Full Text of the Annual Report 2022 of TCL Technology Group Corporation
TCL科技集团股份有限公司
TCL Technology Group Corporation
ANNUAL REPORT 2022
March 30, 2023
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Breaking the Adversity with Strengthened Basic Competitiveness
ANNUAL REPORT 2022 Chairman's Statement
2022 was a year full of opportunities and challenges. 2022 witnessed dramatic changes in theglobal political and economic situation, from the outbreak of the Russia-Ukraine war, rising inflation,sluggish market demand, to deteriorating trade environment, and significant economic slowdown.These multiple factors brought tremendous challenges to the development of the high-techmanufacturing industry. Due to the fluctuation of both industrial chain and supply chain,manufacturers worldwide had to shift their focus from efficiency to both efficiency and safety. Theglobal industrial pattern was restructured. Under this background, China's high-tech manufacturingindustry also faced pressure of transformation and upgrading. We have built our competitiveadvantages in the fields of semiconductor display and new energy photovoltaic, and will take theopportunities of global energy transition and strengthening high-tech industrial chain, activelyrespond to risks and turn crises into opportunities. We will continue to achieve high-quality corporatedevelopment with technological innovation and advantages of economies of scale.Facing the complex business environment of 2022, the Company maintained its strategic focus,built a solid bottom line, and advanced steadily. The Company achieved a revenue of RMB166.55billion, an increase of 1.8%, a net profit of RMB1.79 billion, with the net profit of RMB260 millionattributable to the Company’s shareholders, and net operating cash inflow of RMB18.43 billion,continuously ensured its stable operation.Affected by the global economic downturn, the demand from the end-users weakened, the pricesof large-sized panels dropped significantly, and the operating performance of the semiconductordisplay industry hit a record low during the Reporting Period. The Company achieved a year-on-yearincrease in the sales area of semiconductor displays at 8.3%, and earned a revenue of RMB65.72billion, a year-on-year decrease of 25.5%, saw a full-year loss. Facing the operational challenges,TCL CSOT upheld its bottom-line thinking, and pushed ahead with structural changes such asorganizational changes and management optimization. With strengthened advantages and shored upweakness parts, TCL CSOT accelerated the adjustments to product structures, actively exploredemerging areas, and promoted balanced business development. In its large-size product business,TCL CSOT has consolidated its leading position in TV panels with a high-end product strategy, andvigorously developed commercial displays such as interactive whiteboards, digital signs, and videowalls. TCL CSOT ranked first in the world in the field of shipment of 8K and 120HZ high-end TVpanels and interactive whiteboards. As production lines dedicated to IT products, the t9 adopted oxidesemiconductor displays kicked off its SoP in Guangzhou ahead of schedule, and the G6 LTPS
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
production line in Wuhan proceeded as planned. Small and medium-sized products furtherconsolidated the business development, all of which would drive a new round of growth of TCLCSOT.With increasing transformation of global energy structure, the new energy industry has usheredin historic opportunities. In response to the rapid development of the new energy industry, TCLZhonghuan continued to play its leading advantages in advanced capacity layout, technologicalinnovation, and cost efficiency, as well as the activation effect of institutional mechanisms. In 2022,TCL Zhonghuan achieved a significant increase in its operating performance again, with a revenueof RMB67.01 billion, a year-on-year increase of 63.0%, and a net profit of RMB7.07 billion, a year-on-year increase of 59.5%. Ningxia Zhonghuan Phase VI project increased its capacity, and the waferprojects were put into production in Tianjin and Yixing successively, with the advantageous capacityrapidly increased. TCL Zhonghuan’s capacity for photovoltaic crystalline silicon was increased to140GW, making it the world's largest silicon wafer supplier. The highly-efficient laminated tilemodule intelligent manufacturing projects in Jiangsu and Tianjin have been entered the SOP, with asteady increase in the market share. Through deepening collaboration with Maxeon in terms of thesupply chain, production, and channels, TCL Zhonghuan has accelerated its global business layout.Affected by the economic environment, both Highly and Tianjin Printronics experienced a slightdecline in their operating performance, but they maintained strong potentials for recovery. Theinvestment business continues to focus on business layout and exploration alongside the industrialchain in support of the Company’s main businesses.The Company took product technology innovation as the core driving force, and empoweredmanufacturing transformation and upgrading with digitalization. The Company insisted on investingin cutting-edge technology fields such as new displays, new energy, and semiconductor materials.During the year, the Company invested RMB10.78 billion in research and development, a year-on-year increase of 22.9%. In 2022, the Company made 659 new applications for PCT patents, and 2,244applications for patents of technologies and material in the field of quantum dot electroluminescence,ranking second in the world. The semiconductor display business promoted the digitalizedmanagement in the whole production process and entire product cycle. The Company has establishedan industry-leading Industry 4.0 system for the new energy photovoltaic business, leading themanufacturing revolution in the industry.In the future, global economic development still faces uncertain factors, and the restructuring ofthe political and economic patterns will intensively affect the economic trends of China and the restof the world. At present, China is dedicated to high-quality economic development and independentdevelopment of high-level technologies, which brings significant opportunities for the development
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
of the high-tech industry. In the face of the complex and volatile internal and external environment,the Company will focus on the pan-semiconductor industry that is “high-tech, asset-heavy, and long-term” based on its goal of leading in the world, solidly achieve the pre-set strategic objectives andbusiness strategies, adhere to the bottom-line business thinking, ensure strong risk prevention, andbreak the adversity with strengthened competitiveness.The semiconductor display industry has moved downwards from the middle of 2021, and stayedat the historic bottom for a long time due to the economic slowdown. Leading enterprises increasinglyfocus on the supply-demand balance and industrial profits. With the industry integration, the Mattheweffect is becoming more prominent, and the industrial pattern becomes healthier and more reasonable.The economy and demand are expected to stabilize in the near future, and the industry is expected torebound. The Company, guided by the 9225 Strategy, will continue to optimize the business, product,and customer structures for its semiconductor display business. With the SoP of t9 production linesbased on medium-sized display panels featuring high added value, and the orderly progress of LTPS6-gen production line, which mainly produces medium and small-sized display panels, TCL CSOTwill significantly improve its competitiveness in terms of business and product portfolio.
Driven by the transformation of the global energy structure and the goal of carbon peaking andcarbon neutrality, the new energy industry has entered a stage of rapid development. In terms of thenew energy photovoltaic business, the Company will further expand the technological and productadvantages of G12/N silicon wafers, accelerate the layout of advantageous capacity, and cooperatewith global partners to expand overseas markets. TCL Zhonghuan will provide an ongoing growthengine to the Company. Several projects jointly invested by the Company and partners have beenlaunched, including 100 thousand tons of granular silicon, silicon-based materials and 10 thousandtons of electronic polysilicon, which will further improve the Company’s layout in the new energyphotovoltaic and semiconductor material industry chain and enhance the stability of the Company’sindustry chain.The manufacturing industry acts as the backbone of the national economy, while high-techindustries represent national competitiveness. Being confident in the future development, we willfocus on core segments and drive the healthy corporate development in support of the high-qualitydevelopment of the industry and China’s manufacturing industry.
I would like to express my sincere gratitude for the trust of all our shareholders, for the supportfrom all our partners and users, as well as for the efforts of all employees!
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
March 30, 2023
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of TCL Technology Group Corporation (hereinafter referred toas the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of thisReport and its summary, and shall be jointly and severally liable for any misrepresentations,misleading statements or material omissions therein.Mr. Li Dongsheng, the Chairman of the Board, Ms. Li Jian, the person-in-charge of financialaffairs (Chief Financial Officer), and Mr. Peng Pan, the person-in-charge of the financial department,hereby guarantee that the financial statements carried in this Report are factual, accurate andcomplete.All the Company’s directors attended the Board meeting for the review of this Report and itssummary.The future plans, development strategies or other forward-looking statements mentioned in thisReport and its summary shall NOT be considered as promises of the Company to investors. Therefore,investors are kindly reminded to pay attention to possible investment risks.The Board has approved a final plan for the profit distribution and conversion of the capitalreserve to the share capital as follows: based on the Company’s share capital as at March 30, 2023,i.e., 17,071,891,607 shares, the capital reserve is to be converted into capital on a basis of 1 share forevery 10 shares to all the shareholders. After the conversion, the total share capital of the Companywill be changed to 18,779,080,767 shares. Neither cash dividends or bonus shares will be distributedthis year. Where any changes occur, before the implementation of the dividend plan, to the total sharecapital of the Company due to any convertible bonds-to-stock programs, share repurchases, exercisesof equity incentives, new share issues in refinancing, etc., the dividend will be adjusted according tothe principle of “adjusting the total conversion amount under the same conversion ratio”, subject tothe actual conversion amount.This Report and its summary has been prepared in both Chinese and English. Should there beany discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 6
Part II Corporate Information and Key Financial Information ...... 11
Part III Management Discussion and Analysis ...... 16
Part IV Corporate Governance ...... 46
Part V Environmental and Social Responsibility ...... 70
Part VI Significant Events ...... 77
Part VII Changes in Shares and Information about Shareholders ...... 103
Part VIII Bonds ...... 112Part IX Financial Report .....................................................错误!未定义书签。
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Documents Available for Reference
(I) The financial statements signed and stamped by the person-in-charge of the Company, theChief Financial Officer and person-in-charge of the financial department.
(II) The original of the auditor’s report with the seal of the accounting firm, and signed andstamped by CPAs.
(III) The originals of all company documents and announcements that were disclosed to thepublic during the Reporting Period.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Definitions
| Term | Refers to | Definition |
| The “Company”, the “Group”,“TCL”,“TCL TECH.” or “we” | Refers to | TCL Technology Group Corporation |
| The “Reporting Period”, “current period” | Refers to | The period from January 1, 2022 to December 31, 2022. |
| TCL CSOT | Refers to | TCL China Star Optoelectronics Technology Co., Ltd. |
| Zhonghuan Electronics | Refers to | TCL Technology Group (Tianjin) Co., Ltd. |
| TCL Industrial | Refers to | TCL Industrial Holdings Co., Ltd. |
| TCL Zhonghuan | Refers to | TCL Zhonghuan Renewable Energy Technology Co., Ltd., a majority-owned subsidiary of the Company listed on the Shenzhen Stock Exchange (stock code: 002129.SZ) |
| TPC | Refers to | Tianjin Printronics Circuit Corporation, a majority-owned subsidiary of the Company listed on the Shenzhen Stock Exchange (stock code: 002134.SZ) |
| Highly | Refers to | Highly Information Industry Co., Ltd., a majority-owned subsidiary of the Company listed on the National Equities Exchange and Quotations (stock code: 835281) |
| CDOT | Refers to | China Display Optoelectronics Technology Holdings Limited, a majority-owned subsidiary of the Company listed on the Hong Kong Stock Exchange (stock code: 00334.HK) |
| Shenzhen CSOT | Refers to | Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. |
| Wuhan CSOT | Refers to | Wuhan China Star Optoelectronics Technology Co., Ltd. |
| Wuhan China Star Optoelectronics Semiconductor | Refers to | Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. |
| Guangzhou CSOT | Refers to | Guangzhou China Star Optoelectronics Semiconductor Display Technology Co., Ltd. |
| Suzhou CSOT | Refers to | Suzhou China Star Optoelectronics Technology Co., Ltd. |
| Moka Technology | Refers to | Moka International Limited |
| t1 | Refers to | The generation 8.5 (or G8.5) TFT-LCD production line of TCL CSOT |
| t2 | Refers to | The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor) production line of TCL CSOT |
| t3 | Refers to | The generation 6 (or G6) LTPS-LCD panel production line at Wuhan CSOT |
| t4 | Refers to | The generation 6 (or G6) flexible LTPS-AMOLED panel production line at Wuhan CSOT |
| Wuhan t3 production expansion project | Refers to | The generation 6 (or G6) of new semiconductor production line of Wuhan CSOT |
| t6 | Refers to | The generation 11 (or G11) new TFT-LCD display production line at Shenzhen CSOT |
| t7 | Refers to | The generation 11 (or G11) new ultra high definition display production line at Shenzhen CSOT |
| t9 | Refers to | The generation 8.6 (or G8.6) new oxide semiconductor production line at |
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| Guangzhou CSOT | ||
| t10 | Refers to | The generation 8.5 (or G8.5) TFT-LCD production line at Suzhou CSOT |
| GW | Refers to | Gigawatt, power unit for solar cells, 1GW = 1,000 megawatts |
| G12 | Refers to | 12-inch ultra-large DW-cut solar monocrystalline silicon square wafer, size: 44,096mm?, diagonal line: 295mm, side length: 210mm, with its size 80.5% larger than the conventional M2 |
| RMB | Refers to | Renminbin |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part II Corporate Information and Key Financial Information
I. Corporate Information
| Stock name | TCL TECH. | Stock code | 000100 |
| Stock abbreviation before change (if any) | - | ||
| Place of listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | TCL科技集团股份有限公司 | ||
| Abbr. | TCL科技 | ||
| Company name in English (if any) | TCL Technology Group Corporation | ||
| Abbr. (if any) | TCL TECH. | ||
| Legal representative | Li Dongsheng | ||
| Place of registration | TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province | ||
| Zip code | 516001 | ||
| History of changes in the Company’s place of registration | - | ||
| Office address | TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province | ||
| Zip code | 516001 | ||
| Company website | https://www.tcltech.com/ | ||
| Email address | ir@tcl.com | ||
| Company honors | “7th Guangdong Provincial Government Quality Award” “2022 Chinese Fortune 500” “Top 100 Private Enterprises with the Best CSR Practices in China” “Top 100 Listed Enterprises with the Best ESG Practices in China” | ||
II. Contact Information
| Board Secretary | |
| Name | Liao Qian |
| Office address | 10/F, Tower G1, International E Town, TCL Science Park, 1001 Nanshan District, Shenzhen, Guangdong Province, China |
| Tel. | 0755-3331 1666 |
| Email address | ir@tcl.com |
III. Media for Information Disclosure and Place Where This Report is Lodged
| Stock exchange website for publication of this Report | http://www.cninfo.com.cn |
| Media name and website for publication of this Report | Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily, as well as www.cninfo.com.cn |
| Place where this Report is lodged | Capital Market Department of TCL Technology Group Corporation |
IV. Changes to Company Registered Information
| Unified social credit code | 91441300195971850Y |
| Changes in main business activities of the Company since going public (if any) | 1. In 2019, the Company focused on semi-conductor display devices by sold smart terminal businesses such as consumer electronics and household appliances and related supporting |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| businesses. 2. In 2020, the Company acquired 100% equity of Tianjin Zhonghuan Electronics through public delisting, shaping a business structure that focused on semi-conductor display, new energy photovoltaic and semi-conductor materials. | |
| Changes of controlling shareholder since incorporation (if any) | Not applicable |
V. Other information
The independent audit firm hired by the Company
| Name | Da Hua Certified Public Accountants (Special General Partnership) |
| Office address | Room 1101, Building 7, No. 16 Xi Si Huan Zhong Road, Haidian District, Beijing |
| Accountants writing signatures | Jiang Xianmin and Xiong Xin |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period
√ Applicable □ Not applicable
| Name | Office address | Representative | Period of supervision |
| Shenwan Hongyuan Financing Services Co., Ltd. | 19 Taipingqiao Avenue, Xicheng District, Beijing | Ren Cheng and Mo Kai | The period from December 22, 2022 to December 31, 2023. |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period
□ Applicable √ Not applicable
VI. Key Accounting Data and Financial Indicators
Indicate whether there is any retrospectively adjusted or restated datum in the table below.
√ Yes □ No
Reason for retrospective adjustment or restatement: In accordance with the Interpretation No. 15 of the Accounting Standards forBusiness Enterprises issued by the Ministry of Finance, the Company implemented related requirements and retroactively adjustedrelevant items of the financial statements as at the beginning of the year and the same period of the previous year. Such change inaccounting policies has no material impact on the Company’s financial position and operating results.
| 2022 | 2021 | 2022-Over-2021 Change | 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Revenue (RMB) | 166,552,785,829 | 163,540,559,623 | 163,657,700,477 | 1.77% | 76,677,238,079 | 76,677,238,079 |
| Net profit attributable to the company’s shareholders (RMB) | 261,319,451 | 10,057,443,528 | 10,064,253,118 | -97.40% | 4,388,159,018 | 4,388,159,018 |
| Net profits attributable to the company’s shareholders | -2,698,210,800 | 9,437,240,976 | 9,444,050,566 | -128.57% | 2,933,248,153 | 2,933,248,153 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| before non-recurring gains and losses (RMB) | ||||||
| Net cash generated from operating activities (RMB) | 18,426,376,609 | 32,878,450,437 | 32,878,450,437 | -43.96% | 16,698,282,775 | 16,698,282,775 |
| Basic earnings per share (RMB/share) | 0.0191 | 0.7463 | 0.7468 | -97.44% | 0.3366 | 0.3366 |
| Diluted earnings per share (RMB/share) | 0.0185 | 0.7354 | 0.7359 | -97.49% | 0.3226 | 0.3226 |
| Weighted average return on equity (%) | 0.52 | 26.46 | 26.48 | -25.96 | 13.75 | 13.75 |
| The end of 2022 | The end of 2021 | Change | The end of 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (RMB) | 359,996,232,668 | 308,733,133,305 | 308,749,696,062 | 16.60% | 257,908,278,887 | 257,908,278,887 |
| Owners’ equity attributable to the company’s shareholders (RMB) | 50,678,520,477 | 43,034,234,611 | 43,041,044,200 | 17.74% | 34,107,795,454 | 34,107,795,454 |
The net profit before or after the deduction of non-recurring gains and losses in the latest three accounting years, whichever is lower,is negative and the audit report of the latest year shows the company's ability to continue as a going concern
□ Yes √ No
The net profit before or after the deduction of non-recurring gains and losses, whichever is lower, is negative
√ Yes □ No
| Item | 2022 | 2021 |
| Revenue (RMB) | 166,552,785,829 | 163,657,700,477 |
| Deduction from revenue (RMB) | 4,355,243,194 | 2,714,151,509 |
| Revenue after deduction (RMB) | 162,197,542,635 | 160,943,548,968 |
The total share capital at the end of the last trading session before the disclosure of this Report:
| Total share capital at the end of the last trading session before the disclosure of this Report (share) | 17,071,891,607 |
Fully diluted earnings per share based on the latest total share capital above:
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 0.0153 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
VII. Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Differences in Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
2. Differences in Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VIII. Major Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Revenue | 40,566,851,319 | 43,955,329,809 | 41,992,680,714 | 40,037,923,987 |
| Net profit attributable to the company’s shareholders | 1,352,533,125 | -689,010,254 | -382,858,737 | -19,344,683 |
| Net profits attributable to the company’s shareholders before non-recurring gains and losses | 611,565,003 | -1,238,434,388 | -1,259,772,878 | -811,568,537 |
| Net cash generated from operating activities | 3,863,953,881 | 5,152,681,862 | 3,645,252,917 | 5,764,487,949 |
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what has beendisclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX. Non-Recurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2022 | 2021 | 2020 |
| Gains and losses on disposal of non-current assets (inclusive of impairment allowance write-offs) | 1,757,838,745 | -184,525,551 | 226,829,348 |
| Tax refund, credit and reduction arising from approval beyond authority or without formal approval documents | |||
| Government subsidies charged to current profits and loss (except for government subsidies closely related to the Company’s normal business which comply with national policies and regulations and are enjoyed on an ongoing basis according to certain standard quotas or quantities) | 1,322,782,937 | 699,270,673 | 736,747,146 |
| Fund charges against non-financial enterprises included in current profits and losses |
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| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | - | 40,299,579 | 292,440,389 |
| Profits and losses from exchange of non-monetary assets | |||
| Profits and losses from investment or management assets entrusted to others | |||
| Provision for impairment of assets accrued due to force majeure such as natural disasters | |||
| Profits and losses from debt restructuring | |||
| Enterprise restructuring costs, such as spin-off costs in staff arrangement, integration, etc. | |||
| Profits and losses from transactions with significantly unfair transaction prices that exceed the fair value | |||
| Year-to-date net profits and losses of subsidiaries arising from business combinations of entities controlled by a same company | |||
| Profits and losses from contingencies unrelated to the normal operation of the Company | |||
| The profits or losses generated from changes in fair value arising from holding marketable financial assets and marketable financial liabilities, as well as the investment-related income from the disposal of marketable financial assets, marketable financial liabilities and available-for-sale financial assets, except for the effective hedging business related to the Company’s normal business operation. | -127,233,837 | 238,629,291 | 350,757,476 |
| Reversal of provision for impairment of receivables that have been individually tested for impairment | 37,745,528 | - | - |
| Profits and losses from entrusted loans externally | |||
| Profits and losses from changes in the fair value of investment property subsequently measured under the fair value model | |||
| The impact of one-time adjustments to current profits and losses made in accordance with tax, accounting, and other laws and regulations on current profits and losses | |||
| Trustee fee income from entrusted operation | |||
| Non-operating income and expenses other than the above | 758,599,650 | 275,789,900 | 80,764,287 |
| Other gains and losses that meet the definition of non-recurring gain/loss | - | - | - |
| Less: Corporate income tax | 244,386,076 | 93,176,105 | 135,130,967 |
| Non-controlling interests (net of tax) | 545,816,696 | 356,085,235 | 97,496,814 |
| Total | 2,959,530,251 | 620,202,552 | 1,454,910,865 |
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable √ Not applicable
Explanation of defining the non-recurring profit and loss items that which is listed in the Explanatory Announcement No. 1 onInformation Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss as recurring profit and lossitems
□ Applicable √ Not applicable
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part III Management Discussion and AnalysisI. Company-related industry outlook in the reporting periodSince 2022, the international political and economic patterns have been restructured,protectionism and geopolitics have intensified the trend of backlash against globalization, andinflation pressures have led to tightened monetary policies in major developed economies, increasinguncertainty in global economic development. Facing increasingly severe business environment, TCLTech has adhered to its strategic focus and maintained a stable operation.During the Reporting Period, TCL Tech achieved a revenue of RMB166.55 billion, a year-on-year increase of 1.8%; a net profit of RMB1.79 billion, a year-on-year decrease of 88.0%; and a netprofit of RMB260 million attributable to the shareholders of listed companies, and net operating cashflow of RMB18.43 billion. The main reasons for the decline in the Company’s performance are: thedownturn in the semiconductor display industry, a significant drop of product prices. The Companyachieved a revenue of RMB65.72 billion from the semiconductor display business in 2022, a year-on-year decrease of 25.5%, with a steady increase in shipments and the market share. The Companyfirmly occupied the second largest TV panel market share in the world. The production line for oxidesemiconductor displays positioned as IT products has been put into production in Guangzhou,supporting the accelerated growth of medium-sized product businesses. Facing the downward cycleof the industry, TCL CSOT has increased confidence in development, actively optimized its capacitystructure, and improved its business portfolio, well prepared for future development.New energy photovoltaics keeps sound momentum under the policy of carbon peaking andcarbon neutrality. However, industry competition was increasingly intensifying, upstream rawmaterial prices fluctuated, and excess earnings further concentrated in enterprises with strongercomprehensive competitiveness. With the global industrial restructuring, China's semiconductorindustry has ushered in a golden opportunity of transformation and upgrading. TCL Zhonghuan givesits leading advantages in product and process technologies into full play, accelerates industrialtransformation, takes a lead in the innovation and upgrading of the manufacturing industry and boostshigh-quality development of China's economy. During the reporting period, TCL Zhonghuanachieved a revenue of RMB67.01 billion, a year-on-year increase of 63.0%, and a net profit ofRMB7.07 billion, a year-on-year increase of 59.5%.
The Company has always been committed to the manufacturing industry based on its strategy,and has gradually built long-term strategic planning and management capabilities, operatingcapabilities across cycles, and core competitiveness for global operations.Strengthening the competitiveness based on core businesses, optimizing competitive
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
strategies and seeking business improvement, and promoting the healthy and sustainabledevelopment of the industry. In the face of economic downturn and intensified industrialcompetition, the Company upheld the bottom-line business thinking. During the Reporting Period,operating cash inflow was RMB18.43 billion, and the capital structure remained stable. Facingfluctuations in demands for semiconductor displays, the Company emphasizes industry supply-demand balance and corporate profitability to continuously optimize competitive strategies andimprove economic efficiency. In the fields of new energy photovoltaic and semiconductors, theCompany will continue to give play to the advantages of its advanced capacity and the Industry 4.0platform, and continue to lead the high-quality development of the industry.Technological innovation driven by forward-looking research and development,comprehensively promoting the digital and intelligent transformation, and committed to high-quality corporate development. The Company focuses on technological productivity andprospective investment. In 2022, the Company invested RMB10.78 billion in R&D, a year-on-yearincrease of 22.9%. The Company filed 659 new international applications for patents under the PCT,a total of 14,741 applications filed. The Company demonstrates world-leading technological capacityin the fields such as semiconductor display, new energy photovoltaic and semiconductor materials.The number of its applications for patents of technologies and material in the field of quantum dotelectroluminescence has reached 2,244, ranking second in the world. The export market share of itsG12 large-sized and highly efficient N-type silicon wafers ranked first in the world. The Companycontinues to lead the photovoltaic industry in terms of the process and technology upgrading ofthinning and thin wiring. The Company has deeply integrated digitalization and advancedmanufacturing, achieved dynamic management throughout the full production process ofsemiconductor displays and the entire life cycle of products. The Company takes a lead in the industryin terms of flexible manufacturing capabilities and quality consistency of new energy photovoltaics,and continues to promote comprehensive upgrading of industry digitization and intelligence.Based on the “dual circulation” strategy, actively exploring overseas markets, andintegrating localized operations into the global industrial chain. Facing adjustments andrestructuring of the global supply chain, the Company has strengthened its market operations inChina, while actively exploring overseas markets. From exporting products to exporting industrialcapabilities, the Company has built a global layout of industrial chains and supply chains. In the fieldof semiconductor displays, the India Factory of TCL CSOT has been put into operation, and willcontinue to strengthen its global strategy in the production, marketing, and research process in thefuture. In the field of new energy photovoltaics, TCL Zhonghuan actively expands its global presence.An industrial chain system is taking shape with global competitiveness through Maxeon photovoltaic
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
cell and module factories built in Malaysia, the Philippines, Mexico, and other places.In a new round of technological reform and industrial upgrading, the digital economy keepsgrowing around the world, the "Carbon Peaking and Carbon Neutrality" trend accelerates the newenergy transformation, the semiconductor industry continues to see an increase of localization, andChina's technology industry ushers in a golden opportunity of rapid development. Facing theopportunities, the Company will adhere to the bottom line of business, drive development withinnovation, and actively improve the global industrial layout. TCL Tech will continue to focus on thenational strategic industry that emphasizes high technology, heavy assets, and a long cycle. With themission and vision of “leading technology and mutually beneficial cooperation”, TCL Tech will meetthe requirements of "improving operational quality and efficiency, enhancing strengths to shore upweaknesses and accelerating global expansion as well as innovation-driven development” to take alead in the world.II. Main businesses of the Company during the reporting periodBased on the semiconductor display business, new energy photovoltaic and semi-conductormaterials as the main business, the Company will continue to optimize its business structure, andfurther focus on its main businesses, to achieve the strategic goal of global leadership in its two coreindustries.
(I) Semiconductor display businessIn 2022, the global semiconductor display market experienced significant ups and downs. Dueto multiple impacts such as geopolitical conflicts and inflation, the demand from the end-users fordisplays in major markets dropped significantly, product prices hit a record low, and the panelindustry suffered operating losses.During the Reporting Period, TCL CSOT further consolidated its position in the industry,achieved a sales area of 42.75 million square meters, an increase of 8.3% year-on-year. TCL CSOTranked second in the world in terms of the market share of TV panels. Affected by the decline inprices of major display products, TCL CSOT earned a revenue of RMB65.72 billion from the
TCL TECH
Semi-conductordisplay
| Semi-conductor display | New energy photovoltaic & Semi-conductor materials 材料 | Industrial finance & investment | Other | |||
TCL CSOT
| TCL CSOT | China Ray | Zhonghuan Photovoltaic | Zhonghuan Advanced | TCL Financial | TCL Capital | Highly | TPC |
Juhua
Juhua
MokaTechnology
| Moka Technology | TCL Microchip | Xinhuan/Xinhua |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
semiconductor display business, a year-on-year decrease of 25.5%, and saw a full-year loss in 2022.In response to the challenges, TCL CSOT actively made changes, focused on extreme cost efficiency,improved capacities of risk control and cyclic resilience, and achieved operating cash flow ofRMB14.76 billion. TCL CSOT will accelerate the adjustments to product structures, actively explorenew customers, and become a leader of comprehensive displays in full sizes.In its large-size product business, TCL CSOT has maintained scale leadership, and hasconsolidated its leading position in TV panels with a high-end product strategy, and vigorouslydeveloped commercial displays such as interactive whiteboards, digital signs, and video walls.Three 8.5-generation line factories t1, t2, and t10, and two 11-generation line factories t6 and t7, havemaintained efficient operations. TCL CSOT ranked second in the world in terms of the scale of thehigh-generation lines, with the market share of mainstream products leading the world. TCL CSOTranked first in the world in terms of the scale of 55-inch and 75-inch products, and second in theworld in terms of the share of 65-inch products. TCL CSOT played its advantages in high-generationlines and cutting-edge technology and focused on high-end panel products, ranked top in the worldin terms of sales performance of 8K/120HZ products. TCL CSOT has become a major supplier forleading customers in the commercial markets such as interactive whiteboards, digital signs, and videowalls. TCL CSOT ranked first in the world in terms of the market share of interactive whiteboardsand third in the world in terms of the market share of video walls. Its product and customer structureshave been continuously optimized.In its medium-size product business, TCL CSOT has accelerated the expansion of newbusiness such as IT and vehicle screen products while improving the distribution of productioncapacity to create a new growth engine. In order to meet market demand, the Company hasoptimized its capacity layout, improved its product series, and strengthened customer development,achieving rapid growth in the high-end IT market. The Company ranked first in the world in terms ofthe market share of e-sports displays, second in the world in terms of the market share of the LTPSlaptops, and first in the world in terms of the market share of the LTPS tablet PCs. In terms of on-board products, the Company made breakthroughs in many key customers at home and abroad, andthe shipment volume and revenue scale maintained rapid growth. The 6-generation LTPS productionline is in orderly progress, and the Company’s overall LTPS capacity scale and comprehensivecompetitiveness will rank top in the world. The production line t9 for new oxide semiconductordisplays positioned for businesses such as medium-sized IT and automotive, has been put intoproduction. Combined with the product technologies and customer resources previously accumulatedby the Company, the Company’s medium-sized product business strategy will further bring a newgrowth engine.
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In its small-size product business, TCL CSOT focused on differentiation technologies, suchas flexible OLED folding and LTPO, while expanding VR/AR new displays to optimize itsproduct and customer structures. TCL CSOT ranked third in the world in terms of the shipmentvolume of LTPS mobile panels from the t3 production line. It independently developed industry-leading 1512 PPI LCD-VR screens and actively exploited new business areas. The capacity of thesecond and third phases of the t4 OLED has been in progress as scheduled, with smooth technologicaliteration and new product development. Several new products, such as folding products, CameraUnder Panel, and LTPO technology, have completed SoP and delivery. The shipment of medium andhigh-end products has continued to increase, and the customer structure has further diversified, layinga foundation for business improvement.In the industry’s downward cycle over the past seven quarters, the inefficient capacity hascontinued to be eliminated, bringing opportunities for industry restructuring and integration, andfurther optimizing the competitive patterns. Also, leading manufacturers in the display industry haveaccelerated destocking under the goal of promoting the supply-demand balance and improvingprofitability. In the fourth quarter of 2022, industry inventory entered a healthy level. At present, theprices of major products have stably rebounded. As the demand of downstream end customers forrestocking has increased, the prices of large-sized display products have risen.Looking into the future, the global economy remains resilient, and the Company is firmlyoptimistic about the development trend and industrial value of semiconductor displays as a coreinformation carrier and main interactive interface in the wave of the digital economy. On the otherhand, the supply side tends to stabilize. Leading enterprises continue to strengthen their technologicaladvantages and economies of scale, the display industry sees further increasing concentration, theindustrial chain reaches a new balance in terms of pricing, and the return on investment insemiconductor displays will steadily recover.Based on efficiency and effectiveness, TCL CSOT will consolidate its high-end intelligentmanufacturing capabilities through digitalization construction, and improve its comparativecompetitiveness. TCL CSOT will continue to optimize its business portfolio, adhere to the high-endproduct strategy, consolidate its global leading position in large-sized product businesses, improvethe layout and capacity of medium-sized products, enhance the structure and business conditions ofsmall-sized product customers, and accelerate its transformation and upgrading from a leader of large-sized displays to a leading enterprise of full-sized displays. TCL CSOT will continue to increaseinvestment in research and development, and work with industry chain partners to jointly build anindustrial ecosystem around new display technologies such as printed OLED, Miniled, Microled, andSilicon-based OLED micro displays.
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(II) New energy photovoltaic and semiconductor materials businessDuring the Reporting Period, under the background of the continuous advancement of carbonneutrality goals and the shortage of energy caused by geopolitical conflicts, the global energystructure continued to shift to renewable energy, and the photovoltaic industry maintained rapiddevelopment. In response to the price fluctuation of materials on the upstream of the supply chain,the Company improved its industrial layout, built operational barriers with its technical strength, andgrasped the initiative in the process of rapid changes of the industry. The new energy photovoltaicbusiness of the Company has comprehensively moved towards global leadership. During thereporting period, TCL Zhonghuan maintained a high growth rate of performance, achieved a revenueof RMB67.01 billion, a year-on-year increase of 63.0%, and a net profit of RMB7.07 billion, a year-on-year increase of 59.5%.Releasing advanced capacity of photovoltaic materials, optimizing the product structure,and achieving a rapid growth in production and sale scales. During the Reporting Period, theCompany’s G12 advanced capacity continued to expand, and the capacity of the Phase VI 50GW(G12) monocrystalline silicon materials in Ningxia increased capacity; the smart factory for slicingmonocrystalline silicon wafers in Tianjin (25GW) and the smart factory for slicing monocrystallinesilicon wafers in Yixing (30GW) were put into operation, comprehensively improving the advantagesof economies of scale. As at the end of the Reporting Period, the Company’s total capacity formonocrystalline silicon increased to 140 GW, among which, the G12 advanced capacity accountedfor over 90%. During the Reporting Period, the Company ranked first in the world in terms of thesales market share of photovoltaic silicon wafers, first in the world in terms of the market share ofG12, first in the world in terms of the sales market share of N-type silicon wafers. The productionand sales scales remained leading in the industry.Taking a lead in products such as large-sized, thinned, and N-type silicon wafers, as well asthe development of photovoltaic materials and technologies based on R&D and processcapacity. With high-power components keeping growing on the downstream and the rapid increasein the penetration rate of large-sized silicon wafers, the Company, as the industry leader in large-sized and thinned wafers, continued to expand its G12 product advantages, led the industry in termsof monthly production per furnace and the number of unit wafers produced per kilogram, andeffectively promoted cost reduction and efficiency increase in the industrial chain. With thetechnological evolution of downstream cells, N-type products have entered an accelerated SoP period,and the Company has built deep technological barriers in the field of N-type silicon materials. TheCompany consolidated its leading position in the industry for many years in terms of N-type siliconwafers sales in the global market, and excessive returns are expected from future technological
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changes.
Relying on the “G12 + Laminated Tile” dual technology platform and the leading Industry
4.0 System, transforming manufacturing modes in the photovoltaic industry, and jointlybuilding an intellectual property ecosystem with partners. Based on the dual technology platformof "G12 Silicon Wafers + Laminated Tile Module", the Company's laminated tile module productshave significant performance advantages with a rapid growth in scale. The Company continues todeepen the application of Industry 4.0 in all the industrial links, and implement automation andintelligent management throughout the process, with labor productivity far exceeding the industryaverage. The Industry 4.0 significantly improves the product quality and consistency, andcontinuously enhances flexible manufacturing capabilities. The comprehensive introduction of theIndustry 4.0 System will provide the Company with comparative competitiveness in terms oflocalized manufacturing worldwide. The Company will work with partners such as MAXEON tojointly build an intellectual property ecosystem, and collaborate on innovation and expanddifferentiation competitiveness, to lay a solid foundation for the global strategic layout of thephotovoltaic industry.The transformation of the global energy structure injects long-term development vitality into thephotovoltaic industry, and the continuously improved economic efficiency of photovoltaic powergeneration further stimulates market demand. The global installed photovoltaic capacity is expectedto exceed the expected capacity. Looking into the future, TCL Zhonghuan will continue to promotetechnological changes related to photovoltaic materials such as large-sized, thinned, and N-typesilicon wafers, create an ecosystem of cell and module industries with differentiation strategies,deepen the application of the Industry 4.0 System and flexible manufacturing, strengthen its corecompetitive advantages globally, and consolidate its leading position in the new energy photovoltaicindustry.
TCL Tech will continue to focus on semiconductor display, new energy photovoltaic, andsemiconductor material businesses to achieve the strategic goal of global leadership.III. Analysis of core competitiveness
Over 40 years of extraordinary development, TCL has grown from a small local enterprise toChina’s leading group in the high-tech manufacturing industry. During this time, we haveaccumulated experience and confidence from continuously crossing industry cycles. The year 2022was full of unexpected changes and challenges for TCL. We continued to focus on our strategy andtook on challenges in adverse circumstances, including economic downturns and intensified industrialcompetition. We strengthened our capacity for mitigating operational risks in line with the workrequirements of “improving operational quality and efficiency, enhancing strengths to shore up
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weaknesses and accelerating global expansion as well as innovation-driven development”. Currently,the Company has developed a business structure based on semi-conductor display devices, newenergy photovoltaic materials as well as semi-conductor materials, while its core competitiveness andsustainable development capability have continuously improved.
Leading economies of scale: ongoing capacity growth and globally leading position acrossmultiple product marketsAs a globally leading enterprise in semi-conductor displays, the Company continues to expandproduction capacity through endogenous growth and external acquisition: through the constructionof two 8.5-gen lines, TCL CSOT has gained a firm foothold in the TV panel market; subsequently,two 6-gen lines successfully entered the small-size panel market; in recent years, through investmentand construction of two 11-gen lines and the acquisition of the Suzhou Samsung Factory t10production line, we have further expanded our large-size panel production capacity and maintained aglobally leading position for large-sized panels. In 2022, TCL CSOT’s Guangzhou t9 project waslaunched and put into operation. The Wuhan t3 project expanded its capacity in an orderly manner,with increased investment in medium-sized products such as high value-added IT as well as businessdisplays and accelerated strategic expansion for all display products. At present, the market share ofTCL CSOT TV panels by shipment area ranks second globally. LTPS laptops rank second globally,LTPS mobile phone panels rank third globally, e-sports panels rank first globally, and IWB ranksfirst in market share.The Company will further strengthen its core competitive advantage based on economies of scaleand supply chain synergy. With an improved supply-demand relationship and an optimizedcompetitive landscape in the industry, TCL CSOT will usher in continuous leadership in areas ofadvantage as well as rapid expansion in vulnerable areas while consolidating its industry status andcomprehensive competitiveness.
Technological and ecological leadership: Increasing investment in R&D, active expansion intonew display technologies and materials
The Company, focusing on basic materials, next-generation display materials, key equipment innew manufacturing processes and other fields for its ecological layout, has constructed a TCLecosystem within the display market, so as to establish a leading advantage based on next-generationdisplay technology. In the display market, TCL led the establishment of two national innovationcenters. A preliminary outline for the ecosystem of next-generation display technology has takenshape, promoting industrial technology development and assisting in the implementation of CSOT’stechnology strategies. TCL is also continuously coordinating the construction of national technologyplatforms in other fields and assisting in the development of key technologies related to TCL’s
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
industry segments.
In 2022, the Company ranked forefront among mainland Chinese enterprises for accumulatedpatent applications with 14,741 PCT patents and ranked second globally in terms of quantum dotpatents. More than half of them are invention patents, covering 14 fields such as quantum dotmaterials, backlights and panels, which provide thorough patent coverage. The Company iscommitted to building a leading edge in next-generation display technology and overcomingbottlenecks in future commercial technology applications.Leading management: TCL CSOT aims to be a global leader and traverse cycles usingcomparative competitiveness
Since SoP in 2011, TCL CSOT has weathered several rounds of large fluctuation cycles andmaintained comparative competitiveness in the display industry by relying on extreme cost efficiencyand lean management. By relying on efficient production line layout and increased capacity, theCompany has further improved the line utilization rate and product scheduling efficiency throughadvantages in industrial chain integration and locking in strategic customers. The Company haspromoted end-to-end cost and expense control through refined management and extreme costefficiency measures, so as to build its comparative competitiveness in the industry. Despite a severeindustry downturn and ongoing price reductions of major products in 2022, TCL CSOT further playedto its advantages in management efficiency, industrial chain control, intelligent and digitaldevelopment, and relied on its advantages in core capabilities throughout the industrial developmentcycle to lead the industry.
New strategic pathways: Grasping new opportunities from the rapid development ofsemiconductors and photovoltaics
On the basis of enterprise development and national planning for strategic emerging industries,the Company actively seeks new strategic development pathways that are technology-intensive andcapital-intensive with a long development cycle, so as to strengthen and fully utilize TCL’s corecompetitiveness. In July 2020, the Company successfully entered the new energy photovoltaicindustry by delisting Zhonghuan. Since 2022, TCL Zhonghuan has implemented a series of strategicoperation measures such as industry coordination, optimization of operational efficiency andempowerment through management experience. TCL Zhonghuan has gradually enhanced its abilitiesin areas such as strategy, operation, and resource allocation. Driven by the factors of high industryprosperity and rapid expansion of production capacity, TCL Zhonghuan has further consolidated itsleading position in the industry, realized high-quality and rapid growth performance, and graduallygrown into one of the main engines for performance growth of TCL Technology.
Upgrading organizational culture: The mission “Leading Technology and Mutually Beneficial
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Cooperation” leads the Company into a new development stageSince 2022, the Company has proposed a new mission“Leading Technology and MutuallyBeneficial Cooperation” and is committed to building an organizational culture that emphasizes“Change, Innovation, Responsibility and Excellence”. The Company continued to build the capacityof its management team, strengthen its high-end talent pool and empower employees at the middleand entry level by developing competent specialists, reducing personnel redundancy and optimizingthe organizational structure with quality emphasized over quantity. The Company also ensured properrecruitment and development of international talents, strengthened the integration of overseasorganizational culture and continuously improved on building international organizationalcapabilities. TCL will continue to invest in fields closely related to human life and build its leadingadvantages in technology and products to deliver a wonderful experience and better life for humanity.We will uphold the concept of sustainable development based on a people-oriented approach, whilepromoting mutually beneficial development. We are dedicated to the environmental friendliness,employee engagement, social trust, as well as the harmonious development between humanity,nature, and society. We will also work with stakeholders to build an open and mutually beneficialindustry ecosystem and value healthy competition and integrated development on a basis of opencooperation and mutually beneficial development with partners.IV. Analysis of Core Businesses
1. Overview
See “Part III Management Discussion and Analysis”.
2. Revenue and costs
(1) Breakdown of operating revenue
Unit: RMB
| 2022 | 2021 | Change (%) | |||
| Amount | As % of total revenue (%) | Amount | As % of total revenue (%) | ||
| Total | 166,552,785,829 | 100% | 163,657,700,477 | 100% | 1.77% |
| By operating division | |||||
| Semi-conductor display | 65,717,154,752 | 39.46% | 88,220,061,837 | 53.91% | -25.51% |
| New energy photovoltaic | 67,010,157,025 | 40.23% | 41,104,685,049 | 25.12% | 63.02% |
| Distribution business | 31,847,803,417 | 19.12% | 31,932,016,149 | 19.51% | -0.26% |
| Other businesses and internally offset accounts | 1,977,670,635 | 1.19% | 2,400,937,442 | 1.47% | -17.63% |
| By product category | |||||
| Semi-conductor display devices | 65,717,154,752 | 39.46% | 88,220,061,837 | 53.91% | -25.51% |
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| New energy photovoltaic & semi-conductor materials | 67,010,157,025 | 40.23% | 41,104,685,049 | 25.12% | 63.02% |
| Distribution of electronics | 31,847,803,417 | 19.12% | 31,932,016,149 | 19.51% | -0.26% |
| Other businesses and internally offset accounts | 1,977,670,635 | 1.19% | 2,400,937,442 | 1.47% | -17.63% |
| By operating segment | |||||
| Mainland China | 119,139,823,459 | 71.53% | 104,781,994,802 | 64.03% | 13.70% |
| Overseas (including Hong Kong) | 47,412,962,370 | 28.47% | 58,875,705,675 | 35.97% | -19.47% |
| Distribution mode | |||||
| Direct sales | 140,148,331,286 | 84.15% | 135,409,147,210 | 82.74% | 3.50% |
| Distribution | 25,652,437,925 | 15.40% | 25,981,764,486 | 15.88% | -1.27% |
| Dealer | 752,016,618 | 0.45% | 2,266,788,781 | 1.39% | -66.82% |
(2) Operating division, product category, region or sales mode contributing over 10% of the revenue or operating profit
√ Applicable □ Not applicable
Unit: RMB
| Revenue | Cost of sales | Gross profit margin | Change in revenue year-on-year (%) | Change in cost of sales year-on-year (%) | Change in gross profit margin year-on-year (%) | |
| By operating division | ||||||
| Semi-conductor display | 65,717,154,752 | 65,148,141,621 | 0.87% | -25.51% | -2.05% | -23.74% |
| New energy photovoltaic | 67,010,157,025 | 55,066,992,255 | 17.82% | 63.02% | 71.07% | -3.86% |
| Distribution business | 31,847,803,417 | 30,574,483,912 | 4.00% | -0.26% | -0.65% | 0.38% |
| By product category | ||||||
| Semi-conductor display devices | 65,717,154,752 | 65,148,141,621 | 0.87% | -25.51% | -2.05% | -23.74% |
| New energy photovoltaic & semi-conductor materials | 67,010,157,025 | 55,066,992,255 | 17.82% | 63.02% | 71.07% | -3.86% |
| Distribution of electronics | 31,847,803,417 | 30,574,483,912 | 4.00% | -0.26% | -0.65% | 0.38% |
| By operating segment | ||||||
| Mainland China | 119,139,823,459 | 108,166,269,230 | 9.21% | 13.70% | 26.39% | -9.11% |
| Overseas (including Hong Kong) | 47,412,962,370 | 43,759,219,750 | 7.71% | -19.47% | -3.98% | -14.89% |
| Distribution mode | ||||||
| Direct sales | 140,148,331,286 | 126,351,353,885 | 9.84% | 3.50% | 21.59% | -13.41% |
| Distribution | 25,652,437,925 | 24,967,954,738 | 2.67% | -1.27% | -1.28% | 0.01% |
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| Dealer | 752,016,618 | 606,180,357 | 19.39% | -66.82% | -68.83% | 5.18% |
(3) Whether Revenue from Product Sales is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2022 | 2021 | Change (%) |
| Semi-conductor display | Sales | 10,000 square meters | 4275 | 3949 | 8.25% |
| Production volume | 10,000 square meters | 4230 | 4058 | 4.23% | |
| Inventory | 10,000 square meters | 124 | 170 | -26.81% | |
| Module and finished machine | Sales | 10,000 sets | 1299 | 904 | 43.68% |
| Production volume | 10,000 sets | 1317 | 941 | 39.87% | |
| Inventory | 10,000 sets | 66 | 49 | 36.65% | |
| Photovoltaic silicon wafer | Sales | 10,000 sets | 1,064,653 | 821,234 | 29.64% |
| Production volume | 10,000 sets | 1,084,730 | 824,803 | 31.51% | |
| Inventory | 10,000 sets | 32,102 | 12,025 | 166.97% | |
| Other silicon materials | Sales | Million square inches | 744 | 752 | -1.03% |
| Production volume | Million square inches | 743 | 751 | -1.05% | |
| Inventory | Million square inches | 24 | 25 | -1.61% | |
| Energy | Sales | 10,000 kWh | 123,105 | 81,031 | 51.92% |
| Production volume | 10,000 kWh | 123,105 | 81,031 | 51.92% | |
| Inventory | 10,000 kWh | ||||
| Photovoltaic module | Sales | MW | 6,607 | 4,166 | 58.58% |
| Production volume | MW | 6,619 | 4,763 | 38.98% | |
| Inventory | MW | 639 | 628 | 1.84% |
Explanation of why any financial indicator in the table above registered a year-on-year change of over 30%The changes are mainly caused by the increase in the scale of the Company's new energy photovoltaic business.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of operating cost
Operating division
Unit: RMB
| Operating division | Item | 2022 | 2021 | Change (%) | ||
| Amount | As % of operating cost | Amount | As % of operating cost | |||
| Semi-conductor display | Materials, salary, depreciation etc. | 65,148,141,621 | 42.88% | 66,509,502,371 | 50.71% | -2.05% |
| New energy photovoltaic | Materials, salary, | 55,066,992,255 | 36.25% | 32,190,397,141 | 24.54% | 71.07% |
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| depreciation etc. | ||||||
| Distribution business | Finished goods etc. | 30,574,483,912 | 20.12% | 30,775,267,445 | 23.46% | -0.65% |
| Other | Materials, salary, depreciation etc. | 1,135,871,191 | 0.75% | 1,681,146,797 | 1.28% | -32.43% |
Product category
Unit: RMB
| Product category | Item | 2022 | 2021 | Change (%) | ||
| Amount | As % of operating cost | Amount | As % of operating cost | |||
| Semi-conductor display devices | Materials, salary, depreciation etc. | 65,148,141,621 | 42.88% | 66,509,502,371 | 50.71% | -2.05% |
| New energy photovoltaic | Materials, salary, depreciation etc. | 55,066,992,255 | 36.25% | 32,190,397,141 | 24.5% | 71.07% |
| Distribution of electronics | Finished goods etc. | 30,574,483,912 | 20.12% | 30,775,267,445 | 23.5% | -0.65% |
| Other | Materials, salary, depreciation etc. | 1,135,871,191 | 0.75% | 1,681,146,797 | 1.3% | -32.43% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
For 2022, there are 36 newly-included consolidated subsidiaries (36 newly incorporated) and 5 newly-excluded consolidatedsubsidiaries (4 transferred and 1 de-registered).
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major Customers
| Total sales of top five customers (RMB) | 50,092,171,968 |
| Total sales of top five customers as % of total sales of the Reporting Period (%) | 30.88% |
| Total sales of related parties among top five customers as % of total sales of the Reporting Period (%) | 6.54% |
Top five customers
| Serial No. | Customer | Sales revenue (RMB) | As % of total sales revenue |
| 1 | Customer A | 14,080,676,825 | 8.68% |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| 2 | Customer B | 12,876,104,816 | 7.94% |
| 3 | Customer C | 10,611,856,734 | 6.54% |
| 4 | Customer D | 6,452,412,436 | 3.98% |
| 5 | Customer E | 6,071,121,157 | 3.74% |
| Total | -- | 50,092,171,968 | 30.88% |
Other information about major customers: For sales transactions between the Company and its related parties, see provisionalannouncements disclosed by the Company on the designated media for information disclosure.Major suppliers
| Total purchases from top five suppliers (RMB) | 37,176,674,116 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 25.62% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | - |
Top five suppliers
| Serial No. | Supplier name | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 11,688,855,063 | 8.06% |
| 2 | Supplier B | 7,215,847,792 | 4.97% |
| 3 | Supplier C | 7,168,835,392 | 4.94% |
| 4 | Supplier D | 6,322,022,992 | 4.36% |
| 5 | Supplier E | 4,781,112,877 | 3.29% |
| Total | -- | 37,176,674,116 | 25.62% |
Other information about major suppliers
□ Applicable √ Not applicable
3. Expense
Unit: RMB
| 2022 | 2021 | Change (%) | Main reason for change | |
| Selling expenses | 1,950,527,877 | 1,919,285,105 | 1.63% | |
| Administrative expenses | 3,540,610,990 | 4,393,319,922 | -19.41% | Primarily because the semiconductor display business was affected by the industry cycle |
| Financial expenses | 3,422,894,839 | 3,727,915,281 | -8.18% | |
| R&D expenses | 8,633,638,171 | 7,236,340,804 | 19.31% | Primarily due to the increase in R&D investment |
4. R&D investments
√ Applicable □ Not applicable
| Main R&D project name | Purpose | Progress | Preset goals | Expected influence on the future development of the Company |
| LCD panel ultimate framework | In search of ultimate simplification via panel | Realized industrial transformation | Add CSOT’s image quality improvement IP | Further enhance product |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| development and product application V1.0 | and overall machine design for newly defined architecture | to SOC to optimize system architecture of compact drive chips | competitiveness | |
| H-HVA energy efficiency improvement and qualitative change development | Propose high-penetration and high image quality technology, namely H-HVA. Expand advantage in leading energy efficiency to obtain technical leverage. | Development has been completed on several products. | Improve the transmittance, energy savings and emissions output of display devices | Implement the "Carbon Peaking and Carbon Neutrality" strategy, commit to building a new ecological industry with “Ecological Priority and Green Development”. |
| Research and development of the 0.016Hz ultra-low frequency refresh display technology | Develop an ultra-low frequency display technology in the field of wearable displays to reduce power consumption and achieve longer battery life. | Already implemented | Develop ultra-low frequency display technology, gain customer recognition and enter corresponding high-end markets to earn greater profits. | Improve CSOT’s popularity and product competitiveness in the field of wearable displays, generate interest of-customers from multiple ends and effectively expand the customer base. |
| Research and development of AMOLED low-frequency LTPS technology | Committed to investment in research and development of a low-frequency and low-power technology to meet the strong demand on mobile platforms for low-power display technologies. | Some functions have been delivered to the product development department for trials. | Reduce power consumption and achieve high/medium/low-end product differentiation. | Improve product competitiveness, maximize cost effectiveness and enhance the core competitiveness of the Company’s products. |
| Research and development of the IJP-OLED internal compensation technology platform | Investigate the IGZO internally-compensated IJP OLED technology based on the 17” medium-sized flexible OLED technology platform project. | Development of the IGZO internally-compensated IJP OLED flexible folding laptop technology has been completed | Develop IGZO internally-compensated IJP OLED folding laptop products with the potential for successful industrialization of development results. | Open a new future market for AMOLED IGZO and traverse the OLED IGZO technology in NB-MNT-TV products. |
| Flexible-control multimodal interactive applications | For TV interaction, in addition to remote control and voice control, intelligent gesture control opens | Realized industrial transformation | Gesture interaction allows users to control TVs, which offsets the shortcomings of voice control in a noisy | Contribute product selling points in multimodal applications to the industry, improve the |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| up a new method of control. The application uses algorithms independently developed by the Industry Research Institute to optimize five-finger and fist gestures. | environment. It is easy to learn, convenient to operate and covers multiple scenarios. | Company’s own technical strength, avoid additional licensing fees arising from third-party algorithms and reduce product costs | ||
| Conversational voice interaction system | Intelligent voice terminal equipment can flexibly and accurately respond to users’ needs | The system has been launched and applied to some end-user products | The intelligent experience has been improved in terms of the experience of voice assistant products, and the development cycle for interactive dialog skills has been reduced due to the efficiency of technology research and development | Complement independent-research capability of the NLP and gain the ability to expand across vertical domains. Replace Baidu Solutions and master decision-making in the central voice control business. |
| Research and development of the new energy photovoltaic type-N G12 monocrystalline silicon technology | Meet the market requirements for technical indicators of the type-N G12 monocrystalline silicon technology and strengthen the Company's core competitiveness | Thermal field optimization and process design has been completed, and the SoP has been achieved | Improve the quality of monocrystalline silicon, meet customer needs, further improve efficiency, reduce costs and achieve an increase in market share of the type-N G12 monocrystalline silicon | Enhance the core competitiveness of the company's main business |
| R&D of 210 silicon wafer slicing technology | Research and develop ultra-thin solar silicon wafer cutting technology to meet the demand for thin film in the downstream market and improve unit output | Equipment upgrading and cutting process design have been completed. SoP has been realized for 150um and 130um G12 silicon wafers. | Achieve 150μm thick SoP target of silicon wafer; and complete 130μm thick technical reserve of silicon wafer | Enhance the core competitiveness of the company's main business |
| R&D on semiconductor 12-inch silicon wafer technology | Meet the market demand for large-size silicon wafers of 12-inch integrated circuits | Mass production has been realized for 12-inch silicon wafers for power devices, logic devices and memory devices | Increase the market share of semiconductor 12-inch silicon wafer | Enhance the core competitiveness of the Company's semi-conductor materials |
R&D personnel
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| 2022 | 2021 | Change (%) | |
| Number of R&D Employees | 11,979 | 10,517 | 13.90% |
| As % of R&D Employees (%) | 17.16% | 16.14% | 1.02% |
| Education | |||
| PhD | 231 | 202 | 14.36% |
| Master | 2,442 | 2,081 | 17.35% |
| Bachelor’s degree and others | 9,306 | 8,234 | 13.02% |
| Age | |||
| Under 30 years old | 7,286 | 5,730 | 27.16% |
| 30~ 40 years old | 4,280 | 4,394 | -2.59% |
| Over 40 years | 413 | 393 | 5.09% |
R&D investments
| 2022 | 2021 | Change (%) | |
| R&D investment amount (RMB) | 10,778,414,851 | 8,772,389,079 | 22.87% |
| R&D investments as % of total revenue (%) | 6.47% | 5.36% | 1.11% |
| Capitalization amount of R&D investments (RMB) | 4,287,426,803 | 3,813,925,123 | 12.42% |
| Capitalization amount of R&D investments as % of total revenue (%) | 39.78% | 43.48% | -3.70% |
Reasons and impacts of major changes in the composition of R&D personnel of the Company
□ Applicable √ Not applicable
Reasons for significant changes in R&D investment as % of total revenue compared with the previous year
□ Applicable √ Not applicable
Reasons for significant changes in R&D investments capitalization and rationality explanation
□ Applicable √ Not applicable
5. Cash Flow
Unit: RMB
| Item | 2022 | 2021 | Change (%) |
| Sub-total of cash generated from operating activities | 155,632,096,991 | 153,026,874,325 | 1.70% |
| Sub-total of cash used in operating activities | 137,205,720,382 | 120,148,423,888 | 14.20% |
| Net cash generated from operating activities | 18,426,376,609 | 32,878,450,437 | -43.96% |
| Sub-total of cash generated from investment activities | 51,431,426,776 | 43,772,408,329 | 17.50% |
| Subtotal of cash used in investing activities | 98,267,398,620 | 77,405,450,301 | 26.95% |
| Net cash generated from investing activities | -46,835,971,844 | -33,633,041,972 | -39.26% |
| Sub-total of cash generated from financing activities | 113,655,272,732 | 75,934,217,326 | 49.68% |
| Subtotal of cash used in financing activities | 82,254,617,585 | 63,151,712,744 | 30.25% |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Net cash generated from financing activities | 31,400,655,147 | 12,782,504,582 | 145.65% |
| Net increase in cash and cash equivalents | 3,593,919,427 | 11,873,288,084 | -69.73% |
Explanation of why related data has significant changes year-on-year:
Net cash generated from operating activities: Primarily because the semiconductor display business was affected by the industry cycle;Net cash generated from investing activities: Primarily due to the increase in project investment;Net cash generated from financing activities: Primarily due to the increase in scale of financingExplanation of the significant difference between the net cash flow generated by the Company's operating activities and the net profitof the current year during the reporting periodThe large difference between the net cash flow generated by the Company's operations and the net profits of the current year is primarilycaused by factors such as depreciation, amortization and impairment of the Company's assets during the Reporting Period.
V. Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of gross profit | Source | Sustainability | |
| Asset impairment | 3,486,522,865 | 329.84% | Falling price of inventory write-off in line with market | No |
| Non-operating income | 790,111,708 | 74.75% | Primarily government grants and others | No |
| Non-operating expense | 152,071,435 | 14.39% | No |
VI. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| The end of 2022 | Beginning of 2022 | Change in percentage (%) | Main reason for change | |||
| Amount | As % of total assets (%) | Amount | As % of total assets (%) | |||
| Monetary assets | 35,378,501,261 | 9.83% | 31,393,692,485 | 10.17% | -0.34% | No significant change |
| Accounts receivable | 14,051,661,462 | 3.90% | 18,238,782,247 | 5.91% | -2.01% | No significant change |
| Contract assets | 315,167,085 | 0.09% | 233,528,786 | 0.08% | 0.01% | No significant change |
| Inventories | 18,001,121,855 | 5.00% | 14,083,356,918 | 4.56% | 0.44% | No significant change |
| Investment property | 946,449,125 | 0.26% | 761,902,236 | 0.25% | 0.01% | No significant change |
| Long-term equity investments | 29,256,215,804 | 8.13% | 25,640,578,245 | 8.30% | -0.17% | No significant change |
| Fixed assets | 132,477,671,844 | 36.80% | 113,598,782,727 | 36.79% | 0.01% | No significant change |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Construction in progress | 52,053,833,629 | 14.46% | 36,965,885,393 | 11.97% | 2.49% | No significant change |
| Right-of-use assets | 5,110,123,904 | 1.42% | 2,426,911,208 | 0.79% | 0.63% | No significant change |
| Short-term borrowings | 10,215,910,963 | 2.84% | 9,341,426,543 | 3.03% | -0.19% | No significant change |
| Contract liabilities | 2,336,008,164 | 0.65% | 2,593,882,004 | 0.84% | -0.19% | No significant change |
| Long-term borrowings | 118,603,164,839 | 32.95% | 87,279,081,955 | 28.27% | 4.68% | Increase in financings |
| Lease liabilities | 4,461,382,902 | 1.24% | 1,102,071,813 | 0.36% | 0.88% | No significant change |
Explanation of high proportion of overseas assets
□ Applicable √ Not applicable
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Impairment allowances established in the Reporting Period | Purchased in the Reporting Period | Amount sold in the Reporting Period | Other changes | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 10,305,293,789 | -257,066,897 | 0 | 24,059,751,982 | 18,475,644,160 | 15,632,334,714 | ||
| 2. Derivative financial assets | 70,928,566 | 23,436,569 | 105,189,972 | 161,479,123 | 361,034,230 | |||
| 3. Receivables financing | 2,217,638,736 | 0 | -1,114,510,972 | 1,103,127,764 | ||||
| 4. Other debt investments | 0 | 0 | 0 | 0 | 0 | |||
| 5. Investments in other equity instruments | 927,319,447 | -19,689,751 | 22,639,419 | 502,685,450 | 12,412,598 | 439,996,263 | ||
| Subtotal of financial assets | 13,521,180,538 | -233,630,328 | 85,500,221 | 24,082,391,401 | 18,978,329,610 | -940,619,251 | 17,536,492,971 | |
| Investment property | ||||||||
| Productive biological assets | ||||||||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Other | ||||||||
| Total of the above | 13,521,180,538 | -233,630,328 | 85,500,221 | 24,082,391,401 | 18,978,329,610 | -940,619,251 | 17,536,492,971 | |
| Financial liabilities | 947,240,307 | -94,386,197 | 13,459,465 | 2,104,884,136 | 2,358,170,985 | 319,619,948 | 932,646,673 |
Significant changes to the measurement attributes of the major assets in the Reporting Period
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
| Restricted assets | Carrying amount (RMB'0,000) | Reason for restriction |
| Monetary assets | 32,185 | Deposited in the central bank as the required reserve |
| Monetary assets | 138,103 | Other monetary funds and restricted bank deposits |
| Notes receivable | 26,460 | Pledge |
| Fixed assets | 9,647,955 | As collateral for loan |
| Intangible assets | 417,783 | As collateral for loan |
| Held-for-trading financial assets | 25,517 | Pledge |
| Construction in progress | 1,038,389 | As collateral for loan |
| Right-of-use assets | 1,862 | As collateral for lease |
| Accounts receivable | 160,933 | Pledge |
| Contract assets | 27,168 | Pledge |
| Total | 11,516,355 |
VII. Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
| Total investment amount in the Reporting Period (RMB) | Total investment amount in the same period of last year (RMB) | Change (%) |
| 52,419,386,966 | 46,434,920,794 | 12.89% |
2. Major Equity Investments Made in the Reporting Period
?Applicable ?Not applicable
Unit: RMB100 million
| Name of investee | Principal activity | Investment method | Investment amount | Shareholding ratio (%) | Funding source | Partner | Term of investment | Type of products | Progress | Estimated income | Investment income/loss in the Reporting Period | Involvement in lawsuit(s) | Date (if any) of disclosure | Index (if any) to disclosed information |
| Xiamen TCL Technology Industrial Investment Partnership (Limited Partnership) | Industrial investment | Equity investments | 9.9 | 99% | Self-raised funds | Xiamen Heding Duxing Investment Consulting | Not applicable | Not applicable | Established | Not applicable | Not applicable | No | August 27, 2022 | www.cninfo.com.cn |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Partnership | ||||||||||||||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | Granular silicon projects | Equity investments | 18 | 40% | Self-raised funds | Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. | Not applicable | Not applicable | Established | Not applicable | Not applicable | No | July 7, 2022 | www.cninfo.com.cn |
| Inner Mongolia Xinhua Semiconductor Technology Co., Ltd. | Polycrystalline silicon projects | Equity investments | 7.2 | 40% | Self-raised funds | Jiangsu Xinhua Semiconductor Material Technology Co., Ltd. | Not applicable | Not applicable | Established | Not applicable | Not applicable | No | July 7, 2022 | www.cninfo.com.cn |
| Total | -- | -- | 35.1 | -- | -- | -- | -- | -- | -- | - | Not applicable | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB'0,000
| Security type | Securities code | Securities Abbreviation | Initial investment cost | Accounting measurement method | Beginning carrying amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Purchased in the Reporting Period | Amount sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying amount | Accounting title | Funding source |
| Stocks | 300842.SZ | DK Electronic Materials, Inc. | 2,430 | Fair value | 48,644 | -8,965 | 0 | 0 | 23,188 | -3,516 | 25,258 | Other non-current financial assets | Self-funded |
| Government bond | 220016IB | 22 Interest-bearing government bond 16 | 20,000 | Measurement at amortized cost | - | 0 | 0 | 20,000 | 0 | 144 | 20,327 | Debt investments | Self-funded |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Government bond | 220016IB | 22 Interest-bearing government bond 16 | 20,000 | Measurement at amortized cost | - | 0 | 0 | 20,000 | 0 | 150 | 20,327 | Debt investments | Self-funded |
| Stocks | 688728.SH | Galaxycore Inc. | 4,284 | Fair value | 19,692 | -1,288 | 0 | 0 | 0 | -1,288 | 18,404 | Other non-current financial assets | Self-funded |
| Bonds | US4642885135 | ISHARES IBOXX HIGH YLD CORP | 13,238 | Fair value | - | -116 | 0 | 54,382 | 43,569 | -1,283 | 11,025 | Held-for-trading financial assets | Self-funded |
| Government bond | 220016IB | 22 Interest-bearing government bond 16 | 10,000 | Measurement at amortized cost | - | 0 | 0 | 10,000 | 0 | 75 | 10,158 | Debt investments | Self-funded |
| Government bond | 220016.IB | 22 Interest-bearing government bond 16 | 10,000 | Measurement at amortized cost | - | 0 | 0 | 10,000 | 0 | 81 | 10,152 | Debt investments | Self-funded |
| Stocks | 0860.HK | Wesolutions Inc. | 18,926 | Fair value | 10,131 | 0 | -5,414 | 0 | 0 | 0 | 5,928 | Investments in other equity instruments | Self-funded |
| Financial bond | 223001.IB | 22 ICBC Macau Bond 01 | 5,000 | Measurement at amortized cost | - | 0 | 0 | 5,000 | 0 | 44 | 5,044 | Debt investments | Self-funded |
| Bonds | XS2560662541 | LINK CB LTD | 4,455 | Fair value | - | 326 | 0 | 4,323 | 0 | 326 | 4,791 | Held-for-trading financial assets | Self-funded |
| Other securities investments held at the period-end | 572,007 | -- | 191,472 | -14,981 | -27 | 340,906 | 384,599 | -22,522 | 166,460 | -- | -- | ||
| Total | 680,340 | -- | 269,938 | -25,023 | -5,441 | 464,611 | 451,356 | -27,789 | 297,874 | -- | -- | ||
| Disclosure date of the board announcement approving the securities investments | April 28, 2022 | ||||||||||||
| Disclosure date of the general meeting announcement approving the securities investments (if any) | May 20, 2022 | ||||||||||||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
1) Derivative investments for hedging purposes made during the Reporting Period
√ Applicable □ Not applicable
Unit: RMB'0,000
| Type of contract | Beginning amount | Ending amount | Gain/loss in Reporting Period | Ending contractual amount as % of the Company’s ending net assets | |||
| Contractual amount | Transaction limit | Contractual amount | Transaction limit | Contractual amount | Transaction limit | ||
| 1. Forward forex contracts | 1,736,175 | 61,406 | 2,062,172 | 73,441 | 14,870 | 15.61 | 0.56 |
| 2. Interest rate swaps | 415,696 | 12,471 | 384,446 | 11,533 | 2.91 | 0.09 | |
| Total | 2,151,871 | 73,877 | 2,446,618 | 84,974 | 14,870 | 18.52 | 0.65 |
| Accounting policies and specific accounting principles for hedging business during the Reporting Period and a description of whether there have been significant changes from those of the previous reporting period | No significant change. | ||||||
| Description of actual profits and losses during the Reporting Period | During the Reporting Period, the Company had profits and losses of RMB465.80 million generated from the changes in the fair value of the hedged items, RMB-458.27 million from the delivery of mature forward foreign exchange contracts, RMB120.15 million from the valuation of immature forward foreign exchange contracts and RMB21.02 million from interest rate swaps. | ||||||
| Description of the hedging effect | During the Reporting Period, the Company's main foreign exchange risk exposures include exposures of assets and liabilities denominated in foreign currencies arising from business such as outbound sales, raw material procurement and financing. The uncertain risks arising from the exchange rate fluctuations were effectively hedged by derivative contracts with the same purchase amounts and maturities in opposite directions. | ||||||
| Funding source | Self-funded. | ||||||
| Analysis of risks and control measures associated with derivative investments held in Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | In order to effectively manage the exchange and interest rate risks of foreign currency assets, liabilities and cash flows, the Company, after fully analyzing the market trend and predicting the operation (including orders and capital plans), adopts forward foreign exchange contracts, options and interest rate swaps to avoid future exchange rate and interest rate risks. As its business scale changes subsequently, the Company will adjust the exchange rate risk management strategy according to the actual market conditions and business plans. Risk analysis: 1. Market risk: the financial derivatives business carried out by the Group belongs to hedging and trading business related to main business operations, and there is a market risk of loss due to the fluctuation of underlying interest and exchange rates, which lead to the fluctuation of prices of financial derivatives; 2. Liquidity risk: the derivatives business carried out by the Group is an over-the-counter transaction operated by a financial institution, and there is a risk of loss due to paying fees to the bank for liquidating or selling the derivatives below the buying prices; 3. Performance risk: the Group conducts the derivative business based on rolling budgets for risk management, and there is a risk of performance failure due to deviation between the actual operating results and budgets; | ||||||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| 4. Other risks: in the case of specific business operations, if the operator fails to finish the prescribed procedures for report or approval, or fails to record the financial derivative business information accurately, promptly and completely, it may result in loss of derivative business or trading opportunities. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or product information, the Group will face the legal risks and transaction losses therefrom. Measures taken for risk control: 1. Basic management principles: the Group strictly follows the hedging principle mainly for the purposes of fixing costs and avoiding risks. It is required that the financial derivatives business to be carried out align with the variety, size, direction and duration of spot goods, and this should not involve any speculative trading. In the selection of hedging instruments, only simple financial derivatives that are closely related to the main business operation and meet the requirements of hedge accounting treatment should be selected, and avoid complex business that exceeds the prescribed business scope or is difficult to recognize in terms of risk and pricing; 2. The Group has formulated a special risk management system tailored to the risk characteristics of the financial derivatives business, covering all key aspects such as preemptive prevention, in-process monitoring and post-processing. It reasonably allocates professionals for investment decision-making, business operation and risk control as required; Personnel involved in investment are required to fully understand the risks of financial derivatives investment and strictly implement the business operation and risk management system of derivatives. Before starting the derivatives business, the holding company must submit to the competent department of the Group detailed business reports including its internal approval, main product terms, operational necessity, preparations, risk analysis, risk management strategy, fair value analysis and accounting methods, and special summary reports on business operated. Operation is only allowed upon the approval of the functions under the Group; 3. Relevant departments should track the changes in the open market price or fair value of financial derivatives, timely assess the risk exposure changes of invested financial derivatives, and make reports to the board of directors on business development; 4. When the combined impairment of the fair value of the derivatives bought by the Group and changes in the value of the assets (if any) used for risk hedging by the Group results in a total loss or floating loss amounting to 10% of the Company's recently audited net profit attributable to shareholders of the listed company, and the absolute amount exceeds RMB10 million, the Group will disclose it in a timely manner. | |
| Changes in market prices or fair value of derivative investments in Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | With the rapid expansion of overseas sales, the Company continues to follow the above rules in the operation of forward foreign exchange contracts, interest rate swap contracts and futures contracts to avoid and hedge foreign exchange risks arising from operations and financing. During the Reporting Period, there were profits and losses of RMB465.80 million from changes in the fair value of hedged items and RMB-317.10 million from derivatives. The fair value of derivatives is determined by real-time quoted price of the foreign exchange market, based on the difference between the contractual price and the forward exchange rate quoted immediately in the foreign exchange market on the balance sheet date. |
| Legal matters involved (if applicable) | Not applicable |
| Disclosure date of the board announcement approving the derivative investments (if any) | April 28, 2018 |
| Disclosure date of the general meeting announcement approving the derivative investments (if any) | Not applicable |
| Opinion of independent directors on derivative investments and risk control | In view of the fact that certain raw materials of the core business of the Company are purchased overseas, a wide range of settlement currencies is involved. The Company reduces exchange losses and locks transaction costs by reasonable financial derivatives, which helps to reduce risk control costs and improve company competitiveness. |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Risks are effectively controlled as the Company has taken series of measures such as conducting a rigorous internalevaluation for the operation of financial derivatives business, establishing a corresponding regulatory mechanism,formulating reasonable accounting policies and specific accounting principles, setting limits for risk exposuremanagement, and operating simple financial derivatives. The contracting agent for financial derivatives business ofthe Company is a sound financial agent with good credit standing. We are of the opinion that the financial derivativestransactions carried out by the Company in 2022 were closely related to the daily operation needs of the Companywith controllable risks in line with the interests of the Company and minority shareholders and the relevantprovisions of relevant laws and regulations.
