TCL科技集团股份有限公司TCL Technology Group Corporation
ANNUAL REPORT 2023
April 28, 2024
Amid rapids we beat the waves and sail steadily to reach far
ANNUAL REPORT 2023 Chairman's Statement
Amidst a tightening financial environment, intensifying geopolitical conflicts, and rapidrestructuring of global supply chain, the world economy slowed down in 2023. In the wake ofopportunities amid challenges, the economic restructuring brought new impetus to the transformationand upgrading of the technology industry, and the evolving global energy landscape furtherhighlighted the importantly strategic position of the new energy industry.With the strategic goal of becoming a global leading technology conglomerate, the Companypivoted on the development of high-tech, long-cycle, and capital-intensive businesses, strengthenedthe leading edge of its core businesses in display and new energy photovoltaics. Under the backdropof a complex operating environment, the Company cemented its foundation, enhanced riskmanagement capabilities, pursued extreme cost efficiency, and drove development throughtechnology innovation. In 2023, the Company achieved a revenue of RMB174.367 billion, up 4.69%year on year; net profits of RMB4.781 billion, up 167.37% year on year; net profit attributable toshareholders of the listed company of RMB2.215 billion, up 747.60% year on year; and net operatingcash flow of RMB25.315 billion.During the Reporting Period, the sales of display at user-end market remained sluggish. On thesupply side, the industry structure continued to optimize, competition tended to be benign, and theprices of major products rebounded amid stabilization. The Company's display business keptoptimizing business strategies, and continued to implement the high-end strategy, with a stablegrowth in the market share of major products. TCL CSOT remained top 2nd globally by its marketshare of TV products, while its market share of e-sports monitors and LTPS tablet products rankedfirst globally. The t9 production line, positioned at mid-sized IT and vehicle-mounted displayproducts, started serial production and shipments, and the proportion of OLED high-end productshipments rose quickly. During the Reporting Period, the display business achieved a revenue ofRMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negative RMB7million, with a year-on-year improvement of RMB7.618 billion, among which a net profit ofRMB3.441 billion was recorded in the second half of 2023, indicating steadily improving profitability.
In 2023, the global new energy photovoltaic industry and corporate development embarked ona new pattern. Affected by the capacity centrally released alongside the industrial chain, the supplyand demand was unbalanced, with significant decline of product prices, and some low-efficientcapacity faced the pressure of elimination. Overall, the industry structure was expected to beoptimized. During the Reporting Period, TZE recorded a revenue of RMB59.146 billion, down by
11.74% year on year. Under the influence of the decreasing product price, loss from investees,
provision for impairment loss and other factors, TZE reported a year-on-year decrease of 44.88% innet profit to RMB3.899 billion throughout the year. In the face of challenges, TZE maintained itsstrategic resolve and strengthened its competitiveness. On the one hand, it leveraged its differentiatedadvantages in G12, N-type silicon wafers, shingle components and intelligent manufacturing, andaccelerated industry integration through technological innovation so as to pass through industrialcycles. On the other hand, TZE actively evaluated and explored the feasibility on localizedmanufacturing (e.g. the United States, Europe, and the Middle East) in key countries or regionsaround the world, and promoted the operational improvement of Maxeon to effectively use itspatented technology and unique advantages in overseas markets with entry barriers. TZE continuedto facilitate its efforts to develop photovoltaic business and localized manufacturing on theinternational arena, seized the global opportunities for the development of the new energy industry,and achieved a sustainable growth.
During the Reporting Period, the Company sustained robust operations and made steadyprogress in other business segments.
The Company has always emphasized research and development (R&D) investments in cutting-edge technologies and commercial application, with a focus on innovation to drive businesstransformation and upgrading. During the Reporting Period, the Company invested RMB10.309billion in R&D, accounted for 5.91% of the Company's revenue. In 2023, the Company filed 590 newPCT applications, in total of 15,331 applications applied. Notably, the Company ranked secondglobally in terms of patent applications in the field of quantum dot displays. Furthermore, throughcontinuous technological innovation, process advancements, and a strategic shift towards Industry
4.0 manufacturing, TZE has built its unique competitive edges in large-size, thin-film, and N-type
silicon wafers. To implement the technology ecosystem strategy, the Company has proactivelymarshaled resources, made a breakthrough in key technologies and industrial production. This robust
technology ecosystem serves as a cornerstone for the Company's continued technologicaldevelopment.Looking ahead, with intensive integration of several promising techonologies, we will anticipatea surge of novel display applications and immersive scenarios, which will propel the growingdemands in display industry. The inter-country transfer of LCD industry has gradually drawn to anend, and the competitive landscape tends to stabilize. Companies are transitioning from a scale-drivengrowth model to a high-quality development stage fueled by technological innovation, productupgrading, and an eco-system layout. The Company's display business aims at becoming a "world-leading provider of display solutions". To achieve this, we are implementing a comprehensivestrategy that optimizes our business and product structure, strengthens our operational foundation,enhances operational excellence, differentiates our values, and drives continuous improvement inoperational efficiency.As climate change and energy issues escalate into pressing global challenges, there's a growingconsensus on the urgent need to accelerate the green and low-carbon transformation of the energysector. The photovoltaic industry will remain at the bottom of the market cycle in the near to mediumterm, featuring severely unbalanced supply and demand, acceleration of product and technologytransformation, and elimination of outdated production capacity driven by the Matthew effect. Taking"ranking No.1 in global silicon wafer market share and achieving comprehensive global leadership"as the strategic vision, the Company's new energy photovoltaic business sticks to technologicalinnovation, expands the leading edge in advanced production capabilities, strategically strengthens alayout across the photovoltaic industry chain, and capacity building worldwide, so as to go throughthe cycle by relative competitiveness and achieve a sustainable growth.
As a crucial pillar of the national economy, the manufacturing sector plays a key role in drivingeconomic transformation and development. Technological manufacturing is especially vital forfostering economic transformation and upgrading, and nurturing new engines of growth. TheCompany remains focused on its core businesses in displays and new energy photovoltaics,unwavering in its pursuit of global leadership. With the courage of "venturing midstream and strivingto win", embracing a culture of "relentless perseverance and decisive action", the Company guidesits business units to solidify their competitive edges, ensuring steady progress and positioning theCompany for long-term sustainable growth.
Committed to creating value for shareholders, the Company has a long-standing tradition ofmaintaining a prudent dividend policy. Following this commitment, the Board of Directors proposesa dividend of RMB0.80 per 10 shares for 2023, sharing the Company's growth success with allshareholders.
I would like to express my sincere gratitude for the trust of all our shareholders, for the supportfrom all our partners and users, as well as for the efforts of all employees!
April 28, 2024
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 Ms. Jing Chunmei, the person-in-charge of the financialdepartment, hereby guarantee that the financial statements carried in this Report are factual, accurateand complete.All the Company's directors attended the Board meeting for the review of this Report and itssummary.
The future plans, development strategies or other forward-looking statements mentioned in thisReport and its summary shall NOT be considered as promises of the Company to investors. Therefore,investors are kindly reminded to pay attention to possible investment risks.
The profit distribution plan approved by the meeting of the Board of Directors is as follows: Forevery 10 shares held, shareholders will receive a cash dividend of RMB0.8 (including tax) based onthe total number of outstanding shares of 18,779,080,767(Any repurchased shares held by theCompany upon profit distribution are exclusive of the distribution), without bonus shares or sharesconverted from capital reserve.
This Report and its summary has been prepared in both Chinese and English. Should there beany discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
Content
Part I Important Notes, Table of Contents and Definitions ...... 6
Part II Corporate Information and Key Financial Information ...... 10
Part III Management Discussion and Analysis ...... 15
Part IV Corporate Governance ...... 53
Part V Environmental and Social Responsibility ...... 76
Part VI Significant Events ...... 85
Part VII Changes in Shares and Information about Shareholders ...... 103
Part VIII Preferred Shares ...... 112
Part IX Bonds ...... 113
Part X Financial Report…………………………………………………………..120
Documents Available for Reference
(I) The financial statements signed and stamped by the person-in-charge of the Company, theChief Financial Officer and person-in-charge of the financial department.(II) The original of the auditor's report with the seal of the accounting firm, and signed andstamped by CPAs.
(III) The originals of all company documents and announcements that were disclosed to thepublic during the Reporting Period.
Definitions
Term Refers toDefinitionCompany, the Company, the Group Refers toTCL Technology Group CorporationThe "Reporting Period", "current period" Refers toThe period from January 1, 2023 to December 31, 2023.TCL CSOT Refers toTCL China Star Optoelectronics Technology Co., Ltd.TCL Industrial Refers toTCL Industrial Holdings Co., Ltd.TZE 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)Shenzhen CSOT Refers to
Shenzhen China Star Optoelectronics Bandaoti Display Technology Co.,Ltd.Wuhan CSOT Refers toWuhan China Star Optoelectronics Technology Co., Ltd.Wuhan China Star OptoelectronicsBandaoti
Refers to
Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd.Guangzhou CSOT Refers to
Guangzhou China Star Optoelectronics Bandaoti 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 toThe generation 8.5 (or G8.5) TFT-LCD 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 toThe generation 6 (or G6) of new display 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 display 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
Part II Corporate Information and Key Financial InformationI. Corporate Information
Stock nameTCL TECH.Stock code000100Stock abbreviation before change (if any) -Place of listing Shenzhen Stock ExchangeCompany name in Chinese TCL科技集团股份有限公司Abbr. TCL科技Company name in English (if any)TCL Technology Group CorporationAbbr. in English (if any)TCL TECH.Legal representative Li DongshengPlace of registration
TCL TECH. Building, 17 Huifeng Third Road, Zhongkai Hi-TechDevelopment District, Huizhou City, Guangdong ProvinceZip code 516001History of changes in the Company's place ofregistration
-Office address
TCL TECH. Building, 17 Huifeng Third Road, Zhongkai Hi-Tech
Development District, Huizhou City, Guangdong ProvinceZip code 516001Company website https://www.tcltech.com/Email address ir@tcl.com
II. Contact Information
Board SecretaryNameLiao QianOffice address
10/F, Tower G1, International E Town, TCL Science Park, 1001Nanshan District, Shenzhen, Guangdong Province, ChinaTel.0755-33311666Email addressir@tcl.com
III. Media for Information Disclosure and Place Where This Report is Lodged
Stock exchange website for publication of this ReportShenzhen Stock Exchange http://www.szse.cnMedia name and website for publication of this Report
Securities Times, China Securities Journal, Shanghai Securities News,Securities Daily, as well as www.cninfo.com.cn(http://www.cninfo.com.cn)Place where this Report is lodgedCapital Market Department of TCL Technology Group CorporationIV. Changes to Company Registered InformationUnified Social Credit Code91441300195971850YChanges in main business activities of the Companysince going public
1. In 2019, the Company focused on display devices by sold smart
terminal businesses such as consumer electronics and householdappliances and related supporting businesses.
2. In 2020, the Company acquired 100% equity of Tianjin Zhonghuan
Electronic through public delisting, shaping a business structure that
focused on display, and new energy photovoltaic.Changes of controlling shareholder since incorporationNot applicableV. Other informationThe independent audit firm hired by the Company:
NameDa Hua Certified Public Accountants (Special General Partnership)Office address
Room 1101, Building 7, No. 16 Xi Si Huan Zhong Road, Haidian
District, BeijingName of signing accountantsJiang Xianmin and Xiong XinThe independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period? Applicable □ Not applicable
Name Office address Representative Period of supervisionShenwan HongyuanFinancing Services Co., Ltd.
19 Taipingqiao Avenue, Xicheng
District, Beijing
Ren Cheng and Mo Kai
The period from December22, 2022 to December 31,
2023.The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable ?Not Applicable
VI. Key Accounting Data and Financial IndicatorsIndicate whether there is any retrospectively adjusted or restated datum in the table below? Yes □ No
2023
2022
2023-Over-2022
Change
2021Beforeadjustment
After adjustment
Afteradjustment
Beforeadjustment
After adjustmentRevenue (RMB)174,366,657,015 166,552,785,829166,552,785,8294.69%163,540,559,623 163,657,700,477Net profitattributable tothe company'sshareholders(RMB)
2,214,935,302 261,319,451261,319,451747.60%10,057,443,528 10,064,253,118Net profitsattributable tothe company'sshareholdersafter non-recurring gainsand losses(RMB)
1,021,080,065 -2,698,210,800-2,698,210,800137.84%9,437,240,976 9,444,050,566
Net cashgenerated fromoperatingactivities (RMB)
25,314,756,105 18,426,376,60918,426,376,60937.38%32,878,450,437 32,878,450,437Basic earningsper share(RMB/share)
0.1195 0.01910.0174586.78%0.7463 0.6789
Diluted earningsper share(RMB/share)
0.1179 0.01850.0168601.79%0.7354 0.6690Weightedaverage returnon equity (%)
4.27 0.520.52
Increase by
3.76
percentagepointsYoY
26.46 26.48
The end of 2023
The end of 2022 Change The end of 2021Beforeadjustment
After adjustment
Afteradjustment
Beforeadjustment
After adjustmentTotal assets(RMB)
382,859,086,727 359,996,232,668 359,996,232,668 6.35%308,733,133,305 308,749,696,062Owners' equityattributable tothe company'sshareholders(RMB)
52,921,867,086 50,678,520,477 50,678,520,477 4.43%43,034,234,611 43,041,044,200Reason for retrospective adjustment or restatement:
1. Shares were converted from capital reserve during the Reporting Period. The Company recalculated the basic earnings per share and
diluted earnings per share in accordance with accounting standards and other regulations.
2. In accordance with the requirements of the Interpretations of Accounting Standards for Business Enterprises No. 15, Interpretations
of Accounting Standards for Business Enterprises No. 16, and Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public—Non-Recurring Gain/Loss (Revised in 2023), the Company has implemented therelevant provisions. These adjustments have no material impact on the Company's financial position and operating results.The net profit before or after the deduction of non-recurring gains and losses in the latest three accounting years, whichever is lower,is negative and the audit report of the latest year shows the company's ability to continue as a going concern
□Yes ?No
The net profit before or after the deduction of non-recurring gains and losses, whichever is lower, is negative
□Yes ?No
VII. Accounting Data Differences under China's Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Differences in Net Profit and Equity under CAS and IFRS
□ Applicable ?Not Applicable
There is no difference in net profit and net assets between the financial statements prepared in accordance with International AccountingStandards (IAS) and Chinese Accounting Standards (CAS) for the Reporting Period of the Company.
2. Differences in Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable ?Not Applicable
There is no difference in net profit and net assets between the financial statements prepared in accordance with foreign accountingstandards and Chinese Accounting Standards (CAS) for the Reporting Period of the Company.
3. Reasons for Accounting Data Differences Above
□ Applicable ?Not Applicable
VIII. Major Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4Revenue39,443,242,439 45,705,483,167 47,960,309,079 41,257,622,330Net profit attributable to thecompany's shareholders
-548,999,154 889,492,743 1,270,918,405 603,523,308Net profits attributable to thecompany's shareholders after non-recurring gains and losses
-729,931,586 129,864,746 1,107,560,913 513,585,992Net cash generated from operatingactivities
4,495,356,538 5,920,811,609 5,727,844,866 9,170,743,092Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what has beendisclosed in the Company's quarterly or interim reports.
□Yes ?No
IX. Non-Recurring Gains and Losses
? Applicable □ Not applicable
Unit: RMBItem 2023 2022 2021Gains and losses on disposal of non-current assets (inclusive of impairmentallowance write-offs)
275,255,2251,757,838,745 -184,525,551Public subsidies charged to current profits and loss (except for public subsidieswhich are closely related to the Company's daily operations, comply withnational policies, are granted based on determined standards, and have acontinuous impact on the Company's profits or losses)
2,764,042,9051,322,782,937 699,270,673Gains and losses on change in fair value of financial assets and financialliabilities held by the non-financial companies, other than those valid hedgingactivities related to the normal operating business, as well as gains and lossesfrom the disposal of financial assets and financial liabilities
-114,258,710-127,233,837 238,629,291Reversal of provision for impairment of receivables that have been individuallytested for impairment
22,894,25537,745,528 -Gain equal to the amount by which investment costs for the Company to obtainsubsidiaries, associates and joint ventures are lower than the Company'senjoyable fair value of identifiable net assets of investees when makinginvestments
-- 40,299,579Non-operating income and expenses other than the above 228,994,235758,599,650 275,789,900Less: Corporate income tax 603,197,886 244,386,076 93,176,105
Details 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.
Non-controlling interests (net of tax) 1,379,874,787 545,816,696 356,085,235Total 1,193,855,237 2,959,530,251 620,202,552
Part III Management Discussion and Analysis
I. Company-related Industry Outlook During the Reporting Period
In 2023, the international political and economic situation was complex and volatile, withongoing geopolitical conflicts. The global industrial supply chain faced a restructuring, furtherexacerbating economic fragmentation. Meanwhile, some economies implemented tight monetarypolicy, which further slowed down global economy. In response to the complicated and ever-changing challenges, the Company continued to focus on the development of display business andnew energy photovoltaic business, enhance the resilience of its business, and optimize its competitiveedge in pursuit of high-quality sustainable development. In 2023, TCL TECH. achieved a revenue ofRMB174.367 billion, up 4.69% year-on-year; net profit of RMB4.781 billion, up 167.37% year-on-year; net profit attributable to shareholders of the listed company of RMB2.215 billion, up 747.60%year-on-year; and a net operating cash flow of RMB25.315 billion.Major factors that influenced the Company's performance included: the positive turnaround ofthe supply-demand relationship in the display industry, the steady price appreciation of mainstreamproducts, the Company's proactive optimization of business strategies, improving business structure,and significantly improved profitability. During the Reporting Period, the display business achieveda revenue of RMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negativeRMB7 million, with a year-on-year reducing loss of RMB7.618 billion. The display business turnedlosses into profits in Q3 2023 and continued to achieve strong profitability in Q4 2023, which resultedin a total profit of RMB3.441 billion for H2 2023. Fueled by China's "Dual Carbon" strategy, demandin the new energy photovoltaic industry maintained growth. However, industry-wide supply-demandimbalances led to a decline in product pricing. Furthermore, the TZE's performance was impacted bythe investee Maxeon, such as investment losses associated with the Maxeon, as well as long-termequity investments and financial assets recognized as asset impairment loss and negative fair valuechange, respectively. As a result, TZE reported a revenue of RMB59.146 billion for the ReportingPeriod, down 11.74% year-on-year; a net profit of RMB3.899 billion, reflecting a year-on-yeardecline of 44.88%.
Leveraging technological innovation as a primary driver, the Company is poised for
building a robust portfolio of proprietary and cutting-edge technologies to ensure sustainedindustry leadership and drive continuous industrial upgrading. During the Reporting Period, theCompany invested RMB10.309 billion in R&D, and filed 590 new PCT applications, for a total of15,331 applications applied. The Company's display business strategically amplified R&Dinvestments in ultra-large-sized, ultra-high-resolution, high refresh rate, and flexible displaytechnologies. Establishing new-type display technology and application innovation as its corecompetitivenesses, the Company strove toward the high-end of the value chain. The Company's newenergy photovoltaic business focused on groundbreaking innovation in solar cell technology withindependently developed intellectual property rights, and led the industry transition towardssignificantly improved energy conversion efficiency through its long-term technologicalaccumulation, ultimately securing high-quality development.The Company ensured a steady and sustainable market position by fortifying corecompetencies and establishing a robust operational foundation, as well as optimizingproduction capacity and product structure. In conjunction with stable competition structure in thedisplay industry, leading manufacturers posses an advantage in terms of economies of scale. Duringthe Reporting Period, the Company strategically realigned its production capacity and productstructure on the basis of incremental markets and continuously increased its market share, with itsTV panel shipments ranking No. 2 globally, MNT panel shipments jumping to No. 3 globally, andflexible OLED shipments experiencing growth in leaps and bounds. At the end of the ReportingPeriod, the Company's photovoltaic materials business significantly expanded its crystal waferproduction capacity to 183GW, capturing a 23.4% market share of the global market. The companyaccounted for 60% of the large-sized (210 series) wafer external sales market, 65% of the overseaswafer external sale market, and 36.4% of the N-type wafer segment, maintained No.1 in photovoltaicwafer external sales market share, and further consolidated the Company's leadership within theindustry.The Company implemented a strategic approach focused on fortifying its corecompetencies and rectifying shortcomings, to bolster the competitive advantage of its corebusiness segments, and increase both efficiency and effectiveness. The Company's displaybusiness capitalized on the technological capabilities of its high-gen production lines to actively drivethe development of larger-sized, higher-specification display products, and to grasp the iterative
demand for IT products fueled by the IT revolution, to fill the gap in its mid-sized production capacity(e.g., the t9 production line) and product layout. To enhance its operational efficiency, the small-sizedOLED business has implemented a high-end, differentiated product strategy. Relying on itsadvantages in leading G12 and N-type wafer technology, Industry 4.0 and flexible manufacturingprocesses, the Company's new energy photovoltaic business played a synergistic role across the entirephotovoltaic value chain, and ultimately shored up the relative advantages in cost efficiency.Promoting globalization strategy, the Company transitioned from product export toindustry capacity export, building a global industrial ecosystem. The Company's display businessimproved its layout in its panel module plant in India and overseas business platform, to strengthenits capacity to serve global customers and partners and satisfy the incremental needs of emergingmarkets worldwide. Due to the increasing complexity of the global economic and political landscape,the Company's new energy photovoltaic business prudently and steadfastly implemented itsglobalization strategy, where it actively evaluated and explored potential industrial projects in keyglobal markets, such as the United States, Europe, and the Middle East. Various projects were rolledout, such as comprehensive project planning, strategic partner negotiation, and thorough feasibilitystudies. Concurrently, the business collaborated with strategic partners to expand its photovoltaic celland module business in Malaysia, the Philippines, and other regions, further cementing its globalcompetitiveness within the new energy photovoltaic sector.II. Main Businesses of the Company During the Reporting Period
The Company focused on the development of the core business of displays and new energyphotovoltaics and other silicon materials, and was committed to achieving the strategic goal of globalleadership.
TCL TECH.
Display
New energy photovoltaicsand other silicon materials
Industrial finance and
investment
Others
TCL CSOT
JuhuaChina Ray
MokaTechnolo
ZhonghuanPhotovoltaic
ZhonghuanAdvanced
TCLFinance
TCL Capital
Highly
TPC
(I) Display businessIn 2023, the user-end demand for displays products remained sluggish globally, and it showedseasonal fluctuation. However, the trend towards larger TV panels drove display area demand, whilea just-in-time (“JIT”) production strategy bacame a consensus among major enterprises, fosteringhealthy industry development amid an increasingly favorable competitive landscape. Large-sizedpanel prices exhibited a seasonal pattern with significant peak-season recovery and a slight declinein the off-season, while mid-sized panel prices stabilized at low levels and small-sized panelsexperienced structural price increases in the second half of the year.By leveraging its strengths in terms of scale and efficiency, TCL CSOT has consistentlyoptimized its business and product mix, insisted on JIT production, and accelerated their businesscycle. This, coupled with favorable price increases for key products, has significantly boostedoperating performance. During the Reporting Period, the display business achieved a revenue ofRMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negative RMB7million, with a year-on-year reducing loss of RMB7.618 billion while recorded a profit ofRMB3.441 billion in H2 2023. The display business achieved a net cash flow from operatingactivities of RMB20.12 billion.
In its large-sized products business, TCL CSOT leveraged its advantages in terms of high-gen production lines and synergy with the industry chain, and led the upgrading and high-enddevelopment of large-sized TV panels while actively developing commercial displays, such asinteractive whiteboards, digital signage, and splicing screens. Capitalizing on the manufacturingefficiency and process advantages of its G8.5 and G11 high-gen production lines, TCL CSOTcollaborated with strategic customers to enhance the penetration of large-sized TVs in the market andelevate the value of key segments alongside the industry chain. The Company consolidated its No. 2position in terms of global market share of TV panels. 79% of the shipment area for products above55 inches, 51% of the shipment area for products above 65 inches; while 55-inch and 75-inch productsranked No. 1 in the world, the market share of 65-inch products ranked No. 2 globally. In commercialmarkets such as interactive whiteboards, digital signage, and splicing screens, the Company rankedamong the top three in terms of global market share.
In its medium-sized product business, TCL CSOT accelerated its capacity construction inIT and vehicle-mounted screen products, while optimizing and enhancing product competitiveness
and optimizing customer structure to create a new engine for business growth. Dedicated to mid-sizeddisplays for IT, vehicle-mounted devices and other business, the t9 production line (phase I) is nowrunning at full capacity, propelling the Company to being ranked third globally in terms of displayshipments. In this segment, the Company occupies the largest share in the global e-sports monitorsmarket, while its laptop and vehicle-mounted devices are on track for branded customer introductionsand gradual production increases. With the steady increase in 6th-gen LTPS capacity, the Companyranks No. 2 in LTPS laptop panels globally and No. 1 in LTPS tablets globally; and vehicle-mountedLTPS displays rank fifth worldwide. TCL CSOT's mid-sized business increased to 21% of its revenue,making it a key driver of future growth.In the small-sized display segment, TCL CSOT is targeting the mid-to-high-end marketwith a portfolio of LTPS and flexible OLED production lines, driving continuous improvementsin product competitiveness and market share. TCL CSOT ranked No. 3 in the world in terms ofLTPS mobile panel shipments from the t3 production line. The independently developed 1512 PPIMini-led LCD-VR screens achieved start of production (SoP) and shipment. The Company's t4flexible OLED production line has experienced a significant ramp-up in both utilization rate andshipments. This operational excellence secured the Company's position as the fourth-largest supplierof flexible OLED smartphone panels globally in Q4 2023. Product and customer mix have undergonestructural optimization, evidenced by the introduction of several brand customers during theReporting Period. The Company's leadership in flexible OLED technologies extends to foldable,LTPO, and Pol-Less displays, driving a continuous increase in the share of high-end products withinits portfolio. During the Reporting Period, the flexible OLED business segment achieved a two-foldgrowth in revenue, reflecting a sustained improvement in operational performance.Looking ahead into the future, as major information carriers and interactive interfaces in thedigital economy era, display industry will endure industrial value in the long run and are expected tounleash more value.
