2013 annual results presentation - todayir2013 annual results page 3 / 44 939 1,945 11,940 11,884...

2013 Annual Results Presentation

TCL Multimedia Technology Holdings Limited (Stock Code：01070)

2013 Annual Results

Page 1 / 44

The information contained herein should not be utilized for any legal purposes with

regards to any investor's investment decision or results. In particular, this document

does not constitute any recommendation or invitation for subscribing for or sale and

purchase of any securities in TCL Multimedia Technology Holdings Limited (the

“Company”). The Company hereby expressly disclaims any liability for any loss or

damage resulting from or in connection with any reliance by any investor on the

information contained herein.

A number of forward-looking statements may be made from this presentation. Forward-

looking statements are statements that are not historical facts. These forward-looking

statements are based on the current expectations of the Company and there can be no

assurance that such expectations will prove to be correct. Because forward-looking

statements involve risks and uncertainties, the Company’s actual results could differ

materially from these statements.

Disclaimer

2013 Annual Results

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Results Overview

Financial Highlights

Business Review

Outlook

2013 Annual Results

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939 1,945

11,940 11,884

23,146

25,666

FY2012 FY2013

Results Overview (For the year ended 31 December 2013)

# Restated (Excluded contributions from Tonly Holdings. Tonly Holdings’ results had been classified as “profit from a discontinued operation” and had

been included in the overall results of the Group)

6,145

5,414

FY2012 FY2013

(HK$ million) (HK$ million)

11.9%

Turnover Gross Profit

#

36,025

9.6%

#

PRC

PRC

Overseas Overseas

Others Others

39,495

2013 Annual Results

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Results Overview (For the year ended 31 December 2013) (cont’d)

* Including an one-off gain of HK$144 million arising from the acquisition of entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-

subsidiary, Huizhou TCL Coretronic Co., Ltd..The acquisition was completed on 18 January 2012 §Including an one-off gain of HK$236 million arising from the disposal of all land use rights and buildings held by Inner Mongolia TCL Electrical Appliance Company

Limited, a wholly owned subsidiary of the Group, on 29 November 2013

(HK$ million) FY2013 FY2012

Net profit / (loss) after tax*§

- The Group (34) 922

- From continuing operations (123) 826

Profit / (loss) attributable to owners of

the parent*§

- The Group (48) 911


2013 Annual Results

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1,858

1,314

2012 Q4 2013 Q4

Results Overview (For the three months ended 31 December 2013)

# Restated (excluding contributions from Tonly Holdings. Tonly Holdings’ results had been classified as “profit from a discontinued

operation” and had been included in the overall results of the Group)

(HK$ million) (HK$ million)

29.3%

Turnover Gross Profit

#

11,420

234 1,054

3,282

3,239

7,904 7,314

2012Q4 2013Q4

1.6% #

PRC

PRC

Overseas

Overseas

Others Others

11,607

2013 Annual Results

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Results Overview (For the three months ended 31 December 2013)

(cont’d)

# Restated (Including contributions from Tonly Holdings. Tonly Holdings’ results had been classified as “profit from a discontinued operation” and had been

included in the overall results of the Group) §Including an one-off gain of HK$236 million arising from the disposal of all land use rights and buildings held by Inner Mongolia TCL Electrical Appliance

Company Limited, a wholly owned subsidiary of the Group, on 29 November 2013

(HK$ million) 2013 Q4 2012 Q4

Net profit / (loss) after tax§

- The Group (168) 277#


Profit / (loss) attributable to owners of

the parent§

- The Group (160) 274#


2013 Annual Results

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Main Reasons for the Loss

The optimistic expectation on market demand at the beginning of the year

2013 led to an overstocking of inventory of raw materials and products;

and the decreases in prices of raw materials and products posed a need

to make a devaluation of corresponding inventory

Quality issues of individual products resulting from sourcing of

components from external suppliers led to an increase in additional cost

for after-sale services expense

Did not meet the sales volume target for the PRC Market due to lower

demand for LCD TVs resulting to the withdrawal of the energy-saving

home appliances subsidy policy by the PRC government in mid-2013

2013 Annual Results

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Results Overview


Business Review

Outlook

2013 Annual Results

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Consolidated Results (For the year ended 31 December 2013)

(HK$ million) FY2013 FY2012 Change

Turnover 39,495 36,025# +9.6%

Gross profit 5,414 6,145# (11.9%)

