Full Text of the 2023 Interim Report of TCL Technology Group Corporation
TCL科技集团股份有限公司TCL Technology Group Corporation
INTERIM REPORT 2023
August 29, 2023
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part I Important Notes, Table of Contents and Definitions
The 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 Interim Report are factual, accurate, andcomplete.All the Company’s directors attended the Board meeting for the review of this Interim Reportand its summary.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 Company has no interim dividend plan, either in the form of cash or stock, nor for theconversion of capital reserve into share capital.This Report and its summary have 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 2023 Interim Report of TCL Technology Group Corporation
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2Part II Corporate Information and Key Financial Information ................................................... 6Part III Management Discussion and Analysis ............................................................................... 9Part IV Corporate Governance ...................................................................................................... 32
Part V Environmental and Social Responsibility ...... 35Part VI Significant Events ............................................................................................................... 43Part VII Changes in Shares and Information about Shareholders ............................................. 53Part VIII Preferred Shares ............................................................................................................. 60Part IX Bonds ................................................................................................................................... 61Part X Financial Report .................................................................................................................. 65
Full Text of the 2023 Interim Report 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 originals of all company documents and announcements that were disclosed to thepublic during the Reporting Period.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Definitions
Term Refers toDefinitionThe “Company”, the “Group”，“TCL”，“TCL Tech.” or “we”
Refers to
TCL Technology Group CorporationThe “Reporting Period”, “current period” Refers toThe period from January 1, 2023 to June 30, 2023.TCL CSOT Refers toTCL China Star Optoelectronics Technology Co., Ltd.Zhonghuan Electronics Refers toTCL Technology Group (Tianjin) Co., Ltd.TCL Industrial Refers toTCL 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)Shenzhen CSOT Refers to
Shenzhen China Star Optoelectronics Semiconductor Display Technology
Co., Ltd.Wuhan CSOT Refers toWuhan China Star Optoelectronics Technology Co., Ltd.Wuhan China Star OptoelectronicsSemiconductor
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 toSuzhou China Star Optoelectronics Technology Co., Ltd.Moka Technology Refers toMoka International Limitedt1 Refers toThe generation 8.5 (or G8.5) TFT-LCD production line of TCL CSOTt2 Refers to
The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor)
production line of TCL CSOTt3 Refers to
The generation 6 (or G6) LTPS-LCD panel production line at Wuhan
CSOTt4 Refers to
The generation 6 (or G6) flexible LTPS-AMOLED panel production line
at Wuhan CSOTWuhan t3 production expansion project Refers to
The generation 6 (or G6) of new semiconductor production line of Wuhan
CSOTt6 Refers to
The generation 11 (or G11) new TFT-LCD display production line at
Shenzhen CSOTt7 Refers to
The generation 11 (or G11) new ultra high definition display production
line at Shenzhen CSOTt9 Refers to
The generation 8.6 (or G8.6) new oxide semiconductor production line at
Guangzhou CSOTt10 Refers toThe generation 8.5 (or G8.5) TFT-LCD production line at Suzhou CSOTGW Refers toGigawatt, power unit for solar cells, 1GW = 1,000 megawattsG12 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 toRenminbi
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part II Corporate Information and Key Financial InformationI. Corporate Information
Stock nameTCL TECH.Stock code000100Place of listing Shenzhen Stock ExchangeCompany name in Chinese TCL科技集团股份有限公司Abbr. in Chinese (if any) TCL 科技Company name in English (if any) TCL Technology Group CorporationAbbr. in English (if any)TCL TECH.Legal representativeLi Dongsheng
II. Contact Information
Board SecretaryName Liao QianOffice address
10/F, Tower G1, International E Town, TCL Science Park, 1001 Nanshan District,Shenzhen, Guangdong Province, ChinaTel. 0755-33311666Email address ir@tcl.comIII. Other Information
1. Contact Information of the Company
Whether the registered address, office address and their zip codes, website address and email address of the Company changed duringthe Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the registered address, office address and their zip codes, website address, email address and other contactinformation of the Company during the Reporting Period. Please refer to the Annual Report 2022 for details.
2. Media for Information Disclosure and Place Where This Report is Lodged
Whether the media for information disclosure and place where this report is lodged changed during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the name and website of the stock exchange website and media on which the Company discloses its InterimReport and the place for lodging such reports during the Reporting Period. Please refer to the Annual Report 2022 for details.
3. Other Information
Whether other information changed during the Reporting Period.
□ Applicable √ Not applicable
IV. Key Accounting Data and Financial Indicators
Indicate whether there is any retrospectively adjusted or restated datum in the table below
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
√ Yes □ No
Earnings per share in the first half of 2022 were adjusted due to the conversion of capital reserves into share capital during the ReportingPeriod
H1 2023
H1 2022 ChangeBefore adjustmentAfter adjustment After adjustmentRevenue (RMB) 85,148,725,60684,522,181,12884,522,181,128 0.74%Net profit attributable to the company’sshareholders (RMB)
340,493,589663,522,871663,522,871 -48.68%Net profits attributable to the company’sshareholders before non-recurring gainsand losses (RMB)
-600,066,840-626,869,385-626,869,385 4.28%Net cash generated from operatingactivities (RMB)
10,416,168,1479,016,635,7439,016,635,743 15.52%Basic earnings per share (RMB/share) 0.0184 0.0489 0.0445 -58.65%Diluted earnings per share (RMB/share) 0.01810.0485 0.0441 -58.96%Weighted average return on equity (%) 0.67 1.71 1.71
Decreased by
1.04 percentage
points year on
year
End of theReporting Period
December 31, 2022 ChangeBefore adjustmentAfter adjustment After adjustmentTotal assets (RMB) 381,324,490,388359,996,232,668 359,996,232,668 5.92%Owners’ equity attributable to thecompany’s shareholders (RMB)
50,464,207,95850,678,520,477 50,678,520,477 -0.42%Note: The Company converted its capital reserve into share capital in May 2023, at a rate of 1 share for every 10 shares to allshareholders. The Company recalculated the basic earnings per share and diluted earnings per share for the first half of 2022 inaccordance with accounting standards and other regulations.The total share capital of the Company at the end of the last trading session before the disclosure of this Report:
The Total share capital of the Company at the end of the last tradingsession before the disclosure of this Report (share)
18,779,080,767Fully diluted earnings per share based on the latest total share capital above:
Fully diluted earnings per share based on the latest total share capitalabove (RMB/share)
0.0181
V. Accounting Data Differences under China Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
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
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VI. Non-Recurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMBItem AmountGains and losses on disposal of non-current assets (inclusive of impairment allowance write-offs) 321,753,442Government subsidies charged to current profits and loss (except for government subsidies closely related to theCompany’s normal business which comply with national policies and regulations and are enjoyed on an ongoing basisaccording to certain standard quotas or quantities)
1,267,258,979The profits or losses generated from changes in fair value arising from holding marketable financial assets andmarketable financial liabilities, as well as the investment-related income from the disposal of marketable financialassets, marketable financial liabilities and available-for-sale financial assets, except for the effective hedging businessrelated to the Company’s normal business operation.
-42,740,098Reversal of provision for impairment of receivables that have been individually tested for impairment 2,500,000Non-operating income and expenses other than the above 707,420,655Less: Corporate income tax 364,521,716
Non-controlling interests (net of tax) 951,110,833Total 940,560,429Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable √ Not applicable
The Company has no other profit and loss items that meet the definition of non-recurring profits and losses.Notes on non-recurring profit and loss items that which is listed in the Explanatory Announcement No. 1 on Information Disclosurefor Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss shall be used to define Recurring Gain/Loss items
□ Applicable √ Not applicable
The Company does not have any non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on InformationDisclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss that are defined as recurring profit andloss items.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part III Management Discussion and Analysis
I. Company-related industry outlook in the Reporting PeriodIn the first half of the year, the global economy slowed down significantly with continuedgeopolitical conflicts and a high rate of inflation. The complex and severe external environment hasincreased the uncertainty of domestic economic development. In response to these challenges, theCompany continuously laid out its business in the pan-semiconductor industry on a basis ofsemiconductor displays, new energy photovoltaics, and semiconductor materials, enhanced theresilience of its business and optimized its business strategies to pursue sustainable high-qualitydevelopment.During the Reporting Period, the Company achieved an operating revenue of RMB85.15 billion,with a year-on-year increase of 0.7%; net profit of RMB2.39 billion, with a year-on-year increase of
24.1%; net profit attributable to shareholders of the listed company of RMB0.34 billion; and a net
operating cash flow of RMB10.42 billion. Benefiting from an improving industry landscape, thesupply and demand relationship in the semiconductor display industry was optimized, inventoriesalong the industry chain remained at a healthy level and mainstream product prices steadily increased,the operating revenue and profit in the Company's semiconductor display business significantlyimproved. The Company continued to consolidate its advantages in terms of product and technologyleadership in new energy photovoltaics and semiconductor materials businesses, enhanced itsindustrial chain synergy, and achieved rapid growth in terms of operating revenue and profit.Maintaining strategic focus, optimizing the business strategy, enhancing differentiatedcompetitiveness, and improving operational benefits. With the improved industrial concentration,the leading manufacturers illustrated their advantages in terms of economies of scale, and thesemiconductor display industry entered a new stage of development. During the Reporting Period,the demand area steadily increased, product prices stabilized and rebounded, and the operatingincome of the semiconductor display business increased by 34.9% quarter-on-quarter in the secondquarter, the profitability has steadily improved. TCL Zhonghuan implemented a differentiationstrategy, which focused on the high-growth market such as N-type and G12 products in the field ofphotovoltaic materials. In doing so, it occupied leading global market share and achieved significant
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
growth in revenue and profit. In the field of cells and modules, the Company further consolidated thetechnological advantages of the "G12+Shingled" dual-platform, and strengthened thecompetitiveness of the photovoltaic industry chain by adopting a differentiated layout.Building business barriers based on technological innovation, deepening intelligent anddigital manufacturing capabilities, and accelerating high-quality industrial transformationsand upgrades. During the Reporting Period, the Company invested RMB5.47 billion in R&D, a year-on-year increase of 4.1%. The Company also filed a total of 177 new international patent applicationsunder the PCT, increasing the total number of applications filed to 14,927. The Company continuedto lead product technology upgrades and built a leading technological advantage in the semiconductordisplay business in the fields of ultra-high definition, high refresh rates, large screen sizes and flexibledisplays, top global customers achieved a leap in industrial value through high-end product line ofthe company. In the new energy photovoltaic business, the Company continued to lead the industryupgrading in the field of large-size, thin slicing, thin line, shingled and other technical processes. TheCompany advanced the manufacturing transformation and upgrade through digitalization andintelligentization, and applied AI intelligent detection systems in the semiconductor display businessto identify defects in LCD panel production, further improving production efficiency. In addition, theCompany deepened the application of the industry 4.0 system in the new energy photovoltaic business,with industry-leading flexible manufacturing capabilities, thus promoting high-quality developmentwithin the industry.Pushing localized operations of the global industrial chain, strengthening the constructionof overseas business platforms, and exploring a new globalization model. The Company activelypromoted the localized operations of its industrial chain. The TCL CSOT India Display ModuleFactory continued to expand both its production and sales capacity. TCL Zhonghuan planned toestablish production capacity of crystals and chips in the Middle East through establishing a jointventure with Saudi Vision Industries, and strengthened collaboration with partners in some targetmarkets. The Company continued to strengthen its overseas business development and explored anew globalization model to enhance its competitiveness.
The Company will respond to any challenges with its own operational capabilities and strategicmanagement, continue to improve the profitability of semiconductor display business, and steadilygrow its new energy photovoltaic business. The Company will firmly grasp the opportunities brought
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
by the transformations and upgrades in the technology manufacturing industry and the global energystructure, and shall continue to implement the business strategies of "improving operational qualityand efficiency, enhancing strengths to shore up weaknesses, innovation-driven development as wellas accelerating global expansion" in order to achieve sustainable, high-quality development and takea lead in the global market.II. Main businesses of the Company during the Reporting PeriodThe Company focused on the development of the core business of semiconductor display, newenergy photovoltaic and semiconductor materials, and committed to achieving the strategic goal ofglobal leadership.
(I) Semiconductor display businessIn the first half of the year, the downstream demand for displays remained sluggish, but it hasincreased quarter on quarter. The trend toward large-sized products has driven a steady increase indemand area. On the supply side, the large-size panel industry has become increasingly concentrated,industrial competition has shifted from rapid scale expansion and market share growth driven byinvestment to a focus on technology and profitability as key guiding factors, the industry achievedhealthy development. The prices of large-sized panels have continued to rise since March this year,while the prices of small and medium-sized panels have gradually stabilized at a low level.During the Reporting Period, the Company achieved an operating revenue of RMB35.53 billionin its semiconductor display business, with a year-on-year decrease of 4.7%. Among this, the displaybusiness achieved an operating revenue of RMB20.41 billion in the second quarter, with a year-on-year increase of 18.5%, and a quarter-on-quarter increase of 34.9%. The net loss of display business
TCL TECH
Semi-conductordis
la
| y |
New energy photovoltaic & Semi-conductor materials
Industrial finance &investment
OtherTCL CSOT
MokaTechnology
ZhonghuanPhotovoltaic
ZhonghuanAdvanced
TCLFinancial
TCL CapitalHighlyTPC
JuhuaChina Ray
TCLMicrochi
Xinhuan/Xinhua
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in the second quarter reduced by RMB 2.15 billion compared to the first quarter.
In its large-sized product business, TCL CSOT made the best use of its own strengths andindustry chain advantages, and firmly adopted the strategies of large-sized and high-end TVpanels while actively developing commercial displays, such as interactive whiteboards, digitalsignage, and splicing screens. The layout of TCL CSOT's high-generation production lines coveredthe factories of the G8 production lines of t1, t2, t9, and t10, and the factories of the G11 productionlines (the highest generation in the world) of t6 and t7. The market share of TV panels steadily rankedamong the top two in the world. By giving play to the production efficiency and cutting cost efficiencyof high-generation production lines, the Company led the development of large-sized and high-endproducts in collaboration with strategic customers, and in doing so, improved the value of the wholeindustry chain. The Company's 55-inch TV panels and above increased to 78% in terms of sales areaproportion, while the market share of 55-inch and 75-inch products ranked first in the world, themarket share of 65-inch products ranked second in the world, and the market share of high-end TVpanels such as shadowless screens and 120HZ screens steadily ranked first in the world. Incommercial markets such as interactive whiteboards, digital signages, and splicing screens, TCLCSOT ranked among the top level in terms of global market share.
In its medium-sized product business, TCL CSOT accelerated the layout of its newbusinesses, including IT and vehicle-mounted screen products, while enhancing productcompetitiveness and optimizing customer structure to create new driving forces for businessgrowth. The G6 LTPS production line was expanded as planned, and the t9 production line,positioned at medium-size IT and vehicle-mounted screen products, successfully achieved a capacityincrease in SoP, with brand customer introduced for commercial displays, monitor and laptops. TCLCSOT's medium-sized panel business developed rapidly, reaching a revenue share of 21%. TheCompany's shipments of monitors jumped to the top third in the world, with e-sports monitor havingthe largest market share globally. The market share of LTPS laptops and LTPS tablets ranked secondglobally. With the rapid penetration of LTPS panels in the field of new energy vehicles, theCompany's shipment of LTPS vehicle-mounted screens also significantly increased. The Company'sMini-led backlight products for monitor, laptop, vehicle-mounted screen and other products achievedSoP to continuously satisfy the various needs of customers.
In its small-sized product business, TCL CSOT consolidated its position in the market of
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
LTPS mobile phone panels, drove the growth of the flexible OLED business with productinnovations, and expanded the VR/AR and professional display markets. TCL CSOT rankedthird in the world in terms of LTPS mobile panel shipments from the t3 production line. Theindependently developed 1512 PPI Mini-led LCD-VR screens achieved SoP. The Company activelyexpanded into professional display fields such as healthcare, smart homes, and learning machines.TCL CSOT ranked fifth in the world in terms of the shipments of flexible OLED mobile phone panelsfrom the t4 production line. During the Reporting Period, TCL CSOT began cooperating with severalnew brands, which further improved its customer structure. Flexible OLED folding, LTPO, Pol-Less,and other new technologies have now reached an industry-leading level, and TCL CSOT has achievedSoP and supplied high-end flagship models to brand customers, with high-end products achievingremarkable progress and laying the foundation for business improvement.Looking ahead to the second half of the year, consumer demand is expected to rebound due tothe seasonal effect. Currently, the prices of large-sized display products continue to rise, while theprices of some medium-sized products have begun to bottom out. Meanwhile, the prices of small-sized products have stabilized. Thanks to favorable industry trends and the optimization of theCompany's business structure, the Company is confident that its semiconductor displaybusiness will achieve significant improvement in the second half of the year.
In the long term, as major information carriers and interactive interfaces in the digital economyera, semiconductor displays will further increase in industrial value, the trend toward large-sized TVswill drive steady growth in the display demand area. Maintaining a reasonable level of profitabilityis the foundation for the sustainable development of the industry, the industry will move toward morerational competition. TCL CSOT will continue to promote the healthy and sustainable developmentof the industry. Efficiency and profitability will remain the cornerstone of its operations, allowing forthe continuous improvement of its relative competitiveness. It will also improve the layout of smalland medium-sized products, improve its customer structure and business performance, and accelerateits transformation and upgrade from the leading manufacturer of large-sized displays to a leadingmanufacturer of full-sized displays.
(II) New energy photovoltaics and semiconductor materials business
In the first half of the year, as the capacity of upstream raw materials and various links in the
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
photovoltaic industry chain were released, product prices decreased. However, the economic viabilityof photovoltaic power generation improved, driving a steady increase in terminal demand. TCLZhonghuan grasped the opportunity of the growing market, gave full play to its advanced productioncapacity and flexible manufacturing, and achieved rapid growth in production and sales scale. Duringthe Reporting Period, TCL Zhonghuan achieved an operating revenue of RMB34.9 billion, with ayear-on-year increase of 10.1%, and a net profit of RMB4.84 billion, with a year-on-year increase of50%.Relying on its technical advantages of G12 and N-type photovoltaic materials, TCLZhonghuan consolidated its leading position in the market, enhanced the layout of TOPCONbatteries and shingled modules, and strengthened its differentiated competitiveness. TheCompany continued to expand its advanced production capacity, and gave full play to the scaleadvantages, cost advantages, and market advantages of G12 products to expand its leading positionin the field of photovoltaic materials. At the end of the Reporting Period, the Company's totalmonocrystalline silicon capacity reached 165GW, with its market share of photovoltaic silicon wafersranked top in the world. The Company led the upgrade of large-size, thin slicing, thin line processtechnologies for crystals and wafers. Metrics such as the consumption rate of silicone materials percrystalline unit, monthly crystal output per furnace, number of wafer output per kg, and otherindicators, the Company managed to maintain a leading position in the industry. With the increasingdemand for energy efficiency and upgrading photovoltaic products to N-type technology, theCompany has built a deep technical barrier. The Company also built a smart factory for 25GW N-type TOPCON batteries and continuously improved the production capacity of shingled modules,leading to the development of a differentiated industrial chain based on next-generation technology,enhancing its competitiveness.
TCL Zhonghuan increasingly applied Industry 4.0 technology in flexible manufacturingand accelerated the layout of its international business to seize a high-value market share. Asglobal trade barriers increase, it is becoming much more important to build a global manufacturinglayout. Having relied on long-term investment and development in smart manufacturing over theyears, the Company has achieved industry-leading capabilities in applying Industry 4.0 in flexiblemanufacturing and has satisfied its customers' demands for customization and differentiation.Furthermore, the Company has collaborated with the supply chain and manufacturing sector to
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enhance its end-to-end traceability capabilities, securing a significant share in high-premium markets.The Company has fully introduced the Industry 4.0 system in all links of the industrial chain, creatingautonomously coordinated and highly efficient dark factories. This has allowed it to achieve industry-leading productivity and automated production, establishing a competitive advantage in localizedmanufacturing on a global scale. During the Reporting Period, the Company signed cooperation termsand lists with Vision Industries Company, with a view to jointly establish a joint venture and investin a photovoltaic crystal and wafer factory in Saudi Arabia. This initiative marks the start of anoverseas localized manufacturing strategy for crystals and wafers. The Company and Maxeon haveachieved mutually promoted and coordinated development in terms of production and channelsaround the world. These efforts will further facilitate the accelerated growth of the Company'soverseas business in the future.III. Analysis of core competitivenessOver the past 42 years, TCL TECH has developed an industrial layout that focuses onsemiconductor displays, new energy photovoltaics, and semiconductor materials by maintaininginnovation, change, and transformation, and has achieved leapfrog development in the pan-semiconductor segment from zero to one and one to N. In this process, TCL TECH has continued toenhance its own core competitiveness and sustainability. By upholding its mission of "leadingtechnology and mutually beneficial cooperation", the Company has continued to increase itsinvestment in leading technology to create a better life for people, and build an open and mutuallybeneficial industry ecosystem with partners characterized by a people-oriented approach and mutualcooperation.
Leading in scale: rapid growth of production capacity and improvement of value chainlayout
As a global semiconductor display leader, the Company has two 11th-generation, four 8th-generation, and two 6th-generation semiconductor panel production lines, and is ranked second in theworld in terms of capacity. The Company has continuously expanded its capacity through anendogenous growth and M&A strategy. By establishing two 8.5th-generation OEM lines, CSOT hassecured its foothold in TV panels, further boosted its capacity in large-sized panels, and maintaineda leading position globally with two 11th-generation OEM lines and a merger with the Samsung t10
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production line. CSOT ranks among top 2 globally by market share of TV panels. In 2021, theCompany established a mid-sized t9 production line with high added value to expedite its strategiclayout across all product sizes. At present, products from the t9 production line have been deliveredto IT brand customers. The Company has successfully increased its competitiveness in its mid-sizedbusiness, which is evidenced by securing first place by market share of e-sport MNT products andsecond place by market share of LTPS tablets and LTPS notebooks globally. In addition, theCompany has also maintained high-speed development in vehicle-mounted devices. In the small-sized segment, the Company has focused on mid and high-end products in LTPS and flexible OLEDtechnologies through its two 6th-generation production lines, i.e. t3 and t4. In the first half of the year,the Company ranked third by market share of LTPS mobile panels, and fifth by flexible OLED mobilepanels. The Company has also actively extended its value chain, increased module capacity, acquiredMoka Technology, and further scaled up its position along the value chain and in terms of profitability.Based on its upgraded scale, management, and synergy with the industrial chain, the Company willfurther shore up its industry status and overall competitiveness in the future.
Leading in technology and ecology: Actively laying the groundwork for next-generationdisplay technologies and materials, building a first-mover advantage through ecologicalleadership
Relying on TCL CSOT, the Company has accelerated its vertical layout of the industrial chainand continuously improved its upstream capacity for technological innovation. The Company hasstrategically focused on building an ecosystem in areas such as basic materials, next-generationdisplay materials, and critical equipment for new manufacturing processes. This is aimed at creatinga TCL ecosystem within the display market to establish a leading advantage based on next-generationdisplay technology. The Company has actively invested in quantum dot display technologies, andincreased its research and industrial cooperation efforts in areas such as quantum dot display materials,new device structures, and ink-jet printing. In doing so, it aims to tap into the key technologies of thenext generation of displays. The subsidiary of the Company, Guangdong Juhua, has the only nationalinnovation center "National Printing and Flexible Display Innovation Center" in the display industrywithin China, which has provided a globally-leading public platform for G4.5 printed display R&D.This has helped integrate industrial chain resources from all links, including materials, techniques,processes, and application verification to enable the integration of cutting-edge technology
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development into industrial applications. In addition, the Company has continued to invest in Micro-LED display technologies to help promote the Company's ecological layout in this field frommaterials, techniques, equipment, and production line solutions to independent intellectual property.
New Strategic Growth Engines: Seizing Development Opportunities and Promoting theRapid Development of the New Energy Photovoltaic IndustryThe Company has boosted the rapid development of TCL Zhonghuan based on its excellentmanagement experience that it has accumulated from the high-tech, asset-heavy, and long-cycleindustry for years. By invigorating the organization through systematic and institutional reform, theCompany has optimized its assets structure to enhance its operation efficiency, and has unleashed thegrowth potential of new energy photovoltaics business through industrial synergy. TCL Zhonghuanhas further consolidated its leading position in the industry, with high-quality and growthperformance, and has become one of the key engines driving the Company's core businesses. In 2022,TCL Zhonghuan was awarded the title of "National Championship Enterprises with Leading Productsin the Manufacturing Industry", and was ranked top in the world in terms of its capacity and shipmentof photovoltaic monocrystalline silicon wafers. Furthermore, it secured the leading market shareworldwide for G12 large-size photovoltaic monocrystalline silicon wafers. Driven by its efforts insemiconductor displays and new energy photovoltaics, the Company aims to become a world-leadingtech conglomerate.Upgrading Corporate Culture: Taking the Company to a New Development Stage byupholding the Mission and Vision of "Leading Technology and Mutually BeneficialCooperation"The Company put forward its mission of "leading technology and mutually beneficialcooperation" in the new period. Guided by this mission, the Company is committed to creating anorganizational culture of "reform, innovation, responsibility, and excellence", and continues todeepen its team building and improve its corporate culture. TCL Technology will continue to investin fields closely related to human life (such as intelligence, health, carbon reduction, and energysaving), and build its leading advantages in technology and products to deliver a wonderfulexperience and better life to people. Bearing the sustainable development and people-orientedapproach in mind, the Company is dedicated to environmental friendliness, employee engagement,and social trust, as well as the harmonious development between humanity, nature, and society. The
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Company has also joined hands with stakeholders to develop an open and win-win industrial eco-system that emphasizes healthy competition and synergistic development.IV. Analysis of Core BusinessesOverviewIs it the same as the disclosure of the Company's main business during the reporting period?
√ Yes □ No
See the relevant contents in "I. Main businesses of the Company during the reporting period".Year-on-year changes in key financial data
Unit: RMB
H1 2023 H1 2022 Change (%)Reason for changeRevenue 85,148,725,606 84,522,181,128
0.74%
No significant changeOperating cost 74,267,599,102 76,522,943,519-2.95%No significant changeSales expenses 1,206,697,982 1,053,369,277
14.56%
No significant changeAdministrativeexpenses
2,015,923,674 1,716,379,375
17.45%
No significant changeR&D expenses 4,892,353,793 4,451,763,611
9.90%
No significant changeFinancial expenses 1,613,162,624 1,720,157,252-6.22%No significant changeIncome tax expenses -99,798,639 -88,397,544-12.90%No significant changeR&D investments 5,465,280,784 5,252,157,387
4.06%
No significant changeNet cash generatedfrom operatingactivities
10,416,168,147 9,016,635,743
15.52%
No significant changeNet cash generatedfrom investingactivities
-19,540,957,320 -17,613,551,791-10.94%No significant changeNet cash generatedfrom financingactivities
3,101,455,669 9,930,162,074-68.77%
Mainly caused by a decrease in
financing activitiesNet increase in cashand cash equivalents
-5,931,375,972 1,594,616,564-471.96%
Mainly caused by a year-on-year
decrease in cash flow from
investing activities and financing
activitiesSignificant changes to the profit structure or sources of the Company during the Reporting Period:
□ Applicable √ Not applicable
No significant changes to the profit structure or sources of the Company during the Reporting Period.
Breakdown of revenue:
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Unit: RMB
H1 2023 H1 2022
Change (%)Amount
As % of totalrevenue (%)
Amount
As % of totalrevenue (%)Total 85,148,725,606 100%84,522,181,128100% 0.74%By operating divisionSemi-conductordisplay
35,528,426,910 41.73%37,262,161,646 44.09% -4.65%New energyphotovoltaics
34,897,789,200 40.98%31,698,336,741 37.50% 10.09%Distributionbusiness
13,812,824,911 16.22%14,728,215,432 17.43% -6.22%Other businessesand internallyoffset accounts
909,684,585 1.07%833,467,309 0.98% 9.14%By product categorySemi-conductordisplay devices
35,528,426,910 41.73%37,262,161,646 44.09% -4.65%New energyphotovoltaics &semi-conductormaterials
34,897,789,200 40.98%31,698,336,741 37.50% 10.09%Distribution ofelectronics
13,812,824,911 16.22%14,728,215,432 17.43% -6.22%Other businessesand internallyoffset accounts
909,684,585 1.07%833,467,309 0.98% 9.14%By operating segmentMainland China 58,816,018,766 69.07%57,379,449,518 67.89% 2.50%Overseas(Including HongKong)
26,332,706,840 30.93%27,142,731,610 32.11% -2.98%Operating division, product category, or region contributing over 10% of revenue or operating profit
√ Applicable □ Not applicable
Unit: RMB
Revenue Operating cost
Grossprofitmargin
Change inrevenue year-on-year (%)
Change in costof sales year-on-
year (%)
Change ingross profit
marginyear-on-year
(%)By operating divisionSemi-conductordisplay
35,528,426,910 33,690,861,747 5.17%-4.65%-5.93% 1.28%New energyphotovoltaics
34,897,789,200 26,797,901,799 23.21%10.09%2.71% 5.52%Distributionbusiness
13,812,824,911 13,293,638,124 3.76%-6.22%-5.90% -0.32%By product categorySemi-conductordisplay devices
35,528,426,910 33,690,861,747 5.17%-4.65%-5.93% 1.28%New energyphotovoltaics &
34,897,789,200 26,797,901,799 23.21%10.09%2.71% 5.52%
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
semi-conductormaterialsDistribution ofelectronics
13,812,824,911 13,293,638,124 3.76%-6.22%-5.90% -0.32%By operating segmentMainland China 58,816,018,766 53,121,546,522 9.68%2.50%3.61% -0.96%Offshore(Including HongKong)
26,332,706,840 21,146,052,580 19.70%-2.98%-16.26% 12.73%Core business data in the recent term restated according to the changed methods of measurement that occurred in the Reporting Period
□ Applicable √ Not applicable
V. Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
Amount As % of gross profitSource SustainabilityAssetimpairment
-2,358,955,686 -102.98%
Falling price of inventory write-off in line withthe market
NoNon-operatingincome
26,029,772 1.14%- NoNon-operatingexpenses
49,159,778 2.15%- No
VI. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
End of the Reporting Period December 31, 2022
Change inpercentage
(%)
Main reason for
changeAmount
As % of total
assets
Amount
As % of total
assetsMonetaryassets
29,286,644,892
7.68%35,378,501,2619.83%-2.15%
No significantchangeAccountsreceivable
21,286,401,458
5.58%14,051,661,4623.90%1.68%
No significantchangeContract assets 298,866,599 0.08%315,167,0850.09%-0.01%
No significantchangeInventories18,113,675,417
4.75%18,001,121,8555.00%-0.25%
No significantchangeInvestmentproperty
889,134,656
0.23%946,449,1250.26%-0.03%
No significantchangeLong-termequityinvestments
30,354,398,223
7.96%29,256,215,8048.13%-0.17%
No significantchangeFixed assets 149,680,214,988 39.25%132,477,671,84436.80%2.45%
No significantchangeConstruction inprogress
42,114,759,176
11.04%52,053,833,62914.46%-3.42%
No significantchange
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Right-of-useassets
5,744,716,659
1.51%5,110,123,9041.42%0.09%
No significantchangeShort-termborrowings
9,613,991,211
2.52%10,215,910,9632.84%-0.32%
No significantchangeContractliabilities
2,245,240,166
0.59%2,336,008,1640.65%-0.06%
No significantchangeLong-termborrowings
127,571,442,182
33.45%118,603,164,83932.95%0.51%
No significantchangeLease liabilities 5,058,333,644 1.33%4,461,382,9021.24%0.09%
No significantchange
2. Major Assets Overseas
□ Applicable √ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
3. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMBItem Beginning amount
Gain/loss of fair-value changes in theReporting Period
Cumulative fair-valuechanges recorded inequity
Impairmentallowancesestablished in theReporting Period
Amount purchased
in the Reporting
Period
Amount sold in the
Reporting Period
Other changes Ending amountFinancial assets
1. Held-for-trading
financial assets(excludingderivative financialassets)
15,632,334,714 421,433,335
17,692,666,357 15,012,782,463
18,733,651,943
2. Derivative
financial assets
361,034,230 37,767,673 -47,188,601
-226,409,725 125,203,577
3. Accounts
receivablesfinancing
1,103,127,764
2,204,805,702 3,307,933,466
4. Investments in
other equityinstruments
439,996,263
-20,061,981
1,720,000 -550,603 421,103,679Subtotal of financialassets
17,536,492,971 459,201,008 -67,250,582
17,694,386,357 15,012,782,463 1,977,845,374 22,587,892,665Total of the above 17,536,492,971 459,201,008 -67,250,582
17,694,386,357 15,012,782,463 1,977,845,374 22,587,892,665Financial liabilities 932,646,673 6,800,298 293,602,807
804,379,934 1,034,731,409 33,986,709 1,036,685,012
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
4. Restricted Asset Rights as of the Period-End
Restricted assets Carrying amount (RMB’0,000) Reason for restrictionMonetary assets 26,697 Central bank statutory deposit reserveMonetary assets 127,543 Other monetary funds and restricted bank depositsNotes receivable 17,523 PledgeFixed assets 10,073,210 As collateral for loanIntangible assets 410,416 As collateral for loanHeld-for-trading financial assets 45,254 PledgeConstruction in progress 509,929 As collateral for loanRight-of-use assets 1,813 As collateral for leaseAccounts receivable 135,830 PledgeContract assets 29,804 PledgeTotal 11,378,019
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
last year (RMB)
Change (%) 19,514,629,660 21,824,233,385 -10.58%
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB100 million
Name ofinvestee
Principalactivity
Investment
method
Investment
amountShareholdingpercentage
(%)
Fundingsource
Partner
Term ofinvestment
Type ofproducts
Progress as
of thebalancesheet date
Estimatedincome
Investmentincome/loss inthe Reporting
Period
Involvement inlawsuit(s)Date (if any)of disclosure
Index (ifany) todisclosedinformationHuizhouDongshenJia'an EquityInvestmentPartnership(LimitedPartnership)
Industrialinvestments
Equityinvestments
15.6 99.94%
Self-raisedfunds
Ningbo Jia'anVentureCapitalPartnership(LimitedPartnership)
Notapplicable
Notapplicable
Established
Notapplicable
Not applicable
Notapplicable
March 31,2023
www.cninfo.com.cnTotal -- -- 15.6 -- -- -- -- -- --
Notapplicable
Not applicable-- -- --
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
4. Financial Investments
(1) Stock Investments
√ Applicable □ Not applicable
Unit: RMB'0,000
Stocktype
Stock code Stock abbreviation
Initialinvestment cost
Accountingmeasurementmethod
Beginningcarryingamount
Gain/loss of fair-value changes inthe ReportingPeriod
Cumulative fair-value changesrecorded in equity
Amountpurchased inthe ReportingPeriod
Amount soldin theReportingPeriod
Gain/loss inthe ReportingPeriod
Endingcarryingamount
Accountingtitle
FundingsourceStocks 300842.SZ
DK Electronic Materials,
Inc.
2,430Fair value 25,25817,697 00017,69742,955
Other non-currentfinancial assets
Self-fundedStocks 688469.SH Chip integration 26,745Fair value --94 026,7450-9426,651
Other non-
currentfinancial assets
Self-fundedGovernmentbonds
220016IB
22 Interest-bearinggovernment bonds 16
20,000Measurement atamortized cost
20,3270 00023620,563
Debtinvestments
Self-fundedGovernmentbonds
220016IB
22 Interest-bearinggovernment bonds 16
20,000Measurement atamortized cost
20,3270 00023620,563
Debtinvestments
Self-fundedETFs US4642885135
ISHARES IBOXX HIGHYLD CORP
13,734Fair value 11,02590 015,04911,56327515,018
Held-for-tradingfinancial assets
Self-fundedGovernmentbonds
220016IB
22 Interest-bearinggovernment bonds 16
10,000Measurement atamortized cost
10,1580 00011910,276
Debtinvestments
Self-fundedGovernmentbonds
220016.IB
22 Interest-bearinggovernment bonds 16
10,000
Measurement atamortized cost
10,1520 00011910,271
Debtinvestments
Self-fundedStocks 688728 Galaxycore Inc. 4,284Fair value 18,404-629 001,884-1689,494
Other non-
currentfinancial assets
Self-fundedFinancialbonds
XS2587421681
NANYAN 7.35 PERP
Corp
7,226Measurement atamortized cost
-0 07,22601657,397
Debtinvestments
Self-fundedBonds XS2560662541 LINK CB LTD 4,622Fair value 4,791-406 01,5830-2766,134
Held-for-
tradingfinancial assets
Self-fundedOther securities investments held at the period-end 402,509- 177,432350 -2,461215,886229,3703,179161,851Total 521,552- 297,87417,007 -2,461266,490242,81721,487331,174Disclosure date of the board announcement approvingsecurities investments
March 31, 2023Date for disclosure and announcement on approving securitiesinvestment by the general meeting
April 22, 2023
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
Type of contract
Beginning amount Ending amount
Gain/loss
in theReportingPeriod
Ending contractual amountas % of the Company’sending net assetsContractualamount
Transactionlimit
Contractualamount
Transactionlimit
Contractualamount
Transactionlimit
1. Forward forex
contracts
2,062,172 73,4412,959,775112,977
21,148
21.21 0.81
2. Interest rate swaps 384,446 11,533247,1227,4131.77 0.05
Total2,446,618 84,9743,206,897120,39021,14822.97 0.86Accounting policiesand specificaccounting principlesfor hedging businessduring the ReportingPeriod and adescription of whetherthere have beensignificant changesfrom those of theprevious reportingperiod
No significant change.
Description of actualprofits and lossesduring the ReportingPeriod
During the Reporting Period, profit from changes in the fair value of hedged items amounted to RMB360.35 million;losses from the delivery of due forward exchange contracts amounted to negative RMB189.00 million; and profit fromthe valuation of outstanding forward exchange contracts amounted to RMB40.13 million.Description of thehedging effect
During the Reporting Period, the Company's main foreign exchange risk exposures include exposures of assets andliabilities denominated in foreign currencies arising from business such as outbound sales, raw material procurement, andfinancing. The uncertain risks arising from the exchange rate fluctuations were effectively hedged by using derivativecontracts with the same purchase amounts and maturities in opposite directions.Funding source forderivative investment
Self-funded.
Analysis of risks andcontrol measuresassociated withderivative investmentsheld in the ReportingPeriod (including butnot limited to marketrisk, liquidity risk,credit risk, operationalrisk, 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 trends and predicting operations (including orders and capital plans),adopted forward foreign exchange contracts, options, and interest rate swaps to avoid future exchange rate and interestrate risks. As its business scale changes, the Company will adjust its exchange rate risk management strategy accordingto the actual market conditions and business plans.Risk analysis:
1. Market risk: the financial derivatives business carried out by the Group is related to hedging and trading activities
associated with the main business operations. There is a market risk associated with potential losses due to fluctuationsin market prices, such as underlying interest rates and exchange rates, which affects the 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 incurring losses due to paying fees to the bank for liquidating or selling thederivatives below the buying prices;
3. Performance risk: the Group conducts its derivative business based on rolling budgets for risk management, and there
is a risk of performance failure due to deviation arising between the actual operating results and budgets;
4. Other risks: in the case of specific business operations, the failure of operational personnel to report and obtain
approvals in accordance with established procedures or to accurately, promptly, and comprehensively record informationrelated to financial derivative transactions may result in potential losses or missed trading opportunities in the derivativebusiness. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or productinformation, the Group may face legal risks and transaction losses.Risk control measures:
1. Basic management principles: the Group strictly follows the hedging principle mainly to fix costs and avoid risks. It is
necessary for the financial derivatives business to align with the variety, size, direction, and duration of spot goods, andthis should not involve any speculative trading. When selecting hedging instruments, only simple financial derivativesthat are closely related to the main business operations and comply with the requirements of hedge accounting should beselected. Avoid engaging in complex business activities that go beyond the established scope of operations and involverisks and pricing that are difficult to understand;
2. The Group has formulated a special risk management system tailored to the risk characteristics of the financial
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
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 operations, and risk control as required.Personnel involved in investment are required to fully understand the risks of financial derivatives investment and strictlyimplement the business operations and risk management system of derivatives. Before the holding company engages inderivative business activities, the holding company must submit detailed business reports to the competent department ofthe Group, including information about its internal approval, main product terms, operational necessity, preparations, riskanalysis, risk management strategy, fair value analysis, and accounting methods. Additionally, a special summary reportof previously conducted operations should be submitted. Only after obtaining the opinion of the relevant professionaldepartments within the Group may the holding company proceed with the operations.
3. Relevant departments should track the changes in the open market price or fair value of financial derivatives, promptly
assess the risk exposure changes of invested financial derivatives, and compile reports to the board of directors on businessdevelopment;
4. The financial company should actively manage and disclose in a timely manner any confirmed gains and losses as well
as unrealized losses from futures and derivative transactions of listed companies. When such losses account for 10% ofthe audited net profit attributable to the shareholders of the listed company in the last year and exceed RMB10 million,the financial company should make timely disclosure thereof.Changes in marketprices or fair value ofderivative investmentsin the ReportingPeriod (fair valueanalysis shouldinclude themeasurement methodand relatedassumptions andparameters).
With the rapid expansion of overseas sales, the Company continued to follow the above rules in the operation of forwardforeign exchange contracts, interest rate swap contracts, and futures contracts to avoid and hedge against foreign exchangerisks arising from operations and financing. During the Reporting Period, there were profits and losses of RMB360.35million from changes in the fair value of hedged items and negative RMB148.87 million from derivatives. The fair valueof derivatives is determined by the real-time quoted price of the foreign exchange market, and is based on the differencebetween the contractual price and the forward exchange rate quoted immediately on the foreign exchange market on thebalance sheet date.Legal matters involved(if applicable)
Not applicableDisclosure date of theboard announcementapproving thederivative investments(if any)
March 31, 2023Disclosure date of thegeneral meetingannouncementapproving thederivative investments(if any)
April 22, 2023Opinion ofindependent directorson derivativeinvestments and riskcontrol
From January to June 2023, the financial derivatives transactions entered into by the Company were closely connected to
the daily operational needs of the Company, and the risks therefrom were controllable. Such transactions conformed to
the development needs of the Company, and the requirements of related laws and regulations.
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 ofraising
Method
of
Total amount
raised
Used in the current
period
Total amount
used
Totalamount of
Totalamount of
Totalamount of
Totalprocee
Purpose
and
Amountleft idle
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
raising changed-
purpose
fundsduring theReporting
Period
changed-purposefunds
changed-purposefunds asa % oftotalamountraised
ds thathavenotbeenused
locationof theunusedamount
for overtwoyears
2022Non-publicofferingofshares
947,469.47244.99947,714.46
Notapplicable
Notapplicable
Notapplicable
Notapplicable
Total --
947,469.47244.99947,714.46Not
applicable
Notapplicable
Notapplicable
0 -- 0Use of the Capital RaisedAccording to the Approval for the Non-Public Issue of Shares by TCL Technology Group Co., Ltd. (Zheng Jian Xu Ke [2022] No. 1658) issued bythe China Securities Regulatory Commission, the Company issued no more than 2,806,128,484 shares in a non-public manner. 2,806,128,484 shareswere issued in the offering. As of December 6, 2022, the Company raised RMB9,596,959,415.28, or RMB122,264,729.12 after deducting the cost inconnection with issuing shares (not including VAT). The proceeds that can be utilized amounted to RMB9,474,694,686.16. On December 6, 2022,the Company received the proceeds from the aforementioned share issue, which was confirmed by Da Hua CPAs (Special General Partnership) in itscapital verification report of "Da Hua Yan Zi [2022] No. 000709".As of June 30, 2023, the Company utilized the proceeds of RMB9,477,144,603.75 (including net interest income of RMB2,449,917.59), in whichRMB9,000,000,000.00 was used to repay the funds raised for the investment in previous projects, while the remaining amount was used to make upthe working capital. As of the date of this report issuance, the Company has successfully completed the closure procedures for the special accountdesignated for the funds raised through this private placement.
(2) Promised Use of Raised Funds
√Applicable ?Not applicable
Unit: RMB'0,000
Promisedproject funded
with raised
funds and
investment
with over-raised funds
Whether
theprojectchanged
or not(including
partialchanges)
Totalpromisedinvestmentamountwith raised
funds
Adjusted
totalinvestmentamount (1)
Investment
in theReporting
Period
Cumulativeinvestmentamount atthe period-
end (2)
Investmentprogress as
at theperiod-end
(3)=(2)/(1)
Time when theproject is readyfor its intended
use
Benefitsderived in
theReporting
Period
Whetherit met theexpectedbenefits
or not
Whetherthere weresignificantchanges tothe projectfeasibility
or notPromised projects
1. 8.6th
generationoxidesemiconductornew displaydeviceproduction lineproject
No 900,000.00 900,000.00 0900,000.00100.00%
24 monthsfrom thecommencementdate of the
project
Notapplicable
Notapplicable
No
2. Additional
working capital
No 47,469.47 47,469.47 244.9947,714.46100.52%Not applicable
Notapplicable
Notapplicable
NoSubtotal ofpromisedprojects
-- 947,469.47 947,469.47 244.99947,714.46---- -- --Over-raised fundsNoneDescription ofdelayed
Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
progress andreasons forfailure toachieve theplannedprogress andexpectedincomeDescription ofmajor changesin projectfeasibility
Not applicableOver-raisedfunds amount,purpose, anduse progress
Not applicableChange inlocation of theproject withraised funds
Not applicable
Change in theprojectimplementationmethod
Not applicableAdvanceinvestments inpromisedprojects fundedwith raisedfunds andsubsequentswaps
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, the 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.Temporaryaddition of idleraised funds tosupplementworking capital
Not applicableAmount andreason forsurplus raisedfunds duringprojectimplementation
Not applicableUnused raisedfund purposeand allocation
Not applicableIssues or othersituationsregarding theuse and
Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
disclosure ofraised funds
(3) Change of the raised fund projects
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII. Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
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'0,000Company name
Companytype
Principalactivity
Registered
capital
Total assetsNet assetsRevenue
Operating
profit
Net profitTCL China StarOptoelectronicsTechnology Co.,Ltd.
Subsidiary
Semi-conductor
display
RMB33.08 billion
19,479,825 7,084,528 3,060,062 -447,534 -361,917TCL ZhonghuanNew EnergyTechnology Co.,Ltd.
Subsidiary
Semicond
uctorphotovolta
ics andsemicond
uctormaterials
RMB4.04
billion
12,232,749 5,840,731 3,489,779 539,836 483,888HighlyInformationIndustry Co., Ltd.
Subsidiary
Distributi
onbusiness
RMB0.42
billion
883,358146,9541,381,282 10,628 7,871Acquisition and disposal of subsidiaries in the Reporting Period
√ Applicable □ Not applicable
Company name
How subsidiaries were obtained ordisposed of in the Reporting Period
Effects on overall operations and
operating performanceLumetech North America Corporation Newly incorporated No significant effectSuzhou Zhonghuan Photovoltaic Materials Co., Ltd. Newly incorporated No significant effectNingxia Huanou New Energy Technology Co., Ltd. Newly incorporated No significant effectXinxin Semiconductor Technology Co., Ltd. Acquisition No significant effectJiangsu Mingjing Semiconductor Technology Co., Ltd. Acquisition No significant effectJiangsu Lixin Semiconductor Technology Co., Ltd. Acquisition No significant effectXuzhou Xinjing Semiconductor Technology Co., Ltd. Acquisition No significant effectJiangsu Huasheng Semiconductor Materials Co., Ltd. Acquisition No significant effectHong Kong NExcel Electronic Technology Co., Ltd. Acquisition No significant effectSingapore NExcel Electronic Technology Pte. Acquisition No significant effectXuzhou Jingrui Semiconductor Equipment Technology Co., Ltd.Acquisition No significant effect
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Meixin (Xuzhou) Silicon Material Technology Co., Ltd. Acquisition No significant effectNingxia Zhonghuan Industrial Park Management Co., Ltd. Newly incorporated No significant effectShanghai Zhonghuan Photovoltaic Materials Co., Ltd. Newly incorporated No significant effectGuangzhou TCL Industrial Research Institute Co., Ltd. Newly incorporated No significant effectXiaoyuzaixian (Beijing) Technology Co., Ltd. Newly incorporated No significant effectSuzhou Huaxin Environmental Technology Co., Ltd. Acquisition No significant effectHuizhou Dongshen Jia'an Equity Investment Partnership(Limited Partnership)
Newly incorporated No significant effectInner Mongolia TCL Photoelectric Technology Co., Ltd. Acquisition No significant effectNingbo Dongshen Zhixuan Equity Investment Partnership(Limited Partnership)
Newly incorporated No significant effectHuansheng Photovoltaic (Guangdong) Co., Ltd. Newly incorporated No significant effectTCL Financial Technology (Shenzhen) Co., Ltd. Acquisition No significant effectYixing Huanxing New Energy Co., Ltd. Disposal No significant effectTianjin Binhai Huanneng New Energy Co., Ltd. Disposal No significant effectDushan Anju Photovoltaic Technology Co., Ltd. Disposal No significant effectShangyi Shengxin New Energy Development Co., Ltd. Disposal No significant effectGengma Huanxing New Energy Co., Ltd. Disposal No significant effectGuyuan Shengju New Energy Co., Ltd. Disposal No significant effectZhangjiakou Shengyuan New Energy Co., Ltd. Disposal No significant effectQinhuangdao Tianhui Solar Energy Co., Ltd. Disposal No significant effect
X. Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI. Risks and Responses
1. Risk of Macroeconomic Fluctuations
In recent years, a series of factors have brought about potential financial risks, including tradebarriers, the Russia-Ukraine geopolitical conflict, and increasing uncertainty of global economicdevelopment, as well as measures adopted by countries to address stubbornly high inflation. In thiscontext, the Company has committed to driving innovation and implementing a strategy oftechnological self-reliance, while also following the national roadmap of "fostering a newdevelopment paradigm with domestic circulation as the mainstay and the mutual promotion ofdomestic-international dual circulation". To achieve this, the Company has focused on a specializedoperation strategy for its core businesses, playing to its advantages in industrial chains, consolidatingits leading position in the country, and implementing the "going global" strategy. This approach aimsto establish a more resilient global supply chain layout, enabling the Company to engage in theinternational economy and effectively respond to economic uncertainties.
2. Risk of Industry Climate Fluctuations
Due to a slowdown in global consumer demand, there has been a significant impact on paneldemand and shipments. Although the panel industry has shown some signs of recovery in recent times,it is still in the overall phase of climbing out of a cyclical trough. The Company will dynamically
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
analyze the development trend between supply and demand, and will proactively anticipate shifts inproduction capacity allocation to ensure profitability. Meanwhile, the Company will strengthen itsinvestment in R&D, and expand its advantages in terms of size and effectiveness by creating highbarriers to competition and broadening its business moat.
3. Risk of Changing Technologies and Application Scenarios
The application scenarios of end consumers are constantly evolving. For instance,semiconductor displays serve as gateways to connect the real world with the virtual one, and in thefuture, they will give rise to various products driven by innovative technologies and products. Inaddition, under the consensus of carbon neutrality, paperless and recyclable electronic products, andother low-carbon footprint concepts will also become a new trend on the demand side. The Company'sproducts therefore need to continuously innovate to adapt to evolving application requirements. TheCompany will continue to focus on the demands of the industry and end customers, strengthen R&Dinvestment, optimize business structure driven by technology innovation, and enhance productcompetitiveness. Based on more thorough research and analysis of market segments, the Companywill explore more emerging fields, actively make arrangements regarding emerging market segments,and develop new driving forces for growth.
4. Intellectual Property and Legal Risks
As the Company's business scale expands and its technology footprint continues to grow, therisks associated with intellectual property will become more significant. The Company will continueto maintain high-intensity R&D investment, continuously enhance the professional capabilities ofits core technical team, and continuously improve the patent layout of key technologies and productsthrough the model of "independent research + cooperative R&D". The Company will also improveits intellectual property management and protection mechanisms, and comprehensively mitigateintellectual property risks by engaging in strategic partnerships with external professionalorganizations in the field of intellectual property. Furthermore, international trade barriers andmarket access complexities are continuously increasing, as well as rising compliance risks inoverseas markets. The Company will therefore intensify its research into international laws,regulations, and standards, and further improve its compliance management system to ensure itsoperations remain compliant. It will also maintain close communication with local partners tomitigate potential legal risks.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part IV Corporate GovernanceI. Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Meeting Type
Investorparticipationratio
Date of themeeting
Date of disclosureResolutions of the meetingThe FirstExtraordinaryGeneralMeeting of2023
Extraordinarygeneralmeeting
15.03% January 9, 2023January 10, 2023
All proposals were adopted. Pleaserefer to the Notice on the 1stExtraordinary General Meeting of2023 disclosed onwww.cninfo.com.cn on January 10,2023 (Notice No.: 2023-001)The 2022Annual GeneralMeeting
Annualgeneralmeeting
16.42% April 21, 2023 April 22, 2023
All proposals were adopted. Pleaserefer to the Notice on Resolutionsof General Meeting of 2022disclosed on www.cninfo.com.cnon April 22, 2023 (Notice No.:
2023-029)The SecondExtraordinaryGeneralMeeting of2023
Extraordinarygeneralmeeting
15.57% June 16, 2023 June 17, 2023
All proposals were adopted. Please
refer to the Notice on the 2nd
Extraordinary General Meeting of
2023 disclosed on
www.cninfo.com.cn on June 17,
2023 (Notice No.: 2023--046)
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II. Change of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Name Office title Type of change Date of change Reason for changeWang Cheng Director Elected January 9, 2023
Election at ashareholders’ meetingZhao Jun Director Elected January 9, 2023
Election at ashareholders’ meeting
III. Interim Dividend Plan
□ Applicable √ Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
IV. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
√ Applicable □ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
1. Equity Incentives
□ Applicable √ Not applicable
2. Implementation of Employee Stock Ownership Plan
√ Applicable □ Not applicable
All the valid employee stock ownership plans during the Reporting Period
Name
Scope ofemployees
Number ofemployees
Total number ofshares held（share）
Changes
Proportion to total
share capital oflisted companies
Funding source forimplementing the
plan2021-2023Employee StockOwnership Plan(Phase I)
The Company'smiddle and seniormanagement andoutstanding keystaff
Less than 3,600 48,332,573
Notapplicable
0.26%
Special incentivefunds provisioned bythe Company2021--2023Employee StockOwnership Plan(Phase II)
The Company'smiddle and seniormanagement andoutstanding keystaff
Less than 3,600 117,132,801
Notapplicable
0.62%
Special incentivefunds provisioned bythe CompanyNote: 1.Based on the agreements under the Tranche III Global Partner Program (Draft), the shares attributable to employees have been fully vested, sold andtransferred to employees at the end of the reporting period.
2. At the end of the reporting period, 2021-2023 ESOP (Tranche III) (Draft) and other related matters have been deliberated and approved by the general meeting.
The underlying shares under the ESOP have not been transferred.Shareholdings of Directors, Supervisors and Senior Management under the Employee Stock Ownership Plan during theReporting Period
Name Position
Opening shareholding(shares)
Closing shareholding
(shares)
Proportion to total
share capital oflisted companiesLi Dongsheng Chairman, CEO
About 27.07 million shares About 20 million shares 0.11%Wang Cheng Director, COOZhao Jun
Director, Senior VicePresidentLiao Qian
Director, Board Secretaryand Senior Vice PresidentYan Xiaolin
Senior Vice President,CTOLi Jian CFOMao 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
For details on change in shareholdings from non-trading transfer by directors, supervisors and senior managers under the ESOP, please
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
see the “Change of Shareholdings of Directors, Supervisors and Senior Managers” in the report.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 according to lawsand 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
Based on the agreements under the Tranche III Global Partner Program (Draft), the shares attributable to employees have been fullyvested, sold and transferred to employees at the end of the reporting period.
3. Other Employee Incentives
□ Applicable √ Not applicable
Full Text of the 2023 Interim Report 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 protectiondepartment
√ Yes □ No
Policies and Industrial Standards in connection with Environmental ProtectionThe Company complies with a number of environmental protection policies, including: Law of the People’sRepublic of China on Environmental Protection, Law of the People’s Republic of China on the Prevention andControl of Atmospheric Pollution, Law of the People’s Republic of China on the Prevention and Control of WaterPollution, Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution bySolid Waste, Law of the People’s Republic of China on Soil Pollution Prevention, Law of the People’s Republic ofChina on Noise Pollution Prevention, Law of the People’s Republic of China on the Prevention and Control ofRadioactive Pollution.Industrial standards referred by the Company in environmental protection include: the Electronic IndustryWater Pollutant Discharge Standards, Battery Industry Pollutant Discharge Standards, Pollutant DischargeStandards for Urban Sewage Treatment Plants, Environmental Noise Discharge Standards for Industrial Enterpriseand Factories, Pollutant Discharge Standards for Urban Sewage Treatment Plants, Hazardous Waste StoragePollution Control Standards and Malodorous Pollutant Discharge Standards.Administrative License for Environmental Protection
The Company complies with the laws and regulations related to environmental protection license during itsconstruction, carries out environmental impact evaluation, obtains sewage discharge permits, and files with theprovincial and municipal regulators for its operation on a timely basis.Industrial Discharge Standards, and Details on Pollutant Discharge from Production and OperationName of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Major pollutants Way of discharge
Number
ofdischarge
outlets
Distribution ofdischarge outlets
Dischargeintensity
Governingdischargestandards
Totaldischarge
Approved
totaldischarge
Excessivedischarge
TianJinZhonghuanAdvancedMaterial&Technology Co., Ltd.
Waste waterpollutants
COD, ammonia nitrogen, other
specific pollutants (totalnitrogen, total phosphorus, pH,suspended solids, BOD
, flow,fluoride, petroleum)
Organized 1
General dischargeoutlet
As per emissionstandard
DB12/356-2018ComprehensiveSewage DischargeStandard
Not exceeding Standard
Notapplicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Name of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Major pollutants Way of discharge
Number
ofdischarge
outlets
Distribution ofdischarge outlets
Dischargeintensity
Governingdischargestandards
Totaldischarge
Approvedtotaldischarge
Excessivedischarge
Tianjin Huan'OuSemiconductorMaterial&Technology Co., Ltd.
Waste waterpollutants
COD, ammonia nitrogen, otherspecific pollutants (totalnitrogen, total phosphorus, pH,suspended solids, BOD
, flow,fluoride, petroleum)
Organized 1
General dischargeoutlet
As per emissionstandard
DB12/356-2018ComprehensiveSewage DischargeStandard
Not exceeding Standard
Notapplicable
Tianjin HuanzhiNew EnergyTechnology Co.,Ltd.
Waste waterpollutants
Chemical oxygen demand, totalphosphorus (measured by P),ammonia nitrogen (NH3-N),total nitrogen (measured by N),
pH, suspended solids,petroleum, anionic surfactants,
5-day BOD
Organized 1
General discharge
outlet
As per emissionstandard
DB12/599--2015Discharge Standardof Pollutants forMunicipalWastewaterTreatment Plant
Not exceeding Standard
Notapplicable
Tianjin HuanouNew EnergyTechnology Co.,Ltd
Waste waterpollutants
Chemical oxygen demand,ammonia nitrogen (NH3-N),total nitrogen (measured by N),total phosphorus (measured byP), pH, flotage, 5-day BOD,total organic carbon, anionicsurfactants, petroleum, animaland vegetable oils, suspended
solids
Organized 1
General discharge
outlet
As per emissionstandard
Discharge Standardof Water Pollutantsfor ElectronicIndustry GB39731-2020, IntegratedWastewaterDischarge StandardDB12/356-2018
Not exceeding Standard
Notapplicable
Inner MongoliaZhonghuan SolarMaterial Co., Ltd.
Waste gaspollutants
Particulate matter, nitrogenoxides, VOCs, fluoride
Not organizing Multiple
Rooftops of plants
and production
workshops
As per emissionstandard
Integrated EmissionStandard of AirPollutants GB16297-1996
Not exceeding Standard
NotapplicableWaste waterpollutants
COD, ammonia nitrogen, otherspecific pollutants (total
hosphorus, pH, suspendedsolids, BOD
, fluoride)
Organized 1
General discharge
outlet
As per emissionstandard
GB8978-1996ComprehensiveSewage DischargeStandard
Not exceeding Standard
NotapplicableZhonghuanAdvancedSemiconductorMaterials Co.,Ltd.
Waste waterpollutants
COD, ammonia nitrogen, other
specific pollutants (fluoride,total nitrogen, total phosphorus,suspended solids, pH, BOD
)Organized 1
General discharge
outlet
As per emissionstandard
Wastewater QualityStandards forDischarge toMunicipal SewersGB/T31962GB8978-1996ComprehensiveSewage DischargeStandard
Not exceeding Standard
Notapplicable
Huansheng Solar(Jiangsu) Co.,Ltd.
Waste waterpollutants
COD, ammonia nitrogen, other
specific pollutants (fluoride,total nitrogen, total phosphorus,
suspended solids, pH)
Organized 1
General dischargeoutlet
Dischargedaccording to thestandard
Emission Standard ofPollutants for BatteryIndustry GB30484-2013
Not exceeding Standard
NotapplicableWuxi ZhonghuanAppliedMaterials Co.,Ltd.
Waste waterpollutants
COD, ammonia nitrogen, other
specific pollutants (totalnitrogen, total phosphorus,
suspended solids, pH)
Organized 1
General discharge
outlet
Dischargedaccording to thestandard
Emission Standard ofPollutants for BatteryIndustry GB30484-2013
Not exceeding Standard
NotapplicableTCL China StarOptoelectronicsTechnology Co.,
Waste waterpollutants
COD
Discharged toGuangming Sewage
Plant
North of the plant
area
145.3mg/L 260mg/L 538.47t 2071.12t
Notapplicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Name of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Major pollutants Way of discharge
Numberofdischarge
outlets
Distribution ofdischarge outlets
Dischargeintensity
Governingdischargestandards
Totaldischarge
Approvedtotaldischarge
Excessivedischarge
Ltd.
COD
Discharged to theartificial wetland
1 Artificial wetland14.09mg/L 30mg/L 23.3t 174.89t
NotapplicableWaste gaspollutants
Nitrogen oxides
Discharged to theatmosphere in anorganized manner
50 Plant roof 28.3mg/Nm
120mg/Nm
14.73t
Notapplicable
NotapplicableShenzhen ChinaStarOptoelectronicsSemiconductorDisplayTechnology Co.,Ltd.
Waste waterpollutants
COD
Discharged toGuangming Sewage
Plant
Southeast corner of
the plant
39.85mg/L 110mg/L 149.778t 1077.8t
NotapplicableWaste gaspollutants
Nitrogen oxides
Discharged to theatmosphere in anorganized manner
10 Plant roof 2.375mg/Nm
120mg/Nm
3.7194t 38.86t
Notapplicable
Suzhou ChinaStarOptoelectronicsTechnology Co.,Ltd.
Waste waterpollutants
COD
Continuouslydischarged to CSSD
Environmental
Technology
Wastewater
Treatment Plant
In CSSDEnvironmental
TechnologyWastewaterTreatment Plant
60mg/L 500mg/L 66.39t 129.6t
Notapplicable14mg/L 100mg/L 12.52t 449.82t
NotapplicableAmmonia nitrogen 1 1.84mg/L 6mg/L 1.43t 22.68t
NotapplicableSuzhou ChinaStarOptoelectronicsDisplay Co., Ltd.
Waste waterpollutants
CODContinuouslydischarged toSuzhou IndustrialPark First SewageTreatment Plant
South gate of the
plant area
16mg/L 500mg/L 1.73t 96.335t
NotapplicableAmmonia nitrogen 1 0.308mg/L 45mg/L 0.0201t 5.65t
NotapplicableWuhan ChinaStarOptoelectronicsTechnology Co.,Ltd.
Waste waterpollutants
COD
Intermittently
discharged
Southwestern corner
of the plant
23.93mg/L 400mg/L 54.59t 353.55t
NotapplicableAmmonia nitrogen 1 19.42mg/L 30mg/L 12.74t 35.36t
NotapplicableWuhan ChinaStarOptoelectronicsSemiconductorDisplayTechnology Co.,Ltd.
Waste waterpollutants
COD
Intermittently
discharged
Northeastern corner
of the plant
69.83mg/L 400mg/L 224.36t 570.8t
Notapplicable
Ammonia nitrogen 1 12.01mg/L 30mg/L 17.39t 57.1t
Notapplicable
Disposing of pollutants
During the Reporting Period, the pollutants generated by the Company and its subsidiaries were discharged inaccordance with the requirements of the pollutant discharge permit after treated by corresponding pollutanttreatment facilities. All kinds of pollutant treatment facilities were in normal operation, and there were no incidentsof environmental pollution or complaints from surrounding residents, nor any incidents of notification or
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
punishment received from government environmental supervision agencies. The discharge and disposal of wastewater, waste gas, solid waste, and plant boundary noise generated in the operating process complied with the lawsand regulations of the country and the place where the operation was located.The Company’s waste water includes domestic waste water and industrial waste water, of which domesticwaste water is discharged into the local municipal sewage treatment pipe network after being pre-treated with oilseparation and septic treatment; industrial waste water enters different treatment systems according to itscharacteristics, and is discharged after physical, chemical and biochemical treatment.
The air pollutants produced by the Company are mainly process waste gas in the production process. Fordifferent types of waste gases, the Company has constructed corresponding waste gas treatment systems, such as awaste gas stripping system, acidic waste gas treatment system, alkaline waste gas treatment system, organic wastegas treatment system, waste gas treatment system for waste water treatment station, etc. For the collection of wastegases through pipelines to the corresponding waste gas treatment system, where waste gases are discharged at ahigh altitude after meeting relative standards. The concentration and total amount of waste water and exhaust gasdischarged meet the relevant national and local standards.The solid wastes generated by the Company include general waste, hazardous waste and domestic garbage, ofwhich, hazardous wastes are treated by an entrusted qualified hazardous waste disposal agency according to theregulations; general wastes are recycled and disposed of by a resource recycling manufacturer after being classifiedin the plant area; domestic garbage is handed over by the property company to a domestic garbage landfill forsanitary landfill. All of the above disposals have been carried out according to laws and regulations.The factory noises generated by the Company come from the mechanical noises of production and powerequipment, including refrigerators, cooling towers, air compressors, fans, various pumps, etc. The Companyreduces the impact of noise on the surrounding environment by the use of low-noise equipment, vibration reduction,noise reduction, etc., and noise reduction measures such as sound insulation and sound absorption in the factoriesand equipment rooms. The monitoring results show that the Company's factory noise emissions can stably reachthe standards.Emergency Response Plan for Environmental IncidentsThe Company regularly carries out environmental risk assessment and emergency material survey, preparesan Emergency Response Plan for Environmental Incidents and submits it to the local environmental protectiondepartment for recordation after being reviewed by experts. The Company regularly delivers employee training onemergency plans and carries out emergency drills for environmental emergencies to ensure timely and accurate
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
response to environmental pollution emergencies.
The Plan shall be subject to changes in line with the actual situation and changes of various companies underthe Group in a timely manner, and shall be prepared again in case of major changes or after every 3 years.
Name of subsidiary Filing No. of the Emergency Response Plan
TCL China Star Optoelectronics Technology Co., Ltd. 440311-2023-0005-MShenzhen China Star Optoelectronics Semiconductor Display
Technology Co., Ltd.
440311-2020-0030-MSuzhou China Star Optoelectronics Technology Co., Ltd. (t10)320509-2022-464-MSuzhou China Star Optoelectronics Display Co., Ltd. (M10) 320509-2022-423-LWuhan China Star Optoelectronics Semiconductor Display
Technology Co., Ltd. (t4)
420111-GX-2020-014-HWuhan China Star Optoelectronics Technology Co., Ltd. (t3) 420111-GX-2020-013-HRelevant information on investments in environmental governance and protection and payments ofenvironmental protection taxes
The Company pays the environmental protection taxes every quarter by the Financial Department, and theinvestments in environmental protection are calculated on an annual basis.Environmental Self-Monitoring ProgramThe Company implements on-line monitoring of various pollutants based on the environmental impactassessment approval and pollution discharge permit, clarifies monitoring indicators, execution standards and theirlimits, conducts quarterly testing of various pollution factors such as waste water/waste gas/ground water/soil/plantboundary noise, and develops a self-monitoring plan based on the Company's own situation, as well as regularlyemploying qualified third party to test various pollution factors with the reports kept on file. In addition to self-monitoring, the local environmental protection department also infrequently supervises the environmental testingto ensure that emissions meet standards.Administrative punishments received with respect to environmental issues in the Reporting Period
No such matters to be disclosedMeasures taken to reduce its carbon emissions and their effects during the Reporting Period
√ Applicable □ Not applicable
To address the challenge of global climate change and actively respond to the national strategic requirementsof “emission peak” and "carbon neutrality", the Company officially issued a Carbon Neutrality White Paper on July6, 2023, making a "3050" pledge to achieve emission peak by 2030 and carbon neutrality by 2050. In response tothese targets, TCL Technology Group has established a management framework, set up a working group to dealwith climate change, and effectively managed greenhouse gas emissions based on the Company's actual situation,market environment, and policy trends, and implemented tasks, supervision, and execution responsibilities from
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
senior management to shop-floor employees. TCL Technology Group manages its overall greenhouse gas emissionsfrom five aspects: supervision of carbon accounting, carbon reduction management, carbon asset pooling, carbontrading services and carbon finance support. In addition, the Company also carries out the ISO 14064 GreenhouseGas Accounting and Verification through third-party agencies, scientifically sets carbon emission targets anddevelops relevant improvement measures. The Group's dual carbon targets are further specified with annual self-evaluation conducted to ensure the targets achieved.The Company actively responds to the national strategic requirements of carbon reduction, always upholds thebusiness philosophy of green and sustainable development, and implements a series of measures such as selectionof energy-efficient equipment (100% major equipment equipped with frequency conversion and automationequipment), smart energy system management and optimization of power supply to effectively reduce equipmentenergy consumption, and recovers waste heat and ice water energy and uses solar energy for power generation,thereby reducing carbon emissions. In order to achieve energy saving and emission reduction, TianJin ZhongHuanAdvanced Material&Technology Co., Ltd. renovated Fab3 Compressed Air Supply Station and Fab2 Litian WaterStation, saving about 1.16 million KWH of electricity annually, and the renovation was completed on June 25, 2023.At Huangsheng Photovoltaic (Jiangsu) Co., Ltd., the PV panels are installed in the plant-wide open space (such ascar sheds and roofs), saving approximately 780,000 KWH of electricity annually, and the renovation was completedon June 30, 2023.In the future, all companies of TCL Technology will forge ahead in sustainable development, and constantlyexplore and implement the carbon reduction strategy, leading the industry and the whole value chain towardsgreen and low carbon.II. Social ResponsibilityPlan for consolidating and extending the achievements of poverty alleviation and pushing forward ruralrevitalizationTCL Tech actively responds to national calls and focuses on four major areas (i.e. science and technology,education, culture and sports, and targeted relief), continuously strengthens investment in public charitableundertakings, integrates public charitable resources, and contributes to promoting social equity, consolidating andexpanding achievements of poverty alleviation and, and achieving rural revitalization and common prosperity. TheCompany has combined its advantageous industrial resources to implement projects such as “TCL PhotovoltaicLow-carbon School”, “TCL Smart Classroom”, “A.I. Home”, “Little Music+”, and “TCL Hope Project CandlelightAward Plan”, in assistance with the revitalization of rural education from such aspect as rural school educational
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
resources and infrastructure.Annual summary of consolidating and extending the achievements of poverty alleviation and pushingforward rural revitalizationTo address the sustainable development issues for rural schools, TCL Charity Foundation cooperated with TCLZhonghuan to implement the TCL Photovoltaic Low-carbon School Project, building solar photovoltaic powergeneration systems free of charge on the roofs of the rural schools and donating the income from such powergeneration to the schools. The electricity so generated is fully integrated into the power grid, and the powergeneration income is used for improving the instructional environment and funding for students from poor families,creating a sustainable educational aid model. In June 2023, the Foundation donated roof-based photovoltaic powergeneration systems and income from 25 years of power generation by such equipment, to a total of 9 rural schoolsin Horinger County, Hohhot City, Inner Mongolia respectively. The installed power generation capacity of the roof-based photovoltaic power generation system for each of the school is 55 KW, and it is expected that the photovoltaicpower generation systems in the 9 schools will generate 17.19 million KWH of electricity throughout their lifecycles. Up to now, the Foundation has donated 19 Photovoltaic Low-carbon Schools in Shaanxi, Ningxia, and InnerMongolia, benefiting over 5,000 students.
To address the inequity of educational resources between urban and rural areas, TCL Charity Foundationestablishes TCL Smart Classrooms in urban and rural schools, including smart instructional equipment and software,to build multimedia smart classrooms, tailored and simultaneous classrooms between “urban and rural areas”. InJune 2023, the Foundation started the donation for Smart Classrooms in Shenzhen Chiwan School. Up to now, theFoundation has donated 3 Smart Classrooms in Shenzhen, Guangdong and Guilin, Guangxi, benefiting more than3,000 students.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, bringing together children from rural schools, to improve their wellbeing and help themwith growing up. In 2023, the Foundation distributed over 200 customized “Eagle Storytelling Machines” to left-behind children and migrant children; The sixth batches of pilot schools were selected for the “Eagle Story Club”project. A total of 34 schools from 16 provinces including Xinjiang, Tibet, Guizhou, were selected as the “EagleStory Club” pilot schools, and a total of 145 story boxes were distributed, benefiting 11,000 students.To address the shortage of high-quality music education resources for children, TCL Charity Foundation andthe Education Foundation of the Beijing Central Conservatory of Music launched the “Little Music++” project,
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
developed and designed the “Little Snow Music Machine”, and carried out “Little Snow Music Class” in the ruralschools to introduce both Chinese and international famous music works and appreciation to children who lackmusic resources and motivate kids to develop positive and optimistic characters. In 2023, the sixth batches of pilotschools were selected for the “Little Snow Music Class” project. A total of 35 schools from 15 provinces includingNingxia, Guangxi, Henan, were selected as the “Little Snow Music Class” pilot schools, and a total of 150 musicboxes and 720 music picture books were distributed, benefiting more than 9,000 students.To promote the development of rural education, TCL Charity Foundation continues to implement the “TCLHope Project Candlelight Award Plan” to recruit and encourage rural teachers to stay in their jobs and contribute torural education. The project solicited excellent teachers from 194 counties and districts in 14 provinces that serveas the key counties in the National Rural Revitalization and the pairing support areas of Shenzhen. Each of thewinners received a personal award worth RMB9,500, including a cash reward and 7-day offline “Candlelight Class”training. In the first half of 2023, the 9th "TCL Hope Project Candlelight Award Plan" started its candidate selection,and finally 400 outstanding rural teachers won the awards. Till now, the project applicants cover 523 counties in 23provinces across the country. More than 3,400 outstanding rural teachers from 2,000 schools have won the awards.A total investment of over RMB46 million has been made in this project.In addition, TCL Charity Foundation continues to launch projects such as targeted assistance and communitycharity. Through actions such as helping the needy, and pairing assistance, it supports, consolidates and expandsthe poverty alleviation achievements, builds harmonious urban and rural communities, and contributes to socialequity and harmonious development. The Company focused on rural groups to promote rural revitalization throughcultural co-creation, and developed the “TCL? Chen Xiangbo Aesthetic Education Space” in No. 325 village,Xunwu County, Jiangxi Province, to carry out various cultural and artistic activities in the immersive space so as toimprove the cultural and artistic literacy of local residents. Also, rural public charitable projects were implemented,such as “Rural Elderly Photography Activities” and “TCL Volunteer Public Education Trip to Tibetan Areas ofQinghai Keba”, to push the progress of cultural and ethical development in rural areas from multiple dimensions.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part VI Significant EventsI. Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Overdue at the Period-End
√ Applicable □ Not applicable
Commitment Promisor
Type ofcommitment
Details ofcommitment
Date ofcommitmentmaking
Term ofcommitment
Fulfillment
Commitmentsmade inrefinancing
Citic Securities Company Limited,Nuode Asset Management Co., Ltd.,Guotai Junan Securities Co., Ltd.,Everbright Securities CompanyLimited, UBSAG, Caitong FundManagement Co., Ltd., GF SecuritiesCo., Ltd., Haitong Securities Co., Ltd.,Perseverance Asset ManagementPartnership (Limited Partnership) -Gaoyi Xiaofeng No. 2 Zhixin Fund,China Life Asset Management Co.,Ltd. - China Life Asset Management -Bank of China - China Life Asset -PIPE2020 Insurance AssetManagement Product, China SouthernAsset Management Co., Ltd., ShenRuijin, Dacheng Fund ManagementCo., Ltd., Golden Eagle AssetManagement Co., Ltd., Huaxia LifeInsurance Co., Ltd., Taikang AssetManagement Co., Ltd. - Taikang LifeInsurance Co., Ltd. - Unit Link -Industry Configuration, Guang DongZheng Yuan Private Fund InvestmentManagement Co., Ltd. - ZhengyuanSaturday Private Equity InvestmentFund, Bank of CommunicationsSchroder Fund Management Co., Ltd.,Foresight Fund Co., Ltd.
Aboutrestrictionon sales of
shares
The shares of TCLTech subscribedshall not betransferred within6 months from thedate of listing.
December 5,
2022
6 monthsfrom thedate oflisting of thenew shares
Fulfilled
Fulfilled on time YesSpecific reasonsfor failing to fulfillcommitments ontime and plans fornext steps
Not applicable
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.
III. Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
IV. Engagement and Disengagement of Independent AuditorWhether the semi-annual financial report has been audited
□ Yes √ No
The interim financial statements are unaudited.
V. Explanation of the Board of Directors and Board of Supervisors on the “Non-StandardAuditor’s Report”
□ Applicable √ Not applicable
VI. Explanation of the Board of Directors on the “Non-Standard Auditor’s Report” for thePrevious Year
□ Applicable √ Not applicable
VII. Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII. LawsuitsNo such cases in the Reporting Period.
IX. Punishments and Rectifications
□ Applicable √ Not applicable
No significant punishments or rectifications in the Reporting Period.X. Credit Quality of the Company as well as its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
XI. Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
Please refer to the relevant announcements disclosed by the Company on the designated media.
2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ Applicable √ Not applicable
Please refer to the relevant announcements disclosed by the Company on the designated media.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
The Company did not engage in any related-party transactions regarding joint investments in third parties that should be disclosed
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
during the reporting period.
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 partiesRelatedparties
Relationshipwith theCompany
Source
Capitaloccupationfor non-operatingpurposes ornot
Beginningbalance(RMB’0,000)
Amount ofnew grants incurrent period(RMB’0,000)
Amount ofrecoveredgrants incurrent period(RMB’0,000)
Coupon rate
Interest incurrent period(RMB’0,000)
Endingbalance(RMB’0,000)TCLIndustrialHoldings Co.,Ltd.
Relatedcorporation
Sale ofequityinvestments
No 47,040047,040- -0The Influence of Amounts Dueto Related Parties on theCompany’s Operating Resultsand Financial Status
The Company sold 100% held equity of Chongqing Zhongxin Rongxin to TCL Industries Holdings Inc. in order tofurther optimize its business structure and focus resources on the development of its primary high-tech business inline with the government policy guidance and in accordance with the needs of the Company’s announced financingprojects. According to the agreement signed by both parties, TCL Industries Holdings Inc. shall pay 51% of the equitytransfer 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-PartyTransactions 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
Deposit business
Related parties
Relationship
with theCompany
Daily deposit
ceiling(RMB’0,000)
Range ofinterest
Beginning
balance(RMB’0,000)
Amount incurred in the current period
Endingbalance(RMB’0,000)Total depositamount in current
period(RMB’0,000)
Totalwithdrawalamount incurrent period(RMB’0,000)Subsidiary ofTCL IndustriesHoldings Co.,
Ltd.
Relatedcorporation
250,000 0.8%-1.15%34,186.2465,729.22464,846.56 35,068.86
Loans:
Relatedparties
Relationship
with theCompany
Loan limit
Range ofinterest
Beginning
balance(RMB’0,000)
Amount incurred in the current period
Endingbalance(RMB’0,000)Total loan amount in
current period(RMB’0,000)
Totalrepaymentamount incurrent period(RMB’0,000)
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Subsidiary of
TCLIndustriesHoldingsCo., Ltd.
Relatedcorporation
The balance ofcomprehensive
credit on anyday shall notexceed RMB2.5
billion(includingloans, notesdiscounting,and notesacceptance)
- - - - -
Credit or other financial business:
Related parties
Relationship with
the Company
Business type Total
Ending balance(RMB’0,000)Subsidiary of TCLIndustries HoldingsCo., Ltd.
Relatedcorporation
Credit granting (bill
discount)
The balance of comprehensive
credit on any day shall not
exceed RMB2.5 billion(including loans, notesdiscounting, and notes
acceptance)
60,998.79Subsidiary of TCLIndustries HoldingsCo., Ltd.
Relatedcorporation
Credit granting (bill
acceptance)
44,338.16
7. Other Major Related-Party Transactions
√ Applicable □ Not applicable
Title of announcement
Date of interim
disclosure
Website for disclosureReport on the Execution of Daily Related-Party Transactions in 2022 March 31, 2023
www.cninfo.com.cn
Announcement on Daily Related-party Leases in 2023 March 31, 2023Announcement on the Launch of Accounts Receivable Factoring andthe Related-party Transaction
March 31, 2023Announcement on Reducing the Limit of Financial Services Providedby TCL Technology Group Finance Co., Ltd. to Related Parties andRenewing the Financial Services Agreement for Related-partyTransactions
March 31, 2023Announcement on the Expected Continuing Related-Party Transactionsfor 2023
March 31, 2023Announcement on the Related-party Transactions with Shenzhen JucaiSupply Chain Technology Co., Ltd. in 2023
March 31, 2023Announcement on External Investments and Related-partyTransactions of the Subsidiary - TCL Zhonghuan
May 17, 2023
XII. 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
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
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 dateof the guaranteelineannouncement
Line ofguarantee
Actualoccurrence date
Actualguaranteeamount
Type ofguarantee
Collateral(if any)
Counterguarantee (ifany)
Term ofguarantee
Expiredor notGuarantee forrelatedparties or notTCL King ElectricalAppliances (Huizhou) Co.,Ltd.
April 28, 2022 327,138 August 29, 20199,531
Joint liabilityguarantee
/
Counterguaranteeprovided byTCLIndustrialHolding Co.,Ltd.
1.2 years No Yes
TCL King ElectricalAppliances (Chengdu) Co.,Ltd.
April 28, 2022 51,653 --
Joint liabilityguarantee
/ - Yes YesHuizhou TCL MobileCommunication Co., Ltd.
April 28, 2022 212,507 --
Joint liability
guarantee
/ - Yes YesTCL Mobile Communication(HK) Company LimitedApril 28, 2022 29,225 --
Joint liability
guarantee
/ - Yes YesTCL Home Appliances(Hefei) Co., Ltd.
April 28, 2022 68,280 --
Joint liability
guarantee
/ - Yes YesTCL Home Appliances(Zhongshan) Co., Ltd.April 28, 2022 4,929 --
Joint liability
guarantee
/ - Yes YesTCL Air-Conditioner(Zhongshan) Co., Ltd.
April 28, 2022 80,991 March 31, 20212,867
Joint liability
guarantee
/
10 days-
7.8 years
No YesTCL Air Conditioner(Wuhan) Co., Ltd.April 28, 2022 13,480 --
Joint liability
guarantee
/ - Yes YesZhongshan TCL RefrigerationEquipment Co., Ltd.
April 28, 2022 31,749 --
Joint liability
guarantee
/ - Yes YesGuangdong TCL SmartHeating & VentilationEquipment Co., Ltd.
April 28, 2022 2,522 --
Joint liability
guarantee
/ - Yes YesTCL Home Appliances(Huizhou) Co., Ltd.
April 28, 2022 10,000 --
Joint liability
guarantee
/ - Yes YesTCL Air-Conditioner(Jiujiang) Co., Ltd.April 28, 2022 5,488 --
Joint liability
guarantee
/ - Yes YesTonly Technology Co., Ltd.
April 28, 2022 39,496
November 4,
2021
Joint liability
guarantee
/ 1.4 years No YesTCL Very LightingTechnology (Huizhou) Co.,Ltd.
April 28, 2022 1,034 --
Joint liability
guarantee
/ - Yes YesSHIFENDAOJIA OnlineService Co., Ltd.
April 28, 2022 77 --
Joint liability
guarantee
/ - Yes YesGuangzhou TCL Science andTechnology DevelopmentCo., Ltd.
April 28, 2022 84,700 --
Joint liabilityguarantee
/ - Yes YesTCL Industries Holdings(HK) Limited
April 28, 2022 514,629
December 21,
2021
144,516
Joint liability
guarantee
/ 1.5 years No YesTechigh Circuit Technology(Huizhou) Co., Ltd.April 28, 2022 499 --
Joint liability
guarantee
/ - Yes YesHuizhou Zhongkai TCLZhirong TechnologyMicrocredit Co., Ltd.
May 22, 2021 45,500 --
Joint liability
guarantee
/
Withcounter-guarantee
- Yes YesHuizhou Yunxin TechnologyCo., Ltd.April 22, 2023 15,000 --
Joint liability
guarantee
/
Withcounter-guarantee
- Yes No
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Qihang Import&ExportLimited
April 22, 2023 6,000 --
Joint liability
guarantee
/
Withcounter-guarantee
- Yes NoShenzhen Qianhai QihangSupply Chain ManagementCo., Ltd.
April 22, 2023 40,000 --
Joint liabilityguarantee
/
Withcounter-guarantee
- Yes NoShenzhen Qianhai SailingInternational Supply ChainManagement Co., Ltd.
April 22, 2023 110,000 August 24, 202250,123
Joint liabilityguarantee
/
Withcounter-guarantee
49-296
days
No NoQihang International Importand Export Co., Ltd.April 22, 2023 50,000 --
Joint liability
guarantee
/
Withcounter-guarantee
- Yes NoAijiexu New ElectronicDisplay Glass (Shenzhen)Co., Ltd.April 22, 2023 35,000 April 28, 202025,274.91
Joint liability
guarantee
/
Guarantee inproportion
toshareholdingpercentage
8.5 years No No
Inner Mongolia XinhuanSilicon Energy TechnologyCo., Ltd.April 22, 2023 180,000 --
Joint liability
guarantee
/
Guarantee inproportion
toshareholdingpercentage
- Yes NoInner Mongolia XinhuaSemiconductor TechnologyCo., Ltd.April 22, 2023 40,000 --
Joint liability
guarantee
/
Guarantee inproportion
toshareholdingpercentage
- Yes NoTotal approved line for such guarantees inReporting Period (A1)
476,000Total actual amount of suchguarantees in Reporting Period(A2)
56,311Total approved line for such guarantees at theend of the Reporting Period (A3)
1,999,897
Total actual balance of suchguarantees at end of ReportingPeriod (A4)
232,634Guarantees provided by the Company as the parent for its subsidiariesObligor
Disclosure dateof the guarantee
lineannouncement
Line ofguarantee
Actualoccurrence date
Actualguaranteeamount
Type ofguarantee
Collateral
(if any)
Counterguar
antee (if
any)
Term ofguarantee
Expiredor not
Guarantee for
relatedparties or notTCLMOKAINTERNATIONALLIMITEDApril 22, 2023 176,000 May 31, 202317,040
Joint liabilityguarantee
/ / 336 days No NoTCLTechnologyInvestmentsLimitedApril 22, 2023 400,000 July 14, 2020 216,774
Joint liability
guarantee
/ / 2 years No NoTCL China StarOptoelectronics TechnologyCo., Ltd.
April 22, 2023 1,580,000
December 22,
2022
1,233,058
Joint liability
guarantee
/ /
296 days-
9.5 years
No NoTCL Technology Park(Huizhou) Co., Ltd.April 22, 2023 97,000 June 21, 202148,000
Joint liabilityguarantee
/ /
7.5-7.5
years
No NoTCL Technology Group(Tianjin) Co., Ltd.April 22, 2023 90,000 August 31, 202280,000
Joint liability
guarantee
/ / 4.2 years No NoTCL Technology GroupFinance Co., Ltd.April 22, 2023 200,000 April 15, 202211,556
Joint liabilityguarantee
/ / 3-33 days No NoBeijing Hecheng NuoxinTechnology Co., Ltd.April 22, 2023 10,000
September 2,
2022
10,000
Joint liability
guarantee
/ / 66 days NoNoBeijing Lingyun DataTechnology Co., Ltd.April 22, 2023 128,000 July 14, 2022 33,843
Joint liability
guarantee
/ /
13-296
days
No NoBeijing SunpiestoreTechnology Co., Ltd.April 22, 2023 145,000 July 19, 2022 115,000
Joint liabilityguarantee
/ /
18-139
days
No NoGuangdong Juhua PrintedDisplay Technology Co., Ltd.April 22, 2023 5,000 --
Joint liabilityguarantee
/ / - YesNoGuangzhou China StarOptoelectronicsSemiconductor DisplayTechnology Co., Ltd.
April 22, 2023 1,750,000 March 7, 2022865,918
Joint liability
guarantee
/ /
6 days-
6.7 years
No NoHighly (Tianjin) E-CommerceCo., Ltd.April 22, 2023 5,000 --
Joint liability
guarantee
/ / - YesNoHighly (Tianjin) TechnologyCo., Ltd.April 22, 2023 115,000 April 21, 202332,708
Joint liability
guarantee
/ / 296 days No NoHighly Information IndustryCo., Ltd.April 22, 2023 554,000 May 18, 2022432,174
Joint liabilityguarantee
/ /
25 days-
2.0 years
No NoChina DisplayOptoelectronics Technology(Huizhou) Co., Ltd.
April 22, 2023 150,000 October 18, 202231,247
Joint liability
guarantee
/ /
3-296days
NoNo
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Huizhou China StarOptoelectronics TechnologyCo., Ltd.
April 22, 2023 1,150,000 January 1, 2021530,007
Joint liabilityguarantee
/ /
21 days-
5.7 years
NoNoHuizhou Moka TechnologyDevelopment Co., Ltd.April 22, 2023 55,000 --
Joint liabilityguarantee
/ / - Yes NoMoka Technology(Guangdong) Co., Ltd.April 22, 2023 700,000 April 21, 202378,206
Joint liabilityguarantee
/ / 296 days No NoQingdao Blue BusinessConsulting Co., Ltd.April 22, 2023 5,000 June 19, 2023125
Joint liabilityguarantee
/ /
233-238days
No NoShaanxi Titi ElectronicTechnology Co., Ltd.April 22, 2023 10,000
September 2,
2022
10,000
Joint liability
guarantee
/ / 66 days No NoShenzhen China StarOptoelectronicsSemiconductor DisplayTechnology Co., Ltd.
April 22, 2023 1,300,000 April 28, 20181,107,059
Joint liability
guarantee
/ /
34 days-
6.0 years
NoNoSuzhou China StarOptoelectronics TechnologyCo., Ltd.
April 22, 2023 100,000 April 21, 202313
Joint liability
guarantee
/ /
3-296days
No NoSuzhou China StarOptoelectronics Display Co.,Ltd.
April 22, 2023 265,000 August 30, 202242,655
Joint liability
guarantee
/ / 8.9 years No NoTianjin Printronics CircuitCorporationApril 22, 2023 100,000
September 9,
2022
4,358
Joint liability
guarantee
/ / 7.2 years No NoTianjin TiTi YunchuangTechnology Co., Ltd.April 22, 2023 5,000
September 2,
2022
5,000
Joint liability
guarantee
/ / 66 days No NoTianjin WanfangNuoxinTechnology Co., Ltd.April 22, 2023 5,000
September 2,
2022
5,000
Joint liability
guarantee
/ / 66 days No NoTianjin Xincheng PilotTechnology Co., Ltd.April 22, 2023 5,000
September 2,
2022
5,000
Joint liability
guarantee
/ / 66 days No NoWuhan China StarOptoelectronicsSemiconductor DisplayTechnology Co., Ltd.
April 22, 2023 1,600,000
December 22,
2017
1,010,437
Joint liability
guarantee
/ /
7 days-
4.7 years
No NoWuhan China StarOptoelectronics TechnologyCo., Ltd.
April 22, 2023 1,600,000 June 29, 2021913,885
Joint liabilityguarantee
/ /
4 days-
7.2 years
No NoChongqing Blue BusinessConsulting Co., Ltd.April 22, 2023 1,000 --
Joint liability
guarantee
/ / - Yes NoChina Star OptoelectronicsInternational (HK) LimitedApril 22, 2023 100,000 --
Joint liability
guarantee
/ / - Yes NoTotal approved line for such guarantees inReporting Period (B1)
12,406,000
Total actual amount of suchguarantees in Reporting Period(B2)
1,612,058Total approved line for such guarantees at theend of the Reporting Period (B3)
12,406,000
Total actual balance of suchguarantees at end of ReportingPeriod (B4)
6,839,064Guarantees provided between subsidiariesObligor
Disclosure dateof the guarantee
lineannouncement
Line ofguarantee
Actualoccurrence date
Actualguaranteeamount
Type ofguarantee
Collateral
(if any)
Counterguar
antee (if
any)
Term ofguarantee
Expiredor not
Guarantee for
relatedparties or notHuhehaote Huanju NewEnergy Development Co.,Ltd.*
November 26,
2014
14,529
December 11,
2015
14,529
Joint liabilityguarantee
/ / 1.3 years No NoZhonghuan Energy (InnerMongolia) Co., Ltd.
June 24, 2017 10,680 July 21, 2017 10,680
Joint liabilityguarantee
/ / 9 years No NoOtog Banner Huanju NewEnergy Co., Ltd.
June 24, 2017 16,807 August 30, 201716,808
Joint liabilityguarantee
/ /
4.13
years
No NoTianjin Huanzhi New EnergyTechnology Co., Ltd.
January 21, 2021 62,493 July 20, 2021 42,460
Joint liabilityguarantee
/ / 4.5 years No NoZhonghuan Hong KongHolding Limited
March 22, 2021 100,000 March 26, 202150,000
Joint liabilityguarantee
/ / 1 year No NoInner Mongolia ZhonghuanCrystal Materials Co., Ltd.
March 22, 2021May 26, 2022
562,495 April 30, 2021443,440
Joint liabilityguarantee
/ / 6 years No NoTianjin Huanou New EnergyTechnology Co., Ltd
May 26, 2022 402,000
September 28,
2022
44,728
Joint liabilityguarantee
/ /
6.16
years
No No
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Note: (1) The guarantee period in the above table is the occurrence period of the principal debt. The actual guarantee is valid for twoor 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:
The guarantee limit amounting to RMB 900 million offered to TCL China Star Optoelectronics Technology Co., Ltd. wastransferred to TCL Technology Group (Tianjin) Co., Limited, another controlling subsidiary. The Company has performed internalreview procedures for the above-mentioned guarantee transfers. It's found that they did not violate the legal provisions on listed
Wuxi Zhonghuan AppliedMaterials Co., Ltd.
May 26, 2022 190,000 June 30, 2022101,589
Joint liabilityguarantee
/ / 6 years No NoHuansheng New Energy(Jiangsu) Co., Ltd.
May 26, 2022 155,000
September 30,2022
89,834Joint liabilityguarantee
/ / 6 years No NoHuansheng Solar (Jiangsu)Co., Ltd.
March 22, 2021 47,000 April 1, 2021 47,000
Joint liabilityguarantee
/ / 2.5 years No NoNingxia Zhonghuan SolarMaterial Co., Ltd.
March 22, 2021 748,000 May 30, 2022575,000
Joint liabilityguarantee
/ / 6 years No NoTCLMokaInternationalLimited
April 22, 2023 214,500 April 27, 20235,436
Joint liabilityguarantee
/ /
26-87days
No NoChina Star OptoelectronicsInternational (HK) Limited
April 22, 2023 90,000
November 24,
2020
87,058
Joint liabilityguarantee
/ / 69 days No NoShenzhen China StarOptoelectronicsSemiconductor DisplayTechnology Co., Ltd.
April 22, 2023 3,022,500
November 5,
2021
2,197,925
Joint liabilityguarantee
/ /
2.87-5
years
No NoSubsidiaries within theconsolidated scope (retained)
April 22, 2023 100,000 -Total approved line for such guarantees inReporting Period (C1)
3,427,000
Total actual amount of suchguarantees in Reporting Period(C2)
128,930Total approved line for such guarantees at theend of the Reporting Period (C3)
5,736,004
Total actual balance of suchguarantees at end of ReportingPeriod (C4)
3,726,486Total guarantee amount (total of the three kinds of guarantees above)Total guarantee line approved in the ReportingPeriod (A1+B1+C1)
16,309,000
Total actual guarantee amountin the Reporting Period(A2+B2+C2)
1,797,299Total approved guarantee line at the end of theReporting Period (A3+B3+C3)
20,141,901
Total actual guarantee balanceat the end of the ReportingPeriod (A4+B4+C4)
10,798,185Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets 81.72%
Of which:
Balance of guarantees provided for shareholders, the actual controller and theirrelated parties (D)
157,236Balance of debt guarantees provided directly or indirectly for obligors with an over70% debt/asset ratio (E)
1,908,647Amount by which the total guarantee amount exceeds 50% of the Company’s netassets (F)
4,191,247Total of the three above amounts (D+E+F) 4,191,247Joint liability possibly borne or already borne in the Reporting Period foroutstanding guarantees (if any)
-Guarantees provided in breach of prescribed procedures (if any) -
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
companies, and complied with the relevant requirements of the Proposal on Providing Guarantees for Subsidiaries in 2023 reviewedand approved at the 2023 annual shareholders’ meeting held on April 21, 2023.
(3) In the table above, Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd., a subsidiary controlled
by 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 RMB21.97925 billion. The joint
guarantee 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 RMB21.97925 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 RMB145.29 million.
3. Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Unit: RMB'0,000Type
Fundingsource
Amount Undue amount
Unrecoveredoverdue amount
Impairment allowance
for unrecoveredoverdue amount ofwealth management
productsBank’s wealthmanagementproduct
Self-funded
1,035,315.41913,900.21- -Securities firm’swealthmanagementproduct
Self-funded
386,962.99283,286.43- -Trust plan Self-funded212,100.00212,100.00- -Other Self-funded130,685.4947,040.05- -Total 1,765,063.891,456,326.69- -High-risk wealth management transactions with a significant single amount liquidity:
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
XIII. Other Significant Events
□ Applicable √ Not applicable
There are no other significant events that need to be explained for the Reporting Period.
XIV. Significant Events of Subsidiaries
√ Applicable □ Not applicable
1. During the Reporting Period, the subsidiary - TCL Zhonghuan issued relevant proposals such as the "Plan for Issuing Convertible
Corporate Bonds to Non-specific Investors". Currently, relevant works are implemented in an orderly manner, as detailed in the relevantinformation disclosed by TCL Zhonghuan on designated media.
2. During the Reporting Period, the subsidiary - Tianjin Printronics issued relevant proposals such as the "Report on Major Asset
Purchase and Capital Increase and Related Party Transactions (Draft)". Currently, relevant works are carried out in an orderly manner,as detailed in the relevant information disclosed by Tianjin Printronics on designated media.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part VII Changes in Shares and Information about ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
Before change Increase/decrease in the Reporting Period (+/-) After changeShares Percentage
NewissuesBonusshares
Sharesconverted fromcapital reserve
Others Subtotal Shares PercentageI. RestrictedShares
3,420,220,967 20.03% 0 0342,022,097-3,081,703,851-2,739,681,754 680,539,213 3.62%
1. Shares held
by state-owned legalentities
877,192,981 5.14% 0 087,719,297-964,912,278-877,192,981 0 0.00%
2. Shares held
by otherdomesticinvestors
908,951,956 5.33% 0 090,895,196-320,533,070-229,637,874 679,314,082 3.62%Amongwhich: Sharesheld bydomestic legalentities
187,134,502 1.10% 0 018,713,450-205,847,952-187,134,502 0 0.00%Shares heldby domesticindividuals
721,817,454 4.23% 0 072,181,746-114,685,118-42,503,372 679,314,082 3.62%
3. Shares held
by foreigninvestors
197,538,186 1.15% 0 019,753,819-216,066,874-196,313,055 1,225,131 0.007%Amongwhich: Sharesheld byforeign legalentities
196,783,625 1.15% 0 019,678,363-216,461,988-196,783,625 0 0.00%Shares heldby foreignnaturalpersons
754,561 0.004% 0 075,456395,114470,570 1,225,131 0.007%
4. Fund,
wealthmanagementproduct, etc.
1,436,537,844 8.41% 0 0143,653,785-1,580,191,629-1,436,537,844 0 0.00%II. Non-restrictedshares
13,651,670,640
79.97% 0
1,365,167,0633,081,703,8514,446,870,914 18,098,541,554 96.38%
1. RMB-
denominatedordinaryshares
13,651,670,640
79.97% 0
1,365,167,0633,081,703,8514,446,870,914 18,098,541,554 96.38%III. Totalshares
17,071,891,607
100.00% 0 01,707,189,16001,707,189,160 18,779,080,767 100.00%Reasons for changes in shares
√ Applicable □ Not applicable
1. On April 26, 2023, the Company disclosed the Implementation Announcement on the 2022 Annual Equity Distribution, and after
the completion of the capital reserve conversion, the total share capital of the Company increased from 17,071,891,607 shares to18,779,080,767 shares.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
2. On June 19, 2023, the Company disclosed the “Suggestive Announcement on Releasing from the Restriction on Non-publicly
Offered Shares and Listing for Circulation”. The non-publicly offered restricted shares were released from restriction and listed forcirculation on June 26, 2023.
3. During the Reporting Period, locked-up shares held by senior management increased by 66,446,730 shares, as non-restricted shares
decreased by the same amount.
Approval of changes in shares
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Progress on any share repurchase
√ Applicable □ Not applicable
The 32nd meeting of the 7th Board of Directors of the Company reviewed and approved the Proposal on the Repurchase of PartShares Held by the Public in 2023. On June 28, 2023, the Company repurchased shares of the Company for the first time throughcentralized bidding from the special securities account for repurchase and completed the transaction, with 64,992,964 sharesrepurchased, accounting for 0.35% of the total share capital of the Company. The highest and lowest trading price were RMB3.86 pershare and RMB3.73 per share, respectively, and the total payment approximated to RMB247 million (excluding transaction fees). Fordetails, please refer to the "Announcement on the First Repurchase of Shares Held by the Public in 2023 and the TransactionCompletion" released by the Company on designated media.Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share, diluted earnings per share, net asset value per share attributable to theCompany’s ordinary shareholders and other financial indicators for the most recent period
√ Applicable □ Not applicable
Item H1 2023Basic earnings per share (RMB/share) 0.0184Diluted earnings per share (RMB/share)
0.0181
Item June 30, 2023Net assets per share attributable to ordinary shareholders of the Company (RMB) 2.69Other information that the Company considers necessary or is required by the securities regulatory authorities to be disclosed
□ Applicable √ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: shareName ofshareholder
Number ofrestrictedshares atperiod-begin
Number ofincreasedrestrictedshares of theperiod (note)
Number ofreleasedrestrictedshares of theperiod
Number ofrestrictedshares atperiod-end
Reason forrestriction
Date ofrestrictionreleaseCITICSecurities Co.,Ltd.
280,701,754 28,070,175308,771,9290
The shareswere within thelockup periodof non-publicoffering (sharesof the Companysubscribed byinvestors innon-publicoffering shallnot betransferredwithin 6months fromthe date oflisting)
June 26, 2023
Guotai JunanSecurities Co.,Ltd.
228,070,175 22,807,017250,877,1920EverbrightSecuritiesCompanyLimited
204,678,362 20,467,836225,146,1980UBSAG 196,783,625 19,678,363216,461,9880GF SecuritiesCo., Ltd.
187,134,502 18,713,450205,847,9520HaitongSecurities Co.,Ltd.
163,742,690 16,374,269180,116,9590PerseveranceAssetManagementPartnership(LimitedPartnership) -Gaoyi XiaofengNo. 2 ZhixinFund
131,578,947 13,157,895144,736,8420
China LifeAssetManagement -Bank of China -China LifeAsset -PIPE2020Insurance AssetManagementProduct
116,959,064 11,695,906128,654,9700
Shen Ruijin 108,479,532 10,847,953119,327,4850Huaxia LifeInsurance Co.,Ltd. - Self-owned funds
87,719,298 8,771,93096,491,2280Othershareholdersparticipating inthe non-publicoffering of theCompany
1,100,280,535 110,028,0541,210,308,5890
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Others 614,092,483 66,446,7300680,539,213
Locked-upshares of seniormanagement
Not applicableTotal3,420,220,967 347,059,5783,086,741,332680,539,213-- --Note: During the reporting period, the Company increased one share for every 10 shares to all shareholders with capital reserves,resulting in a corresponding increase in restricted shares during the reporting period.
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholdings
Unit: shareTotal number of ordinaryshareholders by the end of thereporting period
667,265
Total number of preferred shareholders withresumed voting rights by the end of thereporting period (if any)
Shareholdings of ordinary shareholders with more than 5% or the top 10 shareholders of ordinary sharesName ofshareholder
Nature ofshareholder
Shareholdingpercentage
(%)
Number ofshares held atthe period-end
Increase/decrease
during thereporting period
Number ofrestrictedordinaryshares held
Number ofnon-restricted
ordinary
shares held
Shares in pledge, marked or
frozenStatus SharesLi Dongshengand his acting-in-concertparty
Domesticindividual/Domesticgeneral legalentity
6.80% 1,276,684,768117,599,749672,868,839603,815,929
Put in pledgeby LiDongsheng
158,032,380Put in pledgeby JiutianLiancheng
308,057,743Hong KongSecuritiesClearingCompany Ltd.
Foreign legalentity
4.39% 823,982,122435,483,645HuizhouInvestmentHolding Co.,Ltd.
State-ownedlegal entity
3.88% 728,193,7246,053,884Wuhan OpticsValleyIndustrialInvestmentCo., Ltd.
State-ownedlegal entity
2.88% 540,632,616412,320,220ChinaSecuritiesFinanceCorporationLimited
Domesticgeneral legalentity
2.19% 410,554,71037,323,157CITICSecurities Co.,Ltd.
State-ownedlegal entity
2.12% 397,627,664109,943,310GF SecuritiesCo., Ltd.
Domesticgeneral legalentity
1.16% 218,691,15528,125,553PerseveranceAsset
Fund, wealthmanagement
1.05% 197,236,70165,657,754
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
ManagementPartnership(LimitedPartnership) -GaoyiXiaofeng No.2 Zhixin Fund
product, etc.
Bank of ChinaLimited -Huatai-PinebridgeCSIPhotovoltaicIndustryTrading OpenIndexSecuritiesInvestmentFund
Fund, wealthmanagementproduct, etc.
0.93% 175,414,610175,414,610
China LifeAssetManagement -Bank of China- China LifeAsset -PIPE2020InsuranceAssetManagementProduct
Fund, wealthmanagementproduct, etc.
0.69% 128,654,97011,695,906
Strategic investor or generallegal entity becoming top-10ordinary shareholders due toprivate placement of newshares (if any)
Not applicableNote on the aboveshareholders’ associations orconcerted actions
Mr. Li Dongsheng, one of the top 10 shareholders, and Ningbo Jiutian Liancheng Equity Investment Partnership
(Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding
1,276,684,768 shares in total and becoming the largest shareholder of the Company.Explain if any of theshareholders above wasinvolved in entrusting/beingentrusted with voting rights orwaiving voting rights
Not applicableExplanation on repurchaseaccounts among top 10shareholders (if any)
Not applicable
Top 10 non-restricted ordinary shareholdersName of shareholder Number of non-restricted ordinary shares held at the end of the reporting period
Type of sharesType SharesHong Kong SecuritiesClearing Company Ltd.
823,982,122
RMB-denominatedordinaryshares
823,982,122Huizhou Investment HoldingCo., Ltd.
728,193,724
RMB-denominated
728,193,724
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
ordinarysharesLi Dongsheng and his acting-in-concert party
603,815,929
RMB-denominatedordinaryshares
603,815,929Wuhan Optics ValleyIndustrial Investment Co.,Ltd.
540,632,616
RMB-denominatedordinaryshares
540,632,616China Securities FinanceCorporation Limited
410,554,710
RMB-denominatedordinaryshares
410,554,710CITIC Securities Co., Ltd. 397,627,664
RMB-denominatedordinaryshares
397,627,664GF Securities Co., Ltd. 218,691,155
RMB-denominatedordinaryshares
218,691,155Perseverance AssetManagement Partnership(Limited Partnership) - GaoyiXiaofeng No. 2 Zhixin Fund
197,236,701
RMB-denominatedordinaryshares
197,236,701Bank of China Limited -Huatai-Pinebridge CSIPhotovoltaic Industry TradingOpen Index SecuritiesInvestment Fund
175,414,610
RMB-denominatedordinaryshares
175,414,610China Life AssetManagement - Bank of China- China Life Asset -PIPE2020 Insurance AssetManagement Product
128,654,970
RMB-denominatedordinaryshares
128,654,970Related or acting-in-concertparties among top 10 non-restricted ordinaryshareholders, as well asbetween top 10 non-restrictedordinary shareholders and top10 ordinary shareholders
Mr. Li Dongsheng, one of the top 10 shareholders, and Ningbo Jiutian Liancheng Equity Investment Partnership(Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding1,276,684,768 shares in total and becoming the largest shareholder of the Company.Explanation for the top 10ordinary shareholdersparticipating in securitiesmargin trading (if any)
As at the end of the Reporting Period, Huizhou Investment Holding Co., Ltd., one of the top 10 shareholders of theCompany, decreased the number of registered shares by 89,260,000 shares due to their participation in therefinancing business; the shareholder Wuhan Optical Valley Industrial Investment Co., Ltd. decreased the numberof registered shares by 61,000,000 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.IV. Change in Shareholdings of Directors, Supervisors, and Senior Management
√ Applicable □ Not applicable
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Name Position
Position
Status
Number ofshares held
at thebeginningof thereportingperiod
Increase ofsharesduring thereportingperiod
Decreaseof sharesduringthereportingperiod
Number ofshares heldat the end of
thereporting
period
Numberofrestrictedsharesgranted atthebeginningof thereporting
period
Number ofrestrictedsharesgrantedduring thereportingperiod
Number ofrestrictedsharesgranted atthe end ofthereportingperiodLiDongsheng
Chairman,CEO
Incumbent 814,061,096 83,097,357-897,158,453- - -WangCheng
Director,COO
Incumbent 157,661 175,522-333,183- - -Zhao Jun
Director,SeniorVicePresident
Incumbent 200,482 742,372-942,854- - -
Liao Qian
Director,SeniorVicePresident,BoardSecretary
Incumbent 481,306 807,769-1,289,075- - -MaoTianxiang
EmployeeSupervisor
Incumbent 229,583 336,992-566,575- - -YanXiaolin
SeniorVicePresident,CTO
Incumbent 1,303,302 1,038,963-2,342,265- - -Li Jian CFO Incumbent 294,513 674,108-968,621- - -Total -- --816,727,943 86,873,083-903,601,026- - -Note: The increase in the number of shares held by the Company's directors, supervisors, and executives during the Reporting Periodwas due to the Company's conversion of capital reserves into share capital, as well as the non-transactional transfer of shares (whichare attributable to the participants of the Tranche III Global Partnership Plan and the 2021-2023 Employee Shareholding Plan (firsttranche)) to their securities accounts.V. Change of the Controlling Shareholder or the Actual ControllerMr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (LimitedPartnership) became persons acting in concert by signing the Agreement on Concerted Action,holding 1,276,684,768 shares in total and becoming the largest shareholder of the Company.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part VIII Preferred Shares
□ Applicable √ Not applicable
During the reporting period, the Company did not have preferred shares.
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Part IX Bonds
√ Applicable □ Not applicable
I. 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'0,000Bond name Abbr. Bond code
Date ofissuance
Valuedate
Maturity
Outstandingbalance
Coupon rate
Way ofprincipalrepaymentand interestpayment
Place oftradingTCLCorporationCorporate
BondsPubliclyOffered in2019 toQualifiedInvestors(Tranche 3)
19TCL03 112983
October17, 2019
October21, 2019
October21, 2024
44,0002.95%
Interestpayableannuallyandprincipalrepayablein full uponmaturity
Shenzhen
StockExchange
TCLCorporation
Corporate
BondsPubliclyOffered in
2019 toQualifiedInvestors(Tranche 2)
19TCL02 112938
July 19,
2019
July 23,
2019
July 23,
2024
100,0003.05%
Interestpayableannuallyandprincipalrepayablein full uponmaturity
Shenzhen
StockExchange
TCLCorporation
Corporate
BondsPubliclyOffered in
2019 toQualifiedInvestors(Tranche 1)
19TCL01 112905
May 17,
2019
May 20,
2019
May 20,
2024
100,0003.15%
Interestpayableannuallyandprincipalrepayablein full uponmaturity
Shenzhen
StockExchange
TCLCorporation
18TCL02 112747
August 17,
2018
August20, 2018
August20, 2023
200,0003.55%
Interestpayable
Shenzhen
Stock
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Corporate
BondsPubliclyOffered in
2018 toQualifiedInvestors(Tranche 2)
annuallyandprincipalrepayablein full uponmaturity
Exchange
Investor eligibility (if any)For qualified investors / For professional investorsApplicable trading mechanismMatch to trade, click to trade, inquire to trade, bid to trade, negotiate to tradeRisk 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. Adjustments of credit rating results during the Reporting Period
□ Applicable √ Not applicable
4. The implementation and changes of guarantees, debt repayment plans and other safeguard measures
regarding 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: RMB'0,000
Bond name Abbr.
Bondcode
Date ofissuance
Value dateMaturity
Outstanding
balance
Coupon
rate
Way ofprincipalrepaymentand interest
payment
Place of trading
2023 Mid-Term
Notes of TCLTechnology
GroupCorporation(Tranche 1)(ScientificInnovation Notes)
23TCLGroupMTN001(ScientificInnovationNotes)
102380151
February 3,
2023
February 7,
2023
February 7,
2026
150,0004.10%
Interestpayableannually andprincipalrepayable infull uponmaturity
Inter-bank
market2022 Mid-Term
Notes of TCLTechnology
GroupCorporation
22TCLGroupMTN003(ScientificInnovation
102281474 July 4, 2022 July 6, 2022July 6, 2025200,0003.45%
Interestpayableannually andprincipalrepayable in
Inter-bankmarket
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
Overdue bonds
□ Applicable √ Not applicable
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
□ Applicable √ Not applicable
3. Adjustments to credit ratings in the Reporting Period
□ Applicable √ Not applicable
4. Execution and changes of guarantees, repayment plans and other repayment guarantee measures in the
Reporting Period, as well as the impact on the equity of bond investor
□ Applicable √ Not applicable
IV. Convertible Corporate Bonds
□ Applicable √ Not applicable
During the reporting period, the Company did not have convertible corporate bonds.V. Consolidated loss of the Reporting Period Exceeding 10% of Net Assets of the last year-end
□ Applicable √ Not applicable
(Tranche 3)(ScientificInnovation Notes)
Notes) full upon
maturity2022 Mid-TermGreen Notes ofTCL TechnologyGroupCorporation(Tranche 2)
22TCLGroupGN002
132280040
April 25,2022
April 27,2022
April 27,
2025
150,0003.30%
Interest
payable
annually and
principal
repayable in
full upon
maturity
Inter-bank
market2022 Mid-Term
Notes of TCLTechnology
GroupCorporation(Tranche 1)
22TCLGroupMTN001
102280089
January 12,
2022
January 14,
2022
January 14,
2025
200,0003.45%
Interestpayableannually andprincipalrepayable infull uponmaturity
Inter-bank
market2021 Mid-Term
Notes of TCLTechnology
GroupCorporation(Tranche 1)(High-Growth
Bonds)
21TCLGroupMTN001
(High-GrowthBonds)
102100966
May 10,
2021
May 12,
2021
May 12,
2024
200,0004.15%
Interestpayableannually andprincipalrepayable infull uponmaturity
Inter-bank
marketInvestor eligibility (if any) Not applicableApplicable trading mechanism Not applicableRisk of termination of listing and trading (ifany) and countermeasures
No
Full Text of the 2023 Interim Report of TCL Technology Group Corporation
VI. Key accounting data and financial indicators of the Company for the past two years as atthe end of the Reporting Period
Unit: RMB'0,000Item End of the Reporting Period December 31, 2022 ChangeCurrent ratio
1.09 1.09 0.00%Debt/asset ratio
63.4%63.3%0.09%Quick ratio
0.8 0.8 2.6%
H1 2023 H1 2022 ChangeNet profit before non-recurring gains and losses
49,891 54,269 -8.07%Debt to EBITDA ratio
6.82%6.99%-0.17%Interest coverage ratio 1.70 1.46 16.44%Cash coverage ratio 4.76 4.90 -2.80%EBITDA coverage ratio 6.01 6.45 -6.82%Debt repayment ratio100%100%0.00Interest payment ratio100%100%0.00
Section X Unaudited Financial Report
(For the period from January 1, 2023 to June 30, 2023)
I. Auditor’s ReportWhether the 2023 interim report has been audited or not?
□ Yes √ No
The Company’s 2023 interim financial report has not yet been audited.II. Financial StatementsThe unit of the notes to the financial report is: RMB’000.
Content Page
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 theParent Company
13-14
Notes to Financial Statements 15-170
TCL Technology Group CorporationConsolidated Balance Sheet
(RMB’000)
Note VJune 30, 2023January 1, 2023
Current assets
Monetary assets
29,286,645 35,378,501Held-for-trading financial assets
14,371,775 12,703,507Derivative financial assets
125,204 361,034Notes receivable
353,633 512,849Accounts receivable
21,286,401 14,051,661Receivables financing
3,307,933 1,103,128Prepayments
3,523,684 3,593,857Other receivables
3,590,396 4,033,248Inventories
18,113,675 18,001,122Contract assets
298,867 315,167Other current assets
5,258,026 5,438,936Total current assets99,516,239 95,493,010Non-current assets
Debt investments
859,062 741,703
Long-term receivables
624,341 631,373
Long-term equity investments
30,354,398 29,256,216Investments in other equityinstruments
421,104 439,996
Other non-current financial assets
4,361,877 2,928,827
Investment property
889,135 946,449
Fixed assets
149,680,215 132,477,672
Construction in progress
42,114,759 52,053,834
Right-of-use assets
5,744,717 5,110,124
Intangible assets
18,149,218 16,783,931
Development costs
2,487,554 3,179,207
Goodwill
10,385,265 9,161,852
Long-term deferred expenses
3,112,378 2,744,208Deferred income tax assets
2,762,750 1,753,887Other non-current assets
9,861,480 6,293,943
Total non-current assets
281,808,253 264,503,222
Total assets
381,324,492 359,996,232
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge of
thefinancialdepartment: Peng PanThe 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 VJune 30, 2023
January 1, 2023Current liabilitiesShort-term borrowings 279,613,991 10,215,911Borrowings from the Central Bank
727,203 777,676Customer deposits and deposits fromother banks and financial institutions
563,135 603,423Held-for-trading financial liabilities
726,942 861,912Derivative financial liabilities
309,743 70,735Notes payable
5,386,999 6,365,660Accounts payable
30,475,619 26,381,912Advances from customers
569 1,402Contract liabilities
2,245,240 2,336,008Employee compensation payable
2,333,712 2,376,933Taxes and levies payable
1,133,659 1,215,591
Other payables
23,333,685 24,190,352
Non-current liabilities due within oneyear
12,645,566 10,957,321Other current liabilities
1,416,235 1,185,848
Total current liabilities
90,912,298 87,540,684
Non-current liabilities
Long-term borrowings
127,571,442 118,603,165Bonds payable
10,588,471 12,006,851Lease liabilities
5,058,334 4,461,383
Long-term payables
2,431,551 887,763
Long-term employee compensation
payable
191,800 472,538
Deferred income
3,012,860 2,468,145
Deferred income tax liabilities
1,816,071 1,319,428
Estimated liabilities 46108,359 97,522
Total non-current liabilities 150,778,888 140,316,795Total liabilities241,691,186 227,857,479
Share capital 47 18,779,081 17,071,892Capital reserves 48 10,425,008 12,522,793Less: Treasury share 49 1,119,036 1,314,581Other comprehensive income 50 (1,176,068) (811,822)Surplus reserves 51 3,712,273 3,712,273Specific reserves 52 6,791 2,301General risk reserve 538,934 8,934
Retained earnings 5419,827,223 19,486,730
Total equity attributable to shareholders of
the parent company
50,464,206 50,678,520
Non-controlling interests89,169,100 81,460,233
Total shareholders’ equity139,633,306 132,138,753
Total liabilities and shareholders' equity 381,324,492 359,996,232
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge of
thefinancialdepartment: Peng PanThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Income Statement
(RMB’000)
Note V January - June 2023 January - June 2022I. Total revenue85,190,189 84,560,760Including: Operating revenue 5585,148,726 84,522,181Interest income 5641,463 38,579Less: Operating cost 5574,267,599 76,522,944Interest expenditures 56
9,976 14,292Taxes and levies 57391,897 289,081Sales expenses 581,206,698 1,053,369Administrative expenses 592,015,924 1,716,379R&D expenses 60 4,892,354 4,451,764Financial expenses 611,613,163 1,720,157Including: Interest expenses
2,325,785 2,031,269Interest income
415,285 325,439Plus: Other income 62 1,199,925 1,643,110Return on investment 63 2,313,775 1,780,515Including: Return on investment in jointventures and associates
1,220,326
1,757,650Exchange gain
(295) 24,351
Gain on changes in fair value 64452,401 114,495Credit impairment loss 65(45,502) (27,157)Asset impairment loss 66(2,358,956) (1,010,287)Asset disposal income 67(40,012) (23,631)II. Operating profit2,313,9141,294,170Plus: Non-operating income 6826,030 596,540Less: Non-operating expenses 6949,160 52,392III. Gross profit2,290,7841,838,318Less: Income tax expenses 70(99,799) (88,398)IV. Net profit2,390,583 1,926,716(I) Classification by business continuity
1. Net profit from continuing operations
2,390,583 1,926,716
2. Net profit from discontinued operations
--(II) Classification by ownership
1. Net profits attributable to the shareholders
of the parent company
340,493 663,521
2. Net profit attributable to non-controlling
interests
2,050,090 1,263,195V. Other comprehensive income, net of tax 50(451,010)(372,997)(I) Other comprehensive income that cannotbe reclassified into profit or loss
(19,415)(13,285)(II) Other comprehensive income that maysubsequently be reclassified into profit or lossupon satisfaction of prescribed condition
(431,595)(359,712)VI. Total comprehensive income1,939,573 1,553,719Total comprehensive income attributable tothe shareholders of the parent company
(23,753) 308,506Total comprehensive income attributable tonon-controlling interests
1,963,3261,245,213VII. Earnings per share 71
(I) Basic earnings per share (RMB yuan) 0.01840.0445(II) Diluted earnings per share (RMB yuan) 0.0181 0.0441
Legalrepresentative: Li Dongsheng
Person in
chargeof financial affairs:
Li Jian
Person incharge of the
accountingdepartment: Peng PanThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Cash Flow Statement
(RMB’000)
Note VJanuary - June 2023
January - June 2022I. Cash flow from operating activities:
Proceeds from sale of commodities and rendering ofservices
61,503,988 65,932,012Net increase/(decrease) in customer deposits and depositsfrom other banks and financial institutions
(40,289) (400,311)Net increase/(decrease) in borrowings from central bank (50,474) (708,318)Cash received from interest, handling charge and
commission
41,463 38,579Tax and levy rebates 4,842,869 7,032,417Cash generated from other operating activities 72 5,588,817 5,538,379
Sub-total of cash generated from operating activities71,886,374 77,432,758
Payments for commodities and services(48,233,115) (54,309,690)Net (increase)/decrease in loans and advances tocustomers
27,311 (40,873)Net (increase)/decrease in deposits in central bank andother banks and financial institutions
54,883 (73,909)Cash paid to and for employees(6,043,453) (6,631,511)Taxes and levies paid(2,226,234) (1,689,737)Cash used in other operating activities 73(5,049,598) (5,670,402)
Sub-total of cash used in operating activities (61,470,206) (68,416,122)
Net cash generated from operating activities 7810,416,168 9,016,636
II. Cash flow generated from investing activities:
Proceeds from disinvestments 26,691,189 22,017,628Proceeds from return on investments 1,202,097 254,501Net proceeds from disposal of fixed assets, intangibleassets and other long-term assets
39,062 10,504Net proceeds from disposal of subsidiaries and otherbusiness units
- -Cash generated from other investing activities 74 1,640,766 73,748
Sub-total of cash generated from investment activities 29,573,114 22,356,381
Payments for the acquisition and construction of fixed
assets, intangible assets and other long-term assets
(16,465,349) (18,251,636)Cash paid for investments(31,830,252) (21,384,892)Net payments for acquiring subsidiaries and otherbusiness units
(342,527) -Cash used in other investing activities 75(475,943) (333,406)
Subtotal of cash used in investing activities (49,114,071) (39,969,934)Net cash used in investing activities (19,540,957) (17,613,553)
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge ofthefinancialdepartment: 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 VJanuary - June 2023
January - June 2022
III. Cash flow generated from financing activities:
Capital contributions received
1,047,506 5,365,010Including: Capital contributions by non-
controlling interests to subsidiaries
1,047,506 5,365,010Borrowings raised
41,697,801 37,672,460
Net cash received from bonds issue
1,500,000 4,500,000
Cash generated from other financing activities
1,895,912 6,000
Sub-total of cash generated from financing
activities
46,141,219 47,543,470
Cash paid for debt repayment
(33,255,720) (28,355,640)Cash paid for dividend and profit distribution orrepayment of interests
(3,471,466) (4,802,831)
Including: Dividends and profit paid by
subsidiaries to minority shareholders
(325,152) (289,774)
Cash used in other financing activities
(6,312,578) (4,454,836)
Subtotal of cash used in financing activities
(43,039,764) (37,613,307)
Net cash generated from financing activities
3,101,455 9,930,163
IV. Effect of exchange rate changes on cash and cashequivalents
91,958 261,370
V. Net increase in cash and cash equivalents (5,931,376) 1,594,616
Add: Opening balance of cash and cash equivalents 33,675,624 30,081,705
VI. Ending balance of cash and cash equivalents 78 27,744,248 31,676,321
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge of
thefinancialdepartment: Peng PanThe 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)
January - June 2023Equity attributable to shareholders of the parent company
Sharecapital
Otherequityinstruments
Capitalreserves
Treasuryshare
SpecialReserves
Othercomprehensiveincome
Surplusreserves
Generalriskreserve
Undistributedprofit
Non-controllinginterests
ShareholderequityTotalI. Balance at the end of the prior year
17,071,892 -12,522,792 (1,314,581) 2,301 (811,822) 3,712,273 8,934 19,486,730 81,460,234 132,138,753Add: Change in accounting policies
- ----------II. Balance at the beginning of theperiod
17,071,892 -12,522,792 (1,314,581) 2,301 (811,822) 3,712,273 8,934 19,486,730 81,460,234132,138,753III. Movement of the period
1,707,189 -(2,097,784)195,545 4,490 (364,246) --340,493 7,708,866 7,494,553(I) Total comprehensive income
- ----(364,246)--340,493 1,963,326 1,939,573(II) Capital contributed and reducedby shareholders
- -(426,700)219,638-----6,011,113 5,804,051
1. Capital increased by shareholders
- --------6,657,075 6,657,075
2. Share-based payments included in
owners' equity
-
-
20,868466,809
------
487,677
3. Amount of bond issuance included
in owners' equity
-
-
--
------
-
4. Others
- -(447,568)(247,171) -----(645,962)(1,340,701)(III) Profit distribution
- ---4,490 ----(315,559) (311,069)
1. Appropriation of surplus reserves
- ----------
2. Appropriation of general risk
reserve
-
---
16,191
----
34,58850,779
3. Appropriation to shareholders
- --------(325,152)(325,152)
4. Others
- ---(11,701)----(24,995)(36,696)(IV) Transfers within owners’ equity
1,707,189 -(1,683,096)(24,093)-------
1. Capitalization of capital reserves
into capital (or share capital)
1,707,189
-
(1,683,096)(24,093)
-------(V) Others
- -12,012 ------49,986 61,998IV. Balance as at the end of theperiod
18,779,081
-10,425,008 (1,119,036)6,791 (1,176,068)3,712,273 8,934 19,827,223 89,169,100 139,633,306
Legal representative: Li Dongsheng Person in charge of financial affairs:
Li Jian
Person in charge of the
financial department:Peng PanThe 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)
January - June 2022Equity attributable to shareholders of the parent company
Sharecapital
Otherequityinstruments
Capitalreserves
Treasuryshare
SpecialReserves
Othercomprehensive
income
Surplusreserves
eneral
riskreserve
Undistributed
profit
Non-controllinginterests
ShareholderequityTotalI. Balance at the end of theprior year
14,030,642 200,3346,079,267 (1,885,557) 1,549(409,447)2,550,173 8,934 22,458,34076,611,057119,645,292Add: Change in accountingpolicies
- -------69,346185,491 254,837II. Balance at the beginning ofthe period
14,030,642 200,3346,079,267 (1,885,557)1,549(409,447)2,550,1738,934 22,527,68676,796,548 119,900,129III. Movement of the period
- (5,933)(1,893,692)(426,107)1,919(355,015)--(1,400,656)3,317,639(761,845)(I) Total comprehensiveincome
- ----(355,015)--663,5211,245,2131,553,719(II) Capital contributed andreduced by shareholders
- (5,933)(1,893,692)(426,107)-----4,249,509 1,923,777
1. Capital increased by
shareholders
- --------4,735,6954,735,695
2. Capital contributed by
holders of other equityinstruments
- (5,933)3,902-------(2,031)
3. Share-based payments
included in owners' equity
- -49276,664------77,156
4. Others
- -(1,898,086)(502,771)-----(486,186)(2,887,043)(III) Profit distribution
- ---1,919---(2,050,003)(2,177,083)(4,225,167)
1. Appropriation of surplus
reserves
- ----------
2. Appropriation of general
risk reserve
- ---1,919-----1,919
3. Appropriation to
shareholders
- -------(2,050,003)(2,177,083)(4,227,086)
4. Others
- ----------(IV) Others
- -------(14,174)-(14,174)IV. Balance as at the end ofthe period
14,030,642 194,4014,185,575(2,311,664)3,468(764,462)2,550,1738,93421,127,03080,114,187119,138,284
Legalrepresentative: Li Dongsheng
Person in charge offinancial affairs: Li Jian
Person in charge ofthe financialdepartment: Peng PanThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationBalance Sheet of the Company
(RMB’000)
AssetsNote XVIJune 30, 2023 January 1, 2023Current assets
Monetary assets12,917,668 17,821,922Held-for-trading financial assets9,647,246 5,936,208Derivative financial assets4,918 15,578Accounts receivable
365,860 353,812Prepayments
18,451 3,693Other receivables
5,504,163 4,961,948Inventories
- 5,380Other current assets
36,275 34,838
Total current assets
28,494,581 29,133,379
Non-current assets
Long-term receivables
1,988,096 1,935,365Long-term equity investments
77,496,501 76,360,371Investments in other equityinstruments
5,000 5,000Other non-current financialassets
1,218,353 431,023Investment property
79,196 81,034Fixed assets
33,055 32,223Construction in progress
- -Right-of-use assets
445,650 428,575Intangible assets
103,923 109,605Long-term deferred expenses
37,446 24,069Deferred income tax assets7 7
Total non-current assets81,407,227 79,407,272
Total assets109,901,808 108,540,651
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge of thefinancialdepartment: 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 XVI June 30, 2023 January 1, 2023
Current liabilities
Short-term borrowings1,961,839 1,900,169
Accounts payable169,446 140,563Contract liabilities822 308
Employee compensation payable100,677 178,097Taxes and levies payable59,944 63,908
Other payables17,679,838 22,036,683
Non-current liabilities due within oneyear
5,372,565 5,605,919Other current liabilities11,465 2,430
Total current liabilities
25,356,596 29,928,077
Non-current liabilities
Long-term borrowings20,965,355 15,280,955Bonds payable8,424,693 9,922,133Lease liabilities24,455 748Long-term employee compensationpayable
22,660 84,188Deferred income54,343 53,638
Total non-current liabilities
29,491,506 25,341,662
Total liabilities54,848,102 55,269,739
Share capital
18,779,081 17,071,892
Other equity instruments
-
-
Capital reserves
16,029,964 17,715,533
Less: Treasury share
1,119,036 1,314,581
Other comprehensive income
(95,863) (128,195)
Surplus reserves
3,510,209 3,510,209
Retained earnings
17,949,351 16,416,054
Total shareholders’ equity
55,053,706 53,270,912
Total liabilities and shareholders' equity109,901,808 108,540,651
Legalrepresentative: Li Dongsheng
Person inchargeof financialaffairs: Li Jian
Person incharge of the
financialdepartment: Peng PanThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationIncome Statement of the Company
(RMB’000)
Note XVIJanuary - June 2023
January - June 2022
I. Operating revenue6 736,414 589,571
Less: Operating cost6 504,204 412,401Taxes and levies8,793
1,961Sales expenses17,908
31,939Administrative expenses165,184
136,116R&D expenses22,282
78,136Financial expenses390,668
876,773Including: Interest expenses807,654
1,271,057Interest income321,244
391,725Plus: Other income
4,995
2,901Return on investment
1,788,747
10,607,557Of which: Share of profit or loss of joint
ventures and associates
682,026
690,201Gain on changes in fair value
117,382
24,470Credit impairment loss
Asset disposal income
1,093
II. Operating profit1,539,602 9,688,186
Plus: Non-operating income15 574,945
Less: Non-operating expenses6,321 7,360
III. Gross profit1,533,296 10,255,771
Less: Income tax expenses- 12
IV. Net profit1,533,296 10,255,759
V. Other comprehensive income32,333 4,068
VI. Total comprehensive income1,565,629 10,259,827
Legalrepresentative: Li Dongsheng
Person inchargeof financialaffairs: Li Jian
Person incharge of the
financialdepartment: 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)
oteXVI
January - June 2023
January - June 2022
I. Cash flow from operating activities:
Proceeds from sale of commodities and
rendering of services
687,718
421,044Tax and levy rebates1 1,714Cash generated from other operatingactivities
420,249 1,592,522
Sub-total of cash generated from operatingactivities
1,107,968 2,015,280
Payments for commodities and services(397,613) (453,962)Cash paid to and for employees (114,193) (141,860)Taxes and levies pai
Nd
(77,503) (36,637)Cash used in other operating activities(5,065,900) (407,266)
Sub-total of cash used in operating activities(5,655,209) (1,039,725)
dN
et cash gene
| r |
ated from operating activities
(4,547,241) 975,555
II. Cash flow from investing activities:
Proceeds from disinvestments 8,180,269 6,242,022Proceeds from return on investments1,131,472 70,898
et proceeds from disposal of fixed assets,intangible assets and other long-termassets
- 24
Sub-total of cash generated from investmentactivities
9,311,741 6,312,944
Payments for the acquisition andconstruction of fixed assets, intangibleassets and other long-term assets
(6,631) (5,860)Payments for investments (12,791,025) (6,974,584)Cash used in other investing activities- -
Subtotal of cash used in investing activities(12,797,656) (6,980,444)
NN
et cash used in investing activities (3,485,915) (667,500)
Legalrepresentative: Li Dongsheng
Person in chargeof financialaffairs: Li Jian
Person incharge of the
financialdepartment: 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 XVIJanuary - June 2023
January - June 2022
III. Cash flow generated from financingactivities:
Capital contributions received
-
-Borrowings raised11,780,000 14,931,000Net cash received from bonds issue
1,500,000
4,500,000Cash generated from other financing
activities
54,267
106,878
Sub-total of cash generated from financingactivities
13,334,267
19,537,878
Cash paid for debt repayment
(9,203,619)
(12,364,006)Cash paid for distribution of dividends andprofits or repayment of interests
(715,827)
(2,625,194)Cash used in other financing activities
(269,708)
(535,295)
Subtotal of cash used in financingactivities
(10,189,154)
(15,524,495)
Net cash generated from financing
activities
3,145,113
4,013,383
IV. Effect of exchange rate changes on cash andcash equivalents
(53,755)
15,223
V. Net increase in cash and cash equivalents
(4,941,798)
4,336,661
Add: Opening balance of cash and cashequivalents
17,570,270
10,401,379
VI. Ending balance of cash and cash equivalents
12,628,472
14,738,040
Legalrepresentative: Li Dongsheng
Person inchargeof financialaffairs: Li Jian
Person incharge of the
financialdepartment: 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)
January -June 2023Share capital
Other equityinstruments
Capitalreserves
Treasuryshare
Othercomprehensive
income
Surplusreserves
Retainedearnings
Totalshareholders’
equity
I. Balance at the end of the prior yea
| r | , |
892-17
| , | , |
| , | ( |
| , |
| ) | ( |
| , | ) |
| , |
20916
| , |
054 53
| , |
Add: Change in accounting policies ---- ----II. Balance at the beginning of the perio
| d | , |
892-17
| , | , |
| , | ( |
| , |
| ) | ( |
| , | ) |
| , |
20916
| , |
054 53
| , |
III. Movement of the period
| , |
189-
| , |
| ) |
545 32
| , | , |
332 -1
| , |
2971
| , |
(I) Total comprehensive income---- 32
332 -1
| , | , |
2971
| , | , |
(II) Capital contributed and reduced byshareholders-
-17,836219,638
---
,,
1. Capital contributed by owners
--------
2. Capital contributed by holders of other
equity instruments--------
3. Share-based payments included in
owners' equity--17
,,
836466
| , | , |
---
4. Amount of bond issuance included in
owners' equity--------
5. Others
---
,(
| ( | , | |
---
| ) | ( |
| , | ) |
(III) Profit distribution---- -
--
-
1. Appropriation of surplus reserves
---- ----
2. Appropriation to shareholders
---- ----
3. Others
---- ----(IV) Transfers within owners’ equity
| , |
189-
| , |
| ) | ( |
| ) |
----
1. Capitalization of capital reserves into
capital (or share capital)
| , |
189-
| , |
| ) | ( |
| ) |
----(V) Others--
| ( | , | |
- ---
| ) | ( |
| ) |
I
. Balance as at the end of the period
| V | , |
081-16
| , | , |
| , | ( |
| , |
| ) | ( |
| ) |
| , |
20917
| , |
351 55
| , |
Legal representative: Li Dongsheng
Person in charge of financialaffairs: 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)
January - June 2022
Share capital
Other equityinstruments
Capitalreserves
Treasuryshare
Othercomprehensiveincome
SurplusreservesRetained earnings
Totalshareholders’
equityI. Balance at the end of the prior year
14,030,642 200,334 9,900,679 (1,885,557) (112,194)2,348,1098,021,32932,503,342Add: Change in accounting policies - --- -
-
--II. Balance at the beginning of theperiod
14,030,642 200,3349,900,679 (1,885,557) (112,194)2,348,1098,021,32932,503,342III. Movement of the period
- (5,933)(313)(426,107)
4,067-8,191,5827,763,296(I) Total comprehensive income
- --- 4,067-10,255,75910,259,826(II) Capital contributed and reducedby shareholders
- (5,933)(313)(426,107)
---
(432,353)
1. Capital contributed by owners
- ---
---
-
2. Capital contributed by holders of
other equity instruments
- (5,933)3,902-
---
(2,031)
3. Share-based payments included in
owners' equity
- -49276,664
---
77,156
4. Others
- -(4,707)(502,771)
---
(507,478)(III) Profit distribution
-
--- -
-(2,050,003)(2,050,003)
1. Appropriation of surplus reserves
-
--- -
---
2. Appropriation to shareholders
- --- --(2,050,003)(2,050,003)
3. Others
- --- ----(IV) Others
- --- --(14,174)(14,174)IV. Balance as at the end of the period
14,030,642 194,4019,900,366(2,311,664)
(108,127)2,348,10916,212,91140,266,638
Legalrepresentative: Li Dongsheng
Person in charge offinancial affairs: Li Jian
Person in charge o
the financialdepartment:Peng Pan
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
I General information
(I) Place of incorporation and organizational structure
TCL Technology Group Corporation (hereinafter referred to as the “Company”) is a limitedliability 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 TradeCommission of Guangdong Province, the Company was changed to a joint stock limitedcompany with a registered capital of RMB1,591,935,200, which was approved by GuangdongProvince Administration for Industry and Commerce on April 19, 2002. The registrationnumber is 4400001009990.Upon approval of ZJFXZ [2004] Document No. 1 issued by the China Securities RegulatoryCommission (CSRC) on January 2, 2004, the Company was permitted to issue 590,000,000shares 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. (hereinafterreferred to as " TCL Communication Equipment") in a stock-for-stock deal, which were listedon the Shenzhen Stock Exchange on January 30, 2004. The shares issued to the public were allpriced online, with a par value of RMB1 and an issue price of RMB4.26 per share, raising atotal of RMB2,513,400,000. Upon the completion of this deal, the registered capital of theCompany increased to RMB2,586,331,144, and on July 16, 2004, the Company was approvedby the Guangdong Province Administration for Industry and Commerce to change its businesslicense to Business License QGYZZ No. 003362. Upon the completion of the shareholderstructure reform and the expiration of the share lockup period, the foreign shareholding ratioin the Company was less than 10%. On September 11, 2007, the Company was approved byGuangdong Province Administration for Industry and Commerce to change its business licenseto 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 ofRMB2.58 per share, raising a total of RMB904,548,000. Upon the completion of the issue, theregistered 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 forIndustry 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 ofRMB3.46 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 toRMB4,238,109,417, and on September 19, 2010, the Company was approved by GuangdongProvince Administration for Industry and Commerce to change its business license to BusinessLicense No. 440000000011990.On May 19, 2011, the Company carried out a bonus issue of 10 additional shares for every 10shares to all the shareholders with capital reserves, representing a total of 4,238,109,417 newshares, with a par value of RMB1 per share. Upon the completion of this bonus issue, theregistered 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 andCommerce 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 totalshare capital of the Company from 8,476,218,834 shares to 8,535,088,914 shares.
(RMB’000)
I General information (continued)
(I) Place of incorporation and organizational structure (continued)Upon the approval of the CSRC on February 13, 2014 with the ZJXK [2014] Document No. 201,the Company privately placed 917,324,357 ordinary shares denominated in RMB (A-share) todesignated investors on April 30, 2014, with a par value of RMB1 and an issue price of RMB2.18per share, raising a total of RMB1,999,767,098.26. Upon the completion of this deal, the registeredcapital 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 changeits business license to Business License No. 440000000011990.
In 2015, 48,357,920 stock options were exercised under an incentive plan of the Company, and uponapproval by the CSRC on January 28, 2015 with the ZJXK [2015] Document No.151, the Companyissued 2,727,588,511 shares in a private placement. As such, the total share capital of the Companyincreased 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 sharecapital 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 decreasedfrom 12,229,283,042 shares to 12,213,681,742 shares. On April 26, 2016, the Company wasapproved by Huizhou Administration for Industry and Commerce to change its business license toBusiness License No. 91441300195971850Y (unified social credit code).
In 2017, the Company purchased an interest in subsidiary TCL China Star OptoelectronicsTechnology Co., Ltd. by means of a new issue of 1,301,290,321 shares. Upon the completion of thisdeal, the total share capital of the Company increased from 12,213,681,742 shares to 13,514,972,063shares.
In 2018, the Proposal on the Grant of Restricted Stock to Awardees was approved at the 7th Meetingof the 6th Board of Directors, and a total of 34,676,444 shares were subscribed for under therestricted stock incentive plan. Upon the completion of this deal, the total share capital of theCompany 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 tocertain awardees under the 2018 Restricted Stock Incentive Plan & Global Innovation Partner Planbut were still in lockup. As such, the total share capital of the Company decreased from13,549,648,507 to 13,528,438,719 shares.
In 2020, the Proposal on the Intended Change of the Company’s Full Name and Stock Name wereapproved respectively at the 23rd Meeting of the 6th Board of Directors and the First ExtraordinaryGeneral 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.”) sinceFebruary 7, 2020, with the stock name changed from “TCL CORP.” to “TCL TECH.”, while thestock 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 totalshare 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 interestin subsidiary Wuhan China Star Optoelectronics Technology Co., Ltd. Upon the completion of thisdeal, the total share capital of the Company increased from 13,519,279,411 shares to 14,030,788,362shares.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
I. General information (continued)
(I)
I Place of incorporation and organizational structure (continued)
In September 2021, the Company repurchased and retired 145,941 restricted shares that hadbeen granted under the 2019 Restricted Stock Incentive Plans but were still locked up. Assuch, the total share capital of the Company decreased from 14,030,788,362 to14,030,642,421 shares.
During 2022, investors of TCL Directional II Convertible bonds exercised their rights ofconversion resulting in additional issue of 235,120,702 shares, and the total share capital ofthe 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 inRMB 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 increaseof 2,806,128,484 shares in total share capital of the Company to 17,071,891,607 sharesfrom 14,265,763,123 shares.
On May 8, 2023, the Company issued shares to all shareholders with one share for every10 shares through capital reserves, representing a total of 1,707,189,160 new shares, with apar value of RMB1 per share. Upon the completion of this bonus issue, the registered capitalof the Company was increased from RMB17,071,891,607 to RMB18,779,080,767.
As of June 30, 2023, the total issued share capital of the Company was 18,779,080,767
shares. See note V. 47 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 primarilyengaged in the research, development, production and sales of semi-conductors, electronicproducts and communication devices, new optoelectronic products, liquid crystal displaydevices, import and export of goods and technologies (excluding goods and technologiesthat are prohibited from import and export or require an administrative approval for importand export), venture capital business and venture capital consultation, entrepreneurialmanagement services for start-up enterprises, participation in the initiation of venturecapital institutions and investment management advisory institutions, immovable propertyleasing, IT services, conference services, computer technical services and developmentservice of electronic products and technologies, development and sale of software, patenttransfer, customs clearance services, consulting services, payments and settlements (whereany approval from any relevant department is required according to law, it must be obtainedbefore 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 Directorson August 29, 2023.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
II Scope of consolidated financial statements
As at the end of the Reporting Period, for subsidiaries included in the consolidated financialstatements, please refer to Note VII, 1, (1) "Breakdown of important subsidiaries". For thechanges to the scope of the consolidated financial statements of the Reporting Period, see NoteVI.
III Significant accounting policies and accounting estimates
1 Basis for the preparation of financial statements
The preparation of financial statements of the Company is based on the actual transactions and eventsin accordance with the "Accounting Standards for Business Enterprises - Basic Standards" publishedby the Ministry of Finance and specific corporate accounting standards, application guidelines forcorporate accounting standards, corporate accounting standards interpretations and other relevantregulations (hereinafter collectively referred to as "corporate accounting standards") for confirmationand measurement, combining the provisions of “Regulations on Information Disclosure andCompilation of Companies Offering Securities to the Public No. 15 - General Provisions on FinancialReports” (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 theend of the Reporting Period and has not identified any issues or circumstances that result insignificant doubts about its ability to continue as a going concern. Therefore, the financialstatements have been prepared on a going concern basis.
3 Accounting Basis and Measurement Basis
The Company’s accounting treatment is based on the accrual basis. Except certain financial
instruments measured at fair value, the financial statements are measured at historical cost. Ifan asset is impaired, provision for impairment will be made accordingly based onrelevant rules.
4 Statement of compliance with corporate accounting standards
The financial statements are in compliance with the requirements of the Accounting Standardsfor Business Enterprises, and truly and completely reflect the financial position, operatingresults, cash flow and other relevant information of the Company during the Reporting Period.
5 Accounting period
The Company adopts the calendar year as an accounting period, and its fiscal year is fromJanuary 1 to December 31 of the Gregorian calendar.
6 Operations cycle
The Company does not take the operating cycle as the criteria for liquidity classification ofassets and liabilities.
7 Functional currency for bookkeeping
The functional currency for bookkeeping and the preparation of financial statements are alldenominated in RMB, and are presented in the unit of RMB’000 in all the tables herein unlessotherwise specified.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
8 Accounting treatments for business combinations involving enterprises under and not under common control
(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, accounting for multiple transactions is treated as apackage 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 forcollectively;
(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 othertransactions.
(2) Business combinations involving enterprises under common control
(a) Individual financial statement
Assets and liabilities acquired by the Company in business combinations are measured at the carryingamount of assets and liabilities of the acquiree on the date of combination (including the goodwill of theultimate controlling party resulting from the acquiree). The difference between the carrying amount of netassets acquired in the combination and that of the consideration paid for the combination (or the total parvalue of shares issued) is used to adjust the capital stock premium in the capital reserve, and when thecapital stock premium in the capital reserve is insufficient for offset, it is used to adjust the retainedearnings. If there is a contingent consideration and it is necessary to confirm the provision or assets, thedifference between the estimated amount of liabilities or assets and the settlement amount of subsequentcontingent consideration is used to adjust the capital reserve (capital stock premium), and when the capitalreserve is insufficient, it is used to adjust the retained earnings.
For a business combination that is ultimately realized through multiple transactions, if it is a packagetransaction, each transaction is treated as a transaction that acquires control; if it is not a packagetransaction, on the date of acquisition of control, the difference between the initial cost of long-term equityinvestments and the carrying amount of long-term equity investments before the combination plus thecarrying amount of the newly paid considerations on the date of combination is used to adjust the capitalreserve; 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 forother comprehensive gains recognized by equity accounting or financial instrument confirmation andmeasurement standards, and up to the disposal of the investment, the accounting treatment shall be basedon the same basis as the direct disposal of the assets or liabilities of the invested entity; other changes inthe owner’s equity other than net profit or loss, other comprehensive income or profit distribution of netassets of the invested company recognized as equity are not subject to accounting, and will be transferredto the current profit and loss until disposal of the investment.
The agency fees paid for audits, legal services, assessments and consultations and other direct relatedexpenses incurred in the business combination are recognized in profit or loss in the period in which theywere incurred. The transaction costs for the issuance of equity securities for the business combination thatmay be directly attributed to equity transactions can be deducted from equity; transaction costs directlyrelated to the issuance of a debt instrument as a combination consideration are treated as an initialrecognized amount included in the debt instrument.
If the combined party has a consolidated financial statement, the initial investment cost of the long-termequity investment is determined based on the owners' equity attributable to the parent company in theconsolidated financial statements of the combined party.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
Accounting treatments for business combinations involving enterprises under and not undercommon control (continued)
(2) Business combinations involving enterprises under common control (continued)
(b) Consolidated financial statements
Assets and liabilities acquired by the acquirer in the business combination are measured
based on the carrying amount of the owner's equity of the acquiree in the consolidatedfinancial 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 acquiringcontrol; if it is not a package transaction, the long-term equity investments held by thecombined party before the combination, the gains and losses, other comprehensive incomeand other changes in owners' equity have been recognized between the date of acquisitionor the date of the combining party and the combined party under the final control of thesame party, whichever is later, and the date of combination. These are used to offset theinitial retained earnings or current profit and loss during the comparative reporting periodsrespectively.
If the accounting policies adopted by the acquiree are inconsistent with those adopted by
the Company, the Company shall make adjustments in accordance with the accountingpolicies of the Company on the date of combination, and on this basis, confirm theconsolidated financial statements in accordance with the provisions of AccountingStandards for Business Enterprises.
(3) Business combination not under common control
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 differencebetween the fair value and their carrying amount is recognized in profit or loss. Where afuture event that may affect the combination costs is agreed in the combination contract, ifthe estimated future events are likely to occur on the date of purchase and the amount of theimpact on combination costs can be reliably measured, it is also included in the combinationcosts.
The agency fees paid for audits, legal services, assessments and consultations and otherdirectly related expenses incurred in the business combination are recognized in profit orloss during the period in which they are incurred. The transaction costs for the issuance ofequity securities for the business combination that may be directly attributed to equitytransactions 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 theCompany. In case that the cost of combination is less than the fair value of the netidentifiable assets of the acquired party gained in the combination, and the difference is stillless than the fair value of net identifiable assets of the acquired party gain in the combinationafter review, the difference is included in the current profit and loss by the Company.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
Accounting treatments for business combinations involving enterprises under and not under commoncontrol (continued)
(3) Business combination not under common control (continued)
In the case where a business combination not under common control is realized through multipleexchanges and transactions, if it is a package transaction, each transaction will be accounted for as atransaction for acquiring control; in the case it is not a package transaction, if the equity investment heldbefore the date of combination is accounted for using equity method, the sum of the carrying amount ofequity investments of the acquiree held before the date of acquisition, plus the new investment cost on thedate of acquisition will be recognized as the initial cost of the investment; the remaining comprehensiveincome recognized in equity investments using equity method before the date of acquisition will berecorded, when the investment is disposed of on the same basis as those the investee adopted directly todispose of the relevant assets or liabilities. If the equity investment held before the date of combination isaccounted for by financial instrument recognition and measurement criteria, the sum of the fair value ofequity investment on the date of combination plus the new investment cost is taken as the initial investmentcost on the date of combination. The difference between the fair value and the carrying amount of theoriginal equity, and the accumulated fair value changes originally included in other comprehensive incomeshould be transferred to return on investment in the current period of combination date.
(4) Expenses incurred from combination
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 whichthey are incurred. The transaction costs for the issuance of equity securities for the business combinationthat may be directly attributed to equity transactions can be deducted from equity;
9 Method for preparing consolidated financial statements
(1) Consolidation scope
The scope of consolidation of the Company’s consolidated financial statements is determined on the basisof control, and all subsidiaries (including separate entities controlled by the Company) are included intothe consolidated financial statements.
(2) Consolidation procedure
The Company prepares the consolidated financial statements based on the financial statements of itselfand its subsidiaries and other relevant information. The Company prepares the consolidated financialstatements in a manner that the whole group will be treated as an accounting entity to reflect the financialposition, operating results, and cash flow of the group as a whole under unified accounting policies, inaccordance with the recognition, measurement and presentation requirements of relevant accountingstandards for business enterprises.
The accounting policies and accounting periods adopted by all subsidiaries included in the consolidatedfinancial statements are consistent with those of the Company. If the accounting policies or accountingperiods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustmentswill be made in accordance with the Company's accounting policies and accounting periods whenpreparing consolidated financial statements.
The impact of intracompany transactions between the Company and its subsidiaries, and intracompanytransactions between subsidiaries, on the consolidated balance sheet, consolidated income statement,consolidated cash flow statement and consolidated statement of changes in shareholders' equity is offsetin the preparation of consolidated financial statements. Where a transaction is recognized by the Companyor its subsidiaries as the transaction subject, which is different from that under the consolidated financialstatement of the group, the transaction should be adjusted at the group level.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
9 Method for preparing consolidated financial statements (continued)
(2) Consolidation procedure (continued)
If the current losses shared by the minority shareholders of a subsidiary exceed the share enjoyed bythe minority shareholder in the initial owners' equity of the subsidiary, the balance will still reducethe minority interests.
During the Reporting Period, if a subsidiary or business is added due to the business combinationinvolving enterprises under common control, the opening balance of the consolidated balance sheetis adjusted; the income, expenses and profits of the subsidiary or business from the beginning of theperiod of combination to the end of the Reporting Period are included in the consolidated incomestatement; the cash flows of the subsidiary or business from the beginning of the period ofcombination 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 theReporting Period are included in the consolidated income statement; the cash flow of the subsidiaryor business from the date of acquisition to the end of the Reporting Period is included in theconsolidated cash flow statement.
During the Reporting Period, if a subsidiary or business is added due to a business combinationinvolving enterprises under non-common control, the opening balance of the consolidated balancesheet is not adjusted; the income, expenses and profits of the subsidiary or business from the date ofacquisition to the end of the Reporting Period are included in the consolidated income statement; thecash flow of the subsidiary or business from the date of acquisition to the end of the Reporting Periodis 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 disposaldate are included in the consolidated income statement; the cash flow of the subsidiary or businessfrom the beginning of the reporting period to the disposal date is included in the consolidated cashflow statement.
When the Company loses control over the invested party due to disposal of part of the equityinvestment or other reasons, the remaining equity investment after disposal will be re-measuredbased on its fair value by the Company on the date of loss of control. The difference of the sum ofthe 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 enjoyedin accordance with the original share-holding ratio since the date of acquisition or combination, isaccounted for the return on investment in the current period of loss of control. Other comprehensiveincome or net profit and loss related to the original subsidiary's equity investment, othercomprehensive income and other changes in owners' equity other than profit distribution, will beconverted into current return on investment when control is lost, except for other comprehensivegains arising from the re-measurement of net liabilities of the Benefit Plan made by the investedparty or changes in net assets.
10 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 jointarrangement, other relevant facts and circumstances.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
10 Classification of joint arrangements and accounting treatment method for joint operations
(continued)
(1) Classification of joint arrangements (continued)
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 thefollowing conditions and meeting the provisions of relevant laws and regulations is classifiedas 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 theoutput substantially related to the joint arrangement, and the repayment of the liabilities relatingto the arrangement continues relying on the support of the parties.
(2) Accounting treatment for joint operation
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 accountingstandards 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 thetransaction attributable to other participants in the joint operation, before the assets, etc., aresold to a third party by the joint operation. The Company will recognize in full the assetimpairment loss arising if the assets invested or sold are impaired in compliance with theAccounting 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 transactionattributable to other participants in the joint operation, before the assets, etc., are sold to a thirdparty by the Company. The Company will recognize its share of the asset impairment lossarising if the assets purchased are impaired in compliance with the Accounting Standards forBusiness 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 beaccounted for by the above principles; otherwise, it shall be accounted for by the relevantaccounting standards for business enterprises.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
11 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 holdingperiod (generally due within three months from the date of purchase) and strong liquidity, andinvestments with low risk of changes in value (including investments in bonds within threemonths, while excluding equity investments), as cash equivalents.
12 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 basecurrency at the spot exchange rate on the transaction date.
Foreign currency monetary items are translated at the spot exchange rate on the balance sheetdate, and the exchange differences resulted therefrom, except that the exchange differencesarising from special foreign currency loans related to the acquisition and construction of assetseligible for capitalization should be treated in accordance with the principle of capitalization ofborrowing costs, are all included in the current profit and loss. Foreign currency non-monetaryitems measured at historical cost are still translated at the spot exchange rate on the transactiondate, 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 exchangerates on the date when the fair value is determined, and the exchange differences resultedtherefrom are included in profit or loss in the current period as a change in fair value. In the caseof foreign currency non-monetary items that are at fair value through other comprehensiveincome, 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 andliabilities 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 spotexchange rate at the time of occurrence of the items. All the incurred items in the incomestatement are translated at the current average exchange rate of the period in which transactionsoccur. The translation differences of foreign currency financial statement arising from theabove 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 overseas operation listed in other comprehensive income inthe balance sheet are transferred from the other comprehensive income to the profit and loss.When the disposal of a portion of the equity investment or otherwise causes a decrease in theproportion of equity held in the overseas operation without losing of control over the overseasoperation, the translation differences in the foreign currency statements related to the part ofthe overseas operation disposed of will be attributed to minority interests, rather than to theprofit and loss. When the overseas operation disposed of is a portion of the equity of anassociate or joint venture, the translation difference of the foreign statements related to theoverseas operation should be transferred to the profit or loss for the period in proportion to thedisposal of the overseas operation.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financialinstruments
When the Company becomes a party to a financial instrument, it recognizes a financial asset orliability.
The effective interest method refers to the method of calculating the amortized cost of financial assetsor 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 flowof a financial asset or financial liability during its expected duration to the book balance of thefinancial asset or the amortized cost of the financial liability. When determining the effective interestrate, the expected cash flow is estimated on the basis of considering all contract terms of financialassets or liabilities (such as prepayment, extension, call options or other similar options), but theexpected credit loss is not considered.
The amortized cost of a financial asset or financial liability is the accumulated amortization amountformed by deducting the repaid principal from the initial recognition amount of the financial asset orfinancial liability, adding or subtracting the difference between the initial recognition amount and thematurity amount by using the effective interest method, and then deducting the accumulated accruedloss 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 thefollowing 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 notesreceivable arising from the sale of goods or the provision of services do not contain significantfinancing components or do not consider financing components for no more than one year, the initialmeasurement shall be made at the transaction price.
For financial assets at fair value through profit or loss, transaction expenses are directly recognizedin the current profit and loss. For other financial assets, transaction expenses are included in theinitial recognition amount.
Subsequent measurement of financial assets depends on their classification. All related financialassets affected will be reclassified when and only when the Company changes its business model ofmanaging financial assets.
(a) Financial assets classified as those measured at amortized cost
The contract terms of a financial asset stipulate that the cash flow generated on a specific date is onlythe payment of the principal and the interest on the amount of outstanding principal, and the businessmodel for managing the financial asset is to collect the contractual cash flow, then the Companyclassifies the financial asset as measured at amortized cost. Financial assets of the Company that areclassified as those measured at amortized cost include monetary assets, notes receivable, accountsreceivable, other receivables, long-term receivables, debt investments, etc.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
IIISignificant accounting policies and accounting estimates (continued)
Financial instruments (continued)
(1) Classification and measurement of financial assets (continued)
(a)Financial assets classified as those measured at amortized cost (continued)
The Company recognizes interest income from such financial assets with the effectiveinterest method, and carries out subsequent measurement at amortized cost. Gains or lossesarising from impairment or derecognition or modification are included in current profit andloss. The Company calculates and determines the interest income based on the book balanceof financial assets multiplied by the effective interest rate except for the followingcircumstances:
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 atthe amortized cost and the effective interest rate of the financial assets in the subsequentperiod. If the financial instrument is no longer credit-impaired due to the improvement ofits credit risk in the subsequent period, the Company calculates and determines the interestincome by multiplying the effective interest rate by the book balance of the financial asset.
(b)
Financial assets classified as those measured at fair value through other comprehensiveincome
The contract terms of a financial asset stipulate that the cash flow generated on a specificdate is only the payment of the principal and the interest on the amount of outstandingprincipal, and the business model for managing the financial assets is both to collectcontractual cash flow and for its sale, then the Company classifies the financial assets asmeasured at fair value through other comprehensive income.
The Company recognizes interest income from such financial assets with the effectiveinterest method. Except that the interest income, impairment loss and exchange differenceare recognized as the current profit and loss, other changes in fair value are included inother comprehensive income. When the financial asset is derecognized, the accumulatedgains or losses previously included in other comprehensive income are transferred out andincluded in the current profit and loss.
Notes and accounts receivable at fair value through other comprehensive income arereported as receivables financing, and such other financial assets are reported as other debtinvestments. Among them, other debt investments maturing within one year from thebalance sheet date are reported as the current portion of non-current assets, and other debtinvestments maturing within one year are reported as other current assets.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financial instruments (continued)
(1) Classification and measurement of financial assets (continued)
(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-tradingequity instrument investments as financial assets at fair value through other comprehensiveincome on the basis of individual financial assets.
Changes in the fair value of such financial assets are included in other comprehensiveincome without allowance for impairment. When the financial asset is derecognized, theaccumulated gains or losses previously included in other comprehensive income aretransferred out and included in the retained earnings. During the investment period whenthe Company holds the equity instrument, the dividend income is recognized and includedin the current profit and loss when the Company's right to receive dividends has beenestablished, 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 financialassets under the item of investments in other equity instruments.
An investment in equity instruments is a financial asset at fair value through profit or losswhen it is obtained mainly for recent sale, or is part of the identifiable portfolio of financialassets 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 asfinancial guarantee contracts and designated as effective hedging instruments).
(d) Financial assets classified as those measured at fair value through profit or loss
If failing to be classified as those measured at amortized cost or at fair value through othercomprehensive income, or not designated as measured at fair value through othercomprehensive income, financial assets are all classified as those measured at fair valuethrough 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 andinterest income associated with such financial assets into current profits and losses.
The Company reports such financial assets as held-for-trading financial assets and othernon-current financial assets according to their liquidity.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financial instruments (continued)
(1) Classification and measurement of financial assets (continued)
(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 assetsas measured at fair value through profit or loss on the basis of individual financial assets inorder to eliminate or significantly reduce accounting mismatches.
If the mixed contract contains one or more embedded derivative instruments and its maincontract is not any financial asset as above, the Company may designate the whole of themixed contract as a financial instrument at fair value through profit or loss. Except underthe 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 withoutanalysis. If the prepayment right embedded in a loan allows the holder to prepay the loan atan 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 andinterest income associated with such financial assets into current profits and losses.
The Company reports such financial assets as held-for-trading financial assets and othernon-current financial assets according to their liquidity.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financial instruments (continued)
(2) Classification and measurement of financial liabilities
The Company classifies a financial instrument or its components into financial liabilities orequity instruments upon initial recognition according to the contract terms of and the economicsubstance reflected by the financial instrument issued, rather than only in legal form, incombination with the definitions of financial liabilities and equity instruments. Financialliabilities are classified at initial recognition as measured at fair value through profit or loss, orother financial liabilities, or derivatives designated as effective hedging instruments.
Financial liabilities are measured at fair value upon initial recognition. For financial liabilitiesat fair value through profit or loss, relevant transaction expenses are directly included in currentprofits and losses; for other categories of financial liabilities, relevant transaction expenses areincluded 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 derivativesfalling under financial liabilities) and financial liabilities designated as measured at fair valueupon initial recognition and through profit or loss.
A financial liability is a held-for-trading financial liability if it is mainly undertaken for recentsale or repurchase, or is part of the identifiable portfolio of financial instruments centrallymanaged, and there is objective evidence that the enterprise has recently employed a short-termprofit model, or is a derivative instrument, except derivatives designated as effective hedginginstruments and derivatives conforming to financial guarantee contracts. Held-for-tradingfinancial liabilities (including derivatives falling under financial liabilities) are subsequentlymeasured at fair value. All changes in fair values except for hedging accounting are included incurrent profits and losses.
The Company irrevocably designates financial liabilities as measured at fair value through profitor loss at the time of initial recognition in order to provide more relevant accountinginformation, 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 riskmanagement or investment strategy stated in the official written documents, and is reported tokey management personnel within the enterprise on this basis.
The Company subsequently measures such financial liabilities at fair value. Apart from changesin fair value that are brought about by changes in the Company’s own credit risk and includedin other comprehensive income, other changes in fair value are included in current profits andlosses. Unless including such changes in other comprehensive income will cause or expandaccounting 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.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 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 amortizedcost. Such financial liabilities are recognized by the effective interest method and subsequentlymeasured at amortized cost. Gains or losses arising from derecognition or amortization are includedin the current profits and losses:
①Financial liabilities at fair value through profit or loss.②Financial liabilities resulting from the transfer of financial assets that do not meet the conditionsfor derecognition or continue to be involved in the transferred financial assets.③Financial guarantee contracts that do not fall under the first two categories hereof, and loancommitments 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 thecontract holder who has suffered losses when a specific debtor fails to pay the debt in accordancewith the original or modified terms of the debt instrument. Financial guarantee contracts that are notfinancial liabilities designated as measured at fair value through profit or loss are measured afterinitial recognition according to the loss reserve amount and of the initial recognition amount, less theaccumulated 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 thefollowing conditions is met:
①The contractual right to receive cash flow from the financial asset is terminated; or②The financial asset has been transferred, which meets the requirements for derecognition offinancial assets.
(b) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, such financialliability (or part thereof) is derecognized.
The existing financial liability is derecognized with a new one recognized, and the differencebetween the carrying amount and the consideration paid (including transferred non-cash assets orassumed liabilities) is included in the current profits and losses, if an agreement is signed betweenthe Company and the lender to replace the existing financial liability by assuming a new one, andthe contract terms of these two financial liabilities are substantially different, or the contract termsof 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 liabilityshall be distributed according to the proportion of the fair value of the continuing recognition portionand the derecognition portion to the overall fair value on the repurchase date. The difference betweenthe carrying amount allocated to the derecognized portion and the consideration paid (includingtransferred non-cash assets or liabilities assumed) shall be included in the current profits and losses.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 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 thefinancial asset ownership:
(a) If almost all the risks and rewards of the financial asset ownership are transferred, such financialasset shall be derecognized, and the rights and obligations generated or retained in the transfer shallbe separately recognized as assets or liabilities.
(b)
If risks and rewards of the financial asset ownership are substantially retained, such financial assetshall continue to be recognized.
(c) In circumstances where the Company neither transfers nor retains risks and rewards of the financialasset ownership substantially (i.e. circumstances other than①and②of this article), based onwhether it retains control over such financial asset,
①the financial asset shall be derecognized, and the rights and obligations generated or retained inthe transfer shall be separately recognized as assets or liabilities if such control is not retained; or②the relevant financial asset shall continue to be recognized to the extent that it continues to beinvolved in the transferred financial asset, and the relevant liabilities shall be recognized accordinglyif such control is retained. The extent that it continues to be involved in the transferred financial assetrefers to the extent the Company bears the risks or rewards on changes in the value of the transferredfinancial asset.
When judging whether the transfer of financial assets meets the above conditions for derecognitionof financial assets, the principle of substance over form shall be adopted. The Company divides thetransfer of financial assets into overall transfer and partial transfer.
(a)If the overall transfer of financial assets meets the conditions for derecognition, the differencebetween the following two amounts shall be included in the current profits and losses:
①The carrying amount of the transferred financial asset on the date of derecognition.②The sum of the consideration received for the transfer of financial assets and the amount of therespective derecognized portion of the accumulated changes in fair value originally included in othercomprehensive income directly (the financial assets involved in the transfer are financial assets atfair value through other comprehensive income).
(b) If the financial asset is partially transferred and the transferred part meets the conditions forderecognition, the carrying amount of the financial asset before transfer shall be allocated betweenthe derecognition portion and the continuing recognition portion (in this case, the retained serviceasset shall be regarded as the continuing recognition part of the financial asset) according to therespective relative fair values on the transfer date, and the difference between the following twoamounts shall be included in the current profits and losses:
①The carrying amount of the derecognized portion on the derecognition date.②The sum of the consideration received for the derecognized portion and the amount of thecorresponding derecognized portion of the accumulated changes in fair value originally included inother comprehensive income (the financial assets involved in the transfer are financial assets at fairvalue through other comprehensive income).
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 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, thefinancial asset shall continue to be recognized and the consideration received shall berecognized 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 bythe quoted price in the active market, unless the financial asset has a sell-off period for theasset itself. For the financial assets restricted for the assets themselves, the compensationamount demanded by market participants due to the risk of not being able to sell thefinancial assets on the open market within the specified period shall be deducted from thequoted price in the active market. Quoted prices in the active market includes those forrelated assets or liabilities that can be easily and regularly obtained from exchanges, dealers,brokers, industry groups, pricing or regulatory agencies, and can represent actual andrecurring 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 determinedby valuation techniques. At the time of valuation, the Company adopts valuation techniquesthat are applicable under the current circumstances and are supported by sufficient availabledata and other information, selects input values consistent with the characteristics ofrelevant 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 therelevant observable input value cannot be obtained or be feasibly obtained, theunobservable input value shall be used.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financial instruments (continued)
(6) Impairment of financial instruments
Based on the expected credit loss, the Company conducts impairment accounting of financial assetsclassified as those measured at amortized cost, financial assets classified as those measured at fairvalue through other comprehensive income and financial guarantee contracts and recognizes lossreserves.
Expected credit loss refers to the weighted average of the credit losses of financial instrumentsweighted by the risk of default. Credit loss refers to the difference between all contractual cash flowsdiscounted at the original effective interest rate and receivable according to the contract and all cashflows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Amongthem, credit-impaired purchased or originated financial assets of the Company shall be discountedat the credit-adjusted effective interest rate of such financial assets.
For receivables arising from transactions regulated by the income criteria, the Company uses thesimplified measurement method to measure the loss reserve according to the amount equivalent tothe expected credit loss during the entire duration.
For credit-impaired purchased or originated financial assets, only the accumulated changes in theexpected credit losses during the entire duration since the initial recognition are recognized as lossreserves on the balance sheet date. On each balance sheet date, the amount of change in the expectedcredit loss during the entire duration is included in the current gains and losses as impairment lossesor gains. Even if the expected credit loss during the entire duration on the balance sheet date is lessthan that reflected in the estimated cash flow upon initial recognition, the favorable change in theexpected credit loss is recognized as impairment gains.
In addition to other financial assets adopting the above simplified measurement method and otherthan the credit-impaired purchased or originated ones, the Company evaluates whether the credit riskof relevant financial instruments has increased significantly since the initial recognition, measuresits loss reserves and recognizes the expected credit loss and its changes respectively according to thefollowing 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 itsexpected credit loss over the next 12 months, and the interest income shall be calculated accordingto 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 measuredaccording to an amount equivalent to its expected credit loss throughout its life, and the interestincome 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, andthe Company shall measure its loss reserve according to an amount equivalent to its expected creditloss throughout its life, and calculate the interest income at the amortized cost and the effectiveinterest rate.The increase or reversed amount of the credit loss reserve for financial instruments shall be includedin the current profits and losses as impairment losses or gains. Except for financial assets classifiedas those measured at fair value through other comprehensive income, the credit loss reserve willoffset the carrying amount of the financial assets. For financial assets classified as those measured atfair value through other comprehensive income, the Company recognizes its credit loss reserve inother comprehensive income without reducing its carrying amount presented in the balance sheet.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 Financial instruments (continued)
(6) Impairment of financial instruments (continued)
In the previous accounting period, the Company has measured the loss reserve, the amountequivalent 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 longerconforms to the situation of significant increase in credit risk since initial confirmation; onthe balance sheet date of the current period, the Company has measured the loss reserve ofthe financial instruments, the amount equivalent to the expected credit loss in the next 12months, and the reversed amount of the loss reserve thus formed is included in the currentprofit and loss as impairment profit.
(a) Significant increase in credit risk
In order to determine whether the credit risk of financial instruments has increasedsignificantly since the initial recognition, the Company uses the available reasonable andbased forward-looking information and compares the risk of default of financial instrumentson the balance sheet date with the risk of default on the initial confirmation date. When theCompany applies provisions on depreciation of financial instruments to financial guaranteecontracts, the initial recognition date shall be regarded as the date when the Companybecomes a party to make irrevocable commitments.
For the assessment of whether the credit risk has increased significantly, the Company willconsider 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 thetime 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 lowby the Company, the Company assumes that the credit risk of the financial instrument hasnot increased significantly since the initial recognition. The financial instrument will bedeemed to have lower credit risk under the following circumstances: the default risk of thefinancial instrument is lower; the borrower has a strong capacity to fulfill its contractualcash flow obligations in a short time; furthermore, even if there are adverse changes in theeconomic situation and operating environment for a long period of time, it may notnecessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 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, thefinancial asset will become a financial asset that has suffered credit impairment. The followingobservable information can be regarded as evidence of credit impairment of financial assets:
①The issuer or debtor is in serious financial difficulty;② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.;③The creditor gives concessions to the debtor due to economic or contractual considerations relatedto the debtor's financial difficulties; the concessions will not be made under any other circumstances;④There is a great possibility of bankruptcy or other financial restructuring of the debtor;⑤The issuer or debtor has financial difficulties, resulting in the disappearance of the active marketfor the financial assets;⑥Purchasing or generation of a financial asset with a large discount, which reflects the fact of creditloss.
Credit impairment of financial assets may not be caused by separately identifiable events, but maybe 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. Duringthe assessment of the expected credit losses, the Company will take into account reasonable andreliable information about past events, the current situation and future economic situation forecast.
The Company divides financial instruments into different combinations on the basis of commoncredit risk characteristics. Common credit risk characteristics adopted by the Company include:
financial instrument type, credit risk rating, aging combination, overdue aging combination, contractsettlement cycle, debtor's industry, etc. To understand the individual evaluation criteria and combinedcredit risk characteristics of relevant financial instruments, please refer to the accounting policies ofrelevant financial instruments for details.
The Company adopts the following methods to determine the expected credit losses of relevantfinancial instruments:
①In terms of financial assets, credit loss is equivalent to the present value of the difference betweenthe contract cash flow that the Company shall receive and the expected cash flow.②In terms of the financial guarantee contract, credit loss is equal to the expected amount of paymentmade by the Company to the holder of the contract for credit loss incurred, less the present value ofthe difference between the amount expected to be collected from the holder of the contract, the debtoror any other party.③If, on the balance sheet date, a financial asset has suffered credit impairment, but one does notpurchase or generate a financial asset that has suffered credit impairment, the credit loss is equivalentto the difference between the book balance of the financial asset and the present value of the estimatedfuture cash flow discounted at the original actual interest rate.
Factors reflected in the Company's method of predicting credit losses by quantitative finance toolsinclude: unbiased probability weighted average amount determined by evaluating a series of possibleresults; time value of money; reasonable and reliable information about past events, current situationand future economic situation forecast that can be obtained on the balance sheet date withoutunnecessary extra costs or efforts.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
13 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 befully or partially recovered, the book balance of the financial asset will be written offdirectly. 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 withoutoffsetting each other. However, if the following conditions are met at the same time, the netamount after offset will be listed in the balance sheet:
(a)
The Company has the legal right, which is currently enforceable, to offset the confirmedamount;
(b)The Company plans to settle on a net basis, or realize the financial assets and settle thefinancial liabilities at the same time.
Notesreceivable
For the determination method and accounting treatment method of the Company's expectedcredit loss on notes receivable, please refer to 13(6) of note III Impairment of financialinstruments.
If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at thelevel of a single instrument, the Company will refer to the experience of historical creditloss, combine the current situation and judgment on future economic situation, divide notesreceivable into several combinations according to the characteristics of credit risk, andcalculate expected credit loss on the basis of combinations.
15 Accountsreceivable
For the determination method and accounting treatment method of the Company's expectedcredit loss on accounts receivable, please refer to 13(6) of note III Impairment of financialinstruments.
As for the accounts receivable, if there is objective evidence that the Company will not beable to recover the money according to the original terms of the accounts receivable, theCompany will separately determine its credit loss.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at thelevel of single instrument, the Company will divide the accounts receivable into severalcombinations according to the credit risk characteristics, and calculate the expected creditloss on the basis of the combinations (with reference to the experience of historical creditloss, and in combination with the current situation with the judgment of future economicsituation)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
16 Receivablesfinancing
Accounts receivable classified as those measured at fair value through other comprehensiveincome, with a maturity of i) less than one year (including one year) from the initialrecognition date, are listed as receivables financing; or ii) more than one year from theinitial recognition date, are listed as other debt investments. For the relevant accountingpolicies, please refer to 13(6) of note III Impairment of financial instruments.
17 Otherreceivables
For the determination method and accounting treatment method of the Company's expectedcredit loss of other receivables, please refer to 13(6) of note III Impairment of financialinstruments.
For other receivables for which there is objective evidence that the Company will not beable to recover the amount according to the original terms of the receivables, the Companywill separately determine its credit loss.
If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at thelevel 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 otherreceivables into several combinations according to the characteristics of credit risk, andcalculate expected credit loss on the basis of combinations.
Inventories
(1) Classification of inventories
Inventories refer to, among other things, finished products or goods held by the Companyfor sale in its daily activities, work in progress in production, materials and suppliesconsumed in the production or provision of labor services. Inventories mainly include butare not limited to raw materials, work in progress, finished products, and turnover materials.
(2) Valuation method for inventories shipped in transit
When acquired, inventory is initially measured at cost, including purchase costs, processingcosts, and other costs. Inventories are shipped in transit by weighted average method.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
18 Inventories (continued)
(3)Basis for determining the net realizable value of inventories and accrual method for inventoryvaluation allowance
After conducting a comprehensive counting at the end of the period, inventory valuationallowance shall be accrued or adjusted based on whichever lower of the cost and net realizablevalue of the inventory. 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 Sales expenses of theinventory less the estimated sales cost and relevant taxes and fees; for material inventories thatneed to be processed, in the normal production and operations process, the net realizable valueis determined by the amount of the estimated selling expenses of finished products producedless the estimated cost occurred at the time of completion, the estimated selling expenses andrelated taxes; for inventories held for the execution of sales contracts or labor contracts, the netrealizable value is calculated on the basis of the contract price, and if the quantity of inventoriesheld is more than the quantity specified in sales contracts, the net realizable value of excessinventories is calculated based on the general sales price.
At the end of the period, inventory valuation allowance is accrued according to individualinventory items; but for a large number of inventories with lower unit prices, inventory valuationallowance is accrued according to inventory category; for inventories related to the productseries produced and sold in the same region with the same or similar end use or purpose, whichis difficult to measure separately from other items, thus inventory valuation allowance is accruedand combined with other items.
If the influencing factors of the write-down of inventory value have disappeared, the amountwritten-down is recovered and reversed to the amount of inventory valuation allowance alreadyaccrued, 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's turnover materials are amortized by the one-time amortization method.
19 Contract assets
A contract asset shall be recognized if the Company has transferred the goods to the customerand 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 expectedcredit loss on contract assets, please refer to 13(6) of note III Impairment of financialinstruments.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
20 Held-for-sale assets
(1) Criteria for classification as being held for sale
The Company recognizes non-current assets or disposal groups that meet both of the followingconditions as components held for sale:
①they can be sold immediately under the current status according to the practice of selling suchassets or disposal groups in similar transactions;②The sale is likely to occur, that is, the Company has made a resolution on the sale plan, obtainedthe approval from the regulatory authorities (if applicable), and obtained a confirmed purchasecommitment that the sale is expected to be completed in one year.
The confirmed purchase commitment refers to a legally binding purchase agreement concluded byand between the Company and another party, which contains important terms such as transactionprice, time and sufficiently severe penalty for breach of contract, so that there will be little possibilityof major adjustments to or cancellation of the agreement.
(2) Accounting treatment for held-for-sale assets
The Company shall not depreciate or amortize non-current assets or disposal groups held for sale. Ifthe carrying amount is higher than the amount of fair value net of selling expenses, the former shallbe written down to the latter. The amount written down shall be recognized as asset impairment lossand included in the current profit and loss, and the impairment allowance for assets held for sale shallbe accrued at the same time.
The non-current asset or disposal group classified as being held for sale on the date of acquisitionshall be initially measured at whichever initially measured amount is lower under the assumptionthat 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 estatesubsequently measured by the fair value model, biological assets measured by the amount of fairvalue 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 rightsarising from insurance contracts regulated by the relevant accounting standards of insurancecontracts.
21 Other debtinvestments
For the determination method and accounting treatment methods of the Company’s expected creditloss of other debt investments, please refer to 13(6) of note III Impairment of financial instruments.
22 Long-term receivables
For the determination method and accounting treatment method of the Company's expected creditloss on long-term receivables, please refer to 13(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 torecover the money according to the original terms of the accounts receivable, the Company willseparately determine its credit loss.
If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level ofsingle instrument, the Company will refer to the experience of historical credit loss, combine thecurrent situation and judgment on future economic situations, divide long receivables into severalcombinations according to the characteristics of credit risk, and calculate expected credit loss on thebasis of combinations.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
23 Long-term equity investments
(1) Recognition of initial investment cost
(a) Long-term equity investment formed by business combination
For details on accounting policies, please refer to Note (VII) accounting treatments forbusiness combinations involving enterprises under and not under common control.
(b) Long-term equity investment acquired by other means
For long-term equity investment acquired by cash payment, the actual acquisition price isrecognized as initial investment cost. The initial investment cost includes expenses, taxesand other necessary expenses directly related to the acquisition of the long-term equityinvestment.
For long-term equity investment acquired by issuing equity securities, the fair value ofequity securities issued is recognized as initial investment cost; the transaction costs arisingfrom issuing or acquiring the own equity instruments of the acquirer will be offset from theequity in directly attributable transactions.
Provided that the non-monetary asset exchange contains commercial substance and the fairvalue of the assets received or assets surrendered can be reliably measured, the initialinvestment cost of the long-term equity investment received with non-monetary assets isdetermined based on the fair value of the assets surrendered, except that there is conclusiveevidence that indicates that the fair value of assets received is more reliable. For non-monetary assets that do not satisfy the above condition, the carrying amount of assetssurrendered and related taxes and fees payable are recognized as the initial investment costof the long-term equity investment.
The initial investment cost of a long-term equity investment acquired by debt restructuringis determined on the basis of fair value.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
23 Long-term equity investments (continued)
(2) Subsequent measurement and recognition of profit and loss
(a) Cost method
The long-term equity investment by which the Company exercises control over the investee isaccounted for by the cost method and measured at the initial investment cost. When the long-termequity investment is added or recovered, its cost should be adjusted thereby.
In addition to the actual payment or the cash dividends or profits included in the consideration thathave been declared but not yet paid when acquiring the investment, the Company recognizes theinvestment income for the period the investee's cash dividends or profits attributable to the Companywill be recorded in gains from investment for the period.