2) Derivative investments for speculative purposes made during the Reporting Period
□ Applicable √ Not applicable
There were no derivative investments for speculative purposes made by the Company during the Reporting Period.
5. Use of the Capital Raised
√ Applicable □ Not applicable
(1) General Information about the Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB'0,000
| Year of raising | Way of raising | Total amount raised | Used in the current period | Cumulatively used | Amount with changed use in the reporting period | Cumulative amount with changed used | Cumulative amount with changed used as % of total amount raised | Unused amount (note) | Purpose and whereabouts of the unused amount | Amount being idle for more than two years |
| 2022 | Non-public offering of shares | 947,469.47 | 947,469.47 | 947,469.47 | Not applicable | Not applicable | Not applicable | 0 | Not applicable | 0 |
| Total | -- | 947,469.47 | 947,469.47 | 947,469.47 | Not applicable | Not applicable | Not applicable | 0 | -- | 0 |
| Use of the Capital Raised | ||||||||||
| According to the Approval for the Non-Public Issue of Shares by TCL Technology Group Co., Ltd. (Zheng Jian Xu Ke [2022] No. 1658) issued by the China Securities Regulatory Commission, the Company issued no more than 2,806,128,484 shares in a non-public manner. The number of shares actually issued in this issuance was 2,806,128,484 shares. As of December 6, 2022, the Company raised a total of RMB9,596,959,415.28, and the amount of RMB9,471,959,415.28 raised funds was deposited into the Company's special bank account after deducting the underwriting sponsorship fee (tax-inclusive) at RMB125,000,000.00. After deducting the issue-related fees (excluding the value-added tax) of RMB122,264,729.12, RMB9,474,694,686.16 was available for use. | ||||||||||
Note: As at December 31, 2022, the unused amount in the raised fund account was RMB1.8195 million, which was the accumulated balance of specialaccount interest and account maintenance fees. Such amount was deposited in the special bank account for raised funds.
(2) Promised Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB'0,000
| Promised project funded with raised funds and investment with over-raised funds | Project changed or not (including partial change) | Total promised investment amount with raised | Adjusted total investment amount (1) | Investment in the Reporting Period | Cumulative investment amount at the period-end (2) | Investment progress as at the period-end (3)=(2)/(1) | Time when the project is ready for its intended use | Benefits derived in the Reporting Period | Meeting the expected benefits or not | Significant change to project |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| funds | feasibility or not | ||||||||||
| Promised projects | |||||||||||
| 1. The generation 8.6 (or G8.6) new oxide semiconductor production line | No | 900,000.00 | 900,000.00 | 900,000.00 | 900,000.00 | 100.00% | 24 months from the commencement date of the project | Not applicable | Not applicable | No | |
| 2. Additional working capital | No | 47,469.47 | 47,469.47 | 47,469.47 | 47,469.47 | 100.00% | Not applicable | Not applicable | Not applicable | No | |
| Subtotal of promised projects | -- | 947,469.47 | 947,469.47 | 947,469.47 | 947,469.47 | -- | -- | -- | -- | ||
| Over-raised funds | |||||||||||
| None | |||||||||||
| Description of delayed progress and reasons for failure to achieve the planned progress and expected income (including the reasons for selecting “Not applicable” for “whether expected benefits were met or not”) | Not applicable | ||||||||||
| Description of major changes in project feasibility | Not applicable | ||||||||||
| Over-raised fund amount, purpose and use progress | Not applicable | ||||||||||
| Location change of the project with raised funds | Not applicable | ||||||||||
| Adjustment of project implementation | Not applicable | ||||||||||
| Advance investments in promised projects funded with raised funds and subsequent swaps | On December 12, 2022, the Proposal on Using Raised Funds to Swap Self-raised Funds Previously Invested in Projects that should be Funded with Raised Funds was approved at the 26th Meeting of the Company’s 7th Board of Directors. As such, raised funds were agreed to be swapped with the advance investments of self-raised funds in projects that should be funded with raised funds. The total swap amount was RMB9 billion. | ||||||||||
| Supplemented the working capital with idle funds | Not applicable | ||||||||||
| Amount and reasons for the balance of raised funds in the project implementation | As at December 31, 2022, the balance of the unused amount of the raised fund account was RMB1,819,536.34, which was the accumulated balance of special account interest and account maintenance fees. Such amount was deposited in the special bank account for raised funds and was used according to the Company's fund arrangements. | ||||||||||
| Unused fund purpose and whereabouts | Not applicable | ||||||||||
| Problems and other circumstances in raised fund use and disclosure | Not applicable | ||||||||||
(3) Change of the raised fund projects
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
VIII. Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
□ Applicable √ Not applicable
IX. Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit
Unit: RMB'0,000
| Company Name | Company type | Principal activity | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net profit |
| TCL China Star Optoelectronics Technology Co., Ltd. | Subsidiary | Semi-conductor display | RMB32.475 billion | 19,255,707 | 7,384,957 | 5,625,642 | -974,758 | -835,283 |
| TCL Zhonghuan New Energy Technology Co., Ltd. | Subsidiary | New energy photovoltaic & semi-conductor materials | RMB3.234 billion | 10,913,377 | 4,705,984 | 6,701,016 | 732,542 | 707,304 |
| Highly Information Industry Co., Ltd. | Subsidiary | Distribution business | RMB412 million | 871,268 | 148,111 | 3,184,780 | 35,291 | 26,425 |
Acquisition and disposal of subsidiaries in the reporting period
√ Applicable □ Not applicable
| Company Name | How subsidiary was obtained or disposed of in the Reporting Period | Effects on overall operations and operating performance |
| Zhonghuan Advanced Semiconductor (Tianjin) Co., Ltd. | Newly incorporated | No significant effect |
| Huanou (Wuxi) New Energy Materials Co., Ltd. | Newly incorporated | No significant effect |
| Huaian Municipal Huanxin New Energy Co., Ltd. | Newly incorporated | No significant effect |
| Lingwu Huanju New Energy Co., Ltd. | Newly incorporated | No significant effect |
| Inner Mongolia Zhonghuan Electronic Materials Co., Ltd. | Newly incorporated | No significant effect |
| Tianjin Zhonghuan Industrial Park Co., Ltd. | Newly incorporated | No significant effect |
| Tianjin Huanrui Technology Co., Ltd. | Newly incorporated | No significant effect |
| Shaanxi Huanyu Green New Energy Co., Ltd. | Newly incorporated | No significant effect |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Shaanxi Huanshuo Green New Energy Co., Ltd. | Newly incorporated | No significant effect |
| Admiralty Harbour Investment Holding Limited | Newly incorporated | No significant effect |
| Zhonggang Enterprise Service (Shenzhen) Co., Ltd. | Newly incorporated | No significant effect |
| Huizhou Keda Tezhixian Technology Co., Ltd. | Newly acquired | No significant effect |
| Ningxia Huanneng New Energy Co., Ltd. | Newly incorporated | No significant effect |
| Zhonghuan Advanced Semiconductor Japan Co., Ltd. | Newly incorporated | No significant effect |
| TCL CSOT AMERICA CORP. | Newly incorporated | No significant effect |
| Xi’an Sunpie Technology Co., Ltd. | Newly incorporated | No significant effect |
| Weinan Sunpiestore Technology Co., Ltd. | Newly incorporated | No significant effect |
| Guiyang Sunpiestore Technology Co., Ltd. | Newly incorporated | No significant effect |
| Lanzhou Sunpiestore Technology Co., Ltd. | Newly incorporated | No significant effect |
| Urumqi Sunpiestore Technology Co., Ltd. | Newly incorporated | No significant effect |
| Baoji Sunpie Sidao Technology Co., Ltd. | Newly incorporated | No significant effect |
| Urumqi Sunpie Xinhui Technology Co., Ltd. | Newly incorporated | No significant effect |
| Xi’an McSunpie Technology Co., Ltd. | Newly incorporated | No significant effect |
| Shenzhen Sunpiestore Electronics Co., Ltd. | Newly incorporated | No significant effect |
| Shenzhen Sunpiestore Industrial Co., Ltd. | Newly incorporated | No significant effect |
| Dongguan Sunpiestore Digital Co., Ltd. | Newly incorporated | No significant effect |
| Dongguan Sunpiestore Electronics Co., Ltd. | Newly incorporated | No significant effect |
| Guangzhou Sunpie Technology Co., Ltd. | Newly incorporated | No significant effect |
| Lanzhou Hongmao Sunpiestore Technology Co., Ltd. | Newly incorporated | No significant effect |
| Xiamen TCL Technology Industrial Investment Partnership (Limited Partnership) | Newly incorporated | No significant effect |
| TCL CSOT SG PTE. LTD. | Newly incorporated | No significant effect |
| Beijing Youyi Online Technology Co., Ltd. | Newly incorporated | No significant effect |
| PL MOKA Sp. z o.o. | Newly acquired | No significant effect |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Urumqi Sunpie Zhishang Trading Co., Ltd. | Newly incorporated | No significant effect |
| Urumqi Sunpie Maiqi Trading Co., Ltd. | Newly incorporated | No significant effect |
| Lanzhou Hongsheng Sunpiestore Electronics Technology Co., Ltd. | Newly incorporated | No significant effect |
| Tongliao Guangtong New Energy Co., Ltd. | De-registered | No significant effect |
| Beijing Zhiqujia Technology Co., Ltd. | Transferred | No significant effect |
| Huizhou Shengyao New Energy Technology Co., Ltd. | Transferred | No significant effect |
| Ningjin Jinchen New Energy Co., Ltd. | Transferred | No significant effect |
| Lingwu Huanju New Energy Co., Ltd. | Transferred | No significant effect |
X. Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI. ProspectsLooking into 2023, the high-end high-tech industry will embrace new challenges and opportunities as global economictransformation and industrial chain restructuring takes place. TCL Tech will seize the opportunity for industrial development, developglobal high-tech industrial core asset segments and focus on the business development of semiconductor displays, new energyphotovoltaic materials and semiconductor materials. Using technology, management, and scale advantages as fundamentals, theCompany will take into account short-term contingency response and long-term capacity building, pursue long-term high-qualitydevelopment, continue to improve industry chain layout and is committed to becoming a global leader in these two segments.As one of the world’s leading semiconductor display enterprises, the Company will focus on seizing the opportunity for industryintegration, strengthening advantages and offsetting disadvantages, enhancing its leading advantage in large-sized products, improvingthe layout of small and medium-sized products, optimizing business, product and customer structure and transforming into an industryleader for all display sizes.In the two strategic industries of new energy and semiconductors, TCL Zhonghuan has become one of the main engines of TCL'sscientific and technological performance growth through institutional reform, enhancing organizational vitality, releasing growthpotential and accelerating business development. With the global energy restructuring and rapid development of the information age,TCL Zhonghuan will continue to enhance its comparative competitiveness and take a leading position in the industry.In the future, TCL aims to become a global leader and will pool its efforts, be guided by science and technology, driven byinnovation and continue to ramp up, catch up and achieve high-quality development.XII. Communications with the Investment Community such as Researches, Inquiries andInterviews
√ Applicable □ Not applicable
| Date | Place | Way of communication | Type of communication party | Communication party | Main discussions and materials provided | Index to main information communicated |
| March 22, 2022 - March 24, 2022 | Conference Room of TCL Tech in Shenzhen | By teleconference | Institution | Greenwoods Asset, CMB Wealth Management, Tianhong Asset | Latest business operations of TCL Tech | Log Sheet No. 2022-001 on Investor Relations Activities dated March 24, 2022 disclosed by the |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Management, BlackRock, etc. | Company at www.cninfo.com.cn on March 24, 2022. | |||||
| April 28, 2022 | Conference Room of TCL Tech in Shenzhen | By teleconference + p5w.net | Institution | E Funds, Harvest Fund, Perseverance Asset Management, CICC, UBS, etc. | Performance of TCL Tech for 2021 and the first quarter of 2022 |
Log Sheet No. 2022-002 on InvestorRelations Activitiesdated April 28, 2022disclosed by theCompany atwww.cninfo.com.cnon April 29, 2022.
| August 29, 2022 | Conference Room of TCL Tech in Shenzhen | By teleconference | Institution | Southern Asset Management, China Life, Perseverance Asset Management, BOCOM Schroders, etc. | Performance of TCL Tech for the first half of 2022 | Log Sheet No. 2022-003 on Investor Relations Activities dated August 29, 2022 disclosed by the Company at www.cninfo.com.cn on August 31, 2022. |
| October 25, 2022 | Conference Room of TCL Tech in Shenzhen | By teleconference | Institution | E Funds, Huaxia Securities, Penghua Fund, Dacheng Fund, ICBC Wealth Management, etc. | Performance of TCL Tech for the third quarter of 2022 | Log Sheet No. 2022-004 on Investor Relations Activities dated October 25, 2022 disclosed by the Company at www.cninfo.com.cn on October 26, 2022. |
| January - December 2022 | The Company's office | Investor hotline (telephone) | Individuals, institutions, etc. | Individuals, institutions, etc. | Contents and public information, etc., disclosed by the Company | - |
| January - December 2022 | The Company's office | irm.cninfo.com.cn | Individuals, institutions, etc. | Individuals, institutions, etc. | Contents and public information, etc., disclosed by the Company | irm.cninfo.com.cn |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part IV Corporate GovernanceI General information of Corporate Governance
Since listed, in accordance with the Company Law, the Securities Law, the Code of Corporate Governance forListed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange and the Self-regulatoryGuidelines of Shenzhen Stock Exchange for Listed Companies No. 1 - Standardized Operation of Listed Companieson the Main Board and other relevant laws and regulations, the Company has continued to improved its governancestructure and further standardized its operations to comply with the requirements of related laws and regulations.During the Reporting Period, the Company pushed ahead with its corporate government work in many aspects.At present, the Company has established an organizational structure in line with the Company’s business scale andoperation and management, reasonably set up departments and posts, scientifically plan responsibilities and dutiesand build an internal control system that enables employees to performs their duties, assumes their responsibilities,work and supervise each other. The Company has a complete internal audit and internal control system, especiallyin terms of internal audit, with a clarified structure and clear responsibilities defined, which can effectively preventGroup risks.The board of directors of the Company sets up four dedicated committees: strategy committee, auditcommittee, nomination committee and remuneration and appraisal committee to provide suggestions to the boardof directors and ensure the board meetings and decision-making in a professional and efficient manner. The boardof supervisors perform their duties diligently and conscientiously. The supervisors investigate issues at various sites,take the initiative to put forward management suggestions, which effectively improve the internal governance ofthe Company. The Company has continuously improved its information disclosure management and investorrelations management through innovative management system. The Company actively arranges directors,supervisors, senior managers and heads of relevant departments to participate in the dedicated training organizedby regulators and associations, effectively promotes the management’s learning and understanding of relevant laws,regulations and documents on the governance of listed companies, strengthens the management’s self-disciplinecapacity, make them diligently perform their duties, and effectively safeguards the interests of all shareholders,especially small and medium-sized shareholders. The Company has successively launched employee stock incentiveplans with the participation of middle and senior managers and excellent employees, further improving corporateperformance and continuous improvement of its value. The Company is devoted to public charitable undertakingsand actively participates in social public charitable donations. Thanks to these measures, the Company takes a leadin corporate governance in the industry.
Currently, there is no difference between the actual status of the Company’s corporate governance ructure andthe standard documents on the corporate governance for listed companies published by China Securities RegulatoryCommission. The names of the policies are shown in the following table and all the policies have been publishedon www.cninfo.com.cn.
| Category of rules | Title of rules |
| Articles of Association | The Articles of Association of TCL Technology Group Corporation |
| Dividend rules | The Dividend Rules of TCL Corporation |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| The Shareholder Dividend Reward Plan of TCL Technology Group Corporation for the Next Three Years (2023-2025) | |
| Information disclosure policy | The Rules Governing the Shareholdings of Directors, Supervisors and Senior Management in TCL Corporation and Changes therein |
| The Rules Governing the Registration of Information Insiders of TCL Technology Group Corporation | |
| The Accountability Rules for Material Errors in Annual Report Disclosure of TCL Corporation | |
| The Rules Governing External Users of Information of TCL Corporation | |
| The Rules Governing Investor Relations of TCL Corporation | |
| The Work Rules for Independent Directors Concerning Annual Reports of TCL Corporation | |
| The Reception and Promotional Work Rules of TCL Corporation | |
| The Rules Governing Internal Reporting of Significant Information of TCL Corporation | |
| The Work Rules for the Board Secretary of TCL Corporation | |
| The Rules Governing Information Disclosure of TCL Technology Group Corporation | |
| Governance and operation rules | The Rules of Procedure for the General Meeting of TCL Technology Group Corporation |
| The Rules of Procedure for the Supervisory Committee of TCL Technology Group Corporation | |
| The Rules of Procedure for the Board of Directors of TCL Technology Group Corporation | |
| The Work Rules for the Independent Directors of TCL Corporation | |
| The Specific Work Rules for the CEO of TCL Corporation | |
| The Rules of Procedure for the Audit Committee under the Board of Directors of TCL Corporation | |
| The Work Procedures for the Annual Audit by the Audit Committee under the Board of Directors of TCL Corporation | |
| The Rules of Procedure for the Remuneration and Appraisal Committee under the Board of Directors of TCL Corporation | |
| The Rules of Procedure for the Nomination Committee under the Board of Directors of TCL Corporation | |
| The Rules of Procedure for the Strategy Committee under the Board of Directors of TCL Corporation | |
| Internal control rules | The Rules Governing Major Investments of TCL Corporation |
| The Rules Governing the Use of Raised Funds of TCL Technology Group Corporation | |
| The Internal Control Rules for Venture Capital of TCL Corporation | |
| The Rules Governing Securities Investment of TCL Technology Group Corporation | |
| The Internal Control Rules for Investment in Derivative Financial Instruments of TCL Technology Group Corporation | |
| The Rules Governing Securities Investment of TCL Technology Group Corporation | |
| The Majority-Owned Subsidiary Management Measures of TCL Corporation |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| The Rules Governing the Related-Party Transactions of TCL Corporation |
| The Rules Governing the Guarantees Provided for External Parties of TCL Technology Group Corporation |
| The Internal Control Rules of TCL Corporation |
| The Internal Audit Charter of TCL Technology Group Corporation |
| The Internal Control Evaluation Rules of TCL Corporation |
The following rules are revised during the Reporting Period and relevant rules are disclosed on www.cninfo.com.cn:
| Title of rules | |
| Revised | The Articles of Association of TCL Technology Group Corporation |
| The Rules Governing Information Disclosure of TCL Technology Group Corporation | |
| The Rules Governing the Registration of Information Insiders of TCL Technology Group Corporation |
Is there any material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies
□ Yes √ No
There is no material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies.II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
□ Applicable √ Not applicable
III Horizontal Competition
□ Applicable √ Not applicable
IV. Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Date of disclosure | Resolutions of the meeting |
| The First Extraordinary General Meeting of 2022 | Extraordinary general meeting | 22.26% | April 29, 2022 | April 30, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions of the 1st Extraordinary Meeting of Shareholders in 2022 disclosed on www.cninfo.com.cn on April 30, 2022 (Notice No.: 2022-045) |
| The 2021 Annual General Meeting | Annual general meeting | 22.12% | May 19, 2022 | May 20, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions of General Meeting of Shareholders in 2021 disclosed on www.cninfo.com.cn on May 20, 2022 (Notice No.: 2022-051) |
| The Second Extraordinary General Meeting of 2022 | Extraordinary general meeting | 22.18% | July 22, 2022 | July 23, 2022 | All proposals were adopted. Please refer to the Notice on the 2nd Extraordinary General Meeting of Shareholders in 2022 disclosed on www.cninfo.com.cn on July 23, 2022 (Notice No.: 2022-081) |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with ResumedVoting Rights
□ Applicable √ Not applicable
V. Performance of Duty by Independent Directors in the Reporting Period
1. General information
| Name | Position | Position Status | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Share option | Granted restricted shares (shares) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) | Reason for change |
| Li Dongsheng | Chairman | Incumbent | Male | 65 | April 19, 2002 | November 12, 2023 | 813,575,470 | - | - | - | - | 485,626 | 814,061,096 | Non-transaction transfer under the employee stock ownership plan |
| CEO | June 20, 2005 | |||||||||||||
| Liang Weihua | Vice Charmian of the Board | Incumbent | Male | 41 | November 13, 2020 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Wang Cheng | Director | Incumbent | Male | 48 | January 9, 2023 | November 12, 2023 | 157,661 | - | - | - | - | 157,661 | Not applicable | |
| COO | August 9, 2021 | |||||||||||||
| Shen Haoping | Director | Incumbent | Male | 60 | November 13, 2020 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Senior Vice President | November 14, 2020 | |||||||||||||
| Liao Qian | Director | Incumbent | Male | 42 | September 1, 2017 | November 12, 2023 | 229,596 | - | - | - | - | 251,710 | 481,306 | Non-transaction transfer under the employee stock ownership plan |
| Board Secretary | April 23, 2014 | |||||||||||||
| Senior Vice President | August 27, 2020 | |||||||||||||
| Zhao Jun | Director | Incumbent | Male | 50 | January 9, 2023 | November 12, 2023 | - | - | - | - | - | 200,482 | 200,482 | Non-transaction transfer under the employee stock ownership plan |
| Senior Vice President | December 23, 2022 | |||||||||||||
| Lin Feng | Director | Incumbent | Male | 37 | April 29, 2022 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Gan Yong | Independent director | Incumbent | Male | 75 | November 13, 2020 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Chen Shiyi | Independent director | Incumbent | Male | 66 | November 13, 2020 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Wan Liangyong | Independent director | Incumbent | Male | 43 | November 13, 2020 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Liu Xunci | Independent director | Incumbent | Male | 64 | September 1, 2017 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| He Zhuohui | Chairman of the Supervisory Committee | Incumbent | Male | 57 | September 2, 2015 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Qiu Haiyan | Supervisor | Incumbent | Female | 48 | September 1, 2014 | November 12, 2023 | - | - | - | - | - | - | - | Not applicable |
| Mao Tianxiang | Employee Supervisor | Incumbent | Male | 42 | September 1, 2017 | November 12, 2023 | 128,979 | - | - | - | - | 100,604 | 229,583 | Non-transaction transfer under the employee stock ownership plan |
| Li Jian | CFO | Incumbent | Female | 50 | August 9, 2021 | November 12, 2023 | 97,709 | - | - | - | - | 196,804 | 294,513 | Non-transaction transfer under the employee stock ownership plan |
| Yan Xiaolin | Senior Vice President | Incumbent | Male | 56 | September 1, 2014 | November 12, 2023 | 1,018,176 | - | - | - | - | 285,126 | 1,303,302 | Non-transaction transfer under the employee stock ownership plan |
| CTO | December 6, 2012 | |||||||||||||
| Du Juan | Director | Former | Female | 52 | March 19, 2018 | December 22, 2022 | 417,730 | - | - | - | - | 374,237 | 791,967 | Non-transaction transfer under the employee stock ownership plan |
| Jin Xuzhi | Director | Former | Male | 68 | January 25, 2019 | December 22, 2022 | 521,997 | - | - | - | - | 232,564 | 754,561 | Non-transaction transfer under the employee stock ownership plan |
| Senior Vice President | August 13, 2015 | |||||||||||||
| Liu Kun | Director | Former | Male | 44 | May 13, 2021 | April 12, 2022 | - | - | - | - | - | - | - | Not applicable |
| Total | -- | -- | -- | -- | -- | -- | 816,147,318 | - | - | - | - | 2,127,153 | 818,274,471 | -- |
During the reporting period, any resignation of directors and supervisors and dismissal of senior managers during their term of office
□ Yes √ No
Change of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Liu Kun | Non-executive Director | Former | April 12, 2022 | Resigned as a Non-executive Director of the Company due to job adjustment. |
| Lin Feng | Non-executive Director | Elected | April 29, 2022 | Election at a shareholders’ meeting |
| Du Juan | Non-executive Director | Former | December 22, 2022 | Resigned as a Non-executive Director of the Company for personal reasons. |
| Jin Xuzhi | Executive Director, Senior Vice President | Former | December 22, 2022 | Resigned as a Non-executive Director and Senior Vice President of the Company for personal reasons. |
| Wang Cheng | Executive Director | Elected | January 9, 2023 | Election at a shareholders’ meeting |
| Zhao Jun | Executive Director, Senior Vice President | Elected and appointed | January 9, 2023 | Election at a shareholders’ meeting and appointment by the Board |
2. Positions
Professional background, major work experience and current post held in the Company of incumbent director, supervisor and seniormanagerMr. Li Dongsheng, the founder of TCL who currently serves as TCL Tech’s Chairman and CEO; he waselected as a delegate to China’s 16th National Congress of the CPC and a deputy to the 10th, 11th, 12th, 13th and14th National People’s Congress. Mr. Li has held a number of prestigious positions: Former Vice Chairman of AllChina Federation of Industry and Commerce (ACFIC), Vice Chairman of the China Chamber of InternationalCommerce, First President of the China Manufacturing Innovation Alliance, Honorary President of GuangdongFederation of Industry&Commerce, Honorary President of South China University of Technology EducationDevelopment Foundation, Vice President of Alumni Association South China University of Technology, Memberof the Council of South China University of Technology, Visiting Professor in Wuhan University, and HonoraryProfessor in Beijing Institute of Technology.Mr. Liang Weihua, Vice Chairman of TCL Tech. He was born in March 1981. He holds a master's degreeand is a Party member. He graduated from the Department of Sociology of the School of Government, the Sun Yat-sen University, in July 2003 and graduated from the Economics and Management School of Wuhan University withthe MBA degree in December 2012. From July 2003 to December 2010, he worked as Assistant Manager ofEnterprise Management Department and Administration Department of Huizhou Investment ManagementCompany. From December 2010 to December 2011, he took the post of Executive Deputy General Manager ofHuidong County Hongyuan Water Supply Co., Ltd. From December 2011 to June 2016, he served as the GeneralManager of Huidong County Hongyuan Water Supply Co., Ltd. (and participated in the Special Seminar for Youngand Middle-aged Cadres at Section Chief Rank in Huizhou City to Learn and Implement Spirit of Third Plenary
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Session of the 18th CPC Central Committee (Zhong Qing Class 2) from May to August, 2014). From June 2016 toJune 2021, he took office as Deputy General Manager of Huizhou Investment Holding Co., Ltd. (and also served asa director of the company since August 2016). From March 2017 to March 2022, he has been a director of HuizhouFinancing Guarantee Co., Ltd.; from March 2017 to January 2023, he concurrently served as a director of UtrustInclusive Finance (Huizhou) Financing Guarantee Co., Ltd. From April 2017, he was a director at Truly (Huizhou)Smart Display Limited. Since October 2019, he has been Chairman and General Manager of Huizhou New MaterialsIndustry Park Investment and Construction Co., Ltd. Since November 2020, he has held office as Vice Chairmanof TCL Technology Group Corporation and its consolidated subsidiaries, except where the context otherwiserequires. He became Chairman and General Manager of Huizhou Innovative Investment Co., Ltd. in November2020; in June 2021, he was appointed as Deputy General Manager of Huizhou State-Owned Asset InvestmentGroup.Mr. Wang Cheng, Executive Director and COO of TCL Tech. Born in 1974, MBA, EMBA from theUniversity of Texas at Arlington. Since joined TCL in 1997 and successively served in multiple managementpositions at TCL multimedia overseas business, human resources director and senior vice president of TCL Group.He once worked as the CEO of TCL Electronics from October 2017 to August 2021, and CEO of TCL IndustrialHoldings from January 2019 to August 2021. From August 2021, he was appointed as COO of TCL Tech.Mr. Shen Haoping, Executive Director and Senior Vice President of TCL Tech. Born in 1962, he holds abachelor's degree. He is a Senior Engineer receiving a special allowance from the State Council. At present, heserves as Vic Chairman and General Manager of Tianjin Zhonghuan Semiconductor Co., Ltd. and Deputy Secretaryof the Party Committee and General Manager of Tianjin Zhonghuan Electronics and Information Group Co., Ltd.Mr. Liao Qian, Executive Director, Senior Vice President, and Secretary of the Board of Directors of TCLTech. He obtained a Master’s Degree and holds the Occupational Qualification Certificate of the People’s Republicof China for Law. From August 2006 to February 2014, he worked at Guotai Junan International Holdings Co., Ltd.and was engaged in the investment banking business in Hong Kong and Mainland China. Joining TCL Corporationin March 2014, he is in charge of strategic planning, strategic investment and matters in relation to domestic andoverseas capital markets. He is also Chairman of Tonly Technology Co., Ltd. and CDOT (0334.HK); Vice Chairmanof the Board of Tianjin 712 Communication & Broadcasting Co., Ltd. (603712.SH), and Director of TianjinZhonghuan (002129.SZ).Mr. Zhao Jun, Executive Director and Senior Vice President of TCL Tech. He was born in Xianyang City,Shaanxi Province in November 1972, and is a member of the Communist Party of China. He graduated fromNorthwestern Polytechnical University with a master's degree of engineering in polymer materials. After graduation,he served as vice president at Tianma Micro-Electronics Group, and currently serves as Senior Vice President ofTCL Tech and CEO of TCL CSOT. From April 1997 to January 2018, he worked with Tianma Micro-ElectronicsGroup, successively serving as a pre-process engineer, deputy manager of the quality department, director ofmanufacturing and quality, deputy general manager, assistant president, and general manager and vice president ofthe procurement center and quality center. From May 2018 to October 2019, he joined Wuhan China StarOptoelectronics Technology Co., Ltd. as general manager and director. From October 2019 to February 2021, heserved as Vice President of TCL Tech, Senior Vice President of TCL CSOT, General Manager of TCL CSOT Large
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Size Business Group and General Manager of TV Business Department. On July 30, 2021, he was awarded the titleof “Shenzhen Top 100 Innovative Trail-blazers” in the new era. From February 2021 to December 2022, he servedas Chief Operating Officer of TCL CSOT and presided over the overall work of the CSOT. Since December 2022,he has served as Senior Vice President of TCL Tech and CEO of TCL CSOT.
Mr. Lin Feng, Non-executive Director of TCL Tech. He graduated from Central South University ofEconomics and Law in 2011 with a master’s degree in management science and engineering. From July 2011 toJanuary 2013, he worked for China Sanjiang Space Group Co., Ltd.; from February 2013 to May 2016, he servedas project director and deputy director of the Industrial Investment Department of Hubei Science & TechnologyInvestment Group Co., Ltd.; from May 2016 to May 2018, he served as deputy general manager of Wuhan OpticsValley Industrial Investment Co., Ltd.; since May 2018, he has been appointed as general manager of Wuhan OpticsValley Industrial Investment Co., Ltd.Mr. Gan Yong, independent director of TCL Tech. He is a Professor Senior Engineer, metallurgist andmaterials scientist, academician of the Chinese Academy of Engineering (CAE) (2001), and doctoral supervisor.He serves as Director of the National Advisory Committee on New Materials Industry Development, HonoraryPresident of the Association of China Rare Earth Industry (ACREI), and President of the Chinese Society for Metals(CSM). In June 2010, he was elected Assistant Dean of the CAE and became a member of the 12th NationalCommittee of the Chinese People's Political Consultative Conference (CPPCC) and Deputy Director of theCommittee of Population, Resources and Environment of the CPPCC.Mr. Chen Shiyi, independent director of TCL Tech. He was born of Han ethnicity in Tiantai, Zhejiang inOctober 1956. He started to work in July 1987. His titles include doctor of science, doctoral supervisor, academicianof the Chinese Academy of Sciences (CAS) and the World Academy of Sciences (TWAS), and second principal ofthe Southern University of Science and Technology (SUSTech). Currently, he is president of the Eastern Institutefor Advanced Study, a chair professor at the Southern University of Science and Technology, a member of the 10thNational Committee of the China Association for Science and Technology, vice chairman of the 2nd Council of theChina Engineering Education Accreditation Association, vice chairman of the 11th Council of the Chinese Societyof Theoretical and Applied Mechanics, a member of the Standing Committee of the 7th Committee of the CPPCCShenzhen Municipal Committee, and a member of the Standing Committee of the 16th People’s Congress of NingboCity.Mr. Wan Liangyong, independent director of TCL Tech. Born in 1979, he is a Party member who joined the“National Leading Accounting Talent” of the Ministry of Finance of the People’s Republic of China. Currently, heis a professor and a doctoral supervisor at the School of Business Administration of South China University ofTechnology, and director of the Accounting Development Research Center. He is also a council member of theAccounting Society of China (ASC), and independent director of multiple companies, including Goworld.
Mr. Liu Xunci, independent director of TCL Tech., professor, and Top Talent in Huizhou City. He was bornin Longhui County, Hunan Province, and was awarded a master’s degree. In September 1976, he became aneducated urban young man working in the countryside. In July 1983, he started to work upon graduation. He taughtat Huizhou University as a lecturer, associate professor, professor, and teaching supervisor. He is now an expert ofthe Decision-making Consultative Committee of Huizhou Municipal People’s Government.
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Mr. He Zhuohui, Chairman of the Supervisory Committee of TCL Tech. Born in July 1966, he serves as Full-time Deputy Secretary and Director in Huizhou Investment Holdings Co., Ltd. From August 1991 to June 1995, heserved as Deputy Director of the General Office and Director of the Office in China Construction Bank HuiyangBranch; from June 1995 to August 2008, he served as Manager at Ren chengchang (Huizhou) Investment Co., Ltd.;from August 2008 to September 2009, he served as General Manager of Huizhou Investment Holdings AssetManagement Co., Ltd.; from September 2009 to December 2012, he served as Manager of the Management andDevelopment Department in Huizhou Investment Holdings Co., Ltd. and Deputy General Manager and Director ofHuizhou Fairway Investment and Construction Co., Ltd.; from December 2012 till now, he serves as Full-timeDeputy Secretary at Huizhou Investment Holdings Co., Ltd.; from February 2014 till now, he serves as Director atHuizhou Investment Holdings Co., Ltd. (during which period, he has also served as Chairman of the Fifth, Sixth,And Seventh Supervisory Committees of TCL Technology Group Corporation since August 2015).Ms. Qiu Haiyan, Supervisor of TCL Tech. Born in December 1975, She obtained her Bachelor’s Degree fromthe Central Radio & TV University in 2011. She is an accountant and member of the Communist Party of China.From July 1995 to March 1998, she served as a finance officer in Huizhou Zongli Real Estate Company; fromMarch 1998 to June 2002, she served as a finance officer at Huizhou Trust Investment Company; from June 2002till now, she serves as accountant, deputy manager and manager of the Finance Department in Huizhou InvestmentHoldings Co., Ltd.; from February 2014 till now, she serves as workers’ director in Huizhou Investment HoldingsCo., Ltd. (from June 2009 to February 2013, she concurrently served as supervisor at Huizhou Fairway Investmentand Construction Co., Ltd.; from March 2014 to March 2022, she concurrently served as an employee director ofHuizhou Investment Development Co., Ltd.; since April 2014, she has concurrently served as a Supervisor of theFifth, Sixth, and Seventh Supervisory Committees of the Company; and since June 2022, she has concurrentlyserved as a director of Huizhou Industrial Investment Development Master Fund Co., Ltd.).Mr. Mao Tianxiang, Employee Supervisor of TCL Tech. Now, he is Deputy Secretary of the PartyCommittee, Assistant President, and Head of the Audit and Supervision Department of TCL Tech. He was born inJanuary 1980 and graduated with a bachelor degree in July 2003. From July 2003 to June 2005, he served asSecretary at China Telecom Guangxi Guilin Company; from July 2005 to November 2007, he served as Supervisorof PR and Communications in the Strategic OEM Business Division and Officer in the President’s Office in theCompany; from November 2007 to August 2014, he successively served as deputy head of the Legal Section andhead of the General Section in Huizhou Auditing Bureau, the Deputy Director of the Law EnforcementEffectiveness Supervision Office of the Huizhou Municipal Commission for Discipline Inspection, and the Directorof the Deputy Department; since September 2014, he has worked in the Company and successively served as DeputyDirector of the Party and Mass Work Department, Secretary of the Youth League Committee, Acting GeneralManager of the Electronic Devices Business Department of Techne Group, General Manager of TCL ResourceInvestment, Chief Auditor of TCL CSOT, etc. Since 2019, he has successively been a Supervisor of Tianjin 712Communication & Broadcasting Co., Ltd. (603712.SH), the Chairman of the Supervisory Committee of HighlyInformation Industry Co., Ltd., and the Chief Supervisor of TCL Financial Co., Ltd. Since October 2020, he hasbeen Chairman of the Supervisory Committee of TCL Zhonghuan New Energy Technology Co., Ltd. (002129.SZ);since November 2020, he has been Chairman of the Supervisory Committee of Tianjin Printronics Circuit
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Corporation (002134.SZ); since December 2020, he has been Assistant President, Head of the Audit and SupervisionDepartment, Deputy Secretary of the Party Committee and Secretary of the Discipline Inspection Committee ofTCL Tech.Ms. Li Jian, CFO of TCL Tech. Born in 1972, she has an MBA from MIT. Joined TCL in 2004, successivelyserving as the capital director of TCL Multimedia Technology Holding Co., Ltd., the deputy general manager andgeneral manager of TCL Group Finance Co., Ltd., and now serves as the chairman of TCL Technology GroupFinance Co., Ltd. From August 2021, she is appointed as CFO of TCL Tech.Mr. Yan Xiaolin, a doctor and professor senior engineer, serves as Chief Technology Officer (CTO) andSenior Vice President of TCL Tech and Dean of the Wuhan TCL Industrial Technology Research Institute, Ltd.;Director of TCL CSOT, and Chief Scientist of TCL CSOT; Chairman of Guangdong Juhua Printed DisplayTechnology Co., Ltd., Chairman of TCL Microchip Technology (Guangdong) Co., Ltd., Chairman of XiamenExtremely PQ Display Technology Co., Ltd., Chairman of Mostar Semiconductor (Guangdong) Co., Ltd., Directorof National Center of Technology Innovation for Display; Chairman of the IEC Technical Committee on ElectronicDisplay Devices, Vice Chairman and President of Asia of the Organic Printing Electronics Society, and Fellow ofthe Society for Information Display (SID). He is an expert of the National Advisory Committee on New MaterialsIndustry Development and an initiator of the New Display Direction of the National “Key New Materials R&D andApplication Projects (2030)”, an initiator of the New Display Direction of the “National High-tech Research andDevelopment Plan (863 Plan)” under the “12th Five-Year Plan” of the Ministry of Science and Technology of thePeople’s Republic of China, an initiator of the New Display Direction of the key research and development plan of“Special Project for Strategic Advanced Electronic Materials” under the national “13th Five Year Plan”, an initiatorof the New Display Direction of the key research and development plan of “Key Special Project for New Displayand Strategic Electronic Materials” implementation scheme under the national “14th Five Year Plan”. He is also aLeading Talent in Scientific and Technological Innovation of the Special Support Plan for High-level Talent of theOrganization Department of the Central Committee of the CPC and Young Expert with Outstanding Contributionto China of the National “Hundred-Thousand-Ten Thousand Talent Project”.Positions held at the shareholding entity
√ Applicable □ Not applicable
| Name | Name of shareholding entity | Office title at the shareholding entity | Start of tenure | End of tenure | Any pay received from the shareholding entity? |
| Li Dongsheng | Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | Representative appointed by the executive partner | August 2014 | Incumbent | No |
| Lin Feng | Wuhan Optics Valley Industrial Investment Co., Ltd. | General Manager | May 2018 | Incumbent | Yes |
| He Zhuohui | Huizhou Investment Holding Co., Ltd. | Full-time Deputy Secretary and Director | December 2012 | Incumbent | Yes |
| Qiu Haiyan | Huizhou Investment | Workers’ Director | February | Incumbent | Yes |
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| Holding Co., Ltd. | 2014 | |||
| Notes to positions held at the shareholding entity | Not applicable | |||
Positions held at other entities
√ Applicable □ Not applicable
| Name | Name of other entities | Office title at other entities | Start of tenure | End of tenure | Pay received from other entities |
| Li Dongsheng | TCL Industrial Holdings Co., Ltd. | Chairman | September 2018 | Incumbent | Yes |
| Tencent Holdings Limited | Independent and non-executive director | April 2004 | Incumbent | Yes | |
| Liang Weihua | Huizhou New Material Industrial Park Investment and Construction Co., Ltd | Chairman and general manager | October 2019 | Incumbent | No |
| Huizhou Innovation Investment Co., Ltd | Chairman and general manager | November 2020 | Incumbent | No | |
| Huizhou State-owned Capital Investment Group Co., Ltd | Deputy General Manager | June 2021 | Incumbent | Yes | |
| Wang Cheng | TCL Microchip Technology (Guangdong) Co., Ltd. | Director | May 2021 | Incumbent | No |
| Amlogic (Shanghai) Co., Ltd | Director | May 2020 | Incumbent | No | |
| Liao Qian | Tianjin 712 Communication & Broadcasting Co., Ltd. | Vice Charmian of the Board | June 2019 | Incumbent | No |
| Lin Feng | Hubei Xiaomi Changjiang Industrial Investment Fund Management Co., Ltd. | Supervisor | October 2017 | Incumbent | No |
| Wuhan Optical Valley Fiberhome Investment Fund Management Co., Ltd. | Director | August 2018 | Incumbent | No | |
| Wuhan Weineng Battery Assets Co., Ltd. | Director | August 2021 | Incumbent | No | |
| Gan Yong | The Chinese Society for Metals | President | May 2017 | Incumbent | Yes |
| Chen Shiyi | Eastern Institute for Advanced Study | President | August 2022 | Incumbent | Yes |
| Wan Liangyong | URTRUST Insurance Co., Ltd. | Independent director | February 2020 | Incumbent | Yes |
| Guangdong Goworld Co., Ltd | Independent director | October 2021 | Incumbent | Yes | |
| Mao Tianxiang | Tianjin 712 Communication & Broadcasting Co., Ltd. | Supervisor | June 2019 | Incumbent | No |
| Li Jian | Bank of Shanghai Co., Ltd. | Director | January | Incumbent | No |
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| 2022 | |||||
| Yan Xiaolin | TCL Microchip Technology (Guangdong) Co., Ltd. | Chairman | May 2021 | Incumbent | No |
| Notes to positions held at other entities | Other major jobs or concurrently held jobs and resume | ||||
Punishments imposed in recent three years by the securities regulator on the incumbent directors, supervisors and senior managementas well as those who left in the Reporting Period
√ Applicable □ Not applicable
For details, please refer to the relevant announcements disclosed by the Company on the designated information disclosure mediaon October 29, 2022 and January 20, 2023.
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement
(I) Decision-making procedure
The allowances for directors and supervisors of the Company were reviewed and approved by the Company at thesecond extraordinary general meeting in 2008 and the fourth extraordinary general meeting in 2011. The remunerationfor senior executives is subject to the Company’s remuneration rules.
(II) Determination basis and actual payment
1. Remuneration or allowance criteria for directors
The remuneration of executive directors: As the Company pays remuneration to executive directors, it shall not payadditional allowances to them. The remuneration is determined as per the Company’s remuneration management rules.
The allowances of non-executive directors: RMB160,000/year (tax inclusive):
The allowances of independent non-executive directors: The allowance for each independent non-executive directoris RMB160,000/year (tax inclusive), and the allowance for the convener of the Audit Committee is RMB200,000/year(tax inclusive).
The Company shall bear the travel expenses arising from the independent directors attending the Company’s boardand general meetings, as well as other expenses arising from non-executive directors and independent directors’exercising their functions and powers as per the Company’s Articles of Association.
2. Remuneration or allowance criteria for supervisors
The allowance for the Chairman of the Supervisory Committee is RMB160,000/year (tax inclusive);
The allowance for the shareholder supervisor is RMB100,000/year (tax inclusive);
And as the Company pays remuneration to the employee supervisor, it shall not pay additional allowances to him/her.
The Company shall bear the travel expense arising from the shareholder supervisors attending the Company’sSupervisory Committee meetings, general meetings and board meetings (as a non-voting delegate), as well as otherexpenses arising from his/her exercising his/her functions and powers as per the Company’s Articles of Association.
3. Remuneration criteria for senior management
The remuneration of senior management is determined as per the Company’s Articles of Association andremuneration management rules.Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Position | Gender | Age | Position Status | Total before- | Remuneration |
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| tax remuneration from the Company | from any related party or not | |||||
| Li Dongsheng | Chairman of the Board, CEO | Male | 65 | Incumbent | 1037.41 | Yes |
| Liang Weihua | Vice Charmian of the Board | Male | 41 | Incumbent | 0 | Yes |
| Wang Cheng | Director, COO | Male | 48 | Incumbent | 644.64 | No |
| Zhao Jun | Director, Senior Vice President | Male | 50 | Incumbent | 12.19 | No |
| Shen Haoping | Director, Senior Vice President | Male | 60 | Incumbent | Note | No |
| Liao Qian | Director, Board Secretary and Senior Vice President | Male | 42 | Incumbent | 565.34 | No |
| Lin Feng | Director | Male | 37 | Incumbent | 0 | Yes |
| Gan Yong | Independent director | Male | 75 | Incumbent | 0 | No |
| Chen Shiyi | Independent director | Male | 66 | Incumbent | 20 | No |
| Wan Liangyong | Independent director | Male | 43 | Incumbent | 20 | No |
| Liu Xunci | Independent director | Male | 64 | Incumbent | 16 | No |
| He Zhuohui | Chairman of the Supervisory Committee | Male | 57 | Incumbent | 16 | Yes |
| Qiu Haiyan | Supervisor | Female | 48 | Incumbent | 10 | Yes |
| Mao Tianxiang | Employee Supervisor | Male | 42 | Incumbent | 153.08 | No |
| Li Jian | CFO | Female | 50 | Incumbent | 639.60 | No |
| Yan Xiaolin | Senior Vice President, CTO | Male | 56 | Incumbent | 722.25 | No |
| Du Juan | Former director | Female | 52 | Former | 0 | Yes |
| Jin Xuzhi | Former Director, Senior Vice President | Male | 68 | Former | 950.59 | No |
| Liu Kun | Former director | Male | 44 | Former | 0 | No |
| Total | -- | -- | -- | -- | 4,807.10 |
Note: 1. The above amounts include fixed salaries, allowances, and performance bonuses received from the Company by the directors,supervisors, and senior executives of the Company during their terms of office.
2. As at the end of the Reporting Period, non-executive director Mr. Liang Weihua and independent director Mr. Gan Yong had not
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received their respective allowances of RMB341.300 thousand (before tax), and independent director Mr. Chen Shiyi had not receivedthe allowance of RMB141.300 thousand (before tax); non-executive director Mr. Lin Feng gave up the allowance; Director ShenHaoping received an allowance from TCL Zhonghuan. The specific data are subject to the announcements of TCL Zhonghuan.
3. In 2022, the Company took out liability insurances for all its directors, supervisors, and senior executives, with a total premium ofRMB421.8 thousand per year. The participation of the directors, supervisors, and senior executives in the Company’s employee stockownership plan is detailed in the relevant announcements issued by the Company.VI. Performance of Duty by Directors in the Reporting Period
1. Board of Directors During the Reporting Period
| Meeting | Date of the meeting | Date of disclosure | Resolutions of the meeting |
| The 15th meeting of the 7th Board of Directors | January 21, 2022 | January 24, 2022 |
All proposals were adopted. Please refer to the Notice on Resolutionsadopted at the 15th Meeting of the 7th Board of Directors disclosed onwww.cninfo.com.cn on January 24, 2022 (Notice No.: 2022-002)
| The 16th meeting of the 7th Board of Directors | March 18, 2022 | March 21, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 16th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on March 21, 2022 (Notice No.: 2022-007) |
| The 17th meeting of the 7th Board of Directors | April 13, 2022 | April 14, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 17th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on April 14, 2022 (Notice No.: 2022-017) |
| The 18th meeting of the 7th Board of Directors | April 27, 2022 | April 28, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 18th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on April 28, 2022 (Notice No.: 2022-031) |
| The 19th meeting of the 7th Board of Directors | May 31, 2022 | June 1, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 19th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on June 1, 2022 (Notice No.: 2022-054) |
| The 20th meeting of the 7th Board of Directors | June 24, 2022 | June 27, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 20th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on June 27, 2022 (Notice No.: 2022-065) |
| The 21st meeting of the 7th Board of Directors | July 6, 2022 | July 7, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 21st Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on July 7, 2022 (Notice No.: 2022-069) |
| The 22nd meeting of the 7th Board of Directors | August 8, 2022 | August 9, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 22nd Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on August 9, 2022 (Notice No.: 2022-085) |
| The 23rd meeting of the 7th Board of Directors | August 12, 2022 | August 13, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 23rd Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on August 13, 2022 (Notice No.: 2022-087) |
| The 24th meeting of the 7th Board of Directors | August 26, 2022 | August 27, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 24th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on August 27, 2022 (Notice No.: 2022-091) |
| The 25th meeting of the 7th Board of Directors | October 21, 2022 | October 25, 2022 |
All proposals were adopted. Please refer to the Notice on Resolutionsadopted at the 25th Meeting of the 7th Board of Directors disclosed onwww.cninfo.com.cn on October 25, 2022 (Notice No.: 2022-104)
| The 26th meeting of | December | December | All proposals were adopted. Please refer to the Notice on Resolutions |
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| the 7th Board of Directors | 12, 2022 | 13, 2022 | adopted at the 26th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on December 13, 2022 (Notice No.: 2022-114) |
| The 27th meeting of the 7th Board of Directors | December 23, 2022 | December 24, 2022 | All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 27th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on December 24, 2022 (Notice No.: 2022-119) |
2. Attendance of Independent Directors at Board Meetings and General Meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the director eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings or not | General meetings attended |
| Li Dongsheng | 13 | 2 | 11 | - | - | No | 1 |
| Liang Weihua | 13 | 1 | 12 | - | - | No | 1 |
| Wang Cheng | - | - | - | - | - | No | - |
| Shen Haoping | 13 | 1 | 12 | - | - | No | - |
| Liao Qian | 13 | 2 | 11 | - | - | No | 3 |
| Zhao Jun | - | - | - | - | - | No | - |
| Lin Feng | 9 | 1 | 8 | - | - | No | 1 |
| Gan Yong | 13 | 1 | 12 | - | - | No | - |
| Chen Shiyi | 13 | 1 | 12 | - | - | No | - |
| Wan Liangyong | 13 | 1 | 12 | - | - | No | 3 |
| Liu Xunci | 13 | 2 | 11 | - | - | No | 3 |
| Du Juan | 12 | 2 | 10 | - | - | No | - |
| Jin Xuzhi | 12 | 1 | 11 | - | - | No | - |
| Liu Kun | 2 | - | 2 | - | - | No | - |
Explanation for absence from the Board meetings in person for two consecutive times: None
3. Objections Raised by Directors on Matters of the Company
Whether directors raised objections on matters of the Company
□ Yes √ No
No such cases in the Reporting Period.
4. Other information about the Performance of Duty by Directors
Whether directors adopted the proposals of the Company
√ Yes □ No
Explanation for the proposal adopted by directors or not
During the reporting period, the directors of the Company diligently performed their duties and obligations in accordance withthe provisions of the Company Law, the Securities Law, the Listing Rules of Shenzhen Stock Exchange, the Articles of Association, theRules of Procedure of the Board of Directors and other laws, regulations and rules, and put forward valuable professional opinions onthe internal control and daily operation decision-making of the Company, which effectively improved the standard operation andscientific decision-making of the Company. The independent directors of the Company performed their duties independently andimpartially in strict accordance with the Regulations on the Work of Independent Directors and relevant laws and regulations, andissued independent and impartial opinions on major matters such as the Company’s private placement, annual profit distribution and
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annual daily affiliated transaction forecast, effectively safeguarded the legitimate rights and interests of investors, especially small andmedium-sized investors.VII. Performance of Duties by Dedicated Committees During the Reporting Period
| Name | Members | Meetings convened | Date of the meeting | Meeting agenda | Important opinions and proposals raised | Other duties performed | Objection matters (if any) |
| Audit Committee | Wan Liangyong, Chen Shiyi, Du Juan | 3 | January 4, 2022 | 2. 2021 Internal Control Plan of TCL Technology Group Corporation. | The audit committee carried out its work in strict accordance with the Company Law, the regulatory rules of the CSRC, the Articles of Association and the Rules of Procedure of the Board of Directors. Upon thorough communication and discussion, all proposals were unanimously adopted. | - | Not applicable |
| April 26, 2022 | 1. Proposal on the 2021 Annual Financial Report of the Company; 2. Proposal on the Summary Report of the Audit Committee under the Board Regarding the 2021 Annual Audit Carried out by Da Hua Certified Public Accountants (Special General Partnership); 3. Proposal on Renewing the Engagement of the Accounting Firm. | The audit committee carried out its work in strict accordance with the Company Law, the regulatory rules of the CSRC, the Articles of Association and the Rules of Procedure of the Board of Directors. Upon thorough communication and discussion, all proposals were unanimously adopted. | - | Not applicable | |||
| August 26, 2022 | 1. Proposal on the Text of the Company’s 2022 Semiannual Report and Its Summary | The audit committee carried out its work in strict accordance with the Company Law, the regulatory rules of the CSRC, the Articles of Association and the Rules of Procedure of the Board of Directors. Upon thorough communication and discussion, all proposals were | - | Not applicable |
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| unanimously adopted. | |||||||
| Remuneration and Appraisal Committee | Gan Yong, Wan Liangyong, Liu Xunci, Du Juan | 2 | April 27, 2022 | Proposal on the Remuneration of the Directors, Supervisors, and Senior Executives in 2021 | All proposals were adopted upon deliberation. | - | Not applicable |
| May 31, 2022 | 1. Proposal on Adjusting the Company's 2021-2023 Employee Stock Ownership Plan (Phase I) and the Management Measures 2. Proposal on the Company’s 2021-2023 Employee Stock Ownership Plan (Phase II) (Draft) 3. Proposal on the Company’s 2021-2023 Employee Stock Ownership Plan (Phase II) and the Management Measures | All proposals were adopted upon deliberation. | - | Not applicable | |||
| Nomination Committee | Chen Shiyi, Wan Liangyong, Liu Xunci, Liang Weihua, Liao Qian | 2 | April 13, 2022 | Proposal on Supplementing Non-executive Directors to the 7th Board of Directors. | All proposals were adopted upon deliberation. | - | Not applicable |
| December 23, 2022 | Proposal on Supplementing Directors to the 7th Board of Directors. | All proposals were adopted upon deliberation. | - | Not applicable | |||
| Strategy Committee | Li Dongsheng, Liang Weihua, Jin Xuzhi, Du Juan, Liao Qian, Shen Haoping, Chen Shiyi | 2 | April 26, 2022 | Proposal on the 2021 Environmental, Social and Governance Report | All proposals were adopted upon deliberation. | - | Not applicable |
| December 11, 2022 | Proposal on Using Raised Funds to Swap Self-raised Funds Previously Invested in Projects that should be Funded with Raised Funds | All proposals were adopted upon deliberation. | - | Not applicable |
VIII. Performance of Duty by the Supervisory CommitteeIndicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
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The Supervisory Committee raised no objections in the Reporting Period.IX. Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-services of the Company as the parent | 519 |
| Number of in-services of the Company of major subsidiaries | 69,309 |
| Total number of in-services of the Company at the end of period | 69,828 |
| Total number of paid employees in the Reporting Period | 69,828 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 1,443 |
| Functions | |
| Function | Employees |
| Production | 45,409 |
| Sales | 2,341 |
| Technical | 14,458 |
| Financial | 882 |
| Administrative | 514 |
| Management | 2,149 |
| Other | 4,075 |
| Total | 69,828 |
| Educational backgrounds | |
| Educational background | Employees |
| PhD | 287 |
| Master | 3,958 |
| Bachelor’s degree | 14,745 |
| Junior college and others | 4,218 |
| Total | 23,208 |
Note : The “educational backgrounds” section excludes overseas employees and front-line operators.
2. Employee Remuneration Policy
The Company implements the remuneration management on a basis of the principle of “job-determined responsibilities and salary,and pay for performance” Fixed income is determined based on position assessment, variable income is determined based onperformance appraisal and a remuneration distribution mechanism oriented by position and performance is established inside theCompany.
3. Employee Training Plans
On September 10, 2000, the Training Department of TCL Headquarters shifted to TCL Training Institute. On August 16, 2005,TCL Training Institute changed its name to TCL Leadership Development Institute, which focused on cultivation of management talentand development of leadership. In 2015, the institute has been upgraded to TCL University. In 2021, to better focus on the businessscenario, training talents for the organization, TCL University was merged into the Organizational Department of the Company,changed its name to the Learning and Development Group.
The Learning and Development Group shoulders the mission of "empower employees and development of organization by men".It has unswervingly implemented the “Hawk” Project for more than a decade, trained many excellent management personnel at alllevels for enterprises, and supported the development of the Company. In the meantime, to empower the strategy and business, createan atmosphere that fosters the intensive learning and actively implement the digital transformation, the T-school online learningplatform was launched in 2020, and provided more than 2600 online courses to more than 60000 users as of the end of 2022, with atotal 760 thousand study hours. The Learning and Development Group is committed to creating an innovative experience combined
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with knowledge, functions and social culture learning.In 2022, we continued to optimize and upgrade leadership empowerment projects, strengthen to empower the strategy andbusiness, create an atmosphere that fosters the intensive learning, establish a more stereoscopic training system, and build a talent poolfor the management and professional talents in line with the Company’s strategic requirements.In the aspect of platform building, we will strengthen trainer and course management, improve T-classroom, build the knowledgeplatform, upgrade user experience and provide extensive learning resources in all-round way and multiple formats.The Learning and Development Group will continue to build a more comprehensive training system and build a management andprofessional talent pool that meets the strategic requirements of the Company. In terms of long-term goals, the Learning andDevelopment Group is committed to increasing the talent pool (i.e. 1:2 managers: talents), both quantitatively and qualitatively, andgradually transforming the talent structure from a pyramid shape to a spindle.
4. Labor Outsourcing
□ Applicable √ Not applicable
X. Profit Distributions to Shareholders (in the Form of Cash and/or Stock)Formation, implementation or adjustment of profit distribution policy, especially cash dividend policy, in the Reporting Period
√ Applicable □ Not applicable
| Special explanation of cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due roles | Yes |
| Non-controlling interests were able to fully express their opinions and desires and their legal rights and interests were fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved were in compliance with applicable regulations and were transparent | Not applicable |
During the Reporting Period, the Company made profits and the parent company’s profits that were eligible for profit distribution forshareholders were positive, but no cash dividend distribution plan was put forward.
√ Applicable □ Not applicable
| The reasons why the Company made profits and the parent company’s profits that were eligible for profit distribution for shareholders were positive, but no cash dividend distribution plan was put forward during the Reporting Period | The purpose and use plan of the Company’s undistributed profits |
| The final plan for the profit distribution and conversion of the capital reserve to the share capital in 2022: based on the Company’s share capital as at March 30, 2023, i.e., 17,071,891,607 shares, the capital reserve is to be converted into capital on a basis of 1 share for every 10 shares to all the shareholders. After the conversion, the total share capital of the Company will be changed to 18,779,080,767 shares. Neither cash dividends nor bonus shares will be distributed this year. | The Company focuses on high-tech, asset-heavy, and long-term industrial development, with semiconductor display, new energy photovoltaic, and semiconductor materials as its core business. In 2022, with the demand from the end-users weakened, the display industry continued to cyclically adjusted at the bottom, and the prices of large-sized display panels dropped significantly year-on-year, resulted in overall operational losses. The Company is shoring up the weak production capacity of medium-size products in line with recovered demand with a more balanced business structure. In terms of the new |
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energy photovoltaic industry, the Company will seize the industrialdevelopment opportunities, continue to enhance advanced technologyand capacity advantages, and accelerate to become a global leader. Tomeet the Company’s business development needs and in combinationwith the its actual operating conditions, the Company’s Board ofDirectors proposed for converting the capital reserve to 1 share for every10 shares held by the shareholders, instead of cash or share distributionfor this year, to ensure the Company’s sustained, stable, and healthydevelopment, and better safeguard the long-term interests of all theshareholders.
Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
| Bonus issue from profit (share/10 shares) | 0 |
| Cash dividend/10 shares (RMB) (tax inclusive) | 0 |
| Bonus issue from capital reserves (share/10 shares) | 1 |
| Share base (share) | 17,071,891,607 |
| Cash dividends (RMB’0,000) (tax inclusive) | 0 |
| Cash dividends in other forms (e.g. share repurchase) (RMB’0,000) | 50,262 |
| Total cash dividends (including those in other forms) (RMB’0,000) | 50,262 |
| Distributable profits (RMB’0,000) | 1,641,605 |
| Total cash dividends (including those in other forms) as a percentage of total profits to be distributed (%) | Not applicable |
| Cash dividend plan | |
| Not applicable | |
| Details of profit distribution or capital reserve fund transfer plan | |
| In combination with the its actual operating conditions and in order to ensure the Company’s sustained, stable, and healthy development in the future, and better safeguard the long-term interests of all the shareholders, the final plan for the profit distribution and conversion of the capital reserve to the share capital in 2022: based on the Company’s share capital as at March 30, 2023, i.e., 17,071,891,607 shares, the capital reserve is to be converted into capital on a basis of 1 share for every 10 shares to all the shareholders. After the conversion, the total share capital of the Company will be changed to 18,779,080,767 shares. Neither cash dividends nor bonus shares will be distributed this year. Where any changes occur, before the implementation of the dividend plan, to the total share capital of the Company due to any convertible bonds-to-stock programs, share repurchases, exercises of equity incentives, new share issues in refinancing, etc., the dividend will be adjusted according to the principle of “adjusting the total conversion amount under the same conversion ratio”, subject to the actual conversion amount. | |
XI. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
√ Applicable □ Not applicable
1. Equity Incentives
□ Applicable √ Not applicable
Equity Incentives Granted to Directors and Senior Management
□ Applicable √ Not applicable
Appraisal of and Incentive for Senior ManagementDuring the Reporting Period, the Company conducted performance appraisal and competency and quality assessment on themanagers, The Contract To Success (CTS) system was used for performance appraisal. In respect to the team led by each manager, the
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key factors of performance appraisal included phased strategic goals and operating goals of the current period (such as profits, cashflow, products and service quality) and key projects; the comprehensive results of each accomplished goal were considered as the mainbasis for motivating managers. In that way, corporate strategies were converted into internal management activities through the processof goal setting, implementation and accomplishment to direct all systems of the Company and serve the purpose of enhancing theoverall efficiency of the Company. The management assessment consisted of four dimensions, included manager performance,competence, experience and quality (potential, personality and aspiration/values). An annual examination report for managers wasgenerated through annual performance assessment, manager review and inspection, virtual assessment center, 360-degree behaviorinterviews or online assessment, supported by key experience, personality or management style assessment, which served as the mainbasis for appraising, appointing and dismissing leaders.