Operating profit 252§ 1,172#* (78.5%)

Profit / (loss) attributable to owners of the parent

- Profit / (loss) for the year^

- Profit / (loss) from continuing operations

(48)§

(119)§

911*

816*

N/A

N/A

Basic earnings / (loss) per share (HK cents)

- Profit / (loss) for the year^

- Profit / (loss) from continuing operations

(3.61)

(8.96)

69.65

62.37

N/A

N/A

# Restated (excluding contributions from Tonly Holdings. Tonly Holdings’ results had been classified as “profit from a discontinued operation” and had been included in the

overall results of the Group)

* Including an one-off gain of HK$144 million arising from the acquisition of entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-

subsidiary, Huizhou TCL Coretronic Co., Ltd..The acquisition was completed on 18 January 2012

^ Including Tonly Holdings. The Group has successfully spun off Tonly Holdings for a separate listing on the Main Board of The Stock Exchange on 15 August 2013 § Including an one-off gain of HK236 million arising from the sale of all land use rights and buildings held by Inner Mongolia TCL King Electrical Appliance Company Limited,

a wholly owned subsidiary of the Group on 29 November 2013

2013 Annual Results

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Consolidated Results (For the three months ended 31 December 2013)

(HK$ million) 2013 Q4 2012 Q4 Change

Turnover 11,607 11,420# +1.6%

Gross profit 1,314 1,858# (29.3%)

Operating profit 32§ 342# (90.6%)

Profit/ (loss) attributable to owners of the

parent

- Profit/ (loss) for the period^

- Profit/ (loss) from continuing operations

(160)§

(160)§

274#

265

N/A

N/A

Basic earnings/ (loss) per share (HK cents)

- Profit/ (loss) for the period^

- Profit/ (loss) from continuing operations

(11.97)

(11.97)

20.96#

20.26

N/A

N/A

# Restated

^ Including Tonly Holdings. The Group has successfully spun off Tonly Holdings for a separate listing on the Main Board of The Stock Exchange on 15 August 2013 § Including an one-off gain of HK236 million arising from the sale of all land use rights and buildings held by Inner Mongolia TCL King Electrical Appliance Company Limited,

a wholly owned subsidiary of the Group on 29 November 2013

2013 Annual Results

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** Excluding an one-off gain of HK$144 million arising from the acquisition of entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-

subsidiary, Huizhou TCL Coretronic Co., Ltd..The acquisition was completed on 18 January 2012 § Excluding an one-off gain of HK236 million arising from the sale of all land use rights and buildings held by Inner Mongolia TCL King Electrical Appliance Company Limited,

a wholly owned subsidiary of the Group, on 29 November 2013

FY2013 FY2012 Change

(p.p)

Gross profit margin 13.7% 17.1%# (3.4)

Expense ratio* 14.2% 14.4%# (0.2)

Operating profit ratio 0.0%§

2.9%#**

(2.9)

(HK$)

• Expense ratio = (Selling and distribution expenses + Administrative expenses) / Turnover

ASPs of LCD TVs

2,199

2,603

2,154

2,590

Overall The PRC

FY2012 FY2013

0.5%

Profit margins and expense ratio

2.0%

Average Selling Prices (“ASP”) |

Profit Margins and Expense Ratio

2013 Annual Results

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Balance Sheet Highlights

(HK$ million) 31 Dec 2013

31 Dec 2012

(Restated)* Change

31 Dec 2012

Non-current assets 3,230 2,847 +13.5% 3,078

Inventory 4,972 6,387 (22.2%) 6,732

Cash and bank balances 3,048 2,434 +25.2% 3,431

Current assets 18,925 25,173 (24.8%) 24,942

- Continuing operations 18,925 21,735 (12.9%) N/A

- Discontinued operation

(Tonly Holdings) 0 3,438 N/A N/A

Current liabilities 16,510 22,583 (26.9%) 22,587

- Continuing operations 16,510 19,987 (17.4%) N/A

- Discontinued operation

(Tonly Holdings) 0 2,596 N/A N/A

Net current assets 2,415 2,590 (6.8%) 2,355

Non-current liabilities 1,163 445 +161.3% 441

Net assets 4,482 4,992 (10.2%) 4,992

* For illustration purpose only. The amounts as at 31 December 2012 have been reclassified to reconcile with the presentation for the current period’.

