Financial Performance - Revenue for 2021 reached RMB 50,928 million, an increase of 27.0% compared to RMB 40,093 million in 2020[3] - Operating profit before interest and tax was RMB 3,013 million, up 15.0% from RMB 2,620 million in the previous year[3] - Net profit for the year was RMB 1,965 million, reflecting a growth of 7.1% from RMB 1,835 million in 2020[3] - The overall revenue for the fiscal year ending December 31, 2021, was RMB 50,928 million, representing a 27.0% increase from RMB 40,093 million in the previous year[38] - The gross profit margin for the fiscal year was 16.8%, a decrease of 1.1 percentage points compared to the previous year[40] - Sales volume of smart TV systems decreased by 18.0% to 13,977 thousand units, down from 17,048 thousand units in the previous year[41] - Revenue from the mainland China market was RMB 33,220 million, an increase of RMB 8,637 million or 35.1% from RMB 24,583 million in the previous year[44] - Revenue from overseas markets was RMB 17,708 million, accounting for 34.8% of total revenue, with a 14.2% increase from RMB 15,510 million in the previous year[45] - The multimedia business revenue was RMB 27,370 million, an increase of RMB 2,903 million or 11.9% from RMB 24,467 million in the previous year[50] - The smart appliance business recorded revenue of RMB 4,375 million for the year ended December 31, 2021, an increase of RMB 157 million or 3.7% compared to the previous year[64] - The group's new energy business revenue surged to RMB 4,101 million, a significant increase of RMB 3,997 million or 3,843.3% compared to the previous year[69] - The modern service industry business achieved revenue of RMB 3,932 million, an increase of RMB 1,452 million or 58.5% year-on-year[71] Market Expansion and Strategy - The company is actively expanding both domestic and international markets, with a focus on establishing a presence in Africa, ASEAN, Europe, and India[19] - The company aims to enhance its international strategy and expand overseas business to mitigate the impacts of COVID-19[39] - The company plans to spin off Skyworth Electric Co., Ltd. for independent listing on the A-share market, with the application materials accepted by the Shenzhen Stock Exchange[9] - The company aims to achieve a revenue target of RMB 100 billion by 2024 as part of its three-year development plan[16] - The company is focusing on transforming its business model towards modern service industries and software, leveraging new technologies and materials[39] - The company is exploring financial technology services by collaborating with financial institutions to enhance user experience and service capabilities on its OTT platform[87] - The company is considering strategic acquisitions to enhance its product portfolio and market presence, with a budget of up to HKD 1 billion allocated for potential deals[123] - Market expansion efforts include entering three new international markets, aiming for a 25% increase in overseas sales[123] Research and Development - The company added 1,457 new patents in 2021, bringing the total to 11,065 patents, enhancing product competitiveness[10] - The company emphasizes the importance of talent management and aims to strengthen its high-quality talent pool to improve research and development capabilities[27] - The group continues to invest heavily in R&D to enhance competitiveness, which has led to increased R&D expenses despite a decrease in the R&D expense to revenue ratio[76] - The company is investing HKD 500 million in research and development for new technologies in the upcoming year[123] - The group aims to enhance its research and development capabilities by constructing an advanced R&D center in Nanjing Industrial Park[64] Corporate Governance and Management - The management team is committed to improving corporate governance and investor relations, reflecting a strong focus on transparency and accountability[114] - The company has a diverse board with members holding significant shares, ensuring alignment with shareholder interests[104][105][109][113][116] - The board of directors remains committed to maintaining strong corporate governance and transparency in financial reporting[123] - The company has implemented strict quality control measures and conducts regular market surveys to improve product quality and customer satisfaction[151] Financial Position and Investments - The company’s cash position improved by 29.4%, reaching RMB 12,739 million compared to RMB 9,841 million in 2020[3] - The company’s net debt to equity ratio rose to 76.6%, up from 69.6% in 2020, indicating increased leverage[3] - Net current assets as of December 31, 2021, were RMB 13,725 million, an increase of RMB 2,208 million or 19.2% from RMB 11,517 million as of December 31, 2020[78] - Cash and bank balances increased to RMB 10,611 million, up RMB 2,397 million or 29.2% from RMB 8,214 million as of December 31, 2020[78] - Total bank loans amounted to RMB 14,262 million as of December 31, 2021, compared to RMB 11,387 million as of December 31, 2020[80] - The overall interest-bearing liabilities totaled RMB 16,145 million, an increase from RMB 13,224 million as of December 31, 2020, with a debt-to-equity ratio of 76.6%, up from 69.6%[80] - The company held investments in 40 unlisted companies valued at RMB 2,292.4 million as of December 31, 2021[82] - The company has made four equity investments in listed companies on the Hong Kong Stock Exchange, Shanghai Stock Exchange, or Shenzhen Stock Exchange, focusing on emerging industries such as semiconductors and new materials, which are expected to yield significant equity appreciation[88] Employee and Social Responsibility - The company expresses gratitude to its employees, shareholders, and partners for their support and contributions, aiming for greater success and shareholder returns in the coming year[28] - The company emphasizes the importance of employees as key drivers of business growth and provides various training programs to enhance their skills and awareness of environmental issues[150] - The company is committed to long-term environmental sustainability and has established a corporate social responsibility policy focusing on four main areas: work environment, environment, operational practices, and society[146] Product Development and Innovation - The company is accelerating the development of its photovoltaic business, focusing on distributed photovoltaic systems and exploring new business opportunities in energy storage and operation[21] - The introduction of Mini-LED technology provides a 25% energy saving and enhances user experience with superior picture quality[52] - The development of ultra-wideband antennas improved Wi-Fi connection stability by over 30%[52] - The group launched several flagship products, including the 8K OLED TV W92 and the world's first bendable OLED TV W82, enhancing its product lineup[52] - The company plans to leverage new technologies such as 5G, AI, and big data to launch new products including 5G+8K TVs and smart appliances, aiming to enhance product competitiveness and maintain performance in 2021[95] Shareholder Returns and Dividends - The company reported a final dividend of HKD 0.23 per share, totaling approximately RMB 497 million, compared to no dividend in 2020[144] - The company has adopted a dividend policy that allows for the declaration of dividends based on distributable profits, cash flow, and financial condition[145]

[Financial Highlights](index=3&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The company's financial highlights for the first half of 2021 show significant revenue growth, a slight increase in profit attributable to equity holders, and changes in key financial ratios and per-share metrics 2021 First Half Financial Highlights (For the Six Months Ended June 30) | Indicator Category | Indicator | 2021 First Half (Unaudited) | 2020 First Half (Unaudited) | Change | | :--- | :--- | :--- | :--- | :--- | | **Operating Results (RMB millions)** | **Revenue** | **22,567** | **15,979** | **+41.2%** | | | Operating Profit | 1,050 | 1,010 | +4.0% | | | Profit for the Period | 610 | 573 | +6.5% | | | **Profit Attributable to Equity Holders of the Company** | **409** | **391** | **+4.6%** | | **Financial Position (RMB millions)** | Cash Position | 9,242 | 7,901 | +17.0% | | | Borrowings | 13,580 | 7,849 | +73.0% | | | Equity Attributable to Equity Holders of the Company | 17,052 | 15,919 | +7.1% | | | Inventories | 8,746 | 5,388 | +62.3% | | **Key Ratios** | Gross Profit Margin | 16.6% | 19.3% | -2.7 percentage points | | | Net Profit Margin | 2.7% | 3.6% | -0.9 percentage points | | | Net Debt to Equity Ratio | 77.3% | 63.9% | +13.4 percentage points | | | Inventory Turnover Period (Days) | 78 | 79 | -1.3% | | **Per Share Data (RMB cents)** | **Earnings Per Share - Basic** | **15.54** | **12.87** | **+20.7%** | | | Earnings Per Share - Diluted | 14.44 | 12.11 | +19.2% | | | Book Value Per Share | 747.08 | 594.48 | +25.7% | [Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) Skyworth Group Limited is a Bermuda-incorporated company listed on the Hong Kong Stock Exchange, with Deloitte Touche Tohmatsu as its auditor - Skyworth Group Limited is a company incorporated in Bermuda, with its shares listed on The Stock Exchange of Hong Kong Limited under stock code **00751**[5](index=5&type=chunk)[6](index=6&type=chunk) - The company's auditor is Deloitte Touche Tohmatsu[5](index=5&type=chunk) [Business and Financial Review](index=6&type=section&id=%E6%A5%AD%E5%8B%99%E5%8F%8A%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides an overview of the group's operational performance, financial position, and key strategic initiatives during the reporting period [Performance