2. Implementation of Employee Stock Ownership Plan
√ Applicable □ Not applicable
All the valid employee stock ownership plans during the Reporting Period
| Name | Scope of employees | Number of employees | Total number of shares held （share） | Changes | Proportion to total share capital of listed companies | Funding source for implementing the plan |
| The Third Global Partner Plan | The Company's middle and senior management and outstanding key staff | 1,800 | 21,299,502 | Not applicable | 0.12% | The Company's special incentive fund for 2020 |
| 2021-2023 Employee Stock Ownership Plan (Phase I) | The Company's middle and senior management and outstanding key staff | 3,600 | 113,143,154 | Not applicable | 0.66% | The Company's special incentive fund for 2021 |
| 2021-2023 Employee Stock Ownership Plan (Phase II) | The Company's middle and senior management and outstanding key staff | 3,600 | 106,484,364 | Not applicable | 0.62% | The Company's special incentive fund for 2022 |
Shareholdings of Directors, Supervisors and Senior Management under the Employee Stock Ownership Plan during the ReportingPeriod
| Name | Position | Beginning amount in the Reporting Period | Ending amount in the Reporting Period | Proportion to total share capital of listed companies |
| Li Dongsheng | Chairman of the Board, CEO | About 10.93 million shares | About 27.07 million shares | 0.16% |
| Wang Cheng | Director, COO | |||
| Liao Qian | Director, Board Secretary and Senior |
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| Vice President | |
| Zhao Jun | Director, Senior Vice President |
| Yan Xiaolin | Senior Vice President, CTO |
| Li Jian | CFO |
| Mao Tianxiang | Employee Supervisor |
Changes of asset management institutions during the Reporting Period
□ Applicable √ Not applicable
Changes of equity caused by the holder’s disposal share during the Reporting Period
□ Applicable √ Not applicable
Exercise of shareholder rights during the Reporting Period
□ Applicable √ Not applicable
Other relevant information and explanations of the Employee Stock Ownership Plan during the Reporting Period.
□ Applicable √ Not applicable
Changes of the members of Employee Stock Ownership Plan Management Committee
□ Applicable √ Not applicable
Financial impact of Employee Stock Ownership Plan on the Company during the Reporting Period and related accounting treatment
√ Applicable □ Not applicable
The financial, accounting treatment and taxation involved in the Company’s shareholding plan shall be implemented accordingto laws and regulations and normative documents on financial systems, accounting standards, taxation systems, etc. The holder of theshareholding plan shall pay the personal income tax generated due to the shareholding plan according to law, and can choose to sellthe corresponding amount of shares to the shareholding plan to cover personal income tax. The remaining shares will be attributed toindividuals.Termination of Employee Stock Ownership Plan during the Reporting Period
□ Applicable √ Not applicable
3. Other Employee Incentives
□ Applicable √ Not applicable
XII. Construction and Implementation of Internal Control System During the Reporting Period
1. Construction and Implementation of Internal Control System
In accordance with the provisions of internal control standard system, the Company establishes, improves and effectivelyimplements internal controls, reasonably ensures the legal compliance of business management, asset security, authenticity andintegrity of financial statements and relevant information, improves business efficiency and effectiveness, and promotes the realizationof development strategy.
2. Material Internal Control Weaknesses Identified in the Reporting Period
□ Yes √ No
XIII. Management and Control of Subsidiaries by the Company During the Reporting Period
□ Applicable √ Not applicable
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XIV. Internal Control Self-Evaluation Report or Independent Auditor’s Report on InternalControls
1. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | March 31, 2023 | |
| Index to the disclosed internal control self-evaluation report | http://www.cninfo.com.cn | |
| Evaluated entities combined assets as a percentage of consolidated total assets | 97% | |
| Evaluated entities combined revenue as a percentage of consolidated revenue | 97% | |
| Identification standards for internal control weaknesses | ||
| Category | Weaknesses in internal controls over financial reporting | Weaknesses in internal controls not related to financial reporting |
| Nature standard | Material weaknesses: (1) an invalid control environment; (2) fraud of directors, supervisors and senior management; (3) any material misstatement of financial reporting of the current period which is identified by the registered accountants but which the Company failed to report; and (4) invalid internal control supervision by the Audit Committee and the internal audit organ. Serious weaknesses: A single weakness or a group of weaknesses which are less serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious | Material weaknesses: (1) material violations of the country’s laws or regulations in the Company’s operating activities; (2) any material decision-making error that is caused by an irrational decision-making procedure and causes material property loss to the Company; (3) a massive loss of the key managerial or technical personnel; and (4) frequent negative news coverage that causes great concern for the regulatory administration and a material long-lasting impact on the Company’s brand and reputation. Serious weaknesses: A single weakness or a group of weaknesses which are less serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious |
| Quantitative standard | Material weaknesses: misstatements ≥5% of profit before tax; Serious weaknesses: 3% of profit before tax ≤misstatements <5% of profit before tax; Common weaknesses: misstatements <3% of profit before tax | Not applicable |
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| Number of material weaknesses in internal controls over financial reporting | Not applicable |
| Number of material weaknesses in internal controls not related to financial reporting | Not applicable |
| Number of serious weaknesses in internal controls over financial reporting | Not applicable |
| Number of serious weaknesses in internal controls not related to financial reporting | Not applicable |
2. Independent Auditor’s Report on Internal Controls
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal controls | |
| In our opinion, TCL Technology Group Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the Basic Rules on Enterprise Internal Controls and other applicable rules. | |
| Independent auditor’s report on internal controls disclosed or not | The Internal Control Audit Report of TCL Technology Group Corporation disclosed at www.cninfo.com.cn dated March 31, 2023 |
| Disclosure date | March 31, 2023 |
| Index to such report disclosed | http://www.cninfo.com.cn |
| Type of the auditor’s opinion | Unmodified opinions |
| Material weaknesses in internal controls not related to financial reporting | No |
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal controls.
□ Yes √ No
Indicate whether the independent auditor’s report on the Company’s internal controls is consistent with the internal control self-evaluation report issued by the Company’s Board.
√ Yes □ No
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part V Environmental and Social Responsibility
I. Major Environmental IssuesWhether the listed company and its subsidiaries are major polluters announced by the environmental protection department
√ Yes □ No
| Name of the Company or subsidiary | Major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration (mg/L) | Governing discharge standards (mg/L) | Total discharge (metric ton) | Approved total discharge (metric tons/year) | Excessive discharge |
| TCL China Star Optoelectronics Technology Co., Ltd. | COD | Intermittently discharged to Guangming Sewage Plant | 1 | North of the plant area | 127 mg/L | 260mg/L | 884.8t | / | Not applicable |
| COD | Intermittently discharged to the artificial wetland | 1 | Artificial wetland | 13.5 mg/L | 30mg/L | 46.7t | / | Not applicable | |
| Nitrogen oxides | Intermittently discharged to the atmosphere in an organized manner | 50 | Plant roof | 30.3 mg/M3 | 120mg/NM3 | 33t | / | Not applicable | |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | COD | Intermittently discharged to Guangming Sewage Plant | 2 | Southeast corner of the plant | 70mg/L | 110mg/L | 91.785t | / | Not applicable |
| Nitrogen oxides | Intermittently discharged to the atmosphere in an organized manner | 10 | Plant roof | 5 mg/M3 | 30 mg/NM3 | 5.927t | / | Not applicable | |
| Suzhou China Star Optoelectronics Technology Co., Ltd. | COD | Continuously discharged to CSSD Environmental Technology Wastewater Treatment Plant | 2 | In CSSD Environmental Technology Wastewater Treatment Plant | 54.38mg/L | 500mg/L | 90.852t | 129.6t | Not applicable |
| 29.25mg/L | 100mg/L | 67.8455t | 449.82t | Not applicable | |||||
| Ammonia nitrogen | 1 | 0.72mg/L | 6mg/L | 2.2317t | 22.68t | Not applicable | |||
| Suzhou China Star Optoelectronics Display Co., Ltd. | COD | Continuously discharged to Suzhou Industrial Park First Sewage Treatment Plant | 1 | South gate of the plant area | 23.62mg/L | 500mg/L | 4.6954t | 96.335t | Not applicable |
| Ammonia nitrogen | 0.28mg/L | 45mg/L | 0.0565t | 5.65t | Not applicable | ||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | COD | Intermittently discharged | 1 | Southwestern corner of the plant | 43mg/L | 400mg/L | 133.49t | 353.55t | Not applicable |
| Ammonia nitrogen | Intermittently discharged | 1 | Southwestern corner of the plant | 4.6mg/L | 30mg/L | 20.51t | 35.36t | Not applicable | |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., | COD | Intermittently discharged | 1 | Northeastern corner of the plant | 37mg/L | 400mg/L | 249.054t | 570.8t | Not applicable |
| Ammonia nitrogen | Intermittently discharged | 1 | Northeastern corner of the plant | 3.1mg/L | 30mg/L | 31.22t | 57.1t | Not applicab |
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| Ltd. | le | ||||||||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (total nitrogen, total phosphorus, pH value, suspended matter, BOD5, flow, fluoride, petroleum) | Organized | 1 | General discharge outlet | As per emission standard | DB12/356-2018 Comprehensive Sewage Discharge Standard | Not exceeding | Standard | Not applicable |
| Tianjin Huan'Ou Semiconductor Material&Technology Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (total nitrogen, total phosphorus, pH value, suspended matter, BOD5, flow, fluoride, petroleum) | Organized | 1 | General discharge outlet | As per emission standard | DB12/356-2018 Comprehensive Sewage Discharge Standard | Not exceeding | Standard | Not applicable |
| Tianjin Huanzhi New Energy Technology Co., Ltd. | Wastewater: chemical oxygen demand, total phosphorus (calculated as P), ammonia nitrogen (NH3-N), total nitrogen (calculated as N), pH value, suspended solids, petroleum, anionic surfactant, 5-day biochemical oxygen demand | Organized | 1 | General discharge outlet | As per emission standard | DB12/599-2015 Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant | Not exceeding | Standard | Not applicable |
| Inner Mongolia Zhonghuan Solar | Waste gas: Particulate | Organized, unorganized | Multiple | General discharge outlet, plant area, | As per emission standard | GB16297-1996 Comprehensive Air | Not exceeding | Standard | Not applicab |
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| Material Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (total phosphorus, pH, suspended matter, BOD5, fluoride) | and roof of production workshop | Pollutant Emission Standard, GB8978-1996 Comprehensive Sewage Discharge Standard | le | |||||
| Zhonghuan Advanced Semiconductor Materials Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (fluoride, total nitrogen, total phosphorus, suspended matter, pH, BOD5) | Organized | 1 | General discharge outlet | As per emission standard | GB/T 31962 Water Quality Standard for Sewage Discharged into Urban Sewers GB8978-1996 Comprehensive Sewage Discharge Standard | Not exceeding | Standard | Not applicable |
| Huansheng Solar (Jiangsu) Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (fluoride, total nitrogen, total phosphorus, suspended matter, pH) | Organized | 1 | General discharge outlet | As per emission standard | GB 30484-2013 Discharge Standard for Battery Industry Pollutants | Not exceeding | Standard | Not applicable |
| Wuxi Zhonghuan Applied Materials Co., Ltd. | Wastewater: COD, ammonia nitrogen, other characteristic pollutants (total nitrogen, total phosphorus, suspended matter, pH) | Organized | 1 | General discharge outlet | As per emission standard | GB 30484-2013 Discharge Standard for Battery Industry Pollutants | Not exceeding | Standard | Not applicable |
1. Construction and operation of facilities for preventing pollution
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During the Reporting Period, an advanced sewage management system was established by the Company and its subsidiaries, andregular monitoring and supervision and inspection mechanisms were adopted to ensure the waste water, waste gas, solid waste andfactory noises generated during the operation were emitted and treated according to national and local laws and regulations.The Company’s waste water includes domestic waste water and industrial waste water, of which domestic waste water isdischarged into the local municipal sewage treatment pipe network after being pre-treated with oil separation and septic treatment, andindustrial waste water enters different treatment systems according to its characteristics, and is discharged after physical, chemical andbiochemical treatment. The concentration and total amount of waste water discharged meet the relevant national and local standards.The air pollutants produced by the Company are mainly process waste gas in the production process. For different types of wastegases, the Company has constructed corresponding waste gas treatment systems, such as a waste gas stripping system, acidic waste gastreatment system, alkaline waste gas treatment system, organic waste gas treatment system, waste gas treatment system for waste watertreatment station, for the collection of waste gases through pipelines to the corresponding waste gas treatment system, where wastegases are discharged at a high altitude after meeting relative standards. The concentration and total amount of waste gas dischargedmeet the relevant national and local standards.The solid wastes generated by the Company include general waste, hazardous waste and domestic garbage, of which, hazardouswastes are disposed of by an authorized qualified hazardous waste disposal agency according to the regulations; general wastes arerecycled and disposed of by a resource recycling manufacturer after being classified in the plant area. Domestic garbage is handed overby the property company to a domestic garbage landfill for sanitary landfill. All of the above disposals have been carried out accordingto laws and regulations.
The factory noises generated by the Company come from the mechanical noises of production and power equipment, includingrefrigerators, cooling towers, air compressors, fans, various pumps, etc. The Company reduces the impact of noise on the surroundingenvironment by the use of low-noise equipment, vibration reduction, noise reduction, etc., and noise reduction measures such as soundinsulation and sound absorption in the factories and equipment rooms. The monitoring results show that the Company's factory noiseemissions can stably reach the standards.
2. Environmental Impact Assessment on Construction Projects and Other Environmental Protection Administrative Licenses
The Company complies with the laws and regulations of environmental impact assessment on construction projects and otherenvironmental protection administrative licenses.
3. Emergency Response Plan for Environmental Incidents
The Company has set up an environmental incident emergency organization led by the senior management of the enterprise andprepared an environmental emergency response plan, which has been filed with the local environmental protection department inaccordance with relevant national laws and regulations. In addition, regularly staff trainings and emergency drills are conducted forenvironmental incidents according to the plan to ensure valid and accurate treatment of environmental pollution emergencies.
4. Environmental Self-Monitoring Program
The Company has formulated an environmental self-monitoring program in accordance with government regulations, and definedmonitoring indicators, implementation standards, their limits, monitoring frequency, and monitors the discharge of pollutants byautomatic monitoring or manual monitoring performed by a qualified third-party agency. The monitoring plans and annual monitoringreports can be retrieved from the major environmental monitoring information platform managed by local environmental authoritiesor subsidiary websites.Administrative punishments received with respect to environmental issues in the Reporting Period
□ Applicable √ Not applicable
Measures taken to reduce its carbon emissions and their effects during the Reporting Period
√ Applicable □ Not applicable
To meet the challenges of global climate change, TCL Technology is committed to green development, energy saving andemission reduction in all aspects of the Company's operations. TCL technology has effectively reduced the carbon emissions forbusiness by continuously improving the energy management system, increasing the utilization of renewable energies, building a greensupply chain, and enhancing employee low carbon awareness. At the same time, TCL Technology actively expands its green industry,
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
and is developing its photovoltaic semiconductor industry through TCL Zhonghuan’s business, which helps meet the challenges ofclimate change.
In terms of energy management, a sound energy management system has been established for the main subsidiaries of TCL Techand passed the ISO50001 certification. Suzhou CSOT has taken energy saving measures in terms of water, electricity, and gas. Itinvested more than an amount of RMB30 million in technological transformation of energy conservation throughout the year to promotea total of 50 projects on technological transformation of energy conservation, saving 20.52 million kWh of electricity and reducing
14.4 thousand tons of carbon in the year. The units of Shenzhen CSOT have implemented a total of 249 energy-saving projects frommultiple dimensions such as process energy conservation, management energy conservation, and parameter optimization. In 2022,TCL CDOT saved 3.47 million kWh of electricity by improving productivity and other energy management actions. In addition, TCLZhonghuan has carried out comprehensive energy management and energy conservation and consumption reduction, and focused onpromoting the digital construction of energy management. It directly saved 50.2145 million kWh of electricity by means of energyconservation and efficacy enhancement in 2022. In 2022, all major segments under TCL Tech implemented ISO14064 GreenhouseGas Accounting and Verification, and established scientific targets of emission reduction.
Companies under TCL Tech continue to develop and utilize renewable energy. The Photovoltaic Power Generation System ofSuzhou CSOT has a total installed capacity of 12 MW. It is expected to be connected to the grid for power generation in February2023, with an annual power generation capacity of 12 million kWh. Shenzhen CSOT followed the principle of “laying as much aspossible” to equip photovoltaics on its roofs. In 2022, it had a newly installed capacity of 3.83 MW, an annual power generationcapacity of 4 million kWh, and a total capacity of 48 MW. It can generate power of 50 million kWh every year and has been awardedthe title of “National Smart Photovoltaic Demonstration Project”. Since 2019, Huizhou CSOT has successively installed distributedphotovoltaics on the roofs of its factory premises. In 2022, it completed a newly installed capacity of 1 MW, with a total installedcapacity of 18.56 MW, and can generate power of 14.24 million kWh every year. Wuhan CSOT built a photovoltaic power generationsystem in 2022 and connected it to the grid for power generation, which can generate power of 17.50 million kWh, save about 5.70thousand tons of standard coal, and reduce carbon dioxide emissions from greenhouse gas by about 17.2 thousand tons every year. Thedistributed power station built by TCL Zhonghuan can provide 37.31 million kWh of green power and a photovoltaic power stationwith a capacity expected to exceed 4 GW will be built before 2027, directly supplying the production bases in Inner Mongolia andNingxia.
TCL Tech always adheres to green development, focuses on green products, actively deploys a layout in green industries, andbuilds green cultures. The Company continuously updates green product design and production technologies, reduces photovoltaicproduct costs, promotes energy transformation, and further promotes the development of the photovoltaic industry. TCL Zhonghuanhas accelerated the production and manufacturing of semiconductor materials, focusing on the development and integration of twoplatforms, namely, G12 large-sized solar wafers and high-efficiency laminated tile module technology. Relying on the G12 technologyplatform and flexible manufacturing capabilities, TCL Zhonghuan has launched silicon wafers of 210+ large sizes by linking theindustrial chain to respond to the market demand for large-sized and high-power products, and accelerate the construction of laminatedtile module projects. In terms of green culture, the Company continues to conduct various training, experience sharing, and themedactivities in connection with environmental protection knowledge, to publicize the Group’s green image externally, raise employees’low-carbon awareness internally, and create a good atmosphere for energy conservation and carbon reduction.
TCL Tech companies not only strictly fulfill their responsibilities for environment protection, but also strive to integrate theconcept of environment protection in all key parts of the industrial chain. Upholding the idea of low-carbon development, theyconstantly innovate and optimize all links alongside the industrial chain including procurement, logistics, warehousing, and packaging.The Company also actively explores and implements green finance in the supply chain, and strives to promote green and sustainabledevelopment throughout the entire chain. On April 27, 2022, TCL Tech successfully issued the first green medium-term note, whichwas rated by a third-party agency as the green bond level G-1. On June 29, 2022, TCL Finance launched China’s first re-discountbusiness for carbon emission reduction notes within the industry, further enhancing accurate support for “low-carbon” enterprises.
In the future, all companies of TCL Technology will forge ahead in sustainable development, and constantly explore andimplement the carbon reduction strategy, leading the industry and the whole value chain towards green and low carbon.
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Other relevant informationNot applicableII. Social ResponsibilitySee TCL Technology Group Corporation ESG Report 2022.III. Consolidating and Extending the Achievements of Poverty Alleviation and PushingForward Rural RevitalisationPlan for consolidating and extending the achievements of poverty alleviation and pushing forward rural revitalisationTCL Tech actively responds to national calls and focuses on four major areas (i.e. science and technology, education, culture andsports, and targeted relief), continuously strengthens investment in public charitable undertakings, integrates public charitableresources, and contributes to promoting social equity, consolidating and expanding achievements of poverty alleviation and, andachieving rural revitalization and common prosperity. The Company has combined its advantageous industrial resources to conductprojects such as “TCL Photovoltaic School”, “TCL Public Charitable Smart Classroom”, “A.I. Home”, “Little Music+”, and “TCLHope Project Candlelight Award Plan”, to contribute to the revitalization of rural education from the perspectives such as rural schooleducational resources and infrastructure.Annual summary of consolidating and extending the achievements of poverty alleviation and pushing forward ruralrevitalisationTo address the sustainable development issues for rural schools, TCL Charity Foundation cooperated with TCL Zhonghuan toimplement the TCL Photovoltaic Sunshine Campus Project, building solar photovoltaic power generation systems free of charge onthe roofs of the rural schools and donating the income from such power generation to the schools. The electricity so generated is fullyintegrated into the power grid, and the power generation income is used for improving the instructional environment and funding forstudents from poor families, creating a sustainable educational aid model. In 2022, the Foundation donated the first batch of roof-basedphotovoltaic power generation systems and equipment and income from 25 years of power generation by such systems and equipment,to a total of 10 rural schools in Xixiang County, Hanzhong City, and Lingwu City, Yinchuan City respectively. The installed powergeneration capacity of the roof-based photovoltaic power generation system for each of the schools is 54 KW, and it is expected togenerate 30.11 million kWh of electricity throughout its life cycle.To eliminate the inequity of educational resources between urban and rural areas, TCL Charity Foundation establishes TCL PublicCharitable Smart Classrooms in urban and rural schools, including smart instructional equipment, to build multimedia smart classroomsand “urban and rural areas” tailored classes. In September 2022, the opening ceremony of TCL Public Charitable Smart Classroomwas successfully held. In November 2022, Longsheng Experimental Middle School in Guilin, Guangxi was selected and started toimplement the Smart Classroom Project.In 2019, TCL Charity Foundation cooperated with the TCL Industrial Research Institute to launch the "A.I. Home" project,developed and designed the "Eagle Storytelling Machine", and delivered the "Eagle Story Club" campaign in rural schools, bringingtogether children from rural schools, to improve their wellbeing and assist their growth. In 2022, the fourth and fifth batches of pilotschools were selected for the “Eagle Story Club” project. A total of 14 schools from 6 provinces such as Shaanxi, Guangxi, and Hubei,were selected as the “Eagle Story Club” pilot schools, and a total of 70 story boxes were distributed, benefiting 4655 students.To provide high-quality music education resources for children, TCL Charity Foundation and the Education Foundation of theBeijing Central Conservatory of Music launched the “Little Music+” project. Through the “Little Snow Music Machine”, the “LittleSnow Music Class” was delivered to introduce both Chinese and international famous music works to students and motivate kids todevelop positive and optimistic characters. In 2022, the fourth and fifth batches of pilot schools were selected for the “Little SnowMusic Class”. A total of 15 schools from 7 provinces such as Shaanxi, Guangxi, and Guizhou were selected as the “Little Snow MusicClass” pilot schools, and a total of 70 music boxes were distributed, benefiting 6301 students.To promote the development of rural education, TCL Charity Foundation continues to implement the “TCL Hope ProjectCandlelight Award Plan” to recruit and encourage rural teachers to stay in their jobs and contribute to rural education. The projectsolicited excellent teachers from 194 counties and districts in 14 provinces that serve as the key counties in the National Rural
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Revitalization and the pairing support areas of Shenzhen. Each of the winners received a personal award worth RMB9,500, includinga cash reward and 7-day offline “Candlelight Class” training. Till now, this project has been successfully implemented for eightsessions, with applicants from 523 counties in 23 provinces across the country. More than 3000 outstanding rural teachers from 2000schools have won the awards. A total investment of over RMB42 million has been made in this project.In addition, TCL Charity Foundation continues to launch projects such as targeted assistance and community charity. Through actionssuch as helping the needy, and pairing assistance, it supports, consolidates and expands the poverty alleviation achievements, buildsharmonious urban and rural communities, and contributes to social equity and harmonious development. In 2022, the Foundationlaunched projects such as pairing assistance donations to Taimei Town, Boluo County, Huizhou, donations to Jingjia Village,Erwangzhuang Town, Baodi District, Tianjin, donations to Mutouwo, Lianzhuang Town, Ninghe District, Tianjin, and donations tothe Red Cross of Anlong County, Guizhou, in support of local poverty alleviation achievements, improving rural infrastructure, andrevitalizing tourism and other industries. In addition, the Company attached importance to rural population, paid attention to thecultural-ethical development in rural areas, and launched community public charitable projects such as wedding photos for ruralwomen, to bridge the gap between urban and rural areas from multiple aspects.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part VI Significant Events
I. Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and Other Entities Fulfilled in the Reporting Period or Overdue at the Period-End
√ Applicable □ Not applicable
(1) Details of commitment
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in refinancing | Li Dongsheng | About horizontal competition, related-party transaction and capital occupation | 1) I shall avoid horizontal competition between the companies, enterprises or other business organizations that I own, control, control with others, have significant influence on and the Company with its subsidiaries; and 2) I shall reduce and control transactions of related parties between the companies, enterprises or other business organizations that I own, control, control with others, or have significant influence on and the Company with its subsidiaries. | August 30, 2013 | During the tenure of the Company’s director, supervisor or senior management | In continuous performance |
| Citic Securities Company Limited, Nuode Asset Management Co., Ltd., Guotai Junan Securities Co., Ltd., Everbright Securities Company Limited, UBS AG, Caitong Fund Management Co., Ltd., GF Securities Co., Ltd., Haitong Securities Co., Ltd., Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No. 2 Zhixin Fund, China Life Asset Management | About restriction on sales of shares | The shares of TCL Tech subscribed shall not be transferred within 6 months from the date of listing. | December 5, 2022 | 6 months from the date of listing of the new shares | In continuous performance |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Co., Ltd. - China Life Asset Management - Bank of China - China Life Asset - PIPE2020 Insurance Asset Management Product, China Southern Asset Management Co., Ltd., Shen Ruijin, Dacheng Fund Management Co., Ltd., Golden Eagle Asset Management Co., Ltd., Huaxia Life Insurance Co., Ltd., Taikang Asset Management Co., Ltd. - Taikang Life Insurance Co., Ltd. - Unit Link - Industry Configuration, Guang Dong Zheng Yuan Private Fund Investment Management Co., Ltd. - Zhengyuan Saturday Private Equity Investment Fund, Bank of Communications Schroder Fund Management Co., Ltd., Foresight Fund Co., Ltd. | ||||||
| Commitments made in selling major assets | The largest shareholder of the listed company and person acting in concert (Mr. Li Dongsheng and Jiutian Liancheng) | About avoiding horizontal competition | 1. Before and after this transaction, there was no horizontal competition between me/this partnership and the enterprises controlled by me/this partnership and TCL Group and the main businesses of its affiliated enterprises. 2. After this transaction, I/this partnership will take active measures to avoid any business or activity that | December 7, 2018 | During the period of being the largest shareholder of TCL Group | In continuous performance |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| timely and full joint and several compensation for the losses to TCL Group caused thereby. | ||||
| Commitments on reducing and regulating related party transactions | 1. I/this partnership will minimize the related party transactions between me/this partnership and the enterprises controlled by me/this partnership and TCL Group and its affiliated enterprises. 2. For inevitable or reasonable related party transactions, I/this partnership and the enterprises controlled by me/this partnership and TCL Group and its affiliated enterprises will conduct them according to fair market principles and normal commercial conditions, so as to ensure the fairness of the related party transaction price, and will perform the decision-making procedures for related party transactions according to the law, to ensure that the related party transactions will not be used to illegally transfer TCL Group’s funds or to damage the legitimate rights and interests of TCL Group and its shareholders. 3. I/this partnership and the enterprises controlled by me/this partnership will not ask TCL Group and its affiliated enterprises to give more favorable conditions than those that can be offered to an independent third party in any fair market transaction. 4. During the period of being the largest shareholder of TCL Group, the aforementioned commitment is unconditional and irrevocable. If I/this partnership violate the aforementioned commitments, I/this partnership will make comprehensive, timely and full joint and several compensation for the losses to TCL | December 7, 2018 | During the period of being the largest shareholder of TCL Group | In continuous performance |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Group caused thereby. | |||||
| The largest shareholder of the listed company and person acting in concert (Mr. Li Dongsheng and Jiutian Liancheng) | Commitments on maintaining the independence of listed companies | After this transaction, I/this partnership will continue to exercise shareholder’s rights according to laws, regulations and the Articles of Association of TCL Group, and maintain the independence of TCL Group in terms of assets, personnel, finance, business and institutions. I/this partnership will ensure: (I) The independence of TCL Group personnel. I/this partnership promise(s) to maintain personnel independence with TCL Group. TCL Group’s senior management, including the general manager, deputy general manager, chief financial officer, and secretary of the board of directors, shall not hold positions other than directors and supervisors in my/this partnership’s subordinate wholly-owned, controlled or other enterprises with actual control (hereinafter referred to as “subordinate enterprises”), and shall not be paid in my/this partnership’s subordinate enterprises. The financial personnel of TCL Group shall not work part-time in my/this partnership’s subordinate enterprises. (II) The independence and integrity of TCL Group’s assets. 1. The independence and integrity of TCL Group’s assets. 2. TCL Group does not have any funds or assets occupied by me/this partnership and my/this partnership’s subordinate enterprises. (III) The financial independence of TCL Group. 1. TCL Group establishes an independent financial department and an independent financial accounting system. | December 7, 2018 | During the period of being the largest shareholder of TCL Group | In continuous performance |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| subordinate enterprises, I/this partnership will bear the corresponding compensation liability according to the law. | |||
| Fulfilled on time | Yes | ||
| Specific reasons for failing to fulfill commitments on time and plans for next steps | Not applicable | ||
(2) Fulfillment of commitments
In October 2022, the largest shareholder of the Company and his person acting in concert (Mr. Li Dongsheng and JiutianLiancheng) received the Decision on Administrative Supervision Measures issued by the Guangdong Office of China SecuritiesRegulatory Commission. It was found in the Decision that the commitments made by the largest shareholder of the Company and hisperson acting in concert, upon significant asset restructuring in 2018, to reduce related party transactions and maintain the independenceof the listed company were not fully fulfilled. So the administrative supervision measures were taken to order the largest shareholdersof the Company and their persons acting in concert to make rectification thereof.The largest shareholders of the Company and their persons acting in concert attached great importance to the Decision, and basedon the actual situation, they studied and comprehensively sorted out relevant problems item by item, and formulated practical andfeasible rectification plans detailed as follows, in accordance with the Company Law, the Securities Law, the Rules for the Listing ofStocks on the Shenzhen Stock Exchange, the Self-regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No. 1 -Standard Operation of Companies Listed on the Main Board, as well as other relevant laws, regulations, normative documents, andthe Articles of Association:
1. In 2020 and 2021, the total amount of daily related party transactions between TCL Tech and TCL Industrial was RMB13.226billion and RMB 18.349 billion respectively, an increase of 157% and 218% over 2019, which indicates that the commitment to reducerelated party transactions was not fully fulfilled.
The daily related party transactions between the Company and TCL Industrial mainly involved the sales of large-sized LCD panelsand related products by a subsidiary of the Company TCL CSOT to subordinated enterprises of TCL Industrial, and the procurementof components and materials by TCL CSOT from subordinated enterprises of TCL Industrial. As manufacturers from the Chinesemainland, such as TCL CSOT, continuously put new lines into operation, the concentration of the display panel industry continued toincrease. In 2022, the global top three panel manufacturers, including TCL CSOT, had a market share of nearly 60% in the TV panelmarket, among which TCL CSOT’s market share reached 18%. TCL CSOT ranked second in terms of the TV panel market share inthe world, first in terms of the market share of 55-inch and 75-inch market in the world, and second in terms of the market share of 32-inch and 65-inch market in the world. TCL Electronics, a controlling subsidiary of TCL Industrial Holdings, is one of the global topthree TV manufacturers and a key target customer for panel companies including TCL CSOT. With the increasing concentration of theTV industry, and changes in the competition and ecosystem of the display industry chain, it is crucial for TCL CSOT’s operations toconsolidate and enhance cooperation with the existing customers. TCL Electronics is one of the global top three TV manufacturers anda key target customer for panel companies including TCL CSOT.
The largest shareholders of the Company and their persons acting in concert will continue to minimize the related partytransactions between the enterprises controlled by them and the Company. The transactions that are unavoidable or reasonably existingwill be transacted with related parties, based on fair market principles and normal commercial conditions to ensure the fairness of the
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
prices of such related party transactions, and the decision-making procedures for related party transactions shall be gone through inaccordance with laws. For related party transactions taken on the basis of the development trend of the industrial market and necessaryfor the going concern of enterprises, the Company will strengthen the review procedure and information disclosure management inconnection with such transactions, disclose the implementation of the daily related party transactions taken with TCL Industrial in theprevious year from this year, and submit them to the Board of Directors for review. The Company will also continue to explore othermethods to supervise related party transactions that are consistent with the Company’s actual business, ensure that the Company’srelated party transactions with TCL Industrial are just and fair, without harming the interests of the Company and its shareholders,especially those of small and medium shareholders.In addition, the largest shareholders of the Company and their persons acting in concert have formulated plans to reduce relatedparty guarantees and related party financial services: TCL Tech’s related party guarantees for the target companies of TCL Industrial’ssignificant asset restructuring taken in 2019 was reduced to no more than RMB5 billion as at the end of 2022, and will be furtherreduced to no more than RMB3.5 billion by the end of 2023, and be liquidated by the end of 2024; The TCL Tech’s deposit loan limitfor related party transactions with TCL Industrial will drop to no more than RMB2.5 billion in 2023.
2. Some personnel of TCL Tech participated in relevant business of TCL Industrial, office systems (hereinafter referred to as OASystems) of TCL Tech and TCL Industrial were not completely separated, and TCL Tech, TCL Industrial, and TCL Group were notstrictly distinguished in external publicity, which indicates inadequate fulfillment of the commitment to maintain the independence oflisted companies.In accordance with the Company Law, the Securities Law, the Governance Standards for Listed Companies, the Rules for theListing of Stocks on the Shenzhen Stock Exchange, the Self-regulatory Guidelines for Listed Companies on the Shenzhen StockExchange No. 1 - Standard Operation of Companies Listed on the Main Board, as well as relevant rules and regulations of the ChinaSecurities Regulatory Commission, the largest shareholders of the Company and their persons acting in concert require TCL Industrialand advise TCL Tech to fully implement the personnel independence requirements, and conduct a comprehensive inventory onfunctional responsibilities, organizational structure, business processes, and personnel of the functional lines to ensure strictlyindependent staffing, management, and office, etc.The largest shareholders of the Company and their persons acting in concert have required TCL Industrial and advised TCL Techto sort out the permissions of the office systems and strengthen the management of the entrusted system service companies. Accordingto the relevant plan, TCL Tech and TCL Industrial will comprehensively check the organizations, identity authentications, andpermissions of all the OA accounts before June 2023, to solve the problem of employee affiliation caused by untimely data update forreasons such as legacy reasons, organizational changes, and job adjustments. TCL Tech and TCL Industrial have started to build theirown independent OA systems to be physically isolated from each other. Due to the complexity of system construction, it is plannedthat this work will be completed before November 2023.
The largest shareholders of the Company and their persons acting in concert required TCL Industrial and urge TCL Tech tostrengthen the management of their external publicity platforms, develop standardized systems, identify the standard abbreviations oflegal entities and the use scenarios and explanations. The business data of TCL Tech used by TCL Industrial for publicity must bethose that have been publicly disclosed. They should continue to improve the corresponding communication management system andprocess, manage and supervise the information content, entities’ use scenarios, and publication procedures throughout the process.
The Company attaches great importance to the improvement of the standardization level, and will comprehensively sort out andcomplete the rectification as soon as possible in strict accordance with the requirements, and continue to maintain independence interms of aspects such as assets, personnel, finance, business, and institution in accordance with laws, regulations, and the Articles ofAssociation.
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still withinthe forecast period, explain why the forecast has been reached for the Reporting Period.
√ Applicable □ Not applicable
| Name of asset or | Forecast start | Forecast end | Current | Current | Reasons for not | Date of | Index to original |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| project with an earnings forecast | time | time | forecast performance (RMB’0,000) | actual performance (RMB’0,000) | reaching the forecast (if applicable) | original forecast disclosure | forecast disclosure |
| Moka International Limited | January 1, 2021 | December 31, 2023 | 24,607 | 51,099 | Not applicable | December 12, 2020 | Announcement on the Acquisition of the 100% Equity Interests of Moka International Limited & the Related-Party Transactions (2020-166) |
Commitments Made by the Company’s Shareholders and Counterparties on the Annual Operating Performance of the Report
√ Applicable □ Not applicable
According to the Announcement on the Acquisition of the 100% Equity Interests of Moka International Limited & the Related-Party Transaction, the net profit (hereinafter referred to as “net profit”) of Moka International Limited (hereinafter referred to as “thetarget company”) in the audited consolidated statements in 2021, 2022 and 2023 (hereinafter referred to as “performance commitmentperiod”) is not less than RMB224.43 million, RMB246.07 million, and RMB287.65 million respectively. Therefore, TCL IndustriesHoldings (HK) Limited (hereinafter referred to as the “Transferor”) commits that the cumulative net profit of the target company duringthe performance commitment period is not less than RMB760 million (hereinafter referred to as the “committed net profit”).TCL Technology Investments Limited (hereinafter referred to as the “Transferee”, a wholly-owned subsidiary of the Company)shall, within 4 months after the end of the performance commitment period, hire an accounting firm approved by the Transferor toconduct a special audit on the achievement of the target company’s committed net profit throughout the performance commitmentperiod, and issue a special audit report. After auditing, if the net profit actually achieved by the target company during the performancecommitment period fails to reach the committed net profit, the Transferee shall notify the Transferor in writing within 10 working daysafter the issue of the special audit report agreed herein. The Transferor shall compensate the Transferee in cash within 3 months afterreceiving the written notice from the Transferee. The amount of compensation payable by the Transferor for the current period =(committed net profit - achieved net profit) ÷ committed net profit × the price of this equity transfer. Both parties further confirm thatthe accumulative amount compensated by the Transferor during the performance commitment period shall not exceed the total amountof consideration obtained by the Transferor in this equity transfer. After auditing, if the net profit actually achieved by the targetcompany exceeds the committed net profit during the performance commitment period, both parties agree to take 50% of the excessamount as the transferor’s excess performance reward (the maximum amount of excess performance reward shall not exceed 20% ofthe equity transfer price), and the Transferee shall pay this excess performance reward to the Transferor in cash within 3 months afterthe issuance of the special audit report.Achievement of Performance Commitment and Its Influence on Goodwill Impairment TestsIn 2022, the target company Moka International Limited realized a net profit of RMB510.99 million, which exceeded the estimatedamount in the Asset Evaluation Report of the TCL Technology Group Corporation to buy 100% Equity Interests of Moka InternationalLimited. There was no sign of goodwill impairment, so it is not necessary to make provision for goodwill impairment.
II Occupation of the Company、Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
III. Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.IV. Explanations Given by the Board of Directors Regarding the Latest Independent Auditor's“Modified Opinion” on the Financial Statements
□ Applicable √ Not applicable
V. Explanations Given by the Board of Directors, the Supervisory Committee, and IndependentDirectors (If Any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI. YoY Changes to the Accounting Policies and Estimates or Correction of MaterialAccounting Errors
√ Applicable □ Not applicable
On December 31, 2021, the Ministry of Finance issued the Notice on Printing and Distributing the ‘Interpretation of AccountingStandards for Business Enterprises No. 15’ (Cai Kuai [2021] No. 35) (hereinafter referred to as “Interpretation No. 15”), to specify theaccounting treatment for external sales of products or by-products produced before fixed assets reach their intended serviceablecondition or during the research and development process, the related presentation of centralized fund management, and the judgmenton onerous contracts. The Company will make adjustments to its accounting policies in accordance with the above requirements. TheCompany started to implement the provisions of Interpretation No. 15 on the accounting treatment for external sales of products or by-products produced before fixed assets reach their intended serviceable condition or during the research and development process, andthe judgment on onerous contracts from January 1, 2022 and the related presentation of centralized fund management from December31, 2021.VII. YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
Compared with 2021, 36 subsidiaries (36 newly incorporated) are newly included in and 5 subsidiaries (4 transferredand 1 de-registered) are excluded from the consolidation scope of 2022.
VIII. Engagement and Disengagement of Independent AuditorCurrent independent auditor
| Name of the domestic independent auditor | Da Hua Certified Public Accountants (Special General Partnership) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 381.40 |
| How many consecutive years the domestic independent auditor has provided audit services for the Company | 15 years |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Jiang Xianmin and Xiong Xin |
| How many consecutive years the certified public accountants have provided audit services for the Company | 4 years, 1 year |
| Name of the foreign independent auditor (if any) | Not applicable |
| The Company’s payment to the foreign independent auditor | Not applicable |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| (RMB’0,000) (if any) | |
| How many consecutive years the foreign independent auditor has provided audit services for the Company (if any) | Not applicable |
| Names of the certified public accountants from the foreign independent auditor writing signatures on the auditor’s report (if any) | Not applicable |
| How many consecutive years the certified public accountants have provided audit services for the Company (if any) | Not applicable |
Indicate whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Indicate whether the independent auditor was changed during the Audit Period.
□ Yes √ No
CPA firm, financial advisor or sponsor hired for the audit of internal control
√ Applicable □ Not applicable
During the Reporting Period, the Company hired Da Hua Certified Public Accountants (Special General Partnership) to conduct aninternal control audit, with an audit cost of RMB500,000.During the Reporting Period, the Company engaged Shenwan Hongyuan Financing Services Co., Ltd. as the sponsor at arecommendation fee of RMB3 million in connection with the non-public offering of shares.IX. Delisting Faced After the Disclosure of the Annual Report
□ Applicable √ Not applicable
X. Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XI. Significant Lawsuits and Arbitrations
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII. Punishments and Rectifications
√ Applicable □ Not applicable
| Name | Type of change | Reason for change | Investigation punishment type | Conclusion (if any) | Date of disclosure | Index to disclosed information |
| The Company and relevant responsible persons | The Company and some senior executives | Some construction in progress were not promptly transferred into fixed assets and not depreciated, and thus caused depreciation to be less accrued by the Company for 2021. Expenses of some outsourced R&D projects were inappropriately capitalized. The provision for impairment of large assets accrued from January to May 2021 was not disclosed in a timely manner, and it was not disclosed until | Administrative supervision measures taken by the Guangdong Office of China Securities Regulatory Commission | Administrative supervision measures were taken to order the Company to correct the violations, and issue warning letters to relevant responsible persons | October 29, 2022 | www.cninfo.com.cn (2022-109) |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
the publication of the 2021semi-annual report in August2021
Description of rectifications
√ Applicable □ Not applicable
The Company attaches great importance to standard operation and high-quality development. After receiving the Decision onAdministrative Supervision Measures (hereinafter, “the Decision”), the Company comprehensively sorted out and analyzed relevantproblems, and made a comprehensive self-inspection on relevant matters, formulated practical and feasible rectification plans, andidentified responsibilities in accordance with the Governance Standards for Listed Companies, the Measures for the Administration ofInformation Disclosure by Listed Companies, the Rules for the Listing of Stocks on the Shenzhen Stock Exchange, the Self-regulatoryGuidelines for Listed Companies on the Shenzhen Stock Exchange No. 1 - Standard Operation of Companies Listed on the Main Board,and the Accounting Standards for Business Enterprises, as well as other relevant laws, regulations, normative documents, and theArticles of Association, and made the rectifications item by item in strict accordance with the requirements of the Decision. OnDecember 23, 2022, the Company held the 27th meeting of the 7th Board of Directors to review and approve the Proposal on theReporting Rectification according to the ‘Decision on Administrative Supervision Measures’ Issued by the Guangdong Office of ChinaSecurities Regulatory Commission, detailed in the relevant announcements disclosed by the Company on designated media. Thisrectification neither had an impact on the Company’s financial statements for previous years, nor involved any adjustment to thedisclosed financial statements.Other notes: see "Fulfillment of Commitments" under Part VI of this report for details.XIII. Credit Quality of the Company as well as its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XIV. Major Related-Party Transactions
1. Continuing Related-Party Transactions
During the Reporting Period, the Company’s daily related-party transactions is found in the related announcements disclosed onwww.cninfo.com.cn.
2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ Applicable √ Not applicable
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No related-party transactions regarding significant joint investments in third parties which occurred during the Company’s ReportingPeriod.
4. Amounts Due to and from Related Parties
√ Applicable □ Not applicable
Indicate whether there were any amounts due to and from related parties for non-operating purposes.
√ Yes □ No
Amounts receivable due to related parties
| Related parties | Relationship with the Company | Source | Capital occupation for non- | Beginning balance (RMB’0,00 | Amount of new grants in current | Amount of recovered grants in | Coupon rate | Interest in current period | Ending balance (RMB’0,000 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| operating purposes or not | 0) | period (RMB’0,000) | current period (RMB’0,000) | (RMB’0,000) | ) | ||||
| TCL Industrial Holdings Co., Ltd. | Related corporation | Sale of equity investments | No | 126,029 | 96,000 | 174,989 | 0.00% | 0 | 47,040 |
| The Influence of Amounts Due to Related Parties on the Company’s Operating Results and Financial Status | 1. The Company sold 100% equity of Guangzhou Financial Development Service Center to TCL Industries Holdings Inc., in order to seize the opportunity in industrial development, further optimize the business structure, and focus resources on the development of the main business in line with the national policy guidance, and based on the demands of the Company’s announced financing projects. According to the agreement signed by both parties, TCL Industries Holdings Inc. shall pay 51% of the equity transfer price to the Company within 40 days from the effective date of the agreement. The remaining 49% of the equity transfer price will be paid within two years from the effective date of the agreement. Refer to the Announcement on the Disposal of Equity Interests in Guangzhou Financial and the Related-party Transactions disclosed by the Company on www.cninfo.com.cn dated May 22, 2021. 2. The Company sold 100% held equity of Chongqing Zhongxin Rongxin to TCL Industries Holdings Inc. in order to further optimize its business structure and focus resources on the development of its primary high-tech business in line with the government policy guidance and in accordance with the needs of the Company’s announced financing projects. According to the agreement signed by both parties, TCL Industries Holdings Inc. shall pay 51% of the equity transfer price to the Company before June 30, 2022. The remaining equity transfer price will be paid before June 30, 2023. Refer to the Announcement on the Disposal of Equity Interests in Partnership Enterprise and the Related-Party Transactions disclosed by the Company on www.cninfo.com.cn dated June 27, 2022. | ||||||||
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
6. Transactions Between the Financial Company Controlled by the Company and Related Companies
√ Applicable □ Not applicable
Deposits
| Related parties | Relationship with the Company | Daily deposit ceiling (RMB’0,000) | Range of interest | Beginning balance (RMB’0,000) | Amount incurred in the current period | Ending balance (RMB’0,000) | |
| Total deposit amount in current period (RMB’0,000) | Total withdrawal amount in current period (RMB’0,000) | ||||||
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | 600,000.00 | 0.01-1.83% | 2,127.79 | 626,195.69 | 594,137.27 | 34,186.2 |
Loans
| Related | Relationship | Loan limit | Range of | Beginning | Amount incurred in the | Ending |
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| parties | with the Company | (RMB’0,000) | interest | balance (RMB’0,000) | current period | balance (RMB’0,000) | |
| Total loan amount in current period (RMB’0,000) | Total repayment amount in current period (RMB’0,000) | ||||||
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | The balance of comprehensive credit on any one day shall not exceed RMB6 billion (including loans, notes discounting, and notes acceptance) | _ | _ | _ | _ | _ |
Credit or other financial business
7. Other Major Related-Party Transactions
| Title of announcement | Date of disclosure | Website for disclosure |
| Announcement on the Subscription of Convertible Bonds of Maxeon Solar Technologies, Ltd. by a Controlling Subsidiary TCL Zhonghuan and the Related-Party Transaction | August 13, 2022 | www.cninfo.com.cn |
| Announcement on the Disposal of Equity Interests in Partnership Enterprises and the Related-Party Transaction | June 27, 2022 | |
| Announcement on the Expected Continuing Related-Party Transactions for 2022 | April 28, 2022 | |
| Announcement on the Launch of Accounts Receivable Factoring and the Related-party Transaction | April 28, 2022 | |
| Announcement on the Related-party Transactions with Shenzhen Jucai Supply Chain Technology Co., Ltd. in 2022 | April 28, 2022 | |
| Announcement of TCL Technology Group Finance Co., Ltd. on Continuing to Provide Financial Services to Related | April 28, 2022 |
Related parties
| Related parties | Relationship with the Company | Business type | Total line of credit (RMB’0,000) | Ending balance (RMB’0,000) |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | Credit granting (bill discount) | The balance of comprehensive credit on any one day shall not exceed RMB6 billion (including loans, notes discounting, and notes acceptance) | 36,153.16 |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | Credit granting (bill acceptance) | 27,566.97 |
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| Parties and Renewing the Financial Service Agreement | |
| Announcement on Progress of Additional Placement and Share Issue in Subsidiaries and the Related-Party Transaction | March 22, 2022 |
| Announcement on Additional Placement and Share Issue in Subsidiaries and the Related-Party Transaction | January 24, 2022 |
XV. Major Contracts and Execution Thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
(2) Contracting
□ Applicable √ Not applicable
(3) Leases
□ Applicable √ Not applicable
2. Major Guarantees
√ Applicable □ Not applicable
Unit: RMB'0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counterguarantee (if any) | Term of guarantee | Expired or not | Guarantee for related parties or not |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | April 28, 2022 | 327,138 | August 29, 2019 | 10,997 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | 3.6-5 years | No | Yes |
| TCL King Electrical Appliances (Chengdu) Co., Ltd. | April 28, 2022 | 51,653 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| Huizhou TCL Mobile Communication Co., Ltd. | April 28, 2022 | 212,507 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| TCL Mobile Communication (HK) Company Limited | April 28, 2022 | 29,225 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| TCL Home Appliances (Hefei) Co., Ltd. | April 28, 2022 | 68,280 | March 2, 2021 | 3,800 | Joint liability | / | 1-2 years | No | Yes | |
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| guarantee | ||||||||||
| TCL Home Appliances (Zhongshan) Co., Ltd. | April 28, 2022 | 4,929 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | April 28, 2022 | 80,991 | March 13, 2020 | 31,617 | Joint liability guarantee | / | 0.37-3 years | No | Yes | |
| TCL Air Conditioner (Wuhan) Co., Ltd. | April 28, 2022 | 13,480 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | April 28, 2022 | 31,749 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | April 28, 2022 | 2,522 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| TCL Home Appliances (Huizhou) Co., Ltd. | April 28, 2022 | 10,000 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | April 28, 2022 | 5,488 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| Tonly Technology Co., Ltd. | April 28, 2022 | 39,496 | April 23, 2021 | 34,448 | Joint liability guarantee | / | 3 years | No | Yes | |
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | April 28, 2022 | 1,034 | - | - | Joint liability guarantee | / | - | Yes | Yes | |
| SHIFENDAOJIA Online Service Co., Ltd. | April 28, 2022 | 77 | - | - | Joint liability guarantee | / | - | Yes | Yes |
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| Guangzhou TCL Science and Technology Development Co., Ltd. | April 28, 2022 | 84,700 | December 27, 2018 | 28,800 | Joint liability guarantee | / | 13 years | No | Yes | |
| TCL Industries Holdings (HK) Limited | April 28, 2022 | 514,629 | December 21, 2021 | 139,284 | Joint liability guarantee | / | 3 years | No | Yes | |
| Techigh Circuit Technology (Huizhou) Co., Ltd. | April 28, 2022 | 499 | - | - | Joint liability guarantee | / | - | Yes | No | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | April 28, 2022 | 40,000 | - | - | Joint liability guarantee | / | With counter- guarantee | - | Yes | No |
| Qihang Import&Export Limited | April 28, 2022 | 6,000 | - | - | Joint liability guarantee | / | With counter- guarantee | - | Yes | No |
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | April 28, 2022 | 110,000 | August 22, 2022 | 20,541 | Joint liability guarantee | / | With counter- guarantee | 50 days-1 year | No | No |
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | April 28, 2022 | 80,000 | April 28, 2020 | 30,378 | Joint liability guarantee | / | Guarantee in proportion to shareholding percentage | 9 years | No | No |
| Qihang International Import & Export Limited | April 28, 2022 | 50,000 | January 1, 2022 | 13,928 | Joint liability guarantee | / | With counter- guarantee | 1 year | No | No |
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | May 22, 2021 | 45,500 | - | - | Joint liability guarantee | / | With counter- guarantee | - | Yes | Yes |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Total approved line for such guarantees in Reporting Period (A1) | 1,764,397 | Total actual amount of such guarantees in Reporting Period (A2) | 74,264 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | 1,809,897 | Total actual balance of such guarantees at end of Reporting Period (A4) | 313,793 | |||||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counterguarantee (if any) | Term of guarantee | Expired or not | Guarantee for related parties or not |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | April 28, 2022 | 1,600,000 | July 26, 2019 | 574,124 | Joint liability guarantee | / | / | 20 days-3 years | No | No |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | April 28, 2022 | 1,550,000 | April 28, 2018 | 1,126,598 | Joint liability guarantee | / | / | 1 month - 8 years | No | No |
| TCL China Star Optoelectronics Technology Co., Ltd. | April 28, 2022 | 679,500 | February 17, 2022 | 137,116 | Joint liability guarantee | / | / | 4 days-10 years | No | No |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | April 28, 2022 | 2,000,000 | December 22, 2017 | 1,051,156 | Joint liability guarantee | / | / | 3 months - 8 years | No | No |
| Huizhou China Star Optoelectronics Technology Co., Ltd. | April 28, 2022 | 1,150,000 | January 1, 2021 | 710,362 | Joint liability guarantee | / | / | 3 months - 8 years | No | No |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| China Star Optoelectronics International (HK) Limited | April 28, 2022 | 500,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | April 28, 2022 | 150,000 | November 19, 2021 | 41,550 | Joint liability guarantee | / | / | 43 days-7.39 years | No | No |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | April 28, 2022 | 50,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| Guangdong Juhua Printed Display Technology Co., Ltd. | April 28, 2022 | 40,000 | May 31, 2022 | 1,490 | Joint liability guarantee | / | / | 240 days - 15 months | No | No |
| TCL Technology Group Finance Co., Ltd. | April 28, 2022 | 300,000 | January 25, 2022 | 60,974 | Joint liability guarantee | / | / | 95-409 days | No | No |
| Highly Information Industry Co., Ltd. | April 28, 2022 | 480,000 | January 17, 2022 | 464,880 | Joint liability guarantee | / | / | 1 day-2.5 years | No | No |
| Beijing Hecheng Nuoxin Technology Co., Ltd. | April 28, 2022 | 10,000 | September 27, 2022 | 5,000 | Joint liability guarantee | / | / | 1 year | No | No |
| Beijing Lingyun Data Technology Co., Ltd. | April 28, 2022 | 131,500 | June 14, 2022 | 70,278 | Joint liability guarantee | / | / | 86-364 days | No | No |
| Beijing Sunpiestore Technology Co., Ltd. | April 28, 2022 | 130,000 | July 19, 2022 | 97,000 | Joint liability guarantee | / | / | 1 year | No | No |
| Shaanxi Titi Electronic Technology Co., Ltd. | April 28, 2022 | 10,000 | September 27, 2022 | 3,000 | Joint liability guarantee | / | / | 1 year | No | No |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| TCL Technology Park (Huizhou) Co., Ltd. | April 28, 2022 | 172,600 | April 24, 2020 | 99,400 | Joint liability guarantee | / | / | 1-10 years | No | No |
| TCL Technology Investments Limited | April 28, 2022 | 400,000 | July 14, 2020 | 208,926 | Joint liability guarantee | / | / | 5 years | No | No |
| Ningbo TCL Equity Investment Ltd. | April 28, 2022 | 50,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| TCL Moka International Limited | April 28, 2022 | 176,000 | May 20, 2022 | 43,061 | Joint liability guarantee | / | / | 1 year | No | No |
| Huizhou Moka Technology Development Co., Ltd. | April 28, 2022 | 55,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| Moka Technology (Guangdong) Co., Ltd. | April 28, 2022 | 700,000 | June 29, 2022 | 85,566 | Joint liability guarantee | / | / | 1-8 months | No | No |
| Guangzhou China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | April 28, 2022 | 1,750,000 | March 4, 2022 | 1,006,692 | Joint liability guarantee | / | / | 1-8 years | No | No |
| Suzhou China Star Optoelectronics Display Co., Ltd. | April 28, 2022 | 265,000 | August 30, 2022 | 16,444 | Joint liability guarantee | / | / | 10 years | No | No |
| Suzhou China Star Optoelectronics Technology Co., Ltd. | April 28, 2022 | 57,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| Highly (Tianjin) Technology Co., Ltd. | April 28, 2022 | 50,000 | July 9, 2022 | 97,207 | Joint liability guarantee | / | / | 40-61 days | No | No |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Highly (Tianjin) E-Commerce Co., Ltd. | April 28, 2022 | 5,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| Qingdao Blue Business Consulting Co., Ltd. | April 28, 2022 | 5,000 | July 27, 2022 | 395 | Joint liability guarantee | / | / | 242 days | No | No |
| Tianjin Printronics Circuit Corporation | April 28, 2022 | 100,000 | October 12, 2022 | 1,521 | Joint liability guarantee | / | / | 8 years | No | No |
| TCL Technology Group (Tianjin) Co., Ltd.* | April 28, 2022 | 200,000 | August 31, 2022 | 90,000 | Joint liability guarantee | / | / | 5 years | No | No |
| Tianjin TiTi Yunchuang Technology Co., Ltd.* | April 28, 2022 | 5,000 | September 27, 2022 | 5,000 | Joint liability guarantee | / | / | 1 year | No | No |
| Tianjin Xincheng Pilot Technology Co., Ltd.* | April 28, 2022 | 5,000 | September 27, 2022 | 5,000 | Joint liability guarantee | / | / | 1 year | No | No |
| Tianjin WanfangNuoxin Technology Co., Ltd. * | April 28, 2022 | 5,000 | September 27, 2022 | 5,000 | Joint liability guarantee | / | / | 1 year | No | No |
| Total approved line for such guarantees in the Reporting Period (B1) | 12,781,600 | Total actual amount of such guarantees in the Reporting Period (B2) | 3,880,593 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 12,781,600 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 6,007,740 | |||||||
| Guarantees provided between subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counterguarantee (if any) | Term of guarantee | Expired or not | Guarantee for related |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| announcement | parties or not | |||||||||
| Huhehaote Huanju New Energy Development Co., Ltd.* | November 26, 2014 | 19,529 | December 11, 2015 | 19,529 | Joint liability guarantee | / | / | 9.5 years | No | No |
| Zhonghuan Energy (Inner Mongolia) Co., Ltd. | June 24, 2017 | 11,240 | July 21, 2017 | 11,240 | Joint liability guarantee | / | / | 15 years | No | No |
| Otog Banner Huanju New Energy Co., Ltd. | June 24, 2017 | 18,324 | August 30, 2017 | 18,324 | Joint liability guarantee | / | / | 10 years | No | No |
| Qinhuangdao Tianhui Solar Energy Co., Ltd. | November 11, 2017 September 6, 2018 | 21,279 | January 19, 2018 | 21,279 | Joint liability guarantee | / | / | 10-12 years | No | No |
| Guyuan Shengju New Energy Co., Ltd. | September 6, 2018 | 9,369 | October 8, 2018 | 9,369 | Joint liability guarantee | / | / | 11 years | No | No |
| Zhangjiakou Shengyuan New Energy Co., Ltd. | September 6, 2018 | 12,840 | October 8, 2018 | 12,840 | Joint liability guarantee | / | / | 11 years | No | No |
| Zhonghuan Hong Kong Holding Limited | March 22, 2021 | 65,000 | March 26, 2021 | 50,000 | Joint liability guarantee | / | / | 3 years | No | No |
| Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. | March 22, 2021 May 26, 2022 | 582,497 | April 30, 2021 | 463,497 | Joint liability guarantee | / | / | 7 years | No | No |
| Huansheng Solar (Jiangsu) Co., Ltd. | March 22, 2021 | 48,000 | April 1, 2021 | 48,000 | Joint liability guarantee | / | / | 5 years | No | No |
| Tianjin Huanzhi New Energy Technology Co., Ltd. | January 21, 2021 | 171,500 | July 20, 2021 | 45,283 | Joint liability guarantee | / | / | 7 years | No | No |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Ningxia Zhonghuan Solar Material Co., Ltd. | January 23, 2022 | 748,000 | May 30, 2022 | 470,000 | Joint liability guarantee | / | / | 7 years | No | No |
| Wuxi Zhonghuan Applied Materials Co., Ltd. | May 26, 2022 | 190,000 | June 30, 2022 | 101,589 | Joint liability guarantee | / | / | 7 years | No | No |
| Huansheng New Energy (Jiangsu) Co., Ltd. | May 26, 2022 | 55,000 | September 30, 2022 | 31,822 | Joint liability guarantee | / | / | 5 years | No | No |
| Tianjin Huanou New Energy Technology Co., Ltd | May 26, 2022 | 115,000 | September 28, 2022 | 26,000 | Joint liability guarantee | / | / | 7 years | No | No |
| Subsidiaries within the consolidated scope (retained) | May 26, 2022 | 450,000 | - | - | Joint liability guarantee | / | / | - | No | No |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd.* | April 28, 2022 | 2,612,500 | April 28, 2018 | 1,062,350 | Joint liability guarantee | / | / | 8 years | No | No |
| PANEL OPTODISPLAY TECHNOLOGY PRIVATE LIMITED | April 28, 2022 | 8,200 | - | - | Joint liability guarantee | / | / | - | No | No |
| TCL Moka International Limited | April 28, 2022 | 214,500 | April 29, 2022 | 26,046 | Joint liability guarantee | / | / | 26-87 days | No | No |
| China Star Optoelectronics International (HK) Limited | April 28, 2022 | 500,000 | November 24, 2020 | 87,058 | Joint liability guarantee | / | / | 3 years | No | No |
| Total approved line for such guarantees in the Reporting Period (C1) | 5,083,200 | Total actual amount of such guarantees in the | 898,926 | |||||||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Reporting Period (C2) | |||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 5,852,779 | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 2,504,227 |
| Total guarantee amount (total of the three kinds of guarantees above) | |||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 19,629,197 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 4,853,782 |
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 20,444,276 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 8,825,760 |
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 66.79% | ||
| Of which: | |||
| Balance of guarantees provided for shareholders, the actual controller and their related parties (D) | 248,946 | ||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 2,769,974 | ||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 2,218,823 | ||
| Total of the three above amounts (D+E+F) | 2,218,823 | ||
| Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees (if any) | - | ||
| Guarantees provided in breach of prescribed procedures (if any) | - | ||
Note: (1) The guarantee period in the above table is the occurrence period of the principal debt. The actual guarantee is valid fortwo or three years from the expiration date of the principal debt, which is subject to the single contract.
(2) During the Reporting Period, the Company adjusts the guarantee limit to its controlling subsidiaries based on their demands.The details are outlined as follows:
① The guarantee limit amounting to RMB2 billion offered to Suzhou China Star Optoelectronics Technology Co., Ltd. wastransferred to TCL Technology Group (Tianjin) Co., Limited, another controlling subsidiary.
②The guarantee limit amounting to RMB50 million offered to Beijing Sunpiestore Technology Co., Ltd. was transferred toTianjin Wanfang Nuoxin Technology Co., Ltd., Tianjin TiTi Yunchuang Technology Co., Ltd., and Tianjin Xincheng Pilot Technology
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Co., Ltd., all of which are wholly-owned subsidiaries of the Company.
The Company has performed internal review procedures for the above-mentioned guarantee transfers, finding that they did notviolate the legal provisions on listed companies, and complied with the relevant requirements of the Proposal on Providing Guaranteesfor Subsidiaries in 2022 reviewed and approved at the 2021 annual shareholders’ meeting held on May 19, 2022.
(3) In the table above, Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd., a subsidiary controlledby the Company, was jointly guaranteed by the Company and its subsidiary TCL China Star Optoelectronics Technology Co., Ltd. inan external syndicated loan, in which the Company provided certain percentage of guarantee, while TCL China Star OptoelectronicsTechnology Co., Ltd. provided full guarantee.
(4) As at the end of the Reporting Period, the debt portion under joint guarantee amounted to RMB10.6234955 billion. The jointguarantee has been filled in the “Company’s Guarantee for Subsidiaries” and “Guarantee Among Subsidiaries”, respectively. The “totalguarantee accrued at the end of the reporting period” and “total balance of guarantee accrued at the end of the Reporting Period”including the debt portion under the joint guarantee amounted to RMB10.6234955 billion.
In the “guarantee among subsidiaries”, the guaranteed entity and Huhehaote Huanju New Energy Development Co., Ltd. wereprovided with the guarantee under joint and several liability by TCL Technology Group (Tianjin) Co., Ltd. and TCL Zhonghuan NewEnergy Technology Co., Ltd., both of which were subsidiaries. As at the end of the Reporting Period, the debt portion under jointguarantee amounted to RMB195.29 million.
3. Entrusted Cash Asset Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Impairment allowance for unrecovered overdue amount of wealth management products |
| Bank’s wealth management product | Self-funded | 628,075.00 | 856,786.41 | - | - |
| Securities firm’s wealth management product | Self-funded | 236,962.99 | 236,962.99 | - | - |
| Trust plan | Self-funded | 110,000.00 | 80,000.00 | - | - |
| Other | Self-funded | 37,969.76 | 37,969.76 | - | - |
| Total | 1,013,007.75 | 1,211,719.16 | - | - | |
High-risk wealth management transactions with a significant single amount liquidity
□ Applicable √ Not applicable
(2) Loan Entrusted for Wealth Management
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
XVI. Other Significant Events
□ Applicable √ Not applicable
There are no other significant events that need to be explained for the Reporting Period.XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
| Before change | Increase/decrease in the Reporting Period (+/-) | After change | |||||||
| Shares | Percentage | New issues | Bonus shares | Shares converted from capital reserve | Others | Subtotal | Shares | Percentage | |
| I. Restricted Shares | 612,110,488 | 4.36% | 2,806,128,484 | 0 | 0 | 1,981,995 | 2,808,110,479 | 3,420,220,967 | 20.03% |
| 1. Shares held by state-owned legal entities | 0 | 0.00% | 877,192,981 | 0 | 0 | 0 | 877,192,981 | 877,192,981 | 5.14% |
| 2. Shares held by other domestic investors | 611,718,990 | 4.36% | 295,614,034 | 0 | 0 | 1,618,932 | 297,232,966 | 908,951,956 | 5.33% |
| Among which: Shares held by domestic legal entities | 0 | 0.00% | 187,134,502 | 0 | 0 | 0 | 187,134,502 | 187,134,502 | 1.10% |
| Shares held by domestic natural persons | 611,718,990 | 4.36% | 108,479,532 | 0 | 0 | 1,618,932 | 110,098,464 | 721,817,454 | 4.23% |
| 3. Shares held by foreign investors | 391,498 | 0.003% | 196,783,625 | 0 | 0 | 363,063 | 197,146,688 | 197,538,186 | 1.15% |
| Among which: Shares held by foreign legal entities | 0 | 0.00% | 196,783,625 | 0 | 0 | 0 | 196,783,625 | 196,783,625 | 1.15% |
| Shares held by foreign natural persons | 391,498 | 0.003% | 0 | 0 | 0 | 363,063 | 363,063 | 754,561 | 0.004% |
| 4. Fund, wealth management product, etc. | 0 | 0.00% | 1,436,537,844 | 0 | 0 | 0 | 1,436,537,844 | 1,436,537,844 | 8.41% |
| II. Non-restricted shares | 13,418,531,933 | 95.64% | 235,120,702 | 0 | 0 | -1,981,995 | 233,138,707 | 13,651,670,640 | 79.97% |
| 1. RMB-denominated ordinary stock | 13,418,531,933 | 95.64% | 235,120,702 | 0 | 0 | -1,981,995 | 233,138,707 | 13,651,670,640 | 79.97% |
| III. Total shares | 14,030,642,421 | 100.00% | 3,041,249,186 | 0 | 0 | 0 | 3,041,249,186 | 17,071,891,607 | 100.00% |
Reasons for changes in shares
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
√ Applicable □ Not applicable
1. During the Reporting Period, locked-up shares held by senior management increased by 1,981,995 shares, as non-restricted sharesdecreased by the same amount;
2. During the Reporting Period, part of the convertible corporate bonds “TCL Private Convertible 2” issued by the Company wereconverted to shares, among which 235,120,702 shares were newly added from conversion of the bonds by investors, resulting in anincrease of 235,120,702 shares of the Company without restrictions on sale.