In the large-sized and mid-sized segments, display technology has entered a period of slowiteration, while LCD technology will remain the mainstream technology in the long term. In recentyears, global TV sales have remained stable. Fueled by the size increase of large-sized screens,display area has maintained stable growth and industry cycle fluctuations have reduced. The supply-side industry has become further concentrated, and increasingly optimized competition will drive the
balanced development of industrial supply and demand. Corporate profitability will recover withreasonable business returns under favorable circumstances. Driven by product specification upgradessuch as high refresh rates and lower energy consumption, IT panels are poised for significantstructural growth. Capitalizing on this trend, the company’s 8th-gen production lines specialized forIT products will leverage their cutting-edge capabilities to gradually become the main force in keymarkets.Flexible OLED has firmly established its dominance in the smartphone market and graduallypenetrated into new application scenarios. Foldable OLED displays are poised for a new growthfrontier, fueled by rapidly unleashed demand. In the meantime, there exist certain factors that posechallenges to current capacity, manufacturing, and other aspects, such as capacity loss resulting fromnew technologies and the yield ramp-up of new products, which will further improve industry supplyand demand relationships.TCL CSOT, as a global leader in large-sized display panels, will continuously enhance itsrelative competitiveness and profitability; it will improve its medium-sized products portfolio,leverage the advantages of its high-generation production lines, seize the opportunities in incrementalmarkets for high-specification products, and increase market share and revenue scale; TCL CSOTwill optimize its small-sized products and customer structure, drive the high-end development ofproducts through technological innovation, achieve business improvement in flexible OLED, andaccelerate the transformation and upgrading from a large-sized display leader to leader across the fullsize of displays.(II) New energy photovoltaics and other silicon materials businessIn response to such challenges as climate change, energy security, and environmental pollution,the global energy industry is experiencing a rapid shift towards a more sustainable model, whichdrives the fast-growing new energy photovoltaic industry. In 2023, the global installed capacitysurged by 72% year-on-year to 395GW, of which China accounted for approximately 216.9GW,while overseas markets contributed the remaining 178GW. The photovoltaic industry's compellingsustained growth prospects have spurred a wave of investment from both established players and newentrants. The influx of capital has accelerated capacity expansion across the photovoltaic industrialchain, leading to a product price downturn in major links while squeezing the profit margin of theindustry as a whole.
In line with prudent accounting practices, the Company recognized long-term equity investmentsand financial assets in connection with the investee, Maxeon, as asset impairment losses and negativefair value change, respectively. These factors, along with investment recognized under the equitymethod on a consolidated basis, contributed to a negative impact on TZE's fourth-quarterperformance. During the Reporting Period, TZE achieved a revenue of RMB59.146 billion, with ayear-on-year decrease of 11.74%, and a net profit of RMB3.899 billion, with a year-on-year decreaseof 44.88%. In the photovoltaic materials business, year-on-year shipment volume surged by 68% to114GW, capturing a leading market share of 23.4% for silicon wafers and generating RMB43.791billion in revenue. The comprehensive gross profit margin for this business also witnessed asignificant improvement of 2.8 percentage points year-on-year to 21.8%; year-on-year shipmentvolume for photovoltaic cells and modules grew by 29.8% year-on-year to 8.6GW, generatingRMB9.309 billion in revenue.
With an imbalance between demand and supply throughout the industrial chain, competition isevident within the industry from the lowest levelized cost of energy (LCOE) for photovoltaic modulesto product (efficiency/power output) on the basis of integrated internal rate of return (IRR) and land-based balance-of-system (BOS) costs. Those products with higher energy conversion efficiency willbecome the mainstream in the industry. TZE prioritizes technological innovation, securing aleading position in G12 and N-type photovoltaic materials technology. Through continuous costreduction and efficiency optimization, the Company is actively strengthening its comparativecompetitiveness. At the end of the Reporting Period, with comparative competitiveness created bytechnical innovation and lean manufacturing, the Company led the upgrade of large-sized, wafer,thinfilm process technologies for crystals and wafers. Metrics such as the consumption rate of siliconematerials per crystalline unit, monthly crystal output per furnace, and wafer output quantities per kgare at the forefront of the industry and factor into the Company's ability to navigate industry chainfluctuations through sustainable technology and cost leadership. Leveraging its technologicalexpertise in N-type material products, and its flexible manufacturing capabilities, aligned with thedemands for the "multi-product, multi-customer, multi-process" in the N-type era, the Company isaccelerating its transition to N-type materials and shingled modules. With the world's No. 1 externalsales market share in N-type silicon wafer and a cost lower than the second-best cost in the industry
at around RMB0.03/W, the Company is establishing a differentiated competitive edge in the industrychain for next-gen technologies.With the pursuit of autonomous and controllable energy by countries worldwide, coupled withthe increasing localization of photovoltaic manufacturing and the reduction of international trade,there is a resulting degree of uncertainty in business operations. However, also present are novelstrategic opportunities for enterprises with the capacity to expand into overseas markets. TZEstrengthened its Industry 4.0 intelligent manufacturing capabilities, continued to impel itsglobal presence, developing industrial projects in key countries or regions around the world.Reliant upon its long-term investment and accumulation in intelligent manufacturing, the Companyhas secured industry-leading levels of automation and labor productivity, resulting in a competitiveadvantage in localized manufacturing on a global scale. During the Reporting Period, the Companyactively evaluated and pursued industrial expansion projects in key global markets, including theUnited States, Europe, and the Middle East. This included ongoing project planning, communicationand negotiation with potential partners, and research into project implementation. The Company alsoprudently recognized an impairment loss on its investment in Maxeon, a company significantlyimpacted by a confluence of factors in its core markets, including a rapid decline in photovoltaicproduct prices, adjustments to photovoltaic subsidy policies, and a high interest rate. The Companyis actively driving operational excellence initiatives at Maxeon, with an aim to fully capitalize onMaxeon's unique competitive advantages in its core markets and its proven technological innovationcapabilities. By fostering a collaborative ecosystem between global production and distributionchannels, the Company seeks to strengthen its competitive edge in the global marketplace.
Looking ahead into 2024, we anticipate further optimization of the industry structure, along withsustained growth in user-end market demand for display area, which suggests a favorable industryoutlook, leading to enhanced operating performance within the Company's display business. Whilethe photovoltaic industry remains at the bottom of the cycle, the Company's new energy photovoltaicbusiness is taking a proactive stance. By strengthening its operational resilience, the Company aimsto navigate through the industry cycles with a competitive edge. By upholding the spirit of "VenturingMidstream and Striving to Win", the Company will firmly grasp the opportunities brought bytransformations in the technology manufacturing industry and the global energy structure, andcontinue to implement the business strategies of "improving operational quality and efficiency,
enhancing strengths to shore up weaknesses, innovation-driven development as well as acceleratingglobal expansion" in order to achieve sustainable, high-quality development and take on a leadingrole in the global market.III. Analysis of Core CompetitivenessSince its inception in 1981, TCL has embarked on a remarkable journey spanning 42 years,marked by a series of extraordinary achievements. Navigating industry cycles with resilience, TCLhas become a leading technology manufacturing conglomerate in China. Among the numerousenterprises that have emerged since China implemented its reform and opening-up policy, TCL is oneof a select few large corporations that have retained its vibrancy and vigor for nearly half a century.In 2018, TCL introduced the most significant transformation in its corporate history,strategically restructuring from a diversified to a specialized business model, which entailed a clearfocus on the development of high-tech, capital-intensive, and long-cycle technology industries. Inline with China's strategy of transformation from a manufacturer of quantity to one of quality, theCompany is committed to becoming a leading global technology conglomerate. To achieve this, ithas divested its terminal business and non-core businesses, and shifted its focus to industrialupgrading and strategic expansion in upstream high-tech industries. In 2020, the Company officiallychanged its name to "TCL TECH.", delisting Zhonghuan Electronic in July 2020, which facilitatedthe Company's entry into the new energy photovoltaic and silicon materials sectors. In August 2020,the acquisition of Suzhou Samsung solidified TCL TECH.'s position and competitive edge within thedisplay industry.As it stands, leveraging its strengths in independent innovation and self-driven development, theCompany has established a business structure centered on two core industries: displays and newenergy photovoltaics. With a well-defined development roadmap, efficient operations, and adistinctive corporate culture, the Company has established itself as a global leader in its coreindustries, and is well-poised for building its core competitiveness and sustainable developmentcapabilities.
Scale leadership: Transforming from a leader in large-sized displays to a full-size layoutAs a leader in the global display industry and a trailblazer in domestic display line construction,the Company leverages its strategic "Twin Star" production line layout to maximize synergies with afocus on both endogenous growth and epitaxial mergers and acquisitions, enabling the Company to
continuously expand its production capacity. With a global footprint spanning nine high-genproduction lines and five module plants, the Company serves a diverse customer base across majormarkets. In 2023, TCL CSOT ranked No. 2 globally in TV panel shipments, securing the No. 1ranking in terms of both 55-inch and 75-inch TV panels. The Company is also accelerating its full-size strategy by investing in the t9 production line, which is geared towards high-value-added IT andcommercial display products in medium-sized products segment. In 2023, TCL CSOT ranked No. 2in the LTPS notebook market and No. 1 in the tablet market by market share; it ranked No. 3 in theglobal MNT display market, where it ranked No. 1 in the e-sports MNT segment. TCL CSOT reporteda significant surge in flexible OLED shipments during Q4 2023. During 2023, TCL CSOT alsoactively enhanced its value chain structure, increased module capacity, and further elevated itsposition along the value chain and in terms of profitability. TCL CSOT has passed through severalindustry cycles, transforming from a follower to a peer and then to a front-runner, which is not merelya testament to its continuously high-quality growth in scale but also to its unwavering strategy totechnological innovation and ecosystem development in the display sector.Leading management: TCL CSOT aims to be a global leader in efficiency and traversevarious cycles by comparative competitivenessWhile establishing its leadership in market scale, technology, and ecosystem development, TCLCSOT has consistently maintained industry-leading efficiency and profitability metrics. Since itsinception in 2011, TCL CSOT has successfully navigated two significant cycles in the displayindustry thanks to two critical contributors - extreme cost efficiency and lean management.
TCL CSOT leverages the synergy of its twin factories to optimize production line planning,maximize capacity expansion, implement end-to-end cost and expense control through leanmanagement and extreme efficiency cost measures, establishing its competitiveness in the industry.TCL CSOT's proven risk mitigation capabilities, honed through multiple industry cycle fluctuations,will continue to propel the company's leadership position and steer its growth trajectory in the future.Strategic new frontier: Cultivating a thriving second growth curve with new energyOn the basis of enterprise development and national planning for strategic emerging industries,the Company actively seeks new development pathways that are technology-intensive and capital-intensive with a long development cycle, so as to strengthen and fully utilize TCL's corecompetitiveness. In July 2020, the Company successfully acquired the Zhonghuan hybrid-ownership
reform project. TZE aligns perfectly with TCL's quest for new growth drivers, specializing in theresearch and development of new energy photovoltaics and other silicon materials.Since 2021, TZE has unlocked growth potential and accelerated business development throughinstitutional reform, optimizing capital structure and enhancing organizational vitality.Leading in technology and ecology: Actively laying the groundwork for pan-displaytechnologies, building a first-mover advantage through ecological leadership
Relying on TCL CSOT and TZE, the Company has accelerated its vertical layout of theindustrial chain and continuously improved its upstream capacity for technological innovation. TheCompany has strategically focused on building an ecosystem in areas such as basic materials, next-gen display materials, photovoltaic materials and critical equipment for new manufacturing processes.This is aimed at creating an ecosystem within the display market to establish a leading advantagebased on next-gen display technology.TCL TECH. boasts a global network of 32 R&D centers, serving as the only "National Printingand Flexible Display Innovation Center" appointed by the Ministry of Industry and InformationTechnology and the sole "National New Display Technology Innovation Center" designated by theMinistry of Science and Technology, with 9 national-level enterprise open innovation platforms and33 provincial-level innovation platforms having obtained related qualifications.Organizational and cultural assurance: Building the "Philosophy of Global Leadership"and strengthening corporate cultureFour decades of unwavering commitment to "Daring, Innovation, Tenacity, Transformation, andVision" represents TCL's most valuable intangible asset over the last 42 years, serves as themotivation to push boundaries, and acts as the continuous driving force behind its ongoingadvancement toward global leadership. At the beginning of 2020, the Company resolutely set forththe strategic goal of "accelerated growth, surpassing competitors, and achieving global leadership"and released the "Philosophy of Global Leadership" to exemplify its corporate culture in its new phase.With this goal as the driving force, the Company is committed to reshaping its organizational cultureto one that is characterized by ownership, accountability, and a performance-driven mindset. TCLremains dedicated to continuously upgrading, exploring, and strengthening the core values embodiedby TCL's spirit of "Daring, Innovation, Tenacity, Transformation, and Vision". The Company willfurther strengthen the development of organizational structure and corporate culture to foster a more
dynamic and agile work environment. By making its "Philosophy of Global Leadership" thecornerstone of every TCL employee's approach, the Company strides towards sustainable growth.
IV. Analysis of Core Businesses
1. Overview
See "Part III Management Discussion and Analysis".
2. Revenue and costs
(1) Breakdown of operating revenue
Unit: RMB
2023 2022
Change (%)Amount
As % of totalrevenue (%)
Amount
As % of totalrevenue (%)Total revenue 174,366,657,015 100%166,552,785,829100% 4.69%By operating divisionDisplay business 83,654,743,374 47.98% 65,717,154,752 39.46% 27.30%New energyphotovoltaics andother siliconmaterials business
59,146,463,193 33.92% 67,010,157,025 40.23% -11.74%Distributionbusiness
30,109,528,571 17.27% 31,847,803,417 19.12% -5.46%Other and offsets 1,455,921,877 0.83% 1,977,670,635 1.19% -26.38%By product categoryDisplay devices 83,654,743,374 47.98% 65,717,154,752 39.46% 27.30%New energyphotovoltaics andother siliconmaterials
59,146,463,193 33.92% 67,010,157,025 40.23% -11.74%Distribution ofelectronics
30,109,528,571 17.27% 31,847,803,417 19.12% -5.46%Other and offsets 1,455,921,877 0.83% 1,977,670,635 1.19% -26.38%By operating segmentMainland China 119,940,276,585 68.79%119,139,823,459 71.53% 0.67%Overseas(including HongKong)
54,426,380,430 31.21%47,412,962,370 28.47% 14.79%Distribution modeDirect sales 149,146,033,585 85.54%140,148,331,286 84.15% 6.42%Distribution 24,805,129,036 14.23%25,652,437,925 15.40% -3.30%Dealer 415,494,393 0.24%752,016,618 0.45% -44.75%
(2) Operating division, product category, region or sales mode contributing over 10% of the revenue or operating profit:
? Applicable □ Not applicable
Unit: RMB
Revenue Operating cost
Gross profitmargin
Change inrevenue year-
Change inoperating costyear-on-year
Change ingross profitmargin year-
on-year (%) (%) on-year (%)By operating divisionDisplay business 83,654,743,37472,095,222,728 13.82%27.30%10.66% 12.95%New energyphotovoltaicsand other siliconmaterialsbusiness
59,146,463,193 47,170,528,471 20.25%-11.74%-13.96% 2.06%Distributionbusiness
30,109,528,571 28,949,391,997 3.85%-5.46%-5.32% -0.15%By product categoryDisplay devices 83,654,743,37472,095,222,728 13.82%27.30%10.66% 12.95%New energyphotovoltaicsand other siliconmaterials
59,146,463,193 47,170,528,471 20.25%-11.74%-13.96% 2.06%Distribution ofelectronics
30,109,528,571 28,949,391,997 3.85%-5.46%-5.32% -0.15%By operating segmentMainland China119,940,276,585 103,308,185,800 13.87%0.67%-4.49% 4.66%Overseas(including HongKong)
54,426,380,430 45,459,410,741 16.48%14.79%3.89% 8.77%Distribution modeDirect sales149,146,033,585 124,301,367,79716.66%6.42%-1.62% 6.81%Distribution 24,805,129,036 24,159,455,454 2.60%-3.30%-3.24% -0.07%Dealer 415,494,393 306,773,290 26.17%-44.75%-49.39% 6.77%Core business data in the recent term restated according to the changed methods of measurement that occurred in the Reporting Period
□ Applicable ?Not Applicable
(3) Was revenue from product sales higher than service revenue?
? Yes □ No
Operating division Item Unit 2023 2022 Change (%)Display
Sales
10,000 square
meters
5,3044,275
24.06%
Production volume
10,000 square
meters
5,4204,230 28.14%Inventory
10,000 square
meters
240124
93.49%
Modules and finishedmachines
Sales 10,000 sets 1,7531,299 34.99%Production volume 10,000 sets 1,7471,317 32.67%
Inventory 10,000 sets 6066 -9.76%Photovoltaic silicon
wafers
Sales 10,000 sets 1,630,718 1,064,653 53.17%Production volume 10,000 sets 1,671,530 1,084,730 54.10%
Inventory 10,000 sets 72,914 32,102 127.13%Other silicon materials Sales
Million square
inches
737 744-0.96%
Production volume
Million square
inches
765 743
2.97%
Inventory
Million squareinches
53 24
117.48%
Energy
Sales 10,000 kWh 102,019 123,105 -17.13%Production volume 10,000 kWh 102,019 123,105 -17.13%Inventory 10,000 kWhPhotovoltaic modules
Sales MW 7,144 6,607 8.13%Production volume MW 7,911 6,619 19.53%Inventory MW 1,407 639 119.95%Explanation of why any financial indicator in the table above registered a year-on-year change of over 30%? Applicable □ Not applicable
1. The increase in inventory of display was mainly affected by the release of t9 capacity;
2. The increases in modules and finished machines and output was mainly a result of growth in business scale;
3. Photovoltaic silicon wafer sales increased by 53.17% and production increased by 54.10% compared to the previous year. Inventory
increased by 127.13% compared to the previous year. This is mainly due to the Company's construction projects launching forproduction and the continuous improvement of advanced production capacity through technological innovation and Industry 4.0flexible manufacturing. At the end of the year, crystal wafer production capacity reached 183GW, an increase of 31% over thebeginning of the year, leading to an increase in the turnover of silicon wafer production, sales and inventory (solar silicon wafers arepresented as converted to M6 products, including photovoltaic silicon rods converted from exported photovoltaic silicon rods);
4. Inventory of other silicon materials increased by 117.48% compared to the previous year mainly due to the increase in product
inventory with the market downturn. In addition, as the production and sales of polished wafers and epitaxial wafers have increased,the inventory turnover rate has also increased;
5. Inventory of photovoltaic modules increased by 119.95% compared to the previous year mainly due to the severe overcapacity in
the entire photovoltaic industry chain, the dire market conditions, and the slowdown in inventory turnover. In addition, as the scale ofproduction and sales has increased, the inventory turnover rate has increased.
(4) Execution progress of major sales contracts and materials purchasing contracts signed into during the Reporting Period
□ Applicable ?Not Applicable
(5) Breakdown of operating cost
Operating division
Unit: RMBOperating
division
Item
2023 2022
YoYChangeAmount
As % of
total
Amount
As % of
total
revenue revenueDisplay business
Materials, salary,depreciation, etc.
72,095,222,728 48.46%65,148,141,621 42.88% 10.66%New energyphotovoltaics andother siliconmaterialsbusiness
Materials, salary,depreciation, etc.
47,170,528,47131.71%54,822,913,894 36.09% -13.96%
Distributionbusiness
Finished goods, etc. 28,949,391,99719.46%30,574,483,912 20.12% -5.32%Others
Materials, salary,
depreciation, etc.
552,453,3460.37%
1,379,949,553 0.91% -59.97%Product category
Unit: RMBProduct category Item
2023 2022
YoYChangeAmount
As % of
totalrevenue
Amount
As % of
totalrevenueDisplay devices
Materials, salary,depreciation, etc.
72,095,222,72848.46%65,148,141,621 42.88% 10.66%New energyphotovoltaics andother siliconmaterials
Materials, salary,depreciation, etc.
47,170,528,47131.71%54,822,913,894 36.09% -13.96%Distribution ofelectronics
Finished goods, etc. 28,949,391,99719.46%30,574,483,912 20.12% -5.32%Others
Materials, salary,
depreciation, etc.
552,453,346 0.37%1,379,949,553 0.91% -59.97%
(6) Were there changes in the scope of consolidated financial statements for the Reporting Period?
? Yes □ NoCompared with 2022, 39 subsidiaries (24 newly incorporated and 15 acquired) are newly included in the consolidation scope of 2023;and 18 subsidiaries (12 transferred and 6 de-registered) are excluded from the consolidation scope of 2023.
(7) Major changes to the business scope or product or service range in the Reporting Period
□ Applicable ?Not Applicable
(8) Major customers and suppliers
Major customers
Total sales of top five customers (RMB)51,360,607,561Total sales of top five customers as % of total sales of theReporting Period (%)
29.46%
Total sales of related parties among top five customers as % oftotal sales of the Reporting Period (%)
10.09%
Top five customers
No. Customer name Sales revenue (RMB)
As % of total sales revenue
(%)
Customer A 17,595,352,384 10.09%
Customer B 11,982,836,772 6.87%
Customer C 10,005,174,109 5.74%
Customer D 8,108,202,897 4.65%
Customer E 3,669,041,400 2.10%Total -- 51,360,607,561 29.46%Other information about major customers: For sales transactions between the Company and its related parties, see provisionalannouncements disclosed by the Company on the designated platform for information disclosure.Major suppliers
Top five suppliers
No. Supplier name
Purchases in the Reporting
Period (RMB)
As % of total purchases (%)1 Supplier A 7,679,043,598 5.51%2 Supplier B 6,838,857,510 4.91%3 Supplier C 6,351,627,011 4.56%4 Supplier D 4,425,255,517 3.18%5 Supplier E 3,604,909,912 2.59%Total -- 28,899,693,549 20.75%Other information about major suppliers
□ Applicable ?Not Applicable
3. Expenses
Unit: RMB
2023 2022 Change (%) Main reason for changeSalesexpenses
2,523,687,453 1,950,527,877 29.38%Administrative expenses
4,783,246,926 3,540,610,990 35.10%
Mainly caused by the growth in business scale,and increases in labor costs
Total purchases from top five suppliers (RMB) 28,899,693,549Total purchases from top five suppliers as % of total purchasesof the Reporting Period (%)
20.75%
Total purchases from related parties among top five suppliersas % of total purchases of the Reporting Period (%)
-
Financialexpenses
3,972,727,915 3,422,894,839 16.06%R&Dexpenses
9,522,837,963 8,633,638,171 10.30%
4. R&D investments
? Applicable □ Not applicableMain R&D projectname
Purpose Progress Preset goals
Anticipated impact onthe future developmentof the CompanyHigh-quality VRtechnologydevelopment
Enhance VR image
quality to achieve high
PPI
Develop ultra-high-resolution VR displaytechnology with 2K*2Kresolution per eye
Develop high-PPILTPO VR technology,enhancing VR displayquality and reducingpower consumption
Leverage technologicalleadership to attracthigh-end customers,enhancing brand valueand productcompetitivenessDevelopment of a14-inch 2.8Kflagship tablet
14-inch 2.8K in-cell
active pen eye-care
large-screen tablet
Realized industrialtransformation
The world's first 14-inch 2.8K in-cell activepen eye-care large-screen tablet
Enhanced productcompetitiveness andindustry influenceStar IntelligenceLarge Model ExpertSystem
Empowering R&D
efficiency and quality
improvement through
deep understanding and
learning
Realized industrialtransformation
Leveraged multi-modallarge models in R&Ddesign to empowerpanel development
Deep engagement inbusiness activities,accelerated the R&Dprocess, and improvedR&D efficiency andproduct qualityCapitalized upon AIand big data forfailure analysis andapplicationsimulation
Utilized AI algorithms
to enhance yield
analysis efficiency,
swiftly pinpointed
defect root causes, and
accelerated
improvement measures
Realized industrialtransformation
Completed systemimplementation anddeployment, andgradual roll-out to allplants
Used AI and big dataalgorithms to enhanceyield analysis andimprove manufacturingprocessesWQHD LTPOdisplay technology
Achieved a lower
refresh rate and reduced
power consumption
Realized industrialtransformation
Achieved lower powerconsumption whileeffectively addressingvisual fatigue.
Enhanced brandawareness and productcompetitiveness in theLTPO segmentAI-assisted R&D ofOLED materials
Reduced costs while
enhancing efficiency for
R&D of OLED
materials with AI
technologies
AI-assisted R&Dplatform for OLEDmaterials
Identified novel, high-performance, and stableOLED materials withAI-based generationand screening
Facilitated theindustrialization ofOLED materialsDevelopedproprietary high-speed CSPI nationalstandard protocolsand key displaymaterials, e.g., colorfilters and polarizers
Achieved enhanced
technological
competitiveness through
breakthroughs in POL
material specifications,
the development of
material platforms, and
proprietary research of
membrane materials.
Realized industrialtransformation
Breakthrough in POLspecifications /development of materialplatforms;Proprietary R&D ofPOL membranematerials.