Summary](index=6&type=section&id=%E6%A5%AD%E7%B8%BE%E6%91%98%E8%A6%81) In the first half of 2021, the Group's revenue significantly increased by 41.2% to RMB 22.567 billion, primarily driven by multimedia and smart system technology businesses, despite a decline in gross profit margin and a modest increase in profit for the period 2021 First Half Performance Summary | Indicator | Amount (RMB millions) | Prior Period | Remarks | | :--- | :--- | :--- | :--- | | **Revenue** | **22,567** | 15,979 | 64.9% from Mainland China market | | Gross Profit | 3,745 | - | Gross profit margin was 16.6%, compared to 19.3% in the prior period | | Profit for the Period | 610 | 573 | - | | Profit Attributable to Equity Holders | 409 | 391 | - | | Interim Dividend | Not distributed | Not applicable | Company may use cash for share repurchases | [Business Performance Review](index=7&type=section&id=%E6%A5%AD%E5%8B%99%E8%A1%A8%E7%8F%BE%E5%9B%9E%E9%A1%A7) Despite global pandemic challenges and rising raw material costs, the Group achieved strong revenue growth across both Mainland China and overseas markets, with significant contributions from multimedia and modern service businesses [Revenue Analysis](index=7&type=section&id=%E7%87%9F%E6%A5%AD%E9%A1%8D%E5%88%86%E6%9E%90) In the first half of 2021, the Group's total revenue reached RMB 22.567 billion, a 41.2% year-on-year increase, primarily due to global economic recovery, though rising raw material prices led to a decline in gross profit margin and a decrease in smart TV system sales - The Group's overall revenue increased by **41.2%** year-on-year, reaching **RMB 22,567 million**[8](index=8&type=chunk) - Affected by rising raw material prices, the Group's gross profit margin was **16.6%**, a **2.7 percentage point** decrease from the prior period[8](index=8&type=chunk) Smart TV System Sales Volume (Thousand Units) | Market | 2021 First Half | 2020 First Half | Change | | :--- | :--- | :--- | :--- | | China Market | 2,881 | 3,415 | (15.6%) | | Overseas Market | 3,852 | 3,613 | 6.6% | | **Total** | **6,733** | **7,028** | **(4.2%)** | [Geographical Segment Analysis](index=8&type=section&id=%E5%9C%B0%E5%8D%80%E5%88%86%E9%83%A8%E6%A5%AD%E5%8B%99%E5%88%86%E6%9E%90) The Group achieved strong revenue growth in both Mainland China and overseas markets, with Mainland China contributing 64.9% of total revenue and Asia (excluding Middle East) being the largest overseas market - Revenue from the Mainland China market increased by **40.8%** year-on-year, reaching **RMB 14.641 billion**[10](index=10&type=chunk) - Overseas market revenue increased by **42.0%** year-on-year, reaching **RMB 7.926 billion**, accounting for **35.1%** of the Group's total revenue[11](index=11&type=chunk) Overseas Market Revenue Geographical Distribution | Region | 2021 First Half (%) | 2020 First Half (%) | | :--- | :--- | :--- | | Asia (excluding Middle East) | 60 | 58 | | Europe | 12 | 14 | | Middle East | 10 | 12 | | Americas | 10 | 6 | | Africa | 7 | 9 | | Oceania | 1 | 1 | [Business Segment Analysis](index=9&type=section&id=%E6%A5%AD%E5%8B%99%E6%9D%BF%E5%A1%8A%E5%88%86%E6%9E%90) All four of the Group's business segments achieved growth, with multimedia business revenue increasing by 45.4% due to new photovoltaic operations, and modern service business revenue in Mainland China surging by 131.0% Revenue by Business Segment (RMB millions) | Business Segment | 2021 First Half | 2020 First Half | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Multimedia Business | 13,655 | 9,394 | +45.4% | | Smart System Technology Business | 4,599 | 3,805 | +20.9% | | Smart Appliances Business | 2,200 | 1,880 | +17.0% | | Modern Service Business | 1,987 | 899 | +121.0% | - The photovoltaic business, a new segment within multimedia, generated **RMB 829 million** in revenue during the period[20](index=20&type=chunk) - Coolita system's internet value-added service revenue reached **RMB 605 million**, a **19.6%** year-on-year increase, covering over **96 million** smart terminals cumulatively[19](index=19&type=chunk) - Modern service business revenue in the Mainland China market increased by **131.0%** year-on-year, reaching **RMB 1.751 billion**[24](index=24&type=chunk) [Gross Profit Margin](index=14&type=section&id=%E6%AF%9B%E5%88%A9%E7%8E%87) In the first half of 2021, the Group's overall gross profit margin decreased by 2.7 percentage points to 16.6%, primarily due to rising upstream supply chain costs, particularly for key raw materials in smart TV systems and smart appliances - The Group's overall gross profit margin was **16.6%**, a **2.7 percentage point** decrease from **19.3%** in the prior period[26](index=26&type=chunk) - The decline in gross profit margin is primarily attributed to rising upstream raw material costs, such as over **50%** increase in glass and IC prices for smart TVs, and rising copper prices affecting appliance products[26](index=26&type=chunk) [Expenses](index=14&type=section&id=%E8%B2%BB%E7%94%A8) During the reporting period, the Group's selling and distribution, general and administrative, and research and development expenses all increased in absolute terms, but their ratios to revenue decreased, indicating improved cost control efficiency and continued investment in R&D Expense Analysis (RMB millions) | Expense Item | 2021 First Half | Ratio to Revenue | 2020 First Half | Ratio to Revenue | | :--- | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 1,855 | 8.2% | 1,495 | 9.4% | | General and Administrative Expenses | 615 | 2.7% | 587 | 3.7% | | Research and Development Expenses | 980 | 4.3% | 814 | 5.1% | [Liquidity, Financial Resources, and Cash Flow Management](index=14&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E7%AE%A1%E7%90%86) As of June 30, 2021, the Group maintained a stable financial position with net current assets increasing to RMB 13.442 billion, though total interest-bearing debt rose to RMB 15.417 billion, leading to an increase in the debt-to-equity ratio Key Financial Position Indicators (RMB millions) | Indicator | June 30, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | 13,442 | 11,517 | +16.7% | | Bank Balances and Cash | 8,385 | 8,214 | +2.1% | | Total Interest-Bearing Debt | 15,417 | 13,224 | +16.6% | | Debt to Equity Ratio | 77.3% | 69.6% | +7.7 percentage points | [Treasury Policy and Investment Portfolio](index=15&type=section&id=%E8%B2%A1%E8%B3%87%E6%94%BF%E7%AD%96%E8%88%87%E6%8A%95%E8%B3%87%E7%B5%84%E5%90%88) The Group adopts a prudent treasury policy with most assets and liabilities settled in RMB, recorded a net exchange loss of RMB 1 million, and holds significant investments in unlisted and listed equity securities for strategic smart home ecosystem development - As of June 30, 2021, the Group held investments in **46** unlisted companies with a total value of **RMB 2.796 billion**[31](index=31&type=chunk) Major Listed Equity Securities Investments (As of June 30, 2021) | Listed Company | Investment Value (RMB millions) | Listing Exchange | | :--- | :--- | :--- | | Bank of Gansu Co., Ltd. | 102.6 | Hong Kong Stock Exchange | | Jiangsu Broadcasting & TV Information Network Corporation Limited | 122.0 | Shanghai Stock Exchange | | Amlogic (Shanghai) Co., Ltd. | 171.2 | Shanghai Stock Exchange | | Sanrenxing Media Group Co., Ltd. | 79.4 | Shanghai Stock Exchange | | Linklogis Inc. | 112.5 | Hong Kong Stock Exchange | | Anhui Core-Ray Technology Co., Ltd. | 49.7 | Shenzhen Stock Exchange | [Significant Investments and Acquisitions](index=17&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E6%94%B6%E8%B3%BC) During the reporting period, the Group invested RMB 409 million in factory expansions across multiple locations and an additional RMB 197 million in other property, plant, and equipment to enhance production scale and smart product capacity - The Group spent **RMB 409 million** on factory expansion projects and invested **RMB 197 million** in other production equipment during the reporting period[34](index=34&type=chunk) [Human Resources and Contingent Liabilities](index=17&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E8%88%87%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2021, the Group's global workforce decreased to approximately 33,000 employees, while the company continues to focus on staff welfare and training, and addresses patent disputes deemed not to have a material adverse financial impact - As of June 30, 2021, the Group had approximately **33,000** employees, a decrease from **36,000** as of December 31, 2020[35](index=35&type=chunk) - The Group is involved in some individual patent disputes, but the directors believe these will not have a material adverse effect on the Group's financial position[35](index=35&type=chunk) [Outlook and Post-Reporting Period Events](index=18&type=section&id=%E5%89%8D%E7%9E%BB%E8%88%87%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) Looking ahead, the Group designates 2021 as the 'Efficiency Enhancement Year,' focusing on transforming its business model and accelerating R&D in 5G+AI+Terminal technologies, while acknowledging the ongoing uncertainty of the COVID-19 pandemic on overseas operations - The Group will define products with a '5G+AI+Terminal' technology development approach, accelerating R&D and application of new technologies, materials, and processes to enhance product competitiveness[36](index=36&type=chunk) - The Group will focus on advancing the construction of overseas production bases in Southeast Asia, India, and Africa, and actively develop OEM business[36](index=36&type=chunk) - Post-reporting period, the COVID-19 pandemic is expected to continue to impact the Group's overseas business, though the exact timing and scale of the impact remain unpredictable[37](index=37&type=chunk) [Condensed Consolidated Financial Statements](index=19&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=19&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E5%85%A5%E8%A1%A8) For the six months ended June 30, 2021, the Group reported a 41.2% increase in revenue to RMB 22.567 billion, a decline in gross profit margin, and a 4.6% increase in profit attributable to equity holders to RMB 409 million Profit or Loss Statement Summary (RMB millions) | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Total Revenue | 22,567 | 15,979 | | Gross Profit | 3,745 | 3,086 | | Profit Before Tax | 812 | 755 | | **Profit for the Period** | **610** | **573** | | Profit Attributable to Equity Holders of the Company | 409 | 391 | | Basic Earnings Per Share (RMB cents) | 15.54 | 12.87 | [Condensed Consolidated Statement of Financial Position](index=21&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2021, the Group's total assets increased to RMB 56.649 billion, with net current assets rising to RMB 13.442 billion, indicating improved liquidity, despite a significant increase in inventories and bank borrowings Financial Position Statement Summary (RMB millions) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **56,649** | **53,684** | | Non-current Assets | 14,677 | 14,076 | | Current Assets | 41,972 | 39,608 | | **Total Liabilities** | **36,717** | **34,693** | | Current Liabilities | 28,530 | 28,091 | | Non-current Liabilities | 8,187 | 6,602 | | **Net Assets** | **19,932** | **18,991** | | Equity Attributable to Equity Holders of the Company | 17,052 | 16,310 | [Condensed Consolidated Statement of Changes in Equity](index=23&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) As of June 30, 2021, equity attributable to equity holders of the company increased from RMB 16.310 billion at the beginning of the year to RMB 17.052 billion, primarily driven by profit for the period and fair value gains on equity instruments - Equity attributable to equity holders of the company increased from **RMB 16.310 billion** at the beginning of 2021 to **RMB 17.052 billion** at period-end[46](index=46&type=chunk) - The primary drivers for the increase in equity were profit for the period (**RMB 409 million**) and fair value gains on financial assets recognized in other comprehensive income (**RMB 445 million**)[46](index=46&type=chunk) [Condensed Consolidated Cash Flow Statement](index=25&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first half of 2021, the Group experienced a net cash outflow of RMB 1.403 billion from operating activities, contrasting with a net inflow in the prior year, while financing activities generated a net inflow primarily from new bank loans Cash Flow Statement Summary (RMB millions) | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Net Cash (Used in) Generated from Operating Activities | (1,403) | 1,786 | | Net Cash (Used in) Generated from Investing Activities | (202) | 81 | | Net Cash Generated from Financing Activities | 1,755 | 83 | | **Net Increase in Cash and Cash Equivalents** | **150** | **1,950** | | Cash and Cash Equivalents at Beginning of Period | 8,214 | 4,806 | | **Cash and Cash Equivalents at End of Period** | **8,385** | **6,827** | [Notes to the Condensed Consolidated Financial Statements](index=27&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) This section provides detailed notes and disclosures supporting the condensed consolidated financial statements, including segment information, earnings per share, and related party transactions [Revenue and Segment Information](index=28&type=section&id=%E7%87%9F%E6%A5%AD%E9%A1%8D%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's revenue is categorized into four reportable segments, with multimedia business being the largest contributor at RMB 13.655 billion, and the modern service and other segment generating the highest profit primarily from property sales 2021 First Half Segment Revenue and Results (RMB millions) | Reportable Segment | External Segment Revenue | Segment Results | | :--- | :--- | :--- | | Multimedia Business | 13,655 | 91 | | Smart System Technology Business | 4,599 | 188 | | Smart Appliances Business | 2,200 | 42 | | Modern Service and Others | 2,113 | 536 | - Within the modern service and other segment, segment results related to 'property sales' amounted to **RMB 340 million**[62](index=62&type=chunk) [Dividends and Earnings Per Share](index=36&type=section&id=%E8%82%A1%E6%81%AF%E8%88%87%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) The Board resolved not to recommend an interim dividend for the six months ended June 30, 2021, with basic earnings per share at 15.54 RMB cents and diluted earnings per share at 14.44 RMB cents - The Board resolved not to declare an interim dividend for 2021[67](index=67&type=chunk) Earnings Per Share Calculation | Item | 2021 First Half | 2020 First Half | | :--- | :--- | :--- | | Profit for Basic EPS Calculation (millions) | 409 | 391 | | Profit for Diluted EPS Calculation (millions) | 380 | 368 | | Weighted Average Number of Ordinary Shares - Basic (shares) | 2,631,476,890 | 3,037,798,995 | [Related Party Transactions](index=52&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%BA%E5%A3%AB%E4%BA%A4%E6%98%93) During the reporting period, the Group engaged in several related party transactions, with sales of finished goods to associates being the largest at RMB 431 million, and total remuneration for directors and key management increasing by 40% - Sales of finished goods to associates amounted to **RMB 431 million**, more than doubling from the prior period[113](index=113&type=chunk) - Total remuneration for directors and key management personnel was **RMB 35 million**, a **40%** increase from **RMB 25 million** in the prior period[114](index=114&type=chunk) [Review Report](index=54&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E7%9A%84%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) The company's condensed consolidated financial statements for the period have been reviewed by Deloitte Touche Tohmatsu, who found no material non-compliance with accounting standards - The company's auditor, Deloitte Touche Tohmatsu, has reviewed these interim financial statements in accordance with Hong Kong Standard on Review Engagements 2410[119](index=119&type=chunk) - The review concluded that the auditor found no matters leading them to believe the condensed consolidated financial statements are not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[119](index=119&type=chunk) [Corporate Governance and Other Information](index=55&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section details the company's corporate governance practices, shareholder information, related party transactions, and internal control systems [Shareholders' Equity and Share Schemes](index=55&type=section&id=%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A%E8%88%87%E8%82%A1%E4%BB%BD%E8%A8%88%E5%8A%83) As of June 30, 2021, major shareholders Mr. Huang Hongsheng and Ms. Lin Weiping collectively held approximately 46.75% equity, while the company had outstanding share options under its 2014 scheme and purchased shares for a new 2020 share award scheme - Major shareholder Mr. Huang Hongsheng and his spouse Ms. Lin Weiping (Executive Director) are deemed to jointly hold approximately **46.75%** of the company's share interests[122](index=122&type=chunk)[123](index=123&type=chunk)[132](index=132&type=chunk) - As of June 30, 2021, a total of **121,498,000** share options remained unexercised under the 2014 Share Option Scheme[134](index=134&type=chunk)[137](index=137&type=chunk) - The company purchased **40,000,000** shares during the period for the 2020 Share Award Scheme, but no award shares have been granted yet[139](index=139&type=chunk)[145](index=145&type=chunk) [Related Party Transactions and Compliance](index=61&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93%E8%88%87%E5%90%88%E8%A6%8F) During the reporting period, the Group engaged in three ongoing related party transactions, including a sale and leaseback agreement, advisory services, and product sales, with all directors confirming compliance with securities dealing standards - The Group has three continuing related party transactions involving finance leases, advisory services, and product sales, all disclosed as required[141](index=141&type=chunk)[142](index=142&type=chunk) - All directors confirmed compliance with the standard code for securities transactions[144](index=144&type=chunk) [Board of Directors and Committees](index=63&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E8%88%87%E5%A7%94%E5%93%A1%E6%9C%83) The company is committed to high corporate governance standards, with the Board supported by executive, nomination, remuneration, and audit committees that held meetings to fulfill their responsibilities, largely complying with the Corporate Governance Code - The Board has established four committees: Executive, Nomination, Remuneration, and Audit, to assist in fulfilling its responsibilities[147](index=147&type=chunk) - During the reporting period, the company largely complied with the code provisions of the Corporate Governance Code, with a deviation only for code provision A.6.7 due to an independent non-executive director's inability to attend the annual general meeting[146](index=146&type=chunk) [Risk Management and Internal Control](index=66&type=section&id=%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86%E8%88%87%E5%85%A7%E9%83%A8%E7%9B%A3%E6%8E%A7) The Board affirms its responsibility for maintaining robust internal control systems, supported by a dedicated Risk Management Department that independently assesses operations and reports directly to the Audit Committee, and an Internal Audit Department ensuring compliance across business units - The company has established a Risk Management Department and an Internal Audit Department to ensure the robustness and effective operation of its internal control systems[157](index=157&type=chunk)[160](index=160&type=chunk) - The head of the Risk Management Department has direct access to the Audit Committee and reports directly to the Board and Audit Committee, ensuring independence[158](index=158&type=chunk)