2013 Annual Results

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Key Financial Indicators

31 Dec 2013 31 Dec 2012 Change

Inventory turnover (days)* 64 51# 13 days

A/R turnover (days)* 34 32# 2 days

A/P turnover (days)* 62 67# 5 days

Cash conversion cycle (days) 36 16# 20 days

Current ratio (times) 1.1 1.1 Unchanged

Gearing- Gross/Debt/Equity(%) 55.4 66.0 10.6

Gearing ratio (net)(%)** 0 12.0# 12.0



* The above turnover days are calculated based on the average balances for the 12-month period.

** Gearing ratio = Net Borrowing/Equity attributable to owners of the parent. Net Borrowing = Total interest-bearing borrowings – Cash and bank balances – Pledged deposits ## As at 31 December 2013, as the Group’s (excluding Tonly Holdings’ business) total pledged deposits and cash and bank balances of HK$3,048 million was higher than the

total interest bearing borrowings of HK$2,415 million, the Group’s gearing ratio was zero

2013 Annual Results

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Segment Results (For the year ended 31 December 2013)

(HK$ million) FY2013 FY2012 Change

TV Business

PRC Market Turnover 25,666 23,146 +10.9%

Gross profit 4,368 4,916 (11.1%)

Operating results 61 902 （93.2%)

TV Business

Overseas Markets Turnover 11,884 11,940 (0.5%)

Gross profit 1,013 1,112 (8.9%)

Operating results (97) 159 N/A

Tonly Holdings Business (Formerly known as AV Business)

Turnover 2,257* 3,660# (38.3%)

Gross profit 289* 433# (33.3%)

Operating results 92* 83# +10.8%

# Restated

* Up to the spin-off of Tonly Holdings for a separate listing

2013 Annual Results

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Segment Results (For the 3 months ended 31 December 2013)

(HK$ million) 2013 Q4 2012 Q4 Change

TV Business

PRC Market Turnover 7,314 7,904 (7.5%)

Gross profit 1,030 1,553 (33.7%)

Operating results (336) 290 N/A

TV Business

Overseas Markets Turnover 3,239 3,282 (1.3%)

Gross profit 276 223 +23.8%

Operating results 32 7 +357.1%

2013 Annual Results

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Results Overview


Business Review

Outlook

2013 Annual Results

Page 17 / 44 Source: DisplaySearch

Ranking Brand FY2013

LCD TV Market Share

FY2012

LCD TV Market Share

1 Samsung 20.8% 20.0%

2 LGE 14.0% 13.1%

3 TCL 6.5% 5.8% 4 Sony 6.3% 7.3%

5 Hisense 4.8% 4.7%

6 Skyworth 4.5% 4.1%

7 Toshiba 4.2% 5.5%

8 AOC/TP Vision 4.1% 4.0%

9 Panasonic 4.0% 5.0%

10 Sharp 3.8% 4.1%

Ranking Brand FY2013

LCD TV Market Share

FY2012

LCD TV Market Share

1 TCL 18.1% 18.0% 2 Skyworth 16.1% 16.6%

3 Hisense 15.1% 16.3%

4 Changhong 11.9% 10.7%

5 Konka 11.3% 11.7%

6 Haier 5.7% 6.5%

7 Samsung 4.1% 3.1%

8 Sharp 3.5% 3.2%

9 Sony 3.4% 3.8%

10 LGE 1.9% 1.6%

LCD TV PRC Market Share

LCD TV Global Market Share

2013 Annual Results

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TV Sales Volume (For the year ended 31 December 2013)

Total TV Sales Volume (’000 sets) FY2013 FY2012 Change

Total 18,239 17,557 +3.9%

PRC 9,926 9,032 +9.9%

Overseas 8,313 8,525 (2.5%)

LCD TV Sales Volume (’000 sets) FY2013 FY2012 Change

Total 17,184 15,527 +10.7%

Of which: LED backlight LCD TVs

Smart TVs

3D TVs

16,661

2,800

2,669

11,828

1,471

2,179

+40.9%

+90.3%

+22.5%

PRC 9,908 8,856 +11.9%

Overseas 7,276 6,671 +9.1%

2013 Annual Results

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TV Sales Volume (For the three months ended 31 December 2013)

