10:06     TCL MULTIMEDIA<01070> - Announcement (2)                            

    The Company and Thomson have agreed upon the principles for               
    effecting the intended changes and two binding memoranda of               
    understanding were entered into on 21 April 2005 in respect of the        
    Subject Activities.                                                       
                                                                              
    The MOUs set forth the principles in accordance with which the            
    Subject Activities will be conducted in the future. The parties           
    will enter into a number of Definitive Agreements to implement the        
    principles contained in the MOUs. The Definitive Agreements will          
    supersede the MOUs. A further announcement will be issued when the        
    Definitive Agreements are finalised.                                      
                                                                              
    The transactions contemplated under the MOUs will give rise to            
    modifications to or termination of the following Transaction              
    Documents:                                                                
                                                                              
    1.   NA Agency Agreement;                                                 
                                                                              
    2.   EMEA Agency Agreement;                                               
                                                                              
    3.   Styling Agreement;                                                   
                                                                              
    4.   Thomson Trademark Agreement; and                                     
                                                                              
    5.   Angers Agreement.                                                    
                                                                              
    (Details of the above documents can be found in the Merger                
    Circular.)                                                                
                                                                              
    Independent Shareholder's approval was obtained in the                    
    extraordinary general meeting of the Company held on 2 July 2004          
    in respect of the above Transaction Documents save for the Styling        
    Agreement which did not require Independent Shareholders'                 
    approval because the value involved is below 2.5% of the Relevant         
    Ratio. The Company has specifically undertaken that it will               
    re-comply in full with all applicable requirements set out in             
    Chapter 14A of the Listing Rules upon any material variation to           
    the transaction in respect of which previous Independent                  
    Shareholders' approval was obtained.                                      
                                                                              
    SALES AND MARKETING MOU                                                   
                                                                              
    Parties:                                                                  
                                                                              
    (i)   The Company                                                         
    (ii)   Thomson S.A.                                                       
    (iii)   Thomson Inc.                                                      
    (iv)   TTE Corporation                                                    
                                                                              
    This MOU concerns the future operation model in respect of the            
    sales and marketing activities of the Group's products in the U.S.,       
    Canada and Europe. The transactions contemplated thereunder will          
    result in termination of the NA Agency Agreement and EMEA Agency          
    Agreement under which Thomson has been appointed as the exclusive         
    sales and marketing agent to provide a range of sales and marketing       
    services (including after-sales and logistics services) for all           
    TV products of TTE in the U.S. and Canada and a number of countries       
    in Europe.                                                                
                                                                              
    The guiding principle set out in the MOU is that the business             
    activities of Thomson and TTE in the U.S. and Canada and a number         
    of countries in Europe will be clearly divided. TTE will focus on         
    TVs and Thomson will focus on audio/video products, home                  
    networking accessories and residential telephones. Each of                
    Thomson and TTE will bear its own costs in connection with the split      
    of business activities.                                                   
                                                                              
    The MOU contemplates that Thomson will transfer to TTE the product        
    sales, marketing and management activities currently performed by         
    Thomson for TTE under the NA Agency Agreement in the U.S. and Canada      
    and the EMEA Agency Agreement in Europe. It is expected that no           
    cash consideration will be paid by TTE for transfer of employees          
    or acquisition of the relevant entities which are the existing            
    employers of the employees to be transferred. The proposed new            
    arrangements will enable TTE to have direct control over its sales        
    and marketing activities. The Board considers that with                   
    specialization of sales force becoming a trend in the TV industry,        
    it will be more cost effective for the Group to have close and            
    direct control of its marketing and sales activities which will           
    enable TTE to closely monitor the costs involved and take                 
    appropriate cost control measures, rather than the arm's length           
    sales agency relationship in the present agency agreements.               
                                                                              
    The MOU contemplates that a new service agreement will be entered         
    into between Thomson and TTE in respect of certain services which         
    will continue to be provided by Thomson, namely the after-sales           
    and possibly the logistics services business which includes               
    consumer call center, component sales, service contracts and parts        
    distribution.