Reduced cost andenhanced efficiency
R&D of keytechnologies for N-type silicon singlecrystals designed
Met the market
requirements for
technical indicators of
N-type monocrystalline
Promoted productionprocess improvementand product qualityconsistency with
Improved the quality ofmonocrystalline silicon,met customer needs,further improved
Enhanced the corecompetitiveness of thecompany's mainbusiness
for solar cells andtheir applications
silicon technology andstrengthened theCompany's corecompetitiveness
ongoing massproduction byenhancing TotalSolution capabilities,participating incustomer product andprocess design-in, andestablishing IPDcollaboration with N-type customers
efficiency, reducedcosts and achieved anincrease in market shareof N-typemonocrystalline silicon
Researched andapplied granularsilicon in the singlecrystal siliconpreparation process
Removed technicalbarriers in the use ofgranular siliconfeedstock in singlecrystal pullingprocesses to reducesilicon costs andenhance productcompetitiveness
Having addressed thechallenges associatedwith granular siliconfeedstock throughprocess innovation, theCompany has masteredits application method,enabling the productionof higher-quality singlecrystal silicon rods.This method can beapplied to 100% of theCompany's products,placing the Company atthe forefront of theindustry
Achieved 100%application byenhancing the quality ofgranular siliconfeedstock anddeveloped granularsilicon applicationsolutions
Reduced silicon costsand improved productcompetitiveness for theCompany
R&D of G12 siliconwafer slicingtechnology
Researched anddeveloped ultra-thinsolar silicon wafercutting technology tomeet the demand forthin film in thedownstream market andto improve unit output
Equipment upgradingand cutting processdesign have beencompleted; SoP hasbeen realized for 130umand 120um G12 siliconwafers
Achieved the 130μmthick SoP target forsilicon wafers; andcompleted the 110μmthick technical reservefor silicon wafers
Enhanced the corecompetitiveness of themain business
Developed the 4.0technology platformfor components
By successfullydeveloping the 4.0product and equipmentplatform, achieving SoPand obtaining productcertification, theCompany has furtherexpanded its productportfolio to meetdiverse market demandsunder variousapplication scenarios
The development of the
4.0 technology platform
designed forcomponents wascompleted on schedule,resulting in componentswith superior poweroutput, efficiency, andcost-effectiveness,paving the way for theirmarket introduction
Increased our marketshare by successfullytransitioning to N-typecomponent products
Enhanced the corecompetitiveness ofbattery packs
Optimized batterygraphic design
Reduced silverconsumption by 0.03%,increasing efficiency,and enhancing bothbattery efficiency andcomponent power withthe optimized positiveand negative circuit
The introduction of thenew battery graphicdesign has resulted in a
0.07% increase in cell-
level efficiency duringlarge-scale trialproduction, whilemeeting componentprocess yieldrequirements andachieving a 0.2%improvement in
Met customers'demands, whilereducing cost andimproving efficiency, aswell as raising marketshare
Enhanced the corecompetitiveness ofbattery packs
component CTMR&D personnel
2023 2022 Change (%)Number of R&D employees 11,313 11,979 -5.56%As % of R&D employees (%)
15.04%17.16%-2.12%EducationPhD 188 231 -18.61%Master 2,131 2,442 -12.74%Bachelor's degree and others 8,994 9,306 -3.35%AgeUnder 30 years old 5,965 7,286 -18.13%30~40 years old 4,696 4,280 9.72%Over 40 years 652 413 57.87%R&D investments
2023 2022 Change (%)R&D investment amount (RMB) 10,308,543,529 10,778,414,851 -4.36%R&D investments as % of total revenue (%) 5.91%6.47% -0.56%Capitalization amount of R&D investments(RMB)
3,560,255,965 4,287,426,803 -16.96%Capitalization amount of R&D investmentsas % of total revenue (%)
34.54%39.78% -5.24%Reasons and impacts of major changes in the composition of R&D personnel of the Company
□ Applicable ?Not Applicable
Reasons for significant changes in R&D investment as % of total revenue compared with the previous year
□ Applicable ?Not Applicable
Reasons for significant changes in R&D investments capitalization and explanation of rationale
□ Applicable ?Not Applicable
5. Cash flow
Unit: RMBItem 2023 2022 Change (%)Sub-total of cash generated fromoperating activities
155,010,648,305 155,632,096,991 -0.40%Sub-total of cash used in operatingactivities
129,695,892,200 137,205,720,382 -5.47%Net cash generated from operatingactivities
25,314,756,105 18,426,376,609 37.38%Sub-total of cash generated frominvestment activities
61,202,286,515 51,431,426,776 19.00%Subtotal of cash used in investing101,999,341,466 98,267,398,620
3.80%
activitiesNet cash used in investing activities-40,797,054,951 -46,835,971,844
12.89%
Sub-total of cash generated fromfinancing activities
70,023,939,233 113,655,272,732-38.39%Subtotal of cash used in financingactivities
68,232,173,839 82,254,617,585-17.05%Net cash generated from financingactivities
1,791,765,394 31,400,655,147-94.29%Net increase in cash and cashequivalents
-13,678,809,131 3,593,919,427-480.61%Explanation of why related data has significant changes year-on-year? Applicable □ Not applicableNet cash generated from operating activities: Primarily due to the increase in scale of sales during the Reporting Period.Net cash generated from financing activities: Primarily due to the decrease in scale of financing during the Reporting Period.Explanation of the significant difference between the net cash flow generated by the Company's operating activities and the net profitof the current year during the reporting period? Applicable □ Not applicableThe large difference between the net cash flow generated by the Company's operations and the net profits of the current year is primarilycaused by factors such as depreciation, amortization and impairment of the Company's assets during the Reporting Period.V. Analysis of Non-Core Businesses? Applicable □ Not applicable
Unit: RMB
Amount
As % of gross
profit
Source SustainabilityAsset impairment -4,813,965,478 -95.29%
Depreciation of inventory write-off in linewith the market
NoNon-operating income 71,284,932 1.41% NoNon-operating expenses 203,779,883 4.03% No
VI. Analysis of Assets and Liabilities
1. Significant changes in asset composition
The end of 2023 January 1, 2023
Change inpercentage
(%)
Main reason for
changeAmount
Total assetsPercentage
Amount
Total assetsPercentageMonetaryassets
21,924,270,872
5.73%35,378,501,261 9.83%-4.10%
Primarily due to thepurchase of low-riskwealth managementproducts
Unit: RMB
Higher proportion of overseas assets
□ Applicable ?Not Applicable
Accountsreceivable
22,003,651,259
5.75%14,051,661,462 3.90%1.85%
Primarily due to theincrease in sales scaleContract assets343,907,118
0.09%315,167,085 0.09%0.00% No significant changeInventories18,481,754,865
4.83% 18,001,121,855 5.00%-0.17%
No significant changeInvestmentproperty
911,679,154
0.24%946,449,125 0.26%-0.02% No significant changeLong-termequityinvestments
25,431,271,193
6.64% 29,256,215,804 8.13%-1.49%No significant change
Fixed assets 176,422,620,794 46.08%132,477,671,844 36.80%9.28%
Primarily due toconstruction inprogress beingconverted into fixedassets, resulting inincrease in fixedassetsConstruction inprogress
17,000,052,457
4.44%52,053,833,629 14.46%-10.02%
Primarily due toconstruction inprogress beingconverted into fixedassets, resulting indecrease inconstruction inprogressRight-of-useassets
6,386,446,373
1.67%5,110,123,904 1.42%0.25% No significant changeShort-termborrowings
8,473,582,304
2.21%10,215,910,963 2.84%-0.62% No significant changeContractliabilities
1,899,468,140
0.50%2,336,008,164 0.65%-0.15% No significant changeLong-termborrowings
117,662,208,623
30.73% 118,603,164,839 32.95%-2.21%
No significant changeLease liabilities 5,737,287,693 1.50%4,461,382,902 1.24%0.26% No significant change
2. Assets and liabilities at fair value
? Applicable □ Not applicable
Unit: RMBItem
Beginningamount
Gain/loss of fair-value changes in
the ReportingPeriod
Cumulative fair-value changesrecorded in equity
Impairmentallowancesestablished in theReporting Period
Amountpurchased in theReporting Period
Amount sold inthe ReportingPeriod
Other changes Ending amountFinancial assets
1. Held-for-
trading financialassets (excludingderivativefinancial assets)
15,632,334,714 -82,730,18436,690,131,991 26,084,053,319 26,155,683,203
2. Derivative
financial assets
361,034,230 188,835,24626,600,642-468,462,515108,007,603
3. Receivables
financing
1,103,127,764-148,718,206954,409,558
4. Other debt
investments
5. Investments in
other equityinstruments
439,996,263 -55,954,7561,720,000 886,911 386,648,418Subtotal offinancial assets
17,536,492,971 106,105,062 -29,354,11436,691,851,991 26,084,053,319 -616,293,810 27,604,748,782Total of the above17,536,492,971106,105,062-29,354,11436,691,851,991 26,084,053,319 -616,293,810 27,604,748,782Financialliabilities
932,646,67378,767,446143,869,8431,097,300,6001,942,542,301310,042,260Other changed content
None
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□Yes ?No
3. Restricted asset rights as at the period-end
Restricted assets
Carrying amount(RMB'0,000)
Reason for restrictionMonetary assets 34,109 Deposited in the central bank as the required reserveMonetary assets 158,637 Other monetary assets and restricted bank depositsNotes receivable 50,364 PledgeFixed assets 9,347,914 As collateral for loanIntangible assets 396,567 As collateral for loanHeld-for-trading financial assets 36,964 PledgeConstruction in progress 89,559 As collateral for loanAccounts receivable 86,008 PledgeContract assets 34,321 PledgeInvestment property 974 As collateral for loanOther non-current assets due within one year 43,049 Pledge
Total 10,278,465VII. Investments Made
1. Total investment amount
? Applicable □ Not applicableTotal investment amount in the
Reporting Period (RMB)
Total investment amount in the same
period last year (RMB)
Change (%)38,650,552,795 52,419,386,966 -26.27%
2. Major equity investments made in the Reporting Period
? Applicable □ Not applicable
Unit: RMB100 million
Name of investee
Principalactivity
Investment
method
Investmentamount
Shareholdingpercentage
(%)
Fundin
gsource
Partner
Term
ofinvestm
ent
Type ofproducts
Progress as of
thebalancesheetdate
Anticipated income
Investmentincome/loss in theReporting
Period
Involvement inlawsuit
(s)
Date ofdisclos
ure
Index todisclosedinformatio
nHuizhouDongshen Jia'anEquityInvestmentPartnership(LimitedPartnership)
Industrialinvestment
s
Equityinvestment
s
15.6 99.94%
Self-raisedfunds
Ningbo Jia'an
VentureCapitalPartnership(LimitedPartnership)
Notapplica
ble
Notapplica
ble
Establis
hed
Notapplicable
Notapplicable
Notapplica
ble
March
31,2023
www.cninfo.com.cnTotal -- --
15.6
-- -- -- -- -- --
Notapplicable
Notapplicable
-- -- --
3. Major non-equity investments ongoing in the Reporting Period
□ Applicable ?Not Applicable
4. Financial investments
(1) Securities investments
? Applicable □ Not applicable
Unit: RMB'0,000
Security
type
Stock Code
Stockabbreviation
Initialinvestment
cost
Accountingmeasurement
method
Beginning
carryingamount
Gain/loss offair-valuechanges intheReportingPeriod
Cumulativefair-valuechangesrecorded inequity
Amountpurchasedin theReportingPeriod
Amountsold in theReportingPeriod
Gain/lossin theReporting
Period
Endingcarryingamount
Accounting
title
Fundingsource
Stocks 300842.SZ
DK ElectronicMaterials, Inc.
2,430 Fair value 25,258 8,466 0 0 0 8,466 33,724
Other non-
currentfinancial
assets
Self-fundedStocks 688469.SH UNT 26,745Fair value - -3,337 0 26,745 0 -3,337 23,408
Other non-
currentfinancial
assets
Self-fundedFinancialbonds
ZQTZ2303070002
NanyangCommercial
Bank
7,083
Measurementat amortized
cost
- 0 0 7,083 0 426 7,251
Debtinvestments
Self-fundedBonds XS2560662541 LINK CB LTD 4,455 Fair value 4,791 -359 0 1,552 0 -95 6,064
Held-for-
tradingfinancial
assets
Self-fundedFinancialbonds
223001.IB
22 ICBC Macau
Bond 01
5,000
Measurementat amortized
cost
5,044 0 0 0 0 129 5,044
Debtinvestments
Self-fundedBonds USF2941JAA81
ELECTRICITEDE FRANCE SA
2,919 Fair value - 171 0 5,312 730 379 4,754
Held-for-
tradingfinancial
assets
Self-fundedBonds US279158AL39
ECOPETROL
SA
2,421 Fair value 4,349 167 0 0 0 417 4,590
Held-for-
tradingfinancial
Self-funded
assetsBonds USG5975LAA47
MELCORESORTSFINANCE
1,328 Fair value 1 45 0 5,145 1,360 90 3,832
Held-for-
tradingfinancial
assets
Self-fundedFinancialbonds
ZQTZ2303090003
China Taiping
Insurance
Holdings
Company
Limited
3,541
Measurementat amortizedcost
- 0 0 3,541 0 184 3,613
Debtinvestments
Self-fundedU.S.Treasury bill
US912797HH31
TREASURYBILL
3,453 Fair value - 27 0 3,453 0 27 3,480
Held-for-tradingfinancial
assets
Self-fundedOther securities investments held at the period-end 705,553-- 258,430 393 -5,595 442,236 531,456 8,966 169,880 -- --Total 764,929 -- 297,874 5,574 -5,595 495,068 533,545 15,653 265,641 -- --Disclosure date of the board announcement approvingthe securities investments
March 31, 2023Disclosure date of the general meeting announcementapproving the securities investments (if any)
April 22, 2023
(2) Investments in derivative financial instruments
? Applicable □ Not applicable
1) Derivative investments for hedging purposes made during the Reporting Period
? Applicable □ Not applicable
Unit: RMB'0,000
Type of contract
Beginning amount Ending amountGain/loss status in
the ReportingPeriod
Ending contractual amount as % of the
Company's ending net assetsContractualamount
Transaction
limit
Contractual amount Transaction limit
Contractual
amount
Transaction limit
1. Forward forex contracts 2,062,17273,4413,039,040114,095
-12,814
20.920.79
2. Interest rate swaps 384,44611,533407,68612,2312.810.08
Total 2,446,61884,9743,446,726126,326-12,81423.730.87Accounting policies and specificaccounting principles for hedgingbusiness during the ReportingPeriod and a description ofwhether there have beensignificant changes from those ofthe previous reporting period
No significant change.
Description of actual profits andlosses during the ReportingPeriod
During the Reporting Period, profit from changes in the fair value of hedged items amounted to RMB137.85 million; losses from the delivery of due forwardexchange contracts amounted to negative RMB450.92 million; and profit from the valuation of outstanding forward exchange contracts amounted to RMB184.93million.Description of the hedging effect
During the Reporting Period, the Company's main foreign exchange risk exposures included foreign currency asset and liability exposures arising from businessactivities such as outbound sales, raw materials procurement, and financing. The uncertain risks arising from the exchange rate fluctuations were effectively hedgedby derivative contracts with the same purchase amounts and terms in the opposite direction.Funding source for derivativeinvestment
Self-funded.Analysis of risks and controlmeasures associated withderivative investments held in theReporting Period (including butnot limited to market risk,
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 interest rate risks. As its business scale changes, the Company will adjust its exchange rate risk management strategy according to the
actual market conditions and business plans.
Risk analysis:
1. Market risk: The financial derivatives business carried out by the Group is related to hedging and trading activities associated with the main business operations.
liquidity risk, credit risk,operational risk, legal risk, etc.)
There is a market risk associated with potential losses due to fluctuations in market prices, such as underlying interest rates and exchange rates, which affects theprices 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 the derivatives 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 information related to financial derivative transactions may result in potential losses or missedtrading opportunities in the derivatives business. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or product information,the Group may face legal risks and transaction losses.Risk control measures:
1. Basic management principles: The Group strictly adheres to hedging principles with the primary goals of fixing costs and avoiding risks. It is necessary for the
financial derivatives business to align with the variety, size, direction, and duration of spot goods, and this should not involve any speculative trading. Whenselecting hedging instruments, only simple financial derivatives that are closely related to the main business operations and comply with the requirements of hedgeaccounting should be selected while avoiding engaging in complex business activities that go beyond the established scope of operations and involve risks andpricing that are difficult to understand;
2. The Group has formulated a special risk management system tailored to the risk characteristics of the financial derivatives business, covering all key aspects such
as preemptive prevention, in-process monitoring, and post-processing. It reasonably allocates professionals for investment decision-making, business operations,and risk control as required. Personnel involved in investment are required to fully understand the risks of financial derivatives investment and strictly implementthe business operations and risk management system for derivatives. Before the holding company engages in derivative business activities, the holding companymust submit detailed business reports to the competent department of the Group, including information about its internal approval, main product terms, operationalnecessity, preparations, risk analysis, risk management strategy, fair value analysis, and accounting methods. Additionally, a special summary report of previouslyconducted operations should be submitted. Only after obtaining the opinion of the relevant professional departments within the Group may the holding companyproceed 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 business development;
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% of the audited net profit attributable to the shareholders of the listed company in thelast year and exceed RMB10 million, the financial company should make timely disclosure thereof.Changes in market prices or fairvalue of derivative investments inthe Reporting Period (fair valueanalysis should include themeasurement method and relatedassumptions and parameters)
With the rapid expansion of overseas sales, the Company continued to follow the above rules in the operation of forward foreign exchange contracts and interestrate swap contracts, to avoid and hedge against foreign exchange risks arising from operations and financing. During the Reporting Period, there were profits andlosses of RMB137.85 million from changes in the fair value of hedged items and losses of RMB265.99 million from derivatives. The fair value of derivatives isdetermined by the real-time quoted price of the foreign exchange market, and is based on the difference between the contractual price and the forward exchangerate quoted immediately on the foreign exchange market on the balance sheet date.Legal matters involved (ifapplicable)
Not applicableDisclosure date of the boardannouncement approving thederivative investments (if any)
March 31, 2023Disclosure date of the generalmeeting announcement approving
April 22, 2023
the derivative investments (ifany)Opinion of independent directorson derivative investments andrisk control
From January to December 2023, the financial derivatives transactions entered into by the Company were closely connected to the daily operational needs of theCompany, and the risks therefrom were controllable. Such transactions conformed to the development needs of the Company, and the requirements of related lawsand regulations.
2) Derivative investments for speculative purposes made during the Reporting Period
□ Applicable ?Not Applicable
There were no derivative investments for speculative purposes made by the Company during the Reporting Period.
5. Use of the capital raised
? Applicable □ Not applicable
(1) General information about the use of raised funds
? Applicable □ Not applicable
Unit: RMB'0,000
Year
ofraising
Method
ofraising
Total amount
raised
Net amount
raised
Used in
thecurrentperiod
Totalamount used
Totalamount ofchanged-purpose
fundsduring theReporting
Period
Totalamount
of
changed-purpose
funds
Totalamount
of
change
d-purpose
fundsas a %of totalamountraised
Totalproceedsthat havenot been
used
Purpose
andlocation
of theunusedamount
Amountleft idlefor over
twoyears
2022
Non-publicofferingofshares
959,695.94 947,469.47 244.99947,714.46
Notapplicable
Notapplicable
Notapplica
ble
Notapplica
ble
Total -- 959,695.94 947,469.47 244.99947,714.46
Notapplicable
Notapplicable
Notapplica
ble
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 by the ChinaSecurities Regulatory Commission, the Company issued 2,806,128,484 shares in a non-public manner, raising a total of RMB9,596,959,415.28 in 2022. Afterdeducting issuance-related expenses, the actual available proceeds were RMB9,474,694,686.16. On December 6, 2022, the Company received the proceedsfrom the aforementioned share issue, which was confirmed by Da Hua CPAs (Special General Partnership) in its capital verification report of "Da Hua YanZi [2022] No. 000709".As of December 31, 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 supplement theworking capital. As of the date of this report issuance, the Company has successfully completed the closure procedures for the special account designated forthe funds raised through this private placement.
(2) Promised use of raised funds
? Applicable □ Not applicable
Unit: RMB'0,000Promisedproject funded
with raisedfunds andinvestmentwith excess
Whether
theprojectchanged
or not(including
Totalpromisedinvestmentamount withraised funds
Adjusted
totalinvestmentamount (1)
Investm
ent in
theReporti
ngPeriod
Cumulativeinvestmentamount atthe period-
end (2)
Investment progressas at theperiod-
end
(3)=(2)/(1
Datewhen theproject isready for
itsintended
Benefit
sderivedin theReporti
ng
Whether it met
theanticipatedbenefits
Whetherthere weresignificant
changes
to theproject
funds raised partial
changes)
) use Period or not feasibility
or notPromised projects
1. Generation
8.6 oxide
display deviceproduction lineproject
No 900,000.00 900,000.000900,000.00100.00%
24 monthsfrom thecommencementdate of the
project
Notapplicable
Notapplica
ble
No
2. Additional
workingcapital
No 47,469.47 47,469.47244.9947,714.46100.52%
Notapplicable
Notapplicable
Notapplicable
NoSubtotal ofpromisedprojects
-- 947,469.47 947,469.47244.99947,714.46-- --
Notapplicable
-- --Excess funds raisedNo excess funds raisedDescription ofdelayedprogress andreasons forfailure toachieve theplannedprogress andanticipatedincome(including thereasons forselecting "Notapplicable" for"Whetheranticipatedbenefits weremet or not")
Not applicable, no income estimate is made for the item
Description ofmajor changesin projectfeasibility
Not applicableAmount,purpose, anduse progress ofexcess fundsraised
Not applicableChange inlocation of theproject withraised funds
Not applicableChange in theprojectimplementation method
Not applicableAdvanceinvestments in
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
promisedprojectsfunded withraised fundsandsubsequentswaps
agreed to be swapped with the advance investments of self-raised funds in projects that should be funded with raised funds. The total swapamount was RMB9 billion.
Temporaryaddition ofidle raisedfunds tosupplementworkingcapital
Not applicable
Amount andreason forsurplus raisedfunds duringprojectimplementation
Not applicable
Unused raisedfund purposeand allocation
Not applicableIssues or othersituationsregarding theuse anddisclosure ofraised funds
Not applicable
(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
Transact
ioncounterp
art
Assetssold
Announcement date
Transaction price (inRMB0'000
)
Netprofitcontributed bythe asset
to thelistedcompany from
thebeginning of theperiodto the
Impactof saleon theCompany (Note
3)
Percentage of the
netprofitfrom thesale ofthe assetcontribu
ted to
thelistedcompany to thetotal net
Pricingprinciples for thesale ofthe asset
Whetherthis was
anaffiliated-partytransacti
on
Relation
shipwith theaffiliated party(if it is aaffiliated-partytransacti
on)
Whetherall titlesof theassethavebeenfullytransferr
ed
Whetherall debtsof theassethavebeenfullytransferr
ed
Has theprojectbeenimplemented asplannedand onschedule? If not,provide
thereasonsand themeasure
Date ofdisclosu
re
Index todisclose
dinformat
ion
date ofthe sale
(inRMB0'0
00)
profit s taken
by theCompany
BeijingE-TownUrbanRenewalCo.,Ltd.
Idleproperties inNo.2courtyard,BolinRoad,BeijingEconomic-TechnologicalDevelopmentArea
December 28,2023
25,269Notapplicable
Reducedoperational costswhileenhancingoperationalefficiency, whichalignswith thedevelopmentinterestsof theCompany
Notapplicable
Basedon thenegotiatedevaluation price
No
Notapplicable
Notapplicable
Notapplicable
Yes
December 28,2023
www.cninfo.com.cn
2. Sale of major equity investments
□ Applicable ?Not Applicable
IX. Principal Subsidiaries and Joint Stock Companies
? Applicable □ Not applicablePrincipal subsidiaries and joint stock companies with an over 10% effect on the Company's net profit:
Unit: RMB0'000
Acquisition and disposal of subsidiaries in the Reporting Period? Applicable □ Not applicable
Company name
How subsidiaries wereobtained or disposed ofin the Reporting Period
Effects on overalloperations andoperating performanceLumetech North America Corporation Newly incorporated No significant effect
Company name
Company
type
Principal
activity
Registered
capital
Total assetsNet assetsRevenue
Operating
profit
Net profitTCL China StarOptoelectronicsTechnology Co.,Ltd.
SubsidiaryDisplay
RMB33.08
billion
20,893,668 7,409,114 7,207,779 -90,039 -48,056TCL ZhonghuanRenewable EnergyTechnology Co.,Ltd.
Subsidiary
New energyphotovoltaics and other
siliconmaterialsbusiness
RMB4.04
billion
12,506,304 6,023,711 5,914,646 456,547 389,889Highly InformationIndustry Co., Ltd.
Subsidiary
Distribution
business
RMB0.42
billion
726,655 143,404 3,010,953 5,243 4,320
Suzhou Zhonghuan Photovoltaic Materials Co., Ltd. Newly incorporated No significant effectNingxia Huanou New Energy Technology Co., Ltd. Newly incorporated No significant effectNingxia Zhonghuan Industrial Park Management Co., Ltd. Newly incorporated No significant effectGuangzhou TCL Industrial Research Institute Co., Ltd. Newly incorporated No significant effectHuizhou Dongshen Jia'an Equity Investment Partnership (LimitedPartnership)
Newly incorporated No significant effectNingbo Dongshen Zhixuan Equity Investment Partnership (LimitedPartnership)
Newly incorporated No significant effectHuansheng Photovoltaic (Guangdong) Co., Ltd. Newly incorporated No significant effectXuzhou Huanneng New Energy Co., Ltd. Newly incorporated No significant effectLingwu Xuzhao New Energy Co., Ltd. Newly incorporated No significant effectNingxia Zhonghuan Yuelanshan Hotel Management Co., Ltd. Newly incorporated No significant effectZhangjiakou Shengming New Energy Co., Ltd. Newly incorporated No significant effectXi'an Maituo Technology Co., Ltd. Newly incorporated No significant effectXi'an Shengtai Technology Co., Ltd. Newly incorporated No significant effectXi'an Shengke Sunpie Technology Co., Ltd. Newly incorporated No significant effectUrumqi Sunpie Fengshagn Trading Co., Ltd. Newly incorporated No significant effectUrumqi Sunpie Zhixing Trading Co., Ltd. Newly incorporated No significant effectFoshan Sunpiestore Technology Co., Ltd. Newly incorporated No significant effectZhuhai Sunpiestore Technology Co., Ltd. Newly incorporated No significant effectNingxia Hongyuan New Energy Co., Ltd. Newly incorporated No significant effectNingxia Shengyao New Energy Co., Ltd. Newly incorporated No significant effectLingwu Shangyuan New Energy Co., Ltd. Newly incorporated No significant effectXiamen Dili Hongxin Equity Investment Partnership (LimitedPartnership)
Newly incorporated No significant effectXi'an Shengbo Sunpie Technology Co., Ltd. Newly incorporated No significant effectXinxin Bandaoti Technology Co., Ltd. Acquisition No significant effectJiangsu Mingjing Bandaoti Technology Co., Ltd. Acquisition No significant effectJiangsu Lixin Bandaoti Technology Co., Ltd. Acquisition No significant effectXuzhou Xinjing Bandaoti Technology Co., Ltd. Acquisition No significant effectJiangsu Huasheng Bandaoti 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 Bandaoti Equipment Technology Co., Ltd. Acquisition No significant effect
Meixin (Xuzhou) Silicon Material Technology Co., Ltd. Acquisition No significant effectSuzhou Huaxin Environmental Technology Co., Ltd. Acquisition No significant effectInner Mongolia TCL Photoelectric Technology Co., Ltd. Acquisition No significant effectTCL Financial Technology (Shenzhen) Co., Ltd. Acquisition No significant effectTechigh Circuit Technology (Huizhou) Co., Ltd. Acquisition No significant effectTechigh Circuit Technology (Zhuhai) Co., Ltd. Acquisition No significant effectTairui (Hong Kong) Limited Acquisition No significant effectYixing Huanxing New Energy Co., Ltd. Transferred No significant effectTianjin Binhai Huanneng New Energy Co., Ltd. Transferred No significant effectDushan Anju Photovoltaic Technology Co., Ltd. Transferred No significant effectShangyi Shengxin New Energy Development Co., Ltd. Transferred No significant effectGengma Huanxing New Energy Co., Ltd. Transferred No significant effectGuyuan Shengju New Energy Co., Ltd. Transferred No significant effectZhangjiakou Shengyuan New Energy Co., Ltd. Transferred No significant effectQinhuangdao Tianhui Solar Energy Co., Ltd. Transferred No significant effectTianjin Zhonghuan Hengda Technology Co., Ltd. Transferred No significant effectTianjin Yingtuo Computer Control Technology Co., Ltd. Transferred No significant effectShangyi Shengyao New Energy Development Co., Ltd. Transferred No significant effectGuangdong TCL New Technology Co., Ltd. Transferred No significant effectTianjin Huanhai Real Estate Development Co., Ltd. De-registered No significant effectTCL Lighting (Wuhan) Co., Ltd. De-registered No significant effectInner Mongolia Huanneng Resources Development Co., Ltd. De-registered No significant effectInner Mongolia Zhonghuan Electronic Materials Co., Ltd. De-registered No significant effectMeixin (Xuzhou) Silicon Material Technology Co., Ltd. De-registered No significant effectInner Mongolia Zhonghuan Energy Development Center (LimitedPartnership)
De-registered No significant effectExplanation of Principal Subsidiaries and Joint Stock Companies
None
X. Structured Bodies Controlled by the Company
□ Applicable ?Not Applicable
XI. Prospects
As a high-tech manufacturer with a presence in multiple sectors, TCL accelerates itsdevelopment by grasping strategic opportunities made available via China's high-quality economicdevelopment. With ample strategic resources, enhanced organizational efficiency, and presence inhigh-growth, high-potential industries, TCL embraces its 42nd year of development at a newhistorical starting point with a promising future.