3. During the Reporting Period, the Company issued 2,806,128,484 RMB-denominated ordinary stock in non-public offering, resultingin an increase of 2,806,128,484 shares of the Company with restrictions on sale.Approval of changes in shares
√ Applicable □ Not applicable
Upon approval by the China Securities Regulatory Commission under the document Zheng Jian Xu Ke [2020] No. 2521 and withthe consent of the Shenzhen Stock Exchange, the Company issued 26,000,000 convertible corporate bonds to specific investors onNovember 30, 2020, which were converted to 235,120,702 new shares by the investors. The total share capital of the Company wasincreased from 14,030,642,421 shares to 14,265,763,123 shares.Upon approval by the China Securities Regulatory Commission under the document Zheng Jian Xu Ke [2022] No. 1658, theCompany issued a non-public offering of 2,806,128,484 RMB-denominated ordinary stock to specific investors, resulting in an increaseof 2,806,128,484 shares of the Company’s total share capital, which increased from 14,265,763,123 shares to 17,071,891,607 shares.Transfer of share ownership
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’sordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively
√ Applicable □ Not applicable
| Item | January - December 2022 |
| Basic earnings per share (RMB/share) | 0.0191 |
| Diluted earnings per share (RMB/share) | 0.0185 |
| Item | December 31, 2022 |
| Net profit attributable to ordinary shareholders of the Company (RMB) | 2.97 |
Other information that the Company considers necessary or is required by the securities regulator to be disclosed
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Name of Shareholder | Number of restricted shares at period-begin | Number of increased restricted shares of the period | Number of released restricted shares of the period | Number of restricted shares at period-end | Reason for restriction | Date of restriction release |
| CITIC Securities Co., Ltd. | 0 | 280,701,754 | 0 | 280,701,754 | The shares were within the lockup period of non-public | The restriction on the sale of new shares will be released after 6 months from the |
| Guotai Junan Securities Co., Ltd. | 0 | 228,070,175 | 0 | 228,070,175 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Everbright Securities Company Limited | 0 | 204,678,362 | 0 | 204,678,362 | offering (shares of the Company subscribed by investors in non-public offering shall not be transferred within 6 months from the date of listing) | date of listing (December 22, 2022) |
| UBS AG | 0 | 196,783,625 | 0 | 196,783,625 | ||
| GF Securities Co., Ltd. | 0 | 187,134,502 | 0 | 187,134,502 | ||
| Haitong Securities Co., Ltd. | 0 | 163,742,690 | 0 | 163,742,690 | ||
| Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No. 2 Zhixin Fund | 0 | 131,578,947 | 0 | 131,578,947 | ||
| China Life Asset Management - Bank of China - China Life Asset - PIPE2020 Insurance Asset Management Product | 0 | 116,959,064 | 0 | 116,959,064 | ||
| Shen Ruijin | 0 | 108,479,532 | 0 | 108,479,532 | ||
| Huaxia Life Insurance Co., Ltd. - Self-owned funds | 0 | 87,719,298 | 0 | 87,719,298 | ||
| Other shareholders participating in the non-public offering of the Company | 0 | 1,100,280,535 | 0 | 1,100,280,535 | ||
| Other | 612,110,488 | 1,981,995 | 0 | 614,092,483 | Locked-up shares of senior management | Not applicable |
| Total | 612,110,488 | 2,808,110,479 | 0 | 3,420,220,967 | -- | -- |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
II. Issuance and Listing of Securities
1. Issuance of Securities (Preferred Shares Exclusive) in the Reporting Period
√ Applicable □ Not applicable
| Name of stock and its derivative securities | Issue date | Issue price (or interest rate) | Issued number | Listing date | Number approved for public trading | Termination date of transaction | Index to disclosed information | Date of disclosure |
| Shares | ||||||||
| Conversion of directional convertible bonds to shares | November 2022 | RMB 4.10/share | 235,120,702 | November 2022 | 235,120,702 | Not applicable | Please refer to www.cninfo.com.cn | November 24, 2022 |
| Non-public offering of A-shares | November 28, 2022 | RMB 3.42/share | 2,806,128,484 | December 22, 2022 | 2,806,128,484 | Not applicable | December 16, 2022, December 21, 2022 | |
| Convertible corporate bonds, convertible corporate bonds with attached warrants, corporate bonds | ||||||||
| Not applicable | ||||||||
| Other derivative securities | ||||||||
| Not applicable | ||||||||
Notes on Issuance of Securities (Preferred Shares Exclusive) in the Reporting PeriodUpon approval by the China Securities Regulatory Commission under the document Zheng Jian Xu Ke [2020] No. 2521 and withthe consent of the Shenzhen Stock Exchange, the Company issued 26,000,000 convertible corporate bonds to specific investors onNovember 30, 2020, which were converted to 235,120,702 new shares by the investors. The total share capital of the Company wasincreased from 14,030,642,421 shares to 14,265,763,123 shares.Upon approval by the China Securities Regulatory Commission under the document Zheng Jian Xu Ke [2022] No. 1658, theCompany issued a non-public offering of 2,806,128,484 RMB-denominated ordinary stock to specific investors, resulting in an increaseof 2,806,128,484 shares of the Company’s total share capital, which increased from 14,265,763,123 shares to 17,071,891,607 shares.
2. Changes in the Total Number of Shares, Shareholder Structure, and the Structure of Assets and Liabilities
√ Applicable □ Not applicable
(1) For Changes in the total number of shares and shareholder structure, see “I. Changes in Shares” in this part.
(2) The total assets and net assets increased during the Reporting Period, as some of the convertible corporate bonds “TCL PrivateConvertible 2” issued by the Company were converted to shares by the investors and the funds raised through the non-public offeringof shares were received.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III. Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: share
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Total number of ordinary shareholders by the end of the reporting period | 731,411 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 698,567 | Total number of preference shareholders with resumed voting rights by the end of the reporting period (if any) | 0 | Number of preference shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 | |
| Shareholdings of ordinary shareholders with more than 5% or the top 10 shareholders of ordinary shares | ||||||||
| Name of Shareholder | Nature of Shareholder | Shareholding percentage (%) | Number of shares held at the period-end | Increase/decrease during the Reporting Period | Number of restricted ordinary shares held | Number of non-restricted ordinary shares held | Shares in pledge, marked or frozen | |
| Status | Shares | |||||||
| Li Dongsheng and his acting-in-concert party | Domestic individual/Domestic general legal entity | 6.79% | 1,159,085,019 | 610,545,821 | 548,539,198 | Put in pledge by Li Dongsheng | 143,665,800 | |
| Put in pledge by Jiutian Liancheng | 253,620,000 | |||||||
| Huizhou Investment Holding Co., Ltd. and its acting-in-concert parties | State-owned legal entity | 4.23% | 722,144,427 | 0 | 722,144,427 | |||
| Hong Kong Securities Clearing Company Ltd. | Foreign legal entity | 2.28% | 388,498,477 | 0 | 388,498,477 | |||
| China Securities Finance Corporation Limited | Domestic general legal entity | 2.19% | 373,231,553 | 0 | 373,231,553 | |||
| CITIC Securities Co., Ltd. | State-owned legal entity | 1.71% | 292,681,754 | 280,701,754 | 11,980,000 | |||
| Guotai Junan Securities Co., Ltd. | State-owned legal entity | 1.34% | 228,563,475 | 228,070,175 | 493,300 | |||
| Everbright Securities Company Limited | State-owned legal entity | 1.20% | 205,004,054 | 204,678,362 | 325,692 | |||
| UBS AG | Foreign legal entity | 1.15% | 196,842,825 | 196,783,625 | 59,200 | |||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| GF Securities Co., Ltd. | Domestic general legal entity | 1.12% | 190,658,402 | 187,134,502 | 3,523,900 | |||
| Haitong Securities Co., Ltd. | State-owned legal entity | 0.96% | 163,749,690 | 163,742,690 | 7,000 | |||
| Strategic investor or general legal entity becoming top-10 ordinary shareholders due to private placement of new shares (if any) | Not applicable | |||||||
| Note on the above shareholders’ associations or concerted actions | Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding 1,159,085,019 shares in total and becoming the largest shareholder of the Company. Huizhou Investment Development Co., Ltd. and Huizhou Investment Holding Co., Ltd. became persons acting in concert due to equity relations. As at the end of the Reporting Period, there were 4,587 shares registered by Huizhou Investment Development Co., Ltd. with the China Securities Depository and Clearing Corporation Limited and 722,139,840 shares registered by Huizhou Investment Holding Co., Ltd. with the China Securities Depository and Clearing Corporation Limited | |||||||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | Not applicable | |||||||
| Explanation on repurchase accounts among top 10 shareholders (if any) | Not applicable | |||||||
| Top 10 non-restricted ordinary shareholders | ||||||||
| Name of Shareholder | Number of non-restricted ordinaery shares held at the end of the reporting period | Type of shares | ||||||
| Type | Shares | |||||||
| Huizhou Investment Holding Co., Ltd. and its acting-in-concert parties | 722,144,427 | RMB-denominated ordinary shares | 722,144,427 | |||||
| Li Dongsheng and his acting-in-concert party | 548,539,198 | RMB-denominated ordinary shares | 548,539,198 | |||||
| Hong Kong Securities Clearing Company Ltd. | 388,498,477 | RMB-denominated ordinary shares | 388,498,477 | |||||
| China Securities Finance Corporation Limited | 373,231,553 | RMB-denominated ordinary shares | 373,231,553 | |||||
| Wuhan Optics Valley Industrial Investment Co., Ltd. | 128,312,396 | RMB-denominated ordinary shares | 128,312,396 | |||||
| TCL Technology Group Corporation - 2021 to 2023 Employee Stock Ownership Plan (Phase I) | 113,143,154 | RMB-denominated ordinary shares | 113,143,154 | |||||
| National Social Security Fund 113 | 107,093,876 | RMB- | 107,093,876 | |||||
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Portfolio | denominated ordinary shares | ||
| TCL Technology Group Corporation - 2021 to 2023 Employee Stock Ownership Plan (Phase II) | 106,484,364 | RMB-denominated ordinary shares | 106,484,364 |
| Sinatay Life Insurance Co., Ltd. - Conventional Product | 104,190,172 | RMB-denominated ordinary shares | 104,190,172 |
| ICBC Credit Suisse Fund - Agricultural Bank of China - ICBC Credit Suisse China Securities Financial Asset Management Plan | 74,761,500 | RMB-denominated ordinary shares | 74,761,500 |
| Related or acting-in-concert parties among top 10 non-restricted outstanding shareholders, as well as between top 10 non-restricted outstanding shareholders and top 10 shareholders | Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding 1,159,085,019 shares in total and becoming the largest shareholder of the Company. Huizhou Investment Development Co., Ltd. and Huizhou Investment Holding Co., Ltd. became persons acting in concert due to equity relations. As at the end of the Reporting Period, there were 4,587 shares registered by Huizhou Investment Development Co., Ltd. with the China Securities Depository and Clearing Corporation Limited and 722,139,840 shares registered by Huizhou Investment Holding Co., Ltd. with the China Securities Depository and Clearing Corporation Limited | ||
| Explanation for the top 10 ordinary shareholders participating in securities margin trading (if any) | As at the end of the Reporting Period, a shareholder of the Company, i.e., Huizhou Investment Holding Co., Ltd. and its person acting in concert, i.e., Huizhou Investment Development Co., Ltd., decreased the number of shares by 66,500,000 shares due to their participation in the refinancing business; the shareholder Wuhan Optical Valley Industrial Investment Co., Ltd. decreased the number of shares by 430,240,000 shares due to its participation in the refinancing business. | ||
Indicate whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conductedany promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. The Company’s Controlling Shareholders
Explanation of The Company’s Absence of Controlling ShareholdersMr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting inconcert by signing the Agreement on Concerted Action, holding 1,159,085,019 shares in total and becoming the largest shareholder ofthe Company.As per Article 216 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liabilitycompany’s total capital or over 50% of a joint stock company’s total share capital; or, despite the ownership of less than 50% of alimited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in theresolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to his interestin the limited liability company’s total capital or the joint stock company’s total number of shares.According to the definition above, the Company has no controlling shareholder.Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
3. Actual Controller and Its Acting-in-Concert Parties
Explanation of The Company’s Absence of Actual ControllerThe “actual controller” refers to an entity which is not a shareholder of a company but actually controls the company behaviorsthrough investment relationship, agreement or other arrangements. According to the definition above, the Company has no actualcontroller.
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Whether there is any shareholder holding more than 10% of the shares at the ultimate control level of the Company
□ Yes √No
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
The actual controller controls the Company through trust or other asset management methods
□ Applicable √ Not applicable
4. The cumulative number pledged shares of the Company’s controlling shareholder or the largestshareholder and its acting-in-concert parties account for 80% of the company shares held by them.
□ Applicable √ Not applicable
5. Other Corporate Shareholders with a Holding Percentage over 10%
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV. Specific Implementation of Share Repurchase During the Reporting Period
Progress on any share repurchase
√ Applicable □ Not applicable
| Disclosure time of the plan | Number of shares to be repurchased (shares) | Proportion to total share capital | Amount of shares to be repurchased | Proposed repurchase period | Purpose of share repurchase | Number of repurchased shares (shares) | The proportion of repurchased shares to the underlying shares involved in the equity incentive plan (if any) |
| March 21, 2022 | With a total repurchase amount of RMB450 million to 550 million at a repurchase price of no more than RMB8.00 per share (inclusive), it is estimated that the number of shares that can be | Based on the approximately 68.75 million of shares that can be repurchased, the proportion of the repurchased shares to the Company’s total share capital | The total amount of repurchase shall be no less than RMB450 million (inclusive) and no more than RMB550 million | Within 12 months after the 16th Meeting of the Company’s 7th Board of Directors deliberates and approves this share | For employee stock ownership plans or equity incentives | 106,484,364 | - |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| repurchased will be approximately 68.75 million shares based on the upper limit of the total repurchase amount and the upper limit of the share repurchase price | approximately equals to 0.49% | (inclusive) | repurchase plan |
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Part VIII BondsI. Enterprise Bonds
□ Applicable √ Not applicable
No enterprise bonds in the Reporting Period.II. Corporate Bonds
√ Applicable □ Not applicable
1. General Information on Corporate Bonds
Unit: RMB'0,000
| Bond name | Abbr. | Bond code | Date of issuance | Value date | Maturity | Outstanding balance | Coupon rate | Way of principal repayment and interest payment | Place of transaction |
| TCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Tranche 3) | 19TCL03 | 112983 | October 17, 2019 | October 21, 2019 | October 21, 2024 | 44,000 | 2.95% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| TCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Tranche 2) | 19TCL02 | 112938 | July 19, 2019 | July 23, 2019 | July 23, 2024 | 100,000 | 3.05% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| TCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified | 19TCL01 | 112905 | May 17, 2019 | May 20, 2019 | May 20, 2024 | 100,000 | 3.15% | Interest payable annually and principal repayable in full upon | Shenzhen Stock Exchange |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Investors (Tranche 1) | maturity | ||||||||
| TCL Corporation Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Tranche 2) | 18TCL02 | 112747 | August 17, 2018 | August 20, 2018 | August 20, 2023 | 200,000 | 3.55% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| TCL Corporation Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Tranche 1) | 18TCL01 | 112717 | June 5, 2018 | June 6, 2018 | June 6, 2023 | 17,002 | 4.00% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| Investor eligibility (if any) | For qualified investors / For professional investors | ||||||||
| Trading system applicable | Match to trade, click to trade, inquire to trade, bid to trade, negotiate to trade | ||||||||
| Risk of termination of listing and trading (if any) and countermeasures | No | ||||||||
Overdue bonds
□ Applicable √ Not applicable
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
√ Applicable □ Not applicable
In accordance with the provisions of the Prospectus for TCL Technology Group Corporation Corporate Bonds Publicly Offeredin 2019 to Qualified Investors (Tranche 1), the bondholders of 19TCL01 elected to sell back all or part of their 19TCL01 to TCLTechnology Group Corporation during the sell-back registration period (April 19, 2022 to April 25, 2022) at the sell-back price ofRMB100/bond (excluding interest). The coupon rate adjusted from 4.33% to 3.15% two years after the existence period, and the sell-back fund was released on May 20, 2022. According to the data provided by the Shenzhen Branch of China Securities Depository andClearing Corporation Limited, the number of 19TCL01 sold back during the sell-back registration period was 10,000,000, and the sell-back amount was RMB1,000,000,000 (excluding interest). As indicated in the Announcement on Resale Implementation Results, theCompany resold the sold-back bonds from May 23, 2022 to June 20, 2022, and the number of bonds proposed to be resold would beno more than 10,000,000. The number of bonds resold in this tranche was 10,000,000, and the average resale price wasRMB100.2534/bond, and all of which had been resold through manual transfer. Upon the completion of the resales, no bonds pendingfor resales remain, and there are 10,000,000 bonds of 19TCL01 outstanding in depositary.In accordance with the provisions of the Prospectus for TCL Technology Group Corporation Corporate Bonds Publicly Offeredin 2019 to Qualified Investors (Tranche 2), the bondholders of 19TCL02 elected to sell back all or part of their 19TCL02 to TCL
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
Technology Group Corporation during the sell-back registration period (June 27, 2022 to July 1, 2022) at the sell-back price ofRMB100/bond (excluding interest). The coupon rate adjusted from 4.30% to 3.05% two years after the existence period, and the sell-back fund was released on July 25, 2022. According to the data provided by the Shenzhen Branch of China Securities Depository andClearing Corporation Limited, the number of 19TCL02 sold back during the sell-back registration period was 9,800,000, and the sell-back amount was RMB980,000,000 (excluding interest). As indicated in the Announcement on Resale Implementation Results, theCompany resold the sold-back bonds from July 26, 2022 to August 22, 2022, and the number of bonds proposed to be resold would beno more than 9,800,000. The number of bonds resold in this period was 9,800,000, with a net weighted average resale price ofRMB100.0000 per bond. Among them, the number of bonds resold through the “sell-back and resale” column of the Shenzhen StockExchange trading system was 9,800,000. Upon the completion of the resales, no bonds pending for resales remain, and there are10,000,000 bonds of 19TCL01 outstanding in depositary.
In accordance with the provisions of the Prospectus for TCL Technology Group Corporation Corporate Bonds Publicly Offeredin 2019 to Qualified Investors (Tranche 3), the bondholders of 19TCL03 elected to sell back all or part of their 19TCL03 to TCLTechnology Group Corporation during the sell-back registration period (September 16, 2022 to September 22, 2022) at the sell-backprice of RMB100/bond (excluding interest). The coupon rate adjusted from 4.20% to 2.95% two years after the existence period, andthe sell-back fund was released on October 21, 2022. According to the data provided by the Shenzhen Branch of China SecuritiesDepository and Clearing Corporation Limited, the number of 19TCL03 sold back during the sell-back registration period was19,000,000, and the sell-back amount was RMB1,900,000,000 (excluding interest). As indicated in the Announcement on ResaleImplementation Results, the Company resold the sold-back bonds from October 24, 2022 to November 18, 2022 according to relevantregulations, and the number of bonds to be resold would be no more than 19,000,000. The number of bonds resold in this period was3,400,000, with a full weighted average resale price of RMB99.6724 per bond. Among them, the number of bonds resold through the“sell-back and resale” column of the Shenzhen Stock Exchange trading system was 3,400,000. After the implementation of the resaleof the 19TCL03 bonds, the Company applied to the Shenzhen Branch of China Securities Depository and Clearing Corporation Limitedfor the cancellation of the 15,600,000 bonds that had not been resold. After the cancellation, the number of remaining 19TCL03depository bonds was 4,400,000.
3. Intermediary Organizations
| Name of bond project | Name of intermediary organization | Office address | Name of signing accountants | Contact of intermediary organization | Tel. |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | Guotai Junan Securities Co., Ltd. | 33F, One Museum Place, 669 Xinzha Road, Shanghai | - | Xu Lei, Wu Lei, Li Hongyu | 021 -38032198 |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | CITIC Securities Co., Ltd. | Citic Office Tower, 48 Liangmaqiao Road, Chaoyang District, Beijing | - | Yang Fang, Deng Xiaoqiang, Chen Donghui, Zhou Junren, Shi Chunli | 010 -60833575 |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | China Development Bank Securities Co., Ltd. | F1-8, CDB Building, 29 Fuchengmen Outer Avenue, Xicheng District, Beijing | - | Ji Tuo, Zhao Liang, Zhao Zhipeng | 010 -88300907 |
| 19TCL01, | TF Securities Co., | 5F, 83 | - | Huang Yike, Liu | 010 -56702804 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Name of bond project | Name of intermediary organization | Office address | Name of signing accountants | Contact of intermediary organization | Tel. |
| 19TCL02, 19TCL03 | Ltd. | Deshengmen Outer Avenue, Xicheng District, Beijing | Yue | ||
| 19TCL01, 19TCL02, 19TCL03 | Shenwan Hongyuan Securities Underwriting Co., Ltd. | 19 Taipingqiao Avenue, Xicheng District, Beijing | - | Zhou Fan, Ouyang Wenjian | 010 -88085933 |
| 18TCL01, 18TCL02 | Huatai United Securities Co., Ltd. | 26F, China Travel Hong Kong Building, CBD Central Plaza, Futian District, Shenzhen | - | Yu Shouxiang, Tian Jianrong | 0755 -82492000 |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | Beijing Jia Yuan Law Offices | F408, Yuanyang Building , 158 Fuxingmen Inner Avenue, Beijing | - | Wen Liangjuan, Wang Ying | 010 -66413377 |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | China Chengxin International Credit Rating Co., Ltd. | Building 6, Galaxy SOHO, No. 2 Nanzhugan Hutong, Chaoyangmen Inner Avenue, Dongcheng District, Beijing | - | Yan Yan | 010 -66428877 |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | Da Hua Certified Public Accountants (Special General Partnership) | Building 7, Yard 16, West Fourth Ring Middle Road, Haidian District, Beijing | Li Bingxin, Zhang Yuanyuan, Yang Chunxiang | Jiang Xianmin | 0755 -82900734 |
Whether the above organizations are changed in the Reporting Period
□ Yes √No
4. Use of the Capital Raised
Unit: RMB'0,000
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Name of bond project | Total amount of raised funds | Amount spent | Unused amount | Operation of special fund-raising account (if any) | Rectification of illegal use of raised funds (if any) | Whether consistent with the purpose, usage plan and other agreements promised in the prospectus |
| 18TCL01, 18TCL02, 19TCL01, 19TCL02, 19TCL03 | 700,000 | 700,000 | 0 | Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes | Not applicable | Consistent |
The raised funds were used for construction projects
□ Applicable √ Not applicable
The Company changed the usage of above funds raised from bonds during the Reporting Period
□ Applicable √ Not applicable
5. Adjustments of credit rating results during the Reporting Period
□ Applicable √ Not applicable
6. The implementation and changes of guarantees, debt repayment plans and other safeguard measuresregarding debt repayment during the Reporting Period, and their impact on bond investor equity
□ Applicable √ Not applicable
III. Debt Financing Instruments of Non-Financial Enterprises
√ Applicable □ Not applicable
1. General information of debt financing instruments of non-financial enterprises
Unit: RMB100 million
| Bond name | Abbr. | Bond code | Date of issuance | Value date | Maturity | Outstanding balance | Coupon rate | Way of principal repayment and interest payment | Place of transaction |
| 2022 Mid-Term Notes of TCL Technology Group Corporation | 22TCL Ji MTN003 (Scientific innovation notes) | 102281474 | July 4, 2022 | July 6, 2022 | July 6, 2025 | 20.00 | 3.45% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| (Tranche 3) (Scientific innovation notes) | |||||||||
| 2022 Mid-Term Green Notes of TCL Technology Group Corporation (Tranche 2) | 22TCL Ji GN002 | 132280040 | April 25, 2022 | April 27, 2022 | April 27, 2025 | 15.00 | 3.30% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2022 Mid-Term Notes of TCL Technology Group Corporation (Tranche 1) | 22TCL Ji MTN001 | 102280089 | January 12, 2022 | January 14, 2022 | January 14, 2025 | 20.00 | 3.45% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2021 Mid-Term Notes of TCL Technology Group Corporation (Tranche 1) (High-growth bonds) | 21TCL- MTN001 (High-Growth Bonds) | 102100966 | May 10, 2021 | May 12, 2021 | May 12, 2024 | 20.00 | 4.15% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2020 Mid- | 20TCL Ji MTN001 | 102000509 | March 25, 2020 | March 27, 2020 | March 27, 2023 | 30.00 | 3.60% | Interest payable | Inter-bank |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Term Notes of TCL Technology Group Corporation (Tranche 1) | annually and principal repayable in full upon maturity | market | ||
| Investor eligibility (if any) | Not applicable | |||
| Trading system applicable | Not applicable | |||
| Risk of termination of listing and trading (if any) and countermeasures | No | |||
Overdue bonds
□ Applicable √ Not applicable
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
□ Applicable √ Not applicable
3. Intermediary Organizations
| Name of bond project | Name of intermediary organization | Office address | Name of signing accountants | Contact of intermediary organization | Tel. |
| 20TCL Ji MTN001, 21TCL Ji MTN001, 22TCL Ji GN002, 22TCL Ji MTN003 (Scientific innovation notes) | Industrial and Commercial Bank of China | 55 Fuxingmen Inner Avenue, Xicheng District, Beijing | - | Dai Ying | 010 -66109649 |
| 20TCL Ji MTN001, 22TCL Ji MTN001 | Agricultural Bank of China | 69 Jianguomen Inner Avenue, Dongcheng District, Beijing | - | An Liwei | 010 -85109045 |
| 21TCL Ji MTN001, 22TCL Ji MTN003 (Scientific innovation notes) | China Construction Bank Corporation | 25 Jinrong Avenue, Xicheng District, Beijing | - | Zhou Peng | 010 -67596478 |
| 22TCL Ji MTN001 | Bank of China Limited | 1 Fuxingmen Inner Avenue, Beijing | - | Wang Chong | 010 -66592195 |
| 22TCL Ji GN002 | Shanghai Pudong Development | 12 Zhongshan East 1st Road, | - | Lin Jie | 021 -61616388 |
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
| Bank Co., Ltd. | Shanghai | ||||
| 20TCL Ji MTN001, 21TCL Ji MTN001, 22TCL Ji MTN001, 22TCL Ji GN002, 22TCL Ji MTN003 (Scientific innovation notes) | China Chengxin International Credit Rating Co., Ltd. | Building 6, Galaxy SOHO, No. 2 Nanzhugan Hutong, Chaoyangmen Inner Avenue, Dongcheng District, Beijing | - | Yan Yan | 010 -66428877 |
| 20TCL Ji MTN001, 21TCL Ji MTN001, 22TCL Ji MTN001, 22TCL Ji GN002, 22TCL Ji MTN003 (Scientific innovation notes) | Da Hua Certified Public Accountants (Special General Partnership) | Building 7, Yard 16, West Fourth Ring Middle Road, Haidian District, Beijing | Qiu Junzhou and Jiang Xianmin | Jiang Xianmin | 0755 -82900734 |
Whether the above organizations were changed during the Reporting Period
□ Yes √No
4. Use of the Capital Raised
Unit: RMB'0,000
| Name of bond project | Total amount of raised funds | Amount spent | Unused amount | Operation of special fund-raising account (if any) | Rectification of illegal use of raised funds (if any) | Whether consistent with the purpose, usage plan and other agreements promised in the prospectus |
| 20TCL Ji MTN001, 21TCL Ji MTN001, 22TCL Ji MTN001, 22TCL Ji GN002, 22TCL Ji MTN003 (Scientific innovation notes) | 1,050,000 | 1,050,000 | 0 | Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes | Not applicable | Consistent |
The raised funds were used for construction projects
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
□ Applicable √ Not applicable
The Company changed the usage of above funds raised from bonds during the Reporting Period
□ Applicable √ Not applicable
5. Adjustments of credit ratings results during the Reporting Period
□ Applicable √ Not applicable
6. The implementation and changes of guarantees, debt repayment plans and other safeguard measuresregarding debt repayment during the Reporting Period, and their impact on bond investor equity
□ Applicable √ Not applicable
IV. Convertible Corporate Bonds
√ Applicable □ Not applicable
1. Conversion price adjustments
| Name | Price before adjustment (RMB/share) | Adjusted price (RMB/share) | Start date for the adjustment |
| TCL Private Convertible 2 (convertible bond code： 124017) | 8.00 | 7.88 | May 19, 2021 |
| TCL Private Convertible 2 (convertible bond code： 124017) | 7.88 | 7.73 | June 2, 2022 |
| TCL Private Convertible 2 (convertible bond code： 124017) | 7.73 | 4.10 | July 25, 2022 |
2. Cumulative bond-to-stock conversions
√ Applicable □ Not applicable
| Abbreviation of convertible bond | Start and end date of bond-to-stock conversion | Total quantity issued (bond) | Total amount issued (RMB) | Cumulative amount of converted shares (RMB) | Cumulative number of converted shares (share) | The proportion of converted shares to the Company’s total issued shares before the start date of the conversion | Unconverted shares (RMB) | The proportion of unconverted shares to the total issued amount |
| TCL Private Convertible 2 | May 31, 2021 to November 29, 2022 | 26,000,000 | 2,600,000,000 | 2,166,999,871 | 528,536,554 | 3.767% | 0 | 0 |
As of November 30, 2022, TCL Private Convertible 2 has been matured and delisted, as detailed in the Announcement on HonoringUpon Maturity and Delisting of “TCL Private Convertible 2”.
3. Top 10 holders of convertible corporate bonds
□ Applicable √ Not applicable
4. Significant changes to the profitability, assets and credit standing of the guarantor
□ Applicable √ Not applicable
5. Liabilities and change in credit of the Company at the end of the Reporting Period, as well as future casharrangements for repayment
□ Applicable √ Not applicable
Full Text of the Annual Report 2022 of TCL Technology Group Corporation
V. Consolidated loss of the Reporting Period exceeding 10% of net assets of the last year-end
□ Applicable √ Not applicable
VI. Overdue Interest-bearing Debts Other Than Bonds at Period End
□ Applicable √ Not applicable
VII. Any Violation of Rules and Regulations During the Reporting Period
□ Applicable √ Not applicable
VIII. Key Accounting Data and Financial Indicators of the Company for the past two years asat the end of the Reporting Period
Unit: RMB'0,000
| Item | End of the Reporting Period | December 31, 2021 | Change |
| Current ratio | 1.09 | 1.08 | 0.93% |
| Debt/asset ratio | 63.3% | 61.2% | 2.05% |
| Quick ratio | 0.78 | 0.80 | -3% |
| 2022 | 2021 | Change | |
| Net profit before non-recurring gains and losses | -171,729 | 1,399,924 | -112.27% |
| Debt to EBITDA ratio | 12.12% | 20.86% | -8.74% |
| Interest coverage ratio | 0.92 | 4.57 | -79.89% |
| Cash coverage ratio | 4.32 | 8.54 | -49.48% |
| EBITDA coverage ratio | 5.17 | 8.39 | -38.35% |
| Debt repayment ratio | 100% | 100% | 0.00 |
| Interest payment ratio | 100% | 100% | 0.00 |
During the Reporting Period, the operating performance and profitability of the Company’s subsidiaries decreased year-on-year due to the cyclicalimpact of the panel industry, resulting in large changes in the Company’s accounting data and financial indicators.
大华会计师事务所(特殊普通合伙)
Da Hua Certified Public Accountants (Special General Partnership)
| TCL Technology Group Corporation |
| Auditor’s Report |
| DHSZ[2023] No. 002888 |
TCL Technology Group CorporationAuditor’s Report and Financial Statements(For the period from January 1, 2022 to December 31, 2022)
| Content | Page | |
| I. | Auditor’s Report | 1-8 |
| II. | Audited Financial Statements | |
| Consolidated Balance Sheet | 1-2 | |
| Consolidated Income Statement | 3 | |
| Consolidated Cash Flow Statement | 4-5 | |
| Consolidated Statement of Changes in Shareholders’ Equity | 6-7 | |
| Balance Sheet of the Parent Company | 8-9 | |
| Income Statement of the Parent Company | 10 | |
| Cash Flow Statement of the Parent Company | 11-12 | |
| Statement of Changes in Shareholder Equity of the Parent Company | 13-14 | |
| Notes to Financial Statements | 15-161 |
Page 1
Auditor’s Report
DHSZ [2023] No. 002888
To all Shareholders of TCL Technology Group Corporation:
I. OpinionWe have audited the financial statements of TCL Technology Group Corporation(TCL TECH.), which include the balance sheets of the consolidated company andparent company (the parent company exclusive of subsidiaries) as of December 31,2022, the statements on income, cash flow and changes in shareholders' equity of theconsolidated company and parent company for the year then ended, as well as the notesto financial statements.In our opinion, the accompanying financial statements present fairly, in allmaterial respects, the financial position of the consolidated company and parentcompany of the Company as of December 31, 2022, and the consolidated company andparent company operations results and cash flow for the year ended December 31, 2022in accordance with the Accounting Standards for Business Enterprises.II. Basis for OpinionWe conducted our audits in accordance with the Audit Standards for ChineseRegistered Accountants. Our responsibilities under those standards are furtherdescribed in the Auditor’s Responsibilities for Audit of Financial Statements section ofour report. We are independent of the Company in accordance with the China Code ofEthics for Certified Public Accountants, and we have fulfilled our ethicalresponsibilities in accordance with the said Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinions.
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III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were ofmost significance in our audit of the financial statements for the current period. Thesematters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.And key audit matters identified in our audit are summarized as follows:
| Revenue recognition | |
| Please refer to the accounting policies as stated in 36. “Revenue recognition” under Note III to the financial statements and 56. Operating revenue under Note V to the financial statements. | |
| Key Audit Matters | Audit response |
| The Company’s revenue for the current period was approximately RMB166.6 billion, an increase of about RMB2.9 billion from the revenue of RMB163.7 billion for the previous period. As operating revenue is one of the Company’s key operating indicators with the inherent risk of the management manipulating the revenue recognition time point for the purpose of achieving a specific objective or expectation, and the revenue recognition for the current period has a material influence on the financial statements, we have identified revenue recognition as a key audit matter. | The important audit procedures we carried out in respect to revenue recognition include: understand and assesd whether the management's design and operation of key internal controls in respect to revenue recognition are effective; understand and assess whether the management's selection and implementation of the policies related to revenue recognition complied with the Accounting Standards for Business Enterprises; select samples of recorded transactions with revenue for the year and examined relevant supporting documents involved during the transaction process, including outbound delivery orders, customer receipt records, sale invoices, customs declarations, bills of lading and fund receipt proofs; select samples of the recorded transactions with revenue around the balance sheet date and examined outbound delivery orders and other supporting documents to assess whether the revenue has been recorded for the appropriate accounting period; obtain the Company's sale list for the year and carried out analytic review procedures on the operating revenue to determine how reasonable changes in the revenue and gross profit margin for the current period were; conduct confirmation procedures with key accounts and inquired about the sales amount and the account receivable balance incurred for the current period; examine whether the information in connection with revenue was duly presented and disclosed in the financial statements. |
| Based on the audit work executed, we believe that the Company's recognition of revenue complies with relevant requirements of the Accounting Standards for Business Enterprises. | |
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III. Key Audit Matters (continued)
| Measurement of fixed assets and construction in progress | |
| Please refer to the accounting policies as stated in 23. "Fixed assets" and 24. "Construction in progress" under Note III to the financial statements and 18. "Fixed assets" and 19. "Construction in progress" under Note V to the financial statements. | |
| Key Audit Matters | Audit response |
| As of December 31, 2022, the total amount of fixed assets and construction in progress presented in the Company's consolidated financial statements was RMB184.5 billion, accounting for 51.26% of total assets. These fixed assets mainly include machinery and equipment and buildings required for semiconductor display products, new energy photovoltaic products and semiconductor materials. Matters such as the eligibility of assets for capitalization, the point of time at which construction in progress is transferred to fixed assets and depreciation is provisioned, and the useful life and residual value of the respective fixed assets involve management's judgment, so we identified the measurement of fixed assets and construction in progress as key audit matters. | The important audit procedures we carried out in respect to the measurement of fixed assets and construction in progress include: understand and evaluate the effectiveness of the design of internal controls related to fixed assets and construction in progress, and test the effectiveness of the implementation of key controls; obtain a list of new assets in the current period, and carry out a spot check of procurement contracts, payment documents, invoices and acceptance slips for large-value assets; obtain the new settlement statements for construction in the current period, examine them against the amounts recorded in the books, and review the accuracy and completeness of the entries; discuss with the management and judge the accuracy of the point of time when the construction in progress is transferred to fixed assets and the reasonableness of the expected useful life of fixed assets; inspect the construction-in-progress site when approaching the balance sheet date, understanding and evaluate the progress of the work and checking it against the entries in the book; obtain the ownership certificate of fixed assets and the company inventory sheet, and conduct on-site checks of important assets; obtain the statement of depreciation provision for fixed assets and recalculating whether the depreciation has been provisioned accurately; examine that the information in connection with fixed assets and construction in progress has been duly presented and disclosed in the financial statements. |
| Based on the audit work executed, we believe that the Company measured the fixed assets and construction in progress in accordance with relevant requirements of the Accounting Standards for Business Enterprises. | |
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III. Key Audit Matters (continued)
| Related parties | |
| Please refer to "X. Related parties and related transactions" in the notes to the financial statements. | |
| Key Audit Matters | Audit response |
| In 2022, the Company's routine related transactions amounted to about RMB30.1 billion, representing an increase of about 1.25 % from the previous period. The integrity of the disclosure of related parties and related transactions, the authenticity of related transactions and the fairness of transaction prices will have an important impact on the fair presence of the financial statements. Therefore, we identify the related balance and transactions as key matters in this audit. | Examine and evaluate the internal controls adopted by management for identifying and disclosing the relationships between related parties and related transactions, and review the effectiveness of the design and implementation of the internal controls; Acquire the statements of management on the integrity of the relationships between related parties and related transactions, etc., as well as the list of relationships between related parties provided by the management, and examined this with the information acquired from other public channels; examine the customers, suppliers and other stakeholders that deal with the Company to identify whether there were any omissions for the related parties. acquire the resolutions of the board of directors and the general meeting in connection with related transactions, examine the decision-making authority and procedures of the related transactions, judged the legality and compliance of the related transactions, and determine whether they had been properly authorized and approved; compared the prices for selling goods to the related parties with those of similar products sold to unrelated parties to determine the fairness of the prices of related transactions; acquired the accrued amount and balance details of related transactions, and examine the financial vouchers corresponding to the transactions and the attached contracts or orders, dispatch notes, statements, invoices and bank documents for the selected specific samples; conduct confirmation procedures for the amounts and balances of the related transactions with important related parties; |
| Based on audit procedures conducted, we are of the opinion that management has made reasonable disclosure on the completeness of related party relationship, authenticity of related transactions and faireness of consideration. | |
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Ⅳ. Other InformationThe Company’s management is responsible for the other information. Otherinformation comprises all of the information included in the Company's 2022 AnnualReport other than the financial statements and our auditor's report thereon.Our opinion on the financial statements does not cover other information and wedo not express any form of assurance or conclusions thereon.In connection with our audit on the financial statements, our responsibility is toread the other information and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudits or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a materialmisstatement for other information, we are required to report that fact. We have nothingto report in this regard.
Ⅴ. Responsibilities of Management and Those Charged with Governancefor Financial Statements
The Company's management is responsible for the preparation of the financialstatements that provide a fair view in accordance with the Accounting Standards forBusiness Enterprises, and for designing, implementing and maintaining such internalcontrols as the management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud orerror.
In preparing the financial statements, the management is responsible for assessingthe Company's ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concerns and using the going concerns as a basis of accounting unlessthe management either intends to liquidate the Company or to cease operations, or haveno realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company'sfinancial reporting process.
Ⅵ. Auditor's Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditor's report that states our opinions. Reasonable assurance isa high level of assurance, but is not a guarantee that an audit conducted in accordancewith the China Independent Auditing Standards will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financialstatements.
As part of an audit in accordance with the China Independent Auditing Standards,
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we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
1. Identify and assess the risks of material misstatements in financial statements,and whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinions. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the overriding of internal controls.
2. Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate to the circumstances.
3. Evaluate the appropriateness of accounting policies used and determine howreasonable accounting estimates and related disclosures made by the management are.
4. Conclude on the appropriateness of the management's use of the going concernassumption of accounting and, based on the audit evidence obtained, and draw aconclusion on whether a material uncertainty exists related to events or conditions thatmay cast significant doubt on the Company's ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required by the ChinaIndependent Auditing Standards to draw users' attention in our auditor's report on therelated disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinions. Our conclusions are based on the audit evidence obtained up tothe date of our auditor's report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of thefinancial statements and whether the financial statements represent theunderlying transactions and events in a manner that maintains fairpresentation.
6. Obtain sufficiently appropriate audit evidence regarding the financialinformation of the entities or business activities within the Company toexpress an opinion on the financial statements. We are responsible fordirecting, supervising and performing the Company audits and acceptingfull responsibility for audit opinions.
We communicate with those charged with governance regarding,among other matters, the planned scope and timing of the audit andsignificant audit findings, including any noteworthy deficiencies in internalcontrols that we identify during our audit.
We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regardingindependence, and communicate with them on all relationships and other
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matters that may reasonably be thought to bear an impact on ourindependence, and where applicable, related safeguards.
From the matters communicated with those charged with governance,we determined those matters that were of most significance in the audit ofthe financial statements of the current period and these therefore constitutethe key audit matters. We describe these matters in our auditor's reportunless law or regulation precluded public disclosure about the matters orwhen, in extremely rare circumstances, we determined that a matter shouldnot be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interests ofsuch communication.
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(There is no text on this page, which is used for the signature and seal of Audit ReportDHSZ [2023] No. 002888)
| Da Hua Certified Public Accountants (Special General Partnership) | Chinese CPA: | ||
| Beijing · China | (Engagement Partner) | Jiang Xianmin | |
| Chinese CPA: | |||
| Xiong Xin | |||
| March 30, 2023 | |||
TCL Technology Group CorporationConsolidated Balance Sheet
___________(RMB’000)_____________
| Note V | December 31, 2022 | January 1, 2022 | ||
| Current assets | ||||
| Monetary assets | 1 | 35,378,501 | 31,393,692 | |
| Held-for-trading financial assets | 2 | 12,703,507 | 7,601,256 | |
| Derivative financial assets | 3 | 361,034 | 70,929 | |
| Notes receivable | 4 | 512,849 | 776,202 | |
| Accounts receivable | 5 | 14,051,661 | 18,238,782 | |
| Receivables financing | 6 | 1,103,128 | 2,217,639 | |
| Prepayments | 7 | 3,593,857 | 2,306,325 | |
| Other receivables | 8 | 4,033,248 | 4,458,621 | |
| Inventories | 9 | 18,001,122 | 14,083,357 | |
| Contract assets | 10 | 315,167 | 233,529 | |
| Other current assets | 11 | 5,438,936 | 5,802,960 | |
| Total current assets | 95,493,010 | 87,183,292 | ||
| Non-current assets | ||||
| Debt investments | 12 | 741,703 | - | |
| Long-term receivables | 13 | 631,373 | 651,118 | |
| Long-term equity investments | 14 | 29,256,216 | 25,640,578 | |
| Investments in other equity instruments | 15 | 439,996 | 927,319 | |
| Other non-current financial assets | 16 | 2,928,827 | 2,704,038 | |
| Investment property | 17 | 946,449 | 761,902 | |
| Fixed assets | 18 | 132,477,672 | 113,598,783 | |
| Construction in progress | 19 | 52,053,834 | 36,965,885 | |
| Right-of-use assets | 20 | 5,110,124 | 2,426,911 | |
| Intangible assets | 21 | 16,783,931 | 13,982,647 | |
| Development costs | 22 | 3,179,207 | 2,508,419 | |
| Goodwill | 23 | 9,161,852 | 9,158,841 | |
| Long-term deferred expenses | 24 | 2,744,208 | 2,640,530 | |
| Deferred income tax assets | 25 | 1,753,887 | 2,150,423 | |
| Other non-current assets | 26 | 6,293,943 | 7,449,009 | |
| Total non-current assets | 264,503,222 | 221,566,403 | ||
| Total assets | 359,996,232 | 308,749,695 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Balance Sheet (Continued)
___________(RMB’000)_____________
| Liabilities and shareholders' equity: | Note V | December 31, 2022 | January 1, 2022 | |
| Current liabilities | ||||
| Short-term borrowings | 27 | 10,215,911 | 9,341,427 | |
| Borrowings from the Central Bank | 28 | 777,676 | 1,437,062 | |
| Customer deposits and deposits from other banks and financial institutions | 29 | 603,423 | 666,056 | |
| Held-for-trading financial liabilities | 30 | 861,912 | 925,035 | |
| Derivative financial liabilities | 31 | 70,735 | 22,205 | |
| Notes payable | 32 | 6,365,660 | 3,275,296 | |
| Accounts payable | 33 | 26,381,912 | 24,297,860 | |
| Advances from customers | 34 | 1,402 | 5,794 | |
| Contract liabilities | 35 | 2,336,008 | 2,593,882 | |
| Employee compensation payable | 36 | 2,376,933 | 3,311,933 | |
| Taxes and levies payable | 37 | 1,215,591 | 1,238,849 | |
| Other payables | 38 | 24,190,352 | 19,386,888 | |
| Non-current liabilities due within a one-year period | 39 | 10,957,321 | 13,006,765 | |
| Other current liabilities | 40 | 1,185,848 | 1,269,887 | |
| Total current liabilities | 87,540,684 | 80,778,939 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 41 | 118,603,165 | 87,279,082 | |
| Bonds payable | 42 | 12,006,851 | 13,066,281 | |
| Lease liabilities | 43 | 4,461,383 | 1,102,072 | |
| Long-term payables | 44 | 887,763 | 671,344 | |
| Long-term employee compensation payable | 36 | 472,538 | 669,931 | |
| Deferred income | 45 | 2,468,145 | 2,361,205 | |
| Deferred income tax liabilities | 25 | 1,319,428 | 3,158,986 | |
| Estimated liabilities | 46 | 97,522 | - | |
| Total non-current liabilities | 140,316,795 | 108,308,901 | ||
| Total liabilities | 227,857,479 | 189,087,840 | ||
| Share capital | 47 | 17,071,892 | 14,030,642 | |
| Other equity instruments | 48 | - | 200,334 | |
| Capital reserves | 49 | 12,522,793 | 6,079,267 | |
| Less: Treasury stock | 50 | 1,314,581 | 1,885,557 | |
| Other comprehensive income | 51 | (811,822) | (409,447) | |
| Surplus reserves | 52 | 3,712,273 | 2,550,173 | |
| Specific reserves | 53 | 2,301 | 1,549 | |
| General risk reserve | 54 | 8,934 | 8,934 | |
| Retained earnings | 55 | 19,486,730 | 22,465,150 | |
| Total equity attributable to shareholders of the parent company | 50,678,520 | 43,041,045 | ||
| Non-controlling interests | 81,460,233 | 76,620,810 | ||
| Total shareholders’ equity | 132,138,753 | 119,661,855 | ||
| Total liabilities and shareholders' equity | 359,996,232 | 308,749,695 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Consolidated Income Statement
___________(RMB’000)_____________
| Note V | 2022 | 2021 | ||
| I. Total revenue | 166,632,146 | 163,807,783 | ||
| Including: Operating revenue | 56 | 166,552,786 | 163,657,700 | |
| Interest income | 57 | 79,360 | 150,083 | |
| Less: Cost of sales | 56 | 151,925,489 | 131,156,314 | |
| Interest expenditures | 57 | 23,530 | 34,936 | |
| Taxes and levies | 58 | 640,302 | 647,935 | |
| Selling expenses | 59 | 1,950,528 | 1,919,285 | |
| General and administrative expenses | 60 | 3,540,611 | 4,393,320 | |
| R&D expenses | 61 | 8,633,638 | 7,236,341 | |
| Financial expenses | 62 | 3,422,895 | 3,727,915 | |
| Including: Interest expenses | 4,468,008 | 4,125,399 | ||
| Interest income | 723,665 | 446,450 | ||
| Add: Other income | 63 | 2,917,794 | 1,967,750 | |
| Return on investment | 64 | 4,731,394 | 3,904,526 | |
| Including: Return on investment in joint ventures and associates | 2,898,739 | 3,217,871 | ||
| Exchange gain | 57 | 17,914 | (1,224) | |
| Gain on changes in fair value | 65 | (139,244) | (146,584) | |
| Credit impairment loss | 66 | (37,653) | (92,256) | |
| Asset impairment loss | 67 | (3,486,523) | (2,911,464) | |
| Asset disposal income | 68 | (79,825) | (40,434) | |
| II. Operating profit | 419,010 | 17,372,050 | ||
| Add: Non-operating income | 69 | 790,112 | 351,980 | |
| Less: Non-operating expenses | 70 | 152,071 | 140,454 | |
| III. Gross profit | 1,057,051 | 17,583,577 | ||
| Less: Income tax expenses | 71 | (731,008) | 2,608,048 | |
| IV. Net profit | 1,788,059 | 14,975,529 | ||
| (I) Classification by business continuity | ||||
| 1. Net profit from continuing operations | 1,788,059 | 14,917,233 | ||
| 2. Net profit from discontinued operations | - | 58,296 | ||
| (II) Classification by ownership | ||||
| 1. Net profits attributable to the shareholders of the parent company | 261,319 | 10,064,253 | ||
| 2. Net profit attributable to non-controlling interests | 1,526,740 | 4,911,276 | ||
| 5. Other comprehensive income, net of tax | 51 | (327,034) | (244,003) | |
| (I) Other comprehensive income that cannot be reclassified into profit or loss | (18,149) | (286,219) | ||
| (II) Other comprehensive income that may subsequently be reclassified to profit or loss upon satisfaction of prescribed condition | (308,885) | 42,216 | ||
| VI. Total comprehensive income | 1,461,025 | 14,731,526 | ||
| Total comprehensive income attributable to the shareholders of the parent company | (141,056) | 9,800,380 | ||
| Total comprehensive income attributable to non-controlling interests | 1,602,081 | 4,931,146 | ||
| VII. Earnings per share | 72 | |||
| (I) Basic earnings per share (RMB yuan/share) | 0.0191 | 0.7468 | ||
| (II) Diluted earnings per share (RMB yuan/share) | 0.0185 | 0.7359 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the accounting department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Consolidated Cash Flow Statement
___________(RMB’000)_____________
| Note V | 2022 | 2021 | ||
| I. Cash flow from operating activities: | ||||
| Proceeds from sale of commodities and rendering of services | 137,297,835 | 140,078,647 | ||
| Net increase/(decrease) in customer deposits and deposits from other banks and financial institutions | (62,633) | (2,184,083) | ||
| Net increase/(decrease) in borrowings from central bank | (659,386) | 967,228 | ||
| Interest, fees and commissions received | 79,360 | 150,083 | ||
| Tax and levy rebates | 11,020,947 | 7,001,327 | ||
| Cash generated from other operating activities | 73 | 7,955,973 | 7,013,673 | |
| Sub-total of cash generated from operating activities | 155,632,096 | 153,026,875 | ||
| Payments for commodities and services | (113,465,399) | (100,881,893) | ||
| Net (increase)/decrease in loans and advances to customers | 558,603 | 1,085,486 | ||
| Net (increase)/decrease in deposits in central bank and other banks and financial institutions | 36,327 | (148,200) | ||
| Cash paid to and for employees | (10,696,682) | (8,145,698) | ||
| Taxes and levies paid | (3,916,226) | (4,211,870) | ||
| Cash used in other operating activities | 74 | (9,722,343) | (7,846,247) | |
| Sub-total of cash used in operating activities | (137,205,720) | (120,148,422) | ||
| Net cash generated from operating activities | 79 | 18,426,376 | 32,878,453 | |
| II. Cash flow generated from investing activities: | ||||
| Proceeds from disinvestments | 48,642,124 | 40,260,161 | ||
| Proceeds from return on investments | 1,100,618 | 2,125,675 | ||
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | 85,502 | 188,900 | ||
| Net proceeds from disposal of subsidiaries and other business units | 79 | 1,432,795 | 1,164,590 | |
| Cash generated from other investing activities | 75 | 170,387 | 33,083 | |
| Sub-total of cash generated from investment activities | 51,431,426 | 43,772,409 | ||
| Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets | (40,762,787) | (30,855,133) | ||
| Payments for investments | (56,242,405) | (41,931,051) | ||
| Net payments for acquiring subsidiaries and other business units | 79 | (50,133) | (4,139,505) | |
| Cash used in other investing activities | 76 | (1,212,074) | (479,761) | |
| Subtotal of cash used in investing activities | (98,267,399) | (77,405,450) | ||
| Net cash used in investing activities | (46,835,973) | (33,633,041) |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Cash Flow Statement (Continued)
___________(RMB’000)_____________
| Note V | 2022 | 2021 | ||
| III. Cash flow generated from financing activities: | ||||
| Capital contributions received | 17,981,473 | 19,804,515 | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | 8,509,514 | 19,804,515 | ||
| Borrowings raised | 87,581,519 | 52,186,527 | ||
| Net cash received from bonds issue | 7,820,000 | 3,686,905 | ||
| Cash generated from other financing activities | 77 | 272,281 | 256,271 | |
| Sub-total of cash generated from financing activities | 113,655,273 | 75,934,218 | ||
| Cash paid for debt repayment | (66,503,750) | (49,819,646) | ||
| Cash paid for dividend and profit distribution or repayment of interests | (9,640,363) | (7,296,551) | ||
| Including: Dividends and profit paid by subsidiaries to minority shareholders | (1,691,435) | (362,852) | ||
| Cash used in other financing activities | 78 | (6,110,504) | (6,035,517) | |
| Subtotal of cash used in financing activities | (82,254,617) | (63,151,714) | ||
| Net cash generated from financing activities | 31,400,656 | 12,782,504 | ||
| IV. Effect of exchange rate changes on cash and cash equivalents | 602,860 | (154,628) | ||
| V. Net increase in cash and cash equivalents | 3,593,919 | 11,873,288 | ||
| Add: Opening balance of cash and cash equivalents | 30,081,705 | 18,208,417 | ||
| VI. Closing balance of cash and cash equivalents | 79 | 33,675,624 | 30,081,705 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Statement of Changes in Shareholders’ Equity
___________(RMB’000)_____________
| 2022 | |||||||||||||||||||||
| Equity attributable to shareholders of the parent company | |||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Special Reserves | Other comprehensive income | Surplus reserves | Appropriation to general risk reserve | Undistributed profit | Non-controlling interests | Shareholder equity Total | |||||||||||
| I. Balance at the end of the prior year | 14,030,642 | 200,334 | 6,079,267 | (1,885,557) | 1,549 | (409,447) | 2,550,173 | 8,934 | 22,458,340 | 76,611,057 | 119,645,292 | ||||||||||
| Add: Change in accounting policy | - | - | - | - | - | - | - | - | 6,809 | 9,753 | 16,562 | ||||||||||
| II. Balance at the beginning of the period | 14,030,642 | 200,334 | 6,079,267 | (1,885,557) | 1,549 | (409,447) | 2,550,173 | 8,934 | 22,465,149 | 76,620,810 | 119,661,854 | ||||||||||
| III. Movement of the period | 3,041,250 | (200,334) | 6,443,526 | 570,976 | 752 | (402,375) | 1,162,100 | - | (2,978,420) | 4,839,423 | 12,476,897 | ||||||||||
| (I) Comprehensive income | - | - | - | - | - | (415,837) | - | - | 261,319 | 1,602,081 | 1,447,564 | ||||||||||
| (II) Capital contributed and reduced by shareholders | 3,041,250 | (200,334) | 7,822,900 | 570,976 | - | - | - | - | - | 8,109,948 | 19,344,740 | ||||||||||
| 1. Capital increased by shareholders | 3,041,250 | - | 6,668,566 | - | - | - | - | - | - | 8,109,948 | 17,819,764 | ||||||||||
| 2. Share-based payments included in owners' equity | - | - | 26,559 | 76,664 | - | - | - | - | - | - | 103,223 | ||||||||||
| 3. Amount of bond issuance included in owners' equity | (200,334) | 1,127,775 | 997,083 | - | - | - | - | - | - | 1,924,524 | |||||||||||
| 4. Others | - | - | - | (502,771) | - | - | - | - | - | - | (502,771) | ||||||||||
| (III) Profit distribution | - | - | - | - | 752 | - | 1,162,100 | - | (3,212,103) | (2,962,104) | (5,011,355) | ||||||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | 1,162,100 | - | (1,162,100) | (381,108) | (381,108) | ||||||||||
| 2. Appropriation of general risk reserve | - | - | - | - | 752 | - | - | - | - | - | 752 | ||||||||||
| 3. Appropriation to shareholders | - | - | - | - | - | - | - | - | (2,050,003) | (2,580,996) | (4,630,999) | ||||||||||
| 4. Others | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| (IV) Transfers within owners’ equity | - | - | - | - | - | 13,461 | - | - | (13,461) | - | - | ||||||||||
| 1. Other comprehensive income transferred into retained earnings | - | - | - | - | - | 13,461 | - | - | (13,461) | - | - | ||||||||||
| (V) Others | - | - | (1,379,374) | - | - | - | - | - | (14,174) | (1,910,502) | (3,304,050) | ||||||||||
| IV. Balance at the end of the period | 17,071,892 | - | 12,522,793 | (1,314,581) | 2,301 | (811,822) | 3,712,273 | 8,934 | 19,486,730 | 81,460,233 | 132,138,753 | ||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Statement of Changes in Shareholders’ Equity (Continued)
___________(RMB’000)_____________
| 2021 | |||||||||||||||||||||
| Equity attributable to shareholders of the parent company | Non-controlling interests | Shareholder equity Total | |||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Special Reserves | Other comprehensive income | Surplus reserves | Appropriation to general risk reserve | Undistributed profit | |||||||||||||
| I. Balance at the end of the prior year | 14,030,788 | - | 230,241 | - | 5,442,385 | - | (1,913,029) | 211 | (145,573) | - | 2,452,892 | - | 386 | 14,009,494 | 55,949,272 | - | 90,057,067 | ||||
| Add: Change in accounting policy | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||
| II. Balance at the beginning of the period | 14,030,788 | - | 230,241 | - | 5,442,385 | - | (1,913,029) | 211 | (145,573) | - | 2,452,892 | - | 386 | 14,009,494 | 55,949,272 | - | 90,057,067 | ||||
| III. Movement of the period | (146) | - | (29,907) | - | 636,882 | - | 27,472 | 1,338 | (263,874) | - | 97,281 | - | 8,548 | 8,455,655 | 20,671,538 | - | 29,604,787 | ||||
| (I) Comprehensive income | - | - | - | - | - | - | - | - | (141,053) | - | - | - | - | 10,064,253 | 4,931,148 | - | 14,854,348 | ||||
| (II) Capital contributed and reduced by shareholders | (146) | - | (29,907) | - | 636,882 | - | 27,472 | - | - | - | - | - | - | - | 16,271,882 | - | 16,906,183 | ||||
| 1. Capital increased by shareholders | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 18,150,004 | - | 18,150,004 | ||||
| 2. Capital contributed by holders of other equity instruments | - | - | (29,907) | - | 75,461 | - | 537,972 | - | - | - | - | - | - | - | - | - | 583,526 | ||||
| 3. Share-based payments included in owners' equity | (146) | - | - | - | 2,823 | - | 118,559 | - | - | - | - | - | - | - | - | - | 121,236 | ||||
| 4. Others | - | - | 558,598 | (629,059) | - | - | - | - | - | (1,878,122) | (1,948,583) | ||||||||||
| (III) Profit distribution | - | - | - | - | - | - | - | 1,338 | - | - | 97,831 | - | 8,548 | (1,731,969) | (531,492) | - | (2,155,744) | ||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | - | - | - | - | 97,831 | - | - | (97,831) | - | - | - | ||||
| 2. Appropriation of general risk reserve | - | - | - | - | - | - | - | 1,338 | - | - | - | - | 8,548 | (8,548) | - | - | 1,338 | ||||
| 3. Appropriation to shareholders | - | - | - | - | - | - | - | - | - | - | - | - | - | (1,625,590) | (287,220) | - | (1,912,810) | ||||
| 4. Others | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (244,272) | - | (244,272) | ||||
| (IV) Transfers within owners’ equity | - | - | - | - | - | - | - | - | (122,821) | - | (550) | - | - | 123,371 | - | - | - | ||||
| 1. Other comprehensive income transferred to retained earnings | - | - | - | - | - | - | - | - | (122,821) | - | (550) | - | - | 123,371 | - | - | - | ||||
| IV. Balance at the end of the period | 14,030,642 | - | 200,334 | - | 6,079,267 | - | (1,885,557) | 1,549 | (409,447) | - | 2,550,173 | - | 8,934 | 22,465,149 | 76,620,810 | - | 119,661,854 | ||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationBalance Sheet of the Company
___________(RMB’000)_____________
| assets | Note XV | December 31, 2022 | January 1, 2022 | |
| Current assets | ||||
| Monetary assets | 17,821,922 | 10,467,962 | ||
| Held-for-trading financial assets | 5,936,208 | 4,372,557 | ||
| Derivative financial assets | 15,578 | - | ||
| Accounts receivable | 1 | 353,812 | 93,566 | |
| Prepayments | 3,693 | 47,333 | ||
| Other receivables | 2 | 4,961,948 | 13,819,512 | |
| Inventories | 5,380 | 41,029 | ||
| Other current assets | 34,838 | 15,011 | ||
| Total current assets | 29,133,379 | 28,856,970 | ||
| Non-current assets | ||||
| Long-term receivables | 1,935,365 | - | ||
| Long-term equity investments | 3 | 76,360,371 | 71,303,126 | |
| Investments in other equity instruments | 4 | 5,000 | 5,000 | |
| Other non-current financial assets | 5 | 431,023 | 1,051,536 | |
| Investment property | 81,034 | 84,795 | ||
| Fixed assets | 32,223 | 37,402 | ||
| Construction in progress | - | 1,360 | ||
| Right-of-use assets | 428,575 | 452,398 | ||
| Intangible assets | 109,605 | 93,324 | ||
| Long-term deferred expenses | 24,069 | 26,079 | ||
| Deferred income tax assets | 7 | 12 | ||
| Total non-current assets | 79,407,272 | 73,055,032 | ||
| Total assets | 108,540,651 | 101,912,002 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationBalance Sheet of the Parent Company (Continued)
___________(RMB’000)_____________
| Liabilities and shareholders' equity: | Note XV | December 31, 2022 | January 1, 2022 | |
| Current liabilities | ||||
| Short-term borrowings | 1,900,169 | 1,250,989 | ||
| Accounts payable | 140,563 | 141,877 | ||
| Contract liabilities | 308 | 23,823 | ||
| Employee compensation payable | 178,097 | 294,653 | ||
| Taxes and levies payable | 63,908 | 13,076 | ||
| Other payables | 22,036,683 | 38,597,139 | ||
| Non-current liabilities due within a one-year period | 5,605,919 | 4,843,348 | ||
| Other current liabilities | 2,430 | 4,284 | ||
| Total current liabilities | 29,928,077 | 45,169,189 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 15,280,955 | 12,898,000 | ||
| Bonds payable | 9,922,133 | 11,159,524 | ||
| Lease liabilities | 748 | 13,365 | ||
| Long-term employee compensation payable | 84,188 | 108,384 | ||
| Deferred income | 53,638 | 60,198 | ||
| Total non-current liabilities | 25,341,662 | 24,239,471 | ||
| Total liabilities | 55,269,739 | 69,408,660 | ||
| Share capital | 17,071,892 | 14,030,642 | ||
| Other equity instruments | - | 200,334 | ||
| Capital reserves | 17,715,533 | 9,900,679 | ||
| Less: Treasury stock | 1,314,581 | 1,885,557 | ||
| Other comprehensive income | (128,195) | (112,194) | ||
| Surplus reserves | 3,510,209 | 2,348,109 | ||
| Retained earnings | 16,416,054 | 8,021,329 | ||
| Total shareholders’ equity | 53,270,912 | 32,503,342 | ||
| Total liabilities and shareholders' equity | 108,540,651 | 101,912,002 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Income Statement of the Company
___________(RMB’000)_____________
| Note XV | 2022 | 2021 | ||
| I. Operating revenue | 6 | 1,593,213 | 1,490,937 | |
| Less: Cost of sales | 6 | 1,162,807 | 1,111,439 | |
| Taxes and levies | 14,531 | 15,832 | ||
| Selling expenses | 54,059 | 35,458 | ||
| General and administrative expenses | 323,594 | 550,668 | ||
| R&D expenses | 171,276 | 171,151 | ||
| Financial expenses | 1,282,688 | 1,824,650 | ||
| Including: Interest expenses | 2,252,721 | 2,441,346 | ||
| Interest income | 771,483 | 685,498 | ||
| Add: Other income | 8,705 | 2,057 | ||
| Return on investment | 7 | 12,483,556 | 3,005,570 | |
| Including: Share of profit or loss of joint ventures and associates | 7 | 1,308,061 | 1,406,116 | |
| Gain on changes in fair value | (24,134) | 26,134 | ||
| Credit impairment loss | (266) | (187) | ||
| Asset disposal income | 1,540 | 36 | ||
| II. Operating profit | 11,053,659 | 815,349 | ||
| Add: Non-operating income | 575,077 | 223,830 | ||
| Less: Non-operating expenses | 7,737 | 60,875 | ||
| III. Gross profit | 11,620,999 | 978,304 | ||
| Less: Income tax expenses | - | - | ||
| IV. Net profit | 11,620,999 | 978,304 | ||
| V. Other comprehensive income | (16,001) | (259,693) | ||
| VI. Total comprehensive income | 11,604,998 | 718,611 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationCash Flow Statement of the Company
___________(RMB’000)_____________
| Note XV | 2022 | 2021 | ||
| I. Cash flow from operating activities: | ||||
| Proceeds from sale of commodities and rendering of services | 1,357,318 | 1,286,514 | ||
| Tax and levy rebates | 1,781 | - | ||
| Cash generated from other operating activities | 1,029,029 | 30,834,436 | ||
| Sub-total of cash generated from operating activities | 2,388,128 | 32,120,950 | ||
| Payments for commodities and services | (1,054,192) | (1,002,839) | ||
| Cash paid to and for employees | (215,412) | (162,489) | ||
| Taxes and levies paid | (205,575) | (196,647) | ||
| Cash used in other operating activities | (12,757,279) | (3,099,415) | ||
| Sub-total of cash used in operating activities | (14,232,458) | (4,461,390) | ||
| Net cash generated from operating activities | 8 | (11,844,330) | 27,659,560 | |
| II. Cash flow from investing activities: | ||||
| Proceeds from disinvestments | 14,882,100 | 27,292,959 | ||
| Proceeds from return on investments | 10,461,727 | 2,384,221 | ||
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | 24 | - | ||
| Sub-total of cash generated from investment activities | 25,343,851 | 29,677,180 | ||
| Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets | (39,001) | (69,121) | ||
| Payments for investments | (17,545,211) | (35,551,461) | ||
| Cash used in other investing activities | - | - | ||
| Subtotal of cash used in investing activities | (17,584,212) | (35,620,582) | ||
| Net cash used in investing activities | 7,759,639 | (5,943,402) |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationCash Flow Statement of the Company (Continued)
___________(RMB’000)_____________
| Note XV | 2022 | 2021 | ||
| III. Cash flow generated from financing activities: | ||||
| Capital contributions received | 9,471,959 | - | ||
| Borrowings raised | 23,388,555 | 11,900,000 | ||
| Net cash received from bonds issue | 7,820,000 | 3,686,905 | ||
| Cash generated from other financing activities | 991,657 | - | ||
| Sub-total of cash generated from financing activities | 41,672,171 | 15,586,905 | ||
| Cash paid for debt repayment | (26,733,600) | (25,430,014) | ||
| Cash paid for distribution of dividends and profits or payment of interests | (3,195,747) | (2,971,569) | ||
| Cash used in other financing activities | (562,962) | (642,381) | ||
| Subtotal of cash used in financing activities | (30,492,309) | (29,043,964) | ||
| Net cash generated from financing activities | 11,179,862 | (13,457,059) | ||
| IV. Effect of exchange rate changes on cash and cash equivalents | 73,720 | (54,006) | ||
| V. Net increase in cash and cash equivalents | 7,168,891 | 8,205,093 | ||
| Add: Opening balance of cash and cash equivalents | 10,401,379 | 2,196,283 | ||
| VI. Closing balance of cash and cash equivalents | 9 | 17,570,270 | 10,401,376 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationStatement of Changes in Shareholders’ Equity of the Company
___________(RMB’000)_____________
| 2022 | |||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | ||||||||
| I. Balance at the end of the prior year | 14,030,642 | 200,334 | 9,900,679 | (1,885,557) | (112,194) | 2,348,109 | 8,021,329 | 32,503,342 | |||||||
| Add: Change in accounting policy | - | - | - | - | - | - | - | ||||||||
| II. Balance at the beginning of the period | 14,030,642 | 200,334 | 9,900,679 | (1,885,557) | (112,194) | 2,348,109 | 8,021,329 | 32,503,342 | |||||||
| III. Movement of the period | 3,041,249 | (200,334) | 7,810,865 | 570,976 | (16,001) | 1,162,100 | 8,394,725 | 20,763,581 | |||||||
| (I) Comprehensive income | - | - | - | - | (16,001) | - | 11,620,999 | 11,604,998 | |||||||
| (II) Capital contributed and reduced by shareholders | 3,041,249 | (200,334) | 7,823,531 | 570,976 | - | - | - | 11,235,423 | |||||||
| 1. Capital contributed by owners | 3,041,249 | - | 6,668,566 | - | - | - | - | 9,709,816 | |||||||
| 2. Capital contributed by holders of other equity instruments | - | - | - | - | - | - | - | - | |||||||
| 3. Share-based payments included in owners' equity | - | - | 27,190 | 76,664 | - | - | - | 103,854 | |||||||
| 4. Amount of bond issue included in owners' equity | (200,334) | 1,127,775 | 997,083 | - | - | - | 1,924,524 | ||||||||
| 5. Others | - | - | - | (502,771) | - | - | - | (502,771) | |||||||
| (III) Profit distribution | - | - | (12,666) | - | - | 1,162,100 | (3,212,103) | (2,062,669) | |||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | 1,162,100 | (1,162,100) | - | |||||||
| 2. Appropriation to shareholders | - | - | - | - | - | - | (2,050,003) | (2,050,003) | |||||||
| 3. Others | - | - | (12,666) | - | - | - | - | (12,666) | |||||||
| (IV) Others | - | - | 3,989 | - | - | - | (14,171) | (10,182) | |||||||
| IV. Balance at the end of the period | 17,071,891 | - | 17,715,533 | (1,314,581) | (128,195) | 3,510,209 | 16,416,054 | 53,270,912 | |||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationStatement of Changes in Shareholder Equity of the Company (Continued)
___________(RMB’000)_____________
| 2021 | |||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | ||||||||
| I. Balance at the end of the prior year | 14,030,788 | 230,241 | 9,846,835 | (1,913,029) | 141,998 | 2,250,828 | 8,771,394 | 33,359,055 | |||||||
| Add: Change in accounting policy | - | - | - | - | - | - | - | - | |||||||
| II. Balance at the beginning of the period | 14,030,788 | 230,241 | 9,846,835 | (1,913,029) | 141,998 | 2,250,828 | 8,771,394 | 33,359,055 | |||||||
| III. Movement of the period | (146) | (29,907) | 53,844 | 27,472 | (254,192) | 97,281 | (750,065) | (855,713) | |||||||
| (I) Comprehensive income | - | - | - | - | (259,690) | - | 978,304 | 718,614 | |||||||
| (II) Capital contributed and reduced by shareholders | (146) | (29,907) | 53,844 | 27,472 | - | - | - | 51,263 | |||||||
| 1. Capital contributed by owners | - | - | - | - | - | - | - | - | |||||||
| 2. Capital contributed by holders of other equity instruments | - | (29,907) | 75,461 | 537,972 | - | - | - | 583,526 | |||||||
| 3. Share-based payments included in owners' equity | (146) | - | (3,278) | 118,560 | - | - | 115,136 | ||||||||
| 4. Others | - | - | (18,339) | (629,060) | - | - | (647,399) | ||||||||
| (III) Profit distribution | - | - | - | - | - | 97,831 | (1,723,421) | (1,625,590) | |||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | 97,831 | (97,831) | - | |||||||
| 2. Appropriation to shareholders | - | - | - | - | - | - | (1,625,590) | (1,625,590) | |||||||
| 3. Others | - | - | - | - | - | - | - | - | |||||||
| (IV) Transfers within owners’ equity | - | - | - | - | 5,498 | (550) | (4,948) | - | |||||||
| 1. Other comprehensive income transferred into retained earnings | - | - | - | - | 5,498 | (550) | (4,948) | - | |||||||
| IV. Balance at the end of the period | 14,030,642 | 200,334 | 9,900,679 | (1,885,557) | (112,194) | 2,348,109 | 8,021,329 | 32,503,342 | |||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | Peng Pan |
The attached notes to the financial statements form an integral part of the financial statements.
