TCL Communication Announces 2015 Interim Results

HONG KONG, Aug. 12, 2015 /PRNewswire/ --

Financial Highlights

Sales of handsets and other products by geographical breakdown

TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company" which, together with its subsidiaries referred to as the "Group"; HKSE stock code: 02618) today announced the unaudited results of the Group for the six months ended 30 June 2015.

In the first half of 2015, with a sustainable increase in sales of smart devices and efficient execution across all businesses, the Group's overall revenue grew 8% year-on-year to reach HK$13.2 billion, net profit up by 3% year-on-year to HK$454 million. Overall ASP of the Group's products decreased by 3% to US$50.7 due to the persistently sluggish world economy, currency devaluation and other factors. Even so the Group managed to maintain its gross profit margin at 19.3%, a steady and healthy level through continuing efforts to refine its product portfolio. Basic earnings per share amounted to 36.58 HK cents. The Board of Directors recommended an interim dividend of 12.80 HK cents per ordinary share, representing a payout ratio of 35%.

During the period under review, the Group expanded its market share in overseas markets through deepening collaborative relationships with operators and strengthening online channels. Total sales volume of handsets and other products grew 13% year-on-year to 33.7 million units, with 30 million units sold overseas and 3.7 million units sold in China. Sales volume of smart devices increased by 31% year-on-year to 19.7 million units, accounting for 58% of the Group's total shipments.

In the second half of the year, the Group will adopt targeted strategies to each of its six designated business regions. The Group will seek to boost brand awareness in the US market by launching more 4G smartphones. In South America, Africa and the Middle East, the Group will launch various new entry-level smartphones to optimise its product mix. In addition, strengthening online and open market channels will be the key marketing strategy in Europe and China.

Dr. Guo Aiping, Chief Executive Officer of TCL Communication, said "The Group continues to transform and upgrade its product mix. In the first half of 2015, the Group launched a variety of new products, including ALCATEL ONETOUCH IDOL 3 and 4G handset TCL P588L, the cost-effective and ultra-light tablet ALCATEL ONETOUCH POP 10, and the world's first smart wearable device that supports both Android and iOS, ALCATEL ONETOUCH WATCH. Based on its "Double +" business transformation strategy, the Group also launched a variety of mobile internet applications and cloud services such as TCL Smart Home System and HD video communications platform. With the impending launch of new products, the Group will maintain a steady growth momentum."

"Double +" Transformation Strategy

In 2014, the Group began to implement the "Double +" business transformation strategy (i.e., "Intelligence + Internet" and "Products + Services"). It is committed to transcending from being product-oriented to user-centric, with the aim of enhancing its mobile Internet application and smart cloud service capabilities. To promote these strategies, TCL Smart Home (a joint venture between TCL Group, the Group and TCL Multimedia) launched Super APP to create a practical smart home mobile community for consumers, following the release of TCL Smart Cloud and TCL Smart Module. Another innovation of the Group's venture into mobile healthcare, Fortune Dr., has been launched in early 2015. The newly released version Fortune Dr. TV enables users to connect their handset and TV to their medical equipment in order to monitor their health conditions and vital signs. In the next generation to come, Fortune Dr. will collaborate with Sky-tech to provide video consultation functions. Also, a doctor social media platform, "Doctor Circle", will be built to facilitate communication.

In addition, the Group has joined forces with TCL Group and Cisco to develop an enterprise cloud services platform to launch a cloud-based video communications platform and cooperation office system. This Sky-Tech Video Cloud Service will be accessible across 25 multiple sources in parallel, and may be extended widely for areas such as online education, long-distance customer service support, and long-distance medical services.

Regarding the Mobile Internet business, the Group established a Mobile Internet Business Centre in 2014. For the first half of 2015, the number of cumulative activated users of mobile internet platform has reached 13.1 million. Meanwhile, the Group and its parent company have been jointly developing a new online financial service platform (a third-party mobile payment gateway), with the settlement amount in the first half of 2015 amounting to RMB1.3 billion. The Group will also join with its new partners to develop more innovative applications in different vertically integrated areas to enhance user experience and increase service income. Furthermore, the Group will step up efforts to develop its cloud-based platform.

In the second half of the year, riding on the "Internet +" trend, the Group aims at transforming itself into a multinational enterprise that specialises in the manufacturing of smart devices and Internet applications and services. The Group will continue to invest in areas including smart home, mobile healthcare and medical services, and enterprise cloud platforms, to create a unique open smart ecosystem anchored around "smart devices + cloud-based platform + Internet services". In the meantime, for those new projects based on the "Products + Services" business model, the Group will step up its R&D efforts and follow an Internet-Thinking approach to promote further business growth of transformation projects, which will then create new dimensions to enhance the Group's corporate value.

Dr. Guo Aiping, concluded, "Driven by the combined engines of Internationalisation and the  'Double +' business transformation strategy, our edge as a manufacturing and Internet enterprise will become even more prominent. However, the persistent strong US dollar has made currencies in emerging markets devalued and undermined purchasing power. The management of the Group revised its revenue growth target for 2015 to 10% year-on-year. The Group will continue to exercise stringent cost and expense controls to react to market changes in a timely manner. Efforts will be made to establish the Group as a world-leading mobile Internet enterprise, and maximise shareholders' value."

About TCL Communication

TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company"; HKSE stock code: 2618) together with its subsidiaries and its affiliates (collectively the "Group") designs, manufactures and markets an expanding portfolio of mobile and internet products worldwide under two key brands – ALCATEL ONETOUCH and TCL. The Group's portfolio of products is currently sold in China and over 170 countries throughout North America, South America, Europe, the Middle East, Africa and Asia Pacific. According to telecommunication research firm IDC and company's data, the Group ranked No. 6 and No. 8 among global phone manufacturers and global smartphone manufacturers respectively in the second quarter of 2015. The Group also ranked No. 8 among global tablet manufacturers. Headquartered in Shenzhen, China, TCL Communication operates its highly efficient manufacturing plant and R&D centres in various provinces of the PRC. It employs around 15,000 people in China, Hong Kong and overseas.

TCL Communication is one of the few companies in Hong Kong or China who owns or licenses 2G, 2.5G, 2.75G, 3G and 4G patented technologies. It is also able to independently develop products and solutions for the GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA and LTE. For more information, please visit its website at http://tclcom.tcl.com.

Issued by Cornerstones Communications Ltd. on behalf of TCL Communication. For further information, please contact: