ABOUT US
Chairperson's Statement

DEAR SHAREHOLDERS, PARTNERS AND EMPLOYEES,

In 2021, the Covid-19 pandemic persisted with severity worldwide, and the global political and economic landscape became even more complex. Besides, violent fluctuations occurred in the prices of both upstream raw materials and international logistics, posing a huge challenge to the business environment. Nevertheless, the global consumer market where the Group is in still experienced continuous upgrading of product demand structure, resulting in growing revenue. In the meantime, the upgraded display technology and AI provided stronger momentum for economic growth, accelerating the transformation of the smart devices industry. As a result, the industries of smart devices and display technology have ushered in a broad prospect for development.

2021 happened to be TCL's 40th anniversary. It was meant to be an extraordinary year for the Group. In the face of the opportunities and challenges of the global market, we made breakthroughs in the mid-to-high-end market, accelerated expansion in overseas markets, forayed into innovative businesses and new tracks, and carried out organisational restructuring to stimulate team vitality by following the strategic development path of "Value Led by Brand with Relative Cost Advantage". Benefitting from those efforts, the Group became an industry leader in its core businesses and achieved gradual breakthroughs in innovative businesses. In 2021, the Group's revenue reached HK$74,847 million, up by 46.9% year-on-year. Of which, the revenue generated by display business reached HK$63,949 million, up by 43.5% year-on-year; the revenue from innovative businesses increased by 86.7% year-on-year to HK$8,546 million; and Internet business revenue reached HK$1,849 million, with an increase of 49.9% year-on-year, making greater profit contribution. However, due to violent fluctuations in the prices of upstream raw materials and the supply chain, the gross profit increased by 29.7% year-on-year to HK$12,534 million, lower than the sales revenue growth. The profit attributable to owners of the parent from continuing operations was HK$1,183 million; basic earnings per share from continuing operations were HK49.26 cents. To express our sincere gratitude to our shareholders, the Board proposed a final dividend of HK16.70 cents per share, representing a full-year dividend payout ratio of 35.0%.

In 2021, the Group's leading edge in the global market continued to expand. Specifically, the Group continued to lead the industry in global business scale and ranking, with overseas businesses generating 73.9% of its total revenue. Among them, the global sales volume of TCL smart screen reached 23.58 million sets, with its market share firmly ranking No.3 worldwide and ranking among the top 5 in 20 countries and regions. The market share of the Group's smart Android tablets ranked No.4 in the world. The market share of the Group's mobile phones ranked No.3 in Canada and No.4 in the U.S.. Besides, the Group significantly optimised its product mix and made remarkable breakthroughs in the mid-to-high-end market. The sales volume of its Mini LED smart screen and QLED smart screen increased by over 50% year-on-year, driving the overall ASP of TCL smart screens up by 26.1% for the whole year. Meanwhile, the Group continued to increase investments in display and smart business and won the 22nd "China Patent Excellence Award" and the "Science and Technology Innovation Award" by China Video Industry Association, etc. In the future, the Group will continue to implement the globalisation strategy, further improve its layout of global production capacity and supply chain, and optimise channel and product structure to consolidate its competitiveness in the international markets.

This year, the Group's global Internet business continued to maintain rapid growth with its full-year revenue increased significantly by 49.9% year-on-year to HK$1,849 million. Notably, the user loyalty of Falcon Network Technology Group continued to grow with the penetration rate of its membership further enhanced. In 2021, its ARPU increased by 43.4% year-on-year, and profitability continued to improve. In international markets, the Group continued to deepen its close cooperation with global Internet giants such as Roku, Google and Netflix and completed the commercial transformation of TCL Channel. The Group's revenue from Internet business in overseas markets reached HK$359 million, an increase of 11.2% year-on-year.

The Group achieved all-round breakthroughs in innovative business (smart connection, smart home and all-category marketing business). This year, the Group launched a variety of high-tech new products such as AR/XR smart glasses, smart locks and robot vacuum cleaners, and accelerated the global development of its all-category marketing business to create new impetus for the Group's development. Therefore, the Group was included in the "2021-2022 Global Smart Connected Device Brands Top 15" at the Global Top Brands Award Ceremony. In 2021, the Group's revenue from smart connection business and smart home business increased by 34.2% and 78.9%, respectively. By leveraging on its extensive brand and channel advantages worldwide, the Group increased its distribution revenue from all-category marketing business by 70.7% year-on-year in 2021.

Looking into 2022, global economic recovery is still faced with such challenges as persistent Covid-19 pandemic and international tensions. Nevertheless, we can see that the accelerating consumption upgrading and industrial restructuring will inject momentum into the development of smart devices and digital industries. The Group will continue to adhere to the globalisation strategy and focus on the three core competitive edges of "Display, Connection, and Channel". Specifically, it will give full play to its advantages of extensive global channel resources and unique vertical integration of the industrial chain as well as prioritise and increase investments in R&D and innovation to translate technical competence into business performance. The Group will support and actively explore innovative businesses while expanding new tracks to bring long term business growth and greater value return to its shareholders.

On behalf of the Board, I would like to express my sincere gratitude to the global consumers for giving the Group the opportunity to provide you with services. I would also like to express my thanks for the long-standing support and trust from all our shareholders, investors, global customers and partners as well as the dedication and contribution of the Group's directors, management team and staff over the years!

DU Juan
Chairperson
11 March 2022