I General information
(I) Place of incorporation and organizational structure
| TCL Technology Group Corporation (hereinafter referred to as the “Company”) is a limited liability company incorporated in the People's Republic of China (hereinafter referred to as "China") on July 17, 1997 under the Corporate Law of the People's Republic of China (hereinafter referred to as “Corporate Law”). As per the approval documents of YBH [2002] No. 94 and YFH [2002] No. 134 issued by the People’s Government of Guangdong Province, and YJMH [2002] No. 112 and YJMH [2002] No. 184 issued by the Economic and Trade Commission of Guangdong Province, the Company was changed to a joint stock limited company with a registered capital of RMB1,591,935,200, which was approved by Guangdong Province Administration for Industry and Commerce on April 19, 2002. The registration number is 4400001009990. Upon approval of ZJFXZ [2004] Document No. 1 issued by the China Securities Regulatory Commission (CSRC) on January 2, 2004, the Company was permitted to issue 590,000,000 shares to the public on January 7, 2004 and 404,395,944 ordinary shares denominated in RMB (A shares) to all public shareholders of TCL Communication Equipment Co., Ltd. (hereinafter referred to as " TCL Communication Equipment") in a stock-for-stock deal, which were listed on the Shenzhen Stock Exchange on January 30, 2004. The shares issued to the public were all priced online, with a par value of RMB1 and an issue price of RMB4.26 per share, raising a total of RMB2,513,400,000. Upon the completion of this deal, the registered capital of the Company increased to RMB2,586,331,144, and on July 16, 2004, the Company was approved by the Guangdong Province Administration for Industry and Commerce to change its business license to Business License QGYZZ No. 003362. Upon the completion of the shareholder structure reform and the expiration of the share lockup period, the foreign shareholding ratio in the Company was less than 10%. On September 11, 2007, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. Upon the approval of the CSRC on January 7, 2009 with the ZJXK [2009] Document No. 12, the Company privately placed 350,600,000 ordinary shares denominated in RMB (A shares) to designated investors on April 23, 2009, with a par value of RMB1 and an issue price of RMB2.58 per share, raising a total of RMB904,548,000. Upon the completion of the issue, the registered capital of the Company increased from RMB2,586,331,144 to RMB2,936,931,144, and on June 2, 2009, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. Upon the approval of the CSRC on May 27, 2010 with the ZJXK [2010] Document No. 719, the Company privately placed 1,301,178,273 ordinary shares denominated in RMB (A shares) to designated investors on July 26, 2010, with a par value of RMB1 and an issue price of RMB3.46 per share, raising a total of RMB4,502,076,824.58. Upon the completion of this deal, the registered capital of the Company increased from RMB2,936,931,144 to RMB4,238,109,417, and on September 19, 2010, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. On May 19, 2011, the Company carried out a bonus issue of 10 additional shares for every 10 shares to all the shareholders with capital reserves, representing a total of 4,238,109,417 new shares, with a par value of RMB1 per share. Upon the completion of this bonus issue, the registered capital of the Company increased from RMB4,238,109,417 to RMB8,476,218,834, and on June 27, 2011, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. During the years of 2013 and 2014, the exercise of 58,870,080 stock options increased the total share capital of the Company from 8,476,218,834 shares to 8,535,088,914 shares. | |
| I | General information (continued) |
| (I) | I Place of incorporation and organizational structure (continued) |
| Upon the approval of the CSRC on February 13, 2014 with the［2014］ Document No. 201, the Company privately placed 917,324,357 ordinary shares denominated in RMB (A shares) to designated investors on April 30, 2014, with a par value of RMB1 and an issue price of RMB2.18 per share, raising a total of RMB1,999,767,098.26. Upon the completion of this deal, the registered capital of the Company increased from RMB8,535,088,914 to RMB9,452,413,271, and on June 10, 2014, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. In 2015, 48,357,920 stock options were exercised under an incentive plan of the Company, and upon approval by the CSRC on January 28, 2015 with the ZJXK [2015] Document No.151, the Company issued 2,727,588,511 shares in a private placement. As such, the total share capital of the Company increased from 9,452,413,271 shares to 12,228,359,702 shares. In 2016, 923,340 stock options were exercised under an incentive plan of the Company, and the share capital of the Company increased from 12,228,359,702 shares to 12,229,283,042 shares. Later, 15,601,300 shares were repurchased and retired, and the share capital of the Company decreased from 12,229,283,042 shares to 12,213,681,742 shares. On April 26, 2016, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 91441300195971850Y (unified social credit code). In 2017, the Company purchased an interest in subsidiary TCL China Star Optoelectronics Technology Co., Ltd. by means of a new issue of 1,301,290,321 shares. Upon the completion of this deal, the total share capital of the Company increased from 12,213,681,742 shares to 13,514,972,063 shares. In 2018, the Proposal on the Grant of Restricted Stock to Awardees was approved at the 7th Meeting of the 6th Board of Directors, and a total of 34,676,444 shares were subscribed for under the restricted stock incentive plan. Upon the completion of this deal, the total share capital of the Company increased from 13,514,972,063 shares to 13,549,648,507 shares. In 2019, the Company repurchased and retired 21,209,788 restricted shares that had been granted to certain awardees under the 2018 Restricted Stock Incentive Plan & Global Innovation Partner Plan but were still in lockup. As such, the total share capital of the Company decreased from 13,549,648,507 to 13,528,438,719 shares. In 2020, the Proposal on the Intended Change of the Company’s Full Name and Stock Name were approved respectively at the 23rd Meeting of the 6th Board of Directors and the First Extraordinary General Meeting of 2020. The name of the Company was then changed from “TCL Corporation” to “TCL Technology Group Corporation” (abbreviation from “TCL CORP.” to “TCL TECH.”）since February 7, 2020, with the stock name changed from “TCL CORP.” to “TCL TECH.”, while the stock code “000100” remained unchanged. | |
| In July 2020, the Company repurchased and retired 9,159,308 restricted shares that had been granted under the 2018 and 2019 Restricted Stock Incentive Plans but were still in lockup. As such, the total share capital of the Company decreased from 13,528,438,719 to 13,519,279,411 shares. In October 2020, the Company issued 511,508,951 new shares to acquire the non-controlling interest in subsidiary Wuhan China Star Optoelectronics Technology Co., Ltd. Upon the completion of this deal, the total share capital of the Company increased from 13,519,279,411 shares to 14,030,788,362 shares. |
I. General information (continued)
| During 2022, investors of TCL Directional II Convertible bonds exercised their rights of conversion resulting in additional issue of 235,120,702 shares, and the total share capital of the Company increased from 14,030,642,421 shares to 14,265,763,123 shares. In December 2022, the Company issued 2,806,128,484 ordinary shares denominated in RMB to specific investors in a non-public offering with the approval of the ZJXK [2022] No. 1658 issued by the China Securities Regulatory Commission, resulting in an increase of 2,806,128,484 shares in total share capital of the Company to 17,071,891,607 shares from 14,265,763,123 shares. | |
| As of December 31, 2022, the total issued share capital of the Company was 17,071,891,607 shares. See note V. 46 for details. | |
| The registered address of the Company is: TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province. |
(II) Scope of business
| The Company and its subsidiaries (collectively referred to as the “Company”) are primarily engaged in the research, development, production and sales of semi-conductors, electronic products and communication devices, new optoelectronic products, liquid crystal display devices, import and export of goods and technologies (excluding goods and technologies that are prohibited from import and export or require an administrative approval for import and export), venture capital business and venture capital consultation, entrepreneurial management services for start-up enterprises, participation in the initiation of venture capital institutions and investment management advisory institutions, immovable property leasing, IT services, conference services, computer technical services and development service of electronic products and technologies, development and sale of software, patent transfer, customs clearance services, consulting services, payments and settlements (where any approval from any relevant department is required according to law, it must be obtained before carrying out the relevant operations activities). |
(III) Authorization of financial statements for issue
| These financial statements were authorized for issue by the Company’s Board of Directors on March 30, 2023. |
II Scope of consolidated financial statements
| As at the end of the Reporting Period, for subsidiaries included in the consolidated financial statements, please refer to Note VII, 1, (1) "Breakdown of important subsidiaries". For the changes to the scope of the consolidated financial statements of the Reporting Period, see Note VI. |
III Significant accounting policies and accounting estimates1 Basis for the preparation of financial statements
| The preparation of financial statements of the Company is based on the actual transactions and events in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" published by the Ministry of Finance and specific corporate accounting standards, application guidelines for corporate accounting standards, corporate accounting standards interpretations and other relevant regulations (hereinafter collectively referred to as "corporate accounting standards") for confirmation and measurement, combining the provisions of “Regulations on Information Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports” (revised in 2014) published by CSRC. |
2 Going concern basis
| The Company has evaluated the ability to continue as a going concern for 12 months from the end of the Reporting Period and has not identified any issues or circumstances that result in significant doubts about its ability to continue as a going concern. Therefore, the financial statements have been prepared on a going concern basis. | |
| III | Significant accounting policies and accounting estimates (continued) |
3 Statement of compliance with corporate accounting standards
| The financial statements are in compliance with the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the financial position, operating results, cash flow and other relevant information of the Company during the Reporting Period. |
4 Accounting period
| The Company adopts the calendar year as accounting year, and its fiscal year is from January 1 to December 31 of the Gregorian calendar. |
5 Operations cycle
| The Company does not take the operating cycle as the criteria for liquidity classification of assets and liabilities. |
6 Functional currency for bookkeeping
| The functional currency for bookkeeping and the preparation of financial statements are all denominated in RMB, and are presented in the unit of RMB’000 in all the tables herein unless otherwise specified. |
7 Accounting treatments for business combinations involving enterprises under and not under commoncontrol
| (1) | When the terms, conditions and economic influence of transactions in the process of a step-by-step combination conform to one or more of the following, multiple transactions will be accounted for as a package transaction: |
| (a) | These transactions are made simultaneously or with consideration of influence on each other; |
| (b) | These transactions can only achieve a complete business outcome when they are accounted for collectively; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transactions; |
| (d) | A transaction is uneconomical individually, but is economical when considered collectively with other transactions. |
| (2) | Business combinations involving enterprises under common control |
| (a) | Individual financial statement |
| The assets and liabilities acquired by the Company in business combinations are measured based on the book value of assets and liabilities of the combined party on the date of combination (including the goodwill of the ultimate controlling party resulting from the acquisition of the combined party). The difference between the book value of net assets acquired in the combination and that of the consideration paid for the combination (or the total par value of shares issued) is used to adjust the capital stock premium in the capital reserve, and when the capital stock premium in the capital reserve is insufficient for offset, it is used to adjust the retained earnings. If there is a contingent consideration and it is necessary to confirm the provision or assets, the difference between the estimated amount of liabilities or assets and the settlement amount of subsequent contingent consideration is used to adjust the capital reserve (capital stock premium), and when the capital reserve is insufficient, it is used to adjust the retained earnings. |
| III | Significant accounting policies and accounting estimates (continued) |
| 7 | Accounting treatments for business combinations involving enterprises under and not under common control (continued) |
| (2) | Business combinations involving enterprises under common control (continued) |
| (a) | Individual financial statements (continued) |
| For a business combination that is ultimately realized through multiple transactions, if it is a package transaction, each transaction is treated as a transaction that acquires control; if it is not a package transaction, on the date of acquisition of control, the difference between the initial cost of long-term equity investments and the book value of long-term equity investments before the combination plus the book value of the newly paid considerations on the date of combination is used to adjust the capital reserve; and when the capital reserve is insufficient for offset, it is used to adjust the retained earnings. For equity investments held prior to the date of combination, no accounting treatment is carried out for other comprehensive gains recognized by equity accounting or financial instrument confirmation and measurement standards, and up to the disposal of the investment, the accounting treatment shall be based on the same basis as the direct disposal of the assets or liabilities of the invested entity; other changes in the owner’s equity other than net profit or loss, other comprehensive income or profit distribution of net assets of the invested company recognized as equity are not subject to accounting, and will be transferred to the current profit and loss until disposal of the investment. | |
| The agency fees paid for audits, legal services, assessments and consultations and other direct related expenses incurred in the business combination are recognized in profit or loss in the period in which they were incurred. The transaction costs for the issuance of equity securities for the business combination that may be directly attributed to equity transactions can be deducted from equity; transaction costs directly related to the issuance of a debt instrument as a combination consideration are treated as an initial recognized amount included in the debt instrument. | |
| If the combined party has a consolidated financial statement, the initial investment cost of the long-term equity investment is determined based on the owners' equity attributable to the parent company in the consolidated financial statements of the combined party. | |
| (b) | Consolidated financial statements |
| The assets and liabilities acquired by the combining party in the business combination are measured based on the book value of the owner's equity of the combined party in the consolidated financial statements of the ultimate controlling party. | |
| In the case where a business combination is finally realized through multiple transactions, if it is a package transaction, each transaction is treated as a transaction for acquiring control; if it is not a package transaction, the long-term equity investments held by the combined party before the combination, the gains and losses, other comprehensive income and other changes in owners' equity have been recognized between the date of acquisition or the date of the combining party and the combined party under the final control of the same party, whichever is later, and the date of combination. These are used to offset the initial retained earnings or current profit and loss during the comparative reporting periods respectively. | |
| If the accounting policies adopted by the combined parties are inconsistent with those adopted by the Company, the Company shall make adjustments in accordance with the accounting policies of the Company on the date of combination, and on this basis, confirm the consolidated financial statements in accordance with the provisions of Accounting Standards for Business Enterprises. |
| III | Significant accounting policies and accounting estimates (continued) |
| 7 | Accounting treatments for business combinations involving enterprises under and not under common control (continued) |
| (3) | Combination not under common control |
| The assets paid and liabilities incurred or assumed by the Company as a consideration for the business combination are measured at fair value on the date of purchase, and the difference between the fair value and the book value is recognized in profit or loss. Where a future event that may affect the combination costs is agreed in the combination contract, if the estimated future events are likely to occur on the date of purchase and the amount of the impact on combination costs can be reliably measured, it is also included in the combination costs. | |
| The agency fees paid for audits, legal services, assessments and consultations and other directly related expenses incurred in the business combination are recognized in profit or loss during the period in which they are incurred. The transaction costs for the issuance of equity securities for the business combination that may be directly attributed to equity transactions can be deducted from equity; | |
| The difference between the higher combination cost and lower fair value of net identifiable assets of the acquired party gained in the combination is recognized as goodwill by the Company. In case that the cost of combination is less than the fair value of the net identifiable assets of the acquired party gained in the combination, and the difference is still less than the fair value of net identifiable assets of the acquired party gain in the combination after review, the difference is included in the current profit and loss by the Company. | |
| In the case where a business combination involving enterprises not under common control is finally realized through multiple transactions step by step, if it is a package transaction, each transaction is treated as a transaction for acquiring control; if it is not a package transaction, the individual financial statements and consolidated financial statements are treated separately for accounting purposes. | |
| (a) | In the individual financial statements, if the equity investment held before the date of combination is accounted for using equity method, the sum of the book value of equity investments of the acquired party held before the date of acquisition plus the new investment cost on the date of acquisition is recognized as the initial cost of the investment; the remaining comprehensive income confirmed in equity investments using equity method before the date of acquisition is accounted for, when the investment is disposed, on the same basis as those the invested party adopted directly to dispose of the relevant assets or liabilities. |
| If the equity investment held before the date of combination is accounted for by financial instrument recognition and measurement criteria, the sum of the fair value of equity investment on the date of combination plus the new investment cost is taken as the initial investment cost on the date of combination. The difference between the fair value and the book value of the original equity interest, and the accumulated fair value changes originally included in other comprehensive income should be transferred to return on investment in the current period of combination date. | |
| (b) | In the consolidated financial statements, the equity of the acquired party held before the date of acquisition is re-measured based o the fair value of the equity on the date of acquisition. The difference between the fair value and the book value is included in the current return on investment; if the equity of the acquired party held before the date of acquisition involves other comprehensive income, etc. under the equity method, other comprehensive income, etc. related to it is converted into return on investment in the current period of the acquisition date. |
| III | Significant accounting policies and accounting estimates (continued) |
8 Method for preparing consolidated financial statements
| The scope of consolidation of the Company's consolidated financial statements is determined on the basis of control, and all subsidiaries (including separate entities controlled by the parent Company) are included in the consolidated financial statements. | |
| The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with those of the Company. If the accounting policies or accounting periods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustments will be made in accordance with the Company's accounting policies and accounting periods when preparing consolidated financial statements. The consolidated financial statements are based on the financial statements of the Company and its subsidiaries as well as other relevant information, and are prepared by the Company after adjusting the long-term equity investments for the subsidiaries in accordance with the equity method. | |
| The impact of intracompany transactions between the Company and its subsidiaries, and intracompany transactions between subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement and consolidated statement of changes in shareholders' equity is offset in the preparation of consolidated financial statements. | |
| If the current losses shared by the minority shareholders of a subsidiary exceed the share enjoyed by the minority shareholder in the initial owners' equity of the subsidiary, the balance will still reduce the minority interests. | |
| During the Reporting Period, if a subsidiary or business is added due to the business combination involving enterprises under common control, the opening balance of the consolidated balance sheet is adjusted; the income, expenses and profits of the subsidiary or business from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary or business from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated cash flow statement. If a subsidiary or business is added due to a business combination involving enterprises under non-common control, the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary or business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flow of the subsidiary or business from the date of acquisition to the end of the Reporting Period is included in the consolidated cash flow statement. | |
| During the Reporting Period, if a subsidiary or business is added due to a business combination involving enterprises under non-common control, the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary or business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flow of the subsidiary or business from the date of acquisition to the end of the Reporting Period is included in the consolidated cash flow statement. | |
| During the Reporting Period, if the Company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flow of the subsidiary or business from the beginning of the Reporting Period to the disposal date is included in the consolidated cash flow statement. | |
| When the Company loses control over the invested party due to disposal of part of the equity investment or other reasons, the remaining equity investment after disposal will be re-measured based on its fair value by the Company on the date of loss of control. The difference of the sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets and goodwill of the original subsidiary that should be enjoyed in accordance with the original share-holding ratio since the date of acquisition or combination, is accounted for the return on investment in the current period of loss of control. Other comprehensive income or net profit and loss related to the original subsidiary's equity investment, other comprehensive income and other changes in owners' equity other than profit distribution, will be converted into current return on investment when control is lost, except for other comprehensive gains arising from the re-measurement of net liabilities of the Benefit Plan made by the invested party or changes in net assets. |
| III | Significant accounting policies and accounting estimates (continued) |
9 Classification of joint arrangements and accounting treatment method for joint operations
| (1) | Classification of joint arrangements |
| The Company classifies a joint arrangement as a joint operation or a joint venture according to factors such as the structure and legal form of the joint arrangement, the terms agreed in the joint arrangement, other relevant facts and circumstances. | |
| Joint arrangements not reached through independent entities are classified as joint operations; joint arrangements reached through independent entities are usually classified as joint ventures; however, a joint arrangement that is indicated by conclusive evidence of meeting any of the following conditions and meeting the provisions of relevant laws and regulations is classified as a joint operation: ① The legal form of the joint arrangement shows that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ② The contractual terms of the joint arrangement stipulates that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ③ Other relevant facts and circumstances show that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. For example, the parties enjoy all the output substaintially related to the joint arrangement, and the repayment of the liabilities relating to the arrangement continues relying on the support of the parties. | |
| (2) | Accounting treatment method for joint operations |
| The Company shall recognize the following items in relation to interest in the joint operation, and carry out accounting treatment in accordance with the provisions of relevant accounting standards for business enterprises: ① its assets, including its share of any assets held jointly; ② its liabilities, including its share of any liabilities incurred jointly; ③ its revenue from the sale of its share of the output arising from the joint operations; ④ its share of the revenue from the sale of the output by the joint operations; and ⑤ its expenses, including its share of any expenses incurred jointly. | |
| If investing or selling assets (except those that constitute a business), etc., into or to the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the joint operation. The Company will recognize in full the asset impairment loss arising if the assets invested or sold are impaired in compliance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment, etc. | |
| If purchasing assets (except those that constitute a business), etc., from the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the Company. The Company will recognize its share of the asset impairment loss arising if the assets purchased are impaired in compliance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment, etc. | |
| The Company does not enjoy joint control over the joint operations. If the Company has rights to the assets, and obligations for the liabilities, relating to the joint operation, it shall still be accounted for by the above principles; otherwise, it shall be accounted for by the relevant accounting standards for business enterprises. |
| III | Significant accounting policies and accounting estimates (continued) |
10 Criteria for determining cash and cash equivalents
| In the preparation of the cash flow statement, the Company recognizes cash holdings and deposits that can be used for payment at any time as cash. | |
| The Company recognizes cash that is easily converted into known amount with short holding period (generally due within three months from the date of purchase) and strong liquidity, and investments with low risk of changes in value (including investments in bonds within three months, while excluding equity investments), as cash equivalents. |
11 Foreign currency business and translation of foreign currency statements
| (1) | Foreign currency transactions |
| Foreign currency transactions between the Company and its subsidiaries are translated into base currency at the spot exchange rate on the transaction date. | |
| Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date, and the exchange differences resulted therefrom, except that the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization should be treated in accordance with the principle of capitalization of borrowing costs, are all included in the current profit and loss. Foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the transaction date, and the amount of base currency for bookkeeping is not changed. | |
| Foreign currency non-monetary items measured at fair value are translated at the spot exchange rates on the date when the fair value is determined, and the exchange differences resulted therefrom are included in profit or loss in the current period as a change in fair value. In the case of foreign currency non-monetary items that are at fair value through other comprehensive income, the exchange differences incurred are included in other comprehensive income. | |
| (2) | Translation of foreign currency financial statement |
| When the Company translates the financial statements of overseas operations, the assets and liabilities in the balance sheet are translated at the spot exchange rate on the balance sheet date. The owner’s equity items, except for the “Retained earnings” item, are translated at the spot exchange rate at the time of occurrence of the items. All the incurred items in the income statement are translated at the current average exchange rate of the period in which transactions occur. | |
| The translation differences of foreign currency financial statement arising from the above translation are included in other comprehensive income. When disposing of an overseas operation, the translation differences in the foreign currency financial statements related to the foreign operation listed in other comprehensive income items in the balance sheet are transferred from the other comprehensive income item to the current profit and loss. All the incurred items in the cash flow statement are translated at the current average exchange rate of the period in which transactions occur. All the opening balance and actual amount of the previous year are listed on the basis of the amount translated in the previous year. |
| III | Significant accounting policies and accounting estimates (continued) |
12 Financial instruments
| When the Company becomes a party to a financial instrument, it recognizes a financial asset or liability. | |
| The effective interest method refers to the method of calculating the amortized cost of financial assets or liabilities and allocating interest income or interest expenses into each accounting period. | |
| The effective interest rate refers to the interest rate used to discount the estimated future cash flow of a financial asset or financial liability during its expected duration to the book balance of the financial asset or the amortized cost of the financial liability. When determining the effective interest rate, the expected cash flow is estimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment, extension, call options or other similar options), but the expected credit loss is not considered. | |
| The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the repaid principal from the initial recognition amount of the financial asset or financial liability, adding or subtracting the difference between the initial recognition amount and the maturity amount by using the effective interest method, and then deducting the accumulated accrued loss reserve (only applicable to financial assets). | |
| (1) | Classification and measurement of financial assets |
| According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets, the Company divides the financial assets into the following three categories: | |
| (a) | Financial assets at amortized cost. |
| (b) | Financial assets at fair value through other comprehensive income. |
| (c) | Financial assets at fair value through profit or loss. |
| Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider financing components for no more than one year, the initial measurement shall be made at the transaction price. | |
| For financial assets at fair value through profit or loss, transaction expenses are directly recognized in the current profit and loss. For other financial assets, transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial assets depends on their classification. All related financial assets affected will be reclassified when and only when the Company changes its business model of managing financial assets. | |
| (a) | Financial assets classified as measured at amortized cost |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial asset is to collect the contractual cash flow, then the Company classifies the financial asset as measured at amortized cost. Financial assets of the Company that are classified as measured at amortized cost include monetary assets, notes receivable, accounts receivable, other receivables, long-term receivables, debt investments, etc. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (1) | Classification and measurement of financial assets (continued) |
| The Company recognizes interest income from such financial assets with the effective interest method, and carries out subsequent measurement at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in current profit and loss. The Company calculates and determines the interest income based on the book balance of financial assets multiplied by the effective interest rate except for the following circumstances: | |
| ① For purchased or originated credit-impaired financial assets, the Company calculates and determines their interest income at the amortized cost of the financial assets and the credit-adjusted effective interest rate since the initial recognition. ② For financial assets not credit-impaired at the time of being purchased or originated but in the subsequent period, the Company calculates and determines their interest income at the amortized cost and the effective interest rate of the financial assets in the subsequent period. If the financial instrument is no longer credit-impaired due to the improvement of its credit risk in the subsequent period, the Company calculates and determines the interest income by multiplying the effective interest rate by the book balance of the financial asset. | |
| (b) | Financial assets classified as measured at fair value through other comprehensive income |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial assets is both to collect contractual cash flow and for its sale, then the Company classifies the financial assets as measured at fair value through other comprehensive income. | |
| The Company recognizes interest income from such financial assets with the effective interest method. Except that the interest income, impairment loss and exchange difference are recognized as the current profit and loss, other changes in fair value are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the current profit and loss. | |
| Notes and accounts receivable at fair value through other comprehensive income are reported as receivables financing, and such other financial assets are reported as other debt investments. Among them, other debt investments maturing within one year from the balance sheet date are reported as the current portion of non-current assets, and other debt investments maturing within one year are reported as other current assets. | |
| (c) | Financial assets designated as measured at fair value through other comprehensive income |
| At the time of initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets at fair value through other comprehensive income on the basis of individual financial assets. | |
| Changes in the fair value of such financial assets are included in other comprehensive income without allowance for impairment. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the retained earnings. During the investment period when the Company holds the equity instrument, the dividend income is recognized and included in the current profit and loss when the Company's right to receive dividends has been established, the economic benefits related to dividends are likely to flow into the Company, and the amount of dividends can be measured reliably. The Company reports such financial assets under the item of investments in other equity instruments. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (1) | Classification and measurement of financial assets (continued) |
| An investment in equity instruments is a financial asset at fair value through profit or loss when it is obtained mainly for recent sale, or is part of the identifiable portfolio of financial assets centrally managed when initially recognized and objective evidence exists for a short-term profit model in the near future, or is a derivative (except for derivatives defined as financial guarantee contracts and designated as effective hedging instruments). | |
| (d) | Financial assets classified as measured at fair value through profit or loss |
| If failing to be classified as measured at amortized cost or at fair value through other comprehensive income, or not designated as measured at fair value through other comprehensive income, financial assets are all classified as measured at fair value through profit or loss. | |
| The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. | |
| The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. | |
| (e) | Financial assets designated as measured at fair value through profit or loss |
| At the time of initial recognition, the Company may irrevocably designate financial assets as measured at fair value through profit or loss on the basis of individual financial assets in order to eliminate or significantly reduce accounting mismatches. | |
| If the mixed contract contains one or more embedded derivative instruments and its main contract is not any financial asset as above, the Company may designate the whole of the mixed contract as a financial instrument at fair value through profit or loss. Except under the following circumstances: | |
| ① Embedded derivatives do not significantly change the cash flow of mixed contracts. ② When determining initially whether similar mixed contracts need to be split, it is substantially clear that embedded derivatives contained in them should not be split without analysis. If the prepayment right embedded in a loan allows the holder to prepay the loan at an amount close to the amortized cost, the prepayment right does not need to be split. | |
| The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. | |
| The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (2) | Classification and measurement of financial liabilities |
| The Company classifies a financial instrument or its components into financial liabilities or equity instruments upon initial recognition according to the contract terms of and the economic substance reflected by the financial instrument issued, rather than only in legal form, in combination with the definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair value through profit or loss, or other financial liabilities, or derivatives designated as effective hedging instruments. | |
| Financial liabilities are measured at fair value upon initial recognition. For financial liabilities at fair value through profit or loss, relevant transaction expenses are directly included in current profits and losses; for other categories of financial liabilities, relevant transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial liabilities depends on their classification: | |
| (a) | Financial liabilities at fair value through profit or loss |
| Such financial liabilities include held-for-trading financial liabilities (including derivatives falling under financial liabilities) and financial liabilities designated as measured at fair value upon initial recognition and through profit or loss. | |
| A financial liability is a held-for-trading financial liability if it is mainly undertaken for recent sale or repurchase, or is part of the identifiable portfolio of financial instruments centrally managed, and there is objective evidence that the enterprise has recently employed a short-term profit model, or is a derivative instrument, except derivatives designated as effective hedging instruments and derivatives conforming to financial guarantee contracts. Held-for-trading financial liabilities (including derivatives falling under financial liabilities) are subsequently measured at fair value. All changes in fair values except for hedging accounting are included in current profits and losses. | |
| The Company irrevocably designates financial liabilities as measured at fair value through profit or loss at the time of initial recognition in order to provide more relevant accounting information, provided: | |
| ① Such financial liabilities can eliminate or significantly reduce accounting mismatches. ② The financial liability portfolio or the portfolio of financial assets and liabilities is managed and evaluated for performance on the basis of fair value according to the enterprise risk management or investment strategy stated in the official written documents, and is reported to key management personnel within the enterprise on this basis. | |
| The Company subsequently measures such financial liabilities at fair value. Apart from changes in fair value that are brought about by changes in the Company’s own credit risk and included in other comprehensive income, other changes in fair value are included in current profits and losses. Unless including such changes in other comprehensive income will cause or expand accounting mismatch in profit or loss, the Company will include all changes in fair value (including the amount affected by changes in its own credit risk) in current profits and losses. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (2) | Classification and measurement of financial liabilities (continued) |
| (b) | Other financial liabilities |
| The Company classifies financial liabilities except for the following items as measured at amortized cost. Such financial liabilities are recognized by the effective interest method and subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in the current profits and losses: | |
| ① Financial liabilities at fair value through profit or loss. ② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets. ③ Financial guarantee contracts that do not fall under the first two categories hereof, and loan commitments that do not fall under category (1) hereof and lend at a below-market interest rate. | |
| Financial guarantee contracts refer to contracts that require the issuer to pay a specific amount to the contract holder who has suffered losses when a specific debtor fails to pay the debt in accordance with the original or modified terms of the debt instrument. Financial guarantee contracts that are not financial liabilities designated as measured at fair value through profit or loss are measured after initial recognition according to the loss reserve amount and of the initial recognition amount, less the accumulated amortization amount during the guarantee period, whichever is higher. | |
| (3) | Derecognition of financial assets and liabilities |
| (a) | Financial asset are derecognized, i.e. written off from its account and balance sheet if any of the following conditions is met: |
| ① The contractual right to receive cash flow from the financial asset is terminated; or ② The financial asset has been transferred, which meets the requirements for derecognition of financial assets. | |
| (b) | Conditions for derecognition of financial liabilities |
| If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability (or part thereof) is derecognized. | |
| The existing financial liability is derecognized with a new one recognized, and the difference between the carrying amount and the consideration paid (including transferred non-cash assets or assumed liabilities) is included in the current profits and losses, if an agreement is signed between the Company and the lender to replace the existing financial liability by assuming a new one, and the contract terms of these two financial liabilities are substantially different, or the contract terms of the existing financial liability (or part thereof) are substantially modified. | |
| If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall be distributed according to the proportion of the fair value of the continuing recognition portion and the derecognition portion to the overall fair value on the repurchase date. The difference between the carrying amount allocated to the derecognized portion and the consideration paid (including transferred non-cash assets or liabilities assumed) shall be included in the current profits and losses. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (4) | Recognition basis and measurement method of financial asset transfer |
| When a financial asset is transferred, the Company evaluates the risks and rewards retained of the financial asset ownership: | |
| (a) | If almost all the risks and rewards of the financial asset ownership are transferred, such financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities. |
| (b) | If risks and rewards of the financial asset ownership are substantially retained, such financial asset shall continue to be recognized. |
| (c) | In circumstances where the Company neither transfers nor retains risks and rewards of the financial asset ownership substantially (i.e. circumstances other than ① and ② of this article), based on whether it retains control over such financial asset, |
| ① the financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities if such control is not retained; or ② the relevant financial asset shall continue to be recognized to the extent that it continues to be involved in the transferred financial asset, and the relevant liabilities shall be recognized accordingly if such control is retained. The extent that it continues to be involved in the transferred financial asset refers to the extent the Company bears the risks or rewards on changes in the value of the transferred financial asset. | |
| When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance over form shall be adopted. The Company divides the transfer of financial assets into overall transfer and partial transfer. | |
| (a) | If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profits and losses: |
| ① The carrying amount of the transferred financial asset on the date of derecognition. ② The sum of the consideration received for the transfer of financial assets and the amount of the respective derecognized portion of the accumulated changes in fair value originally included in other comprehensive income directly (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). | |
| (b) | If the financial asset is partially transferred and the transferred part meets the conditions for derecognition, the carrying amount of the financial asset before transfer shall be allocated between the derecognition portion and the continuing recognition portion (in this case, the retained service asset shall be regarded as the continuing recognition part of the financial asset) according to the respective relative fair values on the transfer date, and the difference between the following two amounts shall be included in the current profits and losses: |
| ① The carrying amount of the derecognized portion on the derecognition date. ② The sum of the consideration received for the derecognized portion and the amount of the corresponding derecognized portion of the accumulated changes in fair value originally included in other comprehensive income (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (4) | Recognition basis and measurement method of financial asset transfer (continued) |
| If the transfer of a financial asset does not meet the conditions for derecognition, the financial asset shall continue to be recognized and the consideration received shall be recognized as a financial liability. | |
| (5) | Determination of fair value of financial assets and liabilities |
| The fair value of a financial asset or liability with an active market shall be determined by the quoted price in the active market, unless the financial asset has a sell-off period for the asset itself. For the financial assets restricted for the assets themselves, the compensation amount demanded by market participants due to the risk of not being able to sell the financial assets on the open market within the specified period shall be deducted from the quoted price in the active market. Quoted prices in the active market includes those for related assets or liabilities that can be easily and regularly obtained from exchanges, dealers, brokers, industry groups, pricing or regulatory agencies, and can represent actual and recurring market transactions on the basis of fair trade. | |
Financial assets initially acquired or derived or financial liabilities assumed shall bedetermined on the basis of market transaction price.
| The fair value of financial assets or liabilities without an active market shall be determined by valuation techniques. At the time of valuation, the Company adopts valuation techniques that are applicable under the current circumstances and are supported by sufficient available data and other information, selects input values consistent with the characteristics of relevant assets or liabilities considered by market participants in the transactions thereof, and gives priority to the use of relevant observable input values whenever possible. If the relevant observable input value cannot be obtained or be feasibly obtained, the unobservable input value shall be used. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (6) | Impairment of financial instruments |
| Based on the expected credit loss, the Company conducts impairment accounting of financial assets classified as measured at amortized cost, financial assets classified as measured at fair value through other comprehensive income and financial guarantee contracts and recognizes loss reserves. | |
| Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchased or originated financial assets of the Company shall be discounted at the credit-adjusted effective interest rate of such financial assets. | |
| For receivables arising from transactions regulated by the income criteria, the Company uses the simplified measurement method to measure the loss reserve according to the amount equivalent to the expected credit loss during the entire duration. | |
| For credit-impaired purchased or originated financial assets, only the accumulated changes in the expected credit losses during the entire duration since the initial recognition are recognized as loss reserves on the balance sheet date. On each balance sheet date, the amount of change in the expected credit loss during the entire duration is included in the current gains and losses as impairment losses or gains. Even if the expected credit loss during the entire duration on the balance sheet date is less than that reflected in the estimated cash flow upon initial recognition, the favorable change in the expected credit loss is recognized as impairment gains. | |
| In addition to other financial assets adopting the above simplified measurement method and other than the credit-impaired purchased or originated ones, the Company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial recognition, measures its loss reserves and recognizes the expected credit loss and its changes respectively according to the following circumstances on each balance sheet date: | |
| (a) | If the credit risk of the financial instrument has not increased significantly since its initial recognition, it is in the first stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss over the next 12 months, and the interest income shall be calculated according to the book balance and the effective interest rate. |
| (b) | If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in the second stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss throughout its life, and the interest income shall be calculated according to the book balance and the effective interest rate. |
| (c) | If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and the Company shall measure its loss reserve according to an amount equivalent to its expected credit loss throughout its life, and calculate the interest income at the amortized cost and the effective interest rate. The increase or reversed amount of the credit loss reserve for financial instruments shall be included in the current profits and losses as impairment losses or gains. Except for financial assets classified as measured at fair value through other comprehensive income, the credit loss reserve will offset the carrying amount of the financial assets. For financial assets classified as measured at fair value through other comprehensive income, the Company recognizes its credit loss reserve in other comprehensive income without reducing its carrying amount presented in the balance sheet. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (6) | Impairment of financial instruments (continued) |
| In the previous accounting period, the Company has measured the loss reserve, the amount equivalent to the expected credit loss of the financial instruments throughout its life. However, on the balance sheet date of the current period, the financial instrument no longer conforms to the situation of significant increase in credit risk since initial confirmation; on the balance sheet date of the current period, the Company has measured the loss reserve of the financial instruments, the amount equivalent to the expected credit loss in the next 12 months, and the reversed amount of the loss reserve thus formed is included in the current profit and loss as impairment profit. | |
| (a) | Significant increase in credit risk |
| In order to determine whether the credit risk of financial instruments has increased significantly since the initial recognition, the Company uses the available reasonable and based forward-looking information and compares the risk of default of financial instruments on the balance sheet date with the risk of default on the initial confirmation date. When the Company applies provisions on depreciation of financial instruments to financial guarantee contracts, the initial recognition date shall be regarded as the date when the Company becomes a party to make irrevocable commitments. | |
| For the assessment of whether the credit risk has increased significantly, the Company will consider the following factors | |
| ① According to whether the actual or expected debtor's operations results have changed significantly; ② Whether the regulatory, economic or technological environment of the debtor has undergone significant adverse changes; ③ Whether the following items have changed significantly: the value of collateral as debt mortgage, or the guarantee provided by a third party, or the quality of credit enhancement; these changes will reduce the debtor’s economic motivation to repay the loan within the time limit stipulated in the contract and could impact the probability of default; ④ Whether the debtor's expected performance and repayment behavior have changed significantly; ⑤ Whether the Company's credit management methods for financial instruments have changed, etc. | |
| If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by the Company, the Company assumes that the credit risk of the financial instrument has not increased significantly since the initial recognition. The financial instrument will be deemed to have lower credit risk under the following circumstances: the default risk of the financial instrument is lower; the borrower has a strong capacity to fulfill its contractual cash flow obligations in a short time; furthermore, even if there are adverse changes in the economic situation and operating environment for a long period of time, it may not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (6) | Impairment of financial instruments (continued) |
| (b) | Financial assets with depreciation of credit |
| If one or more events have adverse effects on the expected future cash flow of a financial asset, the financial asset will become a financial asset that has suffered credit impairment. The following observable information can be regarded as evidence of credit impairment of financial assets: | |
| ② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.; ③ The creditor gives concessions to the debtor due to economic or contractual considerations related to the debtor's financial difficulties; the concessions will not be made under any other circumstances; ④ There is a great possibility of bankruptcy or other financial restructuring of the debtor; ⑤ The issuer or debtor has financial difficulties, resulting in the disappearance of the active market for the financial assets; ⑥ Purchasing or generation of a financial asset with a large discount, which reflects the fact of credit loss. | |
| Credit impairment of financial assets may not be caused by separately identifiable events, but may be caused by the combined effect of multiple events. | |
| (c) | Determination of expected credit loss |
| The expected credit losses of financial instruments is assessed individually and collectively. During the assessment of the expected credit losses, the Company will take into account reasonable and reliable information about past events, the current situation and future economic situation forecast. | |
| The Company divides financial instruments into different combinations on the basis of common credit risk characteristics. Common credit risk characteristics adopted by the Company include: financial instrument type, credit risk rating, aging combination, overdue aging combination, contract settlement cycle, debtor's industry, etc. To understand the individual evaluation criteria and combined credit risk characteristics of relevant financial instruments, please refer to the accounting policies of relevant financial instruments for details. | |
| The Company adopts the following methods to determine the expected credit losses of relevant financial instruments: | |
| ① In terms of financial assets, credit loss is equivalent to the present value of the difference between the contract cash flow that the Company shall receive and the expected cash flow. ② In terms of the financial guarantee contract, credit loss is equal to the expected amount of payment made by the Company to the holder of the contract for credit loss incurred, less the present value of the difference between the amount expected to be collected from the holder of the contract, the debtor or any other party. ③ If, on the balance sheet date, a financial asset has suffered credit impairment, but one does not purchase or generate a financial asset that has suffered credit impairment, the credit loss is equivalent to the difference between the book balance of the financial asset and the present value of the estimated future cash flow discounted at the original actual interest rate. | |
| Factors reflected in the Company's method of predicting credit losses by quantitative finance tools include: unbiased probability weighted average amount determined by evaluating a series of possible results; time value of money; reasonable and reliable information about past events, current situation and future economic situation forecast that can be obtained on the balance sheet date without unnecessary extra costs or efforts. |
| III | Significant accounting policies and accounting estimates (continued) |
| 12 | Financial instruments (continued) |
| (6) | Impairment of financial instruments (continued) |
| (d) | Write-off of financial assets |
| If the Company cannot reasonably expect the contract cash flow of the financial asset to be fully or partially recovered, the book balance of the financial asset will be written off directly. This write-off constitutes the derecognition of relevant financial assets. | |
| (7) | Offset of financial assets and financial liabilities |
| In the balance sheet, financial assets and financial liabilities are shown separately without offsetting each other. However, if the following conditions are met at the same time, the net amount after offset will be listed in the balance sheet: | |
| (a) | The Company has the legal right, which is currently enforceable, to offset the confirmed amount; |
| (b) | The Company plans to settle on a net basis, or realize the financial assets and settle the financial liabilities at the same time. |
13 Notes receivable
| For the determination method and accounting treatment method of the Company's expected credit loss on notes receivable, please refer to 12(6) of note III Impairment of financial instruments. | |
| If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of a single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide notes receivable into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. | |
| III | Significant accounting policies and accounting estimates (continued) |
14 Accounts receivable
| For the determination method and accounting treatment method of the Company's expected credit loss on accounts receivable, please refer to 12(6) of note III Impairment of financial instruments. | |
| As for the accounts receivable, if there is objective evidence that the Company will not be able to recover the money according to the original terms of the accounts receivable, the Company will separately determine its credit loss. | |
| If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of single instrument, the Company will divide the accounts receivable into several combinations according to the credit risk characteristics, and calculate the expected credit loss on the basis of the combinations (with reference to the experience of historical credit loss, and in combination with the current situation with the judgment of future economic situation) |
15 Other receivables
| For the determination method and accounting treatment method of the Company's expected credit loss of other receivables, please refer to 12(6) of note III Impairment of financial instruments. | |
| For other receivables for which there is objective evidence that the Company will not be able to recover the amount according to the original terms of the receivables, the Company will separately determine its credit loss. | |
| If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide other receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. |
16 Inventories
| (1) | Classification of inventories |
| The Company classifies inventories into raw materials, work in progress, finished goods, goods shipped in transit, turnover materials and molds with an expected benefit period of less than one year, depending on the purpose of holding the inventories. Turnover materials include low-value consumables and packaging materials. | |
| (2) | Valuation method for inventories shipped in transit |
| All types of inventories are accounted for at actual cost, and actual costs include purchase costs, processing costs and other costs. Inventories are shipped in transit by weighted average method. |
| III | Significant accounting policies and accounting estimates (continued) |
| 16 | Inventories (continued) |
| (3) | Basis for determining the net realizable value of inventories and accrual method for inventory valuation allowance |
| Closing inventories are measured at cost or net realizable value, whichever is lower. In cases where differences exists due to the net realizable value being less than the cost of inventory, inventory valuation allowance is made based on individual inventory items or the inventory category, and the difference is recognized in the current profit and loss. | |
| For inventories of goods directly used for sale, such as finished goods, merchandise inventories and materials for sale, in the normal production and operations process, the net realizable value is determined by the amount of the estimated selling expenses of the inventory less the estimated sales cost and relevant taxes and fees; for material inventories that need to be processed, in the normal production and operations process, the net realizable value is determined by the amount of the estimated selling expenses of finished products produced less the estimated cost occurred at the time of completion, the estimated selling expenses and related taxes; for inventories held for the execution of sales contracts or labor contracts, the net realizable value is calculated on the basis of the contract price, and if the quantity of inventories held is more than the quantity specified in sales contracts, the net realizable value of excess inventories is calculated based on the general sales price. | |
| At the end of the period, inventory valuation allowance is accrued according to individual inventory items; but for a large number of inventories with lower unit prices, inventory valuation allowance is accrued according to inventory category; for inventories related to the product series produced and sold in the same region with the same or similar end use or purpose, which is difficult to measure separately from other items, thus inventory valuation allowance is accrued and combined with other items. | |
| If the influencing factors of the write-down of inventory value have disappeared, the amount written-down is recovered and reversed to the amount of inventory valuation allowance already accrued, and the amount reversed is included in the current profit and loss. | |
| (4) | Inventory system |
| The Company adopts a perpetual inventory system for inventory management. | |
| (5) | Amortization method of turnover materials |
| The Company amortizes turnover materials by the one-off amortization method, and the molds with a benefit period of less than one year are amortized within the period of not exceeding one year according to the expected benefit period. |
17 Contract assets
| A contract asset shall be recognized if the Company has transferred the goods to the customer and has the right to receive a consideration depending on other factors than the passage of time. The right of the Company to unconditionally receive the considerations from customers (i.e., only depending on the passage of time) is listed independently as receivables. | |
| For the determination method and accounting treatment method of the Company’s expected credit loss on contract assets, please refer to 12(6) of note III Impairment of financial instruments. |
| III | Significant accounting policies and accounting estimates (continued) |
18. Held-for-sale
| (1) | Criteria for classification as being held for sale |
| The Company recognizes non-current assets or disposal groups that meet both of the following conditions as components held for sale: ① they can be sold immediately under the current status according to the practice of selling such assets or disposal groups in similar transactions; ② The sale is likely to occur, that is, the Company has made a resolution on the sale plan, obtained the approval from the regulatory authorities (if applicable), and obtained a confirmed purchase commitment that the sale is expected to be completed in one year. | |
| The confirmed purchase commitment refers to a legally binding purchase agreement concluded by and between the Company and another party, which contains important terms such as transaction price, time and sufficiently severe penalty for breach of contract, so that there will be little possibility of major adjustments to or cancellation of the agreement. | |
| (2) | Accounting for non-current assets or disposal groups held for sale |
| The Company shall not depreciate or amortize non-current assets or disposal groups held for sale. If the book value is higher than the amount of fair value net of selling expenses, the former shall be written down to the latter. The amount written down shall be recognized as asset impairment loss and included in the current profit and loss, and the impairment allowance for assets held for sale shall be accrued at the same time. | |
| The non-current asset or disposal group classified as being held for sale on the date of acquisition shall be initially measured at whichever initially measured amount is lower under the assumption that it is not classified as being held for sale and the amount of fair value net of selling expenses. | |
| The above principles are applicable to all non-current assets, except investment real estate subsequently measured by the fair value model, biological assets measured by the amount of fair value net of selling expenses, assets formed by employee compensation, deferred income tax assets, financial assets regulated by the relevant accounting standards of financial instruments, and rights arising from insurance contracts regulated by the relevant accounting standards of insurance contracts. |
19 Other debt investments
| For the determination method and accounting treatment methods of the Company’s expected credit loss of other debt investments, please refer to 12(6) of note III Impairment of financial instruments. |
20 Long-term receivables
| For the determination method and accounting treatment method of the Company's expected credit loss on long-term receivables, please refer to 12(6) of note III Impairment of financial instruments. | |
| As for the accounts receivable, if there is objective evidence that the Company will not be able to recover the money according to the original terms of the accounts receivable, the Company will separately determine its credit loss. | |
| If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situations, divide long receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. |
| III | Significant accounting policies and accounting estimates (continued) |
21 Long-term equity investments
| Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and the Company’s long-term equity investments in its associates and joint ventures. | |
| Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Company has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances. Associates are the investees that the Company has significant influence on their financial and operating policies. | |
| Investments in subsidiaries are presented in the Company’s financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in a joint venture and associates are accounted for using the equity method. | |
| (1) | Recognition of initial investment cost |
| (a) | Long-term equity investment formed by business combination |
| For long-term equity investment acquired by business combination involving enterprises under common control, the book value of assets and liabilities of the combined party in the consolidated financial statements of the ultimate controlling party as at the date of combination (including the goodwill formed by the ultimate controlling party's acquisition of the combined party) is recognized as investment cost. For long-term equity investment formed by combination, the share of the book value of shareholders' equity of the combined party acquired on the date of combination is recognized as initial investment cost. The difference between the initial investment cost and assets paid as per consideration for combination, the book value of liabilities incurred or assumed and the total par value of shares issued, is used to adjust capital reserve, and when the capital reserve is insufficient, it is used to adjust retained earnings. | |
| For long-term equity investment acquired by business combinations involving enterprises not under common control, the combination cost is recognized as investment cost of the long-term equity investment. The combination cost is the fair value of assets paid, the liabilities incurred or assumed, and the equity securities issued to acquire the control of acquired party on the date of acquisition. The difference between the higher combination cost and lower fair value of net identifiable assets of the acquired party acquired in the combination is recognized as goodwill; the difference between the lower combination cost and higher fair value of net identifiable assets of the acquired party acquired in the combination is included in current profits and losses after review. For business combination involving enterprises not under common control realized step by step through multiple transactions, the sum of the book value of equity investment held by the acquirer before the date of acquisition and the new investment cost on the date of acquisition is recognized as initial investment cost, and the combination cost includes the sum of assets paid, the liabilities incurred or assumed by the acquirer, and the fair value of equity securities issued. | |
| (b) | Long-term equity investment acquired by other means |
| For long-term equity investment acquired by cash payment, the actual acquisition price is recognized as initial investment cost. The initial investment cost includes expenses, taxes and other necessary expenses directly related to the acquisition of the long-term equity investment; the transaction costs incurred when issuing or acquiring the own equity instruments of acquirer attributed directly to equity transactions which can be deducted from the equity. | |
| For long-term equity investment acquired by issuing equity securities, the fair value of equity securities issued is recognized as initial investment cost. |
| III | Significant accounting policies and accounting estimates (continued) |
| 21 | Long-term equity investments (continued) |
| Provided that the non-monetary asset exchange contains commercial substance and the fair value of the assets received or assets surrendered can be reliably measured, the initial investment cost of the long-term equity investment received with non-monetary assets is determined based on the fair value of the assets surrendered, except that there is conclusive evidence that indicates that the fair value of assets received is more reliable. For non-monetary assets that do not satisfy the above condition, the book value of assets surrendered and related taxes and fees payable are recognized as the initial investment cost of the long-term equity investment. | |
| The initial investment cost of a long-term equity investment acquired by debt restructuring is determined on the basis of fair value. | |
| (2) | Subsequent measurement and recognition of related profit and loss |
| (a) | Subsequent measurement |
| The Company adopts the cost method to account for the long-term equity investments under the control of investee, and the consolidated financial statements are adjusted in accordance with the equity method in preparation. | |
| The Company adopts the equity method to account for the long-term equity investments in associates and joint ventures. The difference between the higher initial investment cost and the fair value share of identifiable net assets of the investee enjoyed in the investment is not used to adjust the initial investment cost of the long-term investment; the difference between the lower initial investment cost and the fair value share of identifiable net assets of the investee enjoyed at the time of conducting the investment is included in the current profits and losses. | |
| (b) | Recognition of profit and loss |
| Under the cost method, in addition to the actual payment or the cash dividends or profits included in the consideration that have been declared but not yet paid, the Company recognizes the investment income according to the cash dividends or profits that the investee declared to pay. | |
| Under the equity method, when the investment enterprise confirms that it should enjoy the net profit or net loss of the investee, it should adjust the net profit of the investee based on the fair value of identifiable assets of the investee at the time of conducting the investment before the confirmation, and the part of profit and loss of internal transaction between the investor and associates and joint venture that should be attributed to the investor according to the shareholding ratio, should be offset, and the investment profits and losses should be confirmed on this basis. When the Company confirms that it should assume the loss occurred by the investee, the process hereunder is followed: first, the book value of the long-term equity investment is offset. Secondly, if the book value of the long-term equity investment is insufficient for the offset, the investment loss is continued to be recognized, and the book value of long-term receivable items is offset, subject to other book value of the longterm equity that substantially constitutes the net investment of the investee. Finally, after the above-mentioned treatment, if the Company still bears additional obligations in accordance with the investment contract or agreement, the provision are recognized according to the estimated obligations and included in the current investment losses. | |
| If the investee realizes profit in the future period, the Company shall, after deducting the unconfirmed loss share, conduct the process in the reverse order of the above to write down the book balance of the confirmed liabilities and recover other long-term equity that substantially constitutes net investment of the investee and the book value of the long-term equity, and recognize the profit as return on investment. | |
| Other changes in the owners' equity other than net profit or loss, other comprehensive income and profit distribution of the investee, are used to adjust the book value of the long-term equity investment and included in capital reserve. The unrealized profit and loss from internal transactions between the Company and the investee attributed to the Company according to the shareholding ratio, is offset, and the investment profit and loss is recognized on this basis. In respect of the internal transaction losses incurred by the Company and the investee, for the part recognized asset impairment losses, the corresponding unrealized losses are not offset. |
| III | Significant accounting policies and accounting estimates (continued) |
| 21 | Long-term equity investments (continued) |
| (3) | Step-by-step disposal of investment in subsidiaries |
| When the terms, conditions and economic influence of transactions of the equity investment of the subsidiary conform to one or more of the following, accounting for multiple transactions is treated as a package transaction: | |
| (a) | These transactions are made simultaneously or with consideration of influence on each other; |
| (b) | These transactions can only achieve a complete business outcome when they are accounted for collectively; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transactions; |
| (d) | A transaction is uneconomical individually, but is economical when considered collectively with other transactions. |
| When an enterprise loses control over the original subsidiary due to disposal of part of the equity investment or other reasons, if the transactions do not belong to a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: | |
| (a) | In the individual financial statements, the disposed equity should be accounted for in accordance with the "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment"; meanwhile, the remaining equity should be recognized as long-term equity or other related financial assets based on its book value. If the remaining equity after disposal can be used to exercise common control or significant influence on the original subsidiary, it shall be accounted for in accordance with the relevant provisions on the conversion of the cost method into the equity method. |
