TCL Reports Interim Net Profit of RMB 420 Million

TCL Reports Interim Net Profit of RMB 420 Million

August 29th,2008

August 21, 2008 Shenzhen -- TCL Corporation released its report on interim results of 2008 today. The Group achieved revenue of RMB 18.54 billion for the first half of 2008, with RMB 18.211 billion generated from operational sales, an increase of 6.93% year-on-year after deducting income from transfer of assets. The company realized a net profit of RMB 420 million; after removing the implications of convertible bonds, it realized a net profit of RMB 482 million; after deducting non-recurring profit and loss, net profit remained RMB 114 million.

Mr. Li Dongsheng, Chairman of TCL Corporation, said that the favorable results in the first half of 2008 were attributed to the Group s enhanced operation efficiency and competitiveness of its principal business. Since stepping out from deficit in 2007, the Group has been quick in completing its business re-structuring: transforming itself from operation-management mode to investment shareholding mode; focusing on principal business and staying close to the market; strengthening global supply chain and management control system.

The benefits of globalization strategy have begun to manifest, bringing about substantial improvement in operation efficiency and various financial indicators.

2008 is a crucial year for TCL, as it will see whether the company is able to step out of the troughs and succeed in moving on to steady development. Analysts believe that the company has seized key opportunities to steer away from the crisis, it is now ready to embark on a new growth phase for full recovery.

In domestic market, TCL has realized full integration of production and supply, optimally allocated the capacity of each production base, and enhanced both organizational and human-machine efficiency; for overseas markets, TCL has established strategic partnership with the world s leading suppliers, to increase efficiency of supply chain, ensure world-class quality and guaranteed supply.

During the first half of 2008, TCL Multimedia fetched a sale of 6,925,000 sets of color television, out of which LCD has shown a rapid growth accounting for a sale of 1,518,000 sets, an increase of 230.7% over the same period last year, stronger than the average growth of the industry.

According to the recent report on sales data for the past 7 months, LCD sales recorded an over quadruple growth year-on-year, signaling the escalation of TCL s position in the global LCD market. In the first half year, CRT realized a sale of 5,407,000 sets, a decrease of 18.2% year-on-year, but lower than the average decrease rate of the industry.

The decline in the sale of CRT is an inevitable result of industry upgrading, and CRT is going to be gradually replaced by flat screen television. Despite this, TCL Multimedia is able to leverage its consolidated advantages in CRT to make breakthroughs in different regional markets across the world. TCL with its RCA brand is claiming half of the CRT color television market in North America. With its strong hold in marketing and distribution in China, TCL has maintained its leadership in China s color television market for 5 consecutive years with 17% market share.

In the area of telecommunication, TCL sold 6,716,000 cell phones in the first half of this year,, an increase of 60% year-on-year, with overseas sale accounting for 90% of the total.. Overseas sale recorded 6,086,000 sets, an increase of 62% year-on-year, and sale in China exceeded 630,000, an increase of 43% year-on-year.

The outstanding performance of overseas sale is mainly attributed to its active exploration of potential markets and the strategy of product differentiation. TCL would strengthen the co-operation with overseas telecommunication operators in order to maintain its steady growth. Meanwhile TCL Communication will speed up the R&D on new products in the latter half of this year, 15 models of TCL products and 19 models of ALCATEL products and new products of TD-SCDMA will be rolled out.

In addition, TCL has achieved noticeable improvement in operation in the areas of home appliances and electronic components. TCL Home Appliances is benefiting from the R&D on energy-saving and emission-reducing products, and the re-structuring of white goods business (products like refrigerators and washing machines).

It raised the proportion in high-end products to relieve pressure from rise of raw materials cost, at the same time lowering the costs of production, and as a result gross profit percentage has increased in a larger margin over the same period of the previous year. Through raising sales to outside TCL, Techne Electronic Components Business Unit recorded increase in sales coupled with expansion of business toward its upstream.