With a strategic focus on displays and new energy photovoltaics, TCL is building coreassets in the global technology industry
Following the spin-off of its consumer-end business in 2019 and repositioning as a globaltechnology industry group, the Company has built its long-term competitive advantage through afocus on the core elements and critical growth drivers within the display and technology industries,in a combination of endogenous growth and epitaxial mergers and acquisitions.
As one of the leading players in the global display sector, the Company has seized industrygrowth opportunities by continuously refining its technology, and expanding its product portfolioacross a full spectrum of sizes. With these efforts, the Company has established a global competitiveedge. Concurrently, the Company is actively expanding into the new energy photovoltaic industrythrough the acquisition of TZE, aiming to establish a new growth pathway for the technology industryin the next decade. Since 2021, TZE has unlocked growth potential and accelerated businessdevelopment through institutional reform, optimizing capital structure and enhancing organizationalvitality.
With both TCL CSOT and TZE flourishing, the Company has entered a new phase driven bytwo business engines, establishing a foundation for long-term profitability that transcends industrycycles, enabling it to unlock long-term growth opportunities even amidst macroeconomic fluctuations.
Effectively implementing major strategic initiatives to achieve the goals of 2024's strategicplanning
Building on the successes of the 2023 strategic plan, the Company's overall efforts this year willmaintain the momentum of continuous improvement and ambitious growth through a key focus onsolidifying our foundation and overcoming challenges to achieve breakthroughs. The Company willimplement a business strategy guided by global leadership, prioritizing the enhancement of its
competitiveness, and driving high-quality development. By meticulously executing key tasks, theCompany will ensure the successful realization of its strategic goals.
Standing on the solid foundation forged over 42 years, TCL aims to become a global leader. Itwill pool its efforts, being guided by science and technology and driven by innovation, to continue toramp up, catch up, and achieve high-quality development and future-proof its success.XII. Communications with the Investment Community such as Research, Inquiries, andInterviews
? Applicable □ Not applicableTime
ofreception
TimeLocation
TimeManner ofcommunication
Type ofcommunication
party
Communication
party
Primaryfocus ofdiscussion
andmaterialsprovided
Index to main information
communicated
March 31,2023
FutianShangri-La
Hotel,Shenzhen
Onsite + Video
conferencing
Institution
E Funds, ChinaSouthern Fund,Harvest Fund,Dacheng Fund,
and others
Performance
andoperations
of TCLTECH. for
2022
Log Sheet No. 2023-001 on
Investor RelationsActivities dated March 31,
2023 disclosed by theCompany atwww.cninfo.com.cn on
April 4, 2023.
May 8,2023
Conference
Room of
TCLTECH. inShenzhen
Videoconferencing
Institution
E Funds,Aegon-Industrial Fund,
Perseverance
AssetManagement,
China Life,Taikang AssetManagement,
and others
Performance
andoperations
of TCLTECH. for
Q1 2023
Log Sheet No. 2023-002 on
Investor RelationsActivities dated May 8,
2023 disclosed by the
Company atwww.cninfo.com.cn on
May 10, 2023.
August30, 2023
Conference
Room of
TCLTECH. inShenzhen
Videoconferencing
Institution
Perseverance
AssetManagement, E
Funds, ChinaSouthern Fund,
CIB Fund,Dacheng Fund,
Loyal Valley
Capital, and
others
2023interimperformance
andoperations
of TCLTECH.
Log Sheet No. 2023-003 on
Investor RelationsActivities dated August 30,
2023 disclosed by the
Company atwww.cninfo.com.cn on
September 1, 2023.
October30, 2023
Conference
Room of
TCLTECH. inShenzhen
Videoconferencing
Institution
Perseverance
AssetManagement,Foresight Fund,
E Funds,Huaxia Fund,Loyal ValleyCapital, and
others
Performance
andoperations
of TCLTECH. for
Q3 2023
Log Sheet No. 2023-004 on
Investor RelationsActivities dated October30, 2023 disclosed by the
Company atwww.cninfo.com.cn on
October 31, 2023.
January -December2023
TheCompany'soffice
Investor hotline
(telephone)
Individuals,institutions,
etc.
Individuals,institutions, etc.
Contentsand publicinformation,
etc.,disclosed by
theCompany
-
January -December2023
TheCompany'soffice
irm.cninfo.com.cn
Individuals,institutions,etc.
Individuals,institutions, etc.
Contentsand publicinformation,etc.,disclosed by
theCompany
irm.cninfo.com.cn
XIII. Implementation of the "Joint Improvement of Quality and Investment Return" ActionPlan
Whether the Company has disclosed the "Joint Improvement of Quality and Investment Returns" Action Plan.?Yes □ No
In line with the national emphasis on enhancing the quality and investment value of listed companies, theCompany has developed the "Joint Improvement of Quality and Investment Returns" Action Plan, which is basedupon in-depth research on industry trends and careful consideration of our future business trajectory. For acomprehensive overview, please refer to the Announcement on "Implementing the 'Joint Improvement of Qualityand Investment Returns' Action Plan" disclosed on February 28, 2024.Recognizing the unwavering support of our investors, the Company remains committed to its "investor-centric"approach, ensuring compliant and prudent operations while safeguarding investor interests.
Part IV Corporate GovernanceI. General information of Corporate Governance
Since listed, in accordance with the Company Law, the Securities Law, the Code of Corporate Governance forListed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange and the Self-regulatoryGuidelines of Shenzhen Stock Exchange for Listed Companies No. 1 - Standardized Operation of Listed Companieson the Main Board and other relevant laws and regulations, the Company has continued to improved its governancestructure and further standardized its operations to comply with the requirements of related laws and regulations.During the Reporting Period, the Company pushed ahead with its corporate governance work in many aspects.At present, the Company has established an organizational structure in line with the Company's business scale andoperation and management, reasonably set up departments and posts, scientifically plan responsibilities and dutiesand build an internal control system that enables employees to performs their duties, assumes their responsibilities,work and supervise each other.In strict accordance with the provisions and requirements of the Company Law, the Securities Law, the Articlesof Associations, the Rules of Procedure for General Meeting of Shareholders, and other laws, regulations and rules,the Company standardizes the procedures for the convening, participation and voting of the general meeting,combines in-person and online voting, provides convenience for all shareholders to exercise their rights, and ensureall shareholders, especially small and mid-size shareholders to fully exercise their rights; the board of director setsup four dedicated committees: audit committee, nomination committee and remuneration and appraisal committeeto provide suggestions to the board of directors and ensure the board meetings and decision-making in a professionaland efficient manner. The board of supervisors perform their duties diligently and conscientiously by attendinggeneral meetings, observing board meetings, regularly inspecting the Company's legal operations and financialstatus, and issuing supervisory board opinions, to effectively supervises the company's major matters, relatedtransactions, financial status, and the performance of directors and executives, safeguarding the legitimate rightsand interests of the company and its shareholders. The supervisors investigate issues at various sites, take theinitiative to put forward management suggestions, which effectively improve the internal governance of theCompany. The Company has continuously improved its information disclosure management and investor relationsmanagement through innovative management system. By providing regular specialized training based on the latestregulatory rules, the Company promptly informs directors, supervisors and senior management of supervisory
focuses, to strengthen self-discipline among the management team, and fulfill their duties with diligence. TheCompany effectively safeguards the interests of all shareholders, particularly minority shareholders, and strengthensthe management's self-discipline capacity, make them diligently perform their duties, and effectively safeguards theinterests of all shareholders, especially small and medium-sized shareholders. The Company has successivelylaunched employee stock incentive plans with the participation of middle and senior managers and excellentemployees, further improving corporate performance and continuous improvement of its value. The Company isdevoted to public charitable undertakings and actively participates in social public charitable donations. Thanks tothese measures, the Company takes a lead in corporate governance in the industry.
Currently, there is no difference between the actual status of the Company's corporate governance structureand the standard documents on the corporate governance for listed companies published by China SecuritiesRegulatory Commission. The names of the policies are published on www.cninfo.com.cn. Details on theamendments to the policies in three years before the Reporting Period are as follows:
Year of amendment Title of rules
2020
The Articles of Association of TCL Technology Group CorporationThe Rules of Procedure for the Board of Directors of TCL Technology Group CorporationThe Rules of Procedure for the Supervisory Committee of TCL Technology Group CorporationThe Rules of Procedure for the General Meeting of TCL Technology Group CorporationThe Rules Governing the Guarantees Provided for External Parties of TCL Technology GroupCorporationThe Internal Control Rules for Investment in Derivative Financial Instruments of TCL TechnologyGroup CorporationThe Rules Governing Securities Investment of TCL Technology Group CorporationThe Rules Governing the Use of Raised Funds of TCL Technology Group Corporation2021
The Articles of Association of TCL Technology Group CorporationThe Rules of Procedure for the Board of Directors of TCL Technology Group Corporation2022
The Articles of Association of TCL Technology Group CorporationThe Rules Governing Information Disclosure of TCL Technology Group CorporationThe Rules Governing the Registration of Information Insiders of TCL Technology Group Corporation
The following rules are revised during the Reporting Period and relevant rules are disclosed onwww.cninfo.com.cn:
Title of rulesRevised
The Internal Audit Charter of TCL Technology Group Corporation (March 2023)The Rules Governing Securities Investment of TCL Technology Group Corporation (March 2023)The Internal Control Rules for Investment in Derivative Financial Instruments of TCL Technology
Group Corporation (March 2023)The Articles of Association of TCL Technology Group Corporation (May 2023)Risk Management Plan for Financial Transactions Between TCL Technology Group Financial Co., Ltd.and its Related Parties (August 2023)Is there any material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies
□Yes ?No
There is no material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies.
II. The Company's Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
□ Applicable ?Not Applicable
III. Horizontal Competition
□ Applicable ?Not Applicable
IV. Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Meeting Type
Investorparticipation ratio
Date of the meetingDate of disclosure Resolutions of the meetingThe FirstExtraordinaryGeneralMeeting of2023
Extraordinarygeneralmeeting
15.03% January 9, 2023 January 10, 2023
All proposals were adopted. Please referto the Notice on the First ExtraordinaryGeneral Meeting of 2023 disclosed onwww.cninfo.com.cn on January 10,2023 (Notice No.: 2023-001)The 2022AnnualGeneralMeeting
Annualgeneralmeeting
16.42% April 21, 2023 April 22, 2023
All proposals were adopted. Please referto the Notice on Resolutions of the 2022Annual General Meeting disclosed onwww.cninfo.com.cn on April 22, 2023(Notice No.: 2023-029)The SecondExtraordinaryGeneralMeeting of2023
Extraordinarygeneralmeeting
15.57% June 16, 2023 June 17, 2023
All proposals were adopted. Please referto the Notice on the SecondExtraordinary General Meeting of 2023disclosed on www.cninfo.com.cn onJune 17, 2023 (Notice No.: 2023-046)The ThirdExtraordinaryGeneralMeeting of2023
Extraordinarygeneralmeeting
16.28% September 15, 2023September 16, 2023
All proposals were adopted. Please referto the Notice on the 3rd ExtraordinaryGeneral Meeting of 2023 disclosed onwww.cninfo.com.cn on September 16,2023 (Notice No.: 2023-057)
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed
Voting Rights
□ Applicable ?Not Applicable
V. Performance of Duty by Independent Directors in the Reporting Period
1. General information
Note: 1. The Company will hold a general meeting on May 24, 2024, to deliberate on matters related to the change of directorship.
2. The increase in the number of shares held by Mr. Li Dongsheng, Mr. Wang Cheng, Mr. Liao Qian, Mr. Zhao Jun, Mr. Mao
Name Position
PositionStatus
Gender Age
Start oftenure
End oftenure
Number ofshares held atthe beginning of
the year
Increase ofsharesduring thereportingperiodDecrease ofsharesduring thereporting
period
Otherincrease/decrease
(share)
Number ofshares held atthe end of the
year
Reason forchangeLiDongsheng
Chairman
Incumbent Male 66
April 19,
2002
May 23,2024
814,061,096--83,097,357897,158,453
See thenote belowCEO
June 20,
2005LiangWeihua
ViceCharmianof theBoard
Incumbent Male 42
November13, 2020
May 23,2024
---- -NoneWangCheng
Director
Incumbent Male 49
January 9,
2023
May 23,
2024
157,661--175,522333,183
See thenote belowCOO
August 9,
2021ShenHaoping
Director
Incumbent Male 61
November13, 2020
May 23,
2024
---- -NoneSenior Vice
President
November14, 2020Liao Qian
Director
Incumbent Male 43
September
1, 2017
May 23,
2024
481,306--807,769 1,289,075
See thenote belowBoardSecretary
April 23,
2014Senior Vice
President
August 27,
2020Zhao Jun
Director
Incumbent Male 51
January 9,
2023
May 23,
2024
200,482--742,372 942,854
See thenote belowSenior Vice
President
December23, 2022Lin Feng Director Incumbent Male 38
April 29,2022
May 23,
2024
---- -NoneGan Yong
Independent
director
Incumbent Male 76
November13, 2020
May 23,
2024
---- -NoneChen Shiyi
Independent
director
Incumbent Male 67
November13, 2020
May 23,
2024
---- -NoneWanLiangyong
Independent
director
Incumbent Male 44
November13, 2020
May 23,
2024
---- -NoneLiu Xunci
Independent
director
Incumbent Male 65
September
1, 2017
May 23,
2024
---- -NoneZheng Tao
Chairman
of theSupervisoryCommittee
Incumbent Male 53
September15, 2023
May 23,
2024
---- -NoneQiu Haiyan Supervisor Incumbent Female 49
September1, 2014
May 23,
2024
---- -NoneMaoTianxiang
EmployeeSupervisor
Incumbent Male 43
September
1, 2017
May 23,
2024
229,583--336,992 566,575
See thenote belowLi Jian CFO Incumbent Female 51
August 9,2021
May 23,
2024
294,513--674,108 968,621
See thenote belowYanXiaolin
Senior Vice
President
Incumbent Male 57
September
1, 2014
May 23,
2024
1,303,302--1,038,963 2,342,265
See thenote belowCTO
December6, 2012HeZhuohui
FormerChairman
of theSupervisoryCommittee
Former Male 58
September
2, 2015
September
14, 2023
---- -NoneTotal -- -- -- -- -- -- 816,727,943--86,873,083 903,601,026--
Tianxiang, Ms. Li Jian, and Mr. Yan Xiaolin during the Reporting Period was due to the Company's shares converted from capitalreserve, as well as the non-transactional transfer of shares (which are attributable to the participants of the Phase III Global PartnershipPlan and the Employee Shareholding Plan) to their securities accounts.During the reporting period, any resignation of directors and supervisors and dismissal of senior managers during their termof office?? Yes □ No
On August 29, 2023, the 22nd meeting of the 7th Supervisory Board of the Company reviewed and passed the"Proposal on Filling the Vacancy of Non-Employee Representative Supervisor of the 7th Supervisory Committee",as Mr. He Zhuohui, Chairman of the Supervisory Committee, submitted a written resignation report to theSupervisory Board due to work changes, requesting to resign from his positions as supervisor and chairman of theSupervisory Committee. He will no longer hold any positions in the Company after his resignation, and hisresignation will take effect after the election of new supervisors by the Company's general meeting.
On September 15, 2023, the Company held its third extraordinary general meeting for the year 2023, reviewedand passed the "Proposal on Filling the Vacancy of Non-Employee Representative Supervisor of the 7th SupervisoryCommittee". Mr. He Zhuohui resigned as the supervisor of the Company and Chairman of the SupervisoryCommittee from September 15, 2023.Change of Directors, Supervisors and Senior Management? Applicable □ Not applicable
2. Positions
Professional background, major work experience and current post held in the Company of incumbentdirector, supervisor and senior manager
Mr. Li Dongsheng, the founder of TCL who currently serves as TCL TECH’s Chairman, CEO and non-independent director; Mr. Li has held a number of prestigious positions: Vice Chairman of the China Chamber ofInternational Commerce, First President of the China Manufacturing Innovation Alliance, Honorary President ofSouth China University of Technology Education Development Foundation, Vice President of Alumni Association
Name Office title Type of changeDate of change Reason for changeWang Cheng Director Elected January 9, 2023 Election at a general meetingZhao Jun Director Elected January 9, 2023 Election at a general meetingZheng Tao
Supervisor and Chairman of theSupervisory Committee
Elected September 15, 2023
Election at a general meetingand appointment by theSupervisory CommitteeHe Zhuohui
Former Supervisor and Chairmanof the Supervisory Committee
Former September 14, 2023
Change as a result of personaljob arrangement
South China University of Technology and Visiting Professor in Wuhan University.
Mr. Liang Weihua, Vice Chairman of TCL TECH. He was born in March 1981. He holds a master's degreeand graduated from the Economics and Management School of Wuhan University with the MBA degree inDecember 2012. From July 2003 to December 2010, he worked as Assistant Manager of Enterprise ManagementDepartment and Administration Department of Huizhou Investment Management Company. From December 2010to December 2011, he took the post of Executive Deputy General Manager of Huidong County Hongyuan WaterSupply Co., Ltd. From December 2011 to June 2016, he served as the General Manager of Huidong CountyHongyuan Water Supply Co., Ltd. From June 2016 to June 2021, he took office as Deputy General Manager ofHuizhou Investment Holding Co., Ltd. (and also served as a director of the company since August 2016). FromMarch 2017 to March 2022, he has been a director of Huizhou Financing Guarantee Co., Ltd.; from March 2017 toJanuary 2023, he concurrently served as a director of Utrust Inclusive Finance (Huizhou) Financing Guarantee Co.,Ltd. From April 2017, he was a director at Truly (Huizhou) Smart Display Limited. Since October 2019, he hasbeen Chairman and General Manager of Huizhou New Materials Industry Park Investment and Construction Co.,Ltd. Since November 2020, he has held office as Vice Chairman of TCL Technology Group Corporation and itsconsolidated subsidiaries, except where the context otherwise requires. He became Chairman and General Managerof Huizhou Innovative Investment Co., Ltd. in November 2020.Mr. Wang Cheng, COO of TCL TECH. Born in 1974, MBA, EMBA from the University of Texas atArlington. Since joined TCL in 1997 and successively served in multiple management positions at TCL multimediaoverseas business, human resources director and senior vice president of TCL Group. He once worked as the CEOof TCL Electronics from October 2017 to August 2021, and CEO of TCL Industrial Holdings from January 2019to August 2021. From August 2021, he was appointed as COO of TCL TECH.Mr. Shen Haoping, Non-independent Director and Senior Vice President of TCL TECH. Born in 1962, heholds a bachelor's degree. At present, he serves as Vic Chairman and General Manager of TCL ZhonghuanRenewable Energy Technology Co., Ltd (“TZE”) and General Manager of Tianjin Zhonghuan Electronics andInformation Group Co., Ltd. He was ranked as one of the best CEOs by Forbes China in 2022. Mr. Shen has manyyears of experience in the design and manufacturing of photovoltaic mono silicon materials. He has presided overseveral key large-scale R&D projects, and led TZE to win the top industry honors such as China patent excellenceaward, China innovation-oriented enterprise and Forbes China potential enterprise. Under Mr. Shen’s leadership,TZE has built a world-leading photovoltaic silicon ingot and wafer R&D, manufacturing and sales organization.
Mr. Liao Qian, Non-independent Director, Senior Vice President, and Secretary of the Board of Directors of
TCL TECH. He obtained a Master’s Degree and holds the Occupational Qualification Certificate of the People’sRepublic of China for Law. From August 2006 to February 2014, he worked at Guotai Junan International HoldingsCo., Ltd. and was engaged in the investment banking business in Hong Kong and Mainland China. Joining TCLCorporation in March 2014, he is in charge of strategic planning, strategic investment and matters in relation todomestic and overseas capital markets. He is also Chairman of Highly Information Industry Co.,Ltd, TonlyTechnology Co., Ltd. and CDOT (0334.HK); Vice Chairman of the Board of Tianjin Qiyier Communication &Broadcasting Co., Ltd. and Director of TCL Zhonghuan Renewable Energy Technology Co., Ltd (002129.SZ).
Mr. Zhao Jun, Non-independent Director and Senior Vice President of TCL TECH. He was born in XianyangCity, Shaanxi Province in November 1972. He graduated from Northwestern Polytechnical University with amaster's degree of engineering in polymer materials. After graduation, he served as vice president at Tianma Micro-Electronics Group, and currently serves as Senior Vice President of TCL Tech and CEO of TCL CSOT. From April1997 to January 2018, he worked with Tianma Micro-Electronics Group, successively serving as a pre-processengineer, deputy manager of the quality department, director of manufacturing and quality, deputy general manager,assistant president, and general manager and vice president of the procurement center and quality center. From May2018 to October 2019, he joined Wuhan China Star Optoelectronics Technology Co., Ltd. as general manager anddirector. From October 2019 to February 2021, he served as Vice President of TCL Tech, Senior Vice President ofTCL CSOT, General Manager of TCL CSOT Large Size Business Group and General Manager of TV BusinessDepartment. From February 2021 to December 2022, he served as Chief Operating Officer of TCL CSOT andpresided over the overall work of the CSOT. Since December 2022, he has served as Senior Vice President of TCLTech and CEO of TCL CSOT.Mr. Lin Feng, Non-independent Director of TCL TECH. He graduated from Central South University ofEconomics and Law in 2011 with a master’s degree in management science and engineering. From February 2013to May 2016, he served as project director and deputy director of the Industrial Investment Department of HubeiScience & Technology Investment Group Co., Ltd.; from May 2016 to May 2018, he served as deputy generalmanager of Wuhan Optics Valley Industrial Investment Co., Ltd.; since May 2018, he has been appointed as generalmanager of Wuhan Optics Valley Industrial Investment Co., Ltd.
Mr. Gan Yong, Independent director of TCL TECH. He is a Professor Senior Engineer, metallurgist andmaterials scientist and doctoral supervisor. He serves as President of the Chinese Society for Metals (CSM).
Mr. Chen Shiyi, Independent director of TCL TECH. He was born of Han ethnicity in Tiantai, Zhejiang inOctober 1956. He started to work in July 1987. His titles include doctor of science, doctoral supervisor, academician
of the Chinese Academy of Sciences (CAS) and the World Academy of Sciences (TWAS). Currently, he is presidentof the Eastern Institute for Advanced Study, a member of the 10th National Committee of the China Associationfor Science and Technology, vice chairman of the 2nd Council of the China Engineering Education AccreditationAssociation, vice chairman of the 11th Council of the Chinese Society of Theoretical and Applied Mechanics.Mr. Wan Liangyong, Independent director of TCL TECH. Currently, he is a professor and a doctoralsupervisor at the School of Business Administration of South China University of Technology, and director of theAccounting Development Research Center. He is also a council member of the Accounting Society of China (ASC),and independent director of multiple companies.Mr. Liu Xunci, Independent director of TCL TECH. He was born in Longhui County, Hunan Province, andwas awarded a master's degree. With the Professorial Title, he is recognized as a High-level Management Talent inHuizhou City. In September 1976, he became an educated urban young man working in the countryside aftergraduation from high school. In 1983, he started to work upon graduation. He was an associate professor, professor,and teaching supervisor. He is now a member in the teaching supervisory panel.
Mr. Zheng Tao, Chairman of the Supervisory Committee of TCL TECH. Currently serving as the Chairmanof the Board and the Supervisor of Huizhou Investment Development Co., Ltd. From September 2011 to September2017, served as the General Manager of Huizhou Golden Leaf Comprehensive Trade Development Co., Ltd.; fromSeptember 2017 to June 2023, held the positions of Chairman and General Manager of Huizhou Golden LeafComprehensive Trade Development Limited Liability Company; since July 2022, concurrently serving as a Directorof Huizhou Industrial Investment Development Fund Co., Ltd.; and since June 2023, has been the Chairman (LegalRepresentative) and Director of Huizhou Investment Development Co., Ltd.