(b) Equity method
The long-term equity investments made by the Company in affiliates and joint ventures are accountedfor using the equity method. Among them, the portion of equity investments in affiliates, heldindirectly through venture capital, mutual funds, trusts, or similar entities, including investment-linked insurance funds, are measured at fair value through profit or loss.The difference between the higher initial cost of the long-term equity investment and the fair valueshare of identifiable net assets of the investee enjoyed in the investment is not used to adjust theinitial investment cost of the long-term investment; the difference between the lower initialinvestment cost and the higher fair value share of identifiable net assets of the investee enjoyed atthe time of conducting the investment is included in the current profits and losses.After the Company acquires a long-term equity investment, the investment income and othercomprehensive income should be recognized respectively based on the Company's share in the netprofit and loss and other comprehensive income realized by the investee, and the carrying amount ofthe long-term equity investment should be adjusted accordingly; the Company's share in the profitsor cash dividends declared by the investee should be calculated, and the carrying amount of the long-term equity investment should be reduced accordingly; the carrying amount of the long-term equityinvestment should be adjusted based on changes in owners' equity of the investee other than net profitand loss, other comprehensive income, and profit distribution, and included in owners' equity.Before the Company recognizes its share in the net profit and loss of the investee, the net profit ofthe investee is adjusted based on the fair value of the identifiable assets of the investee as at theacquisition of the investment. Any unrealized profit and loss from internal transactions between theCompany and its affiliates or joint ventures attributed to the Company based on the Company's, willbe offset, and the investment profit and loss is recognized thereon.When the Company recognizes its share in the losses incurred by the investee, the Company should,firstly, offset the carrying amount of the long-term equity investment. Then, if the carrying amountof the long-term equity investment is insufficient for the offset, the investment loss is continued tobe recognized, and the carrying amount of long-term receivable items is offset, subject to othercarrying amount of the long-term equity constitutes the net investment in the investee. Finally, afterthe above-mentioned treatment, if the Company still bears additional obligations in accordance withthe investment contract or agreement, the provision are recognized according to the estimatedobligations and included in the current investment losses.If the investee realizes profit in the future period, the Company shall, after deducting the unconfirmedloss share, conduct the process in the reverse order of the above to write down the book balance ofthe recognized liabilities and recover other long-term equity that substantially constitutes netinvestment of the investee and the carrying amount of the long-term equity, and then recover therecognition of the profit as return on investment.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
23 Long-term equity investments (continued)
(3) Conversion accounting treatment of long-term equity investments
(a) Accounting treatment for the transfer from fair value measurement to equity method
For an equity investment, originally held by the Company without control, joint control or significant
impact on the investee that is accounted for based on the financial instrument recognition andmeasurement standards, if as a result of additional investment or otherwise, the equity investment enablesthe Company to exercise significant impact on or joint control (rather than control) over the investee, thesum of the fair value of the originally held equity investment determined under the Accounting Standardsfor Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and the newinvestment cost should be deemed as the initial cost of the investment accounted for using equity method.The difference between the lower initial investment cost accounted for using equity method and the highershare of the fair value of the identifiable net assets of the investee as at the date of the additional investmentcalculated based on the new shareholding percentage after the additional investment is made, shall be usedto adjust the carrying amount of the long-term equity investment and included in the non-operating incomefor the period.
(b) Transfer from fair value measurement or equity method to cost method
For an equity investment, originally held by the Company without control, joint control or significantimpact on the investee that is accounted for based on the financial instrument recognition andmeasurement standards, or a long-term equity investment originally held by the Company in an affiliateor joint venture, if as a result additional investment or for other reasons, the investment enables theCompany to exercise control over an investee that is not under the common control with Company, thesum of the carrying amount of the originally held equity investment and the new investment cost shouldbe should be the initial cost of the investment accounted for using cost method in preparation of theindividual financial statements of the Company.The remaining comprehensive income recognized in the equity investments using equity method beforethe date of acquisition is accounted for, when the investment is disposed of, on the same basis as those theinvestee adopted directly to dispose of the underlying assets or liabilities.If the equity investment held before the acquisition date is subject to the accounting treatment under therelevant provisions of the Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments, the cumulative changes in fair value originally included in othercomprehensive income should be transferred to the profit or loss for the period when the investment isaccounted for using cost method.
(c) Transfer from equity method to fair value measurement
If the Company loses joint control or significant impact on the investee due to the disposal of part of theequity investment or otherwise, the equity remaining after the disposal should be accounted for under theAccounting Standards for Business Enterprises No. 22 - Recognition and Measurement of FinancialInstruments, and the difference between the fair value and carrying amount as at the date of losing thejoint control or significant impact should be included in the profit or loss for the period.Other comprehensive income recognized for the original equity investment accounted for using equitymethod should be accounted for on the same basis as the direct disposal of the underlying assets orliabilities by the investee when the equity method is terminated.
(d) Transfer from cost method to equity method
Where the Company loses control over the investee due to the disposal of part of the equity investment or
otherwise, if the equity remaining after the disposal by which the Company can exercise joint control orsignificant impact on the investee in preparation of the individual financial statements of the Company,the investment will be accounted for using equity method, and such remaining equity will be adjusted asif it were accounted for using equity method from the time when it is acquired.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
23 Long-term equity investments (continued)
(3) Conversion accounting treatment of long-term equity investments (continued)
(e) Transfer from cost method to fair value measurement
If the Company loses control over the investee due to the disposal of part of the equity
investment or otherwise, the equity remaining after the disposal by which the Company cannotexercise joint control or significant impact on the investee should be accounted for based on theAccounting Standards for Business Enterprises No. 22 - Recognition and Measurement ofFinancial Instruments, in preparation of the individual financial statements of the Company, andthe difference between the fair value and carrying amount as at the date of losing the controlshould be included in profit or loss.
(4) Disposal of long-term equity investments
When a long-term equity investment is disposed of, the difference between the carrying amountof the long-term equity investment and the actual acquisition price shall be included in the profitor loss for the period. For a long-term equity investment accounted for using equity method,when the investment is disposed of, the part originally included in other comprehensive incomeshould be accounted for in the corresponding proportion and on the same basis as the directdisposal of the underlying assets or liabilities by the investee.
When the terms, conditions and economic influence of transactions of the equity investment ofthe subsidiary conform to one or more of the following, accounting for multiple transactions istreated 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 forcollectively;
(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, theaccounting treatment of individual financial statements and consolidated financial statementsshould be distinguished as follows:
(a) In the individual financial statements, the disposed equity should be accounted for in accordancewith 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 relatedfinancial assets based on its carrying amount. If the remaining equity after disposal can be usedto exercise common control or significant influence on the original subsidiary, it shall beaccounted for in accordance with the relevant provisions on the conversion of the cost methodinto the equity method.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
23 Long-term equity investments (continued)
(4) Disposal of long-term equity investments (continued)
(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 considerationacquired from the disposal of the equity and the fair value of the remaining equity, less the share ofnet assets of the original subsidiary that should be enjoyed in accordance with the originalshareholding ratio from the date of acquisition, is included in the current profit and loss of the periodin which loss of control occurred. Other comprehensive income related to the original subsidiary'sequity investment should be converted into current investment income when control is lost. TheCompany shall disclose in the notes the fair value of the remaining equity after disposal on the dateof loss of control and the amount of relevant gains or losses arising from the disposal remeasuredbased on the fair value.
If the transactions of disposal of equity investment in a subsidiary until the loss of control is a packagetransaction, the accounting treatment of individual financial statements and consolidated financialstatements should be distinguished as follows: :
(a) In the individual financial statements, the difference between each disposal price and the carryingamount of the long-term equity investment corresponding to the disposed equity before the loss ofcontrol is recognized as other comprehensive income, and transferred to the current profit and lossof the period in which the loss of control occurred;
(b) In the consolidated financial statements, the difference between each disposal price and the disposalof investment corresponding to the share of the net assets of the subsidiary before the loss of controlis recognized as other comprehensive income, and transferred to the current profit and loss of theperiod in which the loss of control occurred.
(5) Criteria for judgment of joint control and significant impact
If the Company exerts joint control over an arrangement with other participants in accordance withthe relevant agreement, and decision on activities that has significant impact on the return of thearrangement requires the unanimous consent of the participants sharing the control, the Companyand other participants will be deemed to have joint control over the arrangement - a joint venturearrangement.
If a joint venture arrangement is entered into through an independent entity, and the Company hasright over the net assets of the independent entity based on the relevant agreements, the independententity shall be deemed as a joint venture and accounted for using equity method. If based on therelevant agreement, the Company does not have rights to the net assets of the individual entity, theindividual entity shall be deemed as a joint operation, and the items related to the share of interestsin the joint operation should be recognized and accounted for in accordance with the provisions ofrelevant Accounting Standards for Business Enterprises.
Significant impact means the investor’s power to participate in the decision-making of the financialand operating policies of the investee, but by which the investor cannot control or commonly controltogether with other parties the formulation of the policies. Significant impact on the investee will bedetermined based on one or more of the cases with reference to all facts and conditions:
1) Assigning a representative to the board of directors or similar authority of the investee;
2) Participating in formulation of the financial and operational policies of the investee;
3) Entering into a significant transaction with the investee;
4) Assigning an officer to the investee; or
5) Providing key technical information to the investee.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
24 Investment property
The Company's investment property means the property held for the purpose of earning rentor capital appreciation, or both, including the land use rights that have been leased, the landuse 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 ofDirectors makes a written resolution that expressly indicates that the buildings will be usedfor leases and the intention of holding will not change in a short-term, the building will alsobe 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 policyadopted for buildings as fixed assets and land use rights as intangible assets are used.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
25 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 assetssatisfying 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 andelectronic equipment, transportation vehicles and fixed assets renovation in line with capitalizationconditions. Where each component of a fixed asset with a different service life provides economicbenefits to the Company in different ways and applies different depreciation rates, it is recognizedas a single fixed asset.
Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchaseprice, related taxes, and other expenses attributable to the fixed asset before it is ready for theintended 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. Subsequentexpenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included inthe cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which theyarise.
Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed assetsis determined according to the estimated service life and estimated residual value (the estimatedresidual value is 0-10% of the original value). The depreciation rate of classified fixed assets is asfollows:
Asset Category
Estimated Service
Life
AnnualDepreciation
Rate
Houses and buildings 20-50 years 1.90%-5% Machinery equipment 5-10 years 9.5%-20% Office and electronic equipment 2-5 years 22.22%-50% Transportation equipment 3-5 years 19.00%-33.33% Photovoltaic power stations 20-25 years 3.80%-4.75% Others 4-5 years 19.00%-31.67%
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 depreciatedand continue to be used, and the land that is priced and recorded separately. Fixed assets aredepreciated on a monthly basis. Fixed assets added are not depreciated in the current month whenbeing added but from the following month; fixed assets reduced are still depreciated in the currentmonth when being reduced, and no depreciation is made from the following month. Fixed assets thatare not profitable for the Company or not used temporarily (other than seasonally deactivated) arerecognized as idle fixed assets. The estimated life expectancy and depreciation rate of idle fixedassets should be re estimated, and depreciation is directly included in the current profit and loss.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
26 Construction in progress
Construction in progress refers to the necessary expenses incurred by the Company for the purchaseand construction of fixed assets or investment property before being ready for the expected usablestatus, including engineering materials costs, labor costs, related taxes and fees, borrowing coststhat should be capitalized and indirect costs that should be apportioned. Construction in progress isaccounted for separately according to individual projects.
After the construction in progress is ready for its intended use, it must be transferred to fixed assetsor investment property, whether the final accounting procedures are completed or not.
27 Borrowing costs
Borrowing costs refer to interest and other related costs incurred by the Company as a result ofborrowings, including interest on borrowings, amortization of discounts or premiums, ancillaryexpenses, and exchange differences arising from foreign currency borrowings.
Borrowing costs that can be directly attributable to the acquisition, construction or production ofassets eligible for capitalization are capitalized and included in the relevant asset cost. Otherborrowing costs are recognized as expenses in the period in which they are incurred, and are includedin the current profit and loss. Assets eligible for capitalization refer to fixed assets, investmentproperty and inventories and other assets that require a substantial period of acquisition, constructionor production activities to get ready for the intended use or sale status.
Borrowing costs become capitalized when:
(1)
The asset expenditure has occurred, including expenditure incurred in the form of cash payments,transfer of non-cash assets, or assuming interest-bearing debts for the purpose of acquisition,construction, or production of assets that are eligible for capitalization;
(2) Borrowing costs have occurred;
(3)The acquisition, construction or production activities necessary to enable the assets to be ready forthe intended usable or saleable state have commenced.
When an asset satisfied the capitalization conditions is abnormally interrupted during the process ofacquisition, 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 untilthe acquisition, construction or production of the assets starts again. When an asset satisfied thecapitalization conditions is ready for its intended use or sale, the capitalization is stopped and theborrowing 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 becapitalized to the point when the capitalization is stopped, and the period in which the borrowingcosts are suspended for capitalization is not included. During the period of capitalization, if specialborrowings are made for the acquisition, construction or production of assets eligible forcapitalization, the amount of the interest expenses actually incurred during the current period of thespecial borrowings, less the amount of interest income earned by depositing unused borrowing fundsin a bank or investment income earned by temporary investment, is recognized as the amount ofcapitalization. When a general loan is occupied for the purpose of purchasing, constructing orproducing assets satisfied the capitalization conditions, the amount of capitalization is determinedaccording to the weighted average of the accumulated asset expenditure exceeding the special loanportion multiplied by the capitalization rate of the general loan occupied; the capitalization rate isdetermined based on the weighted average interest rate of general borrowings.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
28 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 leasedasset(s) to the condition agreed upon under the terms of the lease (excluding costs incurredto produce inventory).
After the commencement date of the lease term, the Company uses the cost model forsubsequent measurement of right-of-use assets.
If it is reasonably certain that ownership of the leased asset(s) will be obtained at the end ofthe lease term, the Company depreciates the leased asset(s) over its/their remaining servicelife. If it is not reasonably certain that ownership of the leased asset(s) will be obtained atthe end of the lease term, the Company depreciates the leased asset(s) over the lease termor the remaining service life of the leased asset(s), whichever is shorter. Right-of-use assetsfor which depreciation reserves have been accrued are depreciated in future periods at theircarrying amount net of depreciation reserves, with reference to the above principles.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
29 Intangible assets
Intangible assets are recorded at the actual cost at the time of acquisition. The service lifeof intangible assets is analyzed and judged at the time of acquisition. Intangible assets witha finite service life are amortized on the shortest of the estimated service lives, the beneficialperiod of the contract and the effective period specified by law from the time when theintangible assets are available for use. The amortization period is as follows:
Category Amortization yearsLand use rights
The shorter of the years of the land use rights and theoperating years of the Company
Patents and non-patenttechnologies
10 years or the shorter of service life, beneficiary yearsand legally valid yearsOthers Beneficiary period
The Company reviews the service life and amortization method of intangible assets withlimited 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 isregarded as an intangible asset with an indefinite service life, which will be reviewed ineach accounting period. If evidence indicates that the service life of the intangible asset islimited, then it is converted to an intangible asset with limited service life. Intangible assetswith indefinite service lives are not amortized.
The expenditures of the Company's internal research and development projects areclassified into expenditures in the research phase and expenditures in the developmentphase. Research means an original, planned survey of acquiring and understanding newscientific or technical knowledge. Development means the application of research resultsor 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 developmentprojects are included in the current profit and loss when incurred; expenditures in thedevelopment phase are recognized as intangible assets only when the following conditionsare 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 measuredin a reliable way.
If the above conditions cannot be all satisfied, the expenditures are included in the currentprofit and loss when incurred.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
30 Impairment of long-lived assets
The Company determines whether there is any sign of possible impairment of the long-term assetson the balance sheet date. If there is any sign of impairment in a long-term asset, the Companyestimates the recoverable amount thereof based on the individual asset. If it is difficult to estimatethe recoverable amount of the individual asset, the recoverable amount of the asset is determinedbased on the asset group to which the asset belongs.
The recoverable amount of an asset is determined based on the net amount of fair value of the assetless the disposal expenses, or the present value of estimated future cash flows of the asset, whicheveris higher.
If the measurement results of the recoverable amount indicate that the recoverable amount of thelong-term investment is lower than its carrying amount, the carrying amount of the long-terminvestment is written off to the recoverable amount, and the amount written by is recognized as assetimpairment losses, which is included in the profit and loss, while provision for asset impairment ismade. Once the asset impairment loss is confirmed, it cannot be reversed in the future accountingperiod.
After the asset impairment loss is recognized, the depreciation or amortization expense of theimpaired assets will be adjusted accordingly in the future periods, so that the adjusted carryingamount of the asset (deducting the expected net residual value) will be systematically amortized overthe remaining service life of the asset.
For the goodwill formed by business combination and the intangible assets with indefinite servicelife, impairment test is carried out every year regardless of whether there is any indication ofimpairment.
In the impairment test of goodwill, the carrying amount of goodwill is apportioned to the asset groupor asset group portfolio expected to benefit from the synergy of the business combination. Whenimpairment tests are conducted on underlying asset groups or asset group portfolios that containgoodwill, impairment tests will be first conducted on the asset groups or asset group portfolios thatdo not contain goodwill, provided there is any sign of impairment in the asset groups or asset groupportfolios related to the goodwill, and the recoverable amount will be calculated, and compared withthe relevant carrying amount to recognize the corresponding impairment loss. Further impairmenttests will be conducted on asset groups or asset group portfolios that contain goodwill, by comparingthe carrying amount of such underlying asset groups or asset group portfolios (including the part ofthe carrying amount of the allocated goodwill) with their recoverable amount. If the recoverableamount of the underlying asset group or asset group portfolio is lower than its carrying amount, theimpairment loss shall be recognized for goodwill.
31 Long-term deferred expenses
Long-term deferred expenses refer to various expenses that the Company has paid, should beamortized over the current and future periods, and whose period of amortization is more than oneyear, 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 theexpense items.
32 Contract liabilities
The Company recognizes as contract liabilities the part of the obligation to transfer the goods to thecustomer due to received or receivable consideration from the customer.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
33 Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits provided in various forms ofconsideration in exchange for service rendered by employees or compensations for thetermination 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 injuryinsurance and maternity insurance, housing funds, union running costs and employeeeducation costs, and short-term paid absences. The employee benefit liabilities arerecognized in the accounting period in which the service is rendered by the employees, witha corresponding charge to the profit or loss for the current period or the cost of relevantassets. Non-monetary benefits are measured at their fair value.
(b) Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plansor defined benefit plans. Defined contribution plans are post-employment benefit plansunder which the Company pays fixed contributions into a separate fund and will have noobligation to pay further contributions; and defined benefit plans are post-employmentbenefit plans other than defined contribution plans. During the Reporting Period, theCompany’s defined contribution plans mainly include basic pensions and unemploymentinsurance.
(c) Termination benefits
If the Company terminates the labor relationship with an employee before the labor contractexpires, or offers compensation for encouraging the employee to accept the redundanciesvoluntarily, the liabilities arising from compensation for the termination of labor relationswith the employee is determined, and also included in the current profit and loss, at the timewhen the Company cannot unilaterally withdraw the termination of the labor relationshipplan or redundancies proposal, or the time when the cost associated with reorganizationinvolving 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-termemployment benefits, post-employment benefits and termination benefits.
For other long-term employee benefits that meet the conditions of a defined contributionplan, the amount to be contributed shall be recognized as a liability during the accountingperiod when the employee provides services to the Company, and shall be included in profitor loss for the period or the underlying asset costs. For long-term employee benefits otherthan those mentioned above, on the balance sheet date, the benefit obligations arising fromthe defined benefit plan shall be attributed to the periods during which the employee providesservices, and shall be included in profit or loss for the period or the underlying asset costs.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
34 Estimated liabilities
(1) Recognition standards for estimated liabilities
An obligation related to product quality assurance, loss contracts, restructuring and othercontingencies shall be recognized as provision, if i) it is a current obligation of theCompany, ii) the fulfillment of this obligation is likely to result in an outflow of economicbenefits, and iii) the amount of this obligation can be reliably measured.
(2) Measurement methods for estimated liabilities
The estimated liabilities of the Company are initially measured on the basis of the bestestimate 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 valueof money has a significant impact, the best estimate is determined by discounting therelevant future cash outflows.
The best estimates are handled as follows:
In case there is a continuous range (or interval) of required expenditures, within which thepossibility of occurrence of various results is the same, the best estimate is determined bythe average of the middle value of the range, that is, the average of the upper and lowerlimits.
In case there is no continuous range (or interval) of required expenditures, or there is acontinuous range but the possibility of various results in the range is different, if thecontingency involves a single item, the best estimate is determined based on the mostprobable amount; if a contingency involves multiple items, the best estimate is determinedbased on various possible outcomes and associated probabilities.
If all or part of the expenses required by the Company to settle the provision are expectedto be compensated by a third party, the compensation amount is separately recognized asan asset when it is basically confirmed to be received, and the recognized compensationamount should not exceed the carrying amount of provision.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
35 Lease liabilities
The Company initially measures lease liabilities at the present value of the lease paymentsoutstanding on the commencement date of the lease term. When calculating the present value of leasepayments, the Company uses the interest rate implicit in lease as the rate of discount. If the implicitinterest rate of the lease cannot be determined, the incremental loan interest rate of the Companyshall 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 ofsubstantive 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 thatthe option will be exercised;
(d) The amount required to be paid to exercise the option to terminate the lease if the lease term reflectsthat 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 leaseterm at a fixed rate of discount and includes them in profit or loss for the current period or cost ofthe 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 actuallyincurred.
36 Share-based payments
The share-based payments of the Company are mainly equity-settled share-based payments, and onlyallow to be exercised by employees after the completion of their services in the waiting period. Oneach balance sheet date in the waiting period, based on the best estimate of the number of vestingequity instruments, the services obtained in the current period are included in the relevant costs orexpenses 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 basedon the binomial distribution method. The best estimate of the vesting equity instrument is determinedby the management based on historical statistics on the vesting weights and turnover rates on thebalance sheet date.
Equity-settled share-based payments are measured based on the fair value of the equity instrumentsgranted to employees. In case that the vesting right is available immediately after the grant, it isincluded in relevant cost or expense based on the fair value of the equity instrument on the grantdate, and the capital reserve is increased accordingly. In case that the vesting right is available afterthe 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 areincluded into the relevant costs or expenses and capital reserve on the basis of the best estimate ofthe number of feasible equity instruments and at the fair value of the date on which the equityinstruments are granted. No adjustments are made to the identified related costs or expenses or totalowners' equity after the vesting date.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
37 Revenue recognition
(1) General principles applied to revenue recognition
The Company shall recognize the revenue according to the transaction price assigned to theperformance obligation when any due performance obligation is fulfilled (namely when theclient obtains the control over relevant commodities or services). Performance Obligationmeans that, under the contract, the Company promises to transfer commodities or servicesthat can be clearly distinguished to the client. “Obtain the control over relevant commoditiesor services” refers to the ability to completely dominate the use of commodities and obtainalmost all economic benefits. From the contract’s effectiveness date, the Company shallevaluate the contract, recognize each single performance obligation included and determinewhether 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 fulfilledwithin a certain period, the Company shall recognize corresponding revenue within theperiod as scheduled:
(a)While fulfilling the due obligation in the Company, the client obtains and consumes theresulting economic benefit;
(b)
The client is able to control the commodities under construction during the Company’sfulfillment;
(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 wholecontract period; otherwise, the Company shall recognize corresponding revenue when theclient obtains the control over relevant commodities or services.
For any performance obligation with a certain period, the Company shall apply the outputmethod/input method to determine the appropriate fulfillment schedule based on the specificnature of commodities and services. The output method is to determine the fulfillmentschedule according to the value of commodities transferred to the client (while the inputmethod is to determine the fulfillment schedule according to the Company’s input to fulfillthe performance obligation). If the fulfillment schedule cannot be reasonably determinedand the Company’s costs are predicted to be compensated, corresponding revenue shall berecognized based on the specific cost amount until the fulfillment schedule could bereasonably determined.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
37 Revenue recognition (continued)
(2) Specific revenue recognition method
(a) Product sales contract
According to the contract terms, for the selling of products subject to performance obligation fulfillmentconditions at a time point and other products, the Company shall recognize the realization of sales revenueswhen the client obtains the control over relevant commodities or services according to the delivery conditionagreed 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, correspondingrevenues 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.
(d) Revenue from photovoltaic power stations
a. Centralized power stations: Power stations are combined to the grid. The income will be confirmed based onthe documents on power supply provided by the business departments of the Company, after the duration ofcontinuous and trouble-free operation specified by the electric power company is met. b. Distributed powerstations: Power stations are combined to the grid. The income will be confirmed based on the documents onsettlement provided by the business departments of the Company.
(3) 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 theamount predicted to be returned due to sales return) predicted to be duly charged from transferring commoditiesto the client, and corresponding liabilities shall be recognized based on the amount predicted to be returned dueto sales return. Meanwhile, when commodities are sold, the balance through deducting the predicted cost fromtaking back commodities from the carrying amount of commodities predicted to be returned (including theimpairment of value of returned commodities) shall be checked and calculated under “Returned CommoditiesCost 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 establishedstandards. If the Company provides additional service, it shall be deemed as a single performance obligationand subject to the accounting treatment according to relevant revenue criteria provisions; otherwise, the qualityassurance liability shall be subject to the accounting treatment according to the accounting criteria provisionson 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 performanceobligation and the transaction price shall be apportioned to the performance obligation, and correspondingrevenues shall be recognized when the client executes the purchase option right and obtains the control overrelevant commodities in the future or when the option becomes invalid. If the separable selling price applied tothe client’s additional purchase option right cannot be directly observed, it’s required to comprehensivelyconsider the difference in discounts between the client’s execution of option right and the client’s non-executionof 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
37 Revenue recognition (continued)
(3) Principles of handling revenues from specific transactions (continued)
(d)
The contract licensing the IP right to the client: It’s required to evaluate whether the IP rightlicense constitutes any single performance obligation; if any, it is necessary to determinewhether the performance obligation fulfillment is fulfilled within a certain period or at atime point. If any IP right license is granted to the client and royalties are charged based onthe client’s actual sales or usage, corresponding revenues shall be recognized at a later timebetween the following dates: the day when the client’s subsequent selling or usage occurs;the day when the Company fulfills relevant performance obligations.
38 Contract costs
(1) Contract performance cost
For the cost resulting from performing the contract which is not included in other ASBEexcept the revenue standards and meets the following conditions, the Company shallrecognize 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 theclient and other costs resulting from the contract;
(b)
The cost adds various resources that can be applied by the Company to fulfill dueperformance obligations.
(c) The cost is predicted to be recovered.
The asset shall be presented and reported in inventory or other non-current assets, whichdepends on whether the amortization period exceeds a normal operating cycle during theinitial recognition.
(2) Contract acquisition cost
If the increment cost resulting from the Company’s acquisition of contract is predicted tobe recovered, it shall be recognized as an asset as the contract acquisition cost. IncrementCost refers to the cost which only results from the contract acquisition, like the salescommission. If the amortization period is less than one year, it shall be included in currentprofit and loss.
(3) Contract cost amortization
The asset related to the contract cost shall adopt the same basis for the recognition ofcommodities or services revenues related to the asset, be amortized during the period offulfilling the performance obligation or according to the fulfillment schedule and beincluded into current profit and loss.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
38 Contract costs (continued)
(4) Impairment of contract costs
For the asset related to the contract cost as mentioned above, if the carrying amount is higher thanthe difference between the residual consideration predicted to be obtained from the Company’stransfer 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 berecognized as the asset impairment loss.
After the impairment allowances is established, if changes in depreciation factors during previousperiods have made the above difference higher than the asset’s carrying amount, it shall be restitutedto previously established asset impairment allowances and included in current profit and loss.However, the carrying amount of restituted assets shall not exceed the carrying amount of the asseton the date of restitution without establishing impairment allowances.
39 Government grants
(1) Type of change
Government grants are transfers of monetary or non-monetary assets from the government to theGroup at nil consideration. According to the grants targets stipulated in the relevant governmentdocuments, government grants are classified into government grants related to assets andgovernment 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 agovernment grant is a non-monetary asset, it is measured at fair value. If the fair value cannot beobtained in a reliable way, it is measured at the nominal amount (RMB1). Government grantsmeasured at nominal amounts are recognized directly in the current profits and losses.
(3) Accounting treatment
Government grants related to assets offset the carrying amount of the underlying assets.
If the government grants related to income are used to compensate related costs or losses in thesubsequent period, it is recognized as deferred income and included in the current profit and loss oroffset costs in the period in which the related costs or losses are recognized; government grants usedto compensate costs or losses incurred by the enterprise are directly included in the current profits orlosses or offset related costs. For government grants related to the day-to-day activities of theenterprise, the R&D and VAT-related subsidies and the taxation, or operation-based incentivegovernment subsidies are included in other income; other government grants are written off againstrelated costs based on the substance of economic activities. Government grants not related to dailyactivities of the Company are included in the non-operating income and expenditure. For preferentialloans for policy discount, if the government finance department appropriates the discounted funds tothe lending bank, the borrowing cost is accounted for according to the principal of the loan and thepolicy preferential interest rate, with the amount actually received as the entry value of the loan. Ifthe 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 carrying amount of the assetis adjusted if the carrying amount of relevant assets is offset at the initial recognition; if there isrelated deferred income, the book balance of deferred income is offset, and the excess is included inthe current profit and loss; in case of other circumstances, it is directly included in the current profitand loss.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
40 Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities shall be recognized based on thedifference (temporary difference) between the tax basis and carrying amount of the underlyingassets or liabilities. On the balance sheet date, the deferred income tax assets and deferredincome tax liabilities are measured based on the tax rate applicable during the period when it isexpected to recover the assets or pay off the liabilities.
(1)Basis for recognition of deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporarydifferences to the extent that it is likely to acquire taxable income that can be used to offset thedeductible temporary differences, deductible losses that can be carried forward to future yearsand tax credits. However, deferred income tax assets arising from the initial recognition of assetsor liabilities in a transaction with all the following characteristics shall not be recognized: (1)the transaction is not a business combination; and (2) the occurrence of the transaction does notaffect accounting profits or taxable income or deductible losses.
For a deductible temporary difference related to investments in affiliates, the correspondingdeferred income tax asset will be recognized if the following criteria are met simultaneously:
the temporary difference is likely to be reversed in the foreseeable future and it is likely to obtaintaxable income that can be used to offset the deductible temporary difference in the future.
(2)Basis for recognition of deferred income tax liabilities
The Company recognizes the taxable temporary differences that should be paid but not paid forthe current and previous periods as deferred income tax liabilities. But deferred tax liabilitiesdo not include:
(a)
Temporary differences arising from the initial recognition of goodwill;
(b)Temporary differences arising from transactions or events that are not formed by a businesscombination and do not affect accounting profits or taxable income (or deductible losses) upontheir occurrence;
(c)
For taxable temporary differences related to investments in subsidiaries and associates, thetiming of the reversal of the temporary differences can be controlled and the temporarydifferences are unlikely to be reversed in the foreseeable future.
(3)
Deferred income tax assets and liabilities are presented on a net basis after, provided thefollowing conditions are met:
(a)An enterprise has the legal right to settle current income tax assets and liabilities on a net basis;
(b)
Deferred income tax assets and liabilities relate to income taxes levied by the same taxingauthority on either the same taxable entity or different taxable entities which intend to eithersettle current tax assets and liabilities on a net basis, or to realize the assets and settle theliabilities simultaneously, in each future period in which significant amounts of deferred taxassets or liabilities are reversed.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
41 Leases
From the effectiveness date of a contract, the Company assesses whether the contract is a lease orincludes any lease. If a party to the contract transfers the right allowing the control over the use ofone 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 thelease and non-lease parts, conduct accounting treatment of the lease part in accordance with theaccounting standards governing leases, and conduct accounting treatment of the non-lease part inaccordance 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 samecounterparty or its related parties at the same or a similar time, when any of the following conditionsis met, the contracts are combined into one contract for accounting treatment:
(a)
Two or multiple contracts are concluded based on an overall business purpose and constitute apackage deal, and if they are not considered as a whole, the overall business purpose cannot beunderstood.
(b)The consideration amount of one contract among the two or multiple contracts depends on the pricingor 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 recognizes the right-of-use assets andlease 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 termdoes not exceed 12 months. A low-value asset lease refers to a lease where the value will be lowwhen 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 leasepayments are included in cost of the related assets or profit or loss for the current period on astraightline 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
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
41 Leases (continued)
(3) Accounting treatment with the Company as lessee (continued)
The Company recognizes 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 andNote 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. Afinance lease refers to a lease where almost all the risks and rewards, related to the ownership of theleased asset(s), are substantially transferred, regardless of whether the ownership is transferredeventually. 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 afinance 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 followingcircumstances 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 recognizes the finance lease receivablesfor 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 andthe present value of the lease payments receivable not yet received on the commencement date ofthe lease term discounted at the interest rate implicit in lease is the entry value of the finance leasereceivables. 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 investmentin the lease are included in profit or loss for the current period when they are actually incurred.
(RMB’000)
III Significant accounting policies and accounting estimates (continued)41 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 othersystematic and reasonable methods to recognize the lease receipts of the operating lease as rentalincome; the Company capitalizes the initial direct expenses incurred in connection with theoperating lease, amortizes them over the lease term on the same basis as that for the recognitionof the rental income, and includes them in the current profit and loss by stage; the Companyincludes the variable lease payments, obtained in connection with the operating lease that arenot 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 theright-of-use assets formed by the sale and leaseback based on the portion of the original asset’scarrying amount that is related to the use right acquired by the leaseback, and recognize relatedgains or losses only for the right transferred to the lessor. If the fair value of the salesconsideration is different from the fair value of the asset, or if the lessor does not charge the rentat the market price, the Company will conduct accounting treatment with the sales considerationamount below the market price as the prepaid rent, or the amount above the market price as theadditional financing provided by the lessor to the lessee; at the same time, the relevant salesgains 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 continueto recognize the transferred asset and at the same time recognize a financial liability equivalentto 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 conductcorresponding accounting treatment for asset purchase and apply the accounting standardsgoverning leases to the accounting treatment of the asset lease. If the fair value of the salesconsideration is different from the fair value of the asset, or if the Company does not charge therent at the market price, the Company will conduct accounting treatment with the salesconsideration amount below the market price as the pre-collected rent, or the amount above themarket price as the additional financing provided by the Company to the lessee; at the sametime, 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 recognizea financial asset equivalent to the transfer income.
42 Related parties
If one party controls, commonly controls or exerts a significant influence on the other party, andtwo or more parties are under the control, common control or significant influence of the otherparty, they constitute related parties. Enterprises that are solely controlled by the state and donot have any other related party relationship shall not be deemed as related parties.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
43 Discontinued operations
The Company will recognize a component that meets one of the following conditions, has
been disposed of or classified as being held for sale, and can be separately identified, as acomponent of discontinued operation:
(1) This component represents an independent main business or a separate main operation
region.
(2) This component is part of a related plan to dispose of an independent main business or a
separate main operation region.
(3) This component is a subsidiary acquired for the sole purpose of resale. Operating profit and
loss, such as impairment losses for discontinued operations and the amount reversed, anddisposal profit and loss are presented in the income statement as profit and loss ofdiscontinued operations.
44 Hedge Accounting
Hedge is classified as fair value hedge, cash flow hedge or net foreign investment hedge
based on the hedging relationship.
(1) A hedging relationship qualifies for hedge accounting only if all of the following criteria
are met:
(a) The hedging relationship consists only of eligible hedging
instruments and eligible hedged items.
(b) At the inception of the hedging relationship, there is formal designation of hedging
instruments and hedged items, and documentation of the hedging relationship and theCompany’s risk management strategies and objectives for undertaking the hedge have beenprepared.
(c) The hedging relationship meets the hedge effectiveness requirements.The hedging relationship meets the hedge effectiveness requirements only if all of thefollowing criteria are met:
1) There is an economic relationship between the hedged item and the hedging instrument.
This economic relationship causes opposite changes in the value of the hedging instrumentand the hedged item in face of the identical hedged risk.
2) The effect of credit risk does not dominate the value changes that result from that
economic relationship.
3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity
of the hedged item that the Company actually hedges and the quantity of the hedginginstrument that the Company actually uses to hedge that quantity of hedged item. However,that designation shall not reflect an imbalance between the weightings of the hedged itemand the hedging instrument that would create hedge ineffectiveness that could result in anaccounting outcome that would be inconsistent with the purpose of hedge accounting.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
44 Hedge Accounting (continued)
(2) Fair value hedge accounting
(a) Gain or loss on the hedging instrument shall be recognized in profit or loss. If the hedging
instrument hedges a non-trading equity instrument (or a component thereof) that theCompany has elected to be measured at fair value through other comprehensive income,the hedging gain or loss generated by the hedging instrument shall be recognized in othercomprehensive income.
(b) Gain or loss generated by the hedged item due to the hedged risk exposure shall berecognized in profit or loss, and shall adjust the carrying amount of the recognized hedgeditem that is not measured at fair value. If the hedged item is a financial asset (or a componentthereof) measured at fair value through other comprehensive income, the hedging gain orloss on the hedged item shall be recognized in profit or loss, and will not be required foradjustment since the carrying amount has been measured at fair value. However, if thehedged item is a non-trading equity instrument (or a component thereof) that the Companyhas elected to be measured at fair value through other comprehensive income, the hedginggain or loss on the hedged item shall be recognized in other comprehensive income, andwill not be required for adjustment, since the carrying amount has been measured at fairvalue.When a hedged item represents a defined commitment that has not been unrecognized (ora component thereof), the cumulative change in the fair value of the hedged item subsequentto its designation caused by the hedge relationship is recognized as an asset or a liabilitywith a corresponding gain or loss recognized in profit or loss. When a defined commitmentis made to acquire an asset or assume a liability, the initial carrying amount of the asset orthe liability is adjusted to include the cumulative change in the fair value of the hedged itemthat has been recognized.
(c) If the hedged item is a financial instrument (or a component thereof) measured at amortized
cost, the adjustment made to the carrying amount of the hedged item shall be amortizedbased on the effective interest rate recalculated on the amortization commencement date,and recognized in the profit or loss. This amortization can commence from the adjustmentdate, but not later than the time when the hedging gain or loss adjustment is made for thetermination of the hedged item. If the hedged item is a financial asset (or a componentthereof) measured at fair value through other comprehensive income, the cumulativerecognized hedging gain or loss shall be amortized in the same manner and recognized inthe profit or loss, but the carrying amount of the financial asset (or a component thereof)shall not be adjusted.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
44 Hedge Accounting (continued)
(3) Accounting treatment of cash flow hedges
(a) The portion of the gain or loss on the hedging instrument that is determined to be an effectivehedge (i.e., the portion that is offset by the change in the cash flow hedge reserve) shall berecognized in other comprehensive income. The amount of cash flow hedging reserves shall bedetermined based on the lower of the absolute amount of the following two items:
1) The cumulative gain or loss on the hedging instrument since the commencement of the hedge;
2) The cumulative change in the present value of expected future cash flows of the hedged item
since the commencement of the hedge. The amount of cash flow hedging reserves recognizedin other comprehensive income for each period is the change in cash flow hedging reserves forthe period.
(b) The portion of the gain or loss on the hedging instrument that is determined to be an ineffectivehedge (i.e., other gain or loss after deducting that recognized in other comprehensive income)shall be recognized in profit or loss.
(c) The amount that has been accumulated in the cash flow hedge reserve shall be accounted for asfollows:
1) if any hedged item as an expected transaction, and the expected transaction subsequently
results in the recognition of a non-financial asset or non-financial liability, or a hedged forecasttransaction for a non-financial asset or a non-financial liability becomes a defined commitmentfor which fair value hedge accounting treatment is applied, the Company shall remove thatamount from the cash flow hedge reserve previously recognized in other comprehensive incomeand include it in the initial cost of the asset or the liability.
2) for cash flow hedges other than those covered by 1), that amount from the cash flow hedge
reserve previously recognized in other comprehensive income shall be reclassified from the cashflow hedge reserve to profit or loss in the same period or the period during which the hedgedexpected future cash flows affect profit or loss.
3) however, if that amount from the cash flow hedge reserve previously recognized in other
comprehensive income is a loss and the Company expects that all or a portion of that loss willnot be recovered in one or more future periods, it shall immediately reclassify the amount thatis not expected to be recovered from other comprehensive income to profit or loss.
(4) Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that isaccounted for as part of the net investment shall be accounted for similarly to cash flow hedges:
(a) The portion of the gain or loss on the hedging instrument that is determined to be an effectivehedge shall be recognized in other comprehensive income.When disposing of all or part of the foreign operation, the gain or loss on the hedging instrumentrecognized in other comprehensive income shall be correspondingly transferred out andrecognized in the profit or loss.
(b) The portion of the gain or loss on the hedging instrument that is determined to be an ineffectivehedge shall be recognized in the profit or loss.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
44 Hedge Accounting (continued)
(5) Termination of hedge accounting
Hedge accounting will be terminated if one of the following situations occurs:
(a) The hedging relationship no longer meets the risk management objectives due to changes
in risk management objectives.
(b) The hedging instrument has expired or been sold, or the contract has been terminated or has
been exercised.
(c) The economic relationship no longer exists between the hedged item and the hedging
instrument, or the effect of credit risk start to dominate the value changes that result fromthat economic relationship.
(d) The hedging relationship no longer meets other conditions for applying hedging accounting
stipulated in this standard. In case that the rebalancing of the hedging relationship is applied,the Company shall first consider the rebalancing of the hedging relationship, and thenevaluate whether the hedging relationship meets the conditions for applying hedgingaccounting stipulated in this standard.
Termination of hedge accounting may affect the whole or a portion of the hedging
relationship, and when only a portion thereof is affected, hedge accounting remainapplicable to the remaining unaffected portion.
(6) Fair value selection of credit risk exposure
When credit derivative instruments measured at fair value through profit or loss are used to
manage the credit risk exposure of a financial instrument (or a component thereof), thefinancial instrument (or a component thereof) can be designated as a financial instrumentmeasured at fair value through profit or loss during its initial recognition, subsequentmeasurement, or when not yet recognized, with written records made simultaneously,provided that the following criteria are met:
(a) The subject (such as the borrower or the loan commitment holder) of the credit risk
exposure of the financial instrument is consistent with the subject involved in the creditderivative;
(b) The reimbursement level of the financial instrument is consistent with that of the instrument
required to be delivered under the terms of the credit derivative.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
III Significant accounting policies and accounting estimates (continued)
45 Changes to major accounting policies and estimates
(1) Change of accounting policies
Impact of the adoption of the Interpretation to Accounting Standards for BusinessEnterprises No. 16 on the Company
On December 13, 2022, the Ministry of Finance (“MOF”) issued the Interpretation No. 16of the Accounting Standards for Business Enterprises (CK [2022] No. 31, hereinafterreferred to as the “Interpretation No. 16”), clarifying “Accounting treatment that the deferredincome taxes associated with assets and liabilities arising from a single transaction is notsubject to the initial recognition exemption”. The Interpretation No. 16 is effective fromJanuary 1, 2023, which allows voluntarily early adoption. The Company implementedaccounting treatment related to such matter this year, and the implementation of theInterpretation No. 16 had no significant impact on the consolidation and the Company’sfinancial statements.
(2) Changes to accounting estimates
No significant change occurred to the major accounting estimates in the Reporting Period.
46 Correction of previous accounting errors
No previous accounting errors were identified and corrected in the Reporting Period.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
IV Taxes
1 Value-added tax
In the Reporting Period, output tax was calculated at 3%, 5%, 6%, 9% or 13% of the taxableincome of general taxpayers and the value added-tax was paid based on the difference afterdeducting the allowance deduction of input tax in the current period. The value added-taxpayment for the Company’s directly exported goods is executed in accordance with theregulations 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, urbanmaintenance and construction tax is paid based on the proportion stipulated by the stateaccording 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 ofthe Company based on the proportion stipulated by the state in accordance with the relevantnational tax regulations and local regulations.
4 Property tax
Property tax is paid on the houses with property rights according to the proportion stipulatedby the state in accordance with the relevant national tax regulations and local regulations.
(RMB’000)
IV Taxes (continued)
5 Corporate income taxThe 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 corporateincome 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 MicroEnterprises issued by the Ministry of Finance and the State Administration of Taxation on March, 2022(Announcement No. 13 [2022] of the Ministry of Finance and the State Administration of Taxation), from January1, 2022 to December 31, 2024, the annual taxable income of small and low-profit enterprises exceeding RMB1million but at no more than RMB3 million will be included in the taxable income at a reduced rate of 25%, andthe enterprise income tax will be paid at the rate of 20%.According to the relevant provisions of the Announcement on the Preferential Income Tax Policies for Small andMicro Enterprises and Self-employed Businesses (Announcement No. 6 [2023] of the Ministry of Finance andthe State Taxation Administration) and the Announcement of the Ministry of Finance and the State TaxationAdministration on Tax Policies for Further Supporting the Development of Small and Micro Enterprises and Self-employed Businesses (Announcement No. 12 [2023] of the Ministry of Finance and the State TaxationAdministration), issued by the Ministry of Finance and the State Taxation Administration in 2023, from January1, 2023 to December 31, 2027, the annual taxable income of small and low-profit enterprises not exceeding RMB1million will be included in the taxable income at a reduced rate of 25%, and the enterprise income tax will bepaid at the rate of 20%.
Except for the following subsidiaries entitling to preferential tax treatment and the overseas subsidies that adoptlocal applicable tax rate, other entities under the Company are subject to the applicable tax rate of 25%, or thepreferential tax rate for small and micro enterprises.
Subsidiaries entitled to tax preferences:
Company Name
Preferentialtax rate
Reason
TCL China Star Optoelectronics TechnologyCo., Ltd. 15%High-tech enterprise
Shenzhen China Star OptoelectronicsSemiconductor Display Technology Co., Ltd. 15%High-tech enterprise
Wuhan China Star Optoelectronics TechnologyCo., Ltd. 15%High-tech enterprise
Wuhan China Star OptoelectronicsSemiconductor Display Technology Co., Ltd. 15%High-tech enterprise
Suzhou China Star Optoelectronics TechnologyCo., Ltd. 15%High-tech enterprise
Shenzhen TCL High-Tech Development Co.,Ltd. 15%High-tech enterpriseQingdao Blue Business Consulting Co., Ltd. 15%High-tech enterprise
Shenzhen Qianhai Maojia SoftwareTechnology Co., Ltd. 15%High-tech enterprise
Tianjin Huan'Ou SemiconductorMaterial&Technology Co., Ltd. 15%High-tech enterprise
Tianjin Zhonghuan AdvancedMaterial&Technology Co., Ltd. 15%High-tech enterprise
Inner Mongolia Zhonghuan Solar Material Co.,Ltd. 15%High-tech enterprise
Zhangjiakou Huan? Ou International NewEnergy Technology Co., Ltd. 15%High-tech enterpriseWuxi Zhonghuan Applied Materials Co., Ltd. 15%High-tech enterprise
Tianjin Huanzhi New Energy Technology Co.,Ltd. 15%High-tech enterprise
Zhonghuan Advanced SemiconductorMaterials Co., Ltd. 15%High-tech enterpriseHuansheng New Energy (Jiangsu) Co., Ltd. 15%High-tech enterprise
Xuzhou Jingrui Semiconductor EquipmentTechnology Co., Ltd. 15%High-tech enterpriseTianjin 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
(RMB’000)
IV Taxes (continued)
5 Corporate income tax (continued)
Company Name
Preferential
tax rate
Reason
Guangdong TCL New TechnologyCo., Ltd. 15.00%High-tech enterprise
Inner Mongolia Zhonghuan CrystalMaterials Co., Ltd.