Financial Performance - Revenue for the year ended December 31, 2020, was RMB 40,093 million, representing a 7.6% increase from RMB 37,277 million in 2019[6] - Operating profit (before interest and tax) increased by 28.6% to RMB 2,620 million from RMB 2,037 million in the previous year[6] - Net profit for the period rose by 78.0% to RMB 1,835 million compared to RMB 1,031 million in 2019[6] - Cash position increased by 61.3% to RMB 9,841 million from RMB 6,102 million in 2019[6] - The gross profit margin decreased by 2.2 percentage points to 17.9% from 20.1% in the previous year[6] - The company’s net debt to equity ratio increased to 69.6% from 61.4% in 2019, reflecting a rise of 8.2 percentage points[6] - The company’s market capitalization decreased by 16.3% to HKD 5,763 million from HKD 6,887 million in 2019[6] - Overall gross margin for the group decreased to 17.9%, down 2.2 percentage points from 20.1% in the previous year[61] - Selling and distribution expenses were RMB 3,477 million, a decrease of RMB 280 million or 7.5% compared to the previous year[62] - General and administrative expenses increased to RMB 1,415 million, up RMB 401 million or 39.5% year-over-year[62] - Research and development expenses were RMB 1,865 million, an increase of RMB 22 million or 1.2% compared to the previous year[62] Revenue Breakdown - Revenue from the domestic market was RMB 24,583 million, a decrease of RMB 1,423 million or 5.5% from RMB 26,006 million in the previous year[35] - Revenue from overseas markets was RMB 15,510 million, an increase of RMB 4,239 million or 37.6% from RMB 11,271 million in the previous year[36] - Multimedia business accounted for 59.1% of the revenue in the domestic market, while smart system technology business accounted for 21.1%[35] - Revenue from smart TV systems in the mainland China market was RMB 12,223 million, a decrease of RMB 1,425 million or 10.4% year-on-year[41] - The overseas market for smart TV systems generated revenue of RMB 8,302 million, an increase of RMB 2,395 million or 40.5% compared to the previous year[45] - Smart appliances revenue in mainland China for the year ended December 31, 2020, was RMB 2,868 million, a decrease of RMB 209 million or 6.8% compared to the previous year[54] - Overseas revenue for smart appliances reached RMB 1,350 million, an increase of RMB 132 million or 10.8% year-over-year[54] - Modern services revenue in mainland China was RMB 1,961 million, an increase of RMB 131 million or 7.2% compared to the previous year[57] - Overseas revenue for modern services was RMB 519 million, a significant increase of RMB 497 million or 2,259.1% year-over-year[57] Strategic Initiatives - The company approved 17 major R&D projects with a total investment of RMB 1.86 billion, achieving a new product output rate of 32.3%[11] - The company completed the development of Mini-LED TVs and launched new products including AI entertainment TVs and 4K monitors[11] - The company plans to focus on the "5G+AI+terminal" technology development strategy, accelerating the upgrade of technology and product iterations[20] - The company aims to enhance its market competitiveness by leveraging new technologies and materials to create new product functionalities and experiences[21] - The company anticipates significant potential in the domestic high-end and rural appliance markets in 2021[18] - The company expects pressure on export business profitability due to fluctuations in the RMB exchange rate and rising raw material prices[18] - The company is committed to improving supply chain management and strategic cooperation with suppliers to reduce procurement costs[17] - The company is focused on expanding its industrial park construction to adjust its industrial and asset structure amid a complex global environment[25] - The company aims to expand its overseas business by leveraging supply chain advantages and focusing on markets like India, ASEAN, and Africa[30] - The company plans to introduce high-end and customized new products to meet the demands of urban high-end customers[30] - The company is committed to enhancing internal business collaboration and clarifying development directions to improve overall efficiency[30] - The strategic plan includes a focus on four major business segments: multimedia, smart system technology, smart appliances, and modern services[39] Investments and Acquisitions - The company successfully completed the acquisition of Tianjin Yitong Pump Industry and initiated the IPO process for Shenzhen Cool Open[14] - The company has established two venture capital funds to support innovation and investment initiatives[14] - The group held investments in 46 unlisted companies valued at RMB 2,224 million as of December 31, 2020, with RMB 1,085 million representing a 10% stake in a company involved in manufacturing and selling electronic components[68] - Total capital expenditure for expanding production facilities in Ningbo, Nanjing, Guangzhou, and Qianhai was RMB 958 million, with an additional RMB 769 million invested in machinery and equipment[74] - The group plans to continue investing in property, factory, and office construction to enhance production capacity and operational efficiency[74] Corporate Governance and Management - The company has a diverse board with members holding significant experience in finance, law, and technology sectors[104][106] - The management team is focused on enhancing corporate governance and investor relations to improve overall company performance[98] - The company continues to expand its market presence through strategic appointments and leveraging the expertise of its board members[97][104] - The company reported a comprehensive financial statement for the year ending December 31, 2020, highlighting its performance and financial position[125] - The company faced significant risks and uncertainties during the reporting year, which are discussed in detail in the chairman's report and management discussion sections[127] Employee and Social Responsibility - The group maintained approximately 36,000 employees as of December 31, 2020, consistent with the previous year, and emphasized employee training and welfare[76] - The company has established a corporate social responsibility policy focusing on environmental sustainability and operational practices[130] - The company emphasizes the importance of employee training programs to enhance skills and awareness of environmental issues[134] - The company made charitable donations totaling approximately RMB 1.7 million in the reporting year, compared to RMB 1.4 million in 2019[154] Shareholder Information - As of December 31, 2020, the company's distributable reserves amounted to approximately RMB 2,398 million, an increase from RMB 1,525 million in 2019[148] - The company did not recommend a final dividend for the year ending December 31, 2020, consistent with the previous year[128] - The total number of issued shares was 2,668,129,420[173] - The company has a total of 1,063,361,320 shares issued as of December 31, 2020[175] - The company repurchased a total of 392,800,000 shares at a price of HKD 2.8 per share, totaling approximately HKD 1,099.84 million[151]

Revenue and Profitability - The group's revenue for the period was RMB 15,979 million, a decrease of 7.3% compared to RMB 17,230 million in the same period last year, with 65.1% of sales coming from the mainland China market[11] - Gross profit reached RMB 3,086 million, with a gross margin of 19.3%, down from 19.7% in the previous year[11] - The profit attributable to equity holders for the period was RMB 573 million, representing a 64.7% increase from RMB 348 million in the same period last year[11] - The overall revenue for the six months ended June 30, 2020, was RMB 15,979 million, a decrease of 7.3% compared to RMB 17,230 million for the same period in 2019[12] - Revenue from customer contracts amounted to RMB 15,765 million, with multimedia business contributing RMB 9,394 million and smart systems technology business contributing RMB 3,777 million[57] - The company reported a pre-tax consolidated profit of RMB 755 million for the six months ended June 30, 2020[64] - The company’s net profit for the six months ended June 30, 2020, was RMB 1,387 million, a slight decrease of 3.1% from RMB 1,432 million in the same period of 2019[74] Cash Flow and Financial Position - Net cash inflow from operating activities was RMB 2,055 million, an increase of 40.6% from RMB 1,462 million in the same period last year[8] - Total cash position, including restricted bank deposits and cash, was RMB 7,901 million, up 67.2% from RMB 4,726 million last year[8] - The net cash generated from operating activities for the six months ended June 30, 2020, was RMB 2,055 million, an increase of 40.7% compared to RMB 1,462 million for the same period in 2019[45] - The company reported a net cash outflow from investing activities of RMB 188 million for the six months ended June 30, 2020, compared to RMB 1,187 million for the same period in 2019, indicating improved cash management[46] - The net cash inflow from financing activities was RMB 1,950 million for the six months ended June 30, 2020, compared to RMB 948 million for the same period in 2019, reflecting increased borrowing activities[46] - The total cash and cash equivalents at the end of the period were RMB 6,827 million, up from RMB 4,265 million