| (b) | In the consolidated financial statements, the remaining equity should be re-measured in accordance with its fair value on the date of loss of control. The difference between the sum of the consideration acquired from the disposal of the equity and the fair value of the remaining equity, less the share of net assets of the original subsidiary that should be enjoyed in accordance with the original shareholding ratio from the date of acquisition, is included in the current profit and loss of the period in which loss of control occurred. Other comprehensive income related to the original subsidiary's equity investment should be converted into current investment income when control is lost. The Company shall disclose in the notes the fair value of the remaining equity after disposal on the date of loss of control and the amount of relevant gains or losses arising from the disposal remeasured based on the fair value. |
| If the transactions of disposal of equity investment in a subsidiary until the loss of control is a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: : | |
| (a) | In the individual financial statements, the difference between each disposal price and the book value of the long-term equity investment corresponding to the disposed equity before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred; |
| (b) | In the consolidated financial statements, the difference between each disposal price and the disposal of investment corresponding to the share of the net assets of the subsidiary before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred. |
| III | Significant accounting policies and accounting estimates (continued) |
| 21 | Long-term equity investments (continued) |
| (4) | Basis for determining control, common control and significant influence on the investee |
| Control means having the power of control over the investee, enjoying variable returns by participating in the relevant activities of the investee, and having the ability to use the power over the investee to influence the amount of returns. | |
| Common control means the control that is common to an arrangement in accordance with the relevant agreement, and the decisions of relevant activities of the arrangement must be made upon agreement of the Company and other parties sharing the control rights. | |
| Significant influence means the power to participate in the decision-making of the financial and operating policies of the investee, but by which cannot control or commonly control together with other parties the formulation of the policies. | |
| (5) | Impairment test and allowance for impairment |
| On the balance sheet date, if there is any indication that the long-term equity investment is impaired due to continuous decline in the market price or deterioration of operating conditions of the investee, the recoverable amount of long-term equity investment is determined according to the net value of a single long-term equity investment less the disposal expenses or the present value of expected future cash flows of the long-term equity investment, whichever is higher. When the recoverable amount of the long-term equity investment is lower than the book value, the book value of assets is written-off to the recoverable amount, and the amount written-down is recognized as asset impairment losses, which is included in the current profit and loss, and the corresponding allowance for asset impairment is made. | |
| For long-term equity investments without significant influence or quotation in an active market and whose fair value cannot be measured in a reliable way, the impairment loss is determined by the difference between the book value and the present value determined by discounting the future cash flows of similar financial assets at the current market rate of return. | |
| Other long-term equity investments with signs of impairment other than goodwill arising from business combination, if the measurement of recoverable amount indicates that the recoverable amount of the long-term equity investment is lower than its book value, the difference is recognized as impairment losses. | |
| Goodwill arising from a business combination is tested for impairment annually, regardless of whether there is any indication of impairment. | |
| Once the impairment loss of long-term equity investment is confirmed, it will not be reversed. |
22 Investment property
| The Company's investment property means the property held for the purpose of earning rent or capital appreciation, or both, including the land use rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant buildings held by the Company for the purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that the buildings will be used for leases and the intention of holding will not change in a short-term, the building will also be reported as investment property. | |
| The Company adopts the cost model for subsequent measurement of investment property. For the purpose of depreciation or amortization method, the same amortization policy adopted for buildings as fixed assets and land use rights as intangible assets are used. |
| III | Significant accounting policies and accounting estimates (continued) |
23 Fixed assets
| (1) | Recognition criteria for fixed assets | |||
| Fixed assets mean tangible assets held for the purpose of producing goods, rendering of services, leases or operation management, whose service life is more than one fiscal year. Fixed assets satisfying the following conditions are recognized: | ||||
| (a) | The economic benefits associated with the fixed assets are likely to flow into the enterprise; | |||
| (b) | The cost of the fixed asset can be measured in a reliable way. | |||
| The Company's fixed assets are classified into buildings, machinery and equipment, office and electronic equipment, transportation vehicles and fixed assets renovation in line with capitalization conditions. Where each component of a fixed asset with a different service life provides economic benefits to the Company in different ways and applies different depreciation rates, it is recognized as a single fixed asset. | ||||
| Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase price, related taxes, and other expenses attributable to the fixed asset before it is ready for the intended use, such as the expenses on transportation, handling, installation and professional services, etc. When determining the cost of fixed assets, discard expenses should be considered. Subsequent expenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included in the cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which they arise. | ||||
| Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed assets is determined according to the estimated service life and estimated residual value (the estimated residual value is 0-10% of the original value). The depreciation rate of classified fixed assets is as follows: | ||||
| Asset Category | Estimated Service Life | Annual Depreciation Rate | ||
| Houses and buildings | 20-50 years | 2.22%-5% | ||
| Machinery equipment | 5-10 years | 11.11%-20% | ||
| Office and electronic equipment | 2-5 years | 22.22%-50% | ||
| Transportation equipment | 3-5 years | 22.22%-33.33% | ||
| Photovoltaic power stations | 20-25 years | 4.44%-5% | ||
| Others | 4-5 years | 22.22%-25% | ||
| Fixed assets renovation is amortized evenly over the benefit period. | ||||
| All fixed assets are subject to depreciation, except for fixed assets that have been fully depreciated and continue to be used, and the land that is priced and recorded separately. Fixed assets are depreciated on a monthly basis. Fixed assets added are not depreciated in the current month when being added but from the following month; fixed assets reduced are still depreciated in the current month when being reduced, and no depreciation is made from the following month. Fixed assets that are not profitable for the Company or not used temporarily (other than seasonally deactivated) are recognized as idle fixed assets. The estimated life expectancy and depreciation rate of idle fixed assets should be re estimated, and depreciation is directly included in the current profit and loss. | ||||
| III | Significant accounting policies and accounting estimates (continued) |
24 Construction in progress
| Construction in progress refers to the necessary expenses incurred by the Company for the purchase and construction of fixed assets or investment property before being ready for the expected usable status, including engineering materials costs, labor costs, related taxes and fees, borrowing costs that should be capitalized and indirect costs that should be apportioned. Construction in progress is accounted for separately according to individual projects. | |
| After the construction in progress is ready for its intended use, it must be transferred to fixed assets or investment property, whether the final accounting procedures are completed or not. |
25 Borrowing costs
| Borrowing costs refer to interest and other related costs incurred by the Company as a result of borrowings, including interest on borrowings, amortization of discounts or premiums, ancillary expenses, and exchange differences arising from foreign currency borrowings. | |
| Borrowing costs that can be directly attributable to the acquisition, construction or production of assets eligible for capitalization are capitalized and included in the relevant asset cost. Other borrowing costs are recognized as expenses in the period in which they are incurred, and are included in the current profit and loss. Assets eligible for capitalization refer to fixed assets, investment property and inventories (only refers to inventories with an acquisition, construction and production process for more than one year) that require a substantial period of acquisition, construction or production activities to get ready for the intended use or sale status. | |
| Borrowing costs refer to the interest of borrowings, the amortization of discounts or premiums, auxiliary expenses and exchange differences arising from foreign currency borrowings incurred by the Company. Borrowing costs begin to be capitalized when the following three conditions are all satisfied: | |
| (1) | Asset expenditure has occurred; |
| (2) | Borrowing costs have occurred; |
| (3) | The acquisition, construction or production activities necessary to enable the assets to be ready for the intended usable or saleable state have commenced. |
| When an asset satisfied the capitalization conditions is abnormally interrupted during the process of acquisition, construction or production and the interruption period lasts for more than three months, the capitalization of the borrowing costs is suspended and recognized as the current expenses until the acquisition, construction or production of the assets starts again. When an asset satisfied the capitalization conditions is ready for its intended use or sale, the capitalization is stopped and the borrowing costs incurred in the future are included in the current profit and loss. The period of capitalization refers to the period from the time when the borrowing costs start to be capitalized to the point when the capitalization is stopped, and the period in which the borrowing costs are suspended for capitalization is not included. | |
| During the period of capitalization, if special borrowings are made for the acquisition, construction or production of assets eligible for capitalization, the amount of the interest expenses actually incurred during the current period of the special borrowings, less the amount of interest income earned by depositing unused borrowing funds in a bank or investment income earned by temporary investment, is recognized as the amount of capitalization. When a general loan is occupied for the purpose of purchasing, constructing or producing assets satisfied the capitalization conditions, the amount of capitalization is determined according to the weighted average of the accumulated asset expenditure exceeding the special loan portion multiplied by the capitalization rate of the general loan occupied; the capitalization rate is determined based on the weighted average interest rate of general borrowings. | |
| III | Significant accounting policies and accounting estimates (continued) |
26 Right-of-use assets
| The Company initially measures right-of-use assets at cost. Such cost includes: | |
| (1) | The initial measurement amount of lease liabilities; |
| (2) | Lease payments made on or before the commencement date of the lease term (if a lease incentive exists, net of the amount related to the lease incentive already taken); |
| (3) | Initial direct costs incurred by the Company; |
| (4) | Costs expected to be incurred by the Company to disassemble and remove the leased asset(s), restore the premises where the leased asset(s) is/are located, or restore the leased asset(s) to the condition agreed upon under the terms of the lease (excluding costs incurred to produce inventory). |
| After the commencement date of the lease term, the Company uses the cost model for subsequent measurement of right-of-use assets. | |
| If it is reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over its/their remaining service life. If it is not reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over the lease term or the remaining service life of the leased asset(s), whichever is shorter. Right-of-use assets for which depreciation reserves have been accrued are depreciated in future periods at their carrying value net of depreciation reserves, with reference to the above principles. |
| III | Significant accounting policies and accounting estimates (continued) |
27 Intangible assets
| Intangible assets are recorded at the actual cost at the time of acquisition. The service life of intangible assets is analyzed and judged at the time of acquisition. Intangible assets with a finite service life are amortized on the shortest of the estimated service lives, the beneficial period of the contract and the effective period specified by law from the time when the intangible assets are available for use. The amortization period is as follows: | ||
| Category | Amortization years | |
| Land use rights | The shorter of the years of the land use rights and the operating years of the Company | |
| Patents and non-patent technologies | 10 years or the shorter of service life, beneficiary years and legally valid years | |
| Others | Beneficiary period | |
| The Company reviews the service life and amortization method of intangible assets with limited service life at least at the end of each year, and made adjustment if necessary. | ||
| If an intangible asset is foreseen as unable to bring economic benefits to the Company, it is regarded as an intangible asset with an indefinite service life, which will be reviewed in each accounting period. If evidence indicates that the service life of the intangible asset is limited, then it is converted to an intangible asset with limited service life. Intangible assets with indefinite service lives are not amortized. | ||
| The expenditures of the Company's internal research and development projects are classified into expenditures in the research phase and expenditures in the development phase. Research means an original, planned survey of acquiring and understanding new scientific or technical knowledge. Development means the application of research results or other knowledge to a plan or design to produce new or substantially improved materials, devices, products, etc. prior to commercial production or use. | ||
| The expenditures in the research phase of the Company's internal research and development projects are included in the current profit and loss when incurred; expenditures in the development phase are recognized as intangible assets only when the following conditions are all satisfied: | ||
| (1) | It is technically feasible to complete the intangible asset to enable it to be used or sold; | |
| (2) | There is intent to complete the intangible asset and use or sell it; | |
| (3) | The intangible assets can bring economic benefits; | |
| (4) | There are sufficient technical, financial and other resources to support the development of the intangible assets as well as ability to use or sell the intangible assets; | |
| (5) | Expenditures attributable to the development stage of the intangible asset can be measured in a reliable way. | |
| If the above conditions cannot be all satisfied, the expenditures are included in the current profit and loss when incurred. | ||
| III | Significant accounting policies and accounting estimates (continued) |
28 Long-term deferred expenses
| Long-term prepaid expenses refer to various expenses that the Company has paid and whose period of amortization is more than one year, such as the improvement expenses incurred in renting fixed assets by operating leases. Long-term prepaid expenses are amortized on a straight-line basis within the beneficial period of the expense items. |
29 Impairment of long-lived assets
| The impairment of assets other than inventories, financial assets and deferred income tax assets is determined by the Company as follows: | |
| On the balance sheet date, if there is evidence indicating that the asset is idle, there is a use termination plan or the market price drops sharply, or the external environment changes significantly, impairment tests should be conducted. The difference between the recoverable amount of the asset and its book value is recognized as impairment loss and included in the current profit and loss, and corresponding allowance for asset impairment is made. For the goodwill formed by business combination and the intangible assets with indefinite service life, impairment test is carried out every year regardless of whether there is any indication of impairment. The recoverable amount is determined based on the net amount of fair value of assets less the disposal expenses, or the present value of estimated future cash flows of the assets, whichever is lower. The Company estimates the recoverable amount based on the individual assets. If it is difficult to estimate the recoverable amount of the individual assets, the recoverable amount of the asset is determined based on the asset group to which the asset belongs. After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired assets will be adjusted accordingly in the future period. | |
| Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting period. | |
| Treatment of goodwill impairment: in the impairment test of goodwill, the book value of goodwill is apportioned to the asset group or asset group portfolio expected to benefit from the synergy of business combination, and the book value of goodwill is apportioned to the relevant asset group or asset group combination in a reasonable way. In the case of impairment test, the asset group or asset group portfolio that does not contain goodwill is tested for impairment first to confirm the corresponding asset impairment loss, and then the asset group or asset group containing goodwill is tested for impairment to confirm the corresponding goodwill impairment loss. |
30 Asset transfer with repurchase conditions
| When the Company sells products or transfers other assets, it signs a product or a transfer asset repurchase agreement with the purchaser, and determines whether the sales commodity satisfies the revenue recognition conditions according to the terms of the agreement. If the after-sales repurchase is a financing transaction, the Company does not recognize the sales revenue when the product or asset is delivered. If the repurchase price is greater than the difference between the sales prices, interest of the difference is accrued on time during the repurchase period, and included in finance costs. |
31 Contract liabilities
| The Company recognizes as contract liabilities the part of the obligation to transfer the goods to the customer due to received or receivable consideration from the customer. |
| III | Significant accounting policies and accounting estimates (continued) |
32 Employee benefits
| Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. | |
| (a) | Short-term employee benefits |
| Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, and short-term paid absences. The employee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at their fair value. | |
| (b) | Post-employment benefits |
| The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the Reporting Period, the Company’s defined contribution plans mainly include basic pensions and unemployment insurance. | |
| (c) | Termination benefits |
| If the Company terminates the labor relationship with an employee before the labor contract expires, or offers compensation for encouraging the employee to accept the redundancies voluntarily, the liabilities arising from compensation for the termination of labor relations with the employee is determined, and also included in the current profit and loss, at the time when the Company cannot unilaterally withdraw the termination of the labor relationship plan or redundancies proposal, or the time when the cost associated with reorganization involving payment of termination benefits is confirmed, whichever is earlier. | |
| (d) | Other long-term employee benefits |
| Other long-term employee benefits refer to all employee benefits except short-term employment benefits, post-employment benefits and termination benefits. |
| III | Significant accounting policies and accounting estimates (continued) |
33 Estimated liabilities
| When the Company is involved in any litigation, debt guarantee, contract loss or reorganization, which is likely in need of future delivery of assets or rendering of services, and the amount of which can be measured in a reliable way, it is recognized as provision. | |
| (1) | Recognition standards for provision |
| When an obligation related to the contingent events satisfies all the following conditions, it is recognized by the Company as provision: | |
| (a) | The obligation is the current obligation of the Company; |
| (b) | The fulfillment of the obligation is likely to cause economic benefits to flow out of the Company; |
| (c) | The amount of the obligation can be measured in a reliable way. |
| (2) | Measurement methods for provision |
| The provision of the Company are initially measured on the basis of the best estimate of the expenditure required to perform the relevant current obligations. | |
| When determining the best estimate, the Company considers factors such as risks, uncertainties and time value of money related to contingent events. Where the time value of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows. | |
| The best estimates are handled as follows: | |
| In case there is a continuous range (or interval) of required expenditures, within which the possibility of occurrence of various results is the same, the best estimate is determined by the average of the middle value of the range, that is, the average of the upper and lower limits. | |
| In case there is no continuous range (or interval) of required expenditures, or there is a continuous range but the possibility of various results in the range is different, if the contingency involves a single item, the best estimate is determined based on the most probable amount; if a contingency involves multiple items, the best estimate is determined based on various possible outcomes and associated probabilities. | |
| If all or part of the expenses required by the Company to settle the provision are expected to be compensated by a third party, the compensation amount is separately recognized as an asset when it is basically confirmed to be received, and the recognized compensation amount should not exceed the book value of provision. |
| III | Significant accounting policies and accounting estimates (continued) |
34 Lease liabilities
| The Company initially measures lease liabilities at the present value of the lease payments outstanding on the commencement date of the lease term. When calculating the present value of lease payments, the Company uses the interest rate implicit in lease as the rate of discount. If the implicit interest rate of the lease cannot be determined, the incremental loan interest rate of the Company shall be used as the discount rate. Lease payments include: | |
| (a) | The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; |
| (b) | Variable lease payments that depend on indexation or ratio; |
| (c) | The exercise price of the purchase option, when applicable, if the Company is reasonably certain that the option will be exercised; |
| (d) | The amount required to be paid to exercise the option to terminate the lease if the lease term reflects that the Company will exercise the option to terminate the lease; |
| (e) | The estimated amount payable based on the secured residual value provided by the Company. |
| The Company calculates the interest expenses of lease liabilities for each period within the lease term at a fixed rate of discount and includes them in profit or loss for the current period or cost of the related assets. | |
| Variable lease payments that are not included in the measurement of lease liabilities should be included in profit or loss for the current period or cost of the related assets when they are actually incurred. |
35 Share-based payments
| The share-based payments of the Company are mainly equity-settled share-based payments, and only allow to be exercised by employees after the completion of their services in the waiting period. On each balance sheet date in the waiting period, based on the best estimate of the number of vesting equity instruments, the services obtained in the current period are included in the relevant costs or expenses and capital reserve based on the fair value at the grant date of the equity instruments. | |
| The fair value of equity instruments is determined by the external appraiser or management based on the binomial distribution method. The best estimate of the vesting equity instrument is determined by the management based on historical statistics on the vesting weights and turnover rates on the balance sheet date. | |
| Equity-settled share-based payments are measured based on the fair value of the equity instruments granted to employees. In case that the vesting right is available immediately after the grant, it is included in relevant cost or expense based on the fair value of the equity instrument on the grant date, and the capital reserve is increased accordingly. In case that the vesting right is available after the completion of services in the waiting period or satisfaction of stipulated performance conditions, on each balance sheet day during the waiting period, the services acquired in the current period are included into the relevant costs or expenses and capital reserve on the basis of the best estimate of the number of feasible equity instruments and at the fair value of the date on which the equity instruments are granted. No adjustments are made to the identified related costs or expenses or total owners' equity after the vesting date. |
| III | Significant accounting policies and accounting estimates (continued) |
36 Revenue recognition
| The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). | |
| (1) | General principles applied to revenue recognition |
| The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). Performance Obligation means that, under the contract, the Company promises to transfer commodities or services that can be clearly distinguished to the client. “Obtain the control over relevant commodities or services” refers to the ability to completely dominate the use of commodities and obtain almost all economic benefits. From the contract’s effectiveness date, the Company shall evaluate the contract, recognize each single performance obligation included and determine whether each performance obligation is fulfilled within a certain period or at a time point. | |
| When any of the following conditions is met, for performance obligation to be fulfilled within a certain period, the Company shall recognize corresponding revenue within the period as scheduled: | |
| (a) | While fulfilling the due obligation in the Company, the client obtains and consumes the resulting economic benefit; |
| (b) | The client is able to control the commodities under construction during the Company’s fulfillment; |
| (c) | Commodities generated from the Company’s fulfillment possess irreplaceable purpose and the Company has the right to charge all fulfilled performance obligations within the whole contract period; otherwise, the Company shall recognize corresponding revenue when the client obtains the control over relevant commodities or services. |
| For any performance obligation with a certain period, the Company shall apply the output method/input method to determine the appropriate fulfillment schedule based on the specific nature of commodities and services. The output method is to determine the fulfillment schedule according to the value of commodities transferred to the client (while the input method is to determine the fulfillment schedule according to the Company’s input to fulfill the performance obligation). If the fulfillment schedule cannot be reasonably determined and the Company’s costs are predicted to be compensated, corresponding revenue shall be recognized based on the specific cost amount until the fulfillment schedule could be reasonably determined. |
| III | Significant accounting policies and accounting estimates (continued) |
| 36 | Revenue recognition (continued) |
| (2) | Principles of handling revenues from specific transactions |
| (a) | For the contract containing the sales return article: When the client obtains the control over relevant commodities, corresponding revenue shall be recognized according to the consideration amount (excluding the amount predicted to be returned due to sales return) predicted to be duly charged from transferring commodities to the client, and corresponding liabilities shall be recognized based on the amount predicted to be returned due to sales return. Meanwhile, when commodities are sold, the balance through deducting the predicted cost from taking back commodities from the book value of commodities predicted to be returned (including the impairment of value of returned commodities) shall be checked and calculated under “Returned Commodities Cost Receivable”. |
| (b) | For the contract containing the quality assurance article: it’s required to evaluate whether the quality assurance involves any separable service except for the promise (to the client) that commodities conform to established standards. If the Company provides additional service, it shall be deemed as a single performance obligation and subject to the accounting treatment according to relevant revenue criteria provisions; otherwise, the quality assurance liability shall be subject to the accounting treatment according to the accounting criteria provisions on Contingency. |
| (c) | For the sales contract containing the client’s additional purchase option: the Company shall evaluate whether the option provides the client with any significant right. If any, it shall be deemed as a single performance obligation and the transaction price shall be apportioned to the performance obligation, and corresponding revenues shall be recognized when the client executes the purchase option right and obtains the control over relevant commodities in the future or when the option becomes invalid. If the separable selling price applied to the client’s additional purchase option right cannot be directly observed, it’s required to comprehensively consider the difference in discounts between the client’s execution of option right and the client’s non-execution of option right and analyze the possibility for the client to execute the option right and other relevant information. Then, corresponding reasonable estimate shall be made. |
| (d) | The contract licensing the IP right to the client: It’s required to evaluate whether the IP right license constitutes any single performance obligation; if any, it is necessary to determine whether the performance obligation fulfillment is fulfilled within a certain period or at a time point. If any IP right license is granted to the client and royalties are charged based on the client’s actual sales or usage, corresponding revenues shall be recognized at a later time between the following dates: the day when the client’s subsequent selling or usage occurs; the day when the Company fulfills relevant performance obligations. |
| (3) | Specific revenue recognition method |
| (a) | Product sales contract |
| According to the contract terms, for the selling of products subject to performance obligation fulfillment conditions at a time point and other products, the Company shall recognize the realization of sales revenues when the client obtains the control over relevant commodities or services according to the delivery condition agreed in the sales contract upon signed by the client after commodities are received. | |
| (b) | Technical service contract |
| If revenues are recognized within a certain period based on the technical service contract, corresponding revenues shall be recognized according to the performance schedule. | |
| (c) | Royalties income |
| Accounted for according to the time and method of charging as stipulated in the relevant contract or agreement. |
| III | Significant accounting policies and accounting estimates (continued) |
| 36 | Revenue recognition (continued) |
| (3) | Specific revenue recognition method (continued) |
| (d) | Revenue from photovoltaic power stations |
| a. Centralized power stations: Power stations are combined to the grid. The income will be confirmed based on the documents on power supply provided by the business departments of the Company, after the duration of continuous and trouble-free operation specified by the electric power company is met. b. Distributed power stations: Power stations are combined to the grid. The income will be confirmed based on the documents on settlement provided by the business departments of the Company. |
37 Contract costs
| (1) | Contract performance cost |
| For the cost resulting from performing the contract which is not included in other ASBE except the revenue standards and meets the following conditions, the Company shall recognize it as an asset ： | |
| (a) | The cost is directly related to a current or predicted contract, including the direct labor, direct material and manufacturing expenses (or similar expenses), the cost borne by the client and other costs resulting from the contract; |
| (b) | The cost adds various resources that can be applied by the Company to fulfill due performance obligations. |
| (c) | The cost is predicted to be recovered. |
| The asset shall be presented and reported in inventory or other non-current assets, which depends on whether the amortization period exceeds a normal operating cycle during the initial recognition. | |
| (2) | Contract acquisition cost |
| If the increment cost resulting from the Company’s acquisition of contract is predicted to be recovered, it shall be recognized as an asset as the contract acquisition cost. Increment Cost refers to the cost which only results from the contract acquisition, like the sales commission. If the amortization period is less than one year, it shall be included in current profit and loss. | |
| (3) | Contract cost amortization |
| The asset related to the contract cost shall adopt the same basis for the recognition of commodities or services revenues related to the asset, be amortized during the period of fulfilling the performance obligation or according to the fulfillment schedule and be included into current profit and loss. |
| III | Significant accounting policies and accounting estimates (continued) |
| 37 | Contract costs (continued) |
| (4) | Impairment of contract costs |
| For the asset related to the contract cost as mentioned above, if the book value is higher than the difference between the residual consideration predicted to be obtained from the Company’s transfer of commodities related to the asset and the cost to be incurred due to such transfer, depreciation reserves shall be calculated and withdrawn for the surplus which shall also be recognized as the asset impairment loss. | |
| After the impairment allowances is established, if changes in depreciation factors during previous periods have made the above difference higher than the asset’s book value, it shall be restituted to previously established asset impairment allowances and included in current profit and loss. However, the book value of restituted assets shall not exceed the book value of the asset on the date of restitution without establishing impairment allowances. |
38 Government grants
| (1) | Type of change |
| Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration. According to the grants targets stipulated in the relevant government documents, government grants are classified into government grants related to assets and government grants related to income. | |
| (2) | Recognition of government grants |
| If a government grant is a monetary asset, it is measured at the amount received or receivable. If a government grant is a non-monetary asset, it is measured at fair value. If the fair value cannot be obtained in a reliable way, it is measured at the nominal amount (RMB1). Government grants measured at nominal amounts are recognized directly in the current profits and losses. | |
| (3) | Accounting treatment |
| Government grants related to assets offset the book value of the underlying assets. | |
| If the government grants related to income are used to compensate related costs or losses in the subsequent period, it is recognized as deferred income and included in the current profit and loss or offset costs in the period in which the related costs or losses are recognized; government grants used to compensate costs or losses incurred by the enterprise are directly included in the current profits or losses or offset related costs. For government grants related to the day-to-day activities of the enterprise, the R&D and VAT-related subsidies and the taxation, or operation-based incentive government subsidies are included in other income; other government grants are written off against related costs based on the substance of economic activities. Government grants not related to daily activities of the Company are included in the non-operating income and expenditure. For preferential loans for policy discount, if the government finance department appropriates the discounted funds to the lending bank, the borrowing cost is accounted for according to the principal of the loan and the policy preferential interest rate, with the amount actually received as the entry value of the loan. If the government finance department directly appropriates the interest grant funds to the Company, the grants offset the related borrowing costs. | |
| In case that a confirmed government grant is required to be returned, the book value of the asset is adjusted if the book value of relevant assets is offset at the initial recognition; if there is related deferred income, the book balance of deferred income is offset, and the excess is included in the current profit and loss; in case of other circumstances, it is directly included in the current profit and loss. |
| III | Significant accounting policies and accounting estimates (continued) |
39 Deferred income tax assets and deferred income tax liabilities
| The income taxes of the Company include current income tax and deferred income tax. Both current income tax and deferred income tax are recognized in the current profit and loss as income tax expense or gain, except for the following: | |
| (1) | Adjusting goodwill due to income tax arising from business combination; |
| (2) | Income tax related to transactions or events directly included in shareholders' equity is included in shareholders’ equity. |
| On the balance sheet date, the Company recognizes the deferred income tax assets or deferred income tax liabilities in accordance with the balance sheet liability method on temporary differences between the book value of assets or liabilities and their tax base. | |
| The Company recognizes all taxable temporary differences as deferred tax liabilities except the taxable temporary differences incurred in the following transactions: | |
| (1) | Initial recognition of goodwill; or initial recognition of assets or liabilities arising from transactions with the following characteristics: the transaction is not a business combination, and does not affect the accounting profits or the amount of taxable income which occurs; |
| (2) | For taxable temporary differences related to investments in subsidiaries, associates and joint ventures, the timing of the reversal of the temporary differences can be controlled and the temporary differences are unlikely to be reversed in the foreseeable future. |
| The Company recognizes deferred income tax assets arising from deductible temporary differences, subject to the amount of taxable income likely to be obtained to offset the deductible temporary differences, except the deductible temporary differences incurred in the following transactions: | |
| (1) | The transaction is not a business combination, and does not affect the accounting profits or the amount of taxable income when occurs; |
| (2) | The deductible temporary differences related to investment in subsidiaries, associates and joint ventures cannot satisfy all the following: the temporary differences are likely to be reversed in the foreseeable future and are likely to be used for deduction of deductible taxable income for temporary differences in the future. |
| On the balance sheet date, the Company measures the deferred income tax assets and deferred income tax liabilities according to the tax law based on the applicable tax rate during the period of expectation of recovering the assets or paying off the liabilities, and reflects the income tax impact of the expected recovery of assets or liquidation of liabilities on the balance sheet date. | |
| On the balance sheet date, the Company reviews the book value of deferred income tax assets. If it is probable that no sufficient taxable income will be available in the future to offset the benefits of deferred tax assets, the book value of deferred tax assets is written down. When it is probable that sufficient taxable income will be available, the amount written-down will be reversed. | |
| Deferred income tax assets and liabilities are presented on a net basis after, provided the following conditions are met: | |
| (1) | An enterprise has the legal right to settle current income tax assets and liabilities on a net basis; |
| (2) | Deferred income tax assets and liabilities relate to income taxes levied by the same taxing authority on either the same taxable entity or different taxable entities which intend to either settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are reversed. |
| III | Significant accounting policies and accounting estimates (continued) |
40 Leases
| From the effectiveness date of a contract, the Company assesses whether the contract is a lease or includes any lease. If a party to the contract transfers the right allowing the control over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract is a lease or includes a lease. | |
| (1) | Lease contract split |
| If a contract contains multiple single leases at the same time, the Company will split the contract, and conduct accounting treatment of each single lease respectively. | |
| If a contract contains both lease and non-lease parts at the same time, the Company will split the lease and non-lease parts, conduct accounting treatment of the lease part in accordance with the accounting standards governing leases, and conduct accounting treatment of the non-lease part in accordance with other applicable corporate accounting standards. | |
| (2) | Lease contract combination |
| With regard to two or multiple contracts containing leases concluded by the Company with the same counterparty or its related parties at the same or a similar time, when any of the following conditions is met, the contracts are combined into one contract for accounting treatment: | |
| (a) |
Two or multiple contracts are concluded based on an overall business purpose andconstitute a package deal, and if they are not considered as a whole, the overall businesspurpose cannot be understood.
| (b) | The consideration amount of one contract among the two or multiple contracts depends on the pricing or performance of other contracts. | |
| (c) | The rights to use assets transferred by the two or multiple contracts constitute one single lease. | |
| (3) | Accounting treatment with the Company as lessee | |
| On the commencement date of the lease term, the Company recognises the right-of-use assets and lease liabilities for the lease, unless it is a simplified short-term lease or low-value asset lease. | ||
| (a) | Short-term leases and low-value asset leases | |
| A short-term lease refers to a lease that does not include a purchase option and whose lease term does not exceed 12 months. A low-value asset lease refers to a lease where the value will be low when a single leased asset is a new asset. | ||
| The Company does not recognize the right-of-use assets or lease liabilities for the following short-term leases and low-value asset leases. In each period within the lease term, the relevant lease payments are included in cost of the related assets or profit or loss for the current period on a straightline basis or according to other systemic and reasonable methods. | ||
| Item | Simplified leased asset type | |
| Short-term lease | A lease whose lease term does not exceed 12 months from the commencement date of the lease term | |
| Low-value asset lease | An asset lease with a value of less than RMB40,000 or its foreign currency equivalents | |
| III | Significant accounting policies and accounting estimates (continued) |
40 Leases (continued)
| (3) | Accounting treatment with the Company as lessee (continued) |
| The Company recognises the right-of-use assets and lease liabilities for short-term leases and low-value asset leases other than those mentioned above. | |
| (b) | The accounting policies for right-of-use assets and lease liabilities are detailed in Note III, 26 and Note III, 34. |
| (4) | Accounting treatment with the Company as lessor |
| (a) | Lease classification: |
| The Company classifies leases into finance leases and operating leases at the inception of leases. A finance lease refers to a lease where almost all the risks and rewards, related to the ownership of the leased asset(s), are substantially transferred, regardless of whether the ownership is transferred eventually. An operating lease refers to all leases other than finance leases. Usually, the Company classifies a lease that meets any one or more of the following conditions as a finance lease: 1) Upon expiry of the lease term, the ownership of the leased asset(s) is transferred to the lessee. 2) The lessee has the option to purchase the leased assets. As the agreed purchase price is low enough compared with the fair value of the leased asset(s) at the time the option is expected to be exercised, it can be reasonably determined at the inception of the lease that the lessee will exercise the option. 3) Although the ownership of the asset(s) is not transferred, the lease term accounts for the majority of the service life of the leased asset(s). 4) At the inception of the lease, the present value of the lease payments receivable is almost equal to the fair value of the leased asset(s). 5) The leased asset(s) is/are special in nature and can be only used by the lessee, unless there is a large alteration. The Company may also classify a lease that falls under any one or more of the following circumstances as a finance lease: 1) If the lessee cancels the lease, losses to the lessor caused by the cancellation will be borne by the lessee. 2) Gains or losses arising from fluctuations in the fair value of the residual value of the leased asset(s) are borne by the lessee. 3) The lessee is able to renew the lease with a rental far lower than the market level to the next term. | |
| (b) | Accounting treatment of finance leases |
| On the commencement date of the lease term, the Company recognises the finance lease receivables for the finance lease and derecognises the leased asset(s) of the finance lease. In the initial measurement of finance lease receivables, the sum of the unsecured residual value and the present value of the lease payments receivable not yet received on the commencement date of the lease term discounted at the interest rate implicit in lease is the entry value of the finance lease receivables. Lease payments receivable include: 1) The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; 2) Variable lease payments that depend on indexation or ratios; 3) The exercise price of the purchase option, when applicable, if it is reasonably certain that the lessee will exercise the purchase option; 4) The amount required to be paid by the lessee to exercise the option to terminate the lease if the lease term reflects that the lessee will exercise the option to terminate the lease; 5) Secured residual value provided to the lessor by the lessee, a party related to the lessee, or an independent third party that has the financial ability to perform the security provision obligation. The received variable lease payments that are not included in the measurement of the net investment in the lease are included in profit or loss for the current period when they are actually incurred. |
| III | Significant accounting policies and accounting estimates (continued) |
40 Leases (continued)
| (4) | Accounting treatment with the Company as lessor (continued) |
| (c) | Accounting treatment of operating leases |
| For each period of the lease term, the Company adopts the straight-line method or other systematic and reasonable methods to recognize the lease receipts of the operating lease as rental income; the Company capitalizes the initial direct expenses incurred in connection with the operating lease, amortizes them over the lease term on the same basis as that for the recognition of the rental income, and includes them in the current profit and loss by stage; the Company includes the variable lease payments, obtained in connection with the operating lease that are not included in the lease receipts, in the current profit and loss when actually incurred. | |
| (5) | Sale and leaseback |
| (a) | The Company as seller and lessee |
| If the asset transfer in a sale and leaseback transaction is a sale, the Company will measure the right-of-use assets formed by the sale and leaseback based on the portion of the original asset’s carrying value that is related to the use right acquired by the leaseback, and recognise related gains or losses only for the right transferred to the lessor. If the fair value of the sales consideration is different from the fair value of the asset, or if the lessor does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the prepaid rent, or the amount above the market price as the additional financing provided by the lessor to the lessee; at the same time, the relevant sales gains or losses will be adjusted based on the fair value. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will continue to recognise the transferred asset and at the same time recognise a financial liability equivalent to the transfer income. | |
| (b) | The Company as buyer and lessor |
| If the asset transfer in a sale and leaseback transaction is a sale, the Company will conduct corresponding accounting treatment for asset purchase and apply the accounting standards governing leases to the accounting treatment of the asset lease. If the fair value of the sales consideration is different from the fair value of the asset, or if the Company does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the pre-collected rent, or the amount above the market price as the additional financing provided by the Company to the lessee; at the same time, the rental receipt will be adjusted based on the market price. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will recognise a financial asset equivalent to the transfer income. |
41 Related parties
| If one party controls, commonly controls or exerts a significant influence on the other party, and two or more parties are under the control, common control or significant influence of the other party, they constitute related parties. |
| III | Significant accounting policies and accounting estimates (continued) |
42 Discontinued operations
| The Company recognizes a component disposed of or classified as a component that can be separately distinguished from the category held for sale and satisfies any of the following as a component of discontinued operations: (1) The component represents an independent major business or a separate major business area; (2) This component is part of a related plan to dispose of an independent major business or a separate major operating area; (3) This component is a subsidiary that is acquired for resale. Operating profit and loss, such as impairment losses for discontinued operations and the amount reversed, and disposal profit and loss are presented in the income statement as profit and loss of discontinued operations. |
43 Changes to major accounting policies and estimates
| (1) | Change of accounting policy |
| (a) | Impact of the adoption of the Interpretation to Accounting Standards for Business Enterprises No. 15 on the Company |
| On December 31, 2021, the Ministry of Finance issued the Interpretation to Accounting Standards for Business Enterprises No. 15(Cai Kuai [2021] No. 35, hereinafter referred to as the "Interpretation No. 15"). Interpretation No. 15 outlined that "the accounting treatment of the external sales of products or by-products produced before the fixed assets reach the intended serviceable state or during the R&D process" (hereinafter referred to as "trial sales") and "the judgment on loss-making contracts", effective from January 1, 2022. | |
| ①Accounting treatment of the external sales of products or by-products produced before the fixed assets reach the intended serviceable state or during the R&D process | |
| For trial sales that occurred from January 1, 2021 to the first implementation date, the Company has made retrospective adjustments in accordance with Interpretation No. 15. | |
| According to the provisions of Interpretation No. 15, the Company adjusted the relevant items of the balance sheet as follows: |
| Balance Sheet items | December 31, 2021 | |||
| Before the Change | Accumulated amount impacted before change | After the Change | ||
| Fixed assets | 113,579,297 | 19,486 | 113,598,783 | |
| Deferred income tax assets | 2,153,346 | (2,923) | 2,150,423 | |
| Retained earnings | 22,458,340 | 6,810 | 22,465,150 | |
| Non-controlling interests | 76,611,057 | 9,753 | 76,620,810 | |
| III | Significant accounting policies and accounting estimates (continued) |
43 Changes to Major Accounting Policies and Estimates (continued)
| (1) | Changes to Accounting Policies (continued) | |||
| The Company adjusted the relevant items presented in the income statement and the cash flow statement as follows: | ||||
| Items presented in the income statement and cash flow statement | 2021 | |||
| Before the Change | Accumulated amount impacted before change | After the Change | ||
| Revenue | 163,540,560 | 117,140 | 163,657,700 | |
| Cost of sales | 131,058,658 | 97,656 | 131,156,314 | |
| Income tax expense | 2,605,125 | 2,923 | 2,608,048 | |
| ② Judgment on onerous contracts | |||||
| The Company has not fulfilled all obligations when it first implemented Interpretation No. 15 (January 1, 2022), and the implementation of this provision has no significant impact on the Company's financial statements for comparable periods. | |||||
| (b) | Impact of the adoption of Interpretation to Accounting Standards for Business Enterprises No. 16 on the Company | ||||
| On December 13, 2022, the Ministry of Finance ("MOF") issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises (CK [2022] No. 31, hereinafter referred to as the "Interpretation No. 16"), clarifying the acocunting treatment for three items thereof:: "Accounting treatment that the deferred income taxes associated with assets and liabilities arising from a single transaction is not subject to the initial recognition exemption" is effective from January 1, 2023, which allows companies to implement the exemption earlier than the year of publication, but the Company did not implement the accounting treatment earlier than the year of publication; "Accounting treatment for the income tax effect of dividends related to financial instruments classified as equity instruments by the Issuer” and "Accounting treatment for the revision of cash-settled share-based payment to equity-settled share-based payment" are effective as of the date of publication. The Implementation Interpretation No. 16 has no significant impact on the consolidated financial statements and the Company's financial statements. | |||||
| (2) | Changes to accounting estimates | ||||
| No significant change occurred to the major accounting estimates in the Reporting Period. | |||||
44 Correction of previous accounting errors
| No previous accounting errors were identified and corrected in the Reporting Period. |
IV Taxes
| 1 | Value-added tax |
| In the Reporting Period, output tax was calculated at 3%, 5%, 6%, 9% or 13% of the taxable income of general taxpayers and the value added-tax was paid based on the difference after deducting the allowance deduction of input tax in the current period. The value added-tax payment for the Company’s directly exported goods is executed in accordance with the regulations of “Exemption, Offset and Refund”. The tax refund rate is 0%-13%. | |
| 2 | Urban maintenance and construction tax |
| Subject to the relevant tax laws and regulations of the state and local regulations, urban maintenance and construction tax is paid based on the proportion stipulated by the state according to the individual circumstances of each member of the Company. | |
| 3 | Education surcharges |
| Education surcharges are paid according to the individual circumstances of each member of the Company based on the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. | |
| 4 | Property tax |
| Property tax is paid on the houses with property rights according to the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. |
| IV | Taxes (continued) | |||
| 6 | Corporate income tax | |||
| The corporate income tax rate for the Company was 15% in the current period. | ||||
| According to Article 28 of the Enterprise Income Tax Law of the People's Republic of China, a reduced corporate income tax rate of 15% is applied to important high-tech enterprises that the government supports. | ||||
| According to the Announcement on Further Implementing Preferential Income Tax Policies for Small and Micro Enterprises issued by the Ministry of Finance and the State Administration of Taxation on March 14, 2022 (Announcement No. 13 [2022] of the Ministry of Finance and the State Administration of Taxation), from January 1, 2022 to December 31, 2024, the annual taxable income of small and low-profit enterprises exceeding RMB1 million but at no more than RMB3 million will be included in the taxable income at a reduced rate of 25%, and the enterprise income tax will be paid at the rate of 20%. | ||||
| Except for the following subsidiaries entitling to preferential tax treatment and the overseas subsidies that adopt local applicable tax rate, other entities under the Company are subject to the applicable tax rate of 25%, or the preferential tax rate for small and micro enterprises. | ||||
| Subsidiaries entitled to tax preferences: | ||||
| Company Name | Preferential tax rate | Reason | ||
| TCL China Star Optoelectronics Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Shenzhen TCL High-Tech Development Co., Ltd. | 15% | High-tech enterprise | ||
| Qingdao Blue Business Consulting Co., Ltd. | 15% | High-tech enterprise | ||
| Tianjin Huan'Ou Semiconductor Material&Technology Co., Ltd. | 15% | High-tech enterprise | ||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | 15% | High-tech enterprise | ||
| Huansheng Solar (Jiangsu) Co., Ltd. | 15% | High-tech enterprise | ||
| Zhangjiakou Huan? Ou International New Energy Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | 15% | High-tech enterprise | ||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Tianjin Printronics Circuit Corporation | 15% | High-tech enterprise | ||
| Tianjin Huanbo Science and Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Tianjin Zhonghuan Electronics Computer Co., Ltd. | 15% | High-tech enterprise | ||
| Guangdong TCL New Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Shenzhen Qianhai Maojia Software Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. | 15% | High-tech enterprise, encouraged business in West China | ||
IV Taxes (continued)6 Corporate income tax (continued)
| Company Name | Preferential tax rate | Reason | ||
| Ningxia Zhonghuan Solar Material Co., Ltd. | 15% | Encouraged business in West China | ||
| Phase I projects of Hohhot Huanju New Energy Development Co., Ltd. | 15% | State-supported public infrastructure project, encouraged business in West China | ||
| Phase II and Phase III projects of Hohhot Huanju New Energy Development Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Inner Mongolia Zhonghuan Advanced Semiconductor Material Co., Ltd. | 12.5% | Encouraged business in West China | ||
| Yixing Huanxing New Energy Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Guyuan Shengju New Energy Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Shangqiu Yaowei Photovoltaic Power Generation Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Tianjin Huanyu Yangguang New Energy Technology Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Huludao Zhongrun Energy Technology Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Phase II and Phase III projects of Qinhuangdao Tianhui Solar Energy Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Huludao Xincheng New Energy Technology Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Zhangjiakou Shengyuan New Energy Co., Ltd. | 12.5% | State-supported public infrastructure project | ||
| Dushan Anju Photovoltaic Technology Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Sonid Left Banner Huanxin New Energy Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Otog Banner Huanju New Energy Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Inner Mongolia New Huanyu Yangguang New Energy Technology Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Gengma Huanxing New Energy Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Ongniud Banner Guangrun New Energy Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Tuquan Guanghuan New Energy Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China | ||
| Dangxiong Youhao New Energy Development Co., Ltd. | 7.5% | State-supported public infrastructure project, encouraged business in West China |
IV Taxes (continued)
| 6 | Corporate income tax (continued) | |||
| Company Name | Preferential tax rate | Reason | ||
| Shaanxi Runhuan Tianyu Technology Co., Ltd. | Tax-free | State-supported public infrastructure project, encouraged business in West China | ||
| Tianjin Binhai Huanneng New Energy Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Gaoqing Huanyuan Energy Technology Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Gaoqing Chengguang Energy Technology Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Ningjin Jinchen New Energy Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| 7 | Individual income tax | |||
| Individual income tax of income paid to employees by the Company is withheld by the Company on behalf of employees in accordance with to the relevant national tax regulations. | ||||
V Notes to Consolidated Financial Statements1 Monetary assets
| December 31, 2022 | January 1, 2022 | |||
| Cash on hand | 480 | 789 | ||
| Bank deposits | 33,161,505 | 29,049,850 | ||
| Deposits with the central bank | 381,137 | 481,162 | ||
| Other monetary assets | 1,835,379 | 1,861,891 | ||
| 35,378,501 | 31,393,692 | |||
| Note | Monetary assets with restricted use rights | |||
| December 31, 2022 | January 1, 2022 | |||
| TCL Tech Finance's statutory reserve deposits with the central bank | 321,852 | 358,178 | ||
| Other restricted monetary assets | 1,381,025 | 953,809 | ||
| 1,702,877 | 1,311,987 | |||
| On December 31, 2022, the Company's bank deposits of RMB321,852,000 (December 31, 2021: RMB358,178,000) were statutory deposit reserves deposited with the Central Bank by TCL Technology Group Finance Co., Ltd., a subsidiary of the Company. | ||||
| On December 31, 2022, the Company’s monetary assets offshore amounted to RMB2,230,135,000 (December 31, 2021: RMB2,817,430,000), all of which were owned by the overseas subsidiaries of the Company. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
2 Held-for-trading financial assets
| December 31, 2022 | January 1, 2022 | |||
| Financial assets classified as measured at fair value through profit or loss | 12,703,507 | 7,601,256 | ||
| Including: Debt instrument investments | 12,483,274 | 7,288,741 | ||
| Equity instrument investments | 220,233 | 312,515 | ||
| 12,703,507 | 7,601,256 |
3 Derivative financial assets
| December 31, 2022 | January 1, 2022 | |||
| Foreign exchange forwards | 206,398 | 59,063 | ||
| Interest rate swaps | 154,636 | 11,866 | ||
| 361,034 | 70,929 |
4 Notes receivable
| (1) | Notes receivable by category | |||
| December 31, 2022 | January 1, 2022 | |||
| Bank acceptance notes | 512,767 | 775,423 | ||
| Trade acceptance notes | 82 | 779 | ||
| 512,849 | 776,202 | |||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 4 | Notes receivable (continued) | |||||||||||
| (2) | Presentation of provision for bad debts on notes receivable by category (continued) | |||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||||
| Gross amount | Allowance | Carrying amount | Gross amount | Allowance | Carrying amount | |||||||
| Amount | Ratio (%) | Amount | Percentage | Amount | Ratio (%) | Amount | Percentage | |||||
| Notes receivable for which the allowance for doubtful accounts were established on the grouping basis | 512,849 | 100% | - | - | 512,849 | 776,202 | 100% | - | - | 776,202 | ||
| Including: low-risk portfolio | 512,767 | 99.98% | - | - | 512,767 | 775,423 | 99.90% | - | - | 775,423 | ||
| By aging analysis | 82 | 0.02% | - | - | 82 | 779 | 0.10% | - | - | 779 | ||
| 512,849 | 100% | - | - | 512,849 | 776,202 | 100% | - | - | 776,202 | |||
| (3) | As at December 31, 2022, notes receivable in pledge were RMB264,599,000. | |||||||||||
| (4) | Endorsed or discounted notes receivable that were outstanding on the balance sheet date and were derecognized as at December 31, 2022 amounted to RMB724,952,000. Endorsed or discounted notes receivable that were not outstanding on the balance sheet date and were not derecognized as at December 31, 2022 amounted to RMB148,271,000. | |||||||||||
5 Accounts receivable
| December 31, 2022 | January 1, 2022 | |||
| Accounts receivable | 14,505,731 | 18,657,744 | ||
| Less: allowance for doubtful accounts | 454,070 | 418,962 | ||
| 14,051,661 | 18,238,782 |
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||
| 5 | Accounts receivable (continued) | ||||||||||
| (1) | Accounts receivable in the period from January 1, 2022 to December 31 are classified as follows by how the allowances for doubtful accounts were established: | ||||||||||
| December 31, 2022 | |||||||||||
| Gross amount | Allowance | ||||||||||
| Lifetime ECL rate | Gross amount | ||||||||||
| Accounts receivable for which the related allowances for doubtful accounts were established on the individual basis | 257,358 | 99.48% | 256,017 | ||||||||
| Of which: | |||||||||||
| Accounts receivable | 257,358 | 99.48% | 256,017 | ||||||||
| Accounts receivable for which the related allowances for doubtful accounts were established on the grouping basis | 14,248,373 | 1.39% | 198,053 | ||||||||
| Of which: | |||||||||||
| Group 1: by aging analysis | 7,514,694 | 0.61% | 45,889 | ||||||||
| Group 2: by related parties | 2,787,683 | 0.65% | 18,224 | ||||||||
| Group 3: by tariff | 1,006,665 | 0.34% | 3,470 | ||||||||
| Group 4: by photovoltaics | 2,120,277 | 5.51% | 116,795 | ||||||||
| Group 5: by semiconductor | 819,054 | 1.67% | 13,675 | ||||||||
| 14,505,731 | 454,070 | ||||||||||
| (2) | The aging of accounts receivable is analysed as follows: | ||||||||||
| December 31, 2022 | January 1, 2022 | ||||||||||
| Amount | Ratio (%) | Amount | Ratio (%) | ||||||||
| Within 1 year | 13,254,660 | 91.37% | 17,493,941 | 93.76% | |||||||
| 1 to 2 years | 350,702 | 2.42% | 465,391 | 2.49% | |||||||
| 2 to 3 years | 339,078 | 2.34% | 309,150 | 1.66% | |||||||
| Over 3 years | 561,291 | 3.87% | 389,262 | 2.09% | |||||||
| 14,505,731 | 100% | 18,657,744 | 100% | ||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||
| 5 | Accounts receivable (continued) | |||
| (3) | Allowances for doubtful accounts receivable are analysed as follows: | |||
| December 31, 2022 | January 1, 2022 | |||
| Balance at the beginning of the period | 418,962 | 281,281 | ||
| New subsidiary | - | 33,745 | ||
| Accrued in current period | 155,662 | 209,480 | ||
| Reversal of current period | (110,707) | (86,588) | ||
| Write-off of current period | (11,298) | (12,759) | ||
| Reduced subsidiary | - | (5,381) | ||
| Exchange adjustment | 1,451 | (816) | ||
| Ending amount | 454,070 | 418,962 | ||
| (4) | As of December 31, 2022, balance of the top five accounts receivable are as follows: | |||
| December 31, 2022 | January 1, 2022 | |||
| Total amount owed by the top five | 5,422,959 | 8,922,641 | ||
| Proportion of total accounts receivable | 37.38% | 47.82% | ||
6 Receivables financing
| December 31, 2022 | January 1, 2022 | |||
| Notes receivable financing | 1,103,128 | 2,217,639 | ||
| 1,103,128 | 2,217,639 | |||
| Note | Endorsed or discounted notes receivable that were outstanding on the balance sheet date and were derecognized on December 31, 2022 amounted to RMB24,453,841,000. | |||
| As of December 31, 2022, the Company believes that financing for the receivables it held did not have significant credit risk and will not cause significant losses due to default. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
7 Prepayments
| (1) | Prepayments are analyzed as follows: | |||
| December 31, 2022 | January 1, 2022 | |||
| Within 1 year | 3,586,208 | 2,297,910 | ||
| 1-2 years | 5,556 | 6,560 | ||
| 2-3 years | 1,530 | 1,376 | ||
| Over 3 years | 563 | 479 | ||
| 3,593,857 | 2,306,325 | |||
| (2) | As of December 31, 2022, balance of the top five prepayments are as follows: | |||
| December 31, 2022 | January 1, 2022 | |||
| Total amount owed by the top five | 2,655,698 | 1,681,650 | ||
| As % of total prepayments | 73.90% | 72.91% | ||
8 Other receivables
| December 31, 2022 | January 1, 2022 | |||||
| Dividends receivable | 1,226 | - | ||||
| Other receivables | 4,032,022 | 4,458,621 | ||||
| 4,033,248 | 4,458,621 |
(1) Dividends receivable
| December 31, 2022 | January 1, 2022 | |||||
| Others | 1,226 | - | ||||
| 1,226 | - |
| V | Notes to Consolidated Financial Statements (Continued) |
| 8 | Other receivables (continued) |
(2) Other receivables
| December 31, 2022 | January 1, 2022 | |||||
| Other receivables | 4,259,495 | 4,681,100 | ||||
| Less: allowance for doubtful accounts | 227,473 | 222,479 | ||||
| 4,032,022 | 4,458,621 | |||||
| (a) | Nature of other receivables is analyzed as follows: | |||||
| December 31, 2022 | January 1, 2022 | |||||
| Subsidy receivable | 1,868,634 | 1,696,203 | ||||
| Equity transfer receivables | 1,073,246 | 1,480,960 | ||||
| Security deposits | 479,269 | 421,430 | ||||
| Others | 610,873 | 860,028 | ||||
| 4,032,022 | 4,458,621 | |||||
| (b) | Allowance for doubtful other receivables is analyzed as follows: | |||||||
| 12-month ECL | Lifetime ECL (credit not impaired) | Lifetime ECL (credit impaired) | Total | |||||
| Beginning amount | 76,254 | 120,291 | 25,934 | 222,479 | ||||
| Current accrual | 13,530 | 15,147 | 201 | 28,878 | ||||
| Reversal of current period | (21,665) | (652) | (389) | (22,706) | ||||
| Write-off of current period | - | - | (1,173) | (1,173) | ||||
| Exchange adjustment | (5) | - | - | (5) | ||||
| December 31, 2022 | 68,114 | 134,786 | 24,573 | 227,473 | ||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||
| 8 | Other receivables (continued) | |||||||
| (c) | The aging of other receivables is analyzed as follows: | |||||||
| December 31, 2022 | January 1, 2022 | |||||||
| Carrying amount | Ratio (%) | Carrying amount | Ratio (%) | |||||
| Within 1 year | 3,209,877 | 75.35% | 3,991,248 | 85.26% | ||||
| 1 to 2 years | 417,448 | 9.80% | 292,805 | 6.26% | ||||
| 2 to 3 years | 258,284 | 6.07% | 228,974 | 4.89% | ||||
| Over 3 years | 373,886 | 8.78% | 168,073 | 3.59% | ||||
| 4,259,495 | 100% | 4,681,100 | 100% | |||||
| (d) | As of December 31, 2022, the other receivables of the top five balances are as follows: | ||||
| December 31, 2022 | December 31, 2021 | ||||
| Total amount owed by the top five | 2,324,850 | 3,381,203 | |||
| As % of total other receivables | 54.58% | 72.23% | |||
| (e) | On December 31, 2022, there was no transfer of other receivables that did not conform to the conditions for derecognition in the balance of this account; no transaction arrangement for asset securitization with other receivables as the subject asset; and no financial instrument that was the subject of securitization and did not conform to the conditions for derecognition. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
9 Inventories
| (1) | Inventories are classified as follows: | |||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||||
| Book balance | Provision for depreciation of inventories / provision for impairment of contract performance costs | Carrying amount | Book balance | Provision for depreciation of inventories / provision for impairment of contract performance costs | Carrying amount | |||||||
| Raw materials | 5,604,506 | 979,845 | 4,624,661 | 4,247,095 | 652,265 | 3,594,830 | ||||||
| Work in progress | 3,674,059 | 421,558 | 3,252,501 | 2,705,288 | 321,606 | 2,383,682 | ||||||
| Finished Goods | 11,512,597 | 1,705,750 | 9,806,847 | 8,541,513 | 823,701 | 7,717,812 | ||||||
| Turnover materials | 318,291 | 1,178 | 317,113 | 388,135 | 1,102 | 387,033 | ||||||
| 21,109,453 | 3,108,331 | 18,001,122 | 15,882,031 | 1,798,674 | 14,083,357 | |||||||
| As of December 31, 2022, the Company had no inventory for liabilities guarantee. |
| (2) | Provision for depreciation of inventories / provision for impairment of contract performance costs: |
| December 31, 2021 | Current Accrual | Current Reversal | Current Write-off | Exchange Adjustment | December 31, 2022 | |||||||
| Raw materials | 652,265 | 930,055 | (139,458) | (462,874) | (143) | 979,845 | ||||||
| Work in progress | 321,606 | 507,456 | (69,697) | (337,694) | (113) | 421,558 | ||||||
| Finished Goods | 823,701 | 1,884,201 | (28,705) | (974,866) | 1,419 | 1,705,750 | ||||||
| Turnover materials | 1,102 | 76 | - | - | - | 1,178 | ||||||
| 1,798,674 | 3,321,788 | (237,860) | (1,775,434) | 1,163 | 3,108,331 |
| V | Notes to Consolidated Financial Statements (Continued) |
10 Contract assets
| (1) | Contract assets are classified as follows: |
| December 31, 2022 | January 1, 2022 | |||||||||||
| Book balance | Allowance for doubtful accounts | Carrying amount | Book balance | Allowance for doubtful accounts | Carrying amount | |||||||
| Electricity charges receivable | 327,543 | 12,376 | 315,167 | 239,753 | 6,224 | 233,529 | ||||||
| (2) | Valuation allowances for contract assets are analyzed as follows: | |||||||||
| January 1, 2022 | Current Accrual | Current Reversal or write-off | Other increases and decreases | December 31, 2022 | ||||||
| Electricity charges | 6,224 | 6,152 | - | - | 12,376 | |||||
11. Other current assets
| December 31, 2022 | January 1, 2022 | ||||
| Short-term debt investments | 939,864 | 571,140 | |||
| VAT to be deducted, to be certified, etc. | 3,775,842 | 3,931,095 | |||
| Current portion of loans and advances to customers (note) | 640,917 | 1,169,487 | |||
| Others | 82,313 | 131,238 | |||
| 5,438,936 | 5,802,960 | ||||
| Note: The loans and advances due within one year are loans due within the next year issued by subsidiary TCL Tech Finance Co., Ltd., of which interest receivable is RMB2,281,000. | |||||
| V | Notes to Consolidated Financial Statements (Continued) |
12 Debt Investments
| December 31, 2022 | January 1, 2022 | |||
| National debt and secondary market debt | 741,703 | - | ||
13 Long-term receivables
| December 31, 2022 | January 1, 2022 | Discount rate Interval | ||||||||||||
| Gross amount | Allowance | Carrying amount | Gross amount | Allowance | Carrying amount | |||||||||
| Finance lease | 631,373 | - | 631,373 | 651,118 | - | 651,118 | 7.125%-8.115% | |||||||
| Including: Unrealized financing income | (781,934) | - | (781,934) | (848,837) | - | (848,837) | ||||||||
| 631,373 | - | 631,373 | 651,118 | - | 651,118 | |||||||||
14 Long-term equity investments
| December 31, 2022 | January 1, 2022 | |||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||
| Associates (1) | 29,065,027 | 329,479 | 28,735,548 | 25,086,945 | 1,624 | 25,085,321 | ||||||
| Joint ventures (2) | 570,171 | 49,503 | 520,668 | 604,760 | 49,503 | 555,257 | ||||||
| 29,635,198 | 378,982 | 29,256,216 | 25,691,705 | 51,127 | 25,640,578 | |||||||
| As of December 31, 2022, the Company made impairment allowances for long-term equity investments in investees with poor management and insolvent assets. | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 14 | Long-term equity investments (continued) |
(1) Associates
| Increase or decrease in current period | ||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit | Accrued Impairment allowance | Other increases and decreases | December 31, 2022 | |||||||||
| China Innovative Capital Management Limited | 1,063,219 | - | (109,998) | (11,926) | 3,097 | - | - | - | 944,392 | |||||||||
| LG Electronics (Huizhou) Co., Ltd. | 92,079 | - | 10,693 | (13,000) | - | - | 89,772 | |||||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 36,160 | - | (9,912) | 1,110 | - | - | - | 27,358 | ||||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 10,706 | - | 4,562 | 5 | - | - | - | 15,273 | ||||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 3,620 | (1,500) | (1,127) | - | - | 154 | 1,147 | |||||||||||
| TCL Air Conditioner (Wuhan) Co., Ltd. | 38,605 | - | 2,005 | - | - | - | 40,610 | |||||||||||
| TCL Finance (Hong Kong) Co., Limited | 109,317 | - | 626 | - | - | - | 109,943 | |||||||||||
| Urumqi TCL Equity Investment Management Co., Ltd. | 71 | - | 1,019 | - | - | - | 1,090 | |||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 1,555,876 | (93,374) | (49,429) | - | - | - | 1,413,073 | |||||||||||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 396,773 | (5,072) | 29,651 | 30 | (87,391) | - | 31,520 | 365,511 | ||||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 192,956 | (3,704) | (25,170) | (37,869) | - | - | 126,213 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 14 | Long-term equity investments (continued) | |||||||||||||||||||
| (1) | Associates (continued) | |||||||||||||||||||
| Increase or decrease in current period | ||||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Provision for impairment | Other increases and decreases | December 31, 2022 | |||||||||||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 463,294 | (182,620) | 143,470 | - | - | (51,457) | - | - | 372,687 | |||||||||||
| Wuxi TCL Aisikai Semi-conductor Industry Investment Fund Partnership (Limited Partnership) | 232,764 | (15,730) | 93,896 | - | - | - | - | - | 310,930 | |||||||||||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) | 35,580 | - | 1,219 | 51 | - | - | - | - | 36,850 | |||||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | 64,975 | - | (41,633) | - | - | - | - | 23,342 | ||||||||||||
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) | 29,945 | - | 3,485 | 422 | - | (18,795) | - | - | 15,057 | |||||||||||
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) | 19,725 | (401) | 391 | 11 | - | - | - | - | 19,726 | |||||||||||
| Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) | 8,700 | - | (5) | - | - | - | - | 8,695 | ||||||||||||
| Beijing A Dynamic Venture Capital Center (Limited Partnership) | 6,415 | - | 3,279 | (2,058) | - | - | - | - | 7,636 | |||||||||||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) | 3,750 | - | 1,054 | 16 | - | - | - | - | 4,820 | |||||||||||
| Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) | 2,341 | - | (3) | - | - | - | - | - | 2,338 | |||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 6,006 | - | 5,547 | - | - | - | - | - | 11,553 | |||||||||||
| Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) | 2,595 | - | (52) | - | - | - | - | - | 2,543 | |||||||||||