Ms. Qiu Haiyan, Supervisor of TCL TECH. Born in December 1975, She obtained her Bachelor's Degreefrom the Central Radio & TV University in 2011. From July 1995 to March 1998, she served as a finance officer inHuizhou Zongli Real Estate Company; from March 1998 to July 2002, she served as a finance officer at HuizhouTrust Investment Company; from July 2002 till now, she serves as accountant, deputy manager and manager of theFinance Department in Huizhou Investment Holding Co., Ltd.; from August 2008 to October 2023, she served asdirector of Huizhou Investment Holding and Asset Management Co., Ltd.; from June 2009 to February 2013, sheconcurrently served as supervisor at Huizhou Fairway Investment and Construction Co., Ltd.; from March 2014 toMarch 2022, she concurrently served as an employee director of Huizhou Investment Development Co., Ltd.; sinceApril 2014, she has concurrently served as a Supervisor of the Fifth, Sixth, and Seventh Supervisory Committeesof the Company; and from July 2022 to October 2023, she has concurrently served as a director of Huizhou
Industrial Investment Development Master Fund Co., Ltd.; since July 2023, she has been the CFO at HuizhouInvestment and Development Co., Ltd.Mr. Mao Tianxiang, Employee Supervisor of TCL TECH. Mr. Mao is also Assistant President and Head ofthe Audit and Supervision Department of TCL Tech. He was born in January 1980 and graduated with a bachelordegree in July 2003. From July 2003 to June 2005, he served as Secretary at China Telecom Guangxi GuilinCompany; from July 2005 to November 2007, he served as Supervisor of PR and Communications in the StrategicOEM Business Division and Officer in the President’s Office in the Company; since September 2014, he has workedin TCL Tech Group and was Acting General Manager of the Electronic Devices Business Department of TechneGroup, General Manager of TCL Resource Investment, Chief Auditor of TCL CSOT, etc. Since 2019, he hassuccessively been a Supervisor of Tianjin Qiyier Communication & Broadcasting Co., Ltd. the Chairman of theSupervisory Committee of Highly Information Industry Co., Ltd., and the Chief Supervisor of TCL Financial Co.,Ltd. Since October 2020, he has been Chairman of the Supervisory Committee of TCL Zhonghuan RenewableEnergy Technology Co., Ltd (002129.SZ); since November 2020, he has been Chairman of the SupervisoryCommittee of Tianjin Printronics Circuit Corporation (002134.SZ); since December 2020, he has been AssistantPresident, Head of the Audit and Supervision Department of TCL Tech Group.Ms. Li Jian, CFO of TCL TECH. Born in 1972, she has an MBA from MIT. Joined TCL in 2004, successivelyserving as the capital director of TCL Multimedia Technology Holding Co., Ltd., the deputy general manager andgeneral manager of TCL Group Finance Co., Ltd., and now serves as the chairman of TCL Technology GroupFinance Co., Ltd. From August 2021, she is appointed as CFO of TCL TECH.Mr. Yan Xiaolin, CTO and Senior Vice President of TCL TECH. Also serves as Dean of the Wuhan TCLIndustrial Technology Research Institute, Ltd.; Director of TCL CSOT, and Chief Scientist of TCL CSOT;Chairman of Guangdong Juhua Printed Display Technology Co., Ltd., Chairman of TCL Microchip Technology(Guangdong) Co., Ltd., Chairman of Xiamen Extremely PQ Display Technology Co., Ltd., Chairman of the IECTechnical Committee on Electronic Display Devices, Vice Chairman and President of Asia of the Organic PrintingElectronics Society, and Fellow of the Society for Information Display (SID).Positions held at the shareholding entity? Applicable □ Not applicable
Name Name of shareholding entity
Office title at the
shareholding
entity
Start of tenure
End oftenure
Any pay received
from theshareholding
entity?Li Dongsheng Ningbo Jiutian Liancheng Representative August 2014 Incumbent No
Equity Investment Partnership(Limited Partnership)
appointed by theexecutive partnerLin Feng
Wuhan Optics ValleyIndustrial Investment Co., Ltd.
Chairman andgeneral manager
May 2018 Incumbent YesZheng Tao
Huizhou Investment HoldingCo., Ltd.
Chairman July 2023 Incumbent NoHuizhou InvestmentDevelopment Co., Ltd.
Chairman June 2023Incumbent YesQiu Haiyan
Huizhou Investment HoldingCo., Ltd.
Workers' DirectorFebruary 2014Incumbent YesNotes to positionsheld at theshareholding entity
Not applicablePositions held at other entities? Applicable □ Not applicableName Name of other entities
Office title at other
entities
Start of tenure
End oftenure
Pay received fromother entitiesLiDongsheng
TCL Industrial Holdings Co., Ltd. Chairman September 2018Incumbent YesTencent Holdings Limited
Independent andnon-executivedirector
April 2004 Incumbent YesLiangWeihua
Huizhou New Material IndustrialPark Investment and ConstructionCo., Ltd
Chairman andgeneral manager
October 2019 Incumbent NoHuizhou Innovation InvestmentCo., Ltd
Chairman andgeneral manager
November 2020Incumbent NoHuizhou Guoyou CapitalInvestment Group Co., Ltd
Deputy General
Manager
June 2021 Incumbent YesWangCheng
TCL Microchip Technology(Guangdong) Co., Ltd.
Director May 2021 Incumbent NoLiao Qian
Tianjin Qiyier Communication &Broadcasting Co., Ltd.
Vice Charmian of
the Board
June 2019 Incumbent No
Lin Feng
Hubei Xiaomi ChangjiangIndustrial Investment FundManagement Co., Ltd.
Supervisor October 2017 Incumbent NoWuhan Optical Valley FiberhomeInvestment Fund Management Co.,Ltd.
Director August 2018 Incumbent NoWuhan Weineng Battery AssetsCo., Ltd.
Director August 2021 Incumbent NoGan Yong The Chinese Society for Metals President May 2017 Incumbent YesChen Shiyi
Eastern Institute for AdvancedStudy
President August 2022 Incumbent YesWanLiangyong
URTRUST Insurance Co., Ltd.
Independent
director
February 2020 Incumbent YesGuangdong Goworld Co., Ltd
Independent
director
October 2021 Incumbent YesZheng Tao
Huizhou Guoyou AssetManagement Co., Ltd.
Chairman June 2023 Incumbent NoMaoTianxiang
Tianjin Qiyier Communication &Broadcasting Co., Ltd.
Supervisor June 2019 Incumbent NoLi Jian Bank of Shanghai Co., Ltd. Director January 2022 Incumbent NoYan Xiaolin
TCL Microchip Technology(Guangdong) Co., Ltd.
Chairman May 2021 Incumbent NoNotes topositionsheld at otherentities
Other major jobs or concurrently held jobs and resumePunishments imposed in recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
? Applicable □ Not applicableFor details, please refer to the relevant announcements disclosed by the Company on the designated information disclosure mediaon October 29, 2022 and January 20, 2023.
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
(I) Decision-making procedureThe allowances for directors and supervisors of the Company were reviewed and approved by the Company at the secondextraordinary general meeting in 2008 and the fourth extraordinary general meeting in 2011. The remuneration for senior executivesis subject to the Company's remuneration rules.
(II) Determination basis and actual payment
1. Remuneration or allowance criteria for directors
The remuneration of executive directors: As the Company pays remuneration to executive directors, it shall not pay additionalallowances to them. The remuneration is determined as per the Company's remuneration management rules.
The allowances of non-executive directors: RMB160,000/year (tax inclusive):
The allowances of independent non-executive directors: The allowance for each independent non-executive director isRMB160,000/year (tax inclusive), and the allowance for the convener of the Audit Committee is RMB200,000/year (tax inclusive).
The Company shall bear the travel expenses arising from the independent directors attending the Company's board and generalmeetings, as well as other expenses arising from non-executive directors and independent directors' exercising their functions andpowers as per the Company's Articles of Association.
2. Remuneration or allowance criteria for supervisors
The allowance for the Chairman of the Supervisory Committee is RMB160,000/year (tax inclusive);
The allowance for the shareholder supervisor is RMB100,000/year (tax inclusive);
And as the Company pays remuneration to the employee supervisor, it shall not pay additional allowances to him/her.
The Company shall bear the travel expense arising from the shareholder supervisors attending the Company's SupervisoryCommittee meetings, general meetings and board meetings (as a non-voting delegate), as well as other expenses arising from his/herexercising his/her functions and powers as per the Company's Articles of Association.
3. Remuneration criteria for senior management
The remuneration of senior management is determined as per the Company's Articles of Association and remuneration
management rules.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000Name Position GenderAge
Position
Status
Total before-taxremunerationfrom theCompany
Remuneration
from any
related party ornotLi Dongsheng Chairman, CEOMale 66 Incumbent1,241.97 YesLiang Weihua Vice Charmian of the BoardMale 42 Incumbent0 YesWang Cheng Director, COO Male 49 Incumbent970.24 NoZhao Jun Director, Senior Vice President Male 51 Incumbent915.53 NoShen Haoping Director, Senior Vice President Male 61 IncumbentNote NoLiao Qian
Director, Board Secretary andSenior Vice President
Male 43 Incumbent908.33 NoLin Feng Director Male 38 Incumbent0 YesGan YongIndependent director Male 76 Incumbent0 NoChen ShiyiIndependent director Male 67 Incumbent30.13 NoWanLiangyong
Independent director Male 44 Incumbent20.00 NoLiu XunciIndependent director Male 65 Incumbent16.00 NoZheng Tao
Chairman of the Supervisory
Committee
Male 53 Incumbent4.00 YesQiu HaiyanSupervisor Female49 Incumbent10.00 YesMao TianxiangEmployee Supervisor Male 43 Incumbent227.32 NoLi Jian CFO Female51 Incumbent854.69 NoYan Xiaolin Senior Vice President, CTO Male 57 Incumbent895.17 NoHe Zhuohui
Former Chairman of theSupervisory Committee
Male 58 Former 12.00 YesTotal -- -- -- -- 6,105.38Note: 1. The above amounts include fixed salaries, allowances, and performance bonuses received from the Company by the directors,supervisors, and senior executives of the Company during their terms of office.
2. As at the end of the Reporting Period, non-executive director Mr. Liang Weihua and independent director Mr. Gan Yong had not
received their respective allowances of RMB501.3 thousand (before tax); the compensation for Mr. Chen Shiyi, an independent directorlisted above, includes a portion that was not received in previous years and was distributed in this Reporting Period; non-executivedirector Mr. Lin Feng gave up the allowance; Director Shen Haoping received a compensation from TZE. The specific data are subjectto the announcements of TZE.
3. In 2023, the Company took out liability insurances for all its directors, supervisors, and senior executives, with a total premium of
RMB421.8 thousand per year. The participation of the directors, supervisors, and senior executives in the Company's employee stockownership plan is detailed in the relevant announcements issued by the Company.Other Information
□ Applicable ?Not Applicable
VI. Performance of Duty by Directors in the Reporting Period
1. Board of Directors During the Reporting Period
Meeting
Date of themeeting
Date ofdisclosure
Resolutions of the meetingThe 28thmeeting ofthe 7thBoard ofDirectors
January19, 2023
January 20,2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the28th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onJanuary 20, 2023 (Notice No.: 2023-004)The 29thmeeting ofthe 7thBoard ofDirectors
March 30,
2023
March 31,
2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the29th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onMarch 31, 2023 (Notice No.: 2023-011)The 30thmeeting ofthe 7thBoard ofDirectors
April 27,
2023
April 28,
2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the30th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on April28, 2023 (Notice No.: 2023-032)The 31stmeeting ofthe 7thBoard ofDirectors
May 15,
2023
May 17,
2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the31st Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on May17, 2023 (Notice No.: 2023-035)The 32ndmeeting ofthe 7thBoard ofDirectors
May 31,
2023
June 1, 2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the32nd Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn on June1, 2023 (Notice No.: 2023-039)The 33rdmeeting ofthe 7thBoard ofDirectors
August 29,
2023
August 30,
2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the33rd Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onAugust 30, 2023 (Notice No.: 2023-051)The 34thmeeting ofthe 7thBoard ofDirectors
September
28, 2023
September
29, 2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the34th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onSeptember 29, 2023 (Notice No.: 2023-059)The 35thmeeting ofthe 7thBoard ofDirectors
October27, 2023
- Passed the Proposal on the Text of the Company's Third Quarter 2023 Report.The 36thmeeting ofthe 7thBoard ofDirectors
November
28, 2023
November
29, 2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the36th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onNovember 29, 2023 (Notice No.: 2023-066)The 37thmeeting ofthe 7thBoard of
December27, 2023
December28, 2023
All proposals were adopted. Please refer to the Notice on Resolutions adopted at the37th Meeting of the 7th Board of Directors disclosed on www.cninfo.com.cn onDecember 28, 2023 (Notice No.: 2023-070)
2. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
Director
Total number ofboard meetings
the directoreligible to attend
Boardmeetingsattendedon site
Boardmeetingsattended byway oftelecommunication
Boardmeetingsattendedthrough aproxy
Boardmeetings the
directorfailed to
attend
The directorfailed toattend twoconsecutiveboardmeetings ornot
GeneralmeetingsattendedLi Dongsheng 10 19--No 1Liang Weihua 10 28--No 3Wang Cheng 10 28--No -Shen Haoping 10 19--No -Liao Qian 10 28--No 1Zhao Jun 10 19--No -Lin Feng 10 28--No 3Gan Yong 10 19--No -Chen Shiyi 10 -10--No -Wan Liangyong 10 19--No 2Liu Xunci 10 28--No 4Explanation for absence from the Board meetings in person for two consecutive times: None
3. Objections Raised by Directors on Matters of the Company
Whether directors raised objections on matters of the Company
□Yes ?No
No such cases in the Reporting Period.
4. Other information about the Performance of Duty by Directors
Whether directors adopted the proposals of the Company? Yes □ NoExplanation for the proposal adopted by directors or notDuring the reporting period, the directors of the Company diligently performed their duties and obligations in accordance withthe provisions of the Company Law, the Securities Law, the Listing Rules of Shenzhen Stock Exchange, the Articles of Association, theRules of Procedure of the Board of Directors and other laws, regulations and rules, and put forward valuable professional opinions onthe internal control and daily operation decision-making of the Company, which effectively improved the standard operation andscientific decision-making of the Company. The independent directors of the Company performed their duties independently andimpartially in strict accordance with the Measures for the Administration of Independent Directors of Listed Companies and relevantlaws and regulations, and issued independent and impartial opinions on major matters such as the Company's repurchase proposal,annual profit distribution, capital reserve transferred into share capital and annual daily affiliated transaction forecast, effectivelysafeguarded the legitimate rights and interests of investors, especially small and medium-sized investors.
Directors
VII. Performance of Duties by Dedicated Committees During the Reporting Period
Name Members
Meetingsconvened
Date ofthemeeting
Meeting agenda
Important opinionsand proposals raised
Other dutiesperformed
Objectionmatters
AuditCommittee
WanLiangyong, ChenShiyi,WangCheng
February16, 2023
1. 2022 Audit Plan for
Financial Statements ofTCL Technology GroupCorporation;
2. 2022 Internal Control
Plan of TCL TechnologyGroup Corporation.
The auditcommittee carriedout its work in strictaccordance with theCompany Law, theregulatory rules ofthe CSRC, theArticles ofAssociation and theRules of Procedureof the Board ofDirectors. Uponthoroughcommunication anddiscussion, allproposals wereunanimouslyadopted
- None
March 30,
2023
1. Proposal on the 2022
Annual Financial Reportof the Company;
2. Proposal on the
Summary Report of theAudit Committee underthe Board Regarding the2022 Annual AuditCarried out by Da HuaCertified PublicAccountants (SpecialGeneral Partnership);
3. Proposal on Renewing
the Engagement of theAccounting Firm.
- None
August29, 2023
1. Text of the Company's
2023 Interim Report andIts Summary
- NoneOctober27, 2023
1. Text of the Company's
Third Quarter 2023
- None
Remuneration andAppraisalCommittee
GanYong,WanLiangyong, LiuXunci,WangCheng
March 30,
2023
1. Proposal on the
Remuneration of theDirectors, Supervisors,and Senior Executives in2022
All proposals wereadopted upondeliberation.
- None
May 31,
2023
1. Proposal on the TCL
TECH. 2021-2023Employee StockOwnership Plan (PhaseIII) (Draft);
2. Proposal on the TCL
TECH. 2021-2023Employee StockOwnership Plan (PhaseIII) and the ManagementMeasures.
All proposals wereadopted upondeliberation.
- None
StrategyCommittee
LiDongsheng, LiangWeihua,WangCheng,Liao Qian,ShenHaoping,
March 30,
2023
1. Proposal on the 2022
Environmental, Socialand Governance Report
All proposals wereadopted upondeliberation.
- None
Zhao Jun,ChenShiyi
VIII. Performance of Duty by the Supervisory Committee
Indicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□Yes ?No
The Supervisory Committee raised no objections in the Reporting Period.
IX. Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-services of the Company as the parent
Number of in-services of the Company of major subsidiaries74,838Total number of in-services of the Company at the end ofperiod
75,217Total number of paid employees in the Reporting Period 75,217Number of retirees to whom the Company as the parent or itsmajor subsidiaries need to pay retirement pensions
FunctionsFunction EmployeesProduction51,686Sales 1,974Technical 11,313Financial 706Administrative 469Management 2,141Others 6,928Total 75,217
Educational backgroundsEducational background EmployeesPhD 243Master 3,788Bachelor's degree 14,393Junior college and others 4,097Total 22,521Note : The "educational backgrounds" section excludes overseas employees and front-line operators.
2. Employee Remuneration Policy
The Company implements the remuneration management on a basis of the principle of "job-determined responsibilities and salary,and pay for performance" Fixed income is determined based on position assessment, variable income is determined based onperformance appraisal and a remuneration distribution mechanism oriented by position and performance is established inside theCompany.
3. Employee Training Plans
On September 10, 2000, the Training Department of TCL Headquarters changed to TCL Training Institute. The Institute wasofficially established. On August 16, 2005, TCL Training Institute changed its name to TCL Leadership Development Institute, whichfocused on training of management talent and development of leadership. In 2015, the institute was upgraded to TCL University. In2021, TCL University was incorporated into the Group Organization Department and renamed the Learning and Development Group,focusing on business application and building talent pipeline for the organization. In 2023, to strengthen the accumulation ofmanagement experience and support strategic development, TCL University was re-established with a professional operationmechanism, positioned at carrying forward corporate culture, accumulating the experience and empowering talents, so as to contributeto the Company's continued business success.In 2023, the Company continuously optimized and upgraded the "Elite" development program, to build a talent pool of generalmanagers and directors with strategic thinking and comprehensive operating capabilities. In order to facilitate the transformation andupgrade of the supply chain, the Company established the "Supply Chain Elite" initiative, to train supply chain experts with bothbusiness acumen and the ability to solve problems across diverse functional areas. In support of strategic implementation, the Companyalso conducted three specialized training and frontline exercises.In resource development, the Company places great emphasis on building a training resource system in support of talentdevelopment in all enterprises under the Group. Industry executives, outstanding management representatives, and business backbonepersonnel actively participated in course development, contributing a wealth of internal TCL experience and case studies.TCL University will continue to build a more comprehensive training system, develop a program with the characteristics of TCL,and build a management and professional talent pool that meets the strategic requirements of the Company. TCL University iscommitted to increasing the talent pool (i.e. 1:2 managers: talents), both quantitatively and qualitatively, and gradually transformingthe talent structure from a pyramid shape to a spindle.
4. Labor Outsourcing
□ Applicable ?Not Applicable
X. Profit Distributions to Shareholders (in the Form of Cash and/or Stock)and Share CapitalConverted from Capital Reserve
Formation, implementation or adjustment of profit distribution policy, especially cash dividend policy, in the Reporting Period? Applicable □ Not applicableFor details, see the Shareholder Dividend Reward Plan for the Next Three Years (2023-2025) disclosed by the Company on March 31,2023.
Special explanation of cash dividend policy
In compliance with the Company's Articles of Association andresolution of general meeting
YesSpecific and clear dividend standard and ratio YesComplete decision-making procedure and mechanism YesIndependent directors faithfully performed their duties andplayed their due roles
YesCompanies that do not distribute cash dividends shall disclosethe specific reasons and the measures they intend to take toenhance investor returns in the next step:
Not applicableNon-controlling interests were able to fully express theiropinions and desires and their legal rights and interests werefully protected
YesIn case of adjusting or changing the cash dividend policy, theconditions and procedures involved were in compliance withapplicable regulations and were transparent
Not applicableDuring the Reporting Period, the Company made profits and the parent company's profits that were eligible for profitdistribution for shareholders were positive, but no cash dividend distribution plan was put forward.
□ Applicable ?Not Applicable
Final Dividend Plan and Share Capital Converted from Capital Reserve for the Reporting Period? Applicable □ Not applicable
Bonus issue from profit (share/10 shares) 0Cash dividend/10 shares (RMB) (tax inclusive) 0.8Bonus issue from capital reserves (share/10 shares) 0Share base (share)18,779,080,767Cash dividends (RMB) (tax inclusive)1,502,326,461.36Cash dividends in other forms (e.g. share repurchase) (RMB) 247,096,745.21Total cash dividends (including those in other forms) (RMB)1,749,423,206.57Distributable profits (RMB) 17,871,649,164Total cash dividends (including those in other forms) as apercentage of total profits to be distributed (%)
100%Cash dividend planBased on the Company's capital share as at April 28, 2024, i.e. 18,779,080,767 shares eligible to the profit distribution(in casethe Company repurchases treasury shares upon equity distribution, that proportion will not be entitled to distribution), shareholderswill receive a cash dividend of RMB0.8 for every 10 shares held (tax included).
Details of profit distribution or capital reserve fund transfer planIn connection with the actual operations, the Company proposed a profit distribution plan that for every 10 shares held on April28, 2024, shareholders will receive a cash dividend of RMB0.8 (tax included) based on the capital shares 18,779,080,767 to beeligible for profit distribution, (in case the Company repurchases treasury shares upon equity distribution, that proportion will notbe entitled to distribution) with a total distributed profit of RMB1,502,326,461.36 and the remaining undistributed profit carriedforward for distribution in future years.Where any changes occur, before the implementation of the dividend plan, to the total share capital of the Company due to anyconvertible bonds-to-stock programs, share repurchases, exercises of equity incentives, new share issues in refinancing, etc., thedividend will be adjusted according to the principle of "adjusting the total distribution amount under the same distribution ratio",subject to the actual distribution amount.
XI. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
? Applicable □ Not applicable
1. Equity Incentives
Equity Incentives Granted to Directors and Senior Management
□ Applicable ?Not Applicable
Appraisal of and Incentive for Senior Management
During the Reporting Period, the Company conducted performance appraisal and competency and quality assessment on themanagers, The Contract To Success (CTS) system was used for performance appraisal. In respect to the team led by each manager, thekey factors of performance appraisal included phased strategic goals and operating goals of the current period (such as profits, cashflow, products and service quality) and key projects; the comprehensive results of each accomplished goal were considered as the mainbasis for motivating managers. In that way, corporate strategies were converted into internal management activities through the processof goal setting, implementation and accomplishment to direct all systems of the Company and serve the purpose of enhancing theoverall efficiency of the Company. The management assessment consisted of four dimensions, included manager performance,competence, experience and quality (potential, personality and aspiration/values). An annual examination report for managers wasgenerated through annual performance assessment, manager review and inspection, talent appraisal development center, 360-degreebehavior interviews or online assessment, supported by key experience, personality or management style assessment, which served asthe main basis for appraising, appointing and dismissing leaders.
2. Implementation of Employee Stock Ownership Plan
? Applicable □ Not applicableAll the valid employee stock ownership plans during the Reporting PeriodName
Scope ofemployees
Number ofemployees
Totalnumber ofshares held（share）
Changes
Proportion tototal sharecapital of listed
companies
Funding sourcefor implementing
the plan2021-2023Employee StockOwnership Plan(Phase I)
The Company'smiddle and seniormanagement andoutstanding keystaff
Less than 3,60048,332,573
Notapplicable
0.26%
Special incentivefunds provisionedby the Company2021-2023Employee StockOwnership Plan(Phase II)
The Company'smiddle and seniormanagement andoutstanding keystaff
Less than 3,600117,132,801
Notapplicable
0.62%
Special incentivefunds provisionedby the Company2021-2023Employee Stock
The Company'smiddle and senior
Less than 3,60064,992,964
Notapplicable
0.35%
Employees'legitimate income,
Ownership Plan(Phase III)
management andoutstanding keystaff
performance-based bonus orother distributionpermitted by lawsand regulationsShareholdings of Directors, Supervisors and Senior Management under the Employee Stock Ownership Plan during the ReportingPeriodName Position
Beginning amount in theReporting Period
Ending amount in theReporting Period
Proportion to total
share capital oflisted companiesLi Dongsheng Chairman, CEO
About 27.07 million sharesAbout 18.74 million shares 0.10%Wang Cheng Director, COOZhao Jun
Director, Senior VicePresidentLiao Qian
Director, Board Secretaryand Senior Vice PresidentYan Xiaolin
Senior Vice President,CTOLi Jian CFOMao Tianxiang Employee SupervisorChanges 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, pleasesee 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 accountingtreatment? Applicable □ Not applicableThe financial, accounting treatment and taxation involved in the Company's shareholding plan shall be implemented accordingto laws and regulations and normative documents on financial systems, accounting standards, taxation systems, etc. The holder of theshareholding plan shall pay the personal income tax generated due to the shareholding plan according to law, and can choose to sellthe corresponding amount of shares to the shareholding plan to cover personal income tax. The remaining shares will be attributed to
individuals.Termination of Employee Stock Ownership Plan during the Reporting Period? Applicable □ Not applicable
Based on the agreements under the Phase 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. In March 2024, shares attributed to the Company in thescheme of the current period were sold.
3. Other Employee Incentives
□ Applicable ?Not Applicable
XII. Construction and Implementation of Internal Control System During the ReportingPeriod
1. Construction and Implementation of Internal Control System
In accordance with the provisions of internal control standard system, the Company establishes, improves and effectivelyimplements internal controls, reasonably ensures the legal compliance of business management, asset security, authenticity andintegrity of financial statements and relevant information, improves business efficiency and effectiveness, and promotes the realizationof development strategy.