at the end of the same period in 2019[46] Debt and Equity - The debt-to-equity ratio improved to 63.9%, up from 54.3% in the previous year[8] - The total bank loans as of June 30, 2020, were RMB 7,849 million, a decrease from RMB 8,177 million as of December 31, 2019, while the total interest-bearing liabilities amounted to RMB 11,636 million, up from RMB 11,133 million[31] - The debt-to-equity ratio as of June 30, 2020, was 63.9%, an increase from 61.4% as of December 31, 2019[31] - The company issued secured corporate bonds amounting to RMB 2,000 million on September 15, 2017, with an annual interest rate of 5.36% and a maturity date of September 14, 2022[100] Market Performance and Strategy - The multimedia business and smart system technology business accounted for 58.8% and 23.8% of total revenue, respectively, compared to 59.1% and 24.9% in the same period last year[11] - The company plans to adjust sales strategies and pricing to improve market share in response to the impact of COVID-19 and intense market competition[19] - The company is actively adjusting its product and business structure in response to the ongoing COVID-19 pandemic, aiming to enhance product quality and reduce operational costs[39] - The company is focusing on developing 5G application products and expanding overseas markets, particularly in Southeast Asia, India, and Africa[38] Expenses and Cost Management - Sales and distribution expenses amounted to RMB 1,495 million, a decrease of RMB 343 million or 18.7% compared to RMB 1,838 million in the same period last year, with a sales and distribution expense to revenue ratio of 9.4%, down 1.3 percentage points from 10.7%[28] - General and administrative expenses increased to RMB 587 million, up RMB 169 million or 40.4% from RMB 418 million in the same period last year, with a ratio of 3.7%, an increase of 1.3 percentage points from 2.4%[28] - Research and development expenses were RMB 814 million, a decrease of RMB 94 million or 10.4% from RMB 908 million in the same period last year, with a ratio of 5.1%, down 0.2 percentage points from 5.3%[28] Investments and Acquisitions - The company has established a financial services platform to broaden financing channels, including venture capital and micro-loans[26] - The company acquired a 34% equity interest in Beijing Skyworth Digital Technology Co., Ltd. from a non-controlling shareholder for RMB 10 million[44] - The company plans to continue expanding its smart appliance product line and enhance its internet value-added services through the Cool Open System[61] - The group sold 90% of its subsidiary, Guangzhou Skyworth Electronics, for RMB 574 million, resulting in a gain of RMB 151 million from the sale[131][133] Corporate Governance and Compliance - The company’s financial statements were reviewed by Deloitte, and no significant issues were found regarding compliance with Hong Kong Accounting Standards[145] - The company has maintained compliance with the Corporate Governance Code, except for one independent non-executive director's absence from the annual general meeting due to other commitments[176] - The board is committed to maintaining high standards of corporate governance and transparency to enhance shareholder value[183] Employee and Shareholder Information - The company has approximately 33,000 employees as of June 30, 2020, down from 36,000 as of December 31, 2019, indicating a reduction of about 8.3%[37] - The company announced a conditional cash offer to repurchase up to 392,800,000 shares at HKD 2.80 per share, representing approximately 12.83% of the issued shares as of the announcement date[190] - As of June 30, 2020, the company’s directors held a total of 1,238,258,799 shares, representing approximately 40.45% of the issued shares[148]

Financial Performance - For the year ended December 31, 2019, SKYWORTH reported a revenue of RMB 37.277 billion, representing a year-on-year increase of 23.5%[3] - The net profit attributable to shareholders for the same period was RMB 1.031 billion, reflecting an increase of 86.4% compared to the previous year[3] - The company achieved a gross profit margin of 20.1%, up 1.4 percentage points from the previous year[3] - The overall revenue for the group for the twelve months ended December 31, 2019, was RMB 37,277 million, a decrease of RMB 1,701 million or 4.4% compared to the previous year[17] - Gross profit increased to RMB 7,502 million, reflecting a growth of 4.3% from RMB 7,194 million in the previous year, with a gross margin of 20.1%[16] - The net profit for the year was RMB 1,031 million, representing a 22.9% increase from RMB 839 million in the previous year[16] - The company reported a total comprehensive income of RMB 935 million for the year, recovering from a loss of RMB 1,078 million in the previous year[199] - Basic earnings per share increased to RMB 24.61 from RMB 13.85, marking an increase of 77.5%[199] Research and Development - The company invested nearly RMB 1.9 billion in research and development throughout 2019[6] - Research and development expenses increased by 9.2% to RMB 1,843 million, up from RMB 1,688 million in 2018[16] - Research and development expenses for the year were RMB 1,843 million, compared to RMB 1,327 million in the previous year, showing an increase of 38.8%[198] - The group has applied for a total of 1,164 patents, with several research achievements receiving provincial and municipal awards[7] Market Performance - The number of users for Shenzhen Coolpad reached 42.39 million, with monthly active users at 28 million[6] - Revenue from the mainland China market was approximately RMB 26,006 million, a decrease of RMB 2,230 million or 7.9% compared to the previous year[20] - Revenue from overseas markets was RMB 11,271 million, an increase of RMB 529 million or 4.9% compared to the previous year, accounting for 30.2% of total revenue[21] - The multimedia business revenue recorded RMB 21,505 million, a decrease of RMB 3,290 million or 13.3% compared to the previous year[24] - The group achieved a market share of 39.6% in the OLED market in mainland China, ranking first among domestic brands[27] Product Development and Innovation - The company launched several new products, including the 8K+Alot+5G smart TV and 8K+OLED TV, with new product revenue accounting for over 50%[6] - The group launched nine new OLED TV models using industry-leading technology, enhancing its competitive position in the market[27] - The company is focusing on enhancing product capabilities and consumer experience through the development of new technologies such as the Hummingbird AI chip and SOBiF technology[27] Strategic Initiatives - The company aims for a revenue target of RMB 100 billion, focusing on investment, innovation, and reform in 2020[9] - The company has strategically abandoned some low-margin international projects to focus on emerging consumer markets and optimize sales structure[28] - The company is committed to transforming from manufacturing to modern service industries, enhancing operational efficiency and production capacity[36] - The company is actively promoting the development of smart home systems and plans to increase support for research and development in this area[32] Corporate Governance - The company has a diverse board with members having extensive experience in finance, law, and technology sectors[59][60] - The management team is focused on enhancing corporate governance and investor relations[57] - The company emphasizes the importance of scientific decision-making and strengthening management oversight to enhance operational effectiveness[49] - The company has adopted a board diversity policy to ensure a balanced mix of skills, experience, and perspectives[132] Financial Management - The total bank loans amounted to RMB 8,177 million as of December 31, 2019, an increase from RMB 6,324 million as of December 31, 2018[41] - The overall interest-bearing liabilities totaled RMB 11,133 million as of December 31, 2019, compared to RMB 8,350 million as of December 31, 2018, resulting in a debt-to-equity ratio of 61.4%[41] - The company issued secured corporate bonds with a principal value of RMB 2,000 million at an annual interest rate of 5.36%, aimed at adjusting the debt structure and supplementing general working capital[82] Social Responsibility and Sustainability - The group has established a corporate social responsibility policy focusing on four main areas: work environment, environment, operational practices, and society[71] - The group has implemented various energy efficiency strategies, including the use of energy-saving machines and the installation of eco-friendly lighting systems[71] - The company made charitable donations totaling approximately RMB 1.4 million during the reporting year[86] Challenges and Outlook - The company has faced challenges due to COVID-19 but is optimistic about the recovery of its financial performance in 2020[51] - The company is conducting impairment reviews and expected credit loss assessments due to potential adverse impacts from COVID-19 on receivables and inventory recoverability[51] - The company is focusing on structural adjustments in product, asset, debt, talent, and distribution to drive innovation and sustainable development[49]

