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Tatung Company

Tatung Company. (2371 TT ) Integrity , Honesty, Industry, Frugality March 2014. Y. Lin, President. Executive Summary. 2.

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Tatung Company

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  1. Tatung Company (2371 TT) Integrity, Honesty, Industry, Frugality March 2014 • Y. Lin, President

  2. Executive Summary 2 • We are Taiwan’s leading provider of integrated solutions for Mechatronic projects, including turnkey power generation, smart grid and corporate energy management systems. • We are expanding our Mechatronics turnkey solutions market presence to ASEAN and China. • We are in the midst of a corporate restructuring program aimed at reducing debt, improving cash flow and enhancing transparency. • We are actively managing our extensive real estate portfolio to realize hidden value and maximize cash flow. Over 95% of this portfolio is located in Northern Taiwan.

  3. Our Top Priorities It is painfully clear to us that losses in our ODM monitor business, losses from key investment subsidiaries and high debt levels have prevented investors from recognizing the value of our core power business and our land bank. We set our top priorities for the next five years as: 3 • Consolidated Financial Structure: Our No. 1 priority is to significantly reduce Tatung’s consolidated net debt level over the long term. We also intend to deliver consistent debt reduction on an annual basis. • Core Business: Consistently maintain blended gross margin above 10%, and strive to reach 15%. • Investment Portfolio: Dispose of non-core related and/or underperforming business subsidiaries • Land Assets: Develop our land assets to their highest and best use.

  4. Tatung’s Core Strategic Initiatives

  5. Tatung’s Core Strategic Initiatives

  6. By phasing out low-margin products, we have been able to achieve the following in our core business portfolio: 6+ Years of Structural Improvement in Core Earnings

  7. Revenue Contribution

  8. At the Business Group and Business Unit Level: • Power and Systems Business Groups: Tatung’s core power and systems solutions groups accounted for 72% of revenues in 9M13, versus 40% in 2007. R&D spending devoted to these two groups now accounts for 55% of Tatung’s total core R&D outlay, versus only 25% in 2007. • Power: Motor BU exports reached a 6-year high in 2012, growing by 33%, and leading to the best profit performance for the Motor BU in the past 6 years. In 9M13, Motor BU gross margin reached 18% and operating margin 7.2%, surpassing 2012 levels. • Consumer: In the ODM business unit, unprofitable product lines have been cut (most notably PC monitors), resulting in the elimination of the large losses posted in previous years. In 2010-2012, losses were cut to below NT$300m annually, a big improvement over annual losses of NT$1bn+ in 2007-2009. The ODM business unit now contributes only 7% of total core revenue versus 48% in 2007. 6+ Years of Structural Improvement in Core Earnings

  9. Core Operations Business Performance Revenue Operating Profit Note: Based on unaudited company accounts.

  10. Tatung’s Core Strategic Initiatives

  11. Our Achievements: 6+ Years of Structural Improvement in Investment Income

  12. CPT Has Greatly Reduced its Capital Intensity Source: CPT audited consolidated financial statements.

  13. CPT: Capex Spending CPT has maintained the local LCD industry’s 2nd lowest capex-to-sales ratio since 2007

  14. Investment Income Analysis NT$m

  15. We will continue to dispose of non-core related and/or underperforming business subsidiaries. • We will minimize our exposure to capital-intensive industries and seek continued reduction in debt levels. • Shan Chih Asset Development (SCAD, a 100%-owned subsidiary) will continue to realize the value of our real estate assets via development projects. Our Future Plans

  16. Tatung’s Core Strategic Initiatives

  17. Tatung Land Assets - Taiwan Total area of land holdings: 464k pings or 1,534k sq meters Book value of land: NT$23.3bn (US$790M @ NT$1 = US$29.5) *’Northern Taiwan’ does not include Taipei City and New Taipei City. Note: 1 ping = 3.306 sq m = 35.575 sq ft

  18. Nankang Tatung Xiyuan Residential Project • Land Area: 2,312 ping • Gross Floor Area: 13,436 ping • Floor Plan: 148 housing units, 239 parking spaces • Completion: 1Q 2014 • Revenues and profits to be booked in1H2014.

  19. Land Area: 4,095 ping Gross Floor Area: 25,433 ping Expected Project Timeline: Pre-sale launch in 2H14, pending final regulatory approval. Banchiao Phase I Plant Development Plan

  20. Tatung’s Core Strategic Initiatives

  21. Our Achievements

  22. Lower debt, less capital spending Source: Tatung audited consolidated financial statements.

  23. The Tatung Vision

  24. We aim to become one of Asia’s leading turnkey providers of integrated mechatronic systems and energy-saving power solutions. • Our areas of concentration will be: • *Mechatronics systems • *Power distribution systems employing end-to-end AMI • *Turnkey power generation systems in emerging market countries • *Energy saving initiatives and products The Tatung Vision

  25. Tatung Total Solutions for the Power Grid Renewable Energy Smart Substation System Integration Advanced DistributionAutomation Energy Management Advanced Metering Infrastructure Energy Storage EnergySaving Smart Home

  26. Tatung Integrated EMS Capabilities Remote management Remote Backup Cloud Service System Server Central Control/ Energy Mgt. System Office Network Routers Ethernet Air Conditioning Security Control LED Lighting Power Systems Ancillary Systems 1. Commercial AC 2. Exhaust systems 3. Sophisticated water cooling systems 1. LED bulbs for commercial applications 2. Remote monitoring and management of energy use 1. Distribution network 2. Turnkey power generation 3. End-to-end Advanced Metering Infrastructure (AMI) 1. Water purification 2. Waste water surveillance system 3. Air compressors 4. Industrial gasses 5.UPS systems 6.Reservoir water supply system 1. Electronic security systems 2. Access control systems 3.Video surveillance systems

  27. We will minimize our exposure to capital-intensive industries and seek continued reduction in debt levels. • We will continue to dispose of non-core related and/or underperforming business subsidiaries. • SCAD will continue to realize the value of our real estate assets via development projects. • We pledge to improve corporate governance and transparency. Our Commitment to Shareholders

  28. Company Financials

  29. Five-year Financial Highlights EPS( NTD) Net Income(NT$ million) 29 29

  30. Five-year P&L (Consolidated) 30

  31. Five-year Balance Sheet (Consolidated) 31

  32. Tatung Investment Income

  33. 33

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