# Revenue

The Group’s revenue from continuing operations increased by 46.8% quarter-on-quarter from HK\$7,000 million in the first quarter of 2020 to HK\$10,277 million in the second quarter of 2020. The following table illustrates the revenue in the second and first quarter of 2020 based on different business:

<table><tr><td rowspan="3"></td><td colspan="4">Three months ended</td></tr><tr><td colspan="2">30 June 2020
(unaudited)</td><td colspan="2">31 March 2020
(unaudited)</td></tr><tr><td>HK$’000</td><td>Proportion 
in the total 
revenue</td><td>HK$’000</td><td>Proportion
in the total 
revenue</td></tr><tr><td>TCL brand TV business</td><td></td><td></td><td></td><td></td></tr><tr><td>– Overseas</td><td>6,053,196</td><td>58.9%</td><td>4,269,400</td><td>61.0%</td></tr><tr><td>– the PRC</td><td>2,504,517</td><td>24.4%</td><td>1,889,501</td><td>27.0%</td></tr><tr><td>Internet services</td><td></td><td></td><td></td><td></td></tr><tr><td>– the PRC</td><td>249,689</td><td>2.4%</td><td>146,885</td><td>2.1%</td></tr><tr><td>– Overseas</td><td>116,021</td><td>1.1%</td><td>8,463</td><td>0.1%</td></tr><tr><td>O#thers</td><td>1,353,988</td><td>13.2%</td><td>685,419</td><td>9.8%</td></tr><tr><td>Total revenue</td><td>10,277,411</td><td>100.0%</td><td>6,999,668</td><td>100.0%</td></tr></table>

\# Others mainly comprises revenue from smart home, smart commercial display and smart AV businesses

# TV Business

# Overseas

Revenue of TCL brand TV increased by 41.8% from HK\$4,269 million in the first quarter of 2020 to HK\$6,053 million in the second quarter. The sales volume of TCL brand TV grew by 35.1% from 3.11 million sets in the first quarter of 2020 to 4.20 million sets in the second quarter. The turnaround was attributable to the Group’s active response to the pandemic by swiftly adjusting market strategies and supply capacity which drove up the TV sales.

# The PRC

Revenue of TCL brand TV rose by 32.5% from HK\$1,890 million in the first quarter of 2020 to HK\$2,504 million in the second quarter. The sales volume of TCL brand TV increased by 38.2% from 1.16 million sets in the first quarter of 2020 to 1.61 million sets in the second quarter of 2020. The increase was driven by the Group’s active adjustment of distribution sales and introduction of live-streaming sales, offline channel promotion and other types of sales methods, which contributed to impressive online and offline sales performance.

The sales volume of TCL brand TV through online distribution channels in the PRC market increased by 70.6% from 510,000 sets in the first quarter of 2020 to 870,000 sets in the second quarter. The offline sales volume increased by 13.9% from 650,000 sets in the first quarter of 2020 to 740,000 sets in the second quarter of 2020. The growth was powered by the Group’s increased investment in marketing resources of online sales and maintenance of advantages of offline sales distribution channels.

# Internet Services

# The PRC

Revenue of the Internet business in the PRC (mainly relevant business of Falcon Network Technology) increased by 70.0% from HK\$147 million in the first quarter of 2020 to HK\$250 million in the second quarter. Among which, revenue from membership business, value-added business and advertising business of Falcon Network Technology rose by 12.0%, 363.8% and 23.4% over the previous quarter, respectively. The progress was mainly attributable to Falcon Network Technology’s constant enrichment of platform content and improvement of user experience, which contributed to continuous enhancement of user loyalty. Meanwhile, under the positive influence of homebound life due to the pandemic, more and more consumers chose large-screen TV as the entertainment terminal.

# Overseas

Revenue from overseas Internet business increased by 1,270.9% from HK\$8 million in the first quarter of 2020 to HK\$116 million in the second quarter, mainly due to the overseas Internet revenue of the first half in 2020 recognised in the second quarter.

# Gross Profit and Gross Profit Margin

Due to the Group’s efforts in catching up business in the second quarter of 2020, the overall gross profit of the Group increased by 53.2% from HK\$1,400 million in the first quarter of 2020 to HK\$2,144 million in the second quarter. Moreover, the gross profit margin in the second quarter of 2020 increased by 0.9 percentage point to 20.9% compared with the first quarter of 2020.

# TV Business

# Overseas

The gross profit margin of the Group’s TCL brand TV in the overseas markets decreased by 0.8 percentage point from 17.8% in the first quarter of 2020 to 17.0% in the second quarter. The change was mainly attributable to adjustment of regional structure. Rapid growth was seen in the European and emerging markets with high gross profit in the first quarter of 2020, while the business in North America with low gross profit (low expenses) grew fast in the second quarter.