| Ningbo Jiutian Matrix Investment Management Co., Ltd. (note) | 2,851 | - | (254) | - | - | - | - | - | 2,597 | |||||||||||
| Urumqi Qixinda Equity Investment Management Co., Ltd. | 1,137 | - | 3,365 | - | - | - | - | - | 4,502 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 14 | Long-term equity investments (continued) | ||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | December 31, 2022 | ||||||||||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | 761 | - | (2) | - | - | - | - | - | 759 | ||||||||||
| Beijing A Dynamic Investment Consulting Co., Ltd. | 469 | - | (2) | - | - | - | - | - | 467 | ||||||||||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 918 | - | 1,956 | - | - | (363) | - | - | 2,511 | ||||||||||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | 283 | - | (4) | - | - | - | - | - | 279 | ||||||||||
| Wuxi TCL Medical Imaging Technology Co., Ltd. | 29,235 | 7,661 | (11,274) | - | - | - | - | 215 | 25,837 | ||||||||||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 635,360 | 162,003 | 5,383 | - | 77,503 | - | - | - | 880,249 | ||||||||||
| TCL Ventures Fund L.P. | 53,019 | (45,171) | 20,823 | - | (3,640) | - | 3,987 | 29,018 | |||||||||||
| Getech Ltd. | 21,032 | - | 889 | 25 | 61,714 | - | - | - | 83,660 | ||||||||||
| TCL Environmental Technology Co., Ltd. | 130,643 | (103,246) | 4,842 | - | - | - | - | (32,239) | - | ||||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 372,976 | - | 129,468 | - | - | - | - | - | 502,444 | ||||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) | 151,026 | (279) | 17,062 | - | - | - | - | - | 167,809 | ||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 14 | Long-term equity investments (continued) | ||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | December 31, 2022 | ||||||||||
| Shenzhen Xinhuoyicheng Recreational and Sports Industry Co., Ltd. | 1,417 | - | (29) | - | - | - | - | - | 1,388 | ||||||||||
| Pride Telecom Limited | - | - | - | - | - | - | - | - | - | ||||||||||
| JOLED Incorporation | 869,073 | 80,960 | (420,741) | - | (318,604) | (51,386) | 159,302 | ||||||||||||
| Sichuan Shengtian New Energy Development Co., Ltd. | 478,264 | - | 30,228 | - | - | - | 508,492 | ||||||||||||
| Yanyuan Fengguang New Energy Co., Ltd. | 62,528 | (41,823) | (4,453) | - | - | (16,252) | - | ||||||||||||
| SunPower Systems International Limited | 27,792 | - | 553 | - | - | - | 28,345 | ||||||||||||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 6,843 | - | (2,725) | - | - | - | 4,118 | ||||||||||||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 122,960 | - | 13,722 | - | - | - | 136,682 | ||||||||||||
| Hunan Guoxin Semiconductor Technology Co., Ltd. | 9,758 | - | 67 | - | - | - | 9,825 | ||||||||||||
| Maxeon Solar Technologies, Ltd. | 2,020,194 | - | (399,777) | - | - | - | 1,620,417 | ||||||||||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 1,691,361 | - | 2,228,104 | - | - | - | 3,919,465 | ||||||||||||
| Ruihuan (Inner Mongolia) Solar Power Co., Ltd. | 5,896 | - | 3,355 | - | (9,251) | - | - | ||||||||||||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 659,630 | 4,990 | (7,005) | - | - | - | 657,615 | ||||||||||||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 4,722 | - | 403 | - | - | - | 5,125 | ||||||||||||
| Ningbo Zhongxin Venture Capital Partnership Tianjin Huanxin | 58,278 | 90,000 | (3,310) | - | - | - | 144,968 | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 14 | Long-term equity investments (continued) | ||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | December 31, 2022 | ||||||||||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd.(Note) | 421,762 | - | (27,816) | - | - | - | 393,946 | ||||||||||||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 2,914 | - | 386 | (2,288) | - | - | 1,012 | ||||||||||||
| Inner Mongolia Huanye Material Co., Ltd. | 4,109 | - | 2,054 | - | - | - | 6,163 | ||||||||||||
| Shenzhen Shutuo Technology Co., Ltd. | 38,038 | - | (1,202) | - | - | 1,366 | 38,202 | ||||||||||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 49,964 | - | 18,692 | 884 | - | - | - | 69,540 | |||||||||||
| Wuhan Guochuangke Optoelectronic Equipment Co., Ltd. | 24,744 | - | 1,166 | - | - | - | 25,910 | ||||||||||||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | - | - | - | - | - | - | - | ||||||||||||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | - | - | 3,936 | - | - | - | 3,936 | ||||||||||||
| Purplevine Holdings Limited | - | 3,789 | (2,249) | - | - | 89 | 1,629 | ||||||||||||
| Xinxin Semiconductor Technology Co., Ltd. | 1,790,073 | 8,312 | - | - | - | - | 399 | 1,798,784 | |||||||||||
| Inner Mongolia Xinhua Semiconductor Technology Co., Ltd. | 120,000 | (2,114) | - | - | - | 117,886 | |||||||||||||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | 132,000 | (4,153) | - | - | - | 127,847 | |||||||||||||
| Shanghai Feilihua Shichuang Technology Co., Ltd. | 40,000 | 854 | - | - | 200 | 41,054 | |||||||||||||
| Others | 12,749,892 | (237,044) | 1,286,140 | (6,074) | - | (334,934) | - | (194,774) | 13,263,206 | ||||||||||
| 25,085,321 | 1,701,512 | 2,958,218 | (17,504) | 142,314 | (549,737) | (327,855) | (256,721) | 28,735,548 | |||||||||||
| Note 1: Tianjin Huanxin Technology & Development Co., Ltd. was renamed as TCL Huanxin Semi-conductor (Tianjin) Co., Ltd in April 2022. | |||||||||||||||||||
| Note 2: Others are mainly investments in listed companies that have not yet announced their annual reports for 2022. | |||||||||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 14 | Long-term equity investments (continued) |
(2) Joint ventures
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | December 31, 2022 | ||||||||||
| TCL Huizhou City, Kai Enterprise Management Limited | 1,329 | - | 18 | - | - | - | - | - | 1,347 | ||||||||||
| Huizhou TCL Human Resources Service Co., Ltd. | 3,296 | - | 2,978 | - | - | - | - | - | 6,274 | ||||||||||
| Zhangjiakou Qixin Equity Investment Fund Partnership | 92,681 | - | (5,106) | - | - | (600) | - | - | 86,975 | ||||||||||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. (Note 1) | - | - | - | - | - | - | - | - | - | ||||||||||
| Tianjin Huanyan Technology Co., Ltd. | 144,517 | - | (3,724) | - | - | - | - | - | 140,793 | ||||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. | 313,433 | 25,000 | (53,645) | - | 491 | - | - | - | 285,279 | ||||||||||
| 555,256 | 25,000 | (59,479) | - | 491 | (600) | - | - | 520,668 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 14 | Long-term equity investments (continued) |
(3) Impairment allowances for long-term equity investments
| January 1, 2022 | Increase in current period | Decrease in current period | Other chang es | December 31, 2022 | Note | |||||||
| Pride Telecom Limited | 1,624 | - | - | - | 1,624 | ote 1 | ||||||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 49,503 | - | - | - | 49,503 | ote 1 | ||||||
| OLED Incorporation | - | 310,730 | - | 7,874 | 318,604 | ote 1 | ||||||
| uihuan (Inner Mongolia) Solar Power Co., Ltd. | - | 9,251 | - | - | 9,251 | ote 1 | ||||||
| 51,127 | 319,981 | - | 7,874 | 378,982 | ||||||||
| Note 1 | Impairment allowances were established for the long-term investments in these investees at recoverable amounts because continuous operations loss occurred to these investees with poor management. | |||||||||||
15 Investments in other equity instruments
| December 31, 2022 | January 1, 2022 | |||||||||
| Stocks | 66,706 | 109,011 | ||||||||
| Equity of unlisted companies | 373,290 | 818,308 | ||||||||
| 439,996 | 927,319 | |||||||||
| Item name | Confirmed Dividend income recognized | Accumulated Profits | Accumulated losses | Amount of other comprehensive income transferred to retained earnings | Reasons designated as measured at fair value and whose changes are included in other comprehensive income | Reasons for other comprehensive income transferred to retained earnings | ||||
| Stocks | - | 3,524 | (142,087) | - | Being held long term for strategic purposes | Sold in current period | ||||
| Equity of unlisted companies | 349 | 10,172 | (19,270) | (16,811) | Being held long term for strategic purposes | Sold in current period | ||||
| Total | 349 | 13,696 | (161,357) | (16,811) | ||||||
16 Other non-current financial assets
| December 31, 2022 | January 1, 2022 | |||
| Equity investments | 2,928,827 | 2,149,781 | ||
| Debt investments | - | 554,257 | ||
| 2,928,827 | 2,704,038 |
| V | Notes to Consolidated Financial Statements (Continued) |
17 Investment property
| Houses and buildings | Land use rights | Total | |||||
| Gross amount: | |||||||
| January 1, 2022 | 896,416 | 92,817 | 989,233 | ||||
| Increase | |||||||
| Other increases | 68,252 | - | 68,252 | ||||
| Reclassified from fixed assets and intangible assets | 140,311 | 112,816 | 253,127 | ||||
| Decreases | |||||||
| Reduced subsidiary | (2,967) | - | (2,967) | ||||
| Reclassified to fixed assets and intangible assets | (34,226) | - | (34,226) | ||||
| Other decreases | (307) | - | (307) | ||||
| December 31, 2022 | 1,067,479 | 205,633 | 1,273,112 | ||||
| Accumulated depreciation and amortization: | |||||||
| January 1, 2022 | 165,990 | 8,376 | 174,366 | ||||
| Increase | |||||||
| Accrued in current period | 29,363 | 3,081 | 32,444 | ||||
| Reclassified from fixed assets and intangible assets | 44,290 | 26,945 | 71,235 | ||||
| Decreases | |||||||
| Reduced subsidiary | (343) | - | (343) | ||||
| Reclassified to fixed assets and intangible assets | (3,826) | - | (3,826) | ||||
| December 31, 2022 | 235,474 | 38,402 | 273,876 | ||||
| Investment property, net: | |||||||
| December 31, 2022 | 832,005 | 167,231 | 999,236 | ||||
| January 1, 2022 | 730,426 | 84,441 | 814,867 | ||||
| Impairment allowance: | |||||||
| January 1, 2022 | 52,965 | - | 52,965 | ||||
| Increase | |||||||
| Increase in current period | - | - | - | ||||
| Decreases | |||||||
| Decrease in current period | (178) | - | (178) | ||||
| December 31, 2022 | 52,787 | - | 52,787 | ||||
| Investment property, net: | |||||||
| December 31, 2022 | 779,218 | 167,231 | 946,449 | ||||
| January 1, 2022 | 677,461 | 84,441 | 761,902 |
| V | Notes to Consolidated Financial Statements (Continued) |
18 Fixed assets
| Houses and buildings | Machinery equipment | Office and electronic equipment | Transportation equipment | Power stations | Others | Total | ||||||||
| Gross amount: | ||||||||||||||
| December 31, 2021 | 36,809,487 | 144,268,573 | 6,141,205 | 228,961 | 2,361,036 | 21,576 | 189,830,838 | |||||||
| Change of accounting policy | - | 19,486 | - | - | - | - | 19,486 | |||||||
| January 1, 2022 | 36,809,487 | 144,288,059 | 6,141,205 | 228,961 | 2,361,036 | 21,576 | 189,850,324 | |||||||
| Increase | ||||||||||||||
| Acquisition and other | 8,122 | 1,968,396 | 122,532 | 33,922 | 1,682 | 4,800 | 2,139,454 | |||||||
| New subsidiary | - | - | 414 | - | - | - | 414 | |||||||
| Reclassified from investment property | 34,226 | - | - | - | - | - | 34,226 | |||||||
| Reclassified from construction in progress | 9,006,963 | 28,617,693 | 182,497 | 26,054 | 125 | 932 | 37,834,264 | |||||||
| Other increases | - | 3,650,892 | - | - | - | - | 3,650,892 | |||||||
| Decreases | ||||||||||||||
| Written down with government grants | (721,216) | (887,720) | - | - | - | - | (1,608,936) | |||||||
| Reclassified to investment property | (140,311) | - | - | - | - | - | (140,311) | |||||||
| Other decreases | (25,992) | (2,881,363) | (3,710,126) | (28,258) | (1,414) | (909) | (6,648,062) | |||||||
| Exchange adjustment | 8,327 | (309) | 712 | 415 | - | 827 | 9,972 | |||||||
| December 31, 2022 | 44,979,606 | 174,755,648 | 2,737,234 | 261,094 | 2,361,429 | 27,226 | 225,122,237 | |||||||
| Accumulated depreciation: | ||||||||||||||
| December 31, 2021 | 6,424,323 | 64,912,283 | 2,500,253 | 145,498 | 426,922 | 13,504 | 74,422,783 | |||||||
| Change of accounting policy | - | - | - | - | - | - | - | |||||||
| January 1, 2022 | 6,424,323 | 64,912,283 | 2,500,253 | 145,498 | 426,922 | 13,504 | 74,422,783 | |||||||
| Increase | ||||||||||||||
| Accrual | 1,451,233 | 15,537,599 | 238,755 | 37,730 | 87,530 | 2,307 | 17,355,154 | |||||||
| New subsidiary | - | - | 223 | - | - | - | 223 | |||||||
| Reclassified from investment property | 3,826 | - | - | - | - | - | 3,826 | |||||||
| Other increases | - | 1,902,490 | - | - | - | - | 1,902,490 | |||||||
| Decreases | ||||||||||||||
| Reclassified to investment property | (44,290) | - | - | - | - | - | (44,290) | |||||||
| Other decreases | (8,804) | (1,654,778) | (1,013,390) | (18,348) | (416) | (117) | (2,695,853) | |||||||
| Exchange adjustment | 725 | 2,089 | 591 | 229 | - | 236 | 3,870 | |||||||
| December 31, 2022 | 7,827,013 | 80,699,683 | 1,726,432 | 165,109 | 514,036 | 15,930 | 90,948,203 | |||||||
| Fixed assets, net: | ||||||||||||||
| December 31, 2022 | 37,152,593 | 94,055,965 | 1,010,802 | 95,985 | 1,847,393 | 11,296 | 134,174,034 | |||||||
| January 1, 2022 | 30,385,164 | 79,375,776 | 3,640,952 | 83,463 | 1,934,114 | 8,072 | 115,427,541 | |||||||
| December 31, 2021 | 30,385,164 | 79,356,290 | 3,640,952 | 83,463 | 1,934,114 | 8,072 | 115,408,055 |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 18 | Fixed assets (continued) | |||||||||||||
| Houses and buildings | Machinery equipment | Office and electronic equipment | Transportation equipment | Power stations | Others | Total | ||||||||
| Impairment allowance: | ||||||||||||||
| December 31, 2021 | 771,541 | 653,840 | 338,477 | 2,429 | 62,059 | 412 | 1,828,758 | |||||||
| Change of accounting policy | 305,387 | (305,387) | ||||||||||||
| January 1, 2022 | 771,541 | 959,227 | 33,090 | 2,429 | 62,059 | 412 | 1,828,758 | |||||||
| Accrued in current period | - | 50,195 | 3,673 | 22 | - | - | 53,890 | |||||||
| Write-off of current period | (5,224) | (177,249) | (1,473) | (2,340) | - | - | (186,286) | |||||||
| Other transfers out | - | - | (305,387) | - | - | - | (305,387) | |||||||
| December 31, 2022 | 766,317 | 832,173 | 35,290 | 111 | 62,059 | 412 | 1,696,362 | |||||||
| Fixed assets, carrying amount: | ||||||||||||||
| December 31, 2022 | 36,386,276 | 93,223,792 | 975,512 | 95,874 | 1,785,334 | 10,884 | 132,477,672 | |||||||
| January 1, 2022 | 29,613,623 | 78,721,936 | 3,302,475 | 81,034 | 1,872,055 | 7,660 | 113,598,783 | |||||||
| December 31, 2021 | 29,613,623 | 78,702,450 | 3,302,475 | 81,034 | 1,872,055 | 7,660 | 113,579,297 |
| Please refer to Item 81 of Note V for information on fixed asset pledge. As of December 31, 2022, the gross amount of the fixed assets that were fully depreciated and still in use was RMB34,259,086,000. | ||||
| Fixed assets with pending ownership certificates at the end of the current period: | ||||
| Carrying amount | Expected time of obtaining ownership certificate | |||
| Houses and buildings (Note) | 15,275,634 | Expected to be completed in 2023 | ||
| Note | As of December 31, 2022, the fixed assets with pending ownership certificates of the Company were mainly the buildings and constructions of CSOT's t3, t4, t6, and t9 manufacturing bases, as well as the buildings and constructions of Inner Mongolia Zhonghuan Crystal Material Co., Ltd., Inner Mongolia Zhonghuan Advanced Semi-conductor Material Co., Ltd. and Tianjin Huanhai Industrial Park Co., Ltd. | |||
19 Construction in progress
(1) Schedule of construction in progress
| December 31, 2022 | January 1, 2022 | |||
| Construction in progress | 52,063,442 | 37,112,045 | ||
| Less: Impairment allowance | 9,608 | 146,160 | ||
| 52,053,834 | 36,965,885 |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||||||
| 19 | Construction in progress (continued) | |||||||||||||||||||||||
| (2) | Changes to construction in progress | |||||||||||||||||||||||
| Project name | Budget | Beginning amount | Increase in current period | Transfer-in in current period Fixed assets | Other decreases | December 31, 2022 | Project input Investment as % of budget | Project progress | Cumulative capitalized interest | Including: capitalized interest in current period | Interest capitalizat ion rate for current period | Funding source | ||||||||||||
| t7 production line of LCD panel | 35,337,000 | 3,362,350 | 6,559,254 | (8,802,841) | (15,022) | 1,103,741 | 75% | 75% | 515,456 | 123,023 | 1.04% | Proprietary fund and loans | ||||||||||||
| t5 production line of LCD panel | 11,321,000 | 739,416 | 4,367,946 | (2,353) | (65,608) | 5,039,401 | 80% | 80% | - | - | - | |||||||||||||
| t4 production line of LCD panel | 35,000,000 | 17,226,269 | 2,068,560 | (2,489,529) | (566,209) | 16,239,091 | 96% | 96% | 295,941 | 295,941 | 2.33% | Proprietary fund and loans | ||||||||||||
| t9 production line of LCD panel | 31,500,000 | 3,916,693 | 13,761,271 | (7,294,072) | - | 10,383,892 | 58% | 58% | 144,387 | 144,387 | 3.00% | Proceeds from equity issue and loans | ||||||||||||
| Huizhou modular integration project | 7,066,680 | 620,802 | 1,842,898 | (1,228,426) | (21,916) | 1,213,358 | 100% | 100% | - | - | - | Proprietary fund and loans | ||||||||||||
| Production line of 8-12-inch semiconductor silicon wafers for integrated circuit | 5,707,172 | 1,307,446 | 1,049,821 | (1,196,270) | (28,576) | 1,132,421 | 77% | 77% | - | - | - | Self-financing | ||||||||||||
| 50GW (G12) solar-grade monocrystalline silicon material smart factory project | 10,979,740 | 543,611 | 6,934,838 | (3,805,653) | (5,644) | 3,667,152 | 68% | 68% | - | - | - | Self-financing | ||||||||||||
| High-performing shingled solar module intelligent plant project | 3,045,000 | 407,609 | 824,398 | (499,785) | (2,770) | 729,452 | 86% | 86% | - | - | - | Self-financing | ||||||||||||
| High-performing ultra-thin silicon solar single-crystal wafer intelligent plant project | 1,949,870 | - | 883,977 | - | - | 883,977 | 45% | 45% | - | - | - | Self-financing | ||||||||||||
| Large-diameter semiconductor silicon wafers for integrated circuit | 5,385,000 | 355,184 | 1,624,967 | (212,666) | (136,980) | 1,630,505 | 41% | 41% | - | - | - | Self-financing | ||||||||||||
| Others | Not applicable | 8,486,505 | 14,039,483 | (12,302,669) | (19 2,475) | 10,030,844 | ||||||||||||||||||
| 36,965,885 | 53,957,413 | (37,834,264) | (1,035,200) | 52,053,834 | ||||||||||||||||||||
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
20 Right-of-use assets
| Houses and buildings | Transportation equipment | Machinery equipment | Land use rights | Total | ||||||
| Gross amount: | ||||||||||
| January 1, 2022 | 867,511 | 1,164 | 1,982,380 | 13,335 | 2,864,390 | |||||
| Increase | ||||||||||
| Leased in | 3,482,164 | 139 | 254,198 | 123,136 | 3,859,637 | |||||
| Other increases | - | 462 | - | - | 462 | |||||
| Decreases | ||||||||||
| Other decreases | (61,025) | (339) | (1,126,116) | (1,930) | (1,189,410) | |||||
| Exchange adjustment | 4,474 | 4 | - | - | 4,478 | |||||
| December 31, 2022 | 4,293,124 | 1,430 | 1,110,462 | 134,541 | 5,539,557 | |||||
| Accumulated depreciation: | ||||||||||
| January 1, 2022 | 101,348 | 522 | 335,526 | 83 | 437,479 | |||||
| Increase | ||||||||||
| Accrual | 170,477 | 497 | 139,909 | 11,149 | 322,032 | |||||
| Decreases | ||||||||||
| Other decreases | (45,988) | (110) | (285,549) | - | (331,647) | |||||
| Exchange adjustment | 1,566 | 3 | - | - | 1,569 | |||||
| December 31, 2022 | 227,403 | 912 | 189,886 | 11,232 | 429,433 | |||||
| Right-of-use assets, carrying amount: | ||||||||||
| December 31, 2022 | 4,065,721 | 518 | 920,576 | 123,309 | 5,110,124 | |||||
| January 1, 2022 | 766,163 | 642 | 1,646,854 | 13,252 | 2,426,911 | |||||
| Impairment allowance: | ||||||||||
| January 1, 2022 | - | - | - | - | - | |||||
| December 31, 2022 | - | - | - | - | - | |||||
| Right-of-use assets, carrying amount | ||||||||||
| December 31, 2022 | 4,065,721 | 518 | 920,576 | 123,309 | 5,110,124 | |||||
| January 1, 2022 | 766,163 | 642 | 1,646,854 | 13,252 | 2,426,911 |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
21 Intangible assets
| Land use rights | Non-patent technologies /patents | Others | Total | |||||
| Gross amount: | ||||||||
| January 1, 2022 | 8,649,646 | 8,083,664 | 1,590,550 | 18,323,860 | ||||
| Increase | ||||||||
| New subsidiary | - | 13,358 | - | 13,358 | ||||
| Purchase | 841,929 | 1,296,125 | 228,373 | 2,366,427 | ||||
| Reclassified from construction in progress | 4,715 | - | 185,918 | 190,633 | ||||
| Reclassified from development costs | - | 1,961,331 | - | 1,961,331 | ||||
| Decreases | ||||||||
| Sale and disposal | (167,217) | (39) | (2,664) | (169,920) | ||||
| Reclassified to investment property | (112,816) | - | - | (112,816) | ||||
| Other decreases | - | - | (6,855) | (6,855) | ||||
| Exchange adjustment | - | (3,962) | 328 | (3,634) | ||||
| December 31, 2022 | 9,216,257 | 11,350,477 | 1,995,650 | 22,562,384 | ||||
| Accumulated amortization: | ||||||||
| January 1, 2022 | 802,839 | 2,654,155 | 739,490 | 4,196,484 | ||||
| Increase | ||||||||
| Accrual | 257,146 | 1,027,834 | 188,124 | 1,473,104 | ||||
| New subsidiary | - | 891 | - | 891 | ||||
| Decreases | ||||||||
| Sale and disposal | (6,400) | - | (520) | (6,920) | ||||
| Reclassified to investment property | (26,945) | - | - | (26,945) | ||||
| Other decreases | (8,233) | - | (850) | (9,083) | ||||
| Exchange adjustment | - | 2,618 | 188 | 2,806 | ||||
| December 31, 2022 | 1,018,407 | 3,685,498 | 926,432 | 5,630,337 | ||||
| Intangible assets, net： | ||||||||
| December 31, 2022 | 8,197,850 | 7,664,979 | 1,069,218 | 16,932,047 | ||||
| January 1, 2022 | 7,846,807 | 5,429,509 | 851,060 | 14,127,376 | ||||
| Impairment allowance: | ||||||||
| January 1, 2022 | 23,562 | 110,019 | 11,148 | 144,729 | ||||
| Accrual | - | 442 | - | 442 | ||||
| Exchange adjustment | - | 2,945 | - | 2,945 | ||||
| December 31, 2022 | 23,562 | 113,406 | 11,148 | 148,116 | ||||
| Intangible assets, carrying amount: | ||||||||
| December 31, 2022 | 8,174,288 | 7,551,573 | 1,058,070 | 16,783,931 | ||||
| January 1, 2022 | 7,823,245 | 5,319,490 | 839,912 | 13,982,647 |
| As of December 31, 2022, the total book value of land use rights for which the title certificate has not been registered properly was RMB2,076,000. | |
| Please refer to Item 81 of Note V for information on collateralized intangible assets. |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
22 Development costs
| Development expenditures are presented as follows: | |||||
| December 31, 2022 | January 1, 2022 | ||||
| Semi-conductor display | 2,172,507 | 1,266,973 | |||
| New energy photovoltaic & semi-conductor materials | 1,006,700 | 1,241,446 | |||
| 3,179,207 | 2,508,419 | ||||
23 Goodwill
| (1) | Gross amount of goodwill | |||||||||||
| item incurring goodwill | January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | ||||||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | Note 1 | 28,967 | - | - | 28,967 | |||||||
| Qingdao Blue Business Consulting Co., Ltd. | Note 2 | 2,452 | - | - | 2,452 | |||||||
| Tianjin Huan'Ou Semiconductor Material&Technology Co., Ltd. | Note 3 | 214,683 | - | - | 214,683 | |||||||
| TCL Technology Group (Tianjin) Co., Ltd. | Note 4 | 6,726,130 | - | - | 6,726,130 | |||||||
| Moka International Limited | Note 5 | 1,728,973 | - | - | 1,728,973 | |||||||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Note 6 | 486,603 | - | - | 486,603 | |||||||
| Huizhou Kedate Smart Display Technology Co., Ltd. | Note 7 | - | 3,011 | - | 3,011 | |||||||
| 9,187,808 | 3,011 | - | 9,190,819 | |||||||||
| (2) | Goodwill impairment allowance | |||||||||||
| Name of investee | January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | ||||||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 28,967 | - | - | 28,967 | ||||||||
| Note 1 | In 2010, the Company acquired a 51.82% interest in TCL Medical Radiological Technology (Beijing) Co., Ltd. (hereinafter referred to as “TCL Medical Radiological Technology”) with capital of RMB 52,319,000. Thus, the difference between the accumulated investment of the Company in TCL Medical Radiological Technology (corresponding to 51.82% interest) and the fair value of the net identifiable assets of TCL Medical Radiological Technology attributable to the Company on the settlement date (equal to RMB 28,967,000) was recorded in the Company's goodwill. An impairment allowance of RMB 28,967,000 had been made on such goodwill in 2018. | |||||||||||
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
| 23 | Goodwill (continued) |
| Note 2 | In October 2016, Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired 60% interest in Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as “Blue Business Consulting”) with consideration of RMB 10,000,000. Thus, the difference between the accumulated investment of Highly Information Industry Co., Ltd. in Blue Business Consulting (corresponding to a 60% interest) and the fair value of the net identifiable assets of Blue Business Consulting attributable to Highly Information Industry Co., Ltd. on the settlement date (equivalent to RMB2,452,000) was recorded in the Company’s goodwill. |
| Note 3 | Tianjin Huan’Ou Semiconductor Material&Technology Co., Ltd. is a subsidiary of Zhonghuan Electronics, which the Company has acquired in a business combination not involving entities under common control. |
| Note 4 | The Company completed its acquisition of 100% stake in TCL Technology Group (Tianjin) Co., Ltd. (former name: Tianjin Zhonghuan Electronic Information Group Co., Ltd.) on October 1,2020 with a cash consideration of RMB12,500,000,000. At the date of acquisition, the Group obtained the effective control of TCL Technology Group (Tianjin) Co., Ltd., and included such company into the consolidated financial statements. On the date of transaction, the difference between the accumulated investment of the Company in TCL Technology Group (Tianjin) Co., Ltd. (corresponding to the 100% interest) and the fair value of the net identifiable assets of Zhonghuan Electronics attributable to the Company on the settlement date (equal to RMB6,726,130,000) was recorded in the Company’s goodwill. The goodwill mainly consists of 2 asset groups: the new energy photovoltaic and semiconductor materials and the Tianjin Printronics Circuit Corp. |
| Note 5 | In April 2021, the Company acquired 100% interest in Moka International Limited with a cash consideration of RMB2,800,000,000. Thus, the difference between the accumulated investment of the Company in Moka International Limited (corresponding to the 100% interest) and the fair value of the net identifiable assets of Moka International Limited attributable to the Company on the settlement date (equal to RMB1,728,973,000) was recorded in the Company’s goodwill. |
| Note 6 | In April 2021, the Company acquired 60% interest in Suzhou China Star Optoelectronics Technology Co., Ltd. (formerly known as “Samsung Suzhou LCD Co. Ltd.”) with a cash consideration of RMB4,757,727,000. The difference between the accumulated investment of the Company in Suzhou China Star Optoelectronics Technology Co., Ltd. (corresponding to the total 70% interest) and the fair value of the identifiable net assets of Suzhou China Star Optoelectronics Technology Co., Ltd. attributable to the Company on the settlement date (equivalent to RMB486,603,000) was recorded in the Company’s goodwill. |
| Note 7 | In August 2022, the Company acquired in 100% interest in Huizhou Kedate Smart Display Technology Co., Ltd. with a cash consideration of RMB51,000,000. As such, the difference between the investment of the Company in Huizhou Kedate Smart Display Technology Co., Ltd. (corresponding to the 100% interest) and the fair value of the net identifiable assets of Zhonghuan Electronics attributable to the Company on the settlement date (equal to RMB3,011,000) was recorded in the Company’s goodwill. |
| (III) | Goodwill impairment test |
| The Company carried out an impairment test of its goodwill on December 31, 2022. The recoverable amount of the Qingdao Blue Business Consulting Co., Ltd., Tianjin Zhonghuan Advanced Materials & Technology Co., Ltd., new energy photovoltaic and semiconductor materials, Moka International Limited and Suzhou China Star Optoelectronics Technology Co., Ltd.’s asset groups with goodwill was calculated with the discounted future cash flow approach, based on the budget approved by the management (the budget period is five years). The estimated perpetual annual growth rate was adopted to calculate the future cash flow exceeding the budget period. The perpetual annual growth rate (primarily 0% - 3%) adopted by the management was consistent with predicted data on the industry. The management determines the revenue growth rate (mainly 1.45%-29.62%) and determines the EBITDA (mainly 3.51%-13.30%) based on historical experience and forecasts of market development, combined with the Company's future development strategic plan and adopt a specific risk discount rate (mainly 8%-13.5%) that reflects the relevant asset group. The recoverable amount of the Tianjin Printronics Circuit Corp asset group is determined based on the higher of the present value of the estimated future cash flows of the asset or the fair value less costs of disposal. After the management analyzed the recoverable amount of each asset group based on these assumptions, no provision for impairment was required for the goodwill of any of the above asset group as of December 31, 2022. |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
24 Long-term deferred expenses
| January 1, 2022 | Increase in current period | Amortization in current period | Others | December 31, 2022 | ||||||
| Improvement expense on leased fixed assets | 1,629,475 | 163,652 | (351,972) | 110 | 1,441,265 | |||||
| Others | 1,011,055 | 1,678,488 | (1,261,335) | (125,265) | 1,302,943 | |||||
| 2,640,530 | 1,842,140 | (1,613,307) | (125,155) | 2,744,208 | ||||||
25 Deferred income tax assets and deferred income tax liabilities
| (1) | Un-offset deferred income tax assets | |||||||
| December 31, 2022 | January 1, 2022 | |||||||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |||||
| Deductible losses | 19,383,933 | 3,055,974 | 6,739,226 | 1,087,993 | ||||
| Asset impairment allowances | 4,132,996 | 785,212 | 3,038,745 | 633,013 | ||||
| Provisions | 559,584 | 91,408 | 744,189 | 117,497 | ||||
| Changes in fair value | 15,398 | 2,792 | 55,287 | 13,230 | ||||
| Others | 2,120,079 | 230,223 | 1,546,420 | 298,690 | ||||
| 26,211,990 | 4,165,609 | 12,123,867 | 2,150,423 | |||||
| December 31, 2021 | ||||||||
| Deductible temporary difference | Deferred income tax assets | |||||||
| Deductible losses | 6,758,713 | 1,090,916 | ||||||
| Asset impairment allowances | 3,038,745 | 633,013 | ||||||
| Provisions | 744,189 | 117,497 | ||||||
| Changes in fair value | 55,287 | 13,230 | ||||||
| Others | 1,546,420 | 298,690 | ||||||
| 12,143,354 | 2,153,346 | |||||||
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||
| 25 | Deferred income tax assets and deferred income tax liabilities (continued) | ||||||||
| (2) | Un-offset deferred income tax liabilities | ||||||||
| December 31, 2022 | January 1, 2022 | ||||||||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred income tax liabilities | ||||||
| Accelerated depreciation of fixed assets | 13,198,261 | 2,046,374 | 11,471,272 | 1,787,699 | |||||
| One-off tax deduction for fixed assets | 6,818,647 | 1,021,284 | 3,184,144 | 501,290 | |||||
| Increase in value of assets as assessed in business combination not involving entities under common control | 1,627,106 | 378,993 | 2,491,577 | 531,018 | |||||
| Changes in fair value | 331,292 | 71,725 | 527,471 | 129,006 | |||||
| Government grants | 126,141 | 18,921 | 273,470 | 41,021 | |||||
| Others | 826,685 | 193,853 | 721,284 | 168,952 | |||||
| 22,928,132 | 3,731,150 | 18,669,218 | 3,158,986 | ||||||
| (3) | There were no deferred tax assets or liabilities presented on a net basis after offsetting | ||||||||
| Item | Amount subject to mutual offset of deferred income tax assets against liabilities at the end of the period | Closing balance of deferred income tax assets or liabilities after offset | |||||||
| Deferred income tax assets | (2,411,722) | 1,753,887 | |||||||
| Deferred income tax liabilities | (2,411,722) | 1,319,428 | |||||||
| (4) | Unrecognized deferred income tax assets | ||||||||
| December 31, 2022 | January 1, 2022 | ||||||||
| Deductible temporary difference | 306,669 | 181,612 | |||||||
| Deductible losses | 10,302,065 | 5,840,378 | |||||||
| 10,608,734 | 6,021,990 | ||||||||
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) | ||||
| 25 | Deferred income tax assets and deferred income tax liabilities (continued) | ||||
| (5) | Deductible losses in respect of unrecognized deferred income tax assets will expire in the following years: | ||||
| December 31, 2022 | January 1, 2022 | ||||
| 2021 | - | 178,533 | |||
| 2022 | 268,388 | 268,913 | |||
| 2023 | 472,917 | 477,404 | |||
| 2024 | 472,157 | 476,543 | |||
| 2025 | 440,443 | 464,426 | |||
| 2026 onwards | 8,648,160 | 3,974,559 | |||
| 10,302,065 | 5,840,378 | ||||
26 Other non-current assets
| December 31, 2022 | January 1, 2022 | |||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||
| Advance payment for equipment and land use rights (Note) | 5,426,643 | - | 5,426,643 | 6,310,004 | - | 6,310,004 | ||||||
| Advance payment for patents | 273,348 | - | 273,348 | 211,606 | - | 211,606 | ||||||
| Others | 593,952 | - | 593,952 | 927,399 | - | 927,399 | ||||||
| 6,293,943 | - | 6,293,943 | 7,449,009 | - | 7,449,009 | |||||||
| Note | The Company reclassifies long-lived assets such as advance payment for equipment and land use rights reflected in prepaid accounts to other non-current assets. |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
27 Short-term borrowings
| December 31, 2022 | January 1, 2022 | ||||
| Unsecured borrowings | 10,214,632 | 9,315,505 | |||
| Borrowings secured by pledge | - | 22,549 | |||
| Interest payable | 1,279 | 3,373 | |||
| 10,215,911 | 9,341,427 | ||||
| As of December 31, 2022, the Company has no pledged short-term loans. | |||||
| As of December 31, 2022, the Company does not have any short-term borrowings that have expired and have not been repaid. | |||||
28 Borrowings from the Central Bank
| As of December 31, 2022, the balance of the borrowings of TCL Tech Finance Co., Ltd. (a subsidiary of the Company) from the central bank was RMB777,676,000 (December 31, 2021: RMB1,437,062,000). |
29 Customer deposits and deposits from banks and other financial institutions
| December 31, 2022 | January 1, 2022 | |||
| Customer deposits and deposits from other banks and financial institutions | 603,423 | 666,056 |
| Customer deposits and deposits from banks and other financial institutions are the deposits of related and nonrelated enterprises absorbed by TCL Tech Finance Co., Ltd., a subsidiary of the Company, within the business scope approved by the regulatory authority. |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| For the period from January 1 to December 31, 2022 |
| (RMB’000) |
| V | Notes to Consolidated Financial Statements (Continued) |
30 Held-for-trading financial liabilities
| December 31, 2022 | January 1, 2022 | |||
| Measured at fair value with changes included Financial liabilities at fair value through profit or loss. | 861,912 | 925,035 |
31 Derivative financial liabilities
| December 31, 2022 | January 1, 2022 | |||
| Derivative financial liabilities | 70,735 | 22,205 |
32 Notes payable
| December 31, 2022 | January 1, 2022 | |||
| Bank acceptance notes | 5,731,632 | 2,877,554 | ||
| Trade acceptance notes | 634,028 | 397,742 | ||
| 6,365,660 | 3,275,296 | |||
| As of December 31, 2022, the Company had no notes payable that were due but not paid. | ||||
33 Accounts payable
| December 31, 2022 | January 1, 2022 | |||
| Amounts due to suppliers | 26,381,912 | 24,297,860 | ||
| As of December 31, 2022, there were no significant accounts payable aged over one year. | ||||
34 Advances from customers
35 Contract liabilities
36 Employee benefits payable and long-term employee benefits payable
| V | Notes to Consolidated Financial Statements (Continued) |
| December 31, 2022 | January 1, 2022 | |||||
| Advances from customers | 1,402 | 5,794 |
| As of December 31, 2022, the Company had no significant accounts receivable aged over one year. |
| December 31, 2022 | January 1, 2022 | |||
| Advances from customers | 2,336,008 | 2,593,882 |
(1)
| (1) | Employee compensation payable | |||
| December 31, 2022 | January 1, 2022 | |||
| Short-term employee benefits payable | 2,341,429 | 3,274,021 | ||
| Defined contribution plans payable | 26,353 | 34,383 | ||
| Dismissal benefits payable | 9,151 | 3,529 | ||
| 2,376,933 | 3,311,933 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
| 36 | Employee benefits payable and long-term employee benefits payable (continued) |
| (1) | Employee benefits payable (continued) |
| (a) | Short-term employee benefits presented |
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Wages, bonuses, allowances and subsidies | 2,885,187 | 9,034,445 | (9,885,394) | 2,034,238 | ||||
| Employee services and benefits | 27,664 | 457,363 | (485,027) | - | ||||
| Social insurance benefits | 46,565 | 363,378 | (371,838) | 38,105 | ||||
| Including: medical insurance premium | 44,622 | 333,609 | (341,480) | 36,751 | ||||
| Employment injury insurance premiums | 953 | 17,863 | (18,121) | 695 | ||||
| Maternity insurance | 990 | 11,906 | (12,237) | 659 | ||||
| Housing fund | 30,326 | 328,930 | (331,339) | 27,917 | ||||
| Trade union funds and staff education funds | 27,575 | 186,515 | (164,672) | 49,418 | ||||
| Others | 256,704 | 3,408 | (68,361) | 191,751 | ||||
| - | ||||||||
| 3,274,021 | 10,374,039 | (11,306,631) | 2,341,429 | |||||
| (b) | Defined contribution plans | |||||||
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Basic pension insurance | 32,979 | 702,985 | (710,583) | 25,381 | ||||
| Unemployment insurance | 1,404 | 21,162 | (21,594) | 972 | ||||
| 34,383 | 724,147 | (732,177) | 26,353 |
(2)
| (2) | Long-term employee compensation payable | |||
| December 31, 2022 | January 1, 2022 | |||
| Supplementary pension insurance | 25,101 | 26,595 | ||
| Other long-term benefits | 447,437 | 643,336 | ||
| 472,538 | 669,931 | |||
37 Taxes and levies payable
38 Other payables
(1) Dividends payable
| December 31, 2022 | January 1, 2022 | ||||
| Other non-controlling interests | 40,010 | 34,607 | |||
| 40,010 | 34,607 | ||||
V
| V | Notes to Consolidated Financial Statements (Continued) |
| December 31, 2022 | January 1, 2022 | |||
| Corporate income tax | 731,839 | 1,020,711 | ||
| Value-added tax | 211,873 | 30,967 | ||
| Individual income tax | 42,611 | 39,920 | ||
| Urban maintenance and construction tax | 60,858 | 43,081 | ||
| Education surcharges | 43,495 | 30,800 | ||
| Others | 124,915 | 73,370 | ||
| 1,215,591 | 1,238,849 |
| Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates. |
| December 31, 2022 | January 1, 2022 | |||
| Dividends payable | 40,010 | 34,607 | ||
| Other payables | 24,150,342 | 19,352,281 | ||
| 24,190,352 | 19,386,888 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
| 38 | Other payables (continued) |
(2) Other payables
| December 31, 2022 | January 1, 2022 | |||
| Payables for engineering equipment | 19,130,372 | 13,368,026 | ||
| Unpaid expenses | 2,195,904 | 1,531,544 | ||
| Security deposits | 353,207 | 210,975 | ||
| Others | 2,470,859 | 4,241,736 | ||
| 24,150,342 | 19,352,281 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
39 Non-current liabilities due within one year
| December 31, 2022 | January 1, 2022 | ||||
| Long-term borrowings due within one year (Note 1) | 41 | 4,341,300 | 6,062,928 | ||
| Bonds payable due within one year (Note 2) | 42 | 5,170,383 | 5,646,822 | ||
| Current portion of lease liabilities | 43 | 295,010 | 681,087 | ||
| Current portion of long-term payables | 179,127 | 168,132 | |||
| Current portion of interest payable | 552,181 | 447,796 | |||
| Long-term employee compensation payable due within one year | 419,320 | - | |||
| 10,957,321 | 13,006,765 |
Note 1
| Note 1 | The interest rates of the Company’s long-term borrowing ranged from 2.7% to -5.91% in the current period (2021: 0.46% - 4.15%). |
| Note 2 | The Company's bonds payable due within one year are mainly as follows: |
| ①Medium-term note 20TCL Technology MTN001: Issued in March 2020, with a term of 3 years, the closing balance as of December 31 was RMB2,999,441,000. | |
| ②Corporate bond 18TCL 01: Issued in June 2018, with a term of 5 years, the closing balance as of December 31 was RMB169,761,000. | |
| ③Corporate bond 18TCL 02: Issued in August 2018, with a term of 5 years, the closing balance as of December 31 was RMB2,001,181,000. |
40 Other current liabilities
| December 31, 2022 | January 1, 2022 | ||||
| After-sales service expense (note) | 844,293 | 792,847 | |||
| Output tax to be transferred | 175,626 | 286,384 | |||
| Others | 165,929 | 190,656 | |||
| 1,185,848 | 1,269,887 |
| Note | After-sales service expense expected to occur within 1 year is presented in other current liabilities. |
| V | Notes to Consolidated Financial Statements (Continued) |
41 Long-term borrowings
| December 31, 2022 | January 1, 2022 | ||||
| Borrowings secured by collateral | 42,317,366 | 39,633,561 | |||
| Borrowings secured by pledge | 6,675,371 | 928,156 | |||
| Unsecured borrowings | 73,951,728 | 52,780,293 | |||
| 122,944,465 | 93,342,010 | ||||
| Including: long-term loans due within one year | (4,341,300) | (6,062,928) | |||
| 118,603,165 | 87,279,082 | ||||
| The maturities of the Company's long-term borrowings vary from 2023 to 2037. | |
| As of December 31, 2022, the long-term borrowings secured by collateral were equivalent to RMB42,317,366,000 (including amounts translated from other currencies) (December 31, 2021: RMB39,633,561,000), which were secured by the collaterals of the land use right, houses and buildings, machinery and equipment of about RMB110,182,749,000 (including amounts translated from other currencies) (December 31, 2021: RMB66,737,167,000); the long-term pledged borrowings were equivalent to RMB6,675,371,000 (December 31, 2021: RMB928,156,000), which were pledged by the collaterals of the 60% equity in Suzhou China Star Optoelectronics Technology Co., Ltd., 100% equity in Suzhou China Star Optoelectronics Display Co., Ltd. and 40% equity in Huansheng Solar (Jiangsu) Co., Ltd. and accounts receivable and contract assets of about RMB757,751,000 (December 31, 2021: RMB328,069,000). | |
| The interest rates of the Company’s long-term borrowing ranged from 2.40% to -7.75% in the current period (2021: 1.3% - 5.70%). |
42 Bonds payable
| December 31, 2022 | January 1, 2022 | |||
| Corporate bonds | 4,518,438 | 8,073,016 | ||
| MTN | 7,488,413 | 4,993,265 | ||
| 12,006,851 | 13,066,281 | |||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||
| 42 | Bonds payable (continued) | ||||||||||||
| (1) | Movements in bonds payable | ||||||||||||
| Bond name | Par value | Issue date | Maturity | Issued amount | Balance at the beginning of the period | Issued in current period | Accrued interest as per par value | Amortization of premium or discount | Repaid in current period | Others (note 1) | December 31, 2022 | ||
| 18TCL01 | 1,000,000 | June 6, 2018 | 5 | 1,000,000 | 169,162 | - | 6,462 | 248 | - | (169,410) | - | ||
| 18TCL02 | 2,000,000 | August 20, 2018 | 5 | 2,000,000 | 2,003,039 | - | 72,269 | (1,079) | - | (2,001,960) | - | ||
| 19TCL01 | 1,000,000 | May 20, 2019 | 5 | 1,000,000 | 998,630 | 1,000,000 | 34,249 | 1,634 | (1,000,000) | - | 1,000,264 | ||
| 19TCL02 | 1,000,000 | July 23, 2019 | 5 | 1,000,000 | 998,568 | 980,000 | 37,061 | (2,046) | (980,000) | - | 996,522 | ||
| 19TCL03 | 2,000,000 | October 21, 2019 | 5 | 2,000,000 | 1,996,860 | 340,000 | 69,365 | 74 | (1,900,000) | - | 436,934 | ||
| 20TCL科技MTN001 | 3,000,000 | March 27, 2020 | 3 | 3,000,000 | 2,997,041 | - | 108,888 | 388 | - | (2,997,429) | - | ||
| TCL TEC1 | 1,957,483 | July 14, 2020 | 5 | 1,957,483 | 1,906,757 | - | 39,176 | 1,369 | - | 176,592 | 2,084,718 | ||
| 21TCL Ji MTN001 (High- Growth Debt) | 2,000,000 | May 10, 2021 | 3 | 2,000,000 | 1,996,224 | - | 83,227 | 1,597 | - | - | 1,997,821 | ||
| 22TCL集MTN001 | 2,000,000 | January 14, 2022 | 3 | 2,000,000 | - | 2,000,000 | 66,542 | (2,608) | - | - | 1,997,392 | ||
| 22TCL集GN002 | 1,500,000 | April 27, 2022 | 3 | 1,500,000 | - | 1,500,000 | 33,768 | (2,783) | - | - | 1,497,217 | ||
| 22TCL Group MTN003 (Science and Technology Notes) | 2,000,000 | July 6, 2022 | 3 | 2,000,000 | - | 2,000,000 | 33,838 | (4,017) | - | - | 1,995,983 | ||
| Total | 19,457,483 | —— | —— | 19,457,483 | 13,066,281 | 7,820,000 | 584,845 | (7,223) | (3,880,000) | (4,992,207) | 12,006,851 | ||
| Note 1 | Others are bonds payable within one year which are reclassified to non-current liabilities due within one year and exchange adjustment. | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
43 Lease liabilities
| December 31, 2022 | January 1, 2022 | |||
| Total lease liabilities | 4,756,393 | 1,783,159 | ||
| Less: current portion of lease liabilities | 295,010 | 681,087 | ||
| Total | 4,461,383 | 1,102,072 |
44 Long-term payables
| December 31, 2022 | January 1, 2022 | |||
| Finance lease | 887,763 | 671,344 | ||
45 Deferred income
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Government grants | 2,361,171 | 7,178,621 | (7,071,647) | 2,468,145 | ||||
| Others | 34 | - | (34) | - | ||||
| 2,361,205 | 7,178,621 | (7,071,681) | 2,468,145 |
| Items involving government grants |
| V | Notes to Consolidated Financial Statements (Continued) |
| January 1, 2022 | New grants in current period | Amount recorded in non-operating income in current period | Amount recorded in other income in current period | Amount used to offset costs and expenses in current period | Other changes | December 31, 2022 | ||||||||
| Government grants related to assets | 1,273,978 | 2,351,183 | (2,329) | (240,723) | (217,641) | (2,211,426) | 953,042 | |||||||
| Government grants related to income | 1,087,193 | 4,827,438 | (5,225) | (2,513,186) | (1,801,310) | (79,807) | 1,515,103 | |||||||
| 2,361,171 | 7,178,621 | (7,554) | (2,753,909) | (2,018,951) | (2,291,233) | 2,468,145 |
Note
| Note | "Other changes" were deferred income offset by the carrying amounts of relevant assets. |
46 Estimated liabilities
| December 31, 2022 | January 1, 2022 | ||||
| After-sales service fee of products | 27,105 | - | |||
| Pending litigation | 70,379 | - | |||
| Onerous contract | 38 | - | |||
| 97,522 | - |
| V | Notes to Consolidated Financial Statements (Continued) |
47 Share capital
| January 1, 2022 | Increase or decrease in current period | December 31, 2022 | |||||||||||||
| Amount | Ratio (%) | New issues | Others | Subtotal | Amount | Ratio (%) | |||||||||
| I. Restricted shares | 612,110 | 4.36% | 2,806,128 | 1,982 | 2,808,110 | 3,420,220 | 20.03% | ||||||||
| II. Unrestricted shares | 13,418,532 | 95.64% | 235,122 | (1,982) | 233,140 | 13,651,672 | 79.97% | ||||||||
| III. Total shares | 14,030,642 | 100% | 3,041,250 | - | 3,041,250 | 17,071,892 | 100% | ||||||||
| As of December 31, 2022, the Company's total share capital was 17,071,892 thousand shares. | |
| Note | Except for Chairman of the Board Mr. Li Dongsheng who holds restricted shares subscribed for in a private placement, none of the other incumbent directors, supervisors or senior management hold any restricted shares from a split-share structure reform or a private placement. The shares held by these personnel will stay partially frozen as per the Rules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of the Company and the Changes thereof. The trading and information disclosure in relation to these shares shall be in strict compliance with the applicable laws, regulations and rules. |
| V | Notes to Consolidated Financial Statements (Continued) |
48 Other equity instruments
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Convertible bonds | 200,334 | - | 200,334 | - |
49 Capital reserves
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Share premium | 6,068,268 | 8,414,593 | (2,044,871) | 12,437,990 | ||||
| Other capital reserves | 10,999 | 90,516 | (16,712) | 84,803 | ||||
| 6,079,267 | 8,505,109 | (2,061,583) | 12,522,793 |
50 Treasury stock
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Treasury stock | 1,885,557 | 502,771 | (1,073,747) | 1,314,581 |
| Increase in the period is the result of repurchase of shares from the Company's Employee Stock Ownership Plan. The 16th meeting of the Seventh Session of the Board of Directors held by the Company on March 18, 2022 deliberated on and approved the Repurchase Report on the Repurchase of Some Public Shares in 2022. The repurchase of the company shares will be used for the Employee Stock Ownership Plans or equity incentives. As of December 31, 2022, the total number of shares repurchased was 106,484,000 shares at the total consideration of RMB502,771,000. | |
| Decrease in this year is mainly due to reduction of RMB997,082,000 in the conversion of convertible bond TCL fixed conversion 2, and the number of shares converted by 293,416,000. |
| V | Notes to Consolidated Financial Statements (Continued) |
51 Other comprehensive income
(1) Other comprehensive income items, income tax effects and reclassifications to profit or loss
| 2022 | 2021 | ||||
| I. Items that cannot be reclassified to profit or loss subsequently | |||||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | (3,568) | 1,626 | |||
| Share of the period | (3,568) | 1,626 | |||
| Previous other comprehensive income reclassified to retained earnings for current period | - | ||||
| 2. Changes in fair value of other equity instruments | (14,581) | (287,845) | |||
| Current gain/(loss) | (19,688) | (212,104) | |||
| Previous other comprehensive income reclassified to retained earnings for current period | 16,811 | (122,821) | |||
| Income tax effects recorded in other comprehensive income | (11,704) | 47,080 | |||
| II. Items that will be reclassified to profit or loss subsequently | |||||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | (13,936) | (268,688) | |||
| Share of the period | (13,936) | (268,688) | |||
| Income tax effects recorded in other comprehensive income | - | ||||
| 2. Changes in fair value of financial assets recorded in other comprehensive income | - | - | |||
| Current gain/(loss) | - | - | |||
| 3. Cash flow hedges | 91,730 | 65,566 | |||
| Current gain/(loss) | 163,220 | 77,992 | |||
| Previous other comprehensive income reclassified to profit for current period | (58,996) | - | |||
| Income tax effects recorded in other comprehensive income | (12,494) | (12,426) | |||
| 4. Differences arising from translation of foreign currency financial statements of overseas operations | (386,679) | 245,338 | |||
| 5. Net income arising from disposal of overseas operations through profit or loss | - | - | |||
| (327,034) | (244,003) | ||||
(2) Changes in other comprehensive income items
| V | Notes to Consolidated Financial Statements (Continued) |
| 51 | Other comprehensive income (continued) |
| Equity attributable to shareholders of the parent company | ||||||||||||
| changes | Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | Gain/loss on changes in fair value of financial assets | Gain/(Loss) on changes in cash flow hedges | Differences arising from translation of foreign currency-denominated financial statements | Fair value changes of other equity instruments | Fair value changes of other debt instruments | Other comprehensive income transferred to retained earnings | Subtotal | Non-controlling interests | Total other comprehensive income | ||
| January 1, 2021 | 334,950 | 313,950 | (350,569) | (5,688) | (509,439) | 71,195 | - | 28 | (145,573) | (18,972) | (164,545) | |
| Increase and decrease for 2021 | - | (267,062) | - | 68,234 | 270,260 | (212,485) | - | (122,821) | (263,874) | 19,871 | (244,003) | |
| January 1, 2022 | 334,950 | 46,888 | (350,569) | 62,546 | (239,179) | (141,290) | - | (122,793) | (409,447) | 899 | (408,548) | |
| Increase and decrease for 2022 | - | (17,501) | - | 15,615 | (397,531) | (16,420) | - | 13,462 | (402,375) | 75,341 | (327,034) | |
| December 31, 2022 | 334,950 | 29,387 | (350,569) | 78,161 | (636,710) | (157,710) | - | (109,331) | (811,822) | 76,240 | (735,582) | |
| V | Notes to Consolidated Financial Statements (Continued) |
52 Surplus reserves
| January 1, 2022 | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| Statutory surplus reserves | 2,367,303 | 1,162,100 | - | 3,529,403 | ||||
| Discretionary surplus reserves | 182,870 | - | - | 182,870 | ||||
| 2,550,173 | 1,162,100 | - | 3,712,273 |
| As per China's Company Law, Articles of Association for Companies, accounting standards, the Company and several of its subsidiaries shall appropriate 10% of net profits as statutory surplus reserves until the reserve amount reaches 50% of the registered capital. According to the aforesaid laws and regulations, part of the statutory surplus reserves can be converted into share capital of the Company, and the remaining amount shall not be lower than 25% of the registered capital. | |
| After the appropriation to the statutory surplus reserves, the Company may appropriate the discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used to make up the previous loss or increase the share capital. |
53 Specific reserves
| January 1, 2022 | Appropriation in current period | Decrease in current period | December 31, 2022 | |||||
| Production safety reserve | 1,549 | 752 | - | 2,301 |
54 General risk reserve
| January 1, 2022 | Appropriation in current period | Decrease in current period | December 31, 2022 | |||||
| General risk reserve | 8,934 | - | - | 8,934 | ||||
| As per the General Rules on Financial Affairs of Financial Enterprises and the Guide to the Implementation of the General Rules on Financial Affairs of Financial Enterprises promulgated by the Ministry of Finance, as well as the Articles of Association of TCL Technology Group Corporation, the Company's subsidiary - TCL Technology Group Corporation - appropriated 1% of its net profit as general risk reserve in the previous years. | ||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
55 Retained earnings
| 2022 | 2021 | |||
| Beginning retained earnings | 22,458,340 | 14,009,494 | ||
| Change in accounting policies (Note) | 6,810 | - | ||
| Net profit for current period | 261,319 | 10,064,254 | ||
| Decrease in current period | (3,239,739) | (1,608,598) | ||
| Including: Appropriated as surplus reserves | (1,162,100) | (97,831) | ||
| Distributed to ordinary shareholders as dividends | (2,050,003) | (1,625,590) | ||
| Others | (27,636) | 114,823 | ||
| Ending retained earnings | 19,486,730 | 22,465,150 | ||
| Due to changes in accounting policies, there were RMB6,810,000 undistributed profits at the beginning of the period (see Note III. 43 for details). | ||||
56 Operating income and operating costs
| 2022 | 2021 | |||||||
| Revenue | Cost of sales | Revenue | Cost of sales | |||||
| Core business | 162,197,543 | 148,928,769 | 161,111,860 | 129,716,187 | ||||
| Non-core business | 4,355,243 | 2,996,720 | 2,545,840 | 1,440,127 | ||||
| 166,552,786 | 151,925,489 | 163,657,700 | 131,156,314 | |||||
| (1) | Breakdown of operating income deductions | |||||||
| Item | Amount incurred in the current period | Details of deductions | Amount incurred in the previous period | Details of deductions | ||||
| Amount of operating income | 166,552,786 | 163,657,700 | ||||||
| Total amount of operating income deductions | 4,355,243 | 2,714,152. | ||||||
| Proportion of the total amount of operating income deductions to operating income | 2.61 % | 1.66% | ||||||
| (a) | Business income from operations not related to the principal activities | |||||||
| 1) Other business income from activities other than normal operations. Such income consists of income from leasing fixed assets, intangible assets, packaging, sales of materials, exchange of materials for non-monetary assets, operations of managed business, as well as income that is included in the revenue from main operations but from operations other than normal operations of the listed company. | 4,355,243 | Note 1 | 2,545,840 |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||
| 56 | Operating income and operating costs (continued) | |||||||
| (1) | Breakdown of operating income deductions (continued) | |||||||
| Item | Amount incurred in the current period | Details of deductions | Amount incurred in the previous period | Details of deductions | ||||
| 2) Income from unqualified financial businesses, such as interest income from lending funds; income from quasi-financial businesses added in the accounting year as well as the previous accounting year, such as guarantees, commercial factoring, small loans, financial leasing, pawning, except for financial leasing business carried out for the sale of main products. | - | 168,312 | Note 2 | |||||
| 3) Income from new trading business in the current accounting year and the previous accounting year. | - | - | ||||||
| 4) Income from related transactions not related to the listed company's existing normal operations. | - | - | ||||||
| 5) Income from the beginning of the period to the merger date for subsidiaries under the common control. | - | - | ||||||
| 6) Income from businesses that have not formed or are difficult to form a stable business model. | - | - | ||||||
| Subtotal of income from the business not related to principal activities | 4,355,243 | 2,714,152 | ||||||
| (b) | Income without commercial substance | |||||||
| 1) Income from transactions or events in which risk, time distribution or amount of future cash flows of the enterprise are not changed significantly. | - | Note 3 | - | |||||
| 2) Income from transactions that do not have a real business. For example, false income realized by self-trading or from transactions formed by Internet technology or other methods. | - | - | ||||||
| 3) Income from operations in which the transaction price is obviously unfair. | - | - | ||||||
| 4) Income from subsidiaries or businesses acquired through business combination with obviously unfair consideration or non-transactional means in this accounting year. | - | - | ||||||
| 5) Income involved in non-standard audit opinions. | - | - |
Note 1 TCL TECH. is mainly engaged in the production of semiconductor display, new energy photovoltaic,semiconductor materials, and other products. Since other income from sales of raw materials, scraps, lease,and processing are that realized from the operation other than the principal activities, it will be deducted.
Note 2 In May 2021, the second extraordinary meeting of TCL TECH. deliberated and approved the disposalof 100% stake in TCL Financial Holding Group (Guangzhou) Co., Ltd., and the income from quasi-financialbusiness realized by such company in January-May 2021 was deducted.
Note 3 TCL TECH. does not have such income deductions in 2022 (2021: Nil)
Note 4 TCL TECH. exercised its duties in sales contracts, and recognized revenue when customers obtainedcontrol of related goods or services. In 2022, all TCL TECH.’s sales contracts are of commercial substance,and no income was without commercial substance was recognized (2021: Nil).
| (2) | Business by operating segment | |||||||||||
| Revenue | Cost of sales | Gross profit | ||||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||
| Domestic sales | 119,139,823 | 104,781,994 | 108,166,269 | 85,584,452 | 10,973,554 | 19,197,542 | ||||||
| Foreign sales | 47,412,963 | 58,875,706 | 43,759,220 | 45,571,862 | 3,653,743 | 13,303,844 | ||||||
| 166,552,786 | 163,657,700 | 151,925,489 | 131,156,314 | 14,627,297 | 32,501,386 | |||||||
| (3) | The sales revenue from the top five customers combined was RMB50,108,344,000 and RMB57,063,520,000 respectively for 2022 and 2021, accounting for 30.9% and 35.4% of the core business revenue. | |||||||||||
V
| V | Notes to Consolidated Financial Statements (Continued) | |||||||
| 56 | Operating income and operating costs (continued) | |||||||
| (1) | Breakdown of operating income deductions (continued) | |||||||
| Item | Amount incurred in the current period | Details of deductions | Amount incurred in the previous period | Details of deductions | ||||
| 6) Income from other transactions or events that are not commercially reasonable. | - | - | ||||||
| Subtotal of income without commercial substance | - | - | ||||||
| (c) | Other income that is irrelevant to the principal activities or without commercial substance | - | Note 4 | - | ||||
| Amount after deducting operating income | 162,197,5434 | 160,943,548 | ||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||
| 56 | Operating income and operating costs (continued) | ||||||
| (4) | Revenue and costs generated from the Company's trial sales are as follows: | ||||||
| 2022 | 2021 | ||||||
| Revenue | 739,823 | 117,141 | |||||
| Cost of sales | 721,126 | 79,064 | |||||
| 57 | Interest income/expense and exchange gain | ||||||
| 2022 | 2021 | ||||||
| Interest income | 79,360 | 150,083 | |||||
| Interest expenditures | 23,530 | 34,936 | |||||
| Exchange gain/(loss) | 17,914 | (1,224) | |||||
| The interest income, interest expense and exchange gain/(loss) above occurred with the Company's subsidiary TCL Tech Finance Co., Ltd., which are presented separately herein as required for a financial enterprise. | |||||||
| 58 | Taxes and levies | ||||||
| 2022 | 2021 | ||||||
| Property tax | 265,880 | 221,506 | |||||
| Stamp tax | 218,367 | 161,505 | |||||
| Urban maintenance and construction tax | 68,890 | 126,384 | |||||
| Education surcharges | 35,730 | 90,303 | |||||
| Land use tax | 30,732 | 27,531 | |||||
| Others | 20,703 | 20,706 | |||||
| 640,302 | 647,935 | ||||||
| The applicable tax and levy standards are detailed in Note IV. | |||||||
| V | Notes to Consolidated Financial Statements (Continued) |
59 Selling expenses
| 2022 | 2021 | |||
| Employee salaries and benefits | 601,948 | 593,521 | ||
| After-sales service expense | 400,771 | 617,663 | ||
| Promotional and marketing expenses | 298,422 | 58,927 | ||
| Others | 649,387 | 649,174 | ||
| 1,950,528 | 1,919,285 |
60 General and administrative expense
| 2022 | 2021 | |||
| Employee salaries and benefits | 1,337,491 | 1,823,044 | ||
| Depreciation and amortization expenses | 792,780 | 737,318 | ||
| Digital development expenses | 315,537 | 254,688 | ||
| Others | 1,094,803 | 1,578,270 | ||
| 3,540,611 | 4,393,320 |
61 R&D expenses
| 2022 | 2021 | |||
| Depreciation and amortization expenses | 2,983,043 | 2,477,618 | ||
| Material expenses | 2,940,584 | 2,703,695 | ||
| Employee salaries and benefits | 1,767,546 | 1,421,683 | ||
| Others | 942,465 | 633,345 | ||
| 8,633,638 | 7,236,341 |
62 Financial expenses
| 2022 | 2021 | |||
| Interest expenditures | 4,468,008 | 4,125,399 | ||
| Interest income | (723,665) | (446,450) | ||
| Exchange loss / (gain) | (447,876) | (55,357) | ||
| Others | 126,428 | 104,323 | ||
| 3,422,895 | 3,727,915 |
| V | Notes to Consolidated Financial Statements (Continued) |
63 Other income
| 2022 | 2021 | |||
| R&D subsidies | 2,454,585 | 1,844,420 | ||
| VAT rebates on software | 44,280 | 31,186 | ||
| Over-deduction in taxable amount for VAT | 1,381 | 1,374 | ||
| Others | 417,548 | 90,770 | ||
| 2,917,794 | 1,967,750 |
64 Return on investment
| 2022 | 2021 | |||
| Gain on disposal of debt instruments at fair value through profit or loss Gain on disposal of debt instruments at fair value through profit or loss | 238,803 | 526,862 | ||
| Gain on disposal of debt instruments at fair value through profit or loss Gain on disposal of equity instruments at fair value through profit or loss | (15,097) | (40,149) | ||
| Gain on disposal of debt instruments at fair value through profit or loss Gain on holding of equity instruments at fair value through profit or loss | 18,758 | (132,695) | ||
| Gain on disposal of debt instruments at fair value through profit or loss Gain on holding of debt instruments at fair value through profit or loss | 69,748 | 263,901 | ||
| Share of net income of associates | 2,958,218 | 3,152,870 | ||
| Share of net income of joint ventures | (59,479) | 65,001 | ||
| Net income from disposal of long-term equity investments | 1,823,568 | (159,433) | ||
| Others | (303,125) | 228,169 | ||
| 4,731,394 | 3,904,526 |
65 Gain on changes in fair value
| 2022 | 2021 | |||
| Held-for-trading financial assets | (257,067) | 155,320 | ||
| Derivative financial assets | 23,437 | (317,003) | ||
| Held-for-trading financial liabilities | (1,678) | 12,941 | ||
| Derivative financial liabilities | 96,064 | 2,158 | ||
| (139,244) | (146,584) |
| V | Notes to Consolidated Financial Statements (Continued) |
66 Credit impairment loss
| 2022 | 2021 | |||
| Loss on uncollectible accounts receivable | (44,955) | (122,892) | ||
| Loss on uncollectible other receivables | (6,172) | (17,349) | ||
| Other financial assets | 13,474 | 47,985 | ||
| (37,653) | (92,256) |
67 Asset impairment loss
| 2022 | 2021 | |||
| Inventory valuation loss | (3,083,928) | (1,924,306) | ||
| Impairment loss on long-term equity investments | (319,981) | - | ||
| Loss on impairments of fixed assets | (53,890) | (592,497) | ||
| Impairment loss on contract assets | (6,151) | - | ||
| Loss on impairments of intangible assets | (442) | (78,909) | ||
| Loss on impairments of construction in progress | - | (146,160) | ||
| Others | (22,131) | (169,592) | ||
| (3,486,523) | (2,911,464) |
68 Asset disposal income
| 2022 | 2021 | |||
| Income/(loss) from disposal of fixed assets | (71,718) | (60,496) | ||
| Others | (8,107) | 20,062 | ||
| (79,825) | (40,434) |
69 Non-operating income
| 2022 | 2021 | Amount through current non-recurring gains and losses | ||||
| Gains on retired or damaged non-current assets | 117 | 259 | 117 | |||
| Government grants and others | 789,995 | 351,721 | 789,995 | |||
| 790,112 | 351,980 | 790,112 |
| V | Notes to Consolidated Financial Statements (Continued) |
70 Non-operating expense
| 2022 | 2021 | Amount through current non-recurring gains and losses | ||||
| Losses on retired or damaged non-current assets | 19,377 | 21,233 | 19,377 | |||
| Donation | 70,222 | - | 70,222 | |||
| Others | 62,472 | 119,221 | 62,472 | |||
| 152,071 | 140,454 | 152,071 |
71 Income tax expenses
(1) Table of income tax expenses
| 2022 | 2021 | |||
| Current income tax expense | 734,639 | 2,274,141 | ||
| Deferred income tax expense | (1,465,647) | 333,907 | ||
| (731,008) | 2,608,048 |
(2) Accounting profit and income tax adjustment process
| 2022 | 2021 | |||
| Gross profit | 1,057,051 | 17,583,577 | ||
| Income tax expense calculated at statutory/applicable tax rate | 158,558 | 4,395,894 | ||
| Impact of different tax rates applied to subsidiaries | 383,590 | (1,121,466) | ||
| Impact of adjusting income tax in previous periods | (12,613) | (102,803) | ||
| Impact of non-taxable income | (704,581) | (340,956) | ||
| Impact of non-deductible costs, expenses and losses | 107,325 | 112,433 | ||
| Impact of the use of deductible losses carry forward without recognize deferred tax assets in the previous periods | (576,264) | (424,609) | ||
| Impact of unrecognized deferred tax assets of deductible temporary differences or deductible losses in the current period | 730,522 | 652,219 | ||
| Others | (817,545) | (562,664) | ||
| Income tax expense | (731,008) | 2,608,048 | ||
| V | Notes to Consolidated Financial Statements (Continued) |
72 Earnings per share
(1) Basic EPS
| 2022 | 2021 | |||
| Net profit attributable to shareholders of the parent company | 261,319 | 10,064,253 | ||
| Weighted average outstanding ordinary shares (in thousand shares) | 13,686,001 | 13,476,907 | ||
| Basic earnings per share (RMB yuan/share) | 0.0191 | 0.7468 |
(2) Diluted EPS
| 2022 | 2021 | |||
| Net profit attributable to shareholders of the parent company | 261,319 | 10,064,253 | ||
| Diluted weighted average outstanding ordinary shares (in thousand shares) | 14,144,114 | 13,675,916 | ||
| Diluted earnings per share (RMB yuan/share) | 0.0185 | 0.7359 | ||
73 Cash generated from other operating activities
| Cash received from other related operating activities in the consolidated cash flow statement was RMB7,955,973,000 (the same period of the previous year: RMB 7,013,673,000), which primarily consisted of current payments received, government grants and special appropriation, etc. |
74 Cash used in other operating activities
| Cash paid in other operating activities in the consolidated cash flow statement was RMB 9,722,343,000 (the same period of the previous year: RMB7,846,247,000), which primarily consisted of various expenses and current payments. |
75 Cash generated from other investing activities
| Cash received from other related investing activities in the Company's consolidated cash flow statement amounted to RMB170,387,000 (the same period of the previous year: RMB33,083,000), mainly due to the receipt of project bid bonds. |
76 Cash used in other investing activities
| Cash paid for other related investing activities in the Company's consolidated cash flow statement amounted to RMB1,212,074,000 (the same period of the previous year: RMB479,761,000), mainly due to the refund of project bid bonds and payments for foreign exchange forward delivery. |
| V | Notes to Consolidated Financial Statements (Continued) |
77 Cash generated from other financing activities
| Cash received from other related financing activities in the consolidated cash flow statement of the Company amounted to RMB272,281,000 (the same period of the previous year: RMB256,271,000), mainly including deposits received. |
78 Cash used in other financing activities
| Cash paid for other related financing activities in the Company's consolidated cash flow statement amounted to RMB6,110,504,000 (the same period of the previous year: RMB6,035,517,000), mainly for the repurchase of minority interests in subsidiaries, repurchase of company shares, and payment of financial lease payments. | |
79 Supplementary information for the cash flow statement
| (1) | Reconciliation of net profit to net cash generated from/used in operating activities | ||||
| 2022 | 2021 | ||||
| Net profit | 1,788,059 | 14,975,529 | |||
| Add： Asset impairment allowance | 3,524,176 | 3,003,720 | |||
| Depreciation of fixed assets | 19,290,088 | 15,244,644 | |||
| Depreciation of right-of-use assets | 322,032 | 225,599 | |||
| Amortization of intangible assets | 1,473,104 | 1,177,003 | |||
| Amortization of long-term prepaid expense | 1,613,307 | 1,280,074 | |||
| Loss/(Gain) on disposal of fixed assets, intangible assets and other long-lived assets | 79,825 | 40,434 | |||
| Loss on retired or damaged fixed assets | 19,260 | 20,974 | |||
| Loss/(Gain) on changes in fair value | 139,244 | 146,584 | |||
| Financial expenses | 4,025,748 | 4,106,202 | |||
| Return on investment | (4,731,394) | (3,904,526) | |||
| Decrease/(Increase) in deferred income tax assets | 399,459 | (575,258) | |||
| Increase/(Decrease) in deferred income tax liabilities | (1,839,558) | 772,489 | |||
| Decrease/(Increase) in inventory | (4,643,791) | (7,172,706) | |||
| Decrease/(Increase) in operating receivables | 4,576,161 | (8,678,460) | |||
| Increase/(Decrease) in operating receivables | (7,139,434) | 13,055,727 | |||
| Others | (469,910) | (839,576) | |||
| Net cash generated from operating activities | 18,426,376 | 32,878,453 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
79 Supplementary information for the cash flow statement (continued)
| (2) | Net cash payments for acquisition of subsidiaries in the current period | |||
| 2022 | 2021 | |||
| Payments of cash and cash equivalents made in current period due to business combinations incurred in current period | 51,000 | 9,768,401 | ||
| Less: cash and cash equivalents held by subsidiary on acquisition date | 867 | 5,628,896 | ||
| Add: Payments of cash and cash equivalents made in current period due to business combinations incurred in previous periods | - | - | ||
| Net cash payments for acquisition of subsidiaries | 50,133 | 4,139,505 | ||
| (3) | Net cash proceeds from disposal of subsidiaries in the current period | |||
| 2022 | 2021 | |||
| Cash or cash equivalents received in current period due to disposal of subsidiary in current period | 174,803 | 1,984,421 | ||
| Less: cash and cash equivalents held by subsidiary on the date when the Company’s control over the subsidiary ceased | 2,298 | 900,316 | ||
| V | Notes to Consolidated Financial Statements (Continued) | |||
| 79 | Supplementary information for the cash flow statement (continued) | |||
| (3) | Net cash proceeds from disposal of subsidiaries in the current period (continued) | |||
| 2022 | 2021 | |||
| Add: Cash or cash equivalents received in current period due to disposal of subsidiaries in prior periods | 1,260,290 | 80,485 | ||
| Net proceeds from the disposal of subsidiaries | 1,432,795 | 1,164,590 | ||
(4)
| (4) | Breakdown of cash and cash equivalents | |||
| December 31, 2022 | January 1, 2022 | |||
| I. Cash | 33,675,624 | 30,081,705 | ||
| Including: Cash on hand | 480 | 789 | ||
| Bank deposits available for payment on demand | 32,696,213 | 28,970,585 | ||
| Other monetary assets available for payment on demand | 919,646 | 987,347 | ||
| Deposits with the central bank available for payment | 59,285 | 122,984 | ||
| II. Cash equivalents | - | - | ||
| III. Cash and cash equivalents, end of the period | 33,675,624 | 30,081,705 | ||
80 Net changes in cash and cash equivalents
| 2022 | 2021 | ||||
| Ending cash and cash equivalents | 33,675,624 | 30,081,705 | |||
| Less: Beginning cash | 30,081,705 | 18,208,417 | |||
| Net increase in cash and cash equivalents | 3,593,919 | 11,873,288 | |||
| Analysis of ending cash and cash equivalents: | |||||
| Ending monetary assets | 35,378,501 | 31,393,692 | |||
| Less: Ending non-cash equivalents (note) | 1,702,877 | 1,311,987 | |||
| Ending cash and cash equivalents | 33,675,624 | 30,081,705 | |||
| Note: | The closing non-cash equivalents primarily included interest receivable on bank deposits, the statutory reserve deposits placed by TCL Tech Finance Co., Ltd. in the central bank and other monetary assets, detailed in Annex V, 1. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
81 Assets with restricted ownership or use rights
| December 31, 2022 | Reason for restriction | |||
| Monetary assets | 321,852 | Deposited in the central bank as the required reserve | ||
| Monetary assets | 1,381,025 | Other restricted monetary assets | ||
| Notes receivable | 264,599 | Pledge | ||
| Fixed assets | 96,479,546 | As collateral for loan | ||
| Intangible assets | 4,177,833 | As collateral for loan | ||
| Held-for-trading financial assets | 255,173 | Put in pledge for loan | ||
| Construction in progress | 10,383,892 | As collateral for loan | ||
| Right-of-use assets | 18,617 | As collateral for lease | ||
| Accounts receivable | 1,609,334 | Pledge | ||
| Contract assets | 271,682 | Pledge | ||
| 115,163,553 | ||||
82 Foreign currency monetary items
| December 31, 2022 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Monetary assets | |||||
| Including: USD | 615,534 | 6.9646 | 4,286,948 | ||
| HKD | 240,958 | 0.8933 | 215,248 | ||
| EUR | 8,787 | 7.4250 | 65,243 | ||
| JPY | 1,540,910 | 0.0526 | 81,052 | ||
| SGD | 242 | 5.1824 | 1,254 | ||
| Accounts receivable | |||||
| Including: USD | 565,703 | 6.9646 | 3,939,895 | ||
| HKD | 368,734 | 0.8933 | 329,390 | ||
| INR | 652,819 | 0.0841 | 54,902 | ||
| MXN | 6,756 | 0.3570 | 2,412 | ||
| Receivables financing | |||||
| Including: USD | 83,321 | 6.9646 | 580,297 | ||
| Accounts payable | |||||
| Including: USD | 317,613 | 6.9646 | 2,212,047 | ||
| HKD | 622,434 | 0.8933 | 556,020 | ||
| JPY | 5,779,166 | 0.0526 | 303,984 | ||
| INR | 118,083 | 0.0841 | 9,931 | ||
| EUR | 43 | 7.4250 | 319 | ||
| V | Notes to Consolidated Financial Statements (Continued) | ||||
| 82 | Foreign currency monetary items (continued) | ||||
| December 31, 2022 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Other receivables | |||||
| Including: USD | 24,135 | 6.9646 | 168,091 | ||
| HKD | 37,377 | 0.8933 | 33,389 | ||
| JPY | 12,574 | 0.0526 | 661 | ||
| PLN | 1,812 | 1.5886 | 2,879 | ||
| INR | 60,781 | 0.0841 | 5,112 | ||
| KRW | 102,590 | 5.4956 | 563,794 | ||
| EUR | 6 | 7.4250 | 45 | ||
| MXN | 7,361 | 0.3570 | 2,628 | ||
| SGD | 62 | 5.1824 | 321 | ||
| Other payables | |||||
| Including: USD | 89 | 6.9646 | 620 | ||
| HKD | 686,511 | 0.8933 | 613,260 | ||
| JPY | 3,131,530 | 0.0526 | 164,718 | ||
| INR | 1,476,163 | 0.0841 | 124,145 | ||
| PLN | 350 | 1.5886 | 556 | ||
| KRW | 130,620 | 5.4956 | 717,835 | ||
| MXN | 11,730 | 0.3570 | 4,188 | ||
| EUR | 19 | 7.4250 | 141 | ||
| Short-term borrowings | |||||
| Including: USD | 43,956 | 6.9646 | 306,136 | ||
| Long-term borrowings | |||||
| Including: USD | 702,350 | 6.9646 | 4,891,587 | ||
VI. Changes to Consolidation Scope1 Newly consolidated entities for current period
| Name of investee | Consolidated period | Reason for change | Registered capital (RMB) | Contribution ratio | |
| Zhonghuan Advanced Semiconductor (Tianjin) Co., Ltd. | January - December 2022 | Newly incorporated | RMB10,000,000 | 100.00% | |
| Huanou (Wuxi) New Energy Materials Co., Ltd. | February-December 2022 | Newly incorporated | RMB10,000,000 | 100.00% | |
| Huaian Municipal Huanxin New Energy Co., Ltd. | February-December 2022 | Newly incorporated | RMB1,000,000 | 100.00% | |
| Lingwu Huanju New Energy Co., Ltd. | March-December 2022 | Newly incorporated | RMB1,000,000 | 100.00% | |
| Inner Mongolia Zhonghuan Electronic Materials Co., Ltd. | April - December 2022 | Newly incorporated | RMB10,000,000 | 100.00% | |
| Tianjin Zhonghuan Industrial Park Co., Ltd. | April - December 2022 | Newly incorporated | RMB39,000,000 | 100.00% | |
| Tianjin Huanrui Technology Co., Ltd. | May-December 2022 | Newly incorporated | RMB100,000,000 | 100.00% | |
| Shaanxi Huanyu Green New Energy Co., Ltd. | June-December 2022 | Newly incorporated | RMB1,000,000 | 100.00% | |
| Shaanxi Huanshuo Green New Energy Co., Ltd. | June-December 2022 | Newly incorporated | RMB1,000,000 | 100.00% | |
| Admiralty Harbor Investment Holdings Co., Ltd. | July-December 2022 | Newly incorporated | HKD1,000,000 | 100.00% | |
| Admiralty Harbor Enterprise Services (Shenzhen) Co., Ltd. | July-December 2022 | Newly incorporated | RMB2,000,000 | 100.00% | |
| Huizhou Kedate Smart Display Technology Co., Ltd. | August-December 2022 | Newly acquired | RMB50,000,000 | 100.00% | |
| Ningxia Huaneng New Energy Co., Ltd. | August-December 2022 | Newly incorporated | RMB1,000,000 | 100.00% | |
| Zhonghuan Advanced Japan Co., Ltd. | August-December 2022 | Newly incorporated | JPY1,000,000 | 100.00% | |
| TCLCSOTAMERICACORP. | September-December 2022 | Newly incorporated | US$100 | 100.00% | |
| Xi'an Shangpai Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Weinan Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Guiyang Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB500,000 | 100.00% |
Note: Business combinations not under the common control occurred in the current period
| VI | |||||
| 1 | Newly consolidated entities for current period (continued) | ||||
| Name of investee | Consolidated period | Reason for change | Registered capital (RMB) | Contribution ratio | |
| Lanzhou Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB200,000 | 100.00% | |
| Urumqi Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB500,000 | 100.00% | |
| Baoji Shangpai Sidao Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB300,000 | 100.00% | |
| Urumqi Shangpai Xinhui Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB500,000 | 100.00% | |
| Xi'an Maike Shangpai Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB300,000 | 100.00% | |
| Shenzhen Sunpiestore Electronics Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Shenzhen Sunpiestore Industrial Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Donguan Sunpiestore Digital Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Donguan Sunpiestore Electronics Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Guangzhou Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB100,000 | 100.00% | |
| Lanzhou Hongmao Sunpiestore Technology Co., Ltd. | September-December 2022 | Newly incorporated | RMB200,000 | 100.00% | |
| Xiamen TCL Technology Industry Investment Partnership (Limited Partnership) | October-December 2022 | Newly incorporated | RMB1,000,000,000 | 99.00% | |
| TCLCSOTSGPTE.LTD. | October-December 2022 | Newly incorporated | SGD160,000 | 100.00% | |
| Beijing Youyi Online Technology Co., Ltd. | October-December 2022 | Newly incorporated | RMB30,000,000 | 100.00% | |
| PLMOKASp.zo.o. | November-December 2022 | Newly acquired | USD1,000 | 100.00% | |
| Urumqi Shangpai Zhishang Trading Co., Ltd. | December 2022 | Newly incorporated | RMB500,000 | 100.00% | |
| Urumqi Shangpai Maiqi Trading Co., Ltd. | December 2022 | Newly incorporated | RMB500,000 | 100.00% | |
| Lanzhou Hongsheng Sunpiestore Electronic Technology Co., Ltd. | December 2022 | Newly incorporated | RMB200,000 | 100.00% | |
VI. Changes to Consolidation Scope (continued)1 Newly consolidated entities in the current period (continued)
(1) Acquisition of shares in Huizhou Kedate Smart Display Technology Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On August 31, 2022, the Group acquired 100% equity in Huizhou Kedate Smart DisplayTechnology Co., Ltd. with a cash consideration of RMB51,000,000, and included suchcompany into the scope of consolidation.