2. Material Internal Control Weaknesses Identified in the Reporting Period
□Yes ?No
XIII. Management and Control of Subsidiaries by the Company During the Reporting Period
□ Applicable ?Not Applicable
XIV. Internal Control Evaluation Report or Independent Auditor's Report on InternalControls
1. Internal Control Evaluation Report
Disclosure date of the internal controlself-evaluation report
April 30, 2024Index to the disclosed internal controlself-evaluation report
http://www.cninfo.com.cnEvaluated entities combined assets as apercentage of consolidated total assets
98%Evaluated entities combined revenue as apercentage of consolidated revenue
98%Identification standards for internal control weaknessesCategory
Weaknesses in internal controls over
financial reporting
Weaknesses in internal controls not
related to financial reportingNature standard
Material weaknesses: (1) an invalidcontrol environment; (2) fraud of
Material weaknesses: (1) materialviolations of the country's laws or
directors, supervisors and seniormanagement; (3) any materialmisstatement of financial reporting of thecurrent period which is identified by theregistered accountants but which theCompany failed to report; and (4) invalidinternal control supervision by the AuditCommittee and the internal audit organ.Serious weaknesses: A single weaknessor a group of weaknesses which are lessserious than a material weakness butcould still cause deviation from thecontrol objectivesCommon weaknesses: Other internalcontrol weaknesses that are neithermaterial nor serious
regulations in the Company's operatingactivities; (2) any material decision-making error that is caused by anirrational decision-making procedure andcauses material property loss to theCompany; (3) a massive loss of the keymanagerial or technical personnel; and (4)frequent negative news coverage thatcauses great concern for the regulatoryadministration and a material long-lastingimpact on the Company's brand andreputation.Serious weaknesses: A single weaknessor a group of weaknesses which are lessserious than a material weakness butcould still cause deviation from thecontrol objectivesCommon weaknesses: Other internalcontrol weaknesses that are neithermaterial nor seriousQuantitative standard
Material weaknesses: misstatements ≥5%of profit before tax;Serious weaknesses: 3% of profit beforetax ≤misstatements <5% of profit beforetax;Common weaknesses: misstatements<3% of profit before tax
Not applicableNumber of material weaknesses ininternal controls over financial reporting
NoneNumber of material weaknesses ininternal controls not related to financialreporting
NoneNumber of serious weaknesses ininternal controls over financial reporting
NoneNumber of serious weaknesses ininternal controls not related to financialreporting
None
2. Independent Auditor's Report on Internal Controls
? Applicable □ Not applicable
Opinion paragraph in the independent auditor's report on internal controlsIn our opinion, TCL Technology Group Corporation maintained, in all material respects, effective internal control over financialreporting as of December 31, 2023, based on the Basic Rules on Enterprise Internal Controls and other applicable rules.Independent auditor's report on internalcontrols disclosed or not
The Internal Control Audit Report of TCL Technology Group Corporation disclosed atwww.cninfo.com.cn dated April 30, 2024Disclosure dateApril 30, 2024Index to such report disclosedhttp://www.cninfo.com.cnType of the auditor's opinion Unmodified opinionsMaterial weaknesses in internal controlsnot related to financial reporting
NoIndicate whether any modified opinion is expressed in the independent auditor's report on the Company's internal controls.
□Yes ?No
Indicate whether the independent auditor's report on the Company's internal controls is consistent with the internal control self-evaluation report issued by the Company's Board.? Yes □ No
XV. Ad-hoc self-inspection and rectification for corporate governance of listed companiesNot applicable
Part V Environmental and Social ResponsibilityI. Major Environmental IssuesWhether the listed company and its subsidiaries are major polluters announced by the environmental protection department? Yes □ NoIndustrial Discharge Standards, and Details on Pollutant Discharge from Production and Operation
Name of theCompany orsubsidiary
Keypollutantsand types ofspecificpollutants
Majorpollutants
Way ofdischarge
Numberofdischarge outlets
Distributionof discharge
outlets
Dischargeintensity
Governingdischargestandards
Total discharge
Approvedtotaldischarge
Excessivedischa
rgeSuzhou ChinaStarOptoelectronicsTechnology Co.,Ltd.
Waste waterpollutants
COD
Continuouslydischarged toCSOTEnvironmental TechnologyWastewaterTreatmentPlant
WithinSuzhouCSOTSewageTreatmentPlant
86.92mg/L 500mg/L 106.37t 129.6t None
10.67mg/L 100mg/L 22.73t 449.82t NoneAmmonianitrogen
1 1.15mg/L 6mg/L 3.34t 22.68t None
Suzhou ChinaStarOptoelectronicsDisplay Co., Ltd.
Waste waterpollutants
COD
Continuouslydischarged toSuzhouIndustrialPark FirstSewageTreatmentPlant
South gateof the plantarea
15.539mg/
L
500mg/L 2.7694t 96.335t NoneAmmonianitrogen
1 0.316mg/L 45mg/L 0.0349t 5.65t None
TCL China StarOptoelectronicsTechnology Co.,Ltd.
Waste waterpollutants
COD
Discharged toGuangmingSewage Plant
North of theplant area
153mg/L 260mg/L 105.694t 2071.12t NoneCOD
Discharge toMaozhouRiver
Artificialwetland
15mg/L 30mg/L 52.108t 174.89t NoneWaste gaspollutants
Nitrogenoxides
Discharged totheatmosphere inan organizedmanner
50 Plant roof 1.5mg/Nm
120mg/Nm
5.57t None None
Shenzhen ChinaStarOptoelectronicsDisplayTechnology Co.,Ltd.
Waste waterpollutants
COD
Discharged toGuangmingSewage Plant
Southeastcorner ofthe plant
42mg/L 110mg/L 252.725t 1077.8t NoneWaste gaspollutants
Nitrogenoxides
Discharged totheatmosphere inan organizedmanner
10 Plant roof 4.4mg/Nm
120mg/Nm
21.31t 38.86t None
Wuhan ChinaStarOptoelectronicsTechnology Co.,Ltd. (t3)
Waste waterpollutants
COD
Continuousdischarge
1 t3
Northwestcorner ofthe plant
8.52mg/L 400mg/L 88.62t 315.78t NoneAmmonianitrogen
1 0.165mg/L 30mg/L 0.83t 31.579t NoneWaste gaspollutants
Nitrogenoxides
Continuousdischarge
t3Northwest
89.5 mg/m3150 mg/m32.43t 10.17t None
Name of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Majorpollutants
Way ofdischarge
Number
ofdischarge outlets
Distributionof discharge
outlets
Dischargeintensity
Governingdischargestandards
Total discharge
Approvedtotaldischarge
Excessivedischa
rgecorner ofthe plantWuhan ChinaStarOptoelectronicsTechnology Co.,Ltd. (t5)
Waste waterpollutants
COD
Continuousdischarge
1 t5
Northeastern corner ofthe plant
8.3233mg/
L
400mg/L 12.31t 524.56t NoneAmmonianitrogen
0.2767mg/
L
30mg/L 0.41t 52.456t NoneWuhan ChinaStarOptoelectronicsDisplayTechnology Co.,Ltd. (t4)
Waste waterpollutants
COD
Continuousdischarge
1 t4
Northwestcorner ofthe plant
8.52mg/L 400mg/L 353.566125t 570.8t None
Ammonianitrogen
1 0.165mg/L 30mg/L 1.31t 57.1t NoneWaste gaspollutants
Nitrogenoxides
Continuousdischarge
t4Northwestcorner ofthe plant
Notinspected
150 mg/m3/ 2.021t None
TianJinZhonghuanAdvancedMaterial&Technology Co., Ltd.
Waste waterpollutants
Chemicaloxygenrequirement
Organized 1
Generaldischargeoutlet
As peremissionstandard
DB12/356-
2018Comprehensive SewageDischargeStandard
160.84t 411.02t None
Ammonianitrogen
Organized 1
Generaldischargeoutlet
DB12/356-
2018Comprehensive SewageDischargeStandard
6.53t 22.17t None
Tianjin Huan'OuMaterial&Technology Co., Ltd.
Waste waterpollutants
Chemicaloxygenrequirement
Organized 1
Generaldischargeoutlet
As peremissionstandard
DB12/356-
2018Comprehen
siveSewageDischargeStandard
3.47t 42.19t None
Ammonianitrogen
Organized 1
Generaldischargeoutlet
0.03t 2.14t None
Totalnitrogen
Organized 1
Generaldischargeoutlet
1.779t 2.7t None
Tianjin HuanzhiNew EnergyTechnology Co.,Ltd.
Waste waterpollutants
Chemicaloxygenrequirement
Organized 1
Generaldischargeoutlet
As peremissionstandard
DB12/599-
2015DischargeStandard ofPollutants
forMunicipalWastewaterTreatment
Plant
9.05t 20.08t None
Totalphosphorus
Organized 1
Generaldischargeoutlet
0.02t 0.45t None
Ammonianitrogen
Organized 1
Generaldischargeoutlet
0.09t 1.43t None
Totalnitrogen
Organized 1
Generaldischargeoutlet
0.70t 8.78t None
Tianjin HuanouNew Energy
Waste waterpollutants
Chemicaloxygen
Organized 1
Generaldischarge
As peremission
GB 39731-
2020
12.68t 147.21t None
Name of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Majorpollutants
Way ofdischarge
Number
ofdischarge outlets
Distributionof discharge
outlets
Dischargeintensity
Governingdischargestandards
Total discharge
Approved
totaldischarge
Excessivedischa
rgeTechnology Co.,Ltd
requirement
outlet standard Discharge
Standard of
WaterPollutants
forElectronic
IndustryDB12/356-
2018Comprehen
siveSewageDischargeStandard
Totalphosphorus
Organized 1
Generaldischargeoutlet
0.04t 2.19t None
Ammonianitrogen
Organized 1
Generaldischargeoutlet
0.08t 15.11t None
Totalnitrogen
Organized 1
Generaldischargeoutlet
4.75t 15.92t None
Inner MongoliaZhonghuan SolarMaterial Co.,Ltd.
Waste gaspollutants
Particulatematter,nitrogenoxides,VOCs,fluoride
Notorganizing
Multiple
Rooftops ofplants andproductionworkshops
As peremissionstandard
IntegratedEmissionStandard of
AirPollutantsGB16297-
1996
Not exceeding Standard None
Waste waterpollutants
COD,ammonianitrogen,otherspecificpollutants(totalphosphorus, pH,suspendedsolids,BOD
,fluoride)
Organized 1
Generaldischargeoutlet
As peremissionstandard
GB8978-
1996Comprehen
siveSewageDischargeStandard
Not exceeding Standard None
ZhonghuanAdvancedBandaotiTechnology Co.,Ltd.
Waste waterpollutants
Totalphosphorus
Discharged tocollectiveindustrialsewagetreatmentplant
DW001DW
As peremissionstandard
GB/T
31962
WaterQualityStandardfor SewageDischargedinto Urban
SewersGB8978-
1996Comprehensive SewageDischargeStandard
0.14t 1.39t None
Totalnitrogen
Discharged tocollectiveindustrialsewagetreatmentplant
DW001DW
9.86t 151.48t None
COD
Discharged tocollectiveindustrialsewagetreatmentplant
DW001DW
62.56t 1815.79t None
Name of theCompany orsubsidiary
Keypollutantsand types of
specificpollutants
Majorpollutants
Way ofdischarge
Number
ofdischarge outlets
Distributionof discharge
outlets
Dischargeintensity
Governingdischargestandards
Total discharge
Approvedtotaldischarge
Excessivedischa
rgeAmmonianitrogen
Discharged tocollectiveindustrialsewagetreatmentplant
DW001DW
0.11t 134.69t None
Huansheng Solar(Jiangsu) Co.,Ltd.
Waste waterpollutants
Chemicaloxygenrequirement
Organized 1
Generaldischargeoutlet
Dischargedaccording
to thestandard
GB 30484-
2013DischargeStandardfor Battery
IndustryPollutants
11.43t 44.41t None
Flouride Organized 1
Generaldischargeoutlet
1.24t 1.64t None
Ammonianitrogen
Organized 1
Generaldischargeoutlet
0.002t 0.06t None
Totalnitrogen
Organized 1
Generaldischargeoutlet
0.15t 0.2t None
Totalphosphorus
Organized 1
Generaldischargeoutlet
0.004t 0.006t None
Wuxi ZhonghuanAppliedMaterials Co.,Ltd.
Waste waterpollutants
Chemicaloxygenrequirement
Discharged tourban sewagetreatmentplant
Generaldischargeoutlet
Dischargedaccording
to thestandard
GB39731-
2020DischargeStandard of
WaterPollutants
forElectronic
Industry
52.73t 72.72t None
Ammonianitrogen
Discharged tourban sewagetreatmentplant
Generaldischargeoutlet
0.19t 1.1t None
Totalnitrogen
Discharged tourban sewagetreatmentplant
Generaldischargeoutlet
4.32t 6.91t None
Totalphosphorus
Discharged tourban sewagetreatmentplant
Generaldischargeoutlet
0.36t 0.55t None
Disposing of pollutants
During the Reporting Period, the pollutants generated by the Company and its subsidiaries were discharged in accordance with therequirements of the pollutant discharge permit after treated by corresponding pollutant treatment facilities. All kinds of pollutanttreatment facilities were in normal operation, and there were no incidents of notification or punishment received from governmentenvironmental supervision agencies. The discharge and disposal of waste water, waste gas, solid waste, and plant boundary noisegenerated in the operating process complied with the laws and 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 domestic waste water isdischarged into the local municipal sewage treatment pipe network after being pre-treated with oil separation and septic treatment;industrial waste water enters different treatment systems according to its characteristics, and is discharged after physical, chemical andbiochemical treatment.
The air pollutants produced by the Company are mainly process waste gas in the production process. For different types of wastegases, the Company has constructed corresponding waste gas treatment systems, such as a waste gas stripping system, acidic waste gastreatment system, alkaline waste gas treatment system, organic waste gas treatment system, waste gas treatment system for waste watertreatment station, etc. For the collection of waste gases through pipelines to the corresponding waste gas treatment system, where wastegases are discharged at a high altitude after meeting relative standards. The concentration and total amount of waste water and exhaustgas discharged meet the relevant national and local standards.
The solid wastes generated by the Company include general waste, hazardous waste and domestic garbage, of which, hazardouswastes are treated by an entrusted qualified hazardous waste disposal agency according to the regulations; general wastes are recycledand disposed of by a resource recycling manufacturer after being classified in the plant area; domestic garbage is handed over byqualified units to a domestic garbage landfill for sanitary landfill. All of the above disposals have been carried out according to lawsand regulations.
The factory noises generated by the Company come from the mechanical noises of production and power equipment, includingrefrigerators, cooling towers, air compressors, fans, various pumps, etc. The Company reduces the impact of noise on the surroundingenvironment by the use of low-noise equipment, vibration reduction, noise reduction, etc., and noise reduction measures such as soundinsulation and sound absorption in the factories and equipment rooms. The monitoring results show that the Company's factory noiseemissions can stably reach the standards.
Environmental Self-Monitoring Program
The Company implements on-line monitoring of various pollutants based on the environmental impact assessment approval andpollution discharge permit, clarifies monitoring indicators, execution standards and their limits, conducts quarterly testing of variouspollution factors such as waste water/waste gas/underground water/plant boundary noise, and develops a self-monitoring plan basedon the Company's own situation, as well as regularly employing qualified third party to test various pollution factors with the reportskept on file. In addition to self-monitoring, the local environmental protection department also infrequently supervises theenvironmental testing to ensure that emissions meet standards.
Emergency Response Plan for Environmental Incidents
The Company regularly carries out environmental risk assessment and emergency material survey, prepares an EmergencyResponse Plan for Environmental Incidents and submits it to the local environmental protection department for recordation after beingreviewed by experts. The Company regularly delivers employee training on emergency plans and carries out emergency drills forenvironmental emergencies to ensure timely and accurate response to environmental pollution emergencies.
The Plan shall be subject to changes in line with the actual situation and changes of various companies under the Group in a timelymanner, and shall be prepared again in case of major changes or after every 3 years.
Relevant information on investments in environmental governance and protection and payments of environmental protection taxes
The Company pays the environmental protection taxes every quarter by the Financial Department, and the investments inenvironmental protection are calculated on an annual basis.
Measures 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 requirements of "emission peak"
and "carbon neutrality", the Company officially issued a Carbon Neutrality White Paper on the GPC 2023 on July 6, 2023, and unveiledthe TCL Green, an action plan for carbon neutrality, making a "3050" pledge to achieve emission peak by 2030 and carbon neutralityby 2050. To deliver this commitment, TCL TECH. established an ad-hoc climate change response team, developed well-defined carbonreduction pathway and greenhouse gas management strategies, and continuously increased the use of renewable energy and the overallenergy efficiency. TCL Technology Group managed its overall greenhouse gas emissions from five aspects: supervision of carbonaccounting, carbon reduction management, carbon asset pooling, carbon trading services and carbon finance support. In addition, theCompany also carried out the ISO 14064 Greenhouse Gas Accounting and Verification through third-party agencies, completed 2023carbon verification and developed relevant improvement measures, as well as conducted annual self-evaluation to ensure the targetsachieved.In terms of energy management, a sound energy management system has been established for the main subsidiaries of TCL TECH.,with multiple measures to proactively tap into the technology alternatives to reduce energy consumption. The Company also passedthe ISO50001 certification. The units of TCL CSOT have implemented measures to reduce energy consumptions by process-basedenergy savings, energy conservation management and parameters optimization. In 2023, the Company carried out 638 energyconservation projects, saving 499 million kWh, and reducing carbon emission of 28.46 tons. Besides, TZE took an active stance todevelop energy conservation technologies to enhance its capabilities in saving energy and water in a full scale. In 2023, the Companycarried out 57 water conservation projects, saving 65 million kWh and saving 11.0759 million m? of water.Companies under TCL TECH. continue to develop and utilize renewable energy. TCL CSOT maximized its rollout of the rooftopPV. At the end of the Reporting Period, TCL CSOT has self-built capacity of 123.79MW generating a total of 100,486.33Mwh, andpurchased 42.45 million kWh green power certificate in 2023. TZE has set "100% renewable electricity" as its commitment tosustainable development and a long-term goal for production and operation electricity consumption. In 2023, it achieved 100%coverage of distributed photovoltaic power generation systems on rooftops of its plants. It plans to build photovoltaic power stationswith a total capacity of over 4GW by 2027 to directly supply its plants in Inner Mongolia and Ningxia, and to build a greenmanufacturing system featuring high efficiency, cleanness, low carbon, and circulation, and to set a benchmark of zero-carbon plantsworldwide.TCL Technology prioritizes the R&D of clean technologies and the manufacturing of environmentally friendly, low-carbonproducts. These initiatives are considered a critical pillar for achieving sustainable development and a key strategic focus for theCompany's overall operations. The Company continuously updates green product design and production technologies, and promotesenergy transformation. Ten display panels manufactured by TCL CSOT have been awarded the title of "Green Design Product" selectedon the Ministry of Industry and Information Technology's "Green Manufacturing List", and TCL CSOT Shenzhen has been recognizedas a "National Demonstration Enterprise for Green Design of Industrial Products". TZE's G12 and shingle solar panels have both been
certified for their carbon footprint by authoritative institutions, offering customers products that are both high-performing and low-carbon. Based on life cycle assessments, TZE's annual photovoltaic product shipments contribute significantly to a clean energy future.These products are estimated to generate over 4 trillion kWh of clean electricity throughout their life cycle, which translates to areduction of approximately 2 billion tons of carbon dioxide equivalent emissions, which aligns with the Company's commitment to"zero-carbon energy" and drives carbon neutrality across the value chain ecosystem.In December 2023, TCL attended the Blue Zone Finance Event of the 28th Conference of the Parties (COP28) to the UnitedNations Framework Convention on Climate Change (UNFCCC) and delivered a keynote speech. TCL shared its corporate strategiesin response to climate change and its practical experiences in achieving sustainable development. The Company joined hands withglobal enterprises to engage in climate action, exploring green financial solutions to address climate change and biodiversity crises ina collaborative manner.Other environment information that should be publicly disclosedNone
II. Social ResponsibilityTCL TECH. actively responds to national calls and focuses on four major areas (i.e. science and technology, education, culture,and targeted relief), continuously strengthens investment in public charitable undertakings, integrates public charitable resources, andcontributes to promoting social equity, consolidating and expanding achievements of poverty alleviation and, and achieving ruralrevitalization and common prosperity. Leveraging its industrial strengths and resources, the Company has launched a series ofinitiatives, including "TCL Photovoltaic Low-Carbon Campus," "TCL Smart Classroom," "A.I. Homecoming," and "Little Music+."Upholding the development concept of "dual-carbon", the TCL Charity Foundation has partnered with TZE to spearhead the"TCL Photovoltaic Low-Carbon Campus" program since 2022. In 2023, the foundation implemented a multifaceted photovoltaicinitiative to promote sustainable development and education in Inner Mongolia, including donating photovoltaic rooftop powergeneration systems and their associated 25-year electricity generation income to nine schools in Hohhot and Linger County. A pilotproject was also established at Hohhot No. 1 Middle School through a social value investment approach. Building on this foundationof rural and urban deployments, the project expands its reach to encompass diverse scenarios. It further aims to foster photovoltaicenvironmental education and establish a systematic new model for photovoltaic-assisted education, and advance the deep integrationof science and technology with public welfare undertakings.
To facilitate the integration between technologies and public wellness and empower education equality with technologies, TCLCharity Foundation establishes TCL Smart Classrooms in urban and rural schools, including smart instructional equipment andsoftware, to build multimedia smart classrooms, tailored and simultaneous classrooms between "urban and rural areas". In 2023, TCLSmart Classrooms successfully implemented at several schools, including Shenzhen Nanshan No. 2 Foreign Language School (Group)
Hyde School, Chiwan School, and Guangxi Guilin Longsheng Experiment Middle School, benefiting over 5,800 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, bringingtogether children from rural schools, to improve their wellbeing and help them with growing up. In 2023, the Foundation distributedover 300 customized "Eagle Storytelling Machines" to left-behind children and migrant children; the sixth batches of pilot schoolswere selected for the "Eagle Story Club" project. A total of 34 schools from 16 provinces including Xinjiang, Tibet, Guizhou, wereselected as the "Eagle Story Club" pilot schools, and a total of 173 story boxes, accumulating the number to 293, were distributed,benefiting more than 26,000 students.To address the shortage of high-quality music education resources for children, TCL Charity Foundation and the EducationFoundation of the Beijing Central Conservatory of Music launched the "Little Music++" project, developed and designed the "LittleSnow Music Machine", and carried out "Little Snow Music Class" in the rural schools to introduce both Chinese and internationalfamous music works and appreciation to children who lack music resources and motivate kids to develop positive and optimisticcharacters. In 2023, the sixth batches of pilot schools were selected for the "Little Snow Music Class" project. A total of 35 schoolsfrom 15 provinces including Ningxia, Guangxi, Henan, were selected as the "Little Snow Music Class" pilot schools, and a total of 179music boxes were distributed, benefiting more than 9,000 students.Demonstrating a steadfast commitment to the educational development, the TCL Charity Foundation implemented a novel,pyramid-structured university donation program at the South China University of Technology in 2022, which ensures long-term,sustainable support for institutions of higher learning. Expanding its reach in 2023, the foundation established partnerships with sixprestigious Chinese universities. Through these collaborations, the TCL Charity Foundation provided funding for nine TCL Scienceand Technology Innovation Fund projects, awarded five TCL Young Scholar fellowships, and supported 198 students through theHuameng Scholarship program.III. Consolidating and Extending the Achievements of Poverty Alleviation and PushingForward Rural Revitalisation
To promote the development of rural education, TCL Charity Foundation continues to implement the "TCL Hope ProjectCandlelight Award Plan" to recruit and encourage rural teachers to stay in their jobs and contribute to rural education. The projectsolicited excellent teachers across the country. Each of the winners received a personal award worth RMB9,500, including a cashreward and 7-day offline "Candlelight Class" training. The 9th "TCL Hope Project Candlelight Prize Program", held in 2023,recognized 400 excellent rural teachers who were selected from counties that serve as the key counties in the National RuralRevitalization, the targeted support counties of the Communist Youth League Central Committee, and the pairing support areas ofShenzhen. Since its implementation in 2013, this project has been successfully implemented for nine sessions, with project applicants
from 523 counties in 23 provinces across the country. More than 3400 outstanding rural teachers from 3000 schools have won theawards. A total investment of over RMB46 million has been made in this project.In addition, TCL Charity Foundation continued to launch projects such as targeted assistance and community charity. It supported,consolidated and expanded the poverty alleviation achievements, built harmonious urban and rural communities, and contributed tosocial equity and harmonious development. With a focus on rural communities, the Company supported rural development throughfinancial donations. It has carried out donation activities in targeted poverty alleviation villages in Guizhou, Ningxia, and Huizhou.The Company promoted rural revitalization through cultural co-creation, and developed the "TCL? Chen Xiangbo Aesthetic EducationSpace" in No. 325 village, Xunwu County, Jiangxi Province, to carry out various cultural and artistic activities in the immersive spaceso as to improve 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 of Qinghai Keba", to push theprogress of cultural and ethical development in rural areas from multiple dimensions.
Part VI Significant EventsI. Fulfillment of Commitments
1. Commitments of the Company's Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Entities Fulfilled
in the Reporting Period or Overdue at the Period-End? Applicable □ Not applicable
Commitment Promisor
Type ofcommitment
Details of commitment
Date ofcommitment
making
Term of commitmentFulfillment
Commitments made inrefinancing
Li Dongsheng
Abouthorizontalcompetition,related-partytransaction and
capitaloccupation
1) I shall avoid horizontal competition
between the companies, enterprises orother business organizations that Iown, control, control with others, havesignificant influence on and theCompany with its subsidiaries; and 2)I shall reduce and control transactionsof related parties between thecompanies, enterprises or otherbusiness organizations that I own,control, control with others, or havesignificant influence on and theCompany with its subsidiaries.
August 30,2013
During the tenure of
the Company'sdirector, supervisor orsenior management
In continuousperformance
Citic Securities Company Limited,Nuode Asset Management Co., Ltd.,Guotai Junan Securities Co., Ltd.,Everbright Securities Company Limited,UBS AG, Caitong Fund ManagementCo., Ltd., GF Securities Co., Ltd.,Haitong Securities Co., Ltd.,Perseverance Asset ManagementPartnership (Limited Partnership) -
Aboutrestriction onsales of shares
The shares of TCL TECH subscribedshall not be transferred within 6months from the date of listing.