Financial Performance - The company's revenue for the six months ended June 30, 2019, was RMB 17,230 million, a decrease of 8.0% compared to RMB 18,722 million for the same period last year[5]. - The gross profit margin improved to 19.7%, up from 18.0% in the previous year, with a gross profit amounting to RMB 3,387 million[5]. - The net profit attributable to equity holders for the current period was RMB 348 million, representing an increase of 28.4% from RMB 271 million in the prior period[5]. - The group's total revenue for the six months ended June 30, 2019, was RMB 17,230 million, a slight decrease of 0.7% compared to RMB 17,351 million for the same period in 2018[9]. - Gross profit for the same period was RMB 3,387 million, representing a 13.1% increase from RMB 2,996 million year-on-year[8]. - The pre-tax profit increased by 46.0% to RMB 562 million, compared to RMB 385 million in the same period last year[8]. - Net profit for the period was RMB 348 million, reflecting a 20.4% increase from RMB 289 million year-on-year[8]. - The company reported a decrease in trade receivables of RMB 2,555 million for the six months ended June 30, 2019, compared to an increase of RMB (1,172) million in the same period in 2018, indicating improved collection efficiency[38]. Cash Flow and Liquidity - The company reported a cash inflow of RMB 1,462 million, contrasting with a cash outflow of RMB 2,021 million in the previous period, indicating a significant improvement in cash flow management[3]. - The company’s cash flow from operating activities was RMB 1,462 million for the six months ended June 30, 2019, compared to RMB (2,021) million for the same period in 2018, marking a significant improvement[38]. - Operating cash flow before changes in working capital for the six months ended June 30, 2019, was RMB 1,333 million, compared to RMB 854 million for the same period in 2018, representing a 56.0% increase[38]. - Net cash generated from financing activities for the six months ended June 30, 2019, was RMB 673 million, compared to RMB (1,099) million for the same period in 2018, showing a turnaround in financing cash flow[39]. - Cash and cash equivalents at the end of the period were RMB 4,265 million, an increase from RMB 3,717 million at the end of the same period in 2018[39]. Revenue Breakdown - Sales from television products accounted for 55.5% of total revenue, while digital set-top boxes and LCD modules contributed 21.1%[5]. - In the domestic market, revenue reached approximately RMB 12,257 million, a growth of RMB 274 million or 2.3% compared to the previous year[13]. - Revenue from overseas markets was RMB 4,973 million, a decrease of 7.4% from RMB 5,368 million in the previous year[14]. - The group's television product revenue in the mainland China market for the six months ended June 30, 2019, was RMB 6,639 million, a decrease of RMB 191 million or 2.8% compared to RMB 6,830 million in the same period last year[16]. - The revenue from the group's smart appliance products in the mainland China market was RMB 1,599 million, an increase of RMB 190 million or 13.5% compared to RMB 1,409 million in the same period last year[19]. Expenses and Investments - Research and development expenses increased by 20.6% to RMB 908 million, up from RMB 831 million in the same period last year, reflecting significant investment in high-quality smart products[23]. - The sales and distribution expenses for the group amounted to RMB 1,838 million, a 10.4% increase from RMB 1,665 million in the same period last year[23]. - The company plans to invest approximately RMB 820 million in property, factory, and office construction, as well as new equipment to enhance production capacity[29]. - The group invested approximately RMB 239 million in construction projects for the six months ended June 30, 2019, compared to RMB 228 million for the same period in 2018[90]. Shareholder Information - The company decided not to declare an interim dividend for this period, consistent with the previous year's decision[5]. - The company declared a final dividend of HKD 0.060 per share for the year ended December 31, 2018, totaling RMB 160 million, down from RMB 241 million for the previous year[89]. - The total number of shares held by directors as beneficial owners is 43,278,024, representing 4.03% of the total issued shares[165]. - The total number of share options granted to directors is 30,000,000, with 20,000,000 options exercised in the current period[173]. Corporate Governance - The group has complied with the corporate governance code, except for one independent non-executive director's absence from the annual general meeting due to other commitments[182]. - The company has adopted a policy to ensure board diversity, considering various factors such as gender, age, and professional experience[186]. - The group has maintained high standards of corporate governance to enhance transparency and accountability to shareholders[183]. Market Strategy - The group has launched seven new OLED TV models, achieving a market share of 35.3% in the OLED market in mainland China for the first half of 2019[16]. - The group adopted a conservative sales strategy in response to the ongoing US-China trade war, leading to a decline in revenue from low-margin projects[17]. - The company aims to achieve a revenue target of RMB 100 billion through its five-year transformation strategy, focusing on smart, refined, and international development[31]. Asset Management - The total non-current assets amounted to RMB 13,826 million, an increase of 11.5% from RMB 12,396 million as of December 31, 2018[33]. - The company’s total assets less current liabilities increased to RMB 22,017 million from RMB 21,032 million, an increase of 4.7%[34]. - The company reported a total of RMB 600 million in notes receivable, an increase from RMB 500 million at the end of 2018, indicating improved liquidity management[140]. Compliance and Regulations - The company adopted Hong Kong Financial Reporting Standard No. 16 on leases, replacing HKAS 17, which will impact the financial statements starting from the mid-term period[46]. - The company confirmed the use of short-term lease exemptions for leases with a term of twelve months or less, and for low-value asset leases, recognizing lease payments as expenses on a straight-line basis[48]. - The company will recognize right-of-use assets at the commencement date of the lease, measured at cost less any accumulated depreciation and impairment losses[49].

[Financial Summary](index=3&type=section&id=Financial%20Summary) The reporting period covers nine months ending December 31, 2018, reflecting a fiscal year-end change, with turnover decreasing by 23.1% but net profit increasing by 10.8% compared to the prior twelve-month period - Due to the change in fiscal year-end from March 31 to December 31, this reporting period covers the nine months ended December 31, 2018, Compared to the twelve months ended March 31, 2018, turnover decreased by **23.1%**, but net profit increased by **10.8%**[3](index=3&type=chunk) Financial Summary | Metric | Nine Months Ended December 31, 2018 | Twelve Months Ended March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | **Turnover (Million RMB)** | 30,192 | 39,271 | -23.1% | | **Operating Profit (Million RMB)** | 973 | 1,083 | -10.2% | | **Net Profit for the Period/Year (Million RMB)** | 553 | 499 | +10.8% | | **Profit Attributable to Equity Holders of the Company (Million RMB)** | 420 | 459 | -8.5% | | **Gross Profit Margin (%)** | 18.7 | 16.7 | +2.0 percentage points | | **Earnings Per Share - Basic (RMB Cents)** | 13.85 | 15.21 | -8.9% | | **Dividend Per Share (HK Cents)** | 6.0 | 9.0 | -33.3% | | **Debt-to-Equity Ratio (%)** | 48.1 | 57.6 | -9.5 percentage points | [Chairman's Report](index=5&type=section&id=Chairman's%20Report) The Chairman's Report highlights the Group's resilience in a challenging 2018, achieving slight turnover growth, improved gross margin, and significant profit increase, while advancing its 'One-Three-Three-Four' strategy towards intelligent and high-end products and a RMB 100 billion revenue target Operating Performance January-December 2018 (Year-on-Year Comparison) | Metric | Jan-Dec 2018 | Jan-Dec 2017 | YoY Change | | :--- | :--- | :--- | :--- | | **Turnover** | 39.0 Billion RMB | 38.9 Billion RMB | +0.1% | | **Overall Gross Profit Margin** | 18.5% | 16.9% | +1.6 percentage points | | **After-tax Profit** | 839 Million RMB | 220 Million RMB | +281.4% | - The TV industry, as the Group's core business, recorded sales exceeding **15 million units** and turnover of **23.512 billion RMB**, accounting for **60.3%** of total revenue during the review period, with overseas sales exceeding **6.5 million units**, indicating initial success in the internationalization strategy[7](index=7&type=chunk) - The Group will continue to execute the 'One-Three-Three-Four' overall strategy for transformation and upgrading, aiming to achieve **100 billion RMB** in revenue, focusing on intelligence, refinement, and internationalization, promoting the construction of three major bases, and building four major business segments: multimedia, smart home appliances, smart system technology and big data, and modern services[8](index=8&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the Group's financial and operational performance, highlighting key drivers and strategic initiatives across various business segments and geographical markets [Business Performance Review](index=10&type=section&id=Business%20Performance%20Review) The nine-month reporting period, following a fiscal year-end change, saw turnover of **30.192 billion RMB** and profit of **553 million RMB**, with full-year unaudited data showing a **0.1%** turnover increase and **281.4%** profit growth driven by product optimization and internet content - This reporting period is the first fiscal year after changing the fiscal year-end from March 31 to December 31, covering nine months, Concurrently, the presentation currency has been changed from HKD to RMB[16](index=16&type=chunk)[17](index=17&type=chunk) Unaudited Financial Data January-December 2018 (Year-on-Year) | Metric | Jan-Dec 2018 (Million RMB) | Jan-Dec 2017 (Million RMB) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | **Turnover** | 