TECO Electric & Machinery Co., Ltd

2

Safe Harbor Statement

• This Presentation contains certain forward-looking statements that are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

• Except as required by law, we undertake no obligation to update any forward – looking statements, whether as a result of new information, future events or otherwise.

3

Company Profile

• Business Highlight

• Appendix

Agenda

4

TECO at A Glance Established 1956

Headquarter Taipei, Taiwan

Employee 3,200

Sales and Service Branches- Over 15 international branches covers

markets of Taiwan, China, Japan, South-East Asia, North America, Mexico, West Europe, Mid-East and South America

Manufacturing Facilities- Taiwan, China, USA, Philippine,

Malaysia, Indonesia, Vietnam

2006 Consolidated Revenue- NT$ 41.0 BN (US$ 1.2 Bn apprx.)

Capital- NT$ 19.2 BN (US$ 573 mm apprx.)

TECO Headquarter

Nankang Software Park, Taipei, Taiwan

5

Global Manufacturing and Sales Network

Taiwan

China

USA Texas

Australia

Thailand

Singapore Malaysia

Indonesia

India

England

SpainItaly

Germany

Philippine

KoreaJapan

South Africa

Canada

Netherlands

Vietnam

Saudi ArabiaMexico

New Zealand

6

Business Scope Global Leading Provider of Industrial Products and Services

Most comprehensive product and service offerings

- Industrial Motors

- System Automation

- Construction and Engineering Service

- Commercial Air-conditioning Service

Brand Name Owner of Quality Home Appliances Household Air-conditioner

Home Convenience- e.g. Fridge, Washer, Dryer, …etc.

Home Entertainment

- e.g. TV, DVD player,…etc

Others- e.g. Smart Card System

7

30.8

37.2

41.0

27.2

18.7%

20.9%19.3% 20.0%

0

20

40

60

2003 2004 2005 2006

NT$ Billion

0%

5%

10%

15%

20%

25%

Total Operating Revenue Gross Margin

Historical Growth Momentum

*

* Gross Profit/Operating Revenue

** Gross profit includes unrealized / realized inter-company profit

8

Historical Revenue Breakdown

0

5,000

10,000

15,000

20,000

25,000

2003 2004 2005 2006

Industrial Products Home Appliance Others

IndustrialProduct

58%

Others13%

HomeAppliance

29%

As of 2006, Industrial Products Business represented around 60% of total consolidated revenue.

NT$ Million

9

Trend of Gross Margin in Business Units

23.4%24.7%24.8% 24.5%

15.80%17.80% 16.70%

13.9%

0%

10%

20%

30%

2003 2004 2005 2006

Industrial Products Home Appliance

10

Motors – Where We Build Our Business

High efficiency motor

High voltage three-phase motor

Vertical Motors

Rolled Steel Frame Motors

Aluminum Motors

Gear motors

Eddy Current Motors

Crane Motors

Wound Roter Induction Motors

Motors (1/4Hp ~ 60,000Hp)

Inverter Duty Motors

11

Zimbabwe Refinery ExpansionSynchronous Horizontal Ball Mill Motor for mining (Platinum)(8,177 HP, 34 Poles)

Oil and Gas in Equatorial GuineaMotors for drive propane compressors(6,000 HP)

Higher Efficiency Motor for Cement Mill (4,500 HP)

Remarkable Projects

12

• Company Profile

Business Review

• Appendix

Agenda

13

Financial Highlight - consolidated

(In NT Millions) 1H 05 2H 05 1H 06 2H 06 1H 07

Net Sales 17,124 20,097 20,400 20,583 21,172

Net Income 925 896 1,051 1,285 1,503

EPS - Diluted 0.48 0.49 0.55 0.71 0.81

Total Assets 66,554 63,501 69,373 67,790 67,963

Total Liabilities 33,333 30,668 31,692 29,267 29,491

Total Shareholders' Equity 33,221 32,833 37,681 38,523 38,472

ROE (%) * 5.8% 5.4% 6.0% 6.7% 7.8%

* Annualized Number

14

20.1 20.4 20.6 21.2

17.1

21.9%

18.0%

21.1%

21.8%

20.6%

0

10

20

30

40

1H 05 2H 05 1H 06 2H 06 1H 07

NT$ Billion

0%

5%

10%

15%

20%

25%

Total Operating Revenue Gross Margin

Operating Revenue with Gross Margin

*

* Gross Profit/Operating Revenue

** Gross profit includes unrealized / realized inter-company profit

15

Operating Income with Operating Margin

1,019

1,1541,239

204

629

5.9%

1.0%

5.6%

3.7%

5.0%

0

300

600

900

1,200

1,500

1,800

1H 05 2H 05 1H 06 2H 06 1H 07

NT$ Million

0%

1%

2%

3%

4%

5%

6%

7%

Operating Income Operating Margin*

* Operating Income/Operating Revenue

16

Operating Expense

3.53.2

2.2

3.43.1

15.6%

18.1%

15.5%

17.4%

16.1%

0

1

2

3

4

5

1H 05 2H 05 1H 06 2H 06 1H 07

NT$ Billion

0%

5%

10%

15%

20%

Operating Expense Operating Expense/Operating Revenue

17

Revenue Breakdown by Business Units

0

3,000

6,000

9,000

12,000

15,000

1H 06 2H 06 1H 07

Industrial Products Home Appliance Mechanical & Electrical Construction Others

Others5%

IndustrialProduct

69%

Mechanical& Electrical

Construction4%

HomeAppliance

22%

As of 1H 2007, Industrial Products Business dominated almost 70% of total consolidated revenue.