15.00%
High-tech enterprise, encouragedbusiness in West China
Inner Mongolia Zhonghuan AdvancedSemiconductor Material Co., Ltd.
15.00%
High-tech enterprise, encouragedbusiness in West China
Ningxia Zhonghuan Solar MaterialCo., Ltd. 15.00%
Encouraged business in WestChina
Dushan Anju Photovoltaic TechnologyCo., Ltd. 15.00%
Encouraged business in WestChina
Sonid Left Banner Huanxin NewEnergy Co., Ltd. 15.00%
Encouraged business in WestChina
Otog Banner Huanju New Energy Co.,Ltd. 15.00%
Encouraged business in WestChina
Zhonghuan Advanced Semiconductor(Tianjin) Co., Ltd. 15.00%
Encouraged business in WestChina
Ningxia Huanneng New Energy Co.,Ltd. 15.00%
Encouraged business in WestChina
Shaanxi Huanyu Green New EnergyCo., Ltd. 15.00%
Encouraged business in WestChina
Shaanxi Huanshuo Green New EnergyCo., Ltd. 15.00%
Encouraged business in WestChina
Shaanxi Huanbo Xinneng PowerEngineering Construction Co., Ltd. 15.00%
Encouraged business in WestChina
Ningxia Zhonghuan Industrial ParkManagement Co., Ltd. 15.00%
Encouraged business in WestChina
Ningxia Huanou New EnergyTechnology Co., Ltd. 15.00%
Encouraged business in WestChina
Inner Mongolia TCL PhotoelectricTechnology Co., Ltd. 15.00%
Encouraged business in WestChina
Qinhuangdao Tianhui Solar EnergyCo., Ltd. 12.50%
State-supported publicinfrastructure project
Yixing Huanxing New Energy Co.,Ltd. 12.50%
State-supported publicinfrastructure project
Tianjin Binhai Huanneng New EnergyCo., Ltd. 12.50%
State-supported publicinfrastructure project
Zhangjiakou Shengyuan New EnergyCo., Ltd. 12.50%
State-supported publicinfrastructure project
Phase III project of Hohhot HuanjuNew Energy Development Co., Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
IV Taxes (continued)
5 Corporate income tax (continued)
Company Name
Preferential
tax rate
Reason
Guyuan Shengju New Energy Co.,Ltd.
7.50%
State-supported publicinfrastructure project
Ongniud Banner Guangrun NewEnergy Co., Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
Tuquan Guanghuan New EnergyCo., Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
Inner Mongolia New HuanyuYangguang New Energy TechnologyCo., Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
Gengma Huanxing New Energy Co.,Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
Dangxiong Youhao New EnergyDevelopment Co., Ltd.
7.50%
State-supported publicinfrastructure project, encouragedbusiness in West China
Shaanxi Runhuan TianyuTechnology Co., Ltd.
Tax-free
State-supported publicinfrastructure project, encouragedbusiness in West China
Shangyi Shengyao New EnergyDevelopment Co., Ltd.
Tax-free
State-supported publicinfrastructure project
Hohhot Shuguang New Energy Co.,Ltd.
Tax-free
State-supported publicinfrastructure project, encouragedbusiness in West China
6 Individual income tax
Individual income tax of income paid to employees by the Company is withheld by theCompany on behalf of employees in accordance with to the relevant national tax regulations.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements
1 Monetary assets
June 30, 2023 January 1, 2023
Cash on hand 456 480Bank deposits 27,307,262 33,161,505Deposits with the central bank 268,149 381,137 Other monetary assets 1,710,778 1,835,379
29,286,645 35,378,501
Note Monetary assets with restricted use rights
June 30, 2023 January 1, 2023
TCL Tech Finance's statutory reserve deposits with
the central bank 266,969 321,852 Other restricted monetary assets 1,275,428 1,381,025
1,542,397 1,702,877
On June 30, 2023, the Company’s bank deposits of RMB266,969,000 (December 31, 2022:
RMB321,852,000) were statutory deposit reserves deposited with the Central Bank by TCL
Technology Group Finance Co., Ltd., a subsidiary of the Company.
On June 30, 2023, the Company’s monetary assets offshore amounted to RMB1,517,330,000
(December 31, 2022: RMB2,230,135,000), all of which were owned by the overseas subsidiaries of
the Company.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
2 Held-for-trading financial assets
June 30, 2023 January 1, 2023
Financial assets classified as those measured at fairvalue through profit or loss 14,371,775 12,703,507
Including: Debt instrument investments 14,159,396 12,483,274
Equity instrument investments 212,379 220,233
14,371,775 12,703,507
3 Derivative financial assets
June 30, 2023 January 1, 2023
Foreign exchange forwards and foreign exchange swaps27,216 206,398
Interest rate swaps97,192 154,636
Others796 -
125,204 361,034
4 Notes receivable
(1)Notes receivable by category
June 30, 2023 January 1, 2023
Bank acceptance notes 353,621 512,767
Trade acceptance notes 12 82
353,633 512,849
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
4 Notes receivable (continued)
(2) Presentation of provision for bad debts on notes receivable by category (continued)
June 30, 2023 January 1, 2023
Gross amount Allowance
Carryingamount
Gross amount Allowance
Carryingamount
Amount
Ratio(%)AmountPercentageAmount
Ratio(%)Amount PercentageNotes receivable for
which the allowancefor doubtful accountswere established on thegrouping basis 353,633 100% --353,633 512,849100%- - 512,849
Including:low-risk portfolio353,621 100% --353,621 512,76799.98%- - 512,767
By aging analysis12 0% --12 820.02%- - 82
353,633 100% --353,633 512,849100%- - 512,849
(3)As at June 30, 2023, notes receivable in pledge were RMB175,227,000.
(4)Endorsed or discounted notes receivable that were outstanding on the balance sheet date and werederecognized as at June 30, 2023 amounted to RMB86,344,000. Endorsed or discounted notesreceivable that were not outstanding on the balance sheet date and were not derecognized as atJune 30, 2023 amounted to RMB73,763,000.
5 Accounts receivable
June 30, 2023 January 1, 2023
Accounts receivable 21,783,813 14,505,731
Less: allowance for doubtful accounts 497,412 454,070
21,286,401 14,051,661
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
5 Accounts receivable (continued)
(1)Accounts receivable as at June 30, 2023 are classified as follows by how the doubtful debtswere provisioned:
June 30, 2023Gross amount AllowanceLifetime
ECL rate
Gross amount
Accounts receivable for which the
related allowances for doubtfulaccounts were established on theindividual basis 339,949 92.89% 315,791Of which:
Accounts receivable 339,949 92.89% 315,791
Accounts receivable for which the
lated allowances for doubtful accounts
| e | |
| w | |
ere established on the grouping basis 21,443,8640.85% 181,621Of which:
Group 1: by aging analysis 11,977,8900.14% 16,437 Group 2: by related parties 3,965,9010.00% -Group 3: by tariff 892,388 0.01% 62Group 4: by photovoltaics 3,944,963 3.84% 151,554Group 5: other silicon materials 662,722 2.05% 13,568
21,783,813 497,412
(2) The aging of accounts receivable is analysed as follows:
June 30, 2023 January 1, 2023 AmountRatio (%)Amount Ratio (%)
Within 1 year 20,424,80693.77%13,254,660 91.37% 1 to 2 years 451,3712.07%350,702 2.42% 2 to 3 years 320,6841.47%339,078 2.34% Over 3 years 586,9522.69%561,291 3.87%
21,783,813 100%14,505,731 100%
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
5 Accounts receivable (continued)
(3) Allowances for doubtful accounts receivable are analyzed as follows:
June 30, 2023
Beginning amount 454,070Accrued in current period 59114 Reversal of current period (16,689) Write-off of current period -Exchange adjustment 917
Ending amount 497,412
(4) On June 30, 2023, the accounts receivable of the top five balances are as follows:
June 30, 2023 January 1, 2023
Total amount owed by the top five 7,505,291 5,422,959
Proportion of total accounts receivable 34.45% 37.38%
(5) Accounts receivable derecognized due to
transfer of financial assets
Item
Methods of transfer of
financial assets
Amountderecognized for
the periodGain or loss on derecognitionAccountsreceivable Factoring 1,786,496 (17,689)
6 Receivables financing
June 30, 2023 January 1, 2023
Notes receivable financing 3,136,525 1,103,128 Receivable financing 171,408 -
3,307,933 1,103,128
NoteEndorsed or discounted notes receivable that were outstanding on the balance sheet date and werederecognized on June 30, 2023 amounted to RMB26,295,768,000.As of June 30, 2023, the Company believes that financing for the receivables it held did not havesignificant credit risk and will not cause significant losses due to default.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
7 Prepayments
(1) Prepayments are analyzed as follows:
June 30, 2023 January 1, 2023
Within 1 year3,389,564
3,586,208
1-2 years
124,786
5,556
2-3 years
8,405
1,530
Over 3 years
3,523,684
3,593,857
(2) As of June 30, 2023, the prepayments of the top five balances are as follows:
June 30, 2023 January 1, 2023
Total amount owed by the top five2,103,785 2,655,698
As % of total prepayments 59.70% 73.90%
8 Other receivables
June 30, 2023 January 1, 2023
Dividends receivable - 1,226 Other receivables 3,590,396 4,032,022
3,590,396 4,033,248
(1) Dividends receivable
June 30, 2023 January 1, 2023
Others - 1,226
- 1,226
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
8 Other receivables (continued)
(2) Other receivables
June 30, 2023January 1, 2023
Other receivables 3,821,451 4,259,495Less: allowance for
doubtful accounts 231,055 227,473
3,590,396 4,032,022
(a) Nature of other receivables is analyzed as follows:
June 30, 2023January 1, 2023
Subsidy receivable1,582,263 1,868,634
Equity transferreceivables 526,178 1,073,246
Security and deposits536,848 479,269
Others945,107 610,873
3,590,396 4,032,022
(b) Allowance for doubtful other receivables is analyzed as follows:
12-month
ECL
Lifetime ECL
(credit notimpaired)
Lifetime ECL
(creditimpaired) Total
January 1, 2023 68,114134,78624,573 227,473 Current accrual 3,529 508 - 4,037
Increase of newsubsidiaries - 790 - 790
Reversal of currentperiod (226)-
(51) (277)
Write-off ofcurrent period--
(960) (960)
Exchangeadjustment (8)--(8)
June 30, 2023 71,409 136,084 23,562 231,055
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
8 Other receivables (continued)
(c) The aging of other receivables is analyzed as follows:
June 30, 2023
January 1, 2023
Carrying amountRatio (%)Carrying amount Ratio (%)
Within 1
year 2,587,39067.70%3,209,877 75.35% 1 to 2 years 708,93718.55%417,448 9.80% 2 to 3 years 212,7275.58%258,284 6.07%
Over 3 years 312,3978.17%373,886 8.78%
3,821,451 100.00% 4,259,495 100%
(d) As of June 30, 2023, the other receivables of the top five balances are as follows:
June 30, 2023 January 1, 2023
Total amount owed by the
top five 1,925,635
2,324,850
As % of total other
receivables 50.39%
54.58%
(e)On June 30, 2023, 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.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
9 Inventories
(1) Inventories are classified as follows:
June 30, 2023 January 1, 2023
Carryingbalance
Provision for
depreciation of
inventories /provision forimpairment of
contractperformance
costs
Carrying
amount
Carrying
balance
Provision fordepreciation of
inventories /
provision forimpairment ofcontract
performancecosts
Carrying
amount
Raw
materials
4,703,654 815,985 3,887,669 5,604,506979,845 4,624,661Work in
progress
2,898,920 403,663 2,495,257 3,674,059421,558 3,252,501
FinishedGoods
13,345,469 1,961,524 11,383,945 11,512,5971,705,750 9,806,847Turnover
materials
347,982 1,178 346,804 318,2911,178 317,113
21,296,025 3,182,350 18,113,675 21,109,4533,108,331 18,001,122
As of June 30, 2023, the Company had no inventory for liabilities guarantee.
(2) Provision for depreciation of inventories / provision for impairment of contract performance
costs:
January 1, 2023
CurrentAccrual
IncreaseSubsidiary
CurrentReversal
CurrentWrite-off
ExchangeAdjustment June 30, 2023
Raw
materials 979,845 288,958 80,509 (36,748) (496,921) 342 815,985Work in
progress 421,558 336,539 50,003 (43,558) (360,932) 53 403,663Finished
Goods 1,705,750 1,681,956 29,941 (9,236) (1,448,031) 1,144 1,961,524Turnover
materials 1,178 - --- - 1,178
3,108,331 2,307,453 160,453(89,542)(2,305,884) 1,539 3,182,350
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
10 Contract assets
(1) Contract assets are classified as follows:
June 30, 2023 January 1, 2023
Carrying
balance
Allowancefor doubtfulaccounts
Carryingamount
Carryingbalance
Allowancefor doubtfulaccounts
Carryingamount
Electricity
chargesreceivable
312,131 13,264 298,867 327,54312,376 315,167
(2) Valuation allowances for contract assets are analyzed as follows:
January 1,2023
Current Accrual
Current Reversalor write-off
Otherincreases and
decreases
June 30,2023
Electricitycharges
12,376 3,671(2,783)- 13,264
11 Other current assets
June 30, 2023 January 1, 2023
Short-term debt investments 926,970 939,864VAT to be deducted, to be certified, etc.
3,480,160
3,775,842
Current portion of loans and advances tocustomers (note) 614,704
640,917Others
236,192
82,313
5,258,026
5,438,936
Note: The loans and advances due within one year are loans due within the next year issued bysubsidiary TCL Tech Finance Co., Ltd., of which interest receivable is RMB416,000.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
12 Debt Investments
June 30, 2023January 1, 2023
National debt and secondary market debt859,062
741,703
13 Long-term receivables
June 30, 2023 January 1, 2023
DiscountrateInterval
Grossamount
Allowance
Carryingamount
Grossamount
Allowance
Carryingamount
Financelease 624,341 -624,341 631,373- 631,373
7.125%-
8.115
Including:
Unrealizedfinancingincome(751,763) -(751,763)(781,934)- (781,934)
624,341 -624,341 631,373- 631,373
14 Long-term equity investments
June 30, 2023 January 1, 2023
Grossamount
Impairment
allowance
Carrying
amount
Grossamount
Impairment
allowance
Carrying
amount
Associates
(1) 30,347,995 459,722 29,888,273 29,065,027329,479 28,735,548
Jointventures
(2) 515,628 49,503 466,125 570,17149,503 520,668
30,863,623 509,225 30,354,39829,635,198378,982 29,256,216
As of June 30, 2023, the Company made impairment allowances for long-term equity investments in investeeswith poor management and insolvent assets.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
14 Long-term equity investments (continued)
(1) Associates
Increase or decrease in current period
Name of investee
January 1,2023
Increase/decreasein investment incurrent period
Investmentgains andlossesrecognized
y equitymethod
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared
Cashdividends
or profit
AccruedImpairment
allowance
Otherincreases
anddecreases
June 30,
2023
China Innovative Capital ManagementLimited 944,392-(3,099) - ----941,293
LG Electronics (Huizhou) Co., Ltd. 89,772-9,143 --(13,400) --85,515
Shenzhen Qianhai Qihang SupplyChain Management Co., Ltd. 27,358-(1,144) 274 ---(26,488) -
Shenzhen Jucai Supply ChainTechnology Co., Ltd. 15,273-1,712 5 ----16,990
Shenzhen Tixiang BusinessManagement Technology Co., Ltd. 1,147-190 ----5 1,342
TCL Air Conditioner (Wuhan) Co.,Ltd. 40,610-1,035 -----41,645
TCL Finance (Hong Kong) Co.,Limited 109,943-799 -----110,742
Urumqi TCL Equity InvestmentManagement Co., Ltd. 1,090-(1)-----1,089
Hubei Changjiang Hezhi EquityInvestment Fund Partnership (LimitedPartnership) 1,413,073(106,205) 137,873 -----1,444,741
Ningbo Dongpeng Weichuang EquityInvestment Partnership (LimitedPartnership) 365,51148,403 6,954 5 -(5,902) --414,971
Deqing Puhua Equity Investment FundPartnership (Limited Partnership) 126,213(8,668) 77263 --- --194,808
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
14 Long-term equity investments (continued)
(1) Associates (continued)
Increase or decrease in current periodName of investee
January 1,
2023
Increase/decrease
in investment in
current period
Investment
gains and
lossesrecognized
y equitymethod
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared
Cashdividends or
profitdistribution
declared
Provision
forimpairment
Otherincreases
anddecreases
June 30,
2023
Ningbo Dongpeng Heli Equity InvestmentPartnership (Limited Partnership) 372,687(17,656) (22,416)--(32,747) --299,868Wuxi TCL Aisikai Semi-conductor IndustryInvestment Fund Partnership (LimitedPartnership) 310,930(2,644) (10,402)-----297,884Wuxi TCL Venture Capital Partnership
(Limited Partnership) 36,850-(14)289 ----37,125Ningbo Meishan Bonded Port QiyuInvestment Management Partnership(Limited Partnership) 23,342-25,755 -----49,097Shanghai Gen Auspicious Venture Capital
Partnership (Limited Partnership) 15,057-241 1,531 ----16,829Nanjing Zijin A Dynamic Investment
Partnership (Limited Partnership) 19,726-(3)5 ----19,728Huizhou Kaichuang Venture Investment
Partnership (Limited Partnership) 8,695-(9) 220----8,906Beijing A Dynamic Venture Capital Center
(Limited Partnership) 7,636-6 - ----7,642Yixing Jiangnan Tianyuan Venture Capital
Company (Limited Partnership) 4,820-(95)7 ----4,732Shenzhen Chuangdong New Industry
Investment Fund Enterprise (Limited
Partnership) 2,338-- -----2,338Hubei Changjiang Hezhi Equity Investment
Fund Management Co., Ltd. 11,553-787 --(3,000)--9,340Huizhou Kaimeng Angel Investment
Partnership (Limited Partnership) 2,543-(13) -----2,530Ningbo Jiutian Matrix Investment
Management Co., Ltd. 2,597-(11) -----2,586Urumqi Qixinda Equity Investment
Management Co., Ltd. 4,502-(97)-----4,405
(RMB’000)
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
January 1,2023
Increase/decreasein investment incurrent period
Investmentgains andlossesrecognized
y equitymethod
Othercomprehensiveincomeadjustment
Otherequitychanges
DeclaredCashdividendsor profitdistributiondeclared
AccruedImpairment
allowance
Otherincreasesanddecreases
June 30,2023
Urumqi TCL Create Dynamic EquityInvestment Management Co., Ltd. 759 - --- ---759
Beijing A Dynamic InvestmentConsulting Co., Ltd. 467 - (1)-- ---466
Shanghai Gen Auspicious InvestmentManagement Co., Ltd. 2,511 - (259)-- (1,753)--499
Nanjing A Dynamic Equity InvestmentFund Management Co., Ltd. 279 -(1) --
-
--278
Wuxi TCL Medical Imaging TechnologyCo., Ltd. 25,837-(3,387) --
-
-(351) 22,099
Aijiexu New Electronic Display Glass(Shenzhen) Co., Ltd. 880,249 - 163-- -- -880,412
TCL Ventures Fund L.P. 29,018 (15,877) (400)-- (403)- (174)12,164
Getech Ltd. 83,660 - (1,355) (7)- -- (4)82,294
Guangdong Innovative LingyueIntelligent Manufacturing andInformation Technology Industry EquityInvestment Fund Partnership (LimitedPartnership) 502,444 338,054 8,975-- (19,937)--829,536
Guangdong Utrust Emerging IndustryEquity Investment Fund Partnership(Limited Partnership) 167,809 - 9,051-- ---176,860
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
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
January 1,
2023
Increase/decrease
in investment incurrent period
Investment
gains and
lossesrecognized
y equitymethod
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared
Cashdividends
or profitdistribution
declared
AccruedImpairment
allowance
Otherincreases
anddecreases
June 30,
2023
Shenzhen Xinhuoyicheng Recreationaland Sports Industry Co., Ltd. 1,388-(148)-----1,240
JOLED Incorporation 159,302- (17,384)-- -(137,375)(4,543)-
Sichuan Shengtian New EnergyDevelopment Co., Ltd. 508,492- 17,203-- (9,128) - -516,567
SunPower Systems InternationalLimited 28,345-1,735-----30,080
Zhonghuan Aineng (Beijing)Technology Co., Ltd. 4,118-(1,385)-----2,733
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.136,682- 1,121-- ---137,803
Hunan Guoxin SemiconductorTechnology Co., Ltd. 9,825 - (88)-- -- -9,737
Maxeon Solar Technologies, Ltd. 1,620,417 290,027 (177,080)-- -- 64,3901,797,754
Xinjiang Goens Energy Technology Co.,Ltd. (Note) 3,919,465 - 546,333-- (216,000)- -4,249,798
Tianjin Zhonghuan Haihe IntelligentManufacturing Fund Partnership(Limited Partnership) 657,615 18,550 (9,875)-- (4,986)--661,304
Zhonghuan Feilang (Tianjin)Technology Co., Ltd. 5,125-460----(2,000)3,585
Ningbo Zhongxin Venture CapitalPartnership Tianjin Huanxin 144,968-515-----145,483
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
14 Long-term equity investments (continued)
(1) Associates (continued)
Increase or decrease in current periodName of investee
January 1,
2023
Increase/decrease
in investment in
current period
Investment
gains and
lossesrecognized
y equitymethod
Othercomprehensiveincomeadjustment
Otherequitychanges
DeclaredCashdividends orprofitdistributiondeclared
AccruedImpairmentallowance
Otherincreases anddecreases
June 30, 2023
TCL Huanxin Semi-conductor (Tianjin) Co.,Ltd. 393,946 - (15,840) - - - - -378,106
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd. 1,012 - - - - - - -1,012Inner Mongolia Huanye Material Co., Ltd. 6,163 - - - - - - -6,163Shenzhen Shutuo Technology Co., Ltd. 38,202 - (687) - - - - (1,364)36,151Shenzhen Qianhai Sailing International
Supply Chain Management Co., Ltd. 69,540 - (5,584) 650 - - - (261)64,345Wuhan Guochuangke Optoelectronic
Equipment Co., Ltd. 25,910- (1,651) - - - -(6,743) 17,516Zhihui Xinyuan Commercial (Huizhou) Co.,
Ltd. 3,936 - 5,058 - - - - -8,994Purplevine Holdings Limited 1,629 - (1,621) - - - - (8)-
Xinxin Semiconductor Technology Co., Ltd.1,798,784 - (34,120) - - - -(1,764,664) -Inner Mongolia Xinhua Semiconductor
Technology Co., Ltd. 117,886 240,000 (5,751) - - - - -352,135Inner Mongolia Xinhuan Silicon Energy
Technology Co., Ltd. 127,847 1,668,000 (11,885) - - - - -1,783,962Shanghai Feilihua Shichuang Technology
Co., Ltd. 41,054 - 392 - - - - 37341,819Bank of Shanghai Co., Ltd. 12,809,374 -718,10632,788 -(327,157) - -13,233,111Hubei Consumer Finance Co., Ltd. 166,077 -6,967 - - - - -173,044Tianjin 712 Communication & Broadcasting
Co., Ltd. 287,755-6,662 - -(2,548) -(115,598)176,271Jiangsu Jixin Semiconductor Silicon
Material Research Institute Co., Ltd. - 8,900 (740) - - - - (113)8,047Xi’an Simovi New Material Co., Ltd. - 30,000 - - - - - -30,000
28,735,5482,490,884 1,257,95335,767 -(636,961) (137,375) (1,857,543) 29,888,273
Note: Xinjiang Xiexin New Energy Materials Technology Co., Ltd. was renamed as Xinjiang Goens Energy TechnologyCo., Ltd. in May 2023.
(RMB’000)
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
January 1,
2023
Increase/decrease
in investment incurrent period
Investment gainsand lossesrecognized byequity method
Othercomprehensiveincomeadjustment
Otherequitychanges
DeclaredCashdividends or
rofitdistribution
declared
AccruedImpairment
allowance
Otherincreases
anddecreases
June 30, 2023
TCL Huizhou City, Kai EnterpriseManagement Limited
1,347
-
(2)
- - - - -
1,345
Huizhou TCL Human ResourcesService Co., Ltd.
6,274
-
- - - - -
6,641
Zhangjiakou Qixin Equity InvestmentFund Partnership
86,975
-
-
- - - - -
86,975
Tianjin Huanyan Technology Co., Ltd.
140,793 -(2,792) - - - - -138,001
TCL Microchip Technology(Guangdong) Co., Ltd.
285,279
-
(35,200)
-
(16,916)
- - -
233,163
520,668-(37,627) -(16,916)---466,125
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
(3)Impairmentallowances for long-term equity investments
15 Investments in other equity instruments
16 Other non-current financial assets
V Notes to Consolidated Financial Statements (Continued)
14 Long-term equity investments (continued)
January 1,2023
Increase inthe period
Decrease inthe period
Otherchanges
June 30,2023
Note
Pride TelecomLimited 1,624 - - -1,624Note 1
Huaxia CPV (InnerMongolia) PowerCo., Ltd. 49,503 - - -49,503Note 1
JOLEDIncorporation 318,604 137,375 -(7,132)448,847Note 1
Ruihuan (InnerMongolia) SolarPower Co., Ltd. 9,251 - --9,251Note 1
378,982 137,375 -(7,132)509,225
Note
Impairment allowances were established for the long-term investments in these investees at recoverableamounts because continuous operations loss occurred to these investees with poor management. June 30, 2023 January 1, 2023
Stocks 46,668 66,706 Equity of unlisted companies 374,436 373,290
421,104 439,996
Item name
Confirmed
Dividend
incomerecognized
Accumu
latedProfits
Accumu
latedlosses
Amount of
othercomprehensi
ve incometransferredto retained
earnings
Reasons designated asmeasured at fair value andwhose changes are included
in other comprehensive
income
Stocks - 3,166 (166,341) -
Being held long term for
strategic purposes
Equity of unlistedcompanies - 132,19 (21,665) -
Being held long term for
strategic purposesTotal - 163,85 (188,006) - June 30, 2023January 1, 2023
Equity investments 4,252,713 2,928,827 Debt investments 109,164 -
4,361,877 2,928,827
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
17 Investment property
Houses and
buildings
Land use rights TotalGross amount:
January 1, 2023
1,067,479 205,633 1,273,112Increase
Reclassified from fixedassets and intangible assets1,932 -1,932Decreases
Reclassified to fixed assetsand intangible assets(44,787) - (44,787)Other decreases -(1,828) (1,828)
June 30, 2023
1,024,624 203,805 1,228,429
Accumulated depreciation andamortization:
January 1, 2023
235,474 38,402 273,876Increase
Accrued in current period17,059 2,196 19,255
Reclassified from fixedassets and intangible assets
-
Decreases
Reclassified to fixed assetsand intangible assets(6,788) - (6,788)Other decreases-
(37) (37)
June 30, 2023
245,946 40,561 286,507
Investment property, net:
--
-
June 30, 2023
778,678 163,244 941,922
January 1, 2023
832,005 167,231 999,236
Impairment allowance:
January 1, 2023
52,787 - 52,787
Increase
Increase in the perio
- -
-
Decreases
Decrease in the perio
dd
- -
-
June 30, 2023
52,787 - 52,787
Investment property, net:
June 30, 2023
725,891 163,244 889,135
January 1, 2023
779,218 167,231 946,449
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
18 Fixed assets
Houses
andbuildings
Machineryequipment
Office
andelectronicequipment
Transportation
equipment
Powerstations
Others
TotalGross
amount:
January 1,
2023 44,979,606 174,755,648 2,737,234 261,094 2,361,429 27,226 225,122,237IncreaseAcquisition
and other 687,724 826,098 65,665 22,823 1,000 3,149 1,606,459New
subsidiary 1,888,332 2,968,135 11,225 2,083 - 14,164 4,883,939Reclassified
from
investment
property 44,787 ---- - 44,787Reclassified
from
construction
in progress 5,536,951 20,095,440 190,427 5,065 177 3,113 25,831,173DecreasesWritten
down with
government
grants (3,846) (1,132,196)--- - (1,136,042)Reclassified
to investment
property (1,932) ---- - (1,932)Other
decreases (134,039) (3,811,277)(37,138)(3,655)(134,800) (3,929) (4,124,838)Exchange
adjustment 24,584 9,354 2,408 648 - 1,022 38,016
June 30,
2023 53,022,167 193,711,202 2,969,821 288,058 2,227,806 44,745 252,263,799
Accumulated
depreciation:
January 1,
2023 7,827,013 80,699,683 1,726,432 165,109 514,036
15,930 90,948,203IncreaseAccrual 874,982 8,605,889136,125 19,504 41,277 2,155 9,679,932New
subsidiary 241,475 357,935 9,130 1,478 - 14,164 624,182Reclassified
from
investment
property 6,788 ---- - 6,788Other
increases - 679,050 --7 - 679,057DecreasesReclassified
to investment
property (201) ---- - (201)Other
decreases (15,595) (941,540)(30,701) (1,906)(19,244) (3,929) (1,012,915)Exchange
adjustment 1,441 2,254 934 316 - 347 5,292
June 30,
2023 8,935,903 89,403,2711,841,920 184,501 536,076 28,667 100,930,338
Fixed assets,
net:
June 30,
2023 44,086,264 104,307,9311,127,901 103,557 1,691,730 16,078 151,333,461January 1,
2023 37,152,593 94,055,965 1,010,802 95,985 1,847,393 11,296 134,174,034
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
18 Fixed assets (continued)
Houses andbuildings
Machineryequipment
Office andelectronicequipment
Transportation
equipment
Powerstations
Others
TotalImpairment
allowance:
January 1,2023 766,317 832,173 35,290 111 62,059 412 1,696,362Accrued in
currentperiodWrite-offof currentperiod - (43,071)(45)-- - (43,116)June 30,
2023 766,317 789,102 35,245 11162,059 412 1,653,246
Fixedassets,carryingamount:
June 30,202343,319,947 103,518,829 1,092,656 103,446 1,629,671 15,666 149,680,215
January 1,202336,386,276 93,223,792 975,512 95,874 1,785,334 10,884 132,477,672
Please refer to Item 81 of Note V for information on fixed asset pledge. As of June 30, 2023, the gross amount
of the fixed assets that were fully depreciated and still in use was RMB41,764,110,000.
Fixed assets with pending ownership certificates at the end of the current period:
Carrying amount
Expected time ofobtaining ownership certificate
Houses and buildings
(Note)
21,899,635
Expected to be completed in
2024
Note As of June 30, 2023, the fixed assets with pending ownership certificates of the Company were mainly the
buildings and constructions of CSOT’s t3, t4 and t9 manufacturing bases, as well as the buildings andconstructions of Inner Mongolia Zhonghuan Crystal Material Co., Ltd., Inner Mongolia Zhonghuan AdvancedSemi-conductor Material Co., Ltd. and Tianjin Huanhai Industrial Park Co., Ltd.
19 Construction in progress(1)Schedule of construction in progress June 30, 2023January 1, 2023
Construction in progress 42,124,367 52,063,442
Less: Impairment allowance 9,608 9,608
42,114,759 52,053,834
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)19 Construction in progress (continued)
(2) Changes to construction in progress
Project name Budget
January 1,2023
Increase in the
period
Transfer-in incurrent periodFixed assets
Othermovements
June 30,2023
Project
input
estment as %of budget
Projectprogress
Cumulativecapitalizedinterest
Including:
capitalized interestin current period
Interest capitalization rate for current
period Funding source
t5 production line ofLCD panel 11,321,000 5,039,401 2,043,760(3,759,096)-3,324,06590% 90%77,36546,1161.5%
Proprietary fund and loans
t4 production line ofLCD panel 35,000,000 16,239,091 374,674(29,825)(10,577)16,573,36396% 96%1,485,024134,4392.4%
Proprietary fund and loans
t9 production line ofLCD panel31,500,000 10,383,892 1,574,055(6,770,575)(88,079)5,099,29363% 63%224,67380,2871.5%
Proprietary funds, proceedsfrom share offering and loans
Large-diametersemiconductor siliconwafers for integratedcircuit 5,410,520 1,630,505 982,920 (121,014)-2,492,411 59% 59%- --
Self-financing
50GW (G12) solar-grademonocrystalline siliconmaterial smart factoryproject 10,979,744 3,667,153 2,612,733(4,050,814)(42,379)2,186,693 92% 92%115,797115,797 3.4%
Proprietary fund and loans
Semiconductor siliconwafers for integratedcircuit9,450,000 - 1,445,805 (41,805)(5,565)1,398,435 35% 35%71,111641 3.0%
Proprietary fund and loans
Production line of 8-12-inch semiconductorsilicon wafers forintegrated circuit5,707,172 1,130,031 204,212 (60,522)(3,864)1,269,857 80% 80%11,757 11,7570.6%
Proprietary fund and loans
SemiconductorMonocrystalline SiliconWafters for Energy-Saving Power Devices 1,998,710 878,904 185,527 (289,272)(377)774,782 48% 48%- --
Self-financing
Others Not applicable 13,084,857 6,773,542 (10,708,250) (154,289)8,995,860
52,053,834 16,197,228(25,831,173) (305,130) 42,114,759
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
20 Right-of-use assets
Houses andbuildings
Transportation
equipment
Machineryequipment
Land use
rights
TotalGross amount:
January 1, 2023 4,293,124 1,430 1,110,462 134,541 5,539,557IncreaseNew subsidiary --212,139- 212,139Leased in 677,761 - - 3,428 681,189Other increases 5,209 - 52,715 257 58,181Decreases
Reducedsubsidiary - - - (55,039) (55,039)
Reduction due tocontract revision (2,697) - - - (2,697)Other decreases (30,239) (302)- - (30,541)Exchange adjustment 1,858 --- 1,858June 30, 2023 4,945,016 1,128 1,375,316 83,187 6,404,647
Accumulateddepreciation:
January 1, 2023 227,403 912 189,886 11,232429,433IncreaseAccrual 154,967 (60)65,619 4,321 224,847DecreasesOther decreases (24,639) - - (2,648) (27,287)Exchange adjustment 855 - -- 855June 30, 2023 358,586 852 287,587 12,905 659,930
Right-of-use assets,carrying amount:
June 30, 2023 4,586,430 276 1,087,729 70,282 5,744,717January 1, 2023 4,065,721 518 920,576 123,309 5,110,124
Impairmentallowance:
January 1, 2023 ---- -June 30, 2023 ---- -
Right-of-use assets,carrying amountJune 30, 2023 4,586,430 276 1,087,729 70,282 5,744,717January 1, 2023 4,065,721 518 920,576 123,309 5,110,124
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)21 Intangible assets
Land userights
Non-patenttechnologies/patents
OthersTotalGross amount:
January 1, 2023 9,216,257 11,350,477 1,995,650 22,562,384IncreaseNew subsidiary 279,287 392,385 142,037 813,709Purchase 26,214 68,13119,388 113,733
Reclassified fromconstruction in progress - - 254,583 254,583
Reclassified fromdevelopment costs - 1,386,093 - 1,386,093DecreasesSale and disposal (31,436)-(31,218) (62,654)
Reclassified to investmentpropertyReduced subsidiary (3,144)- - (3,144)Other decreases (76,918)(165,570) - (242,488)Exchange adjustment -(3,514)501 (3,013)June 30, 2023 9,410,260 13,028,002 2,380,941 24,819,203
Accumulated amortization:
January 1, 2023 1,018,407 3,685,498 926,432 5,630,337IncreaseAccrual 130,913 582,251 114,683 827,847New subsidiary 17,388 18,260 58,920 94,568DecreasesSale and disposal (643) - (5,935)(6,578)
Reclassified to investmentproperty ----Reduced subsidiary (157)- - (157)Other decreases (7,934) (15,150)(2,668)(25,752)Exchange adjustment - 11 287 298June 30, 2023 1,157,974 4,270,870 1,091,719 6,520,563Intangible assets, net：
June 30, 2023 8,252,286 8,757,132 1,289,222 18,298,640January 1, 2023 8197850 7,664,979 1,069,21816,932,047Impairment allowance:
January 1, 2023 23,562 113,406 11,148 148,116AccrualExchange adjustment - 1,306 - 1,306June 30, 2023 23,562 114,712 11,148 149,422
Intangible assets, carryingamount:
June 30, 2023 8,228,724 8,642,420 1,278,074 18,149,218January 1, 2023 8,174,288 7,551,573 1,058,070 16,783,931
As of June 30, 2023, the total carrying amount of land use rights for which the title certificatehas not been registered properly was RMB11,653,000.
Please refer to Item 81 of Note V for information on collateralized intangible assets.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
22 Development costs
Development expenditures are presented as follows:
June 30, 2023January 1, 2023
Semi-conductor display 1,598,511 2,172,507
New energy photovoltaic & semi-conductor materials 889,043 1,006,700
2,487,554 3,179,207
23 Goodwill
(1)Gross amount of goodwill
Name of investee oritem incurring goodwill
January 1,
2023
Increase inthe period
Decrease
in theperiod
June 30,
2023
TCL Medical Radiological
Technology (Beijing) Co., Ltd. Note 128,967-- 28,967
Qingdao Blue Business ConsultingCo., Ltd. Note 22,452-- 2,452
Tianjin Huan'Ou SemiconductorMaterial&Technology Co., Ltd. Note 3214,683-- 214,683
TCL Technology Group (Tianjin)Co., Ltd. Note 46,726,130-- 6,726,130Moka International Limited Note 51,728,973-- 1,728,973
Suzhou China Star OptoelectronicsTechnology Co., Ltd. Note 6486,603-- 486,603
Huizhou Kedate Smart DisplayTechnology Co., Ltd. Note 73,011-- 3,011
Suzhou China Star EnvironmentalProtection Technology Co., Ltd. Note 8- 43,408 - 43,408
Xinxin Semiconductor TechnologyCo., Ltd. Note 9- 1,180,005 - 1,180,005
9,190,8191,223,413 - 10,414,232
(2) Goodwill impairment allowance
Name of investee January 1, 2023
Increase inthe period
Decrease
in theperiodJune 30, 2023
TCL Medical Radiological
Technology (Beijing) Co., Ltd. 28,967--28,967
Note
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 RMB52,319,000. Thus, the difference between the accumulated investment of the Company in TCL MedicalRadiological Technology (corresponding to 51.82% interest) and the fair value of the net identifiableassets 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 RMB28,967,000 had been made on such goodwill in 2018.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
23 Goodwill (continued)
(2) Goodwill impairment allowance
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 BusinessConsulting”) with consideration of RMB 10,000,000. Thus, the difference between the accumulatedinvestment of Highly Information Industry Co., Ltd. in Blue Business Consulting (corresponding to a60% interest) and the fair value of the net identifiable assets of Blue Business Consulting attributableto Highly Information Industry Co., Ltd. on the settlement date (equivalent to RMB2,452,000) wasrecorded 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 undercommon 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 acash consideration of RMB12,500,000,000. At the date of acquisition, the Group obtained the effectivecontrol of TCL Technology Group (Tianjin) Co., Ltd., and included such company into the consolidatedfinancial statements. On the date of transaction, the difference between the accumulated investment ofthe Company in TCL Technology Group (Tianjin) Co., Ltd. (corresponding to the 100% interest) andthe fair value of the net identifiable assets of Zhonghuan Electronics attributable to the Company onthe settlement date (equal to RMB6,726,130,000) was recorded in the Company’s goodwill. Thegoodwill mainly consists of 2 asset groups: the new energy photovoltaic and semiconductor materialsand 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 theCompany in Moka International Limited (corresponding to the 100% interest) and the fair value of thenet identifiable assets of Moka International Limited attributable to the Company on the settlementdate (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 ofRMB4,757,727,000. The difference between the accumulated investment of the Company in SuzhouChina Star Optoelectronics Technology Co., Ltd. (corresponding to the total 70% interest) and the fairvalue 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 inthe 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 investmentof 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 theCompany on the settlement date (equal to RMB3,011,000) was recorded in the Company’s goodwill.
Note 8 Suzhou China Star Optoelectronics Technology Co., Ltd., a subsidiary of the Company, completed the
acquisition of 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. inMay 2023 at a cash consideration of RMB344,942,000. As at the date of this transaction, the difference(RMB43,407,000) between the investment amount i.e. the 100% equity of Suzhou China StarEnvironmental Protection Technology Co., Ltd. held by Suzhou China Star OptoelectronicsTechnology Co., Ltd. and the fair value of the identifiable net assets of the equity are recognized in thisitem.
Note 9 Zhonghuan Advanced Semi-conductor Material Co., Ltd., a subsidiary of the Company, completed the
acquisition of 100% equity of Xinxin Semiconductor Technology Co., Ltd. in February, 2023 at aconsideration of RMB7,399,683,000 by issuing equity securities. As at the date of this transaction, thedifference (RMB1,180,005,000) between the investment amount i.e. the 100% equity of XinxinSemiconductor Technology Co., Ltd. held by Zhonghuan Advanced Semi-conductor Material Co., Ltd.and the fair value of the identifiable net assets of the equity are recognized in this item.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
23 Goodwill (continued)
(III) Goodwill impairment test
As of June 30, 2023, there were no signs of impairment in the asset group of QingdaoBlue Business Consulting Co., Ltd., the asset group of Tianjin Zhonghuan AdvancedMaterials & Technology Co., Ltd., the asset group of new energy photovoltaic andsemiconductor materials, the asset group of Moka International Limited, the assetgroup of Suzhou China Star Optoelectronics Technology Co., Ltd. and the asset groupof Suzhou China Star Environmental Protection Technology Co., Ltd. No impairmentprovision was required for the goodwill of the above asset groups.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
24 Long-term deferred expenses
January 1,
2023
Increase in
the period
Amortizationin the period
Others
June 30,
2023
Improvementexpense on leasedfixed assets 1,441,265218,898 (86,840)19 1,573,342Others 1,302,9431,173,161 (938,947)1,879 1,539,036
2,744,2081,392,059 (1,025,787) 1,898 3,112,378
25 Deferred income tax assets and deferred income tax liabilities
(1) Un-offset deferred income tax assets
June 30, 2023 January 1, 2023
Deductibletemporarydifference
Deferred
incometax assets
Deductibletemporarydifference
Deferred
incometax assets
Deductible losses
23,189,142 3,658,74819,383,933 3,055,974Asset impairment
allowances
3,315,646 632,526 4,132,996 785,212Provisions
651,954 109,859 559,584 91,408Changes in fairvalue
12,713 2,123 15,398 2,792Lease liabilities
3,661,586467,532195,722 29,358Others
3,514,662602,2371,924,357 200,865
34,345,703 5,473,025 26,211,990 4,165,609
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(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
June 30, 2023 January 1, 2023
Taxable
temporarydifferences
Deferred tax
liabilities
Taxabletemporarydifferences
Deferredincome tax
liabilities
Accelerated depreciation of
fixed assets
12,775,095 1,982,389 13,198,261 2,046,374One-off tax deduction for fixedassets
6,776,680 1,047,887 6,818,647 1,021,284Increase in value of assets asassessed in businesscombination not involvingentities under common control
3,657,410 688,3931,627,106 378,993
Changes in fair value
777,623 183,329 331,292 71,725
Right-of-use assets
3,567,816465,6981,139 171
Others
701,405 158,650 951,687 212,603
28,256,0294,526,346 22,928,132 3,731,150
(3)There were no deferred income tax assets or liabilities presented on a net basis afteroffsetting
Item
Amount subject to
mutual offset ofdeferred income tax
assets againstliabilities at the end of
the period
Closing balance of deferredincome tax assets or liabilities
after offset
Deferred income tax assets
2,710,275 2,762,750Deferred income tax liabilities
2,710,275 1,816,071
Item
Amount subject to
mutual offset ofdeferred income tax
assets against
liabilities at the
beginning of the
period
Opening balance of deferredincome tax assets or liabilities
after offset
Deferred income tax assets
2,411,7221,753,887Deferred income tax liabilities
2,411,7221,319,428
(4) Unrecognized deferred income tax assets
June 30, 2023January 1, 2023
Deductible temporary
difference
791,998 306,669
Deductible losses
12,531,63710,302,065
13,323,635 10,608,734
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
Deferred income tax assets and deferred income tax liabilities (continued)
(5)Deductible losses in respect of unrecognized deferred income tax assets will expire in thefollowing years:
June 30, 2023January 1, 2023
2022
-268,388
2023
471,740 472,917
2024
472,157 472,157
2025
440,443 440,443
2026
1,079,1771,242,203
2027 onwards
10,068,1207,405,957
12,531,637 10,302,065
26 Other non-current assets
June 30, 2023 January 1, 2023
Gross
amount
Impairment
allowance
Carrying
amount
Grossamount
Impairment
allowance
Carrying
amount
Advance
payment forequipmentand land userights (Note) 5,503,724 -5,503,724 5,426,643- 5,426,643Advance
payment forpatents 262,799 -262,799
273,348- 273,348
Others 4,094,957 -4,094,957
593,952- 593,952
9,861,480 -9,861,480
6,293,943- 6,293,943
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 StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
27 Short-term borrowings
June 30, 2023January 1, 2023
Unsecured borrowings 9,588,27610,214,632
Borrowings secured bypledge 19,461 -Interest payable 6,2541,279
9,613,99110,215,911
On June 30, 2023, the Company’s short-term pledged loans were equivalent toRMB19,461,000, pledged with held-for-trading financial assets equivalent toRMB21,441,000.As of June 30, 2023, the Company does not have any short-term borrowings that haveexpired and have not been repaid.
28 Borrowings from the Central Bank
As of June 30, 2023, the balance of the borrowings of TCL Tech Finance Co., Ltd. (asubsidiary of the Company) from the central bank was RMB727,203,000 (December 31,2022: RMB777,676,000).