38,978 | 38,935 | 0.1% | | **Gross Profit** | 7,194 | 6,596 | 9.1% | | **Gross Profit Margin** | 18.5% | 16.9% | 1.6 p.p. | | **Profit Before Tax** | 1,033 | 435 | 137.5% | | **Profit for the Year** | 839 | 220 | 281.4% | TV Sales Volume 2018 (Thousand units) | Market | Jan-Dec 2018 (Thousand units) | Jan-Dec 2017 (Thousand units) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | **China Market** | 8,804 | 7,813 | 12.7% | | Of which: 4K TVs | 5,003 | 4,302 | 16.3% | | **Overseas Market** | 6,512 | 7,770 | (16.2%) | | **Total Sales Volume** | 15,316 | 15,583 | (1.7%) | [Business Analysis - By Region](index=12&type=section&id=Business%20Analysis%20-%20By%20Region) The Group's business is primarily focused on mainland China, which saw a **10.7%** increase in turnover to **28.236 billion RMB** for the twelve months ended December 31, 2018, while overseas turnover decreased by **20.0%** due to strategic adjustments in OEM business - For the twelve months ended December 31, 2018, turnover from the mainland China market was approximately **28.236 billion RMB**, a year-on-year increase of **10.7%**[22](index=22&type=chunk) - For the twelve months ended December 31, 2018, overseas market turnover was **10.742 billion RMB**, a year-on-year decrease of **20.0%**, primarily due to the strategic adjustment of OEM business client and order structure to pursue higher stability[23](index=23&type=chunk) Overseas Market Turnover Geographical Distribution | Region | Jan-Dec 2018 (%) | Jan-Dec 2017 (%) | | :--- | :--- | :--- | | Asia (excluding Middle East) | 52 | 53 | | Middle East | 14 | 13 | | Africa | 13 | 7 | | Europe | 12 | 13 | | Americas | 8 | 13 | | Oceania | 1 | 1 | [Business Analysis - By Business Segment](index=14&type=section&id=Business%20Analysis%20-%20By%20Business%20Segment) The Group's business is divided into four segments, with multimedia TV sales growing in China but declining overseas due to strategic shifts, while internet content revenue surged and smart appliance business showed strong growth domestically and internationally [1. Multimedia Business](index=14&type=section&id=1.%20Multimedia%20Business) Multimedia business, encompassing TV products and internet content, saw China's color TV sales grow by **12.7%** but revenue slightly decline due to price adjustments, while overseas revenue fell **27.4%** from strategic OEM abandonment, contrasted by a **113.4%** surge in internet content revenue - Color TV product sales in mainland China increased by **12.7%** year-on-year, but turnover decreased by **3.8%** to **16.201 billion RMB** due to price adjustments in response to market competition[28](index=28&type=chunk) - Overseas market color TV product turnover decreased by **27.4%** year-on-year to **7.311 billion RMB**, primarily because the company strategically abandoned low-margin OEM projects to ensure operational stability[29](index=29&type=chunk) - Internet content revenue significantly increased by **113.4%** year-on-year to **510 million RMB**, benefiting from over **36 million** activated smart TV users and strategic collaborations with iQiyi, Tencent, and Baidu[30](index=30&type=chunk) [2. Smart System Technology Business](index=16&type=section&id=2.%20Smart%20System%20Technology%20Business) Smart system technology business, including digital set-top boxes and LCD modules, grew **15.5%** in mainland China to **5.120 billion RMB** due to increased smart terminal sales and telecom operator market share, while overseas turnover decreased by **11.3%** despite new product R&D and strategic partnerships - Turnover from digital set-top boxes and LCD modules in mainland China was **5.120 billion RMB**, a year-on-year increase of **15.5%**, primarily driven by a higher proportion of smart terminal sales and increased market share in the telecom operator segment[31](index=31&type=chunk) - Overseas market turnover was **2.188 billion RMB**, a year-on-year decrease of **11.3%**, as the company focuses on R&D for new Android ecosystem products and establishes strategic partnerships with Google and Netflix[31](index=31&type=chunk) [3. Smart Appliances Business](index=17&type=section&id=3.%20Smart%20Appliances%20Business) The smart appliances business achieved growth through product and sales channel optimization, with smart white goods showing strong performance, increasing **17.4%** in mainland China and **67.0%** overseas, while other smart appliances grew **40.7%** internationally despite a domestic decline Smart Appliances Business Turnover (Jan-Dec 2018) | Product Category | Market | Turnover (Million RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | **Smart White Goods** | China Mainland | 2,052 | +17.4% | | | Overseas Market | 618 | +67.0% | | **Other Smart Appliances** | China Mainland | 736 | -25.0% | | | Overseas Market | 166 | +40.7% | - The company is deepening product R&D around 'health,' 'energy efficiency,' and 'intelligence,' launching high-end, intelligent products such as washing machines with AI smart voice systems[33](index=33&type=chunk) [Financial Performance Analysis](index=18&type=section&id=Financial%20Performance%20Analysis) The Group's financial position remains robust, with overall gross profit margin increasing to **18.5%** due to lower panel prices and product optimization, while R&D expenses rose **18.0%** and the debt-to-equity ratio improved to **48.1%** - For the twelve months ended December 31, 2018, the Group's overall gross profit margin was **18.5%**, a year-on-year increase of **1.6 percentage points**, primarily due to falling upstream panel prices, the launch of differentiated high-end products (MAXTV and OLED series), and the abandonment of low-margin projects in overseas markets[34](index=34&type=chunk) - Selling and distribution expense ratio decreased by **1.1 percentage points** to **9.5%**, while general and administrative expense ratio increased by **0.8 percentage points** to **7.1%**, with R&D expenses growing **18.0%** year-on-year to **1.688 billion RMB**, mainly for high-intelligence, high-quality product development[35](index=35&type=chunk)[36](index=36&type=chunk) - As of December 31, 2018, the Group's debt-to-equity ratio was **48.1%**, an improvement from **57.6%** as of March 31, 2018[38](index=38&type=chunk) - The Group holds **1.911 billion RMB** in unlisted equity securities investments, as well as equity investments in two listed companies, Chigo Holding and Ningbo Gezhi Technology[40](index=40&type=chunk)[41](index=41&type=chunk) [Outlook](index=21&type=section&id=Outlook) Looking ahead, the Group will capitalize on the upgrading opportunities in the home appliance industry, steadfastly advancing its 'One-Three-Three-Four' transformation strategy to achieve **100 billion RMB** in revenue, focusing on intelligence, refinement, and internationalization, and investing in new technologies like ultra-HD video, AI, IoT, and 5G to build a smart home appliance ecosystem - The Group will continue to deeply implement the 'One-Three-Three-Four' strategic plan, aiming for **100 billion RMB** in revenue, and comprehensively implementing three major strategies: intelligence, refinement, and internationalization[45](index=45&type=chunk)[46](index=46&type=chunk) - Future efforts will increase R&D and utilization of new technologies such as ultra-HD video, artificial intelligence, IoT, and 5G, accelerating the deep integration of hardware, software, content, and services to build a smart home appliance industry ecosystem[46](index=46&type=chunk) [Directors and Senior Management Profile](index=22&type=section&id=Directors%20and%20Senior%20Management%20Profile) This section details the background information of the company's executive directors, independent non-executive directors, and senior management, including their age, positions, professional qualifications, industry experience, and tenure within the Group - Mr. Lai Weide, Chairman of the Board, 60 years old, has extensive experience in central government agencies and state-owned enterprise management[49](index=49&type=chunk) - Mr. Liu Tangzhi, Chief Executive Officer, 56 years old, joined the Group in 1998 and holds a Bachelor's degree in Economics and an MBA[49](index=49&type=chunk) - The Board of Directors comprises professionals from diverse fields including accounting, law, electronic engineering, communication information, and enterprise management, reflecting the board's diversity[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk) [Directors' Report](index=31&type=section&id=Directors'%20Report) The Directors' Report outlines the Group's principal activities, performance review, environmental and social responsibilities, dividend policy, and financial position, confirming compliance with relevant regulations and disclosing director and major shareholder interests - The Board recommends a final dividend of **6.0 HK cents** per share in cash for the reporting period ended December 31, 2018, which is lower than the **9.0 HK cents** of the previous year[67](index=67&type=chunk) - As of December 31, 2018, controlling shareholder Mr. Huang Hongsheng and his spouse Ms. Lin Weiping collectively held or were deemed to hold approximately **40.11%** equity interest in the company[81](index=81&type=chunk)[82](index=82&type=chunk)[100](index=100&type=chunk) - During the reporting period, the Group had continuing connected transactions with Nanjing Golden Dragon Bus Manufacturing Co., Ltd., involving factoring services and sale-and-leaseback agreements, with an annual cap of **500 million RMB**, which was not exceeded[103](index=103&type=chunk)[104](index=104&type=chunk) - On June 12, 2018, the Board granted **10,060,000** shares under the share award scheme, with Chairman Mr. Lai Weide and CEO Mr. Liu Tangzhi receiving **3,000,000** and **2,000,000** shares respectively[93](index=93&type=chunk)[95](index=95&type=chunk) [Corporate Governance Report](index=49&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance practices, confirming compliance with most Code Provisions of the Corporate Governance Code, and outlines the board's composition, responsibilities, committee structures, risk management, internal controls, and shareholder communication - The company complied with the Code Provisions of the Corporate Governance Code during the reporting period, with deviations only due to fewer than four board meetings (Code A.1.1) and two independent non-executive directors' absence from the AGM (Code A.6.7) caused by the change in fiscal year-end[112](index=112&type=chunk) - The Board has four committees: Executive Committee, Nomination Committee, Remuneration Committee, and Audit Committee, with the latter three chaired by and majority-composed of independent non-executive directors, meeting corporate governance requirements[134](index=134&type=chunk)[136](index=136&type=chunk)[140](index=140&type=chunk)[145](index=145&type=chunk) - The company maintains a Risk Management Department and Internal Audit Department for independent assessment and review of internal controls and risk management systems, which the Board has annually assessed as effective and adequate[150](index=150&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk) [Independent Auditor's Report](index=68&type=section&id=Independent%20Auditor's%20Report) Deloitte Touche Tohmatsu issued an unmodified opinion on Skyworth Digital Holdings Limited's consolidated financial statements for the nine months ended December 31, 2018, highlighting key audit matters including inventory write-downs, expected credit loss provisions for trade receivables, and valuation of unlisted equity securities, all involving significant management judgment and estimation - The auditor issued an unmodified opinion on the consolidated financial statements, deeming them to present fairly, in all material respects, the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards[169](index=169&type=chunk) - Key audit matters include: - **Inventory write-downs**: due to the significant amount of inventory and the significant management judgment involved in the assessment - **Expected credit loss provision for trade receivables**: due to the significant amount of trade receivables and the significant management estimates involved in the impairment assessment - **Valuation of unlisted equity securities**: due to the significant judgment and estimates required in determining fair value[171](index=171&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[178](index=178&type=chunk) [Consolidated Financial Statements and Notes](index=76&type=section&id=Consolidated%20Financial%20Statements%20and%20Notes) This section presents the Group's detailed consolidated financial statements for the nine months ended December 31, 2018, including statements of profit or loss, financial position, changes in equity, and cash flows, along with comprehensive notes explaining accounting policies and the impact of adopting new HKFRS 15 and 9 [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=76&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the nine months ended December 31, 2018, the Group reported turnover of **30.192 billion RMB**, gross profit of **5.658 billion RMB** with a **18.7%** gross profit margin, and profit for the period of **553 million RMB**, with **420 million RMB** attributable to equity holders Consolidated Statement of Profit or Loss Summary (Nine Months Ended December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | **Turnover** | 30,192 | | Cost of Sales | (24,534) | | **Gross Profit** | 5,658 | | Profit Before Tax | 648 | | Income Tax Expense | (95) | | **Profit for the Period** | 553 | | Profit Attributable to Equity Holders of the Company | 420 | | Profit Attributable to Non-controlling Interests | 133 | [Consolidated Statement of Financial Position](index=78&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2018, the Group's total assets were **45.160 billion RMB**, total liabilities **27.805 billion RMB**, and net assets **17.355 billion RMB**, with **15.470 billion RMB** attributable to equity holders, and significant assets including property, plant, and equipment, trade receivables, and inventories Consolidated Statement of Financial Position Summary (As of December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | **Non-current Assets** | 12,396 | | **Current Assets** | 32,764 | | **Total Assets** | 45,160 | | **Current Liabilities** | 24,128 | | **Non-current Liabilities** | 3,677 | | **Total Liabilities** | 27,805 | | **Net Assets** | 17,355 | | **Equity Attributable to Equity Holders of the Company** | 15,470 | | **Non-controlling Interests** | 1,885 | [Consolidated Statement of Cash Flows](index=83&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the nine months ended December 31, 2018, the Group's net cash used in operating activities was **2.318 billion RMB**, primarily due to increased trade receivables, with net cash used in investing activities of **948 million RMB** and in financing activities of **634 million RMB**, resulting in a net decrease in cash and cash equivalents of **3.900 billion RMB** Consolidated Statement of Cash Flows Summary (Nine Months Ended December 31, 2018) | Metric | Amount (Million RMB) | | :--- | :--- | | **Net Cash Used in Operating Activities** | (2,318) | | **Net Cash Used in Investing Activities** | (948) | | **Net Cash Used in Financing Activities** | (634) | | **Net Decrease in Cash and Cash Equivalents** | (3,900) | | **Cash and Cash Equivalents at Beginning of Period** | 7,294 | | **Cash and Cash Equivalents at End of Period** | 3,314 | [Notes to the Consolidated Financial Statements](index=85&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, key estimates, and statement components, highlighting the change in fiscal year-end and presentation currency, the impact of adopting new HKFRS 15 and 9 on revenue recognition and financial instruments, segment information showing color TV products as the main revenue source, and financial risk management - The Group changed its fiscal year-end from March 31 to December 31 during this financial period, and the presentation currency from HKD to RMB[198](index=198&type=chunk) - The Group first adopted HKFRS 15 (Revenue from Contracts with Customers) and HKFRS 9 (Financial Instruments), with the adoption resulting in adjustments to opening retained profits and other equity components as of April 1, 2018, and comparative information not being restated[201](index=201&type=chunk)[209](index=209&type=chunk) - Segment information indicates that color TV products (China and overseas markets) are the primary source of revenue, accounting for approximately **69%** of external segment revenue, with digital set-top boxes and LCD modules, and white goods products also being significant components[309](index=309&type=chunk) [Financial Summary and Review](index=224&type=section&id=Financial%20Summary%20and%20Review) This section provides a comprehensive overview of the Group's financial performance and position over the past five fiscal periods, including key financial ratios and trends in assets, liabilities, and profitability [Financial Summary](index=225&type=section&id=Financial%20Summary) This section provides a summary of the Group's performance, assets, and liabilities over the past five fiscal periods, showing that despite a shorter reporting period in FY2018, net assets and equity attributable to equity holders have consistently grown Five-Year Performance Summary (Million RMB) | Item | 2018 (9 months) | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Turnover** | 30,192 | 39,271 | 37,147 | 35,010 | 32,068 | | **Gross Profit** | 5,658 | 6,545 | 7,428 | 7,678 | 6,411 | | **Profit Attributable to Equity Holders of the Company** | 420 | 459 | 1,136 | 1,779 | 2,499 | Five-Year Assets and Liabilities Summary (Million RMB) | Item | Dec 31, 2018 | Mar 31, 2018 | Mar 31, 2017 | Mar 31, 2016 | Mar 31, 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Consolidated Assets** | 45,160 | 43,101 | 38,193 | 35,078 | 26,691 | | **Total Consolidated Liabilities** | (27,805) | (26,557) | (23,280) | (21,150) | (14,513) | | **Net Assets** | 17,355 | 16,544 | 14,913 | 13,928 | 12,178 | [Financial Review](index=226&type=section&id=Financial%20Review) This section reviews key financial ratios and statistics over the past five fiscal periods, indicating fluctuations in gross and net profit margins, with the FY2018 (nine months) gross margin at **18.7%** showing recovery but still below 2016 and 2017 levels, and an improved debt-to-equity ratio Five-Year Key Ratios Review | Ratio | 2018 (9 months) | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Gross Profit Margin (%)** | 18.7 | 16.7 | 20.0 | 21.9 | 20.0 | | **Net Profit Margin (%)** | 1.8 | 1.3 | 3.6 | 5.9 | 8.3 | | **Debt-to-Equity Ratio (%)** | 48.1 | 57.6 | 47.5 | 48.5 | 17.0 | | **Earnings Per Share - Basic (RMB Cents)** | 13.85 | 15.21 | 38.04 | 61.34 | 88.58 | [Company Information](index=227&type=section&id=Company%20Information) This chapter provides essential company details, including board and committee members, company secretary, auditor, legal counsel, principal bankers, registered office, principal place of business, share registrar, listing information, and key dates for the 2018/19 final dividend - The company's shares are listed on The Stock Exchange of Hong Kong Limited, stock code **00751**[561](index=561&type=chunk) - The 2018 final dividend is **6.0 HK cents** per share, with a record date of June 11, 2019, and an approximate payment date of June 26, 2019[562](index=562&type=chunk)