Welcome to E Ink's second quarter 2020 earnings conference call. Today's speaker is Chairman, Mr. Johnson Lee; CFO, Mr. Lloyd Chen; and Finance Director, Mr. Patrick Chang. All participants are currently in the listen-only mode. After the presentation, there will be a Q&A session. A webcast replay will be available after today's conference. Please visit www.eink.com under the investor relations section. We now proceed with the conference.
Good day, everyone. Let's take a quick look at the safe harbor statement before our second quarter investor conference. Thank you. Okay. Next page. All right. Firstly, let's take a look at the first half results. There was a lot of positive momentum happened in the first half in terms of sales revenue, gross profit, operating profit, as well as the net income. For the second quarter revenue, basically the highest among the past eight years. In terms of the operating profit and the net profit for Q2 and first half both, also achieved record high among the past nine years. For the first half operating profit, we already achieved around 76% what we had in 2019. As you can see, the year-over-year improvement basically all positively improved. However, in terms of the non-GAAP income was slightly decreased in the first half.
By better utilizing our cash generated from operation and royalty income, we basically convert the cash to the financial investment. Some products basically are generating higher investment income in order to offset the royalty income shortfall. Basically, that will be our long-term non-GAAP income strategy. We will talk more in the third quarter investor conference. Next page. We have done a lot of efforts to improve our business and even financial performance. However, we definitely know the importance of the CSR. E Ink's efforts on the CSR has been recognized in the second quarter. We were in the top 10 Taipei Exchange CSR Index. E Ink is publicly traded in the Taipei Exchange. We also prepared a short video clip to let you know the efforts we have done for CSR in the past few years. [Wayne], please.
That's the efforts and the achievement we have done for the CSR. We apologize for the content in the video clip. It is in Chinese. The English one is under preparation. We apologize for that once again. Next page. As I explained, the second quarter operating profit and net income achieved a record high in the past nine years. Basically, this slide shows a trend chart, how it has been improved in terms of the net income and operating profit. Basically, the better profitability came from the more E Ink material sales growth. That's why it supported a better profit. Next page. For the financial position movement, basically it's the balance sheet items. For the cash and financial assets, in the past three years, as you can see, our cash and financial assets position has been increased from TWD 12.4 billion to TWD 16.8 billion.
Even the debt ratio for operation has been slightly increased, from 28% in 2018 to 36% in 2020. The total assets and also proportionately increased by 4%, for example, from 2019 to 2020. In the long run, basically, our strategy to utilize the cash is to use the cash being generated from operation and royalty income to invest. Once again, convert cash into financial assets to get higher interest investment income in order to offset royalty income shortfall. Also, for the cash needed from the operation, since E Ink has been growing positively, we also obtain more bank facility. We will better utilize the bank facility at the lower interest rate to meet the operation cash needs. That's how we are going to utilize our cash strategically in the long run. Next page.
Once again, as I explained in the previous slide, our cash utilization strategy. Basically, as you can tell from the slide, from second quarter 2019 to second quarter 2020, net TWD 1.9 billion cash being increased. Of course, it came from the operation activities positively, and we utilize the cash to reinvest through the financial products to get the higher interest and dividend income to offset the royalty income shortfall. We utilize our bank facility at the lower interest rate, to meet the requirement from the CapEx and the annual cash dividends. Once again, our financial investment for offsetting royalty income shortfall and also continuing CapEx investment for expanding E Ink Kaleido. That's our printing color technology. Also to expand the material capacity. That's how we utilize the cash in the second quarter.
For the technology innovation, I think we spent a lot of efforts on capacity expansion and the strategy about how we utilize the cash. We also continue our technology innovation for business growth. For the color part, basically, we will move from the smaller size to the larger size and from the three-color Spectra being used on the ESL, electronic shelf label, and to the multicolor Kaleido products with our printing color technologies, up to the full color Gallery display. Also from label ESL to all diversified applications. That's for the color part. For the black and white, basically, we have been spending a lot of efforts on the black and white. We definitely will enhance our black and white ePaper advantages, such as faster page turns, and make the display thinner and make the size bigger.
In terms of the temperature range, we will make the temperature range wider to even move more valued functions such as battery-free solution and flexible, affordable technology for future business growth. We also prepare two video clips to help you better understand what I just talked about. Next page. This is the affordable ebook I just talked about. Apart from more smooth page turns, in the video clip, you can see that a front light function is added. We prepare a video clip for you to understand better. Please. Right. The next example that I will talk about, next page, is our E Ink Gallery 4100. It's our second- generation ACeP technology. In comparison with the first generation, as you will see from the video, it shows a frictionless page turn on black and white, and a faster page turn on colors.
Please. Just for your reference, this video clip is from our online SID show. Okay. Next page. Apart from the financials and the efforts on the technologies, we continuously expand our ecosystem. E Ink, we actively developing the ecosystem around ePaper. ePaper, of course, as a core, collaborate with upstream partners such as TFT-LCD makers, IC makers, and also to the downstream partners such as hardware, software suppliers, system integrators, service providers, even all the way up to the branders. We gradually build up and expand our ecosystems. In the second quarter, three new strategic partners joined our ecosystem. The first one is Innolux. The cooperation with Innolux basically is that E Ink supplies our advanced color ePaper to them. They are the, of course, the ecosystem partner for the large size module for our advanced color ePaper technologies.