NT$ Million

18

Gross Margin of Main Business Units

15.0%

24.9%24.4%

23.3%

13.0%14.8%

0%

10%

20%

30%

1H 06 2H 06 1H 07

Industrial Products Home Appliance

19

Industrial Products Revenue Breakdown

0

2,000

4,000

6,000

8,000

10,000

1H 06 2H 06 1H 07

Motor System Automation Power Business Compressor

Compressor3% Motor

67%

PowerBusiness

11%SystemAutomation

19%

As of 1H 2007, Motor Business represented 67% of total revenue in Industrial Products Business.

NT$ Million

20

Motor Business Revenue Breakdown - by Geography

* Based on 2006 consolidated number

China12%

Taiwan24%

NorthAmerica

34%

Japan10%

South EastAsia9%

Europe4%Australia

7%

21

0

500

1,000

1,500

2,000

2,500

1H 06 2H 06 1H 07

A/C Commercial A/C LCD TV Washer Fridge Other

Fridge11%

Other13%

Washer7%

A/C26%

LCD TV24%

CommercialA/C19%

As of 1H 2007, A/C, Commercial A/C and LCD TV business were main sources of Home Appliance revenue.

Home Appliance Revenue Breakdown

NT$ Million

22

Improving Core Business

1,808

1,239

833

41.5%66.4%

64.1%

0

500

1,000

1,500

2,000

2,500

2005 2006 1H 07

0%

25%

50%

75%

100%

Operating Income Operating Income/ Pre-tax Income

NT$ Million

23

Highlights of Company Strategy

Aggressively Expanding Industrial Products Business - Speeding up capacity expansion- Cost down through product redesign- Exploring emerging market, eg. Vietnam, Mid-east, Mexico….- Looking for new applications

Restructuring Home Appliance Business- Improved profitability rather than top-line growth- Cost down through finished good outsourcing and SKD manufacturing- Adjusting portfolio of product offering

Continually disposing non-core investment

24

• Company Profile

• Business Review

Appendix

Agenda

25

Income Statements(In NT Millions, except otherw ise noted) 1H05 2H05 1H06 2H06 1H07

Net sales 17,124 20,097 20,400 20,582 21,172

COGS (13,467) (16,404) (16,191) (16,240) (16,526)

Gross Profit * 3,731 3,698 4,205 4,341 4,644

Gross Margin 21.8% 18.4% 20.6% 21.1% 21.9%

Operating Expense (3,101) (3,495) (3,186) (3,552) (3,405)

Operating Income 630 203 1,019 789 1,239

Operating Margin 3.7% 1.0% 5.0% 3.8% 5.9%

Non-operating Income/(Expense) 391 782 212 702 694

Income before tax 1,021 985 1,231 1,491 1,933

Income Tax Benefit/(Expense) (73) (90) (222) (258) (429)

Cumulated effect ** (23) 0 42 52 0

Net Income 925 895 1,051 1,285 1,504

Net Margin 5.4% 4.5% 5.2% 6.2% 7.1%

Diluted EPS (NT$) 0.48 0.49 0.55 0.71 0.81

* Gross profit includes unrealized / realized inter-company profit

** Cumulated effect of changes in accounting principles

26

Balance Sheets1H05 2H05 1H06 2H 06 1H07

(In NT Millions) Amount Amount Amount Amount Amount Cash & ST Investments 4,590 4,536 4,782 5,883 5,335

Receivables 9,283 7,776 8,627 8,544 9,297

Inventory 9,647 8,726 8,821 9,083 9,683

Other Current Assets 4,532 4,221 4,959 4,861 6,081

Total Current Assets 28,052 25,259 27,189 28,371 30,396 LT Investment 4,277 4,827 5,007 5,135 4,593 Fixed & Other Assets 34,225 33,415 37,177 34,284 32,974

Total Assets 66,554 63,501 69,373 67,790 67,963 Current Liabilities 19,113 17,980 19,625 18,053 20,476 Long - Term Interest-bearing debt 11,583 9,661 9,263 8,732 6,562 Other Liabilities 2,637 3,027 2,804 2,482 2,453

Total Liabilities 33,333 30,668 31,692 29,267 29,491Total Shareholders' Equity 33,221 32,833 37,681 38,523 38,472

27

Cash Flows(In NT Millions) 1H 05 2H 05 1H 06 2H 06 1H 07

Net Income 925 896 1,051 1,285 1,503

Depreciation & Amortization 857 852 823 749 832

Other Op Sources/(Use) (1,429) (1,155) (798) 794 (2,079)

From Operation 353 593 1,076 2,828 256

Capital Expenditures (3,494) (681) (528) (786) (401)

Marketable Financial Instruments (717) (3,676) 414 2,898 1,119

Other Investing Sources/(Uses) (5,214) 7,264 (125) (54) (198)

From Investment (9,425) 2,907 (239) 2,058 520

Cash Dividends 0 0 0 (1,118) 0

Employee & BOD Profit Sharing 0 0 0 (247) 0

Other Financing Sources/(Uses) 1,634 (1,164) (602) (2,244) 1,124

From Financing 1,634 (1,164) (602) (3,609) 1,124

Net Cash Position Change 1,830 (54) 246 1,101 (548)

Ending Cash Blance 4,590 4,536 4,782 5,883 5,335

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