Total TV Sales Volume (’000 sets) 2013 Q4 2012 Q4 Change

Total 5,259 5,050 +4.1%

PRC 2,886 2,911 (0.9%)

Overseas 2,373 2,139 +10.9%

LCD TV Sales Volume (’000 sets) 2013 Q4 2012 Q4 Change

Total 5,099 4,678 +9.0%

Of which: LED backlight LCD TVs

Smart TVs

3D TVs

5,092

1,018

758

4,097

745

884

+24.3%

+36.6%

(14.3%)

PRC 2,886 2,885 -

Overseas 2,213 1,793 +23.4%

2013 Annual Results

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Sales volume of smart TVs and 3D TVs in December accounted for

36.5% and 30.1%, respectively, of the LCD TV sales volume

Opened 4,000 new specialty stores (City: 1,500 stores; Village: 2,500

stores)

TCL-iQIYI TV+ became the best-selling smart TV model in the PRC

The Group did not meet its sales volume target due to the

withdrawal of the energy-saving home appliances subsidy policy

The progress of product launches was slower than expected

The overly optimistic expectations led to increase in an

overstocking of the inventory of raw materials; the gross profit

margin was affected due to the subsequent lower raw material

prices

*Source: DisplaySearch

TV Business in the PRC Market

2013 Annual Results

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Sales volume of the LCD TVs in the Emerging Markets rose by

13.0% y-o-y (Brazil: up by 72.6% y-o-y)

Smart TVs accounted for 17.1% of the sales volume of LCD TVs in

the European Market

The market share in France increased to 7.1%* (2012: 5.7%)

Proportion of high-end products had yet to be improved

Volatilities in exchange rates in some of the emerging markets

affected profit

TV Business in the Overseas Markets

* Source: GfK

2013 Annual Results

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Sales volume of TV+ reached

over 100,000 sets in less

than four months after launch,

becoming the best-selling

smart TV model in the PRC

Launched jointly with Baidu iQIYI “TCL-iQIYI TV+”

Establishment of Internet-oriented Ecosystem

2013 Annual Results

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Intensified Marketing Efforts to Enhance

Brand Influence

2013 Annual Results

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TCL Chinese Theatre in Hollywood

Imprint Ceremony


Brand Influence (cont’d)

2013 Annual Results

Page 25 / 44

International Consumer Electronics Fair

in Germany (IFA)

Consumer Electronics Show in the U.S.(CES)

China Information Technology Expo

(CITE) Guangzhou Trade Fair



2013 Annual Results

Page 26 / 44

Press conference of new product

launch for Spring in Beijing



2013 Annual Results

Page 27 / 44

Disney press conference in

Guangzhou

Bus-body advertising



2013 Annual Results

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Expanding Business Horizon – Cross-industry

Cooperation with IMAX

Provide premium all-round smart home theatre entertainment

solutions covering “hardware, software, service and content”

2013 Annual Results

Page 29 / 44

The 47th Consumer Electronics Show (“CES”)

Included in the leagues of “Top 50 global Consumer Electronics Brands” and “Top 10 Chinese

Consumer Electronics Brands” for the sixth consecutive year

“2013 Global Innovative Smart TV of the Year” award, the most prestigious product award

“TCL-iQIYI TV+” received “Global Innovative Smart TV of the Year” award

4K ultra-high definition TV met the Chinese National 4K TV Certification Standards

TCL Disney Children TV received “Innovative Technology” award in China Electronic Information

Industry Economic Operation Cum TV Industry Research Conference, jointly organized by China

Video Industry Association and All Viewing Consulting in Beijing

Viveza V101 and the 110-inch ultra-high definition 3D flat-panel TV MTB001D01-1 won the “2013

CITE Innovation Product and Application” gold award in the “China Information Technology Expo”

(CITE)

TCL has maintained its No.1 position among television enterprises in the PRC with a brand value of

RMB63,916 million and ranked No.6 among the Top 100 Most Valuable Brands in China