Now and then, E Ink will take opportunity to introduce potential customers to Innolux. through the strong cooperation between us and Innolux, we will expand our application of color ePaper, show the excellence and the value to the ePaper, and attract more market attention and adoption of our color displays. The second strategic partner is TCL CSOT. Basically, this cooperation, CSOT will manufacture a 42 in ePaper TFT backplane using an 8.5 generation production line. This will be the first time large size ePaper backplane have been manufactured in an 8.5 generation facilities. With this collaboration, it will not only help optimize our cost effectiveness of the production, but also definitely will help to increase our efficiency. last but not least, the cooperation with Visionox, in particular, a subsidiary, Yiwu Qingyue Optoelectronics.
The addition of Visionox definitely will, to our module manufacturing partner, it will enable us to expand our presence in the ESL industry, particularly in the China market. That's our efforts on ecosystem build-up. Three strategic partner join our ecosystem in the second quarter. Next page. E Ink has been established for 30 years already. Apart from earning the profit, of course, a company needs to make the profit. We are striving to be a sustainable company for the world changing environment. We definitely need a healthier earth for us to grow sustainably. We believe we are green company with green technology. As of today, we have shipped 400 million electronic shelf labels and 130 million eReader in the past five years. In other words, with those shipments, 20 million trees being saved because with our green technology.
Also in other words, more than 5.25 billion lbs of CO2 emission are being saved with our ePaper technology. If we convert it to kilogram, that is 2.4 billion kg. We definitely know the importance of the ESG, and we just want to share with you for you to understand that E Ink is a company you are evaluating for investment or you've already invested. That's our contribution in terms of the CO2 emission saving. Having said that, can you move to the next page? Once again, we definitely understand the importance of the ESG. I want to emphasize again, apart from earning the profit, we're definitely striving to be a sustainable company.
With the ESL eReader green effects on the CO2 saving I just mentioned, through our ecosystem partners on support, we believe our ePaper technology application can be further expanded to the field, for example, smart packaging, printing, and even writing. By using a very conservative estimation, let's just assume 2% of the paper consumption on those area I just mentioned, that would be 166 million trees can be saved per year. In other words, around 8 billion lbs of CO2 can be absorbed in one years. Recently, in Taiwan locally, the Taiwanese government emphasized the ESG 3.0 with a big policy. We believe E Ink not just only follow, but we already move ahead. Once again, we do understand the importance of the ESG. Last but not least, we would like to share the future of E Ink with you. Internally, we have a slogan.
We want to make services smarter. We endeavor to make all the services smarter. This slide basically outlines the future of E Ink with full potential and massive business opportunities. As you can see from the smart factory, logistics, education, medical, retail to architecture. We really want to make all these services smarter. The most important will be we continuously endeavor to the society and to the environment. That's a key point we want to deliver in the second quarter investor conference. We can move to the Q&A session.
We are now in the Q&A session. Please press raise your hand icon on the sidebar if you would like to ask a question. When we take your question, please remember to unmute yourself. You can also ask questions through text in the question box on the sidebar. We are now on a Q&A session. Please press raise your hand icon on the sidebar if you would like to ask a question. When we take your question, please remember to unmute yourself. You can also ask questions through text in the question box on the sidebar.
Yeah. We saw a question from Michael Li from Antipodes. I think Michael brought up a question about the outlook of July and August. I think Johnson can answer in general.
Hi, Michael. Basically, we believe that our second half will be better than the first half. Even though first half, we hit nine-year record high. I think we released our July sales revenue. It's either the highest or the second highest for this year. We're relatively bullish about the second half. I think it's because of COVID-19, and we were hit with the impact on the e-reader side during the first half, but because I guess people have been staying at home for too long, and the pickup of reading, which indirectly helps the sales volume for e-readers also start picking up. We believe that the second half will be better than the first half. ESL also has remained quite strong so far. Okay, I saw another question by [Weather Xu]. Is that [Xu]? Yeah, [Weather Xu].
In terms of royalty income, we believe that this year will still continue to fall from last year. The good thing is that we're trying to offset that with our investment. We do actually make investment in two categories. One is strategic investment that we think is important as for us to grow, either through acquisitions or purchase of IPs or purchase of teams, or just purely an investment as a shareholder to bring that relationship closer. At the same time, because we have roughly TWD 16 billion or TWD 1.6 billion?
TWD 16 billion.
Yeah, TWD 16 billion of cash. Oh, TWD 16 billion TWD dollars-
Yeah.
Of cash.
Financial product.
Cash equivalent. We continue to look for low-risk investment opportunities. In terms of the technology, so basically LCD technology that basically has a touch on top of it, because FFS technology are the ones that if you press on it, you don't see any ripple effect. Any LCD displays that you see comes with either capacitive touch or cover lens, are using our technology. OLED technology, the AMOLED, they don't have to pay us royalty. The ones that's using LCD base, a lot of marketing name is called IPS, but it's a very similar technology, but it's really about fringe field switching, which has an ITO on the top, which is widely used in LCD today. Okay, either in mobile phone, tablet, car displays, that needs to have interactive touch on top of it.
Thank you for joining us today. You may now leave the conference. Good day and goodbye.
Thank you.
Thank you.