| Cash consideration | 51,000 |
| Less: Share of fair value of identifiable net assets acquired | 47,989 |
| Difference of lower goodwill / merger cost and higher share of fair value of identifiable net assets acquired | 3,011 |
② Assets and liabilities of the acquiree as at the acquisition date are presented as follows:
| Fair value at acquisition date | Carrying value at acquisition date | |||
| Current assets | 37,486 | 37,486 | ||
| Non-current assets | 13,549 | 127 | ||
| Net assets | 47,989 | 36,581 | ||
| Less: non-controlling interests | - | - | ||
| Net assets acquired | 47,989 | 36,581 |
③ SHENZHEN CHINA UNITED ASSETS APPRAISAL GROUP CO., LTD. hasevaluated the information above using the asset-based method, and issued an asset appraisalreport (SCUPB Zi [2022] No. 118), with an appraised value of RMB51,003,000.2 Deconsolidated entities for current period
| Name of investee | Time of deconsolidation | Reason for change | ||
| Tongliao Guangdong New Energy Co., Ltd. | January 2022 | De-registered | ||
| Beijing Zhiqujia Technology Co., Ltd. | December 2022 | Transferred | ||
| Huizhou Shengyao New Energy Technology Co., Ltd. | December 2022 | Transferred | ||
| Ningjin Jinchen New Energy Co., Ltd. | December 2022 | Transferred | ||
| Lingwu Huanju New Energy Co., Ltd. | December 2022 | Transferred |
VI. Changes to Consolidation Scope (continued)3 Subsidiaries disposed in current period
| Name of subsidiary | Beijing Zhiqujia Technology Co., Ltd. | |
| Price for equity interest disposal | 194,226 | |
| % equity interest disposed | 100% | |
| Way of disposal | Equity transfer | |
| Time of loss of control | December 2022 | |
| Determination basis for time of loss of control | Rights & obligations all transferred | |
| Difference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest | 186,170 | |
VII Interests in Other Entities1 Interests in subsidiaries
(1) Principal subsidiaries
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | |||
| Direct | Indirect | |||||||
| TCL China Star Optoelectronics Technology Co., Ltd. | Shenzhen | Manufacturin g and sales | Shenzhen | 80.03% | - | Incorporated | ||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Shenzhen | Manufacturin g and sales | Shenzhen | - | 54.31% | Incorporated | ||
| Guangzhou China Ray Optoelectronic Materials Co., Ltd. | Guangzhou | Research and development | Guangzhou | - | 100% | Incorporated | ||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturin g and sales | Wuhan | - | 93.93% | Incorporated | ||
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Wuhan | Manufacturin g and sales | Wuhan | - | 57.14% | Incorporated | ||
| Shenzhen CPT Display Technology Co., Ltd. | Shenzhen | Manufacturin g and sales | Shenzhen | - | 100% | Business combination not under common control | ||
| China Star Optoelectronics International (HK) Limited | Hong Kong | Sales | Hong Kong | - | 100% | Incorporated | ||
| China Display Optoelectronics Technology Holdings Limited | Bermuda | Investment holding | Bermuda | - | 64.20% | Business combination not under common control | ||
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturin g and sales | Huizhou | - | 100% | Incorporated | ||
| Wuhan China Display Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturin g and sales | Wuhan | - | 100% | Incorporated | ||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Suzhou | Manufacturin g and sales | Suzhou | - | 100% | Business combination not under common control | |||
| VII | Interests in Other Entities (Continued) | ||||||||
| 1 | Interests in subsidiaries (Continued) | ||||||||
| (1) | Composition of key subsidiaries (Continued) | ||||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | ||||
| Direct | Indirect | ||||||||
| Suzhou China Star Optoelectronics Display Co., Ltd. | Suzhou | Manufacturin g and sales | Suzhou | - | 100% | Business combination not under common control | |||
| Guangzhou China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Guangzhou | Manufacturin g and sales | Guangzhou | - | 55% | Incorporated | |||
| Beijing HAWK Cloud Information Technology Co., Ltd. | Beijing | Internet service | Beijing | 100% | - | Incorporated | |||
| TCL Culture Media (Shenzhen) Co., Ltd. | Shenzhen | Ad planning | Shenzhen | 100% | - | Incorporated | |||
| Highly Information Industry Co., Ltd. | Beijing | Product distribution | Beijing | 66.46% | - | Incorporated | |||
| Beijing Sunpiestore Technology Co., Ltd. | Beijing | Sales | Beijing | - | 53.45% | Incorporated | |||
| Beijing Lingyun Data Technology Co., Ltd. | Beijing | Sales | Beijing | - | 60.00% | Incorporated | |||
| TCL Technology Group Finance Co., Ltd. | Huizhou | Financial | Huizhou | 82.00% | 18.00% | Incorporated | |||
| Xinjiang TCL Equity Investment Ltd. | Xinjiang | Investment business | Shenzhen | 100% | - | Incorporated | |||
| Ningbo TCL Equity Investment Ltd. | Ningbo | Investment business | Shenzhen | 100% | - | Incorporated | |||
| TCL Technology Park (Huizhou) Co., Ltd. | Huizhou | Property management | Huizhou | - | 100% | Incorporated | |||
| TCLResearchAmericaInc. | U.S. | Research and development | U.S. | - | 100% | Incorporated | |||
| TCL Industrial Technology Research Institute (Hong Kong) Limited | Hong Kong | Research and development | Hong Kong | - | 100% | Incorporated | |||
| TCLTechnologyInvestmentsLimited | Hong Kong | Investment business | Hong Kong | 100% | - | Incorporated | |||
| TCL Zhonghuan New Energy Technology Co., Ltd. (Note) | Tianjin | Manufacturin g and sales | Tianjin | 2.41% | 27.37% | Business combination not under common control | |||
| Tianjin Printronics Circuit Corporation | Tianjin | Manufacturin g and sales | Tianjin | - | 26.86% | Business combination not under common control | |||
| Tianjin Huan'Ou Semiconductor Material&Technology Co., Ltd. | Tianjin | Manufacturin g and sales | Tianjin | - | 100% | Business combination not under common control | |||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | Wuxi | Manufacturin g and sales | Wuxi | - | 98.08% | Business combination not under common control | |||
VII Interests in Other Entities (continued)1 Interests in subsidiaries (Continued)
(1) Principal subsidiaries (Continued)
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | |||
| Direct | Indirect | |||||||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | Tianjin | Manufacturin g and sales | Tianjin | - | 62.00% | Business combination not under common control | ||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | Inner Mongolia | Manufacturin g and sales | Inner Mongolia | - | 100% | Business combination not under common control | ||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | Tianjin | Manufacturin g and sales | Tianjin | - | 100% | Business combination not under common control | ||
| Huansheng Solar (Jiangsu) Co., Ltd. | Wuxi | Manufacturin g and sales | Wuxi | - | 83.73% | Business combination not under common control | ||
| Tianjin Huanou International Silicon Material Co., Ltd. | Tianjin | Procurement & sales | Tianjin | - | 100% | Business combination not under common control | ||
| Zhonghuan Hong Kong Holding Limited | Hong Kong | Sales | Hong Kong | - | 100% | Business combination not under common control | ||
| Tianjin Huanrui Electronic Technology Co., Ltd. | Tianjin | Procurement & sales | Tianjin | - | 100% | Business combination not under common control | ||
| Inner Mongolia Zhonghuan Xiexin Solar Material Co., Ltd. | Inner Mongolia | Manufacturin g and sales | Inner Mongolia | - | 59.32% | Business combination not under common control | ||
| Inner Mongolia Zhonghuan Advanced Semiconductor Material Co., Ltd. | Inner Mongolia | Manufacturin g and sales | Inner Mongolia | - | 100% | Business combination not under common control | ||
| Zhonghuan Advanced Semiconductor Materials Co., Ltd. | Wuxi | Manufacturin g and sales | Wuxi | - | 58.79% | Business combination not under common control | ||
| Moka International Limited | BVI | Investment holding | BVI | 100% | Business combination not under common control | |||
| Moka Technology (Guangdong) Co., Ltd. | Huizhou | Manufacturin g and sales | Huizhou | 100% | Business combination not under common control | |||
Note: Tianjin Zhonghuan Semiconductor Co., Ltd. changed its name to TCL Zhonghuan New EnergyTechnology Co., Ltd. on June 16, 2022.
VII Interests in Other Entities (continued)1 Interests in subsidiaries (Continued)
(2) Subsidiaries with substantial non-controlling interests
| Name of subsidiary | Non-controlling shareholding ratio (%) | Current period profit or loss attributable to non-controlling interests | Current period Dividends distributed to non-controlling interests | Ending non-controlling interests Shareholder equity | |
| TCL China Star Optoelectronics Technology Co., Ltd. | 19.97% | (3,592,778) | 1,946,283 | 43,984,814 | |
| TCL Zhonghuan New Energy Technology Co., Ltd. | 70.22% | 5,054,868 | 589,019 | 35,856,582 | |
| Highly Information Industry Co., Ltd. | 33.54% | 105,734 | 45,309 | 512,656 |
| VII | Interests in Other Entities (Continued) | |||||||||||||
| 1 | Interests in subsidiaries (Continued) | |||||||||||||
| (2) | Subsidiaries with substantial non-controlling interests (continued) | |||||||||||||
| The key financial information of the above subsidiaries is as follows: | ||||||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||||||
| Current assets | Non-current assets | Assets Total | Current liabilities | Non-current liabilities | Liabilities Total | Current assets | Non-current assets | Assets Total | Current liabilities | Non-current liabilities | Liabilities Total | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 40,115,151 | 152,441,917 | 192,557,068 | 45,523,242 | 73,184,255 | 118,707,497 | 68,597,560 | 135,290,612 | 203,888,172 | 53,275,700 | 66,065,421 | 119,341,121 | ||
| TCL Zhonghuan New Energy Technology Co., Ltd. | 31,829,523 | 77,304,246 | 109,133,769 | 23,020,082 | 39,053,844 | 62,073,926 | 24,458,844 | 53,758,790 | 78,217,634 | 20,443,660 | 15,865,920 | 36,309,580 | ||
| Highly Information Industry Co., Ltd. | 8,563,285 | 149,390 | 8,712,675 | 7,191,610 | 39,961 | 7,231,571 | 6,035,827 | 100,060 | 6,135,887 | 4,782,662 | 22,603 | 4,805,265 | ||
| 2022 | 2021 | |||||||||
| Revenue | Net profit | Total comprehensive income | Net cash generate from/used in operating activities | Revenue | Net profit | Total comprehensive income | Net cash generate from/used in operating activities | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 56,256,417 | (8,352,833) | (8,445,005) | 11,012,565 | 80,168,858 | 10,127,192 | 10,205,670 | 27,060,041 | ||
| TCL Zhonghuan New Energy Technology Co., Ltd. | 67,010,157 | 7,073,043 | 7,073,043 | 5,056,839 | 41,104,685 | 4,435,128 | 4,435,128 | 4,281,641 | ||
| Highly Information Industry Co., Ltd. | 31,847,803 | 264,253 | 264,253 | (574,296) | 31,932,016 | 272,046 | 272,046 | (103,091) | ||
| VII | Interests in Other Entities (Continued) |
2 Interests in joint ventures and associates
(1) Basic information about principal joint ventures and associates
| Name of investee | Principal place of business/place of registration | Nature of business | Strategic to the Group’s activities or not | Shareholding ratio (%) | ||
| Direct | Indirect | |||||
| Associate | ||||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Xinjiang | R&D, production & sale of polycrystalline silicon & monocrystalline silicon; | Yes | - | 27% | |
(2) Key financial information of major associates
| December 31, 2022 | January 1, 2022 | ||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Xinjiang Xiexin New Energy Material Technology Co., Ltd. | ||||
| Total assets | 18,250,952 | 11,377,813 | |||
| Total liabilities | 3,992,915 | 5,110,841 | |||
| Non-controlling interests | Not applicable | Not applicable | |||
| Equity attributable to shareholders of the parent company | 14,258,037 | 6,266,973 | |||
| Share of equity in proportion to the Company’s interest | 3,849,670 | 1,692,083 | |||
| Carrying amount of investment in associate | 3,919,465 | 1,691,361 | |||
| VII | Interests in Other Entities (Continued) | |||
| 2 | Interests in joint ventures and associates (continued) | |||
| (2) | Key financial information of major associates (continued) | |||
| 2022 | 2021 | |||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Xinjiang Xiexin New Energy Material Technology Co., Ltd. | |||
| Revenue | 13,523,962 | 2,905,071 | ||
| Net profit attributable to the parent company | 7,991,046 | 1,322,643 | ||
| Dividends from associate to the Group in current period | - | - |
(3) Financial information of other joint ventures and associates combined respectively
| 2022 | 2021 | |||
| Joint ventures: | ||||
| Aggregated carrying amount of investments | 520,668 | 555,257 | ||
| Aggregate of following items calculated in proportion to the Company’s interest | ||||
| Net profit (note) | (59,479) | 65,001 | ||
| Other comprehensive income (note) | - | - | ||
| Total comprehensive income | (59,479) | 65,001 | ||
| Associate: | ||||
| Aggregated carrying amount of investments | 24,816,083 | 23,393,960 | ||
| Aggregate of following items calculated in proportion to the Company’s interest | ||||
| Net profit (note) | 730,114 | (1,269,007) | ||
| Other comprehensive income (note) | (17,504) | 910,473 | ||
| Total comprehensive income | 712,610 | (358,534) | ||
| Note: | The net profit and other comprehensive income have taken into account the impacts of both the fair value of the identifiable assets and liabilities upon the acquisition of investment and accounting policies unifying. | |||
(4) The Company had no significant joint ventures in the Reporting Period.
VIII Risks related to financial instruments
| The purpose of the Company’s risk management is to achieve a right balance between the risk and the benefit and maximally reduce the adverse impact of financial risks on the Company’s financial performance. Based on such purpose, the Company has established various risk management policies to recognize and analyze possible risks to be encountered by the Company, set an appropriate risk acceptable level and designed corresponding internal control procedures so as to control the Company’s risk level. In addition, the Company will regularly review these risk management policies and relevant internal control system in order to adapt to the market or handle various changes in the Company’s operating activities. Meanwhile, the Company’s internal audit department will also regularly or randomly check whether the implementation of internal control system conforms to relevant risk management policies. In fact, the Company has applied proper diversified investment and business portfolio to disperse various financial instrument risks and worked out corresponding risk management policies to reduce the risk of concentrating on one single industry, specific region or specific counterpart. | |
| The main risks arising from the Company's financial instruments are credit risk, liquidity risk, and market risk (mainly foreign exchange risk and interest rate risk). |
(1) Credit risk
| Credit risk refers to the risk of financial loss caused by any party of financial instruments to another party due to the failure in fulfilling performance obligations. The Group controls the credit risk based on the specific group classification, and credit risk mainly results from bank deposit, due from central bank, notes receivable, accounts receivable, loans and advances to customers and other receivables. | |
| The Group’s bank deposits and due from central bank are mainly deposited in stated-owned banks and other large and medium-sized listed banks. The Group considers no significant credit risk existed and no significant loss will be caused by the counterpart’s breach of contract. | |
| For notes receivable, accounts receivable, loans and advances to customers and other receivables, the Group has established relevant policies to control the credit risk exposure, and will evaluate the client’s credit qualification and determine corresponding credit period based on the client’s financial status, the possibility of obtaining guarantees from the third party, relevant credit records and other factors (like the current market situation). In the meantime, the Group will regularly monitor the client's credit records. For any client with unfavorable credit records, the Group will issue written reminders, shorten the credit period or cancel the credit period so as to keep the Group's overall credit risk controllable. | |
| As of December 31, 2022, no significant guarantee or other credit enhancements held due to the debtor mortgage was found in the Group. |
(2) Liquidity risk
| Liquidity risk refers to the risk of capital shortage the Company encounters when the Company is fulfilling the obligation of settlement in the form of cash or other financial assets. Various subsidiaries under the Group shall be responsible for predicting their own cash flow. The financial department of the headquarter shall firstly summarize predictions on the cash flow of various subsidiaries and then continuously monitor the short-term and long-term fund demand at the Group's level so as to maintain sufficient cash reserves and negotiable securities that can be realized at any time; meanwhile, special efforts shall also be made to continuously monitor whether provisions stated in the loan agreement are observed and to make major financial institutions promise to provide sufficient reserve funds so as to satisfy short-term and long-term capital demand. | |
| As of December 31, 2022, the Group had no liquidity risk events. |
VIII Risks Related to Financial Instruments (Continued)
(3) Market risk
| (a) | Foreign exchange risk | ||||
| The Group has carried out various economic activities around the world including manufacturing, selling, investment and financing etc., and corresponding interest rate fluctuation risks exist in the Group’s foreign currency assets and liabilities and future foreign currency transactions. | |||||
| The Group always regards "Locking the Cost and Avoiding Possible Risks" as the foreign currency risk management goal. Through the natural hedging of settlement currency, matching with the foreign currency liabilities, signing simple derivative products closely related to the owner's operation and meeting corresponding hedge accounting treatment requirements and applying other management methods, the foreign currency risk exposure can be controlled within a reasonable scope and the impact of interest rate fluctuations on the Group's overall profit and loss will be reduced. | |||||
| (a) On December 31, 2022, foreign-currency asset and liability items with significant exposure to exchange risk were mainly denominated in US dollars. After management, the total risk exposure of the US dollar-denominated items had a net asset exposure of USD348,049,000, equivalent to RMB2,424,025,000 based on the spot exchange rate on the balance sheet date. The differences arising from the translation of foreign currency financial statements were not included. | |||||
| The Group applies the following exchange rate of USD against RMB: | |||||
| Average exchange rate | Exchange rate at period-end | ||||
| 2022 | December 31, 2022 | ||||
| USD/RMB | 6.7573 | 6.9646 | |||
| Provided that other risk variables remained unchanged except for the exchange rate, a 5% depreciation/appreciation in RMB as a result of the changes in the exchange rate of RMB against USD would cause an increase/decrease of RMB121,201,000 in shareholders' equity and net profit respectively of the Group on December 31, 2022. | |||||
| The above-mentioned sensitivity analysis is made based on the assumption that the exchange rate changes on the balance sheet date, and financial instruments held by the Group on the balance sheet date exposed to the exchange risk are re-calculated based on the changed exchange rate. The above analysis does not include differences arising from the translation of foreign currency financial statements. | |||||
| (b) | Interest risk | ||||
| The Group’s interest rate risk mainly results from interest-bearing bank borrowings adopting floating interest rates, and the Group determined the proportion of fixed interest rates and floating interest rates based on the market environment and its risk tolerance. Up until December 31, 2022, the Group’s liabilities with floating interest rates accounted for 69.31% of its total interest-bearing liabilities. And, the Group will continuously monitor the interest rates and make corresponding adjustments according to the specific market changes so as to avoid interest rate risk. | |||||
IX. Classification of Financial Instruments and Fair Value
| Fair value of financial instruments and levels | |
| 1 | Fair value is divided into the following levels in measurement and disclosure: |
| Level 1 refers to the (unadjusted) quotation of the same type of assets or liabilities on the active market; and the Company mainly adopts the closing price as the value of a financial asset. Financial instruments of level 1 mainly include exchange listed stocks and bonds. | |
| Level 2 refers to the directly or indirectly observable input of a financial asset or liability that does not belong to level 1. | |
| Level 3 refers to the input of a financial asset or liability determined based on variables other than the observable market data (non-observable input). | |
| 2 | Basis for determining the market value of items measured at continuous level 1 fair value |
| The Company adopts the active market quotation as the fair value of a level 1 financial asset. | |
| 3 | Items measured at continuous level 2 fair value adopt the following valuation techniques and parameters: |
| The Company’s receivables financing was bank acceptance notes and trade acceptance notes, of which the market prices were determined based on the transfer or discounted amounts. | |
| Derivative financial assets and liabilities are multiple IRS and CCS signed between the Group and financial institutions. The Company adopts the quotations provided by the financial institution in valuation. | |
| 4 | Items measured at continuous level 3 fair value adopt the following valuation techniques and parameters (nature and quantity): |
| Other non-current financial assets measured at continuous level 3 fair value are mainly unlisted equity investments held by the Company. In measuring the fair value, the Company mainly adopts the valuation technique of comparison with listed companies, taking into account the price of similar securities and liquidity discount. | |
| Held-for-trading financial assets measured at continuous level 3 fair value are mainly wealth management products held by the Company. In valuation of the fair value, the Company adopts the method of discounting future cash flows based on the agreed expected yield rate. | |
| IX | Classification of Financial Instruments and Fair Value (Continued) | |||||||
| 5 | Financial instruments measured in three levels of fair value | |||||||
| Financial assets | ||||||||
| Item | Level 1 | Level 2 | Level 3 | Total | ||||
| Held-for-trading financial assets (see Note V. 2) | 988,403 | 11,647,404 | 67,700 | 12,703,507 | ||||
| Derivative financial assets (see Note V.3) | - | 361,034 | 361,034 | |||||
| Receivables financing (see Note V.6) | - | 1,103,128 | 1,103,128 | |||||
| Investments in other equity instruments (see Note V. 15) | 66,706 | - | 373,290 | 439,996 | ||||
| Other non-current financial assets (see Note V. 16) | 1,852,623 | - | 1,076,204 | 2,928,827 | ||||
| Total assets continuously measured at fair value | 2,907,732 | 13,111,566 | 1,517,194 | 17,536,492 | ||||
| Financial liabilities | ||||||||
| Item | Level 1 | Level 2 | Level 3 | Total | ||||
| Held-for-trading financial liabilities (see Note V, 30) | - | 397,024 | 464,888 | 861,912 | ||||
| Derivative financial liabilities (see Note V, 31) | - | 70,735 | - | 70,735 | ||||
| Total liabilities continuously measured at fair value | - | 467,759 | 464,888 | 932,647 |
X Related Parties and Related-Party Transactions1 Actual controller and its acting-in-concert parties
| Explanation of The Company’s Absence of Controlling Shareholders | |
| Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding 1,159,085,019 shares in total and becoming the largest shareholder of the Company. | |
| As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total share capital; or, despite the ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to their interest in the limited liability company’s total capital or the joint stock company’s total number of shares. According to the definition above, the Company has no controlling shareholder or actual controller. |
2 Related parties that do not control or are not controlled by the Company
| Information about such related parties： | ||
| Company Name | Relationship with the Company | |
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | Joint venture | |
| Huizhou TCL Human Resources Service Co., Ltd. | Joint venture | |
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | Joint venture | |
| Tianjin Huanyan Technology Co., Ltd. | Joint venture | |
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | Joint venture | |
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | Joint venture’s subsidiary | |
| Moxing Semi-conductor (Guangdong) Co., Ltd. | Joint venture’s subsidiary | |
| Jiangsu Huanxin Semiconductor Co., Ltd. | Joint venture’s subsidiary | |
| Anhui TCL Human Resources Service Co., Ltd. | Joint venture’s subsidiary | |
| Peer College Education Technology (Huizhou) Co., Ltd. | Joint venture’s subsidiary | |
| Shanxi Shengwei Enterprise Management Co., Ltd. | Joint venture’s subsidiary | |
| Anhui Dangzhuo Enterprise Management Co., Ltd. | Joint venture’s subsidiary | |
| Hubei Shifen Sharing Technology Co., Ltd. | Joint venture’s subsidiary | |
| Moxun Semiconductor Technology (Shanghai) Co., Ltd. | Joint venture’s subsidiary | |
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | Associate | |
| SunPower Systems International Limited | Associate | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | |
| MAXEON SOLAR TECHNOLOGIES ,PTE.LTD | Associate | |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | |
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | Associate | |
| Shenzhen Tixiang Business Management Technology Co., Ltd. | Associate | |
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Associate | |
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | Associate | |
| X | X. Related parties and related-party transactions (continued) | |
| 2 | 2 The nature of related parties without control relationship (continued) | |
| TCL Intelligent Technology (Ningbo) Co., Ltd. | Associate | |
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | Associate | |
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | Associate | |
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | |
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | Associate | |
| TCL Finance (Hong Kong) Co., Limited | Associate | |
| Inner Mongolia Huanye Material Co., Ltd. | Associate | |
| Ruihuan (Inner Mongolia) Solar Power Co., Ltd. | Associate | |
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | Associate | |
| LG Electronics (Huizhou) Co., Ltd. | Associate | |
| Wuxi TCL Medical Imaging Technology Co., Ltd. | Associate | |
| China Innovative Capital Management Limited | Associate | |
| TCl Environmental Technology Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Getech Ltd. and its subsidiaries | Associate and its subsidiaries | |
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| SunPower Corporation | Associate’s subsidiary | |
| SunPower Phils.Manufacture Ltd | Associate’s subsidiary | |
| SunPower Systems Sarl | Associate’s subsidiary | |
| Qihang International Import & Export Limited | Associate’s subsidiary | |
| Qihang Import&Export Limited | Associate’s subsidiary | |
| Jucai Supply Chain International (Hong Kong) Co., Ltd. | Associate’s subsidiary | |
| Shenzhen Xirang International Network Information Technology Co., Ltd. | Associate’s subsidiary | |
| Shanghai Tixiang Enterprise Management Consulting Co., Ltd. | Associate’s subsidiary | |
| Elite Excellent Investments Limited | Associate’s subsidiary | |
| Esteem Venture Investment Limited | Associate’s subsidiary | |
| Shenzhen Juchuang Zhilian Information Technology Co., Ltd. | Associate’s subsidiary | |
| Huixing Holdings Limited | Associate’s subsidiary | |
| Marvel Paradise Limited | Associate’s subsidiary | |
| Union Dynamic Investment Limited | Associate’s subsidiary | |
| Dalian Tixiang Enterprise Management Consulting Co., Ltd. | Associate’s subsidiary | |
| Zijinshan Investment Co., Ltd. | Associate’s subsidiary | |
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | Associate’s subsidiary | |
| Huizhou Tixiang Enterprise Management Consulting Co., Ltd. | Associate’s subsidiary | |
| SunPower Malaysia Manufacturing Sdn.Bhd. | Associate's subsidiary | |
| TCL Industries Holdings Co., Ltd. and its subsidiaries | Other relationships | |
| CJ Speedex Logistics Co., Ltd. | Significantly influenced by the Company’s senior management |
| X | Related Parties and Related-Party Transactions (Continued) |
3 Major related-party transactions
(1) Selling raw materials and finished goods to related parties Note 1
| 2022 | 2021 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 10,460,136 | 15,594,088 | |||
| SunPower Systems Sarl | 1,912,424 | 1,434,224 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 1,014,946 | 641,810 | |||
| Qihang International Import & Export Limited | 520,330 | 528,883 | |||
| SunPower Malaysia Manufacturing Sdn.Bhd. | 482,562 | 41,403 | |||
| SunPower Systems International Limited | 195,077 | 323,973 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 147,016 | 48,858 | |||
| Qihang Import&Export Limited | 91,498 | 5,728 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 50,095 | 35,337 | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 5,443 | 3,355 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 4,964 | - | |||
| Getech Ltd. and its subsidiaries | 4,704 | - | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 2,658 | 843 | |||
| MAXEON SOLAR TECHNOLOGIES ,PTE.LTD | 1,691 | - | |||
| Moxing Semi-conductor (Guangdong) Co., Ltd. | 44 | - | |||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 39 | 671 | |||
| SunPower Corporation | 37 | - | |||
| Sunpower Phils.Manufacture Ltd | 10 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | - | 333 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | - | 17 | |||
| 14,893,674 | 18,659,523 |
(2) Purchasing raw materials and finished products from related parties Note 2
| 2022 | 2021 | ||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 5,741,285 | 2,440,128 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 2,768,083 | 3,288,681 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,437,095 | 1,556,530 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 1,230,135 | 960,377 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 573,491 | 128,872 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 228,127 | 142,865 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 178,523 | 213,923 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 144,809 | 29,348 | |||
| Qihang Import&Export Limited | 48,531 | - | |||
| Jucai Supply Chain International (Hong Kong) Co., Ltd. | 5,142 | 6,951 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 2,308 | 51,335 | |||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 1,309 | 1,521 | |||
| 12,358,838 | 8,820,531 |
| X | Related Parties and Related-Party Transactions (Continued) |
| 3 | Major related-party transactions (continued) |
(3) Receiving funding from related parties Note 3
| 2022 | 2021 | ||||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 300,000 | - | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 132,577 | 101,130 | |||
| Jiangsu Huanxin Semiconductor Co., Ltd. | 42,552 | 109,384 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 41,862 | 40 | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 34,228 | 162,982 | |||
| Qihang International Import & Export Limited | 25,811 | 3,234 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 20,731 | 44,945 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 15,367 | 24,975 | |||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | 11,952 | 7,555 | |||
| Anhui TCL Human Resources Service Co., Ltd. | 9,983 | 5,740 | |||
| Shanghai Tixiang Enterprise Management Consulting Co., Ltd. | 9,920 | 4,937 | |||
| Qihang Import&Export Limited | 9,089 | 12,779 | |||
| Elite Excellent Investments Limited | 8,762 | 3,860 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 5,764 | 7,868 | |||
| Esteem Venture Investment Limited | 5,416 | 41 | |||
| Shenzhen Juchuang Zhilian Information Technology Co., Ltd. | 4,135 | - | |||
| Peer College Education Technology (Huizhou) Co., Ltd. | 3,881 | 3,410 | |||
| Shanxi Shengwei Enterprise Management Co., Ltd. | 3,197 | 725 | |||
| Anhui Dangzhuo Enterprise Management Co., Ltd. | 2,751 | - | |||
| Huizhou TCL Human Resources Service Co., Ltd. | 2,516 | 371 | |||
| Huixing Holdings Limited | 673 | 672 | |||
| Marvel Paradise Limited | 612 | 570 | |||
| Union Dynamic Investment Limited | 401 | 377 | |||
| Hubei Shifen Sharing Technology Co., Ltd. | 85 | - | |||
| Dalian Tixiang Enterprise Management Consulting Co., Ltd. | 46 | - | |||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 33 | - | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 8 | 229,133 | |||
| TCL Finance (Hong Kong) Co., Limited | - | 21,238 | |||
| 692,352 | 745,966 | ||||
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major related-party transactions (continued) | ||||
(4) Leases
| 2022 | 2021 | ||||
| Rental income | |||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 75,322 | 72,763 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 66,902 | 80,552 | |||
| Inner Mongolia Huanye Material Co., Ltd. | 16,063 | 509 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 4,323 | 1,949 | |||
| Getech Ltd. and its subsidiaries | 1,065 | 532 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 1,046 | 988 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 837 | 812 | |||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 368 | 350 | |||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 1 | 460 | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | - | 886 | |||
| Huizhou TCL Real Estate Development Co., Ltd. | - | 367 | |||
| 165,927 | 160,168 | ||||
| Rental expense | |||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 62,456 | 52,989 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 5,147 | 232 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 1,927 | 834 | |||
| 69,530 | 54,055 | ||||
(5) Providing labour service for or accepting labour service from related parties
| 2022 | 2021 | ||||
| Providing labour service for related parties | 293,468 | 242,517 | |||
| Accepting labour service from related parties | 1,534,144 | 885,757 | |||
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major related-party transactions (continued) | ||||
(6) Receiving interest from or paying interest to related parties Note 3
| 2022 | 2021 | ||||
| Interest received | 22,837 | 81,607 | |||
| Interest paid | 18,040 | 18,244 |
(7) Remuneration of key management personnel
| 2022 | 2021 | ||||
| Remuneration of key management personnel | 48,071 | 58,199 | |||
(8) Other related transactions
In June 2022, the Group signed a property share transfer agreement with TCL Industrial Holdings Co., Ltd. totransfer all the property shares held by the Group in Chongqing Zhongxin Rongxin Investment Center (LimitedPartnership) to TCL Industrial Holdings Co., Ltd., with the transaction price of RMB960,000,000.
| Note 1 | Selling raw materials and finished products to related parties | ||||
| The Company sells raw materials, spare parts, auxiliary materials and finished goods to its joint ventures and associates at market prices, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit but play an important role as to the Company’s continued operations. | |||||
| Note 2 | Purchasing raw materials and finished products from related parties | ||||
| The Company purchases raw materials and finished goods from its joint ventures and associates at prices similar to those paid to third-party suppliers, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit^ but play an important role as to the Company’s continued operations. | |||||
| Note 3 | Providing funding for or receiving funding from related parties and corresponding interest received or paid | ||||
| The Company set up a settlement center in 1997 and TCL Tech Finance Co., Ltd. in 2006 (together, the “Financial Settlement Center”). The Financial Settlement Center is responsible for the financial affairs of the Company, including capital operation and allocation. The Center settles accounts with the Company’s subsidiaries, joint ventures and associates and pays the interest. It also allocates the money deposited by the subsidiaries, joint ventures and associates in it to these enterprises and charges interest. The interest income and expense between the Company and the Center are calculated according to the interest rates declared by the People’s Bank of China. The funding amount provided refers to the outstanding borrowings due from the Center to related parties, while the funding amount received means the balances of related parties’ deposits in the Center. | |||||
| Note 4 | The transactions between Maojia International Co., Ltd. and its subsidiaries and the Company from January to March 2021 are included in TCL Industrial Holdings Co., Ltd. and its subsidiaries. | ||||
| X | Related Parties and Related-Party Transactions (Continued) |
| 3 | Major related-party transactions (continued) |
| Note 5 | Transactions between TCL Financial Holding (Guangzhou) Group Co., Ltd. and its subsidiaries with the Company in June 2021 are recorded into TCL Industrial Holdings Co., Ltd. and its subsidiaries. |
| Note 6 | The transaction between TCL Huanxin Semiconductor (Tianjin) Co., Ltd. and the Company in June 2021 is a related-party transaction. |
| Note 7 | Remuneration of key management personnel does not include share-based payment. |
4 Balances due from and to related parties (continued)
(1) Notes receivable
| December 31, 2022 | January 1, 2022 | ||||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | - | 13,441 | |||
| - | 13,441 |
(2) Accounts receivable
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 2,143,258 | 2,230,056 | |||
| SunPower Systems Sarl | 258,443 | 281,163 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 249,860 | 276,090 | |||
| SunPower Systems International Limited | 76,749 | 119,817 | |||
| Qihang Import&Export Limited | 36,224 | - | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 12,651 | 24,710 | |||
| Inner Mongolia Huanye Material Co., Ltd. | 6,398 | - | |||
| Qihang International Import & Export Limited | 6,163 | 235,474 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 5,774 | - | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 1,522 | 1,569 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 1,163 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 969 | - | |||
| Tianjin Huanyan Technology Co., Ltd. | 289 | - | |||
| Getech Ltd. and its subsidiaries | 281 | - | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 183 | 1 | |||
| MAXEON SOLAR TECHNOLOGIES ,PTE.LTD | 104 | - | |||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 44 | 40 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 28 | - | |||
| SunPower Malaysia Manufacturing Sdn.Bhd. | 2 | 2,183 | |||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | - | 199 | |||
| 2,800,105 | 3,171,302 |
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) |
(3) Receivables financing
| December 31, 2022 | January 1, 2022 | ||||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | - | 500 | |||
| - | 500 |
(4) Accounts payable
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,295,863 | 448,553 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 699,954 | 552,883 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 268,519 | 274,366 | |||
| Getech Ltd. and its subsidiaries | 112,831 | 10,762 | |||
| Qihang Import&Export Limited | 73,130 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 63,818 | 5,246 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 57,847 | 30,029 | |||
| Inner Mongolia Huanye Material Co., Ltd. | 25,090 | 1,457 | |||
| Qihang International Import & Export Limited | 20,058 | - | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 15,313 | 24,033 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 9,534 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 7,981 | 2,240 | |||
| Jucai Supply Chain International (Hong Kong) Co., Ltd. | 3,769 | 6,503 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 968 | - | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 10 | - | |||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | - | 1,195 | |||
| Peer College Education Technology (Huizhou) Co., Ltd. | - | 38 | |||
| 2,654,685 | 1,357,305 |
(5) Other receivables
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 545,760 | 1,390,733 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 30,642 | 2,139 | |||
| Ruihuan (Inner Mongolia) Solar Power Co., Ltd. | 20,181 | - | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 7,987 | - | |||
| Inner Mongolia Huanye Material Co., Ltd. | 4,061 | - | |||
| Getech Ltd. and its subsidiaries | 3,994 | 404 | |||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | 3,825 | 1,185 | |||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 3,101 | 3,099 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 2,058 | 663 |
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) | ||||
| (5) | Other receivables (continued) | ||||
| December 31, 2022 | January 1, 2022 | ||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 1,725 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 559 | - | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 218 | 8 | |||
| LG Electronics (Huizhou) Co., Ltd. | 212 | 109 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 15 | 524 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 9 | - | |||
| Wuxi TCL Medical Imaging Technology Co., Ltd. | 6 | - | |||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | - | 3,777 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | - | 64 | |||
| Moxing Semi-conductor (Guangdong) Co., Ltd. | - | 7 | |||
| 624,353 | 1,402,712 |
(6) Other payables
| December 31, 2022 | January 1, 2022 | ||||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 428,100 | 428,100 | |||
| Getech Ltd. and its subsidiaries | 166,525 | 118,911 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 115,220 | 84,988 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 67,456 | 39,554 | |||
| Qihang International Import & Export Limited | 25,812 | 3,234 | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 18,762 | 48,969 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 14,402 | 1,365 | |||
| Anhui TCL Human Resources Service Co., Ltd. | 11,009 | 6,073 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 9,317 | 1,330 | |||
| Qihang Import&Export Limited | 9,089 | 12,779 | |||
| Elite Excellent Investments Limited | 8,762 | 3,860 | |||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 5,564 | 5,316 | |||
| Esteem Venture Investment Limited | 5,416 | 41 | |||
| Moxun Semiconductor Technology (Shanghai) Co., Ltd. | 4,057 | 1,000 | |||
| Peer College Education Technology (Huizhou) Co., Ltd. | 3,881 | 3,624 | |||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | 3,124 | - | |||
| Anhui Dangzhuo Enterprise Management Co., Ltd. | 2,751 | - | |||
| Huizhou TCL Human Resources Service Co., Ltd. | 2,515 | 370 | |||
| Jucai Supply Chain International (Hong Kong) Co., Ltd. | 2,333 | - | |||
| Shanxi Shengwei Enterprise Management Co., Ltd. | 2,221 | 725 | |||
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) | ||||
| (6) | Other payables (continued) | ||||
| December 31, 2022 | January 1, 2022 | ||||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 1,924 | - | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 1,444 | - | |||
| Huixing Holdings Limited | 673 | 672 | |||
| Marvel Paradise Limited | 612 | 570 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 449 | 245 | |||
| Union Dynamic Investment Limited | 401 | 377 | |||
| CJ Speedex Logistics Co., Ltd. | 102 | 1,772 | |||
| Hubei Shifen Sharing Technology Co., Ltd. | 85 | - | |||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 75 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 55 | - | |||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 66 | 33 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 45 | 45 | |||
| China Innovative Capital Management Limited | 29 | - | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | - | 197 | |||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | - | 4 | |||
| 912,276 | 764,154 |
(7) Non-current liabilities due within a one-year period
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 19,555 | 6,346 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 4,972 | 4,648 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 957 | 957 | |||
| 25,484 | 11,951 | ||||
(8) Prepayments
| December 31, 2022 | January 1, 2022 | ||||
| Tianjin Huanyan Technology Co., Ltd. | 30,438 | - | |||
| Getech Ltd. and its subsidiaries | 16,890 | 4,850 | |||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 8,386 | 74,672 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 2,633 | - | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 1,446 | - |
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) | ||||
| (8) | Advance payments (continued) | ||||
| December 31, 2022 | January 1, 2022 | ||||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | 1,416 | - | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 75 | 40 | |||
| 61,284 | 79,562 | ||||
(9) Advances from customers
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 214 | - | |||
| 214 | - | ||||
(10) Contract liabilities
| December 31, 2022 | January 1, 2022 | ||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 148,237 | 111 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 53,736 | 10,633 | |||
| TCl Environmental Technology Co., Ltd. and its subsidiaries | 3,233 | 2,885 | |||
| 205,206 | 13,629 |
(11) Lease liabilities
| December 31, 2022 | January 1, 2022 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,345 | 6,576 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 1,260 | 6,242 | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | - | 275 | |||
| 2,605 | 13,093 |
| X | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) |
(12) Deposits from related parties (note)
| December 31, 2022 | January 1, 2022 | ||||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 300,086 | 185 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 132,615 | 101,181 | |||
| Jiangsu Huanxin Semiconductor Co., Ltd. | 42,553 | 109,395 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 41,867 | 46 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 20,735 | 45,018 | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 15,722 | 114,413 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 15,382 | 25,040 | |||
| Shenzhen Xirang International Network Information Technology Co., Ltd. | 11,956 | 7,559 | |||
| Shanghai Tixiang Enterprise Management Consulting Co., Ltd. | 9,923 | 4,940 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 5,766 | 7,873 | |||
| Shenzhen Juchuang Zhilian Information Technology Co., Ltd. | 4,136 | - | |||
| Anhui TCL Human Resources Service Co., Ltd. | 1,637 | - | |||
| Shanxi Shengwei Enterprise Management Co., Ltd. | 978 | - | |||
| Dalian Tixiang Enterprise Management Consulting Co., Ltd. | 46 | - | |||
| TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. | 8 | 229,154 | |||
| TCL Finance (Hong Kong) Co., Limited | - | 21,241 | |||
| 603,410 | 666,045 | ||||
| These deposits are made by related parties in the Company’s subsidiary TCL Tech Finance Co., Ltd. | |||||
(13) Other non-current assets
| December 31, 2022 | January 1, 2022 | ||||
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | 216,468 | - | |||
| Getech Ltd. and its subsidiaries | 3,176 | - | |||
| 219,644 | - |
XI Share-based payments1 General conditions of share-based payment
| Total amount of each equity instrument granted by the Company in the current period | - | |
| Total amount of each equity instrument exercised by the Company in the current period | - | |
| Total amount of the Company’s equity instruments that expired in the current period | - | |
| Range of exercise prices of the Company’s stock options outstanding and remaining contract term at the end of the period | --- | |
| Range of exercise prices of the Company’s other equity instruments outstanding and remaining contract term at the end of the period | --- |
According to the Proposal on the Management Measures of the Company's Employee Stock OwnershipPlan (Phase II) 2021-2023 deliberated and adopted at the Second Extraordinary Meeting 2022, and theProposal on the Company's Employee Stock Purchase Plan (Phase II) 2021-2023 (Draft) adopted by theresolution of the 19th and 14th Meetings of the Seventh-term Board of Directors, the grant date of thisshare incentive was July 22, 2022; the grant price was RMB4.35; 32.6211 million shares were granted tono more than 3,600 awardees at the price of RMB4.35 on July 22,The vesting arrangement of the restricted stock granted under this incentive plan is shown in the followingtable:
| Number of times | Vesting period and ratio | |
| First non-trade transfer or sale | After 12 months from the date of vesting of the holder's respective quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder's respective shares to the account of the holder of the Shareholding Plan, provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation; | |
| Second non-trade transfer or sale | After 24 months from the date of vesting of the holder's corresponding quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder's corresponding shares to the account of the holder of the Shareholding Plan provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation |
2 Equity-settled share-based payments
| Method of determining the fair value of equity instruments on the date of grant | Restricted shares: The Group determined the fair value of equity instruments on the grant date based on the fair value of shares, RMB4.35 per share thereon. | |
| Basis for determining the number of exercisable equity instruments | On each balance sheet date within the vesting period, the Group determines the best estimate based on the latest number of employees eligible to exercise their options, and revise the estimated number of exercisable equity instruments. | |
| Reasons for significant differences between current and previous estimates | Not applicable | |
| Accumulated amount of equity-settled share-based payment included in capital reserve | RMB26,559,000 | |
| Total expense recognized for equity-settled share-based payments in the current period | RMB26,559,000 |
3 The Company has no cash-settled share-based payments.4 The Company has no share-based payment modification or termination.
XII Commitments1 Capital commitments
| December 31, 2022 | January 1, 2022 | ||||
| Under contractual obligations but not provided for | Note 1 | 12,563,851 | 17,764,772 | ||
| Approved by Board but not under contractual obligations | Note 2 | 3,248,000 | 172,384 | ||
| 15,811,851 | 17,937,156 | ||||
| Note 1 | The capital commitments under contractual obligations but not provided for in the current period primarily consisted of such commitments for construction of investment projects and external investments. | ||||
| Note 2 | The capital commitments were approved by the Board but are not under contractual obligations in the current period primarily consisting of such commitments for CSOT’s LCD panel project. | ||||
| As of December 31, 2022, apart from the disclosures above, there were no other major commitments that are required to be disclosed. | |||||
XIII Contingencies
| Guarantees Provided for External Parties | |
| The guaranteed amount for related party bank loan, commercial drafts, letters of credit, etc. is RMB3,137,934,000. | |
XIV Events after Balance Sheet Date
| 1 | From February 3 to 6, 2023, TCL TECH. completed the issue of the first phase of medium-term notes (science and technology Notes) in 2023, with interest valued from February 7, 2023, an issue scale of RMB1.5 billion, a term of 3 years, and a coupon rate of 4.1%. |
| 2 | According to 2022 profit distribution and the proposal for conversion of capital reserve to share capital reviewed and approved by the resolution of the Company’s board of directors: Based on 17,071,891,607 share capital of the Company as of March 30, 2023, all shareholders will be issued one share for every 10 shares they hold from the capital reserve, and subsequently, the total share capital of the Company will be changed to 18,779,080,767 shares. No cash dividends and no bonus shares are declared for the year. |
| 3 | Zhonghuan Advanced Semiconductor Materials Co., Ltd., a holding subsidiary of the Company, acquired 100% equity of Xinxin Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xinxin Semiconductor") by means of newly increased registered capital (hereinafter referred to as "the transaction"). Through deliberation and approval by the board of directors of the Company, Zhonghuan Advanced Semiconductor Materials Co., Ltd. signed the Equity Acquisition and Capital Increase Agreement with the shareholders of Xinxin Semiconductor. As of the date of approval of these financial statements, the closing conditions of the transaction have been fulfilled and Xinxin Semiconductor has become a wholly-owned subsidiary of Zhonghuan Advanced Semiconductor Materials Co., Ltd. Consideration for the transaction is RMB7,756,983,000, and after the completion of the transaction, shareholders of Xinxin Semiconductor hold a total of 32.50% equity interest in Zhonghuan Advanced Semiconductor Materials Co., Ltd. 口 |
XV Other Important Matters(I) Discontinued operations
| In May 2021, the Company's second extraordinary general meeting reviewed and approved the proposal to sell 100% equity of TCL Financial Holding (Guangzhou) Group Co., Ltd.: to sell 100% of the Company's equity to TCL Industrial Holdings Co., Ltd. at RMB2,572,020,000. The Company completed the closing at the end of May. | |||
| 2022 | 2021 | ||
| Revenue from discontinued operations | - | 168,312 | |
| Gross profit of discontinued operations | - | 63,259 | |
| Income tax expense of discontinued operations | - | 15,502 | |
| Net profit of discontinued operations | - | 47,757 | |
| Add: Net gain/loss on disposal of discontinued operations | - | 10,539 | |
| Total net profit of discontinued operations | - | 58,296 | |
(II) Segment reporting
| 1 | Basis for determining reporting segment and accounting policies |
| According to the Company’s internal organizational structure, management requirements and internal reporting system, the Company’s business is divided into four reporting segments: the semi-conductor display business, the new energy photovoltaic and semi-conductor materials business, the distribution business and the other businesses. The Company's management regularly evaluates the operating results of these reporting segments to determine the allocation of resources and evaluate their performance. The Company’s four reporting segments are: | |
| (1) | Semiconductor display business: mainly includes the research and development, manufacturing and sales of semiconductor display panels and semiconductor display modules, as well as complete display processing. |
| (2) | New energy photovoltaic and semiconductor materials business: mainly includes the manufacture and sales of semiconductor materials, semiconductor devices, new energy materials, and new energy; development, and operation of high-efficiency photovoltaic power station projects. |
| (3) | Distribution business: mainly includes the sales of computers, software, tablet computers, mobile phones and other electronic products. |
| (4) |
Other businesses: other businesses besides the above, including industrial finance and investmentbusiness, technology development services and patent maintenance services provided by thecompany, etc.
| Segment assets include all current assets such as tangible assets, intangible assets, other long-term assets and receivables attributable to each segment. Segment liabilities include payables, bank loans and other long-term liabilities attributable to each segment. | |
| Segment operating results refer to the income generated by each segment (including external transactions income and inter-segment transaction income), net of expenses incurred by each segment, depreciation, amortization and impairment losses of assets attributable to each segment, gains or losses from changes in fair value, return on investment, non-operating income and income tax expenses. Transfer pricing of inter-segment income is calculated on terms similar to other foreign transactions. |
| XIV | Other Important Matters (Continued) | ||||||||||
| (II) | Segment reporting (continued) | ||||||||||
| 2 | Financial information of reporting segments | ||||||||||
| For the 12 months ending on December 31, 2022 | |||||||||||
| Semi-conductor display | New energy photovoltaics and semi-conductor materials business | Distribution business | Other and offsets | Total | |||||||
| Revenue | 65,717,155 | 67,010,157 | 31,847,803 | 1,977,671 | 166,552,786 | ||||||
| Gross profit | (8,994,284) | 7,449,331 | 351,040 | 2,250,964 | 1,057,051 | ||||||
| Income tax expense | (1,330,043) | 376,289 | 86,787 | 135,959 | (731,008) | ||||||
| Net profit | (7,625,065) | 7,073,042 | 264,253 | 2,075,829 | 1,788,059 | ||||||
| Total assets | 175,429,564 | 109,133,768 | 8,712,675 | 66,720,225 | 359,996,232 | ||||||
| Total liabilities | 99,999,637 | 62,073,927 | 7,231,569 | 58,552,346 | 227,857,479 | ||||||
| Other items | |||||||||||
| Depreciation and amortization | 15,514,561 | 4,581,580 | 56,980 | 1,603,733 | 21,756,854 | ||||||
| Capital expenditure | 29,340,453 | 11,212,723 | - | 209,611 | 40,762,787 | ||||||
| Net interest expense | 1,215,925 | 951,451 | 88,754 | 1,432,383 | 3,688,513 | ||||||
| For the 12 months ending on December 31, 2021 | |||||||||||
| Semi-conductor display and materials business | New energy photovoltaics and semi-conductor materials business | Distribution business | Other and offsets | Total | |||||||
| Revenue | 88,220,062 | 41,104,685 | 31,932,016 | 2,400,938 | 163,657,701 | ||||||
| Gross profit | 12,402,514 | 5,000,031 | 366,835 | (185,801) | 17,583,579 | ||||||
| Income tax expense | 1,738,017 | 564,903 | 94,789 | 210,339 | 2,608,048 | ||||||
| Net profit | 10,664,497 | 4,435,128 | 272,046 | (396,140) | 14,975,531 | ||||||
| Total assets | 206,597,444 | 77,979,359 | 6,135,887 | 18,037,005 | 308,749,695 | ||||||
| Total liabilities | 120,788,713 | 36,309,580 | 4,805,264 | 27,184,283 | 189,087,840 | ||||||
| Other items | |||||||||||
| Depreciation and amortization | 14,307,942 | 2,977,409 | 23,292 | 619,270 | 17,927,913 | ||||||
| Capital expenditure | 24,135,467 | 6,102,319 | - | 617,348 | 30,855,133 | ||||||
| Net interest expense | 944,263 | 827,243 | 55,480 | 1,736,816 | 3,563,802 | ||||||
XVI Notes to the key items presented in the financial statements of the Company1 Accounts receivable
| December 31, 2022 | January 1, 2022 | |||||||||||||||||||||
| Amount | Ratio (%) | Allowance | Accrual Ratio (%) | Amount | Ratio (%) | Allowance | Percentage | |||||||||||||||
| Within 1 year | 353,877 | 100% | 65 | 0.02% | 93,929 | 100% | 363 | 0.39% | ||||||||||||||
2 Other receivables
| December 31, 2022 | January 1, 2022 | |||||||||||
| Dividends receivable | - | - | ||||||||||
| Other receivables | 4,961,948 | 13,819,512 | ||||||||||
| 4,961,948 | 13,819,512 | |||||||||||
| (a) | Nature of other receivables is analyzed as follows: | |||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||||
| Equity transfer receivables | 470,628 | 1,260,290 | ||||||||||
| Receivables from external entities | - | 107,708 | ||||||||||
| Security deposits | 1,795 | 1,407 | ||||||||||
| Others | 4,489,525 | 12,450,107 | ||||||||||
| 4,961,948 | 13,819,512 | |||||||||||
| (b) | Allowance for doubtful other receivables is analyzed as follows: | |||||||||||
| 12-month ECL | Lifetime ECL (credit not impaired) | Lifetime ECL (credit impaired) | Total | |||||||||
| January 1, 2022 | 962 | - | 31,966 | 32,928 | ||||||||
| Accrued in current period | 113 | - | - | 113 | ||||||||
| Reversal of current period | - | - | (158) | (158) | ||||||||
| Write-off of current period | - | - | (90) | (90) | ||||||||
| December 31, 2022 | 1,075 | - | 31,718 | 32,793 | ||||||||
| XVI | Notes to Financial Statements of the Parent Company (Continued) | ||||||||||
| 2 | Other receivables (continued) | ||||||||||
| (c) | The aging of other receivables is analyzed as follows: | ||||||||||
| December 31, 2022 | January 1, 2022 | ||||||||||
| Amount | Ratio (%) | Amount | Ratio (%) | ||||||||
| Within 1 year | 3,944,909 | 78.98% | 12,536,263 | 90.50% | |||||||
| 1 to 2 years | 23,902 | 0.48% | 363,773 | 2.63% | |||||||
| 2 to 3 years | 225,690 | 4.52% | 587,773 | 4.24% | |||||||
| Over 3 years | 800,240 | 16.02% | 364,631 | 2.63% | |||||||
| 4,994,741 | 100% | 13,852,440 | 100% | ||||||||
| The outstanding other receivables were mostly current accounts with related parties. | |||||||||||
| The top five other receivables of the Company amounted to approximately RMB4,008,688,000 (December 31, 2021: RMB12,357,035,000), accounting for 80.26 % of the total other receivables of the Company (December 31, 2021: 89.20%). | |||||||||||
3 Long-term equity investments
| December 31, 2022 | January 1, 2022 | |||||||
| Gross amount | Allowance for doubtful accounts | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||
| Associates and joint ventures (1) | 17,171,275 | - | 17,171,275 | 14,968,764 | - | 14,968,764 | ||
| Subsidiaries (2) | 59,189,096 | - | 59,189,096 | 56,334,362 | - | 56,334,362 | ||
| 76,360,371 | - | 76,360,371 | 71,303,126 | - | 71,303,126 | |||
| As of December 31, 2022, there are no major restrictions on the realization of investment and the remittance of return on long-term equity investments. | ||||||||
| XVI | Notes to Financial Statements of the Parent Company (Continued) |
| 3 | Long-term equity investments (continued) |
(1) Associates and joint ventures
| Increase or decrease in current period | December 31, 2022 | |||||||||||||||||
| Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared cash dividends or profits | Provision for impairment | Other increases and decreases | |||||||||||
| China Innovative Capital Management Limited | 1,063,219 | - | (109,998) | (11,926) | 3,097 | - | - | - | 944,392 | |||||||||
| LG Electronics (Huizhou) Co., Ltd. | 92,079 | - | 10,693 | - | - | (13,000) | - | - | 89,772 | |||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 36,160 | - | (9,912) | 1,110 | - | - | - | - | 27,358 | |||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 3,620 | (1,500) | (1,127) | - | - | - | - | 154 | 1,147 | |||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 10,706 | - | 4,562 | 5 | - | - | - | - | 15,273 | |||||||||
| TCL Environmental Technology Co., Ltd. | 122,391 | (103,246) | 4,842 | - | - | - | - | (23,987) | - | |||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 372,976 | - | 129,468 | - | - | - | - | - | 502,444 | |||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) | 151,026 | (279) | 17,062 | - | - | - | - | - | 167,809 | |||||||||
| Xinxin Semiconductor Technology Co., Ltd. | - | 1,790,073 | 8,312 | - | - | - | - | 399 | 1,798,784 | |||||||||
| Huizhou TCL Human Resources Service Co., Ltd. | 3,296 | - | 2,978 | - | - | - | - | - | 6,274 | |||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. | 313,434 | 25,000 | (53,645) | - | 491 | - | - | - | 285,280 | |||||||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 49,964 | - | 18,692 | 884 | - | - | - | - | 69,540 | |||||||||
| Others | 12,749,892 | (237,044) | 1,286,133 | (6,074) | - | (334,934) | - | (194,772) | 13,263,201 | |||||||||
| 14,968,764 | 1,473,004 | 1,308,060 | (16,001) | 3,588 | (347,934) | - | (218,206) | 17,171,275 | ||||||||||
| Note: Others are mainly investments in listed companies that have not yet announced their annual reports for 2022. | ||||||||||||||||||
| XVI | Notes to Financial Statements of the Parent Company (Continued) |
| 3 | Long-term equity investments (continued) |
(2) Subsidiaries
| Direct shareholding Ratio (%) | Beginning amount | Increase in current period | Decrease in current period | December 31, 2022 | |||||
| TCL China Star Optoelectronics Technology Co., Ltd. | 80.03% | 32,700,898 | 1,079,955 | - | 33,780,853 | ||||
| TCL Technology Group Finance Co., Ltd. | 82% | 1,256,003 | - | - | 1,256,003 | ||||
| TCL Technology Group (Tianjin) Co., Ltd. | 100% | 15,000,000 | - | - | 15,000,000 | ||||
| TCL Zhonghuan New Energy Technology Co., Ltd. | 2.41% | 1,752,635 | - | - | 1,752,635 | ||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | - | - | - | - | |||||
| TCL Culture Media (Shenzhen) Co., Ltd. | 100% | 361,414 | - | - | 361,414 | ||||
| Xinjiang TCL Equity Investment Ltd. | 100% | 200,000 | - | - | 200,000 | ||||
| Huizhou Sailuote Communication Co., Ltd. | 100% | 110,000 | - | - | 110,000 | ||||
| Highly Information Industry Co., Ltd. | 66.46% | 107,296 | - | - | 107,296 | ||||
| TCL Communication Equipment (Huizhou) Co., Ltd. | 75% | 79,500 | - | - | 79,500 | ||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 100% | 58,497 | - | - | 58,497 | ||||
| Shenzhen TCL Strategic Equity Investment Fund Partnership (Limited Partnership) | 100% | 70,826 | 183 | - | 71,009 | ||||
| TCL Industrial Technology Research Institute, Ltd. (Europe) | 100% | 20,000 | - | - | 20,000 | ||||
| Wuhan TCL Industrial Technology Research Institute, Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Shenzhen TCL High-Tech Development Co., Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Beijing HAWK Cloud Information Technology Co., Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Huizhou Hongsheng Science and Technology Development Co., Ltd. | 100% | 1,000 | - | - | 1,000 | ||||
| Beijing Zhiqujia Technology Co., Ltd. | 100% | 257,627 | - | (257,627) | - | ||||
| Tianjin Silica Material Technology Co., Ltd. | 100% | 1,000,000 | 1,800,000 | - | 2,800,000 | ||||
| Xiamen TCL Technology Industrial Investment Co., Ltd. | 100% | - | 211,000 | - | 211,000 | ||||
| TCL Internet Technology (Shenzhen) Co., Ltd. | 100% | - | 15,000 | - | 15,000 | ||||
| Ningbo TCL Equity Investment Ltd. | 100% | 300,000 | - | - | 300,000 | ||||
| TCL Technology Investments Limited | 100% | 2,988,293 | - | - | 2,988,293 | ||||
| Equity incentives of subsidiaries | 10,373 | 6,223 | - | 16,596 | |||||
| 56,334,362 | 3,112,361 | (257,627) | 59,189,096 | ||||||
| For the registered capital of subsidiaries and the Company's equity interests in the subsidiaries, see Note VII. | |||||||||
| XVI | Notes to Financial Statements of the Parent Company (Continued) |
4 Investments in other equity instruments
| December 31, 2022 | January 1, 2022 | |||
| Equity of unlisted companies | 5,000 | 5,000 |
5 Other non-current financial assets
| December 31, 2022 | January 1, 2022 | |||
| Equity investments | 431,023 | 1,051,536 |
6 Operating income and operating costs
| 2022 | 2021 | |||||||
| Revenue | Cost of sales | Revenue | Cost of sales | |||||
| Core business | 1,019,036 | 1,009,786 | 1,133,244 | 1,111,423 | ||||
| Non-core business | 574,177 | 153,021 | 357,693 | 16 | ||||
| 1,593,213 | 1,162,807 | 1,490,937 | 1,111,439 | |||||
7 Return on investment
| 2022 | 2021 | |||
| Gain on disposal of debt instruments at fair value through profit or loss | 244,997 | 253,698 | ||
| Gain on disposal of equity instruments at fair value through profit or loss | - | 24,321 | ||
| Profit from holding debt instruments at fair value through profit or loss | - | 84,124 | ||
| Debt instruments at amortized cost through profit or loss | - | 877 | ||
| Profit from holding equity instruments at fair value through profit or loss | 3,953 | - | ||
| Dividends from subsidiaries | 9,340,042 | 410,500 | ||
| Share of profit of associates for current period | 1,358,727 | 1,427,874 | ||
| Share of profit of joint ventures for current period | (50,667) | (21,758) | ||
| Net income from disposal of long-term investments | 1,586,504 | 825,934 | ||
| 12,483,556 | 3,005,570 | |||
| As of December 31, 2022, there were no significant restrictions on the collection of return on investment. | ||||
| XVI | Notes to Financial Statements of the Parent Company (Continued) |
8 Net cash generated from operating activities
| Net cash used in operating activities of the parent company was RMB11,844,330,000. |
9 Cash and cash equivalents, end of the period
| Cash and cash equivalents at end of the period of the Company was RMB17,570,270,000. |
10 Contingent liabilities
| As of December 31, 2022, the contingent liabilities not provided for in the financial report were as follows: | ||||
| December 31, 2022 | January 1, 2022 | |||
| Guarantees for trade notes and letters of guarantee of subsidiaries | 17,329,299 | 10,025,125 | ||
| Guarantees for bank loans of subsidiaries | 42,748,105 | 29,542,641 | ||
| Guarantees for bank loans, trade notes, letters of credit, etc. of related parties | 3,137,934 | 15,991,207 | ||
XVII Comparative Figures
| Certain comparative data have been reclassified to comply with the presentation of the current period. |
XVIII Non-Recurring Gains and Losses
| 2022 | 2021 | |||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 1,757,839 | (184,526) | ||
| Government subsidies charged to current profits and loss (exclusive of government grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 1,322,783 | 699,271 | ||
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments; | - | 40,300 | ||
| The profits or losses generated from changes in fair value arising from holding marketable financial assets and marketable financial liabilities, as well as the investment-related income from the disposal of marketable financial assets, marketable financial liabilities and available-for-sale financial assets, except for the effective hedging business related to the Company’s normal business operation. | (127,234) | 238,629 | ||
| Reversal of provision for impairment of receivables that have been individually tested for impairment | 37,746 | - | ||
| Non-operating income and expenses other than the above | 758,600 | 275,790 | ||
| Income tax effects | (244,386) | (93,176) | ||
| Non-controlling interests effects | (545,817) | (356,085) | ||
| Non-recurring gains and losses attributable to ordinary shareholders of the parent company | 2,959,531 | 620,203 | ||
| The Company recognizes non-recurring gain and loss items in accordance with the provisions of (2008) No.43 Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss(2008) issued by the China Securities Regulatory Commission. | ||||
XIX Weighted Average Return on Equity (ROE) and Earnings per Share (EPS)
| The Company calculates the ROE and EPS as follows in accordance with "the Compilation Rules No. 9 for Information Disclosure of Companies Offering Securities to the Public-Calculation and Disclosure of Return on Equity and Earnings per Share (Revised in 2010)" issued by the China Securities Regulatory Commission and relevant provisions of accounting standards: | ||||||||
| Item | Reporting period Net profit attributable to the parent company for the reporting period | Weighted average return on equity (%) | EPS (RMB yuan) | |||||
| Basic earnings per share | Diluted EPS income | |||||||
| Net profit attributable to ordinary shareholders of the Company | 261,319 | 0.52% | 0.0191 | 0.0185 | ||||
| Net profit attributable to ordinary shareholders of the Company before non-recurring gains and losses | (2,698,212) | (5.34 %) | (0.1972) | (0.1908) | ||||
Company Name: TCL Technology Group Corporation
Date: March 30, 2023
The financial statements and the notes thereto from page 1 to page 161 are signed by:
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Accounting Person-in-charge of the accounting department: | Peng Pan |