December 5,
2022
6 months from thedate of listing of thenew shares (the issue
date of restricted
shares is June 26,
2023)
Fulfilled
Gaoyi Xiaofeng No. 2 Zhixin Fund,China Life Asset Management Co., Ltd.- China Life Asset Management - Bankof China - China Life Asset - PIPE2020Insurance Asset Management Product,China Southern Asset Management Co.,Ltd., Shen Ruijin, Dacheng FundManagement Co., Ltd., Golden EagleAsset Management Co., Ltd., HuaxiaLife Insurance 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.
Commitments made inselling major assets
The largest shareholder of the listedcompany and person acting in concert(Mr. Li Dongsheng and JiutianLiancheng)
About avoiding
horizontalcompetition
1. Before and after this transaction,
there was no horizontal competitionbetween me/this partnership and theenterprises controlled by me/thispartnership and TCL Group and themain businesses of its affiliatedenterprises.
2. After this transaction, I/this
partnership will take active measuresto avoid any business or activity thatcompetes or may constitutecompetition with the main business ofTCL Group and its affiliatedenterprises, and will urge theenterprises controlled by me/thispartnership to avoid any business oractivity that competes or mayconstitute competition with the mainbusiness of TCL Group and itsaffiliated enterprises.
3. If I/this partnership and the
enterprises controlled by me/thispartnership obtain the opportunity toengage in new business, which
December 7,
2018
During the period ofbeing the largestshareholder of the
Company
In continuousperformance
constitutes or may constitutehorizontal competition with the mainbusiness of TCL Group and itsaffiliated enterprises. I/this partnershipwill, when it is possible, try my/ourbest to make this business opportunityavailable to TCL Group or itsaffiliated enterprises in the first placebased on reasonable and fair terms andconditions.
4. If the business of mine/this
partnership and the enterprisescontrolled by me/this partnershipcoincides or may constitute horizontalcompetition with TCL Group'sbusiness due to my/this partnership'sinvestment demand or TCL Group'sbusiness development, I/thispartnership and the enterprisescontrolled by me/this partnershipagree to solve the resulting horizontalcompetition within a specific timelimit since as it is determined.
5. During the period of being the
largest shareholder of TCL Group, theaforementioned commitment isunconditional and irrevocable. If I/thispartnership violate the aforementionedcommitments, I/this partnership willmake comprehensive, timely and fulljoint and several compensation for thelosses to TCL Group caused thereby.The largest shareholder of the listedcompany and person acting in concert(Mr. Li Dongsheng and JiutianLiancheng)
Commitmentson reducing and
regulating
related partytransactions
1. I/this partnership will minimize the
related party transactions betweenme/this partnership and the enterprisescontrolled by me/this partnership andTCL Group and its affiliatedenterprises.
2. For inevitable or reasonable related
party transactions, I/this partnershipand the enterprises controlled byme/this partnership and TCL Groupand its affiliated enterprises willconduct them according to fair market
December 7,
2018
During the period of
being the largestshareholder of the
Company
In continuousperformance
principles and normal commercialconditions, so as to ensure the fairnessof the related party transaction price,and will perform the decision-makingprocedures for related partytransactions according to the law, toensure that the related partytransactions will not be used toillegally transfer TCL Group's fundsor to damage the legitimate rights andinterests of TCL Group and itsshareholders.
3. I/this partnership and the enterprises
controlled by me/this partnership willnot ask TCL Group and its affiliatedenterprises to give more favorableconditions than those that can beoffered to an independent third partyin any fair market transaction.
4. During the period of being the
largest shareholder of TCL Group, theaforementioned commitment isunconditional and irrevocable. If I/thispartnership violate the aforementionedcommitments, I/this partnership willmake comprehensive, timely and fulljoint and several compensation for thelosses to TCL Group caused thereby.
The largest shareholder of the listedcompany and person acting in concert(Mr. Li Dongsheng and JiutianLiancheng)
Commitmentson maintaining
theindependence of
listedcompanies
After this transaction, I/thispartnership will continue to exerciseshareholder's rights according to laws,regulations and the Articles ofAssociation of TCL Group, andmaintain the independence of TCLGroup in terms of assets, personnel,finance, business and institutions.I/this partnership will ensure:
(I) The independence of TCL Grouppersonnel.I/this partnership promise(s) tomaintain personnel independence withTCL Group. TCL Group's seniormanagement, including the generalmanager, deputy general manager,
December 7,
2018
During the period of
being the largestshareholder of theCompany
In continuousperformance
chief financial officer, and secretary ofthe board of directors, shall not holdpositions other than directors andsupervisors in my/this partnership'ssubordinate wholly-owned, controlledor other enterprises with actual control(hereinafter referred to as "subordinateenterprises"), and shall not be paid inmy/this partnership's subordinateenterprises. The financial personnel ofTCL Group shall not work part-time inmy/this partnership's subordinateenterprises.(II) The independence and integrity ofTCL Group's assets.
1. The independence and integrity of
TCL Group's assets.
2. TCL Group does not have any funds
or assets occupied by me/thispartnership and my/this partnership'ssubordinate enterprises.(III) The financial independence ofTCL Group.
1. TCL Group establishes an
independent financial department andan independent financial accountingsystem.
2. TCL Group has a standardized and
independent financial accountingsystem.
3. TCL Group opens an independent
bank account and does not share abank account with me/this partnership.
4. The financial personnel of TCL
Group shall not work part-time inmy/this partnership's subordinateenterprises.
5. TCL Group can make independent
financial decisions, and I/thispartnership shall not interfere with theuse of TCL Group's funds.(IV) The institutional independence ofTCL Corporation.
1. TCL Group has an independent and
complete organization which canoperate independently.
2. TCL Group's office and premises
for production and operations areseparated from my subordinateenterprises/this partnership.
3. The Board of Directors, Board of
Supervisors and various functionaldepartments of TCL Group operateindependently, and have nosubordinate relationship with thispartnership's functional departments.(V) The business independence ofTCL Group.
1. I/this partnership promise(s) to
maintain the business independence ofTCL Group after this transaction.
2. TCL Group has the assets,
personnel, qualifications and ability toindependently carry out businessactivities, and has the ability to operateindependently in the market.If TCL Group suffers losses due to theviolation of commitments under theletter of commitment by me/thispartnership or my/this partnership'ssubordinate enterprises, I/thispartnership will bear thecorresponding compensation liabilityaccording to the law.Fulfilled on time YesSpecific reasons forfailing to fulfillcommitments on time andplans for next steps
Not applicable
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.? Applicable □ Not applicable
Name ofasset orproject withan earnings
forecast
Forecaststarttime
Forecastend time
Currentforecastperformance(RMB'0,000)
Current actualperformance(RMB'0,000)
Reasons fornot reachingthe forecast
Date oforiginalforecastdisclosure
Index to originalforecast disclosure
MokaInternational Limited
January1, 2021
December31, 2023
28,76556,756
Notapplicable
December12, 2020
Announcement on theAcquisition of the100% Equity Interestsof Moka InternationalLimited & the Related-Party Transactions(2020-166)Commitments Made by the Company's Shareholders and Counterparties on the Annual Operating Performance of the Report? Applicable □ Not applicableAccording to the Assets Valuation Report for TCL Technology Group Corp. To Acquire the 100% Equity Interests of MokaInternational Limited, the net profit (hereinafter referred to as "net profit") of Moka International Limited (hereinafter referred to as"the target company") in the audited consolidated statements in 2021, 2022 and 2023 (hereinafter referred to as "performancecommitment period") is expected to be not less than RMB224.43 million, RMB246.07 million, and RMB287.65 millionrespectively.Therefore, TCL Industries Holdings (HK) Limited (hereinafter referred to as the "Transferor") commits that the cumulativenet profit of the target company during the performance commitment period is not less than RMB760 million (hereinafter referred toas the "committed net profit").
TCL Technology Investments Limited (hereinafter referred to as the "Transferee", a wholly-owned subsidiary of the Company)shall, within 4 months after the end of the performance commitment period, hire an accounting firm approved by the Transferor toconduct a special audit on the achievement of the target company's committed net profit throughout the performance commitmentperiod, and issue a special audit report. After auditing, if the net profit actually achieved by the target company during the performancecommitment period fails to reach the committed net profit, the Transferee shall notify the Transferor in writing within 10 working daysafter the issue of the special audit report agreed herein. The Transferor shall compensate the Transferee in cash within 3 months afterreceiving the written notice from the Transferee. The amount of compensation payable by the Transferor for the current period =(committed net profit - achieved net profit) ÷ committed net profit × the price of this equity transfer. Both parties further confirm thatthe accumulative amount compensated by the Transferor during the performance commitment period shall not exceed the total amountof consideration obtained by the Transferor in this equity transfer. After auditing, if the net profit actually achieved by the targetcompany exceeds the committed net profit during the performance commitment period, both parties agree to take 50% of the excess
amount as the transferor's excess performance reward (the maximum amount of excess performance reward shall not exceed 20% ofthe equity transfer price), and the Transferee shall pay this excess performance reward to the Transferor in cash within 3 months afterthe issuance of the special audit report.On April 28, 2024, the Company held its 39th meeting of the 7th Board of Directors and approved the "Proposal on the 2021-2023 Performance of Moka International Limited". For more details, please refer to the relevant announcements disclosed on the sameday as this annual report.Achievement of Performance Commitment and Its Influence on Goodwill Impairment TestsAccording to the special audit report issued by Da Hua Certified Public Accountants (Special General Partnership), the targetcompany Moka International Limited realized a net profit of RMB402.42 million, RMB510.99 million and RMB567.56 million in2021, 2022 and 2023 (performance commitment periods), respectively, which exceeded the estimated amount in the Asset EvaluationReport of the TCL Technology Group Corporation to buy 100% Equity Interests of Moka International Limited. There was no sign ofgoodwill impairment, so it is not necessary to make provision for goodwill impairment.II. Occupation of the Company, Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable ?Not Applicable
No such cases in the Reporting Period.
III. Irregularities in the Provision of Guarantees
□ Applicable ?Not Applicable
No such cases in the Reporting Period.
IV. Explanations Given by the Board of Directors Regarding the Latest Independent Auditor's"Modified Opinion" on the Financial Statements
□ Applicable ?Not Applicable
V. Explanations Given by the Board of Directors, the Supervisory Committee, and IndependentDirectors (If Any) Regarding the Independent Auditor's "Modified Opinion" on the FinancialStatements of the Reporting Period
□ Applicable ?Not Applicable
VI. YoY Changes to the Accounting Policies and Estimates or Correction of MaterialAccounting Errors? Applicable □ Not applicable
According to the relevant provisions of the Explanatory Announcement on Information Disclosure by
Companies Offering Securities to the Public No. 1 - Non-Recurring Profits and Losses (2023 Revision), any publicsubsidies that are closely related to the Company's day-to-day operations, comply with national policies, are grantedbased on established standards, and create a lasting impact on the Company's profit or loss, should be classified asrecurring profit or loss. The change did not have any material impact on the Company's financial position andoperation results.
In accordance with the Interpretation No. 15 of the Accounting Standards for Business Enterprises issued bythe Ministry of Finance, the Company implemented related requirements and retroactively adjusted relevant itemsof the financial statements during the comparable periods. Such change in accounting policies has no materialimpact on the Company's financial position and operating results.VII. YoY Changes to the Scope of the Consolidated Financial Statements
? Applicable □ Not applicable
Compared with 2022, 39 subsidiaries (24 newly incorporated and 15 acquired) are newly included in theconsolidation scope of 2023; and 18 subsidiaries (12 transferred and 6 de-registered) are excluded from theconsolidation scope of 2023.VIII. Engagement and Disengagement of Independent AuditorCurrent independent auditor:
Name of the domestic independent auditor
Da Hua Certified Public Accountants (SpecialGeneral Partnership)The Company's payment to the domestic independent auditor (RMB'0,000)
427.1
How many consecutive years the domestic independent auditor has providedaudit services for the Company
16 yearsNames of the certified public accountants from the domestic independentauditor writing signatures on the auditor's report
Jiang Xianmin and Xiong XinHow many consecutive years the certified public accountants have providedaudit services for the Company
5 years, 2 yearName of the foreign independent auditor (if any) Not applicableThe Company's payment to the foreign independent auditor (RMB'0,000) (ifany)
Not applicableHow many consecutive years the foreign independent auditor has providedaudit services for the Company (if any)
Not applicableNames of the certified public accountants from the foreign independent auditorwriting signatures on the auditor's report (if any)
Not applicableHow many consecutive years the certified public accountants have providedaudit services for the Company (if any)
Not applicableIndicate whether the independent auditor was changed for the Reporting Period.
□Yes ?No
Indicate whether the independent auditor was changed during the Audit Period.
□Yes ?No
Independent auditor, financial advisor or sponsor hired for the audit of internal control:
? Applicable □ Not applicableDuring the Reporting Period, the Company hired Da Hua Certified Public Accountants (Special General Partnership)to conduct an internal control audit, with an audit cost of RMB500,000.
IX. Delisting Faced After the Disclosure of the Annual Report
□ Applicable ?Not Applicable
X. Insolvency and Reorganization
□ Applicable ?Not Applicable
No such cases in the Reporting Period.
XI. Significant Lawsuits and Arbitrations:
□ Applicable ?Not Applicable
No such cases in the Reporting Period.
XII. Punishments and Rectifications
□ Applicable ?Not Applicable
No significant punishments or rectifications in the Reporting Period.
XIII. Credit Quality of the Company as well as its Controlling Shareholder and ActualController
□ Applicable ?Not Applicable
XIV. Major Related-Party Transactions
1 Continuing Related-Party Transactions
□ Applicable ?Not Applicable
During the Reporting Period, the Company's daily related-party transactions is found in the related announcements disclosed onwww.cninfo.com.cn.
2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ Applicable ?Not Applicable
During the Reporting Period, there is no related-party transactions regarding purchase or disposal of assets or equity investments.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable ?Not Applicable
No related-party transactions regarding significant joint investments in third parties which occurred during the Company's Reporting
Period.
4. Amounts Due to and from Related Parties
? Applicable □ Not applicableIndicate whether there were any amounts due to and from related parties for non-operating purposes.? Yes □ NoAmounts receivable due to related parties
Relatedparties
Relationshipwith theCompany
Source
Capitaloccupation for non-operatingpurposes
or not
Beginning
balance(RMB'0,0
00)
Amountof newgrants incurrentperiod(RMB'0,0
00)
Amount
ofrecoveredgrants incurrentperiod(RMB'0,000)
Couponrate
Interest incurrentperiod(RMB'0,000)
Endingbalance(RMB'0,
000)TCLIndustrialHoldingsCo., Ltd.
Relatedcorporation
Sale ofequityinvestments
No 47,040047,040- - 0
The Influence of AmountsDue to Related Parties onthe Company's OperatingResults and FinancialStatus
The Company sold equity of Chongqing Zhongxin Rongxin to TCL Industries Holdings Inc. in orderto further optimize its business structure and focus resources on the development of its primary high-tech business in line with the public policy guidance and in accordance with the needs of theCompany's announced financing projects. According to the agreement signed by both parties, TCLIndustries Holdings Inc. shall pay 51% of the equity transfer price to the Company before June 30,2022. The remaining equity transfer price will be paid before June 30, 2023. Refer to theAnnouncement 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 applicableDeposits:
Relatedparties
Relationship
with theCompany
Daily deposit
ceiling(RMB0'000)
Range of
interest
Beginning
balance(RMB'0,000)
Amount incurred in the
current period
Endingbalance(RMB'0,000)Total deposit
amount in
currentperiod(RMB0'000)
Totalwithdrawalamount in
current
period(RMB0'000)Subsidiary ofTCLIndustries
Relatedcorporation
250,000.00 0.8%-1.15% 34,186.21,193,727.71,227,883.6 30.3
HoldingsCo., Ltd.Loans:
Relatedparties
Relationshipwith theCompany
Loan limit(RMB'0,000)
Range ofinterest
Beginningbalance(RMB'0,000)
Amount incurred in thecurrent period
Endingbalance(RMB'0,000)Total loanamount incurrentperiod(RMB0'000)
Totalrepaymentamount in
current
period(RMB0'000)Subsidiary ofTCLIndustriesHoldingsCo., Ltd.
Relatedcorporation
250,000.00 - - - - -Credit or other financial business:
Related parties
Relationship with theCompany
Business type Total
Ending balance
(RMB'0,000)Subsidiary of TCLIndustries HoldingsCo., Ltd.
Related corporation
Credit granting(bill discount)
The balance ofcomprehensive crediton any day shall notexceed RMB2.5 billion(including loans, notesdiscounting, and notes
acceptance)
86,998.51Subsidiary of TCLIndustries HoldingsCo., Ltd.
Related corporation
Credit granting(bill acceptance)
35,675.18
7. Other Major Related-Party Transactions
? Applicable □ Not applicable
Title of announcement
Date of interim
disclosure
Website for disclosureAnnouncement on External Investments and Related-partyTransactions of the Subsidiary - TZE
May 17, 2023
www.cninfo.com.cn
Announcement on the Related-party Transactions with Shenzhen JucaiSupply Chain Technology Co., Ltd. in 2023
March 31, 2023Announcement on the Expected Daily Related-Party Transactions for2023
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 Launch of Accounts Receivable Factoring andthe Related-party Transaction
March 31, 2023Report on the Execution of Daily Related-Party Transactions in 2022 March 31, 2023
XV. Major Contracts and Execution Thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable ?Not Applicable
(2) Contracting
□ Applicable ?Not Applicable
(3) Leases
□Applicable ?Not Applicable
2. Major Guarantees
? Applicable □ Not applicable
Unit: RMB'0,000Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)Obligor
Disclosure date ofthe guarantee lineannouncement
Line of guarantee
Actual occurrencedate
Actual guarantee
amount
Type of guaranteeCollateral (if any)
Counterguarantee (if
any)
Term ofguarantee
Expired or not
Guarantee forrelated parties or
notTCL Industries Holdings
(HK) Limited
April 28, 2022 514,629- -
Joint liability
guarantee
/
Counter guaranteeprovided by TCLIndustrial Holding Co.,
Ltd.
- Yes YesTCL Air-Conditioner(Zhongshan) Co., Ltd.
April 28, 2022 80,991March 31, 2021 1,969
Joint liabilityguarantee
/ 78-134 days No YesTCL King ElectricalAppliances (Huizhou) Co.,
Ltd.
April 28, 2022 327,138August 29, 2019 7,332
Joint liability
guarantee
/ 241 days No YesTonly Technology Co., Ltd.April 28, 2022 39,496November 4, 2021315
Joint liability
guarantee
/ 311 days No YesTCL King ElectricalAppliances (Chengdu) Co.,
Ltd.
April 28, 2022 51,653- -
Joint liability
guarantee
/ - Yes -Huizhou TCL MobileCommunication Co., Ltd.
April 28, 2022 212,507- -
Joint liability
guarantee
/ - Yes -TCL MobileCommunication (HK)
Company Limited
April 28, 2022 29,225- -
Joint liability
guarantee
/ - Yes -TCL Home Appliances
(Hefei) Co., Ltd.
April 28, 2022 68,280- -
Joint liability
guarantee
/ - Yes -TCL Home Appliances(Zhongshan) Co., Ltd.
April 28, 2022 4,929- -
Joint liability
guarantee
/ - Yes -TCL Air Conditioner
(Wuhan) Co., Ltd.
April 28, 2022 13,480- -
Joint liability
guarantee
/ - Yes -Zhongshan TCLRefrigeration Equipment
April 28, 2022 31,749- -
Joint liability
guarantee
/ - Yes -
Co., Ltd.Guangdong TCL SmartHeating & VentilationEquipment Co., Ltd.
April 28, 2022 2,522- -
Joint liability
guarantee
/ - Yes -TCL Home Appliances
(Huizhou) Co., Ltd.
April 28, 2022 10,000- -
Joint liabilityguarantee
/ - Yes -TCL Air-Conditioner(Jiujiang) Co., Ltd.
April 28, 2022 5,488- -
Joint liabilityguarantee
/ - Yes -TCL Very LightingTechnology (Huizhou) Co.,
Ltd.
April 28, 2022 1,034- -
Joint liabilityguarantee
/ - Yes -SHIFENDAOJIA Online
Service Co., Ltd.
April 28, 2022 77- -
Joint liabilityguarantee
/ - Yes -Guangzhou TCL Science
and TechnologyDevelopment Co., Ltd.
April 28, 2022 84,700- -
Joint liabilityguarantee
/ - Yes -
Techigh CircuitTechnology (Huizhou) Co.,
Ltd.
April 28, 2022 499- -
Joint liabilityguarantee
/ - Yes -Huizhou Zhongkai TCLZhirong TechnologyMicrocredit Co., Ltd.
May 22, 2021 45,500- -
Joint liabilityguarantee
/ With counter- guarantee - Yes -Aijiexu New ElectronicDisplay Glass (Shenzhen)
Co., Ltd.
April 22, 2023 35,000 April 28, 2020 23,055.92
Joint liability
guarantee
Guarantee in proportion
to shareholding
percentage
8 years No NoHuizhou YunxinTechnology Co., Ltd.
April 22, 2023 15,000 - -
Joint liability
guarantee
With counter- guarantee - Yes -Qihang Import&ExportLimited
April 22, 2023 6,000 - -
Joint liability
guarantee
With counter- guarantee - Yes -Shenzhen Qianhai QihangSupply Chain Management
Co., Ltd.
April 22, 2023 40,000 - -
Joint liabilityguarantee
With counter- guarantee - Yes -Shenzhen Qianhai SailingInternational Supply Chain
Management Co., Ltd.
April 22, 2023 110,000 March 1, 2023 48,048
Joint liabilityguarantee
With counter- guarantee58-268 days No NoQihang InternationalImport and Export Co., Ltd.
April 22, 2023 50,000 - -
Joint liability
guarantee
/ With counter- guarantee - Yes -Inner Mongolia XinhuaBandaoti Technology Co.,
Ltd.
April 22, 2023 40,000 May 22, 2023 23,320
Joint liability
guarantee
/
Guarantee in proportion
to shareholding
percentage
6.4 years No NoInner Mongolia XinhuanSilicon Energy Technology
Co., Ltd.
April 22, 2023 180,000 June 15, 2023 132,000
Joint liability
guarantee
/
Guarantee in proportion
to shareholding
percentage
5.5 years No NoTotal approved line for such guarantees in
Reporting Period (A1)
476,000
Total actual amount of such guarantees inReporting Period (A2)
242,817Total approved line for such guarantees at the end
of the Reporting Period (A3)
1,999,897.00
Total actual balance of such guarantees at
end of Reporting Period (A4)
236,040Guarantees provided by the Company as the parent for its subsidiariesObligor
Disclosure date ofthe guarantee line
announcement
Line of guarantee
Actual occurrence
date
Actual guarantee
amount
Type of guaranteeCollateral (if any)
Counterguarantee (if
any)
Term ofguarantee
Expired or not
Guarantee forrelated parties or
notTCL MOKAINTERNATIONAL
LIMITED
April 22, 2023 176,000 June 12, 2023 17,793
Joint liability
guarantee
/ /
152 days-2.4
years
No NoTCL TechnologyInvestments Limited
April 22, 2023 400,000 July 14, 2020 212,481
Joint liabilityguarantee
/ / 1.5 years No NoTCL China StarOptoelectronicsTechnology Co., Ltd.
April 22, 2023 1,580,000
December 22,
2022
1,613,759
Joint liability
guarantee
/ /
112 days-9.0
years
No NoTCL Technology Park
(Huizhou) Co., Ltd.
April 22, 2023 97,000 - -
Joint liability
guarantee
/ / - Yes -TCL Technology Group April 22, 2023 90,000 August 31, 2022 70,000 Joint liability / / 3.7 years No No
(Tianjin) Co., Ltd.* guaranteeTCL Technology Group
Finance Co., Ltd.
April 22, 2023 200,000 - -
Joint liability
guarantee
/ / - Yes NoBeijing Hecheng Nuoxin
Technology Co., Ltd.
April 22, 2023 10,000 September 2, 202210,000
Joint liability
guarantee
/ / 246 days No NoBeijing Lingyun DataTechnology Co., Ltd.
April 22, 2023 128,000 April 21, 2023 52,497
Joint liabilityguarantee
/ / 112-238 days No NoBeijing SunpiestoreTechnology Co., Ltd.
April 22, 2023 145,000 September 2, 2022120,000
Joint liability
guarantee
/ / 246 days No NoGuangdong Juhua PrintedDisplay Technology Co.,
Ltd.
April 22, 2023 5,000 - -
Joint liability
guarantee
/ / - Yes -Guangzhou China StarOptoelectronics BandaotiDisplay Technology Co.,
Ltd.
April 22, 2023 1,750,000 March 7, 2022 994,615
Joint liabilityguarantee
/ / 1 day-6.2 years No NoHighly (Tianjin) E-Commerce Co., Ltd.
April 22, 2023 5,000 April 21, 2023 3,971
Joint liability
guarantee
/ / 112 days No NoHighly (Tianjin)Technology Co., Ltd.
April 22, 2023 115,000 April 21, 2023 96,245
Joint liability
guarantee
/ / 112 days No NoHighly InformationIndustry Co., Ltd.
April 22, 2023 554,000 May 18, 2022 328,280
Joint liabilityguarantee
/ / 19 days-1.5 yearsNo NoHuizhou China Star
OptoelectronicsTechnology Co., Ltd.
April 22, 2023 1,150,000 March 23, 2021 511,809
Joint liability
guarantee
/ / 68 days-5.2 yearsNo NoHuizhou Moka Technology
Development Co., Ltd.
April 22, 2023 55,000 - -
Joint liabilityguarantee
/ / - Yes -Moka Technology(Guangdong) Co., Ltd.
April 22, 2023 700,000 April 21, 2023 129,463
Joint liability
guarantee
/ /
112 days-5.2
years
No NoQingdao Blue Business
Consulting Co., Ltd.
April 22, 2023 5,000 June 19, 2023 389
Joint liabilityguarantee
/ / 49-237 days No NoShaanxi Titi ElectronicTechnology Co., Ltd.
April 22, 2023 10,000 September 2, 202210,000
Joint liability
guarantee
/ / 246 days No NoShenzhen China StarOptoelectronics BandaotiDisplay Technology Co.,
Ltd.