Enhance Product R&D Capability

and Brand Influence

2013 Annual Results

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Results Overview


Business Review

Outlook

2013 Annual Results

Page 31 / 44

Continue to maintain leading position in

the PRC Market and speed up internet-

oriented layout

〇 Implement reforms of sales channels

〇 Continue to improve 4K ultra high-definition

TV product layout

〇 Strengthen “All cloud strategies” and

planning of innovative internet-oriented

products like TCL-iQIYI TV+

〇 Strengthen establishment of specialty stores,

facilitate development of e-commerce

channels and promote O2O integration

〇 Expand integration in the industrial chain,

lower cost and expense ratio, and speed up

turnover cycle

The PRC Market

Increase market share in the global

market and enhance brand influence,

improve profitability

〇 Continue to implement a steady business

strategy with speed, efficiency and cost

control as the core

〇 Lift the proportion of sales of high-end

products in Emerging Markets, expand sales

channels and improve overall operating

efficiency

〇 Invest more in branding, improve lead time

for new products and sales volume

〇 Optimize strategic OEM customer base and

cost structure

Overseas Markets

Quality growth

Optimize product mix and improve ASP

LCD TV sales volume

18.50 million sets

Target for 2014

2013 Annual Results

Page 32 / 44

Provide multimedia

products & services that

exceed users’ expectations

Maintaining leading position in the

PRC for TV business

Top 3 in the world for TV business

To be a global multimedia entertainment

technology enterprise

Strategic Goals

2013 Annual Results

Page 33 / 44

Strategic Directions

Smart-driven

transformation

Internet-oriented layout

Brand globalization

Establishment of

fundamental capabilities

Product + Service Smart + Internet

Str

ate

gic

tra

nsfo

rmati

on

of

TC

L M

ult

imed

ia

Comprehensive

entertainment

solution

User-oriented

Smart TV

Game

OTT box

IMAX equipment

Accessories

……

Operating business

Smart game platform

Worldwide broadcasting

OTT operating platform

IMAX content

O2O

……

2013 Annual Results

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Short-, mid- and long-term overall business planning

To achieve sustainable profitable growth

Business in

the PRC

ROWA

Melody

IBU

EU

NA

Accessories

E Home

Content/service

Color TV

hardware

business

Internet-

oriented

new

business

EM

ODM

Core businesses

Profit and efficiency-focused

Smart-oriented

transformation

Growth businesses

Income and growth-focused

Brand globalization

New businesses

Focus on business model

exploration

Internet-oriented layout

Game

2013 Annual Results

Page 35 / 44

Improve fundamental capabilities

IT

Finance Human

Resources

Service

System

management

Establishment of fundamental capabilities

2013 Annual Results

Page 36 / 44

People-oriented

Emphasis on experience

Establish operation and service

Rapid hardware upgrading

Rapid software generation renewal

New business System

single-chip

Operation

platform

Corporation

cloud

Operating

system

User

experiences

Smart strategy

New

business

2013 Annual Results

Page 37 / 44

Internationalization

20th Century 21st Century

Globalization

Exports Duplication Integration Optimization

Now Future

To establish a mature brand operation management model

Trans-nationalization

Integrate and operate towards globalized resources

Brand Globalisation

2013 Annual Results

Page 38 / 44

Evolutions at the

sales front

Establishment of

ecosystem

Develop loyal consumer base

Expand hardware business

Explore cooperation in contents and services

Provide one-stop service to users across the whole sales process

Cross-organization integration Operational layout

Change of culture

New business

development

Internet thinking

Transformation of capabilities from wholesale to retail

Streamline sales channels

Strengthen direct sales

O2O integration

Finer-targeted marketing

TCL-IMAX premium smart home theatres

Smart-driven + Internet-oriented transformation

2013 Annual Results

Page 39 / 44

The world-class talent

Flemming Pedersen officially joined

TCL Multimedia as Vice President

and General Manager of InnoCenter

2013 Annual Results

Page 40 / 44

110-inch UHD 3D LCD TVs

Enhancing Product Competitiveness

85-inch UHD 3D LCD TVs

2013 Annual Results

Page 41 / 44

Curved UHD TVs

Enhancing Product Competitiveness (cont’d)

2013 Annual Results

Page 42 / 44

Movie Game Karaoke Variety Video 4K product series TV+ product series

Look Better

Use Better

Play Better

Product Segmentation

2013 Annual Results

Page 43 / 44

Internet-oriented layout – Launch of new TCL iQIYI TV+ product series

2013 Annual Results

Page 44 / 44

TCL Multimedia - The Global multimedia

entertainment technology enterprise

Thank you!

2013 annual results presentation - todayir2013 annual results page 3 / 44 939 1,945 11,940 11,884...

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