29 Customer deposits and deposits from banks and other financial institutions
June 30, 2023January 1, 2023
Customer deposits and deposits fromother banks and financial institutions 563,135603,423
Customer deposits and deposits from banks and other financial institutions are the depositsof related and nonrelated enterprises absorbed by TCL Tech Finance Co., Ltd., a subsidiaryof the Company, within the business scope approved by the regulatory authority.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
30 Held-for-trading financial liabilities
June 30, 2023January 1, 2023
Financial liabilities at fair valuethrough profit or loss.
726,942 861,912
31 Derivative financial liabilities
June 30, 2023January 1, 2023
Derivative financial liabilities 309,743 70,735
32 Notes payable
June 30, 2023January 1, 2023
Bank acceptance notes 4,222,772 5,731,632Trade acceptance notes 1,164,227634,028
5,386,999 6,365,660As of June 30, 2023, the Company had no notes payable that were due but not paid.
33 Accounts payable
June 30, 2023 January 1, 2023
Amounts due to suppliers 30,475,619 26,381,912
As of June 30, 2023, there were no significant accounts payable aged over one year.
(RMB’000)
34 Advances from customers
35 Contract liabilities
36 Employee benefits payable and long-term employee benefits payable
V Notes to Consolidated Financial Statements (Continued)
June 30, 2023
January 1, 2023
Advances from customers
1,402
As of June 30, 2023, the Company had no significant accounts receivable aged over one year.
June 30, 2023January 1, 2023
Advances from customers 2,245,240 2,336,008
(1) Employee compensation payable
June 30, 2023 January 1, 2023
Short-term employee benefits payable 2,313,534 2,341,429 Defined contribution plans payable 16,437 26,353 Dismissal benefits payable 3,741 9,151
2,333,712 2,376,933
(RMB’000)
VNotes to Consolidated Financial Statements (Continued)
Employee benefits payable and long-term employee benefits payable (continued)
(1)Employee benefits payable (continued)
(a)Short-term employee benefits presented
January 1, 2023
Increase in the
period
Decrease inthe period June 30, 2023
Wages, bonuses,
allowances and subsidies 2,034,238 5,672,377 (5,652,103) 2,054,512Employee services and
benefits - 225,408 (225,408) -Social insurance benefits 38,105 186,201 (191,841) 32,465Including: medical
insurancepremium 36,751 170,631 (175,697) 31,685Employment
injury insurancepremiums 695 9,232 (9,331) 596Maternity
insurance 659 6,338 (6,813) 184Housing fund 27,917 171,658 (181,587) 17,988Trade union funds and staff
education funds 49,41896,695 (109,222) 36,891Others 191,75126,433 (46,506) 171,678
2,341,4296,378,772 (6,406,667) 2,313,534
(b) Defined contribution plans
January 1, 2023
Increase in the
period
Decrease in
the period June 30, 2023
Basic pension insurance 25,381384,295(393,832) 15,844Unemployment insurance 97211,507 (11,886) 593
26,353395,802(405,718) 16,437
(2) Long-term employee compensation payable
June 30, 2023 January 1, 2023
Supplementary pension insurance 24,591 25,101 Other long-term benefits 167,209 447,437
191,800 472,538
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
37 Taxes and levies payable
38 Other payables
(1) Dividends payable
June 30, 2023 January 1, 2023
Other non-controlling interests55,083 40,010
55,083 40,010
V Notes to Consolidated Financial Statements (Continued)
June 30, 2023 January 1, 2023
Corporate income tax 559,142 731,839 Value-added tax 105,307 211,873 Individual income tax 128,847 42,611 Urban maintenance and construction tax 75,362 60,858 Education surcharges 53,858 43,495 Others 211,143 124,915
1,133,659 1,215,591Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates.
June 30, 2023 January 1, 2023
Dividends payable 55,083 40,010 Other payables 23,278,603 24,150,342
23,333,686 24,190,352
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
38 Other payables (continued)
(2) Other payables
June 30, 2023 January 1, 2023
Payables for engineering equipment19,022,322 19,130,372
Unpaid expenses2,182,555 2,195,904
Security and deposits347,180 353,207
Others1,726,546 2,470,859
23,278,603 24,150,342
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
39 Non-current liabilities due within one year
June 30, 2023 January 1, 2023
Long-term borrowings due within one year(Note 1)
6,389,135 4,341,300
Bonds payable due within one year (Note 2)42 4,998,972 5,170,383
Lease liabilities due within one year
43 430,363 295,010
Long-term payables due within one year
123,510 179,127
Interest payable due within one year
393,984 552,181
Long-term employee compensation payabledue within one year 309,602 419,320
12,645,566
10,957,321
Note 1 The interest rates of the Company’s long-term borrowing due within one year ranged from 2.3% to
6.61% in the current period (2022: from 2.7% to 5.91%).
Note 2 The Company's bonds payable due within one year are mainly as follows:
① Corporate bond 18TCL 02: Issued in August 2018, with a term of 5 years, the closing balance
as of June 30 was RMB2,000,260,000.
② Corporate bond 19TCL 01: Issued in May 2019, with a term of 5 years, the closing balance as
of June 30 was RMB1,000,099,000.
③ Medium-term note 21TCL Technology MTN001 (high-growth bond): Issued in May 2021, with
a term of 3 years, the closing balance as of June 30 was RMB1,998,613,000.
40 Other current liabilities
June 30, 2023 January 1, 2023
After-sales service expense (note) 1,100,958 844,293
Output tax to be transferred 235,431 175,626
Others 79,846 165,929
1,416,235 1,185,848
Note After-sales service expense expected to occur within 1 year is presented in other current liabilities.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
41 Long-term borrowings
June 30, 2023 January 1, 2023
Borrowings secured by collateral 42,107,358 42,317,366 Borrowings secured by pledge 6,216,682 6,675,371 Unsecured borrowings 85,636,537 73,951,728
133,960,577 122,944,465
Including: long-term loans due within one year (6,389,135) (4,341,300)
127,571,442 118,603,165
The maturities of the Company's long-term borrowings vary from 2023 to 2038.
As of June 30, 2023, the long-term borrowings secured by collateral were equivalent to RMB42,107,358,000(December 31, 2022: RMB42,317,366,000), which were secured by the collaterals of the land use right, housesand buildings, machinery and equipment of about RMB109,429,235,000 (December 31, 2022:
RMB110,182,749,000); the long-term pledged borrowings were equivalent to RMB6,216,682,000 (December31, 2022: RMB6,675,371,000), which were pledged by the collaterals of the 60% equity in Suzhou China StarOptoelectronics Technology Co., Ltd., 100% equity in Suzhou China Star Optoelectronics Display Co., Ltd. and40% equity in Huansheng Solar (Jiangsu) Co., Ltd. and accounts receivable and contract assets of aboutRMB971,785,000 (December 31, 2022: RMB757,751,000).
The interest rates of the Company’s long-term borrowing ranged from 2.30% to 7.79% in thecurrent period (2022: from 2.4% to 7.75%).
42 Bonds payable
June 30, 2023 January 1, 2023
Corporate bonds 3,599,179 4,518,438 MTN 6,989,292 7,488,413
10,588,471 12,006,851
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)42 Bonds payable (continued)
(1) Movements in bonds payable
Bond name Par value Issue date
Maturi
tyIssued amount
January 1,
2023
Issued in
currentperiod
Accruedinterest as
per parvalue
Amortization of
remium
ordiscount
Repaid in
currentperiod
Others (note 1)
June 30, 2023
19TCL01 1,000,000May 20, 201951,000,0001,000,264- 17,246 (109)-(1,000,155) -19TCL02 1,000,000July 23, 201951,000,000996,522- 15,125 1,104- 997,626 19TCL03 2,000,000
October 21,
2019
52,000,000436,934- 6,437 841- 437,775TCL TEC1 1,957,483July 14, 202051,957,4832,084,718- 20,097 11,872- 67,188 2,163,778
21TCL Group MTN001 (High- GrowthDebt)
2,000,000May 10, 202132,000,0001,997,821- 40,900 525- (1,998,346) - 22TCL Group MTN001 2,000,000
January 14,
2022
32,000,0001,997,392- 34,342 441- - 1,997,83322TCL Group GN002 1,500,000April 27, 202231,500,0001,497,217- 24,522 594- - 1,497,811
22TCL Group MTN003 (Science andTechnology Notes)
2,000,000July 06, 202232,000,0001,995,983- 34,153 792- - 1,996,775
23TCL Group MTN001 (Science andTechnology Notes)
1,500,000
February 03,
2023
31,500,0001,500,000 24,206 (3,127) -- 1,496,873-Total 14,957,48314,957,48312,006,8511,500,000217,02812,933-(2,931,313) 10,588,471Note Others are bonds payable within one year which are reclassified to non-current liabilities due within one year and exchange adjustment.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
43 Lease liabilities
June 30, 2023January 1, 2023
Total lease liabilities5,488,6974,756,393
Less: Current portion of lease liabilities 430,363 295,010
Total5,058,3344,461,383
44 Long-term payables
June 30, 2023January 1, 2023
Finance lease 2,431,551 887,763
45 Deferred income
January 1, 2023
Increase inthe period
Decrease in
the period
Others June 30, 2023
Government
grants 2,468,1454,067,217 (3,538,632) 16,130 3,012,860
2,468,1454,067,217(3,538,632) 16,130 3,012,860
Items involving governmen
grants
January1, 2023
Newgrants in
currentperiod
Amountrecorded in
non-operatingincome in
currentperiod
Amountrecorded in
otherincome in
currentperiod
Amount
used tooffset costs
andexpenses in
currentperiod
Otherchanges
June 30, 2023Government
grants relatedto assets
953,042 262,499-(6,653)(37,455)(1,019,853) 151,580Governmentgrants relatedto income
1,515,103 3,820,848-(1,128,701)(1,022,487)(323,483) 2,861,280
2,468,145 4,083,347-(1,135,354)(1,059,942)(1,343,336) 3,012,860
Note "Other changes" were deferred income offset by the carrying amounts of relevant assets.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
46 Estimated liabilities
June 30, 2023January 1, 2023
After-sales service fee of products
39,352 27,105
Pending litigation
68,969 70,379Onerous contract
38 38
108,359 97,522
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
47 Share capital
January 1, 2023 Increase or decrease in
current period
June 30, 2023
Amount Ratio (%)New issues
Sharesconverted from
capital reserve
OthersSubtotalAmountRatio (%)
I. Restricted Shares3,420,221 20.03%-342,022 (3,081,704)(2,739,682) 680,539 3.62%
II. Non-restricted shares13,651,671 79.97%-1,365,167 3,081,704 4,446,871 18,098,542 96.38%
III. Total shares17,071,892 100%-1,707,189 1,707,189 18,779,081 100%
As of June 30, 2023, the Company's total share capital was 18,779,080,767 shares.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
48 Capital reserves
January 1, 2023
Increase in
the period
Decrease in
the period June 30, 2023
Share premium 12,437,990274,244 (2,401,878) 10,310,356
Other capital reserves 84,80353,253 (23,404) 114,652
12,522,793327,497(2,425,282) 10,425,008
49 Treasury share
January 1, 2023
Increase inthe period
Decrease inthe period
June 30, 2023
Treasury share1,314,581271,264 (466,809) 1,119,036
Increase in the period is mainly stock repurchases for the employee stock ownership plan or the equityincentives of the Company. On May 31, 2023, the 32nd meeting of the Seven-term Board of Directorswas held to deliberate and approve the “Proposal on the Repurchase of Certain Shares from the SocialPublic in 2023”. The Com
any will repurchase its own shares via centralized bidding, and theCompany’s shares repurchased will be used for the employee stock ownership plans or equityincentives. As of June 30, 2023, the total number of shares repurchased was 64,993,000 shares at thetotal consideration of RMB247,171,000.
Decrease in the year is mainly caused by the non-trading transfer and sale of the employee portion ofthe employee stock ownership plan.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
50 Other comprehensive income
(1) Other comprehensive income items, income tax effects and reclassifications to profit or
loss
January - June 2023
January - June 2022
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
4,483
Share of the period 4,483 388Previous other comprehensive income reclassified to
retained earnings for current period
2. Changes in fair value of other equity instruments (23,898) (13,674) Current gain/(loss) (20,062) (9,968)
Previous other comprehensive income reclassified toretained earnings for current period - - Income tax effects recorded in other comprehensive income(3,836) (3,706)
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
29,896
4,046 Share of the period 29,896 4,046 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 (360,611) (209,875) Current gain/(loss) (340,791) (158,364)
Previous other comprehensive income reclassified to profitfor current period (23,262) (48,626) Income tax effects recorded in other comprehensive income3,442 (2,885)
4. Differences arising from translation of foreign currency
financial statements of overseas operations (100,880) (153,882)
5. Net income arising from disposal of overseas operations
through profit or loss - -(451,010) (372,997)
(RMB’000)
(2) Changes in other comprehensive income items
V Notes to Consolidated Financial Statements (Continued)50 Other comprehensive income (continued)
Equity attributable to shareholders of the parent company
Change ofaccountingpolicies
Share of othercomprehensiveincome ofinvestees that will
e reclassified to
| b | |
| p | |
rofit or lossunder equity
method
Gain/losson changes
in fairvalue of
financial
assets
Gain/(Loss)
on changes
in cash
flowhedges
Differencesarising fromtranslationof foreigncurrency-denominatedfinancialstatements
Fair valuechanges ofother equityinstruments
Fair valuechanges ofother debtinstruments
Othercomprehensive
incometransferred toretainedearningsSubtotal
Non-controllinginterests
Total othercomprehensive
income
January 1, 2022 334,950 46,888(350,569)62,546(239,179)(141,290)-(122,793)(409,447)899(408,548)
Movement of 2022 - (17,501)-15,615(397,531)(16,420)-13,462(402,375)75,341(327,034)
January 1, 2023 334,950 29,387(350,569)78,161(636,710)(157,710)-(109,331)(811,822)76,240(735,582)
Movement fromJanuary to June 2023 - 34,381 -(271,320) (107,245) (20,062) --(364,246) (86,764) (451,010)
June 30, 2023 334,950 63,768 (350,569) (193,159) (743,955) (177,772) -(109,331) (1,176,068) (10,524) (1,186,592)
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
51 Surplus reserves
January 1, 2023
Increase in
the period
Decrease in
the period June 30, 2023
Statutory surplusreserves 3,529,403
-
- 3,529,403Discretionary surplusreserves 182,870
-
- 182,870
3,712,273-- 3,712,273
As per China's Company Law, Articles of Association for Companies, accounting standards, theCompany and several of its subsidiaries shall appropriate 10% of net profits as statutory surplusreserves until the reserve amount reaches 50% of the registered capital. According to the aforesaidlaws and regulations, part of the statutory surplus reserves can be converted into share capital of theCompany, 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 thediscretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used tomake up the previous loss or increase the share capital.
52 Specific reserves
January 1, 2023
Appropriationin the period
Decrease in
the period June 30, 2023
Production safetyreserve 2,30116,191 (11,701) 6,791
53 General risk reserve
January 1, 2023
Appropriation
in the period
Decrease inthe period June 30, 2023
General risk reserve8,934-- 8,934
As per the General Rules on Financial Affairs of Financial Enterprises and the Guide to theImplementation of the General Rules on Financial Affairs of Financial Enterprises promulgated bythe Ministry of Finance, as well as the Articles of Association of TCL Technology GroupCorporation, the Company's subsidiary - TCL Technology Group Corporation - appropriated 1% ofits net profit as general risk reserve in the previous years.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)54 Retained earnings
January - June 2023
January - June
2022
Retained earnings at the beginning of the year 19,486,730 22,458,340
Change of accounting policies (Note) - 69,346
Net profit for current period 340,493 663,521
Decrease in the period - (2,064,177)
Including: Appropriation of surplus reserves
Distributed to ordinary shareholders asdividends
-
(2,050,003)
Others- (14,174)
Retained earnings at the end of the period 19,827,223 21,127,030
55 Operating income and operating costs
January - June 2023 January - June 2022
Revenue
Operatingcost
RevenueOperating
cos
Core business
82,810,846 72,687,776 82,566,755 75,173,515
Non-core business2,337,880 1,579,823 1,955,426 1,349,429
85,148,726 74,267,59984,522,181 76,522,944
(1) Business by operating segment
Revenue Operating costGross profit
January -June 2023
January -June 2022
January -June 2023
January -June 2022
January - June
2023
January - June
2022
Domesticsales
58,816,019 57,379,45053,158,646 51,272,0925,657,373 6,107,358
Foreignsales
26,332,707 27,142,73121,108,953 25,250,8525,223,754 1,891,879
85,148,726 84,522,18174,267,599 76,522,94410,881,127 7,999,237
(2)The sales revenue from the top five customers combined was RMB22,802,968,000 andRMB27,189,512,000 respectively for January-June, 2023 and January-June, 2022, accounting for
27.5% and 32.9% of the core business revenue.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
55 Operating income and operating costs (continued)
(3) Revenue and costs generated from the Company's trial sales are as follows:
January - June 2023 January - June 2022
Revenue 457,949427,118 Operating cost 417,719403,777
56 Interest income/expense and exchange gain
January - June 2023 January - June 2022
Interest income 41,46338,579 Interest expenditures 9,976 14,292 Exchange gain/(loss) (295)24,351
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 afinancial enterprise.
57 Taxes and levies
January - June 2023 January - June 2022
Property tax 190,060 131,638 Stamp tax 119,421 100,211 Urban maintenance and construction tax 35,287 21,608 Education surcharges 18,924 15,407 Land use tax 18,063 13,634 Others 10,142 6,583
391,897 289,081
The applicable tax and levy standards aredetailed in Note IV.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)58 Sales expenses
January - June 2023 January - June 2022
Employee salaries and benefits 340,417 322,046
After-sales service expense 408,042 281,872
Promotional and marketing expenses 121,280 139,964
Others 336,959 309,487
1,206,698 1,053,369
59 General and administrative expense
January - June 2023 January - June 2022
Employee salaries and benefits 755,363 759,634
Depreciation and amortization expenses 391,849 370,222
Digital development expenses 64,244 128,251
Others 804,468 458,272
2,015,924 1,716,379
60 R&D expenses
January - June 2023January - June 2022
Depreciation and amortization expenses 1,815,422 1,483,845
Material expenses 1,469,934 1,859,860
Employee salaries and benefits 1,053,804 779,375
Others 553,194 328,684
4,892,354 4,451,764
61 Financial expenses
January - June 2023January - June 2022
Interest expenditures 2,325,785 2,031,269
Interest income (415,285) (325,439)
Exchange loss / (gain) (360,345) (55,264)
Others 63,008 69,591
1,613,163 1,720,157
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
62 Other income
January - June 2023January - June 2022
R&D subsidies 896,801 1,554,890 VAT rebates on software 20,873 17,127 Over-deduction in taxable amount for VAT 1,585 589 Others 280,666 70,504
1,199,925 1,643,110
63 Return on investment
January - June 2023January - June 2022
Gain on disposal of debt instruments at fairvalue through profit or loss
23,310 141,285
Gain on disposal of debt instruments at fairvalue through profit or lossGain on disposal of equity instruments at fairvalue through profit or loss
703,905 (75,115)
Gain on disposal of debt instruments at fairvalue through profit or lossGain on holding of equity instruments at fairvalue through profit or loss
8,840 7,365
Gain on disposal of debt instruments at fairvalue through profit or lossGain on holding of debt instruments at fairvalue through profit or loss
137,076 35,619 Share of net income of associates 1,257,953 1,769,993 Share of net income of joint ventures (37,627) (12,343)
Net income from disposal of long-termequity investments 360,377 491,319 Others (140,059) (577,608)
2,313,775 1,780,515
64 Gain on changes in fair value
January - June 2023January - June 2022
Held-for-trading financial assets 483,079 (139,785) Derivative financial assets 37,768 (1,176) Held-for-trading financial liabilities (68,190)46,194 Derivative financial liabilities (256) 209,262
452,401 114,495
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)65 Credit impairment loss
January - June 2023January - June 2022
Loss on uncollectible accounts receivable (42,425) (21,227)
Loss on uncollectible other receivables (3,760) (4,351)
Other financial assets 683 (1,579)
(45,502) (27,157)
66 Asset impairment loss
January - June 2023 January - June 2022
Inventory valuation loss (2,217,911) (1,006,908)
Impairment loss on long-term equityinvestments (137,375)
-
Impairment loss on fixed assets - -
Impairment loss on contract assets (3,670) -
Impairment loss on intangible assets - -
Impairment loss on construction in progress- -
Others - (3,379)
(2,358,956) (1,010,287)
67 Asset disposal income
January - June 2023 January - June 2022
Income/(loss) from disposal of fixed assets (18,624) (17,103)
Income/(loss) from disposal of intangibleassets
(22,271)
(8,498)
Others 883 1,970
(40,012) (23,631)
68 Non-operating income
January - June
2023
January - June
2022
Amount through
current non-recurring gains
and losses
Gains on retired or damaged non-current assets 176 116 176Government grants and others 25,854 596,424 25,854
26,030 596,540 26,030
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
V
Notes to Consolidated FinancialStatements (Continued)
69 Non-operating expense
January - June
2023
January - June
2022
Amount through
current non-recurring gains
and losses
Losses on retired or damaged non-current assets 2,392 2,020 2,392 Others 46,76850,372 46,768
49,160 52,392 49,160
70 Income tax expenses
(1) Table of income tax expenses
January - June 2023 January - June 2022
Current income tax expense 577,065 338,743 Deferred income tax expense (676,864) (427,141)
(99,799) (88,398)
(2) Accounting profit and income tax adjustment process
January - June 2023 January - June 2022
Gross profit
2,290,784 1,838,318
Income tax expense calculated atstatutory/applicable tax rate 572,696 275,748
Impact of different tax rates applied tosubsidiaries 20,717 365,664
Impact of adjusting income tax in previousperiods (182,054) (51,310)
Impact of non-taxable income(344,175) (488,118)
Impact of non-deductible costs, expenses andlosses 31,332 44,556
Impact of the use of deductible losses carryforward without recognize deferred income taxassets in the previous periods (118,357) (329,838)
Impact of unrecognized deferred income taxassets of deductible temporary differences ordeductible losses in the current period 384,393 324,802
Others (464,351) (229,902)
Income tax expense(99,799) (88,398)
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
71 Earnings per share
(1) Basic earnings per share
January - June 2023 January - June 2022
Net profit attributable to shareholders of the parent company340,493 663,523
Weighted average outstanding ordinary shares (in thousandshares) 18,519,475 14,925,203
Basic earnings per share (RMB yuan) 0.0184 0.0445
(2) Diluted earnings per share
January - June 2023 January - June 2022
Net profit attributable to shareholders of the parent company340,493 663,523
Diluted weighted average outstanding ordinary shares (inthousand shares) 18,779,081 15,042,602
Diluted earnings per share (RMB yuan) 0.0181 0.0441
72 Cash generated from other operating activities
Cash received from other related operating activities in the consolidated cash flow statement wasRMB5,588,817,000 (the same period of the previous year: RMB5,538,379,000), which primarilyconsisted of current payments received, government grants and special appropriation, etc.
73 Cash used in other operating activities
Cash paid in other operating activities in the consolidated cash flow statement was RMB5,049,598,000(the same period of the previous year: RMB5,670,402,000), which primarily consisted of variousexpenses and current payments.
74 Cash generated from other investing activities
Cash received from other related investing activities in the Company’s consolidated cash flowstatement amounted to RMB1,640,766,000 (the same period of the previous year: RMB73,748,000),mainly due to the receipt of project bid bonds and net cash received from subsidiaries, etc.
75 Cash used in other investing activities
Cash paid for other related investing activities in the Company’s consolidated cash flow statementamounted to RMB475,943,000 (the same period of the previous year: RMB333,406,000), mainly dueto the refund of project bid bonds, payments for foreign exchange forward delivery and net cash paidfor selling subsidiaries, etc.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
76 Cash generated from other financing activities
Cash received from other related financing activities in the consolidated cash flow statement of theCompany amounted to RMB1,895,912,000 (the same period of the previous year: RMB6,000,000),mainly including finance lease payments and deposits received.
77 Cash used in other financing activities
Cash paid for other related financing activities in the Company’s consolidated cash flow statementamounted to RMB6,312,578,000 (the same period of the previous year: RMB4,454,836,000), mainlyfor the repurchase of minority interests in subsidiaries, repurchase of company shares, and payment offinancial lease payments, etc.
78 Supplementary information for the cash flow statement
(1) Reconciliation of net profit to net cash generated from/used in operating activities
January - June
2023
January - June
2022
Net profit 2,390,583 1,926,716Add: Asset impairment allowance 2,404,458 1,037,444Depreciation of fixed assets 9,763,566 9,659,290Depreciation of right-of-use assets 224,847 152,525Amortization of intangible assets 808,784 753,154Amortization of long-term prepaid expense 1,025,787 857,830Loss/(Gain) on disposal of fixed assets, intangible assets andother long-lived assets 40,012 23,631 Loss on retired or damaged fixed assets 2,216 1,904 Loss/(Gain) on changes in fair value (452,401) (114,495) Financial expenses 1,975,711 1,965,946 Return on investment (2,313,775) (1,780,515) Decrease/(Increase) in deferred income tax assets (1,008,863) (663,627) Increase/(Decrease) in deferred income tax liabilities 496,643 565,235 Decrease/(Increase) in inventory (324,976) (119,965) Decrease/(Increase) in operating receivables (8,800,043) (2,029,270) Increase/(Decrease) in operating payables 3,073,357 (2,332,939) Others 1,110,262 (886,228)
Net cash generated from operating activities 10,416,168 9,016,636
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
Supplementary information for the cash flow statement (continued)
(2)
et cash payments for acquisition of subsidiaries in thecurrent period
January - June
2023
January - June
2022
Payments of cash and cash equivalents made in current perioddue to business combinations incurred in current period
350,155 -
Less: cash and cash equivalents held by subsidiary onacquisition date
7,628 -
Add: Payments of cash and cash equivalents made in current
Np
eriod due to business combinations incurred in previousperiods
- -
Net cash payments for acquisition of subsidiaries 342,527 -
(3)
pN
et cash proceeds from disposal of subsidiaries in the currentperiod
Cash or cash equivalents received in current period due to
disposal of subsidiary in current period
- -
Less: cash and cash equivalents held by subsidiary on the datewhen the Company’s control over the subsidiary ceased
- -
Add: Cash or cash equivalents received in current period due
to disposal of subsidiaries in prior periods - -
Net proceeds from the disposal of subsidiaries - -
(4)Breakdown of cash and cash equivalents
June 30, 2023 January 1, 2023 I. Cash 27,744,248 33,675,624 Including: Cash on hand 456 480 Bank deposits available for payment on demand 27,307,262 32,696,213Other monetary assets available for payment ondemand 435,350 919,646 Deposits with the central bank available for payment1,180 59,285 II. Cash equivalents - -
III. Ending balance of cash and cash equivalents 27,744,248 33,675,624
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)79 Net changes in cash and cash equivalents
January - June 2023 January - June 2022
Cash and cash equivalents at the end of the period 27,744,248 31,676,321 Less: Cash at the beginning of the year 33,675,624 30,081,705
Net increase in cash and cash equivalents (5,931,376) 1,594,616
Analysis of ending cash and cash equivalents:
Monetary assets at the end of the period 29,286,645 33,795,517 Less: Non-cash equivalents at the end of the period (note)1,542,397 2,119,196
Cash and cash equivalents at the end of the period 27,744,248 31,676,321
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 othermonetary assets, detailed in Annex V, 1.
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
80 Assets with restricted ownership or use rights
June 30, 2023 Reason for restriction
Monetary assets
266,969
Deposited in the central bank as
the required reserve
Monetary assets1,275,428
Other restricted monetary assets
Notes receivable175,227
Pledge
Fixed assets
100,732,098
As collateral for loan
Intangible assets4,104,162
As collateral for loan
Held-for-trading financial assets452,544
Pledge
Construction in progress5,099,292
As collateral for loan
Right-of-use assets18,131
Lease collateral
Accounts receivable1,358,298
Pledge
Contract assets298,041
Pledge
113,780,190
81 Foreign currency monetary items
June 30, 2023 Foreign currency balanceConversion rate RMB balanceMonetary assetsIncluding: USD 601,167 7.2258 4,343,913HKD 116,889 0.9219 107,760EUR 3,314 7.8487 26,011JPY 1,829,193 0.0499 91,277 SGD 248 5.3280 1,321INR 2,540,279 0.0881 223,799
Accounts receivableIncluding: USD 1,292,625 7.2258 9,340,250HKD 100 0.9219 92INR 4,687,216 0.0881 412,944
Accounts payableIncluding: USD 580,092 7.2258 4,191,629 HKD 624,481 0.9219 575,709JPY 11,554,876 0.0499 576,588 EUR 3,8437.8487 30,163INR 368,134 0.0881 32,433
(RMB’000)
V Notes to Consolidated Financial Statements (Continued)
81 Foreign currency monetary items (continued)
June 30, 2023 Foreign currency balanceConversion rate RMB balanceOther receivables Including: USD 28,373 7.2258 205,018HKD 29,957 0.9219 27,617JPY 71,970 0.0499 3,591PLN 1,520 1.7645 2,682INR 56,801 0.0881 5,004KRW 102,590 0.0055 565MXN 20,888 0.4220 8,815SGD 75 5.3280 400
Other payablesIncluding: USD 784,534 7.2258 5,668,886HKD 81,348 0.9219 74,995JPY 20,199,269 0.0499 1,007,944INR 31,931 0.0881 2,813PLN 421 1.7645 743KRW 176,9700.0055 974AUD 34 4.7806 163MXN 26,139 0.4220 11,031EUR 179 7.8487 1,405SGD 32 5.3280 170
Notes payable Including: USD 2,6027.2258 18,802
Short-term borrowingsIncluding: USD 2,693 7.2258 19,459
Long-term borrowings Including: USD 555,448 7.2258 4,013,556
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
VI Changes to Consolidation Scope
1 Newly consolidated entities for current period
Name of investee
Consolidatedperiod
Reason forchange
Registered capital(RMB)
Contributionratio
Lumetech North America Corporation
February-June,2023
Newlyincorporated USD10,000,000 100.00%
Suzhou Zhonghuan PhotovoltaicMaterials Co., Ltd.
March-June,2023
Newlyincorporated RMB50,000,000 100.00%
Ningxia Huanou New EnergyTechnology Co., Ltd.
March-June,2023
Newlyincorporated RMB1,250,000,000 100.00%
Xinxin Semiconductor TechnologyCo., Ltd.
March-June,2023 Acquisition RMB6,513,000,000 100.00%
Jiangsu Mingjing SemiconductorTechnology Co., Ltd.
March-June,2023 Acquisition RMB120,000,000 100.00%
Jiangsu Lixin SemiconductorTechnology Co., Ltd.
March-June,2023 Acquisition RMB4,300,000,000 100.00%
Zhonghuan Advanced (Xuzhou)Semiconductor Technology Co., Ltd.
March-June,2023 Acquisition RMB4,210,000,000 100.00%
Jiangsu Huasheng SemiconductorMaterials Co., Ltd.
March-June,2023 Acquisition RMB200,000,000 100.00%
Hong Kong NExcel ElectronicTechnology Co., Ltd.
March-June,2023 Acquisition USD5,000,000 100.00%
Singapore NExcel ElectronicTechnology Co., Ltd.
March-June,2023 Acquisition SGD100,000 100.00%
Xuzhou Jingrui SemiconductorEquipment Technology Co., Ltd.
March-June,2023 Acquisition RMB150,000,000 100.00%
Meixin (Xuzhou) Silicon MaterialTechnology Co., Ltd.
March-June,2023 Acquisition RMB22,000,000 100.00%
Ningxia Zhonghuan Industrial ParkManagement Co., Ltd.
March-June,2023
Newlyincorporated RMB10,000,000 100.00%
Shanghai Zhonghuan PhotovoltaicMaterials Co., Ltd.
March-June,2023
Newlyincorporated RMB10,000,000 100.00%
Guangzhou TCL Industrial ResearchInstitute Co., Ltd.
March-June,2023
Newlyincorporated RMB200,000,000 100.00%
Xiaoyu Online (Beijing) TechnologyCo., Ltd.
March-June,2023
Newlyincorporated RMB10,000,000 100.00%
Suzhou China Star EnvironmentalProtection Technology Co., Ltd.
May-June,2023 Acquisition RMB100,000,000 100.00%
Huizhou Dongshen Jia'an EquityInvestment Partnership (LimitedPartnership) May-June, 2023
Newlyincorporated RMB1,561,000,000 99.94%
Inner Mongolia TCL PhotoelectricTechnology Co., Ltd. May-June, 2023Acquisition RMB100,000,000 100.00%
(RMB’000)
Note: Business combinations not under the common control occurred in the current period
(1) Acquisition of shares of Suzhou China Star Environmental Protection Technology Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On May 31, 2023 (the “Acquisition Date”), the Group acquired 100% equity of Suzhou China Star EnvironmentalProtection Technology Co., Ltd. at a cash consideration of RMB344,942,000, and included such company into thescope of consolidation.Cash consideration 344,942Less: Share of fair value of identifiable net assets acquired 301,534Goodwill amount 43,408
② Assets and liabilities of the acquiree as at the acquisition date are presented as follows:
Fair value at acquisition dateCarrying amount at acquisition date
Current assets 25,50225,502
Non-current assets 332,703150,272
Net assets 301,534146,468Less: non-controlling interests --Net assets acquired 301,534146,468
③ Jiangsu Tiandi Heng’an Real Estate Land Asset Appraisal Co., Ltd. has appraised the information above using
the income method, and issued an asset appraisal report (TDHA [2022] ZPZ No. 1065), with an appraised value ofRMB344,942,000.
Ningbo Dongshen Zhixuan EquityInvestment Partnership (LimitedPartnership) May-June, 2023
Newlyincorporated
RMB551,000,000 90.74%VI Changes to Consolidation Scope
(continued)
1 Newly consolidated entities for
current period (continued)
Name of investee
Consolidatedperiod
Reason forchange
Registered capital(RMB)
Contribution
ratio
TCL Financial Technology(Shenzhen) Co., Ltd. Late June 2023 Acquisition RMB5,000,000 100.00%
Huansheng Photovoltaic(Guangdong) Co., Ltd. Late June 2023
Newlyincorporated RMB10,000,000 100.00%
(RMB’000)
(2)Acquisition of shares in TCL Internet Technology (Shenzhen) Co., Ltd.
① On June 30, 2023 (the “Acquisition Date”), the Group acquired 100% equity of TCL Internet
Technology (Shenzhen) Co., Ltd. with a cash consideration of RMB15,036,000, and included suchcompany into the scope of consolidation.
Cash consideration
15,036
Less: Share of fair value of identifiable net assets acquired
15,036
Difference of lower goodwill / merger cost and higher share of fair value of identifiable netassets acquired
-
② Assets and liabilities of the acquiree as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount at acquisition
dateCurrent assets
38,151 38,151
Non-current assets
11,600 6,098Net assets
15,036 10,360
Less: non-controllinginterests
--Net assets acquired
15,036 10,360
(3)Acquisition of shares in Xinxin Semiconductor Technology Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On February 28, 2023 (the “Acquisition Date”), the Group acquired 100% equity of XinxinSemiconductor Technology Co., Ltd. by issuing equity securities, and included such company into thescope of consolidation.Fair value of equity securities issued
7,399,683Less: Share of fair value of identifiable net assets acquired
6,219,678Goodwill amount
1,180,005
② Assets and liabilities of the acquiree as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount at acquisition
dateTotal assets
8,320,672 7,752,700
Total liabilities
2,100,994 2,313,890
Net assets
6,219,678 5,438,810
Less: non-controlling interests
--Net assets acquired
6,219,678 5,438,810
VI
Changes to Consolidation Scope (continued)
Newly consolidated entities for current period (continued)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
(4)Acquisition of shares in Inner Mongolia TCL Photoelectric Technology Co., Ltd.
①The cost of acquisition and goodwill were recognized as follows:
On May 1, 2023 (the “Acquisition Date”), the Group acquired 100% equity of Inner MongoliaTCL Photoelectric Technology Co., Ltd. at a cash consideration of RMB119,039,000, andincluded such company into the scope of consolidation.Cash consideration119,039
Less: Share of fair value of identifiable net assets acquired119,039
Difference of lower goodwill / merger cost and higher share of fair value ofidentifiable net assets acquired
-
② Assets and liabilities of the acquiree as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount at
acquisition dateTotal assets213,871 194,735
Total liabilities94,832 94,832
Net assets119,039 99,903
Less: non-controllinginterests
--
Net assets acquired119,039 99,903
2 Deconsolidated entities for current period
Name of investee
Time o
deconsolidation Reason for change
Yixing Huanxing New Energy Co., Ltd. April 2023 Transferred
Tianjin Binhai Huanneng New Energy Co., Ltd.April 2023 Transferred
Dushan Anju Photovoltaic Technology Co.,Ltd. April 2023 Transferred
Shangyi Shengxin New Energy DevelopmentCo., Ltd. April 2023 Transferred
Gengma Huanxing New Energy Co., Ltd. April 2023 Transferred
Guyuan Shengju New Energy Co., Ltd. April 2023 Transferred
Zhangjiakou Shengyuan New Energy Co., Ltd.April 2023 Transferred
Qinhuangdao Tianhui Solar Energy Co., Ltd. April 2023 Transferred
VI
Changes to Consolidation Scope (continued)
Newly consolidated entities for current period (continued)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
3 Subsidiaries disposed in current period
Name of subsidiary
YixingHuanxing New
Energy Co.,
Ltd.
Tianjin BinhaiHuanneng New
Energy Co.,
Ltd.
Dushan AnjuPhotovoltaicTechnology Co.,
Ltd.
Shangyi Shengxin New
Energy Development
Co., Ltd.Price for equity interest disposal 32,213 30,249 52,460 79,060% equity interest disposed 100%100%99% 100%Way of equity disposal SaleSaleSale SaleTime of loss of control April 2023April 2023April 2023 April 2023Determination basis for time of loss ofcontrol
The operating
risk has been
transferred
The operatingrisk has been
transferred
The operatingrisk has been
transferred
The operating riskhas been transferredDifference between the disposal priceand the Company’s share of thesubsidiary’s net assets in theconsolidated financial statementsrelevant to the disposed equity interest
6,038 26,308 (22,207)
84,046
Name of subsidiary
GengmaHuanxing New
Energy Co.,
Ltd.
GuyuanShengju New
Energy Co.,
Ltd.
ZhangjiakouShengyuan NewEnergy Co., Ltd.
Qinhuangdao Tianhui Solar Energy Co., Ltd.Price for equity interest disposal
31,830 57,490 58,290
84,060% equity interest disposed
99%99%99%
99%Way of equity disposal
SaleSaleSale
SaleTime of loss of control
April 2023April 2023April 2023
April 2023Determination basis for time of loss ofcontrol
The operatingrisk has been
transferred
The operatingrisk has been
transferred
The operatingrisk has been
transferred
The operating riskhas been transferredDifference between the disposal priceand the Company’s share of thesubsidiary’s net assets in theconsolidated financial statementsrelevant to the disposed equity interest
(13,906) (9,728) (9,413)
(38,259)
VI
Changes to Consolidation Scope (continued)
(RMB’000)
VII Interests in Other Entities
1 Interests in subsidiaries
(1) Principal subsidiaries
Name of investee
Place ofregistration
Nature ofbusiness
Principalplace ofbusiness
Shareholding ratio
(%)
Howsubsidiarywas obtainedDirect Indirect
TCL China Star OptoelectronicsTechnology Co., Ltd.Shenzhen
Manufacturing
and sales Shenzhen79.17% - Incorporated
Shenzhen China StarOptoelectronics SemiconductorDisplay Technology Co., Ltd.Shenzhen
Manufacturing
and sales Shenzhen- 54.31% Incorporated
Guangzhou China RayOptoelectronic Materials Co.,Ltd.Guangzhou
Research anddevelopmentGuangzhou- 100% Incorporated
Wuhan China StarOptoelectronics Technology Co.,Ltd.Wuhan
Manufacturing
and sales Wuhan- 95.35% Incorporated
Wuhan China StarOptoelectronics SemiconductorDisplay Technology Co., Ltd.Wuhan
Manufacturing
and sales Wuhan- 57.14% Incorporated
China Star OptoelectronicsInternational (HK) Limited
HongKong Sales Hong Kong- 100% Incorporated
China Display OptoelectronicsTechnology Holdings LimitedBermuda
Investment
holding Bermuda- 64.20%
Businesscombination
not under
commoncontrol
China Display OptoelectronicsTechnology (Huizhou) Co., Ltd.Huizhou
Manufacturing
and sales Huizhou- 100% Incorporated
Wuhan China DisplayOptoelectronics Technology Co.,Ltd.Wuhan
Manufacturing
and sales Wuhan- 100% Incorporated
Suzhou China StarOptoelectronics Technology Co.,Ltd.Suzhou
Manufacturing
and sales Suzhou- 100%
Businesscombination
not under
commoncontrol
(RMB’000)
VII Interests in Other Entities (Continued)
1 Interests in subsidiaries (Continued)
(1) Composition of key subsidiaries (Continued)
Name of investee
Place ofregistration Nature of business
Principal placeof business
Shareholding ratio
(%)How subsidiary was
obtained DirectIndirect
Suzhou China Star Optoelectronics DisplayCo., Ltd.Suzhou
Manufacturingand sales Suzhou-100%
Business combination
not under common
control
Guangzhou China Star OptoelectronicsSemiconductor Display Technology Co.,Ltd.Guangzhou
Manufacturingand sales Guangzhou-55% Incorporated
TCL Culture Media (Shenzhen) Co., Ltd.Shenzhen Ad planning Shenzhen100%- Incorporated
Highly Information Industry Co., Ltd.Beijing
Productdistribution Beijing66.46%- 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 Huizhou82.00%18.00% Incorporated
Xinjiang TCL Equity Investment Ltd.Xinjiang
Investment
business Shenzhen100%- Incorporated
Ningbo TCL Equity Investment Ltd.Ningbo
Investment
business Shenzhen100%- Incorporated
TCL Technology Park (Huizhou) Co., Ltd.Huizhou
Propertymanagement Huizhou-100% Incorporated
TCL Research America Inc.U.S.
Research anddevelopment U.S.-100% Incorporated
TCL Industrial Technology ResearchInstitute (Hong Kong) LimitedHong Kong
Research anddevelopment Hong Kong-100% Incorporated
TCL Technology Investments LimitedHong Kong
Investment
business Hong Kong100%- Incorporated
TCL Zhonghuan New Energy TechnologyCo., Ltd.
Tianjin
Manufacturing
and sales Tianjin2.55%27.37%
Business combination
not under common
control
Tianjin Printronics Circuit Corporation
Tianjin
Manufacturing
and sales Tianjin-26.86%
Business combination
not under common
control
Tianjin Huan'Ou SemiconductorMaterial&Technology Co., Ltd.Tianjin
Manufacturing
and sales Tianjin -100%
Business combination
not under common
control
Wuxi Zhonghuan Applied Materials Co.,Ltd.Wuxi
Manufacturing
and sales Wuxi-98.08%
Business combination
not under common
control
Tianjin Huanzhi New Energy TechnologyCo., Ltd.Tianjin
Manufacturing
and sales Tianjin-62.00%
Business combination
not under commoncontrol
(RMB’000)
VII Interests in Other Entities (Continued)
1 Interests in subsidiaries (Continued)
(1) Composition of key subsidiaries (Continued)
Inner Mongolia Zhonghuan
Solar Material Co., Ltd.
InnerMongolia
Manufacturing
and sales
InnerMongolia-100.00%
Business combinationnot under commoncontrol
Tianjin Zhonghuan Advanced
Material&Technology Co., Ltd. Tianjin
Manufacturing
and sales Tianjin-100.00%
Business combination
not under common
control
Huansheng Solar (Jiangsu) Co.,
Ltd. Wuxi
Manufacturing
and sales Wuxi-83.73%
Business combination
not under common
control
Tianjin Huanou International
Silicon Material Co., Ltd. Tianjin
Procurement &sales Tianjin-100.00%
Business combination
not under common
control
Zhonghuan Hong Kong
Holding Limited
HongKong Sales
Hong
Kong-100.00%
Business combination
not under common
control
Tianjin Huanrui Electronic
Technology Co., Ltd. Tianjin
Procurement &
sales Tianjin-100.00%
Business combination
not under common
control
Inner Mongolia Zhonghuan
Xiexin Solar Material Co., Ltd.
InnerMongolia
Manufacturing
and sales
InnerMongolia-59.32%
Business combination
not under common
control
Inner Mongolia ZhonghuanAdvanced SemiconductorMaterial Co., Ltd.
InnerMongolia
Manufacturing
and sales
InnerMongolia-100.00%
Business combination
not under common
control
Zhonghuan AdvancedSemiconductor Materials Co.,Ltd. Wuxi
Manufacturing
and sales Wuxi7.50%36.00%
Business combination
not under common
control
Moka International Limited BVI
Investmentholding BVI-100.00%
Business combinationnot under common
control
Moka Technology (Guangdong)
Co., Ltd. Huizhou
Manufacturing
and sales Huizhou-100.00%
Business combination
not under common
control
(2) Subsidiaries with substantial non-controlling interests
Name of subsidiary
Non-controllingshareholding
ratio (%)
Current period
profit or lossattributable to non-controlling interests
Current perioddividends distributed
to non-controlling
interests
Closing non-controlling
interestsShareholder equity
TCL China Star OptoelectronicsTechnology Co., Ltd.
20.83%(1,546,652) - 42,840,468
TCL Zhonghuan New EnergyTechnology Co., Ltd.
70.09%3,484,892 227,089 44,090,640
Highly Information Industry Co., Ltd.
33.54% 29,568 33,963 552,148
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
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:
June 30, 2023
January 1, 2023
Current
assets
Non-current
assets
Totalassets
Currentliabilities
Non-current
liabilities
Totalliabilities
Current
assets
Non-current
assets
Totalassets
Currentliabilities
Non-currentliabilities
Totalliabilities
TCL China StarOptoelectronicsTechnology Co., Ltd.
38,461,841 156,336,412 194,798,254 46,726,932 77,226,042 123,952,974 40,115,151152,441,917192,557,06845,523,24273,184,255118,707,497
TCL Zhonghuan NewEnergy TechnologyCo., Ltd.
34,331,503 87,995,990 122,327,493 21,375,853 42,544,326 63,920,179 31,829,52377,304,246109,133,76923,020,08239,053,84462,073,926
Highly InformationIndustry Co., Ltd.
8,692,301 141,278 8,833,578 7,330,519 33,518 7,364,038 8,563,285149,3908,712,6757,191,61039,9617,231,571
January - June 2023
January - June 2022
Revenue Net profit
Totalcomprehensive
income
Net cash generatefrom/used in operating
activitiesRevenueNet profit
Totalcomprehensive
income
Net cash generatefrom/used in operating
activitiesTCL China StarOptoelectronicsTechnology Co., Ltd.
30,600,624 (3,619,167)(3,976,323) 6,612,328 32,429,876 (2,631,952)(2,880,645) 10,250,591TCL Zhonghuan NewEnergy Technology Co.,Ltd.
34,897,789 4,838,880 4,839,827 2,860,116 31,698,337 3,224,900 3,224,900 2,809,898Highly InformationIndustry Co., Ltd.
13,812,825 78,707 78,707 (605,431) 14,728,215 118,259 118,259 (574,296)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
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
Principalplace ofbusiness/placeof registration
Nature of business
Strategic to theGroup’s activities or
not
Shareholding
ratio (%)
Direct Indirect
Associate
Xinjiang Goens EnergyTechnology Co., Ltd.
Xinjiang
R&D, production
& sale ofpolycrystalline
silicon &monocrystalline
silicon;
Yes - 27%
Bank of Shanghai Co.,Ltd.
ShanghaiFinancialYes 5.76%
(2) Key financial information of major associates
June 30, 2023January 1, 2023June 30, 2023
January 1,
2023
Xinjiang Goens
EnergyTechnology Co.,
Ltd.
Xinjiang Goens
EnergyTechnology Co.,
Ltd.
Bank ofShanghai Co.,
Ltd.
Bank ofShanghai Co.,
Ltd.
Total assets
18,456,400
18,957,948 3,033,046,069
2,878,524,759
Total liabilities2,747,094
4,436,5462,804,061,231
2,656,876,235
Non-controlling interests Not applicableNot applicable607,016 594,465
Equity attributable toshareholders of the parentcompany
15,709,306
14,521,402228,377,822
221,054,059
Share of equity in proportion tothe Company’s interest
4,241,513
3,920,77913,154,563
12,732,714
Carrying amount of investmentin associate
4,249,798
3,919,46413,233,111
12,809,374
January - June
2023
January - June
2022
January - June
2023
January - June
2022
Xinjiang Goens
EnergyTechnology Co.,
Ltd.
Xinjiang Goens
EnergyTechnology Co.,
Ltd.
Bank ofShanghai Co.,
Ltd.
Bank ofShanghai Co.,
Ltd.
Revenue
4,079,162
6,649,11926,360,045
27,941,662
Net profit attributable to the parentcompany
2,023,457
3,835,37712,834,970
12,674,306
Dividends from associate to theGroup in current period
-
-327,157
327,157
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
VII
Interests in Other Entities(Continued)
Interests in joint ventures andassociates (continued)
(3) Financial
informationof other joint ventures and associates combined respectively
End of June 2023 /January-June 2023
End of June 2022 / January-
June 2022
Joint ventures:
Total carrying amount of investments
466,125542,914
Aggregate of following items calculatedin proportion to the Company’s interest
Net profit (note)
(37,627)(12,343)
Other comprehensive income (note)
Total comprehensive income
(37,627)(12,343)
Associate:
Total carrying amount of investments
12,405,36411,064,477
Aggregate of following items calculatedin proportion to the Company’s interest
Net profit (note)
(6,486)(13,791)
Other comprehensive income (note)
2,979 366
Total comprehensive income
(3,507)(13,425)
Note:
The net profit and other comprehensive income have taken into account the impacts of both the fairvalue of the identifiable assets and liabilities upon the acquisition of investment and accountingpolicies unifying.
(4) The Company did
nothave any significant joint venture during the reporting period.
(RMB’000)
VIII Risks related to financial instruments
The purpose of the Company’s risk management is to achieve a right balance between the risk and thebenefit and maximally reduce the adverse impact of financial risks on the Company’s financialperformance. Based on such purpose, the Company has established various risk management policiesto recognize and analyze possible risks to be encountered by the Company, set an appropriate riskacceptable level and designed corresponding internal control procedures so as to control theCompany’s risk level. In addition, the Company will regularly review these risk management policiesand relevant internal control system in order to adapt to the market or handle various changes in theCompany’s operating activities. Meanwhile, the Company’s internal audit department will alsoregularly or randomly check whether the implementation of internal control system conforms torelevant risk management policies. In fact, the Company has applied proper diversified investment andbusiness portfolio to disperse various financial instrument risks and worked out corresponding riskmanagement policies to reduce the risk of concentrating on one single industry, specific region orspecific counterpart.
The main risks arising from the Company's financial instruments are credit risk, liquidity risk, andmarket 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 anotherparty due to the failure in fulfilling performance obligations. The Group controls the credit risk basedon the specific group classification, and credit risk mainly results from bank deposit, due from centralbank, 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 andother large and medium-sized listed banks. The Group considers no significant credit risk existed andno 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, theGroup has established relevant policies to control the credit risk exposure, and will evaluate the client’scredit 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 creditrecords. For any client with unfavorable credit records, the Group will issue written reminders, shortenthe credit period or cancel the credit period so as to keep the Group's overall credit risk controllable.
As of June 30, 2023, no significant guarantee or other credit enhancements held due to the debtormortgage was found in the Group.
(2) Liquidity risk
Liquidity risk refers to the risk of capital shortage the Company encounters when the Company isfulfilling the obligation of settlement in the form of cash or other financial assets. Various subsidiariesunder the Group shall be responsible for predicting their own cash flow. The financial department ofthe headquarter shall firstly summarize predictions on the cash flow of various subsidiaries and thencontinuously monitor the short-term and long-term fund demand at the Group's level so as to maintainsufficient cash reserves and negotiable securities that can be realized at any time; meanwhile, specialefforts shall also be made to continuously monitor whether provisions stated in the loan agreement areobserved and to make major financial institutions promise to provide sufficient reserve funds so as tosatisfy short-term and long-term capital demand.
As of June 30, 2023, the Group had no liquidity risk events.
(RMB’000)
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 theGroup’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 currencyrisk management goal. Through the natural hedging of settlement currency, matching with the foreigncurrency liabilities, signing simple derivative products closely related to the owner's operation andmeeting corresponding hedge accounting treatment requirements and applying other managementmethods, the foreign currency risk exposure can be controlled within a reasonable scope and theimpact of interest rate fluctuations on the Group's overall profit and loss will be reduced.
(a) On June 30, 2023, foreign-currency asset and liability items with significant exposure toexchange risk were mainly denominated in US dollars. After management, the total risk exposure ofthe US dollar-denominated items had a net asset exposure of USD685,752,000, equivalent toRMB4,955,104,000 based on the spot exchange rate on the balance sheet date. The differencesarising 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
January - June 2023 June 30, 2023
USD/RMB 6.9693 7.2258
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 againstUSD would cause an increase/decrease of RMB247,755,000 in shareholders’ equity and net profitrespectively of the Group on June 30, 2023.
The above-mentioned sensitivity analysis is made based on the assumption that the exchange ratechanges on the balance sheet date, and financial instruments held by the Group on the balance sheetdate exposed to the exchange risk are re-calculated based on the changed exchange rate. The aboveanalysis does not include differences arising from the translation of foreign currency financialstatements.
(b) Interest risk
The Group’s interest rate risk mainly results from interest-bearing bank borrowings adopting floatinginterest rates, and the Group determined the proportion of fixed interest rates and floating interestrates based on the market environment and its risk tolerance. Up until June 30, 2023, the Group’sliabilities with floating interest rates accounted for 59.93% of its total interest-bearing liabilities.And, the Group will continuously monitor the interest rates and make corresponding adjustmentsaccording to the specific market changes so as to avoid interest rate risk.
(RMB’000)
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 theactive market; and the Company mainly adopts the closing price as the value of a financialasset. 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 liabilitythat does not belong to level 1.
Level 3 refers to the input of a financial asset or liability determined based on variables otherthan 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.
Items measured at continuous level 2 fair value adopt the following valuation techniquesand parameters:
The Company’s receivables financing was bank acceptance notes and trade acceptancenotes, of which the market prices were determined based on the transfer or discountedamounts.
Derivative financial assets and liabilities are multiple IRS and CCS signed between theGroup and financial institutions. The Company adopts the quotations provided by thefinancial institution in valuation.
Items measured at continuous level 3 fair value adopt the following valuation techniquesand parameters (nature and quantity):
Other non-current financial assets measured at continuous level 3 fair value are mainlyunlisted equity investments held by the Company. In measuring the fair value, the Companymainly adopts the valuation technique of comparison with listed companies, taking intoaccount the price of similar securities and liquidity discount.
Held-for-trading financial assets measured at continuous level 3 fair value are mainly wealthmanagement products held by the Company. In valuation of the fair value, the Companyadopts the method of discounting future cash flows based on the agreed expected yield rate.
(RMB’000)
IX Classification of Financial Instruments and Fair Value (Continued)
Financial instruments measured in three levels of fair value
Financial assets
Item Level 1Level 2Level 3 Total
Held-for-trading financial assets(see Note V. 2)319,92510,646,4263,405,424 14,371,775
Derivative financial assets (seeNote V.3)-125,204 125,204
Receivables financing (see NoteV.6) --3,307,933 3,307,933
Investments in other equityinstruments (see Note V. 15)46,668-374,436 421,104
Other non-current financial assets(see Note V. 16) 722,328 -3,639,549 4,361,877
Total assets continuously measuredat fair value
1,088,92110,771,63010,727,342 22,587,893
Financial liabilities
Item Level 1Level 2Level 3 Total
Held-for-trading financial
liabilities (see Note V, 30)- 163,872 563,070 726,942Derivative financial liabilities (seeNote V, 31) - 309,743 - 309,743
Total liabilities continuouslymeasured at fair value-473,615563,070 1,036,685
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
X Related Parties and Related-Party Transactions
1 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) becamepersons acting in concert by signing the Agreement on Concerted Action, holding 1,276,684,768 shares in totaland becoming the largest shareholder of the Company.
As per Article 216 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% ofa limited liability company’s total capital or over 50% of a joint stock company’s total share capital; or, despitethe ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stockcompany’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a generalmeeting of shareholders according to the voting rights corresponding to their interest in the limited liabilitycompany’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 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 Goens Energy Technology Co., Ltd. Associate
Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. Associate
(RMB’000)
X
Related parties and related-party transactions (continued)
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 (LimitedPartnership)
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 AssociateGetech Ltd. and its subsidiaries
Associate and itssubsidiariesTCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries
Associate and its
subsidiaries Shenzhen Qianhai Qihang Supply Chain Management Co., 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 TechnologyCo., 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 Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. Associate’s subsidiary SunPower Malaysia Manufacturing Sdn.Bhd. Associate's subsidiary Huizhou Yunxin Technology Co., Ltd. Associate’s subsidiary Shenzhen Junhe Supply Chain Co., Ltd. Associate’s subsidiary Shenzhen Wisteria Intellectual Property Agency Co., Ltd. Associate’s subsidiary TCL Industries Holdings Co., Ltd. and its subsidiaries Other relationships Thunderbird Innovation Technology (Ningbo) Co., Ltd. Other relationships Thunderbird Innovation Technology (Shenzhen) Co., Ltd. Other relationshipsCJ Speedex Logistics Co., Ltd.
Significantly influenced by
the Company’s senior
management
(RMB’000)
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
January - June 2023 January - June 2022
TCL Industries Holdings Co., Ltd. and its subsidiaries7,423,420 5,216,624SunPower Systems Sarl 880,7161,031,484
SunPower Malaysia Manufacturing Sdn.Bhd. 643,867171,070Qihang International Import & Export Limited 524,009497,015SunPower Systems International Limited 79,537106,752
Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd.
74,6571,176,332
Qihang Import&Export Limited 54,082-
TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 51,49616,015
Shenzhen Qianhai Qihang Supply Chain ManagementCo., Ltd.
25,2374,680
Shenzhen Jucai Supply Chain Technology Co., Ltd. 4,647
Zhonghuan Feilang (Tianjin) Technology Co., Ltd. 3,8402,940
Ziteng Intellectual Property Operation (Shenzhen)Co., Ltd.
-
Tianjin 712 Communication & Broadcasting Co., Ltd. 16-Jiangsu Huanxin Semiconductor Co., Ltd. -19,542Getech Ltd. and its subsidiaries -4,704
Moxing Semi-conductor (Guangdong) Co., Ltd. -
9,765,599 8,247,890
(2) Purchasing raw materials and finished products from related parties Note 2
January - June 2023 January - June 2022
Aijiexu New Electronic Display Glass (Shenzhen)Co., Ltd.
2,329,164 2,230,372Xinjiang Goens Energy Technology Co., Ltd. 1,890,773 2,464,489
TCL Industries Holdings Co., Ltd. and itssubsidiaries
701,382 440,420
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
661,064 154,854Shenzhen Jucai Supply Chain Technology Co., Ltd. 626,214 607,566
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
172,513 89,991
Inner Mongolia Zhongjing Science and TechnologyResearch Institute Co., Ltd.
119,831 70,157Qihang Import&Export Limited 60,781 15,776
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
25,461 32,406Getech Ltd. and its subsidiaries 11,666 12,062
Jucai Supply Chain International (Hong Kong) Co.,Ltd.
2,776 1,126TCL Intelligent Technology (Ningbo) Co., Ltd. 2,596 861Zhonghuan Feilang (Tianjin) Technology Co., Ltd. 401 -
6,604,622 6,120,080
(RMB’000)
X Related Parties and Related-Party Transactions (Continued)
3 Major related-party transactions (continued)
(3) Receiving funding from related parties Note 3
January - June 2023 January - June 2022
Zhihui Xinyuan Commercial (Huizhou) Co.,Ltd.
350,000 93
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
156,551 149,714Qihang Import&Export Limited 23,016 36,860
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
22,025 52,452Qihang International Import & Export Limited 16,823 19,047Anhui TCL Human Resources Service Co., Ltd. 13,667 6,148Huizhou Yunxin Technology Co., Ltd. 11,448 -
Shenzhen Juchuang Zhilian InformationTechnology Co., Ltd.
10,406 -Elite Excellent Investments Limited 9,082 5,412Esteem Venture Investment Limited 5,619 40
Anhui Dangzhuo Enterprise Management Co.,Ltd.
5,572 -
Shenzhen Xirang International NetworkInformation Technology Co., Ltd.
5,371 6,516
Peer College Education Technology (Huizhou)Co., Ltd.
4,063 3,744
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
3,058 27,985
Shanxi Shengwei Enterprise Management Co.,Ltd.
2,948 3,808Hubei Shifen Sharing Technology Co., Ltd. 2,246 85
Huizhou TCL Human Resources Service Co.,Ltd.
1,509 158
Ningbo Dongpeng Weichuang EquityInvestment Partnership (Limited Partnership)
816 56,146Huixing Holdings Limited 667 670Marvel Paradise Limited 633 600TCL Intelligent Technology (Ningbo) Co., Ltd. 564 -Union Dynamic Investment Limited 411 397
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
125 205
Ningbo Dongpeng Heli Equity InvestmentPartnership (Limited Partnership)
33 33
Shanghai Tixiang Enterprise ManagementConsulting Co., Ltd.
- 10,904
Shenzhen Tixiang Business ManagementTechnology Co., Ltd.
- 1,494
TCL Huanxin Semi-conductor (Tianjin) Co.,Ltd.
- 8
646,653 382,519
(RMB’000)
X Related Parties and Related-Party
Transactions (Continued)
3 Major related-party transactions (continued)
(4) Leases
January - June 2023 January - June 2022Rental income
TCL Industries Holdings Co., Ltd. and itssubsidiaries
31,029 39,217
Aijiexu New Electronic Display Glass(Shenzhen) Co., Ltd.
30,171 34,756Inner Mongolia Huanye Material Co., Ltd. 9,668 -
TCL Huanxin Semi-conductor (Tianjin) Co.,Ltd.
2,752 -
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
439 439
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
427 414Getech Ltd. and its subsidiaries 376 683
Zhihui Xinyuan Commercial (Huizhou) Co.,Ltd.
189 182
75,051 75,691
Rental expense
TCL Industries Holdings Co., Ltd. and itssubsidiaries
33,563 28,999
Huaxia CPV (Inner Mongolia) Power Co., Ltd. 4,926 2,581
TCL Huanxin Semi-conductor (Tianjin) Co.,Ltd.
703 1,120
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
70 137
39,262 32,837
(5) Rendering or receipt of services
January - June 2023 January - June 2022
Rendering of services 127,756 120,933
Receipt of services 888,553 567,820
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
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
January - June 2023 January - June 2022
Interest received 7,058 11,457
Interest paid 2,319 8,387
(7) Remuneration of key management personnel Note 4
January - June 2023 January - June 2022
Remuneration of key managementpersonnel
6,996 7,460
(8) Other related transactions
1. In May 2023, the Group signed an equity transfer agreement with TCL Ace (Huizhou) Co., Ltd., a
subsidiary of TCL Industries Holdings Co., Ltd., to acquire 100% equity of Inner Mongolia TCLOptoelectronic Technology Co., Ltd. held by TCL Ace (Huizhou) Co., Ltd. at a transaction price ofRMB1,190.39 million.
2. In June 2023, the Group signed an equity transfer agreement with TCL Financial Holding Group
(Guangzhou) Co., Ltd., a subsidiary of TCL Industries Holdings Co., Ltd., to acquire 100% equity ofTCL Financial Technology (Shenzhen) Co., Ltd. held by TCL Financial Holding Group (Guangzhou)Co., Ltd. at a transaction price of RMB15,036,000.
3. In June 2023, the Group signed an equity transfer agreement with Shenzhen Qianhai Sailing
International Supply Chain Management Co., Ltd. to transfer 40% equity of Shenzhen Qianhai SailingSupply Chain Management Co., Ltd. to Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd. at a transaction price of RMB21,940,000.
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 jointventures and associates at market prices, which are settled in the same way as non-related-partytransactions. These related-party transactions have no material impact on the Company’s netprofit^ 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 associatesat 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 theCompany’s net profit^ but play an important role as to the Company’s continued operations.
(RMB’000)
X Related Parties and Related-Party Transactions (Continued)
3 Major related-party transactions (continued)
Note 3
Providing funding for or receiving funding from related parties and corresponding interestreceived 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 forthe financial affairs of the Company, including capital operation and allocation. The Centersettles accounts with the Company’s subsidiaries, joint ventures and associates and pays theinterest. It also allocates the money deposited by the subsidiaries, joint ventures and associatesin it to these enterprises and charges interest. The interest income and expense between theCompany and the Center are calculated according to the interest rates declared by the People’sBank of China. The funding amount provided refers to the outstanding borrowings due from theCenter to related parties, while the funding amount received means the balances of related parties’deposits in the Center.
Note 4 Remuneration of key management personnel does not include share-based payment.
Note 5
Transactions taken by TCL Financial Technology (Shenzhen) Co., Ltd. with the Group betweenJanuary and June 2023 are recorded into TCL Industries Holdings Co., Ltd. and its subsidiaries.
(RMB’000)
X Related Parties and Related-Party Transactions (Continued)
4 Balances due from and to related parties (continued)
(1) Notes receivable
June 30, 2023 January 1, 2023
TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 158 -
158 -
(2) Accounts receivable
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
3,312,435 2,149,032SunPower Systems Sarl 310,833 258,443
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
157,228 249,860Qihang International Import & Export Limited 57,546 6,163Qihang Import&Export Limited 42,410 36,224TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 22,235 12,651Inner Mongolia Huanye Material Co., Ltd. 13,567 6,398SunPower Systems International Limited 12,589 76,749
Tianjin Zhonghuan Haihe IntelligentManufacturing Fund Partnership (LimitedPartnership)
6,690 -
Inner Mongolia Shengou ElectromechanicalEngineeringCo., Ltd.
5,286 -Zhonghuan Feilang (Tianjin) Technology Co., Ltd. 2,055 1,522
Thunderbird Innovation Technology (Ningbo) Co.,Ltd.
Shenzhen Jucai Supply Chain Technology Co., Ltd. 482 1,163Getech Ltd. and its subsidiaries 344 281
Tianjin 712 Communication & Broadcasting Co.,Ltd.
71 44 Huizhou Yunxin Technology Co., Ltd. 30 -Huaxia CPV (Inner Mongolia) Power Co., Ltd. 25 183 Shenzhen Junhe Supply Chain Co., Ltd. 15 -SunPower Malaysia Manufacturing Sdn.Bhd. 2 2
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.
2 969Tianjin Huanyan Technology Co., Ltd. - 289MAXEON SOLAR TECHNOLOGIES , PTE. LTD- 104
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
- 28
3,944,503 2,800,105
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
X
Related Parties and Related-PartyTransactions (Continued)
Balances due from and to related parties(continued)
(3) Accounts payable
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
1,694,814 1,311,176
Aijiexu New Electronic Display Glass (Shenzhen)Co., Ltd.
1,169,450 699,954
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
191,890 268,519Getech Ltd. and its subsidiaries134,830 112,831
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
108,723 9,534Qihang Import&Export Limited92,731 73,130
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.
89,886 63,818Inner Mongolia Huanye Material Co., Ltd.61,129 25,090
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
60,779 57,847Qihang International Import & Export Limited20,354 20,058
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
6,530 7,981
Jucai Supply Chain International (Hong Kong)Co., Ltd.
672 3,769 TCL Huanxin Semi-conductor (Tianjin) Co., Ltd.443 968
Shenzhen Xirang International NetworkInformation Technology Co., Ltd.
324 -TCL Intelligent Technology (Ningbo) Co., Ltd.173 -
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
109 10
Ziteng Intellectual Property Operation (Shenzhen)Co., Ltd.
45 -
3,632,882 2,654,685
(RMB’000)
X Related Parties and Related-Party Transactions
(Continued)
Balances due from and to related parties(continued)
(4) Other receivables
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
129,006 576,402
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
21,940 218Inner Mongolia Huanye Material Co., Ltd.9,819 4,061
Aijiexu New Electronic Display Glass (Shenzhen)Co., Ltd.
7,791 7,987TCL Huanxin Semi-conductor (Tianjin) Co., Ltd.6,813 2,058Getech Ltd. and its subsidiaries5,211 3,994
Shenzhen Xirang International NetworkInformation Technology Co., Ltd.
3,553 3,825Zhonghuan Aineng (Beijing) Technology Co., Ltd.3,101 3,101Shenzhen Jucai Supply Chain Technology Co., Ltd. 2,786 1,725
Inner Mongolia Zhongjing Science and TechnologyResearch Institute Co., Ltd.
856 15
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
743 -LG Electronics (Huizhou) Co., Ltd. 278 212Anhui TCL Human Resources Service Co., Ltd. 70 -TCL Intelligent Technology (Ningbo) Co., Ltd. 24 -Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 15 -Ruihuan (Inner Mongolia) Solar Power Co., Ltd. - 20,181
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
- 559
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
- 9Wuxi TCL Medical Imaging Technology Co., Ltd. - 6
192,006 624,353
(RMB’000)
X
Related Parties and Related-Party Transactions(Continued)
Balances due from and to related parties(continued)
(5) Other payables
June 30, 2023 January 1, 2023
Tianjin Zhonghuan Haihe Intelligent Manufacturing FundPartnership (Limited Partnership)
428,100 428,100Shenzhen Jucai Supply Chain Technology Co., Ltd. 143,999 115,220Getech Ltd. and its subsidiaries 123,209 166,525TCL Industries Holdings Co., Ltd. and its subsidiaries 107,247 81,858Qihang Import&Export Limited 26,296 9,089Anhui TCL Human Resources Service Co., Ltd. 20,541 11,009Qihang International Import & Export Limited 16,823 25,812
Shenzhen Xirang International Network InformationTechnology Co., Ltd.
11,103 3,124
Aijiexu New Electronic Display Glass (Shenzhen) Co.,Ltd.
9,317 9,317Elite Excellent Investments Limited 9,082 8,762Esteem Venture Investment Limited 5,619 5,416Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 5,574 5,564Anhui Dangzhuo Enterprise Management Co., Ltd. 5,520 2,751
Inner Mongolia Shengou Electromechanical EngineeringCo., Ltd.
4,378 1,444Peer College Education Technology (Huizhou) Co., Ltd. 4,166 3,881Hubei Shifen Sharing Technology Co., Ltd. 2,247 85TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 2,091 1,924Tianjin Huanyan Technology Co., Ltd. 1,982 -Shanxi Shengwei Enterprise Management Co., Ltd. 1,909 2,221Huizhou TCL Human Resources Service Co., Ltd. 1,519 2,515Moxun Semiconductor Technology (Shanghai) Co., Ltd. 830 4,057Huixing Holdings Limited 667 673Marvel Paradise Limited 633 612Union Dynamic Investment Limited 411 401
Ningbo Dongpeng Weichuang Equity InvestmentPartnership (Limited Partnership)
272 18,762TCL Intelligent Technology (Ningbo) Co., Ltd. 164 75
Shenzhen Qianhai Qihang Supply Chain ManagementCo., Ltd.
151 449Thunderbird Innovation Technology (Shenzhen) Co., Ltd. 144 -
Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd.
114 -CJ Speedex Logistics Co., Ltd. 92 102
Ningbo Dongpeng Heli Equity Investment Partnership(Limited Partnership)
66 66
Inner Mongolia Zhongjing Science and TechnologyResearch Institute Co., Ltd.
55 55Huaxia CPV (Inner Mongolia) Power Co., Ltd. 45 45Jucai Supply Chain International (Hong Kong) Co., Ltd. - 2,333 China Innovative Capital Management Limited - 29
934,366 912,276
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
X
Related Parties and Related-Party Transactions(Continued)
Balances due from and to related parties(continued)
(6) Non-current liabilities due within one year
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
19,058 19,555Huaxia CPV (Inner Mongolia) Power Co., Ltd. 7,646 4,972TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 1,210 957
27,914 25,484
(7) Prepayments
June 30, 2023 January 1, 2023 Tianjin Huanyan Technology Co., Ltd. 30,438 30,438 Getech Ltd. and its subsidiaries 14,027 16,890
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
8,985 1,446
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
7,525 -Huaxia CPV (Inner Mongolia) Power Co., Ltd. 1,043 -
Shenzhen Xirang International NetworkInformation Technology Co., Ltd.
1,014 1,416 TCL Intelligent Technology (Ningbo) Co., Ltd. 800 -
TCL Industries Holdings Co., Ltd. and itssubsidiaries
670 75
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
120 2,633
Jucai Supply Chain International (Hong Kong) Co.,Ltd.
88 -Anhui Dangzhuo Enterprise Management Co., Ltd.5 - Xinjiang Goens Energy Technology Co., Ltd. - 8,386
64,715 61,284
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
XRelated Parties and Related-Party Transactions(Continued)
Balances due from and to related parties(continued)
(8) Advances from customers
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
304 214
304 214
(9) Contract liabilities
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
6,734 56,969TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. 67 -Huizhou Yunxin Technology Co., Ltd. 2 -Shenzhen Junhe Supply Chain Co., Ltd. 1 -
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
- 148,237
6,804 205,206
(10) Lease liabilities
June 30, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
25,451 1,345Huaxia CPV (Inner Mongolia) Power Co., Ltd. 5,987 1,260
31,438 2,605
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
XRelated Parties and Related-Party Transactions(Continued)
Balances due from and to related parties(continued)
(11) Deposits from related parties (note)
June 30, 2023 January 1, 2023Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 350,022 300,086
Shenzhen Jucai Supply Chain Technology Co.,Ltd.
156,794 132,615
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
22,034 15,382Huizhou Yunxin Technology Co., Ltd. 11,449 -
Shenzhen Juchuang Zhilian InformationTechnology Co., Ltd.
10,421 4,136
Shenzhen Xirang International NetworkInformation Technology Co., Ltd.
5,374 11,956
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
3,064 20,735Anhui TCL Human Resources Service Co., Ltd. 1,675 1,637
Shanxi Shengwei Enterprise Management Co.,Ltd.
1,058 978TCL Intelligent Technology (Ningbo) Co., Ltd. 564 -
Ningbo Dongpeng Weichuang Equity InvestmentPartnership (Limited Partnership)
544 15,722
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
125 41,867Jiangsu Huanxin Semiconductor Co., Ltd. - 42,553
Shanghai Tixiang Enterprise ManagementConsulting Co., Ltd.
- 9,923
Shenzhen Tixiang Business ManagementTechnology Co., Ltd.
- 5,766
Dalian Tixiang Enterprise Management ConsultingCo., Ltd.
- 46TCL Huanxin Semi-conductor (Tianjin) Co., Ltd. - 8
563,124 603,410
These deposits are made by related parties in the Company’s subsidiary TCL Tech Finance Co., Ltd.
(12) Other non-current assets
June 30, 2023 January 1, 2023
Ziteng Intellectual Property Operation (Shenzhen)Co., Ltd.
168,448 216,468.00Getech Ltd. and its subsidiaries 17,602 3,176.00
Shenzhen Wisteria Intellectual Property AgencyCo., Ltd.
7,741 - Qihang International Import & Export Limited 4,052 - TCL Intelligent Technology (Ningbo) Co., Ltd. 1,085 -
198,928 219,644
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
XI Share-based payments1 General conditions of share-based payment
Total amount of each equity instrument granted by the Company in the currentperiod
247,100Total amount of each equity instrument exercised by the Company in the currentperiod
-Total amount of the Company’s equity instruments that expired in the currentperiod
3,520Range of exercise prices of the Company’s stock options outstanding andremaining contract term at the end of the period
-Range of exercise prices of the Company’s other equity instruments outstandingand remaining contract term at the end of the period
-
(1) Employee Stock Ownership Plan (Phase II) 2021-2023
According to the Proposal on the Management Measures of the Company’s Employee Stock Ownership Plan(Phase II) 2021-2023 deliberated and adopted at the Second Extraordinary Meeting 2022, and the Proposal on theCompany’s Employee Stock Purchase Plan (Phase II) 2021-2023 (Draft) adopted by the resolution of the of the19th Meeting of the Seventh-term Board of Directors and the 14th Meeting of the Seventh-term Board ofSupervisors; 32.6211 million shares were granted to no more than 3,600 awardees at the price of RMB4.35 onJuly 22, 2022. In 2023, a total of 3,520,000 restricted shares granted by the Company became void due to theawardees’ resignation.
(2) Employee Stock Ownership Plan (Phase III) 2021-2023
According to the Proposal on the Management Measures of the Company’s Employee Stock Ownership Plan(Phase III) 2021-2023 deliberated and adopted at the Second Extraordinary Meeting 2023, and the Proposal onthe Company’s Employee Stock Purchase Plan (Phase III) 2021-2023 (Draft) adopted by the resolution of the32nd Meeting of the Seventh-term Board of Directors and the 21st Meeting of the Seventh-term Board ofSupervisors; 247.10 million shares were granted to no more than 3,600 awardees at the price of RMB3.94 on June16, 2023.
The vesting arrangement of the restricted stock granted under the above incentive plan is shown in the followingtable:
Number of times Vesting period and ratioFirst non-trade transfer orsale
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 accountof the holder of the Shareholding Plan, provided that such transfer and salesare then supported by the systems of SZSE and the Registration andSettlement Corporation;Second non-trade transferor 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 sell50% of the shares or to transfer 50% of the holder's corresponding shares tothe account of the holder of the Shareholding Plan provided that such transferand sales are then supported by the systems of SZSE and the Registration andSettlement Corporation2 Equity-settled share-based payments
Method of determining the fair value of equityinstruments on the date of grant
The Group determined the fair value of equityinstruments on the grant date based on the fairvalue of the shares.Basis for determining the number of exercisableequity instruments
On each balance sheet date within the vestingperiod, the Group determines the best estimatebased on the latest number of employees eligible toexercise their options, and revise the estimatednumber of exercisable equity instruments.Reasons for significant differences between currentand previous estimates
Not applicableAccumulated amount of equity-settled share-basedpayment included in capital reserve
RMB52,466,000Total expense recognized for equity-settled share-based payments in the current period
RMB25,907,000
3 The Company has no cash-settled share-based payments.4 The Company has no share-based payment modification or termination.
(RMB’000)
XII Commitments
1 Capital commitments
June 30, 2023January 1, 2023
Contracted but notprovisioned Note 1 19,260,93012,563,851
Approved by Board but not Note 2 1,196,2603,248,000
20,457,19015,811,851
Note
The capital commitments under contractual obligations but not provided for in the current periodprimarily consisted of such commitments for construction of investment projects and externalinvestments.
Note
The capital commitments were approved by the Board but are not under contractual obligations inthe current period primarily consisting of such commitments for CSOT’s LCD panel project.
As of June 30, 2023, 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. isRMB2,326,335,000.
XIV Events after Balance Sheet Date
There are no significant non-adjusting events after the balance sheet date.
(RMB’000)
XV Other Important Matters
(I) 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: thesemi-conductor display business, the new energy photovoltaic and semi-conductor materialsbusiness, the distribution business and the other businesses. The Company's managementregularly evaluates the operating results of these reporting segments to determine the allocation ofresources and evaluate their performance. The Company’s four reporting segments are:
(1)
Semiconductor display business: mainly includes the research and development, manufacturingand sales of semiconductor display panels and semiconductor display modules, as well ascomplete display processing.
(2)
New energy photovoltaic and semiconductor materials business: mainly includes the manufactureand sales of semiconductor materials, semiconductor devices, new energy materials, and newenergy; 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 investment
business, 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 loansand 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 eachsegment, 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 incometax expenses. Transfer pricing of inter-segment income is calculated on terms similar to otherforeign transactions.
(RMB’000)
XIV Other Important Matters (Continued)
(I) Segment reporting (continued)
2 Financial information of reporting segments
For the six-month period ending June 30, 2023
Semi-conductor
display
New energyphotovoltaics and
semi-conductormaterials business
Distribution
business
Other and
offsets
TotalRevenue 35,528,427 34,897,789 13,812,825 909,685 85,148,726 Gross profit (4,227,369) 5,377,407 104,851 1,035,895 2,290,784Income tax
expense (778,497) 538,527 26,144 114,027 (99,799)Net profit (3,448,872) 4,838,880 78,707 921,868 2,390,583 Total assets 217,251,615 122,327,493 8,833,579 32,911,805 381,324,492Total
liabilities 144,644,005 63,920,179 7,364,037 25,762,965 241,691,186
Other items - --- -Depreciation
and
amortization 8,892,304 2,764,766 30,524 135,394 11,822,988Capital
expenditure 8,709,800 7,696,786 -58,764 16,465,349Net interest
expense 454,816 551,207 56,617 816,373 1,879,013
For the six-month period ending June 30, 2022
Semi-conductor
displayand materials
business
New energyphotovoltaics and
semi-conductormaterials business
Distribution
business
Other and
offsets
Total Revenue 37,262,162 31,698,33714,728,215833,467 84,522,181Gross profit (2,750,561) 3,480,014165,175943,690 1,838,318Income tax
expense
(477,736) 255,11446,91687,308 (88,398)Net profit (2,272,825) 3,224,900118,259856,382 1,926,716Total assets 222,752,118 88,714,8348,228,82610,660,749 330,356,527Total
liabilities
145,828,388 43,905,7646,891,65414,592,438 211,218,244
Other items - --- -Depreciation
andamortization
7,868,657 1,982,213 15,9911,555,938 11,422,798Capital
expenditure
13,126,031 4,963,363-162,242 18,251,636Net interest
expense
424,130 384,45633,041839,916 1,681,543
(RMB’000)
XVINotes to the key items presented in the financial statements of the Company
1 Accounts receivable
June 30, 2023 January 1, 2023
Amount Ratio (%)
Allowance
AccruaRatio (%)
Amount Ratio (%)
Allowance Percentage
Within1 year
365,925 100% 65 0.02% 353,877100% 65 0.02%
2 Other receivables
June 30, 2023 January 1, 2023
Dividends receivable 58,994 - Other receivables 5,445,169 4,961,948
5,504,163
4,961,948
(a) Nature of other receivables is analyzed as follows:
June 30, 2023January 1, 2023
Equity transfer receivables
22,550 470,628
Current account with external entities - -
Security and deposits
2,524 1,795
Others
5,420,095 4,489,525
5,445,169
4,961,948
(b) Allowance for doubtful other receivables is analyzed as follows:
12-month
ECL
Lifetime ECL
(credit notimpaired)
Lifetime ECL (credit
impaired)
Total
January 1, 2023 1,075-31,718 32,793
Accrued in currentperiod ---
Reversal of currentperiod (4)-(6) (10)
Write-off of currentperiod --- -
June 30, 20231,071 -31,712 32,783
(RMB’000)
XVI Notes to Financial Statements of the Parent Company (Continued)
2 Other receivables (continued)
(c) The aging of other receivables is analyzed as follows:
June 30, 2023 January 1, 2023
AmountRatio (%)Amount Ratio (%)
Within1 year 2,777,142 50.70%3,944,909 78.98%
1 to 2years 1,738,964 31.74%23,902 0.48%
2 to 3years 9,845 0.18%225,690 4.52%
Over 3years 952,001 17.38%800,240 16.02%
5,477,952 100.00%4,994,741 100%
The outstanding other receivables were mostly current accounts with related parties.
The top five other receivables of the Company amounted to approximately RMB4,559,160,000(December 31, 2022: RMB4,008,688,000), accounting for 83.23% of the total other receivables ofthe Company (December 31, 2022: 80.26 %).
3 Long-term equity investments
June 30, 2023 January 1, 2023
Grossamount
Allowance
fordoubtfulaccounts
Carrying
amount
Grossamount
Impairment
allowance
Carrying
amount
Associates andjoint ventures
(1) 15,938,111 15,938,111 17,171,275- 17,171,275
Subsidiaries (2)61,558,390 61,558,390 59,189,096- 59,189,096
77,496,501 77,496,501 76,360,371- 76,360,371
As of June 30, 2023, there are no major restrictions on the realization of investment and the remittanceof return on long-term equity investments.
(RMB’000)
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
June 30, 2023
Opening balance
Increase/decreasein investment incurrent period
Investment gains andlosses recognized by
equity method
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared cashdividends or
profits
Provision forimpairment
Other increasesand decreases
China Innovative Capital Management Limited
944,392-(3,099)-
----941,293
LG Electronics (Huizhou) Co., Ltd.89,772-9,143-
-(13,400)--85,515
Shenzhen Qianhai Qihang Supply Chain ManagementCo., Ltd. 27,358-(1,144) 274---(26,488) 0
Shenzhen Tixiang Business Management TechnologyCo., Ltd. 1,147-
---5 1,342
Shenzhen Jucai Supply Chain Technology Co., Ltd.15,273-1,712 5----16,990
Guangdong Innovative Lingyue IntelligentManufacturing and Information Technology IndustryEquity Investment Fund Partnership (LimitedPartnership) 502,444338,054 8,975-
-(19,937)--829,536
Guangdong Utrust Emerging Industry Equity InvestmentFund Partnership (Limited Partnership) 167,809-9,051-
----176,860
Xinxin Semiconductor Technology Co., Ltd.
1,798,784-(34,120)-
---(1,764,664) 0
Huizhou TCL Human Resources Service Co., Ltd.
6,274-
-
----6,641
TCL Microchip Technology (Guangdong) Co., Ltd.
285,281-(35,200)-
(16,915)---233,166
Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd. 69,540-(5,584)650---
(261)64,345
Bank of Shanghai Co., Ltd.
12,809,374-718,10632,788-(327,157)--13,233,111
Hubei Consumer Finance Co., Ltd.166,077-6,967 - ----173,044
Tianjin 712 Communication & Broadcasting Co., Ltd.287,755-6,662 - -(2,548) -(115,598) 176,271
17,171,280338,054682,026 33,717 (16,915)(363,042)-(1,907,006)15,938,111
(RMB’000)
XVI Notes to Financial Statements of the Parent Company (Continued)
3 Long-term equity investments (continued)(2)Subsidiaries
Directshareholding
ratio (%)
Openingbalance
Increase inthe period
Decrease
in theperiod
June 30,
2023
TCL China Star OptoelectronicsTechnology Co., Ltd. 79.17%33,780,853268,400- 34,049,253
TCL Technology Group FinanceCo., Ltd. 82%1,256,003-- 1,256,003
TCL Technology Group (Tianjin)Co., Ltd. 100%15,000,000-- 15,000,000
TCL Zhonghuan New EnergyTechnology Co., Ltd. 2.55%1,752,635177,098- 1,929,733
TCL Culture Media (Shenzhen)Co., Ltd. 100%361,414-- 361,414
Xinjiang TCL Equity InvestmentLtd. 100%200,000-- 200,000
Huizhou Sailuote CommunicationCo., 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 RadiologicalTechnology (Beijing) Co., Ltd. 100%58,497-- 58,497
Shenzhen TCL Strategic EquityInvestment Fund Partnership(Limited Partnership) 100%71,009-- 71,009
TCL Industrial TechnologyResearch Institute, Ltd. (Europe) 100%20,000-- 20,000
Wuhan TCL Industrial TechnologyResearch Institute, Ltd. 100%20,000
-
- 20,000
Shenzhen TCL High-TechDevelopment Co., Ltd. 100%20,000-- 20,000
Beijing HAWK Cloud InformationTechnology Co., Ltd. 100%20,000-- 20,000
Huizhou Hongsheng Science andTechnology Development Co., Ltd. 100%1,000-- 1,000
Tianjin Silica Material TechnologyCo., Ltd. 100%2,800,000-- 2,800,000
Xiamen TCL Technology IndustrialInvestment Co., Ltd. 100%211,000108,448- 319,448
TCL Internet Technology(Shenzhen) Co., Ltd. 100%15,000-- 15,000
Ningbo TCL Equity InvestmentLtd. 100%300,000- 300,000
TCL Technology InvestmentsLimited
100%2,988,293-- 2,988,293
Huizhou Dongshen Jia’an EquityInvestment Partnership (LimitedPartnership)
99.94%
10,000 - 10,000
TCL Financial Technology(Shenzhen) Co., Ltd. 100% 15,036 - 15,036
Zhonghuan AdvancedSemiconductor Materials Co., Ltd. 7.5%
1,790,312 - 1,790,312
Equity incentives ofsubsidiaries
——16,596-- 16,596
59,189,0962,369,294- 61,558,390
For the registered capital of subsidiaries and the Company's equity interests in the subsidiaries, see NoteVII.
(RMB’000)
XVI Notes to Financial Statements of the Parent Company (Continued)
4 Investments in other equity instruments
June 30, 2023January 1, 2023
Equity of unlisted companies 5,0005,000
5 Other non-current financial assets
June 30, 2023January 1, 2023
Equity investments 454,654 431,023
Debt investments 763,699 -
6 Operating income and operating costs
January - June 2023 January - June 2022RevenueOperating
cost
Revenue Operating
cost
Core business 433,463 431,097 339,768 333,523 Non-core business 302,951 73,107 249,803 78,878
736,414 504,204 589,571 412,401
7 Return on investment
January - June
2023
January - June
2022Profit from holding and disposal of debt instruments at fair
value through profit or loss 104,795 140,452 Gain on disposal of derivative financial assets/liabilities 4,637 - Dividends from subsidiaries 713,047 9,292,231 Share of profit of associates for current period 716,859 701,530 Share of profit of joint ventures for current period (34,833) (11,328) Net income from disposal of long-term investments 284,242 484,672
1,788,747 10,607,557As of June 30, 2023, there were no significant restrictions on the collection of return on
investment.
(RMB’000)
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 Company was (RMB4,547,241,000).
9 Ending balance of cash and cash equivalents
Cash and cash equivalents at end of the period of the Company was RMB12,628,472,000.
10 Contingent liabilities
As of June 30, 2023, the contingent liabilities not provided for in the financial report were as follows:
June 30, 2023 January 1, 2023
Guarantees for bank loans of subsidiaries 46,798,594 42,748,105
Guarantees such as trade notes, letters of credit and
letters of guarantee for subsidiaries 21,592,043 17,329,299
Guarantees for bank loans, trade notes, letters of credit,
etc. of related parties 2,326,335 3,137,934
(RMB’000)
XVII Comparative Figures
Certain comparative data have been reclassified to comply with the presentation of the
current period.
XVIII Non-recurring profit and loss items and amount
January - June 2023
January - June 2022
Gain or loss on disposal of non-current assets
(inclusive of impairment allowance write-offs) 321,753 464,268
Government grants through profit or loss (exclusive
of government grants given in the Company’sordinary course of business at fixed quotas oramounts as per the government’s uniformstandards)
1,267,259
429,923The profits or losses generated from changes in fair
value arising from holding marketable financialassets and marketable financial liabilities, as well asthe investment-related income from the disposal ofmarketable financial assets, marketable financialliabilities and available-for-sale financial assets,except for the effective hedging business related tothe Company’s normal business operation.
(42,740)
(11,164)
Reversal of provision for impairment of receivables
that have been individually tested for impairment2,500 10,180
Non-operating income and expenses other than the
above 707,421 538,585
Income tax effects (364,522) (47,766)
Non-controlling interests effects (951,111) (93,634)
Non-recurring gains and losses attributable to
ordinary shareholders of the parent company 940,560 1,290,392
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 CompaniesOffering Their Securities to the Public—Non-Recurring Gain/Loss (2008) issued by the ChinaSecurities Regulatory Commission.
XIX Weighted Average Return on Equity (ROE) and Earnings per Share (EPS)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to June 30, 2023
(RMB’000)
The Company calculates the ROE and EPS as follows in accordance with "the CompilationRules 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 accountingstandards:
Item Reporting
periodNet profitattributableto the parentcompanyfor thereportingperiod
Weightedaveragereturn onequity(%)
Earnings per share (RMB yuan)Basicearnings pershare
Dilutedearningsper share
et profit attributable toordinary shareholders of theCompany 340,493 0.67%0.0184 0.0181
NN
et profit attributable toordinary shareholders of theCompany before non-recurring gains and losses (600,067) -1.19% -0.0324 -0.0320
Company Name: TCL Technology Group Corporation
Date: August 29, 2023
The financial statements and the notes thereto from page 1 to page 170 are signed by:
Legalrepresentative:
LiDongsheng
Person inchargeof financialaffairs: Li Jian
AccountingPerson incharge oftheaccountingdepartment: Peng Pan