April 22, 2023 1,300,000 April 28, 2018 1,065,799
Joint liability
guarantee
/ /
112 days-5.5
years
No NoSuzhou China Star
OptoelectronicsTechnology Co., Ltd.
April 22, 2023 100,000 - -
Joint liability
guarantee
/ / - Yes -Suzhou China StarOptoelectronics Display
Co., Ltd.
April 22, 2023 265,000 August 30, 2022 50,959
Joint liability
guarantee
/ / 8.4 years No NoTianjin Printronics Circuit
Corporation
April 22, 2023 100,000 September 9, 20226,254
Joint liability
guarantee
/ / 6.7 years No NoTianjin TiTi Yunchuang
Technology Co., Ltd.
April 22, 2023 5,000 September 2, 20225,000
Joint liabilityguarantee
/ / 246 days No NoTianjin WanfangNuoxin
Technology Co., Ltd.
April 22, 2023 5,000 September 2, 20225,000
Joint liability
guarantee
/ / 246 days No NoTianjin Xincheng PilotTechnology Co., Ltd.
April 22, 2023 5,000 September 2, 20225,000
Joint liabilityguarantee
/ / 246 days No NoChina DisplayOptoelectronicsTechnology (Huizhou) Co.,
Ltd.
April 22, 2023 150,000 April 21, 2023 13,160
Joint liabilityguarantee
/ / 6-112 days No NoWuhan China StarOptoelectronics BandaotiDisplay Technology Co.,
Ltd.
April 22, 2023 1,600,000
December 22,
2017
908,268
Joint liability
guarantee
/ / 12 days-4.2 yearsNo NoWuhan China Star
OptoelectronicsTechnology Co., Ltd.
April 22, 2023 1,600,000 June 29, 2021 1,048,026
Joint liabilityguarantee
/ / 2 days-6.7 years No No
Chongqing Blue Business
Consulting Co., Ltd.
April 22, 2023 1,000 - -
Joint liabilityguarantee
/ / - Yes -China Star OptoelectronicsInternational (HK) Limited
April 22, 2023 100,000 - -
Joint liabilityguarantee
/ / - Yes -Total approved line for such guarantees inReporting Period (B1)
12,406,000
Total actual amount of such guarantees inReporting Period (B2)
3,873,168Total approved line for such guarantees at the end
of the Reporting Period (B3)
12,406,000
Total actual balance of such guarantees at
end of Reporting Period (B4)
7,278,769Guarantees provided between subsidiariesObligor
Disclosure date ofthe guarantee line
announcement
Line of guarantee
Actual occurrence
date
Actual guarantee
amount
Type of guaranteeCollateral (if any)
Counterguarantee (if
any)
Term ofguarantee
Expired or not
Guarantee forrelated parties or
notOtog Banner Huanju New
Energy Co., Ltd.
June 24, 2017 15,276August 30, 2017 15,276
Joint liability
guarantee
/ / 3.7 years No NoHuhehaote Huanju NewEnergy Development Co.,
Ltd.*
November 26, 2014 9,529
December 11,2015
9,529
Joint liability
guarantee
/ / 287 days No NoHuansheng Solar (Jiangsu)Co., Ltd.
March 22, 2021 36,000 April 1, 2021 36,000
Joint liabilityguarantee
/ / 2 years No NoHuansheng New Energy
(Jiangsu) Co., Ltd.
May 26, 2022 155,000
September 30,
2022
109,834
Joint liability
guarantee
/ / 3.8-7.5 years No NoInner Mongolia ZhonghuanCrystal Materials Co., Ltd.
March 22, 2021
May 26, 2022
542,492 April 30, 2021 423,382
Joint liability
guarantee
/ / 4.3-5.5 years No NoNingxia Zhonghuan SolarMaterial Co., Ltd.
January 23, 2022 748,000 May 30, 2022 600,000
Joint liabilityguarantee
/ / 5.4 years No NoTianjin Huanou NewEnergy Technology Co.,
Ltd
September 27, 2022 115,000
September 28,
2022
44,728
Joint liability
guarantee
/ / 5.7 years No NoTianjin Huanzhi NewEnergy Technology Co.,
Ltd.
January 21, 2021
May 26, 2022
59,703 August 2, 2021 38,603
Joint liability
guarantee
/ / 3.8-4.0 years No NoWuxi Zhonghuan AppliedMaterials Co., Ltd.
May 26, 2022 190,000 June 30, 2022 99,089
Joint liabilityguarantee
/ / 5.5 years No NoZhonghuan Energy (Inner
Mongolia) Co., Ltd.
June 24, 2017 10,120 July 21, 2017 10,120
Joint liability
guarantee
/ / 8.6 years No NoZhonghuan Hong Kong
Holding Limited
May 26, 2022 50,000 July 15, 2022 50,000
Joint liabilityguarantee
/ / 228 days No NoShenzhen China StarOptoelectronics BandaotiDisplay Technology Co.,
Ltd.
April 22, 2023 2,612,500 November 5, 20212,351,300
Joint liability
guarantee
/ / 4.4 years No NoPANEL OPTODISPLAY
TECHNOLOGYPRIVATE LIMITED
April 22, 2023 35,000 April 28, 2022 10,000
Joint liability
guarantee
/ / 3.5 years No NoTCL MOKAINTERNATIONAL
LIMITED
April 22, 2023 214,500 April 27, 2023 17,746
Joint liabilityguarantee
/ / 2.5 years No NoTotal approved line for such guarantees in
Reporting Period (C1)
2,862,000
Total actual amount of such guarantees in
Reporting Period (C2)
219,030Total approved line for such guarantees at the end
of the Reporting Period (C3)
4,793,121
Total actual balance of such guarantees at
end of Reporting Period (C4)
3,815,607Total guarantee amount (total of the three kinds of guarantees above)Total guarantee line approved in the Reporting
Period (A1+B1+C1)
15,744,000
Total actual guarantee amount in the
Reporting Period (A2+B2+C2)
4,335,016Total approved guarantee line at the end of theReporting Period (A3+B3+C3)
19,199,018
Total actual guarantee balance at the end
of the Reporting Period (A4+B4+C4)
11,330,416Total actual guarantee amount (A4+B4+C4) as % of the Company's net assets 214.10%
Of which:
Balance of guarantees provided for shareholders, the actual controller and their related parties (D) 9,616Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset
ratio (E)
1,638,911
Amount by which the total guarantee amount exceeds 50% of the Company's net assets (F) 11,330,151
Total of the three above amounts (D+E+F) 11,330,151Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees -
Guarantees provided in breach of prescribed procedures -
Note: (1) The guarantee period in the above table is the occurrence period of the principal debt. The actual guarantee is valid for two or three years from the expirationdate 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. was transferred to TCL Technology Group (Tianjin) Co., Limited,another controlling subsidiary. The Company has performed internal review procedures for the above-mentioned guarantee transfers. It's found that they did not violate the legal provisions onlisted companies, and complied with the relevant requirements of the Proposal on Providing Guarantees for Subsidiaries in 2023 reviewed and approved at the 2022 Annual General Meeting heldon April 21, 2023.
(3) In the table above, Shenzhen China Star Optoelectronics Bandaoti 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. in an external syndicated loan, in which the Company provided certain percentage of guarantee, while TCL China StarOptoelectronics Technology Co., Ltd. provided full guarantee.
(4) As at the end of the Reporting Period, the debt portion under joint guarantee amounted to RMB21.25217 billion. The joint guarantee has been filled in the "Company's Guarantee for
Subsidiaries" and "Guarantee Among Subsidiaries", respectively.
In the "guarantee among subsidiaries", the guaranteed entity and Huhehaote Huanju New Energy Development Co., Ltd. were provided with the guarantee under joint and several liability byTCL Technology Group (Tianjin) Co., Ltd. and TCL Zhonghuan Renewable Energy Technology Co., Ltd. both of which were subsidiaries. As at the end of the Reporting Period, the debt portionunder joint guarantee amounted to RMB95.29 million.
3. Entrusted Cash Asset Management
(1) Cash Entrusted for Wealth Management
? Applicable □ Not applicableOverview of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
Type Funding source Amount Undue amount
Unrecoveredoverdue amount
Impairmentallowance forunrecoveredoverdue amount ofwealthmanagementproductsBank's wealthmanagementproduct
Self-funded 1,119,219.00941,269.000 0Securities firm'swealthmanagementproduct
Self-funded 392,957.43313,146.250 0Trust plan Self-funded 326,836.67246,836.670 0Other Self-funded 74,040.0570,640.050 0
Total 1,913,053.151,571,891.970 0High-risk wealth management transactions with a significant single amount liquidity:
□ Applicable ?Not Applicable
Situation in which the Company fails to recover its principal for entrusted wealth management products, or other situations that mayresult in impairment
□ Applicable ?Not Applicable
(2) Loan Entrusted for Wealth Management
□ Applicable ?Not Applicable
During the Reporting Period, the Company did not have any entrusted loans.
4. Other Major Contracts
□ Applicable ?Not Applicable
XVI. Other Significant Events
□ Applicable ?Not Applicable
XVII. Significant Events of Subsidiaries
□ Applicable ?Not Applicable
Part VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: Share
Before change Increase/decrease in the Reporting Period (+/-) After changeShares Percentage
Newissues
Bonusshares
Sharesconvertedfrom capitalreserve
Others Subtotal Shares PercentageI. RestrictedShares
3,420,220,967 20.03% 0 0342,022,097-3,081,703,851-2,739,681,754 680,539,2133.62%
1. Shares held
by state-ownedlegal entities
877,192,981 5.14% 0 087,719,297-964,912,278-877,192,981 00.00%
2. Shares held
by otherdomesticinvestors
908,951,956 5.33% 0 090,895,196-320,533,070-229,637,874 679,314,0823.62%Among which:
Shares held bydomestic legalentities
187,134,502 1.10% 0 018,713,450-205,847,952-187,134,502 00.00%Shares held bydomesticindividuals
721,817,454 4.23% 0 072,181,746-114,685,118-42,503,372 679,314,0823.62%
3. Shares held
by foreigninvestors
197,538,186 1.15% 0 019,753,819-216,066,874-196,313,055 1,225,1310.007%Among which:
Shares held byforeign legalentities
196,783,625 1.15% 0 019,678,363-216,461,988-196,783,625 00.00%Shares held byforeignindividual
754,561 0.004% 0 075,456395,114470,570 1,225,1310.007%
4. Fund,
wealthmanagementproduct, etc.
1,436,537,844 8.41% 0 0143,653,785-1,580,191,629-1,436,537,844 00.00%II. Non-restrictedshares
13,651,670,64
79.97% 0 01,365,167,0633,081,703,8514,446,870,914 18,098,541,55496.38%
1. RMB-
denominatedordinaryshares
13,651,670,64
79.97% 0 01,365,167,0633,081,703,8514,446,870,914 18,098,541,55496.38%III. Totalshares
17,071,891,60
100.00% 0 01,707,189,16001,707,189,160 18,779,080,767100.00%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.
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
Effects of changes in shares on the basic earnings per share, diluted earnings per share, Net asset per share attributable to theCompany's ordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively? Applicable □ Not applicable
Item January - December 2023Basic earnings per share (RMB/share)
0.1195
Diluted earnings per share (RMB/share) 0.1179
Item December 31, 2023Net asset per share attributable to ordinary shareholders of the Company (RMB) 2.8Other information that the Company considers necessary or is required by the securities regulatory authorities to be disclosed
□ Applicable ?Not Applicable
2. Changes in Restricted Shares
? Applicable □ Not applicable
Unit: ShareName ofshareholder
Number ofrestricted sharesat period-begin
Number ofincreasedrestrictedshares of the
period
Number of
releasedrestrictedshares of the
period
Number ofrestrictedshares atperiod-end
Reason forrestriction
Date ofrestriction
releaseCITIC SecuritiesCo., Ltd.
280,701,754 28,070,175308,771,9290
The shares werewithin the lockupperiod of non-public offering(shares of theCompanysubscribed byinvestors in non-public offeringshall not betransferred within6 months from thedate of listing)
June 26, 2023Guotai JunanSecurities Co.,Ltd.
228,070,175 22,807,017250,877,1920EverbrightSecuritiesCompany Limited
204,678,362 20,467,836225,146,1980UBS AG 196,783,625 19,678,363216,461,9880GF Securities Co.,Ltd.
187,134,502 18,713,450205,847,9520Haitong SecuritiesCo., Ltd.
163,742,690 16,374,269180,116,9590
PerseveranceAssetManagementPartnership(LimitedPartnership) -Gaoyi XiaofengNo. 2 Zhixin Fund
131,578,947 13,157,895144,736,8420
China Life AssetManagement -Bank of China -China Life Asset -PIPE2020Insurance AssetManagementProduct
116,959,064 11,695,906128,654,9700
Shen Ruijin 108,479,532 10,847,953119,327,4850Huaxia LifeInsurance Co.,Ltd. - Self-ownedfunds
87,719,298 8,771,93096,491,2280Othershareholdersparticipating inthe non-publicoffering of theCompany
1,100,280,535 110,028,0541,210,308,5890
Others 614,092,483 66,446,7300680,539,213
Locked-up sharesof seniormanagement
Not applicableTotal3,420,220,967 347,059,5783,086,741,332680,539,213-- --
II. Issuance and Listing of Securities
1. Issuance of Securities (Preferred Shares Exclusive) in the Reporting Period
□ Applicable ?Not Applicable
2. Changes in the Total Number of Shares, Shareholder Structure, and the Structure of Assets and
Liabilities
? Applicable □ Not applicableFor Changes in the total number of shares and shareholder structure, see "I. Changes in Shares" in this part.
3. Existing Staff-Held Shares
□ Applicable ?Not Applicable
III. Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: Share
Total number of600,087Number of578,652Total number
Number of preferred
ordinaryshareholders bythe end of thereporting period
ordinaryshareholdersat the month-end prior tothe disclosureof this Report
of preferredshareholderswith resumedvoting rightsby the end ofthe reportingperiod
shareholders with resumedvoting rights at the month-end prior to the disclosureof this Report
Shareholders with 5% or above, and shareholdings of top 10 shareholders of ordinary shares (excluding the lending of shares under refinancingName ofshareholder
Nature ofshareholder
Shareholdingpercentage(%)
Number ofshares held atthe period-end
Increase/decrease duringthe ReportingPeriod
Number ofrestrictedshares held
Number of non-
restrictedordinary shares
held
Shares in pledge,marked or frozenStatus NumberLi Dongsheng
Domesticindividual/Domesticgenerallegal entity
6.73% 1,264,053,189104,968,170672,868,839591,184,350
Ningbo JiutianLianchengEquityInvestmentPartnership(LimitedPartnership)
Pledge 293,668,015Hong KongSecuritiesClearingCompany Ltd.
Foreignlegal entity
5.53% 1,037,612,543649,114,0661,037,612,543HuizhouInvestmentHolding Co.,Ltd.
Municipallegal entity
4.35% 817,453,824 95,313,984817,453,824Wuhan OpticsValleyIndustrialInvestment Co.,Ltd.
Provinciallegal entity
2.83% 532,003,016 403,690,620532,003,016 Pledge 249,000,000China SecuritiesFinanceCorporationLimited
Domesticgenerallegal entity
2.19% 410,554,710 37,323,157410,554,710PerseveranceAssetManagementPartnership(LimitedPartnership) -Gaoyi XiaofengNo. 2 ZhixinFund
Fund,wealthmanagement product,etc.
1.21% 226,736,51295,157,565226,736,512
CITICSecurities Co.,Ltd.
FinancialInstitution
1.20% 225,726,798-61,957,556225,726,798Bank of ChinaLimited -Huatai-Pinebridge CSIPhotovoltaicIndustry ETF
Fund,wealthmanagement product,etc.
1.09% 204,079,760204,079,760204,079,760China ForeignEconomy andTrade Trust Co.,
Fund,wealthmanagemen
0.90% 168,599,830168,599,830168,599,830
Ltd. - Foreigntrade trust -Gaoyi XiaofengHongyuanCollective FundTrust Scheme
t product,etc.
Strategic investor or generallegal entity becoming top-10ordinary shareholders due toprivate placement of newshares
Not applicable
Note on the above shareholders'associations or concertedactions
Among the top 10 shareholders, Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership(Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action. Mr. LiDongsheng holds 897,158,453 shares and Ningbo Jiutian Liancheng Equity Investment Partnership (LimitedPartnership) holds 366,894,736 shares, representing 1,264,053,189 shares in total and becoming the largestshareholder 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
Not applicable
Shareholdings of 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 QuantityHong Kong Securities ClearingCompany Ltd. 1,037,612,543
RMB-denominatedordinary shares
1,037,612,543Huizhou Investment HoldingCo., Ltd. 817,453,824
RMB-denominatedordinary shares
817,453,824Li Dongsheng
591,184,350
RMB-denominatedordinary shares
591,184,350Ningbo Jiutian LianchengEquity Investment Partnership(Limited Partnership)Wuhan Optics Valley IndustrialInvestment Co., Ltd. 532,003,016
RMB-denominatedordinary shares
532,003,016China Securities FinanceCorporation Limited 410,554,710
RMB-denominatedordinary shares
410,554,710Perseverance AssetManagement Partnership(Limited Partnership) - GaoyiXiaofeng No. 2 Zhixin Fund
226,736,512
RMB-denominatedordinary shares
226,736,512CITIC Securities Co., Ltd. 225,726,798
RMB-denominatedordinary shares
225,726,798Bank of China Limited -Huatai-Pinebridge CSIPhotovoltaic Industry ETF
204,079,760
RMB-denominatedordinary shares
204,079,760China Foreign Economy and 168,599,830 RMB-168,599,830
Trade Trust Co., Ltd. - Foreigntrade trust - Gaoyi XiaofengHongyuan Collective FundTrust Scheme
denominatedordinary sharesRelated or acting-in-concertparties among top 10 non-restricted outstandingshareholders, as well asbetween top 10 non-restrictedoutstanding shareholders andtop 10 shareholders
Among the top 10 shareholders with non-restricted shares, Mr. Li Dongsheng and Ningbo Jiutian Liancheng EquityInvestment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement onConcerted Action. Mr. Li Dongsheng holds 224,289,614 non-restricted shares and Ningbo Jiutian Liancheng EquityInvestment Partnership (Limited Partnership) holds 366,894,736 non-restricted shares, representing 591,184,350non-restricted shares in total and becoming the largest shareholder of the Company.Explanation for the top 10ordinary shareholdersparticipating in securitiesmargin trading
Not applicable
Top 10 shareholders participating in the lending of shares under the refinancing business? Applicable □ Not applicable
Unit: ShareTop 10 shareholders participating in the lending of shares under the refinancing business
Name ofshareholder(full name)
Shares in the ordinary
account and creditaccount at the beginning
of the period
Shares lent underrefinancing at thebeginning of the period
that have not been
returned
Shares in the ordinaryaccount and creditaccount at the end of the
period
Shares lent underrefinancing at the end ofthe period that have notbeen returned
Totalnumber
Proportion
to total
sharecapital
Totalnumber
Proportion
to totalsharecapital
Totalnumber
Proportion
to total
sharecapital
Totalnumber
Proportion
to totalsharecapitalHuizhouInvestmentHolding Co.,Ltd.
722,139,840 4.23% 21,000,0000.12%817,453,8244.35% 0 0%Wuhan OpticsValleyIndustrialInvestmentCo., Ltd.
128,312,396 0.75% 430,240,0002.52%532,003,0162.83% 0 0%Bank of ChinaLimited -Huatai-PinebridgeCSIPhotovoltaicIndustry ETF
Unknown
(note)
Unknown
(note)
00%204,079,7601.09% 1,602,800 0.01%
Note: The regular shareholder data provided by the China Securities Depository and Clearing Corporation
Limited does not containthis information.Changes in the top 10 shareholders compared with the previous period? Applicable □ Not applicable
Unit: Share
Changes in the top 10 shareholders
compared with the end of previous period
Name of shareholder
(full name)
Addition/exit
during theReporting Period
Number of shares lent under refinancing
at the end of the period that have not
been returned
Number of shares held in the ordinaryaccount, credit account and lendingthrough refinancing that have not been
returned at the end of the periodTotal number
Proportion to total
share capital
Total number
Proportion to total
share capitalWuhan Optics ValleyIndustrial InvestmentCo., Ltd.
Addition 00%532,003,016 2.83%Perseverance AssetManagementPartnership (LimitedPartnership) - GaoyiXiaofeng No. 2Zhixin Fund
Addition 00%226,736,512 1.21%Bank of ChinaLimited - Huatai-Pinebridge CSIPhotovoltaic IndustryETF
Addition 1,602,8000.01%205,682,560 1.09%China ForeignEconomy and TradeTrust Co., Ltd. -Foreign trade trust -Gaoyi Xiaofeng HongYuan Collective FundTrust Scheme
Addition 00%168,599,830 0.90%Guotai JunanSecurities Co., Ltd.
Exit 00%8,794,061 0.05%Everbright SecuritiesCompany Limited
Exit 00%10,414,915 0.06%UBS AG Exit 00%62,073,717 0.33%GF Securities Co.,Ltd.
Exit 00%53,191,566 0.28%Haitong SecuritiesCo., Ltd.
Exit Unknown (note) Unknown (note) Unknown (note) Unknown (note)Note: The regular shareholder data provided by the China Securities Depository and Clearing Corporation Limited does not containthis information.Indicate whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Companyconducted any promissory repo during the Reporting Period.
□Yes ?No
2. The Company's Controlling Shareholders
Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting inconcert by signing the Agreement on Concerted Action, holding 1,264,053,189 shares in total and becoming the largest shareholder ofthe Company.
As per related provisions of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limitedliability company's total capital or over 50% of a joint stock company's total share capital; or, despite the ownership of less than 50%
of a limited liability company's total capital or less than 50% of a joint stock company's total number of shares, who can still prevail inthe resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to theirinterest in the limited liability company's total capital or the joint stock company's total number of shares. According to the provisionsabove, the Company has no controlling shareholder or actual controller.
Change of the controlling shareholder in the Reporting Period
□ Applicable ?Not Applicable
3. Actual Controller and Its Acting-in-Concert Parties
Explanation of The Company's Absence of Actual ControllerThe "actual controller" refers to an entity which is not a shareholder of a company but actually controls the company behaviorsthrough investment relationship, agreement or other arrangements. According to the definition above, the Company has no actualcontroller.
Whether there is any shareholder holding more than 10% of the shares at the ultimate control level of the Company
□Yes ?No
Change of the actual controller in the Reporting Period
□ Applicable ?Not Applicable
The actual controller controls the Company through trust or other asset management methods
□ Applicable ?Not Applicable
4. The cumulative number of shares pledged by the Company's controlling shareholder or the largest
shareholder and its acting-in-concert parties account for 80% of their shareholdings in the Company
□ Applicable ?Not Applicable
5. Other corporate shareholders with a holding percentage over 10%
□ Applicable ?Not Applicable
6. Limits on shareholding reduction of the Company's controlling shareholder, actual controller, reorganizer
and other commitment entities
□ Applicable ?Not Applicable
IV. Specific Implementation of Share Repurchase During the Reporting Period
Progress on any share repurchase? Applicable □ Not applicable
Disclosure
time ofthe plan
Number of sharesto be repurchased
Proportion to
total share
capital
Proposedrepurchase
amount
Proposedrepurchase
period
Purpose of
sharerepurchase
Number ofrepurchased
shares
Proportion
ofrepurchased
(shares) shares to the
underlying
sharesinvolved inthe equityincentive
plan
June 1,2023
With a totalrepurchase amountof RMB220 millionto 250 million at arepurchase price ofno more thanRMB5.78 per share(inclusive), it isestimated that thenumber of sharesthat can berepurchased will beapproximately
43.2526 million
shares based on theupper limit of thetotal repurchaseamount and theupper limit of theshare repurchaseprice
Based on theapproximately
43.2526
million ofshares that canberepurchased,the proportionof therepurchasedshares to theCompany'stotal sharecapitalapproximatelyequals to
0.23%
The totalamount ofrepurchaseshall be noless thanRMB220million(inclusive)and no morethanRMB250million(inclusive)
Within 12months afterthe 32ndMeeting oftheCompany's7th Board ofDirectorsdeliberatesandapprovesthis sharerepurchaseplan
For employeestockownershipplans orequityincentives
64,992,964 -
November
29, 2023
With a totalrepurchase amountof RMB400 millionto 600 million at arepurchase price ofno more thanRMB6.04 per share(inclusive), it isestimated that thenumber of sharesthat can berepurchased will beapproximately
99.3377 million
shares based on theupper limit of thetotal repurchaseamount and theupper limit of theshare repurchaseprice
Based on theapproximately
99.3377
million ofshares that canberepurchased,the proportionof therepurchasedshares to theCompany'stotal sharecapitalapproximatelyequals to
0.53%
The totalamount ofrepurchaseshall be noless thanRMB400million(inclusive)and no morethanRMB600million(inclusive)
Within 12months afterthe 36thMeeting oftheCompany's7th Board ofDirectorsdeliberatesandapprovesthis sharerepurchaseplan
For employeestockownershipplans orequityincentives
0 -
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable ?Not Applicable
Part VIII Preferred Shares
□ Applicable ?Not Applicable
During the reporting period, the Company did not have preferred shares.
Part IX BondsI. Enterprise Bonds
□ Applicable ?Not Applicable
No enterprise bonds in the Reporting Period.II. Corporate Bonds? Applicable □ Not applicable
1. General Information on Corporate Bonds
Unit: RMB'0,000Bond name Abbr. Bond code
Date ofissuance
Valuedate
Maturity
Outstandingbalance
Couponrate
Way ofprincipalrepaymentandinterestpayment
Place oftradingTCLCorporationCorporate BondsPublicly Offeredin 2019 toQualifiedInvestors (Phase3)
19TCL03 112983.SZ
October
17,2019
October
21,2019
October21, 2024
44,0002.95%
Interestpayableannually
andprincipalrepayable
in full
uponmaturity
Shenzhen
StockExchange
TCLCorporationCorporate BondsPublicly Offeredin 2019 toQualifiedInvestors (Phase2)
19TCL02 112938.SZ
July 19,
2019
July 23,
2019
July 23,
2024
100,0003.05%
Interestpayableannually
andprincipalrepayable
in full
uponmaturity
Shenzhen
StockExchange
TCLCorporationCorporate BondsPublicly Offeredin 2019 toQualifiedInvestors (Phase1)
19TCL01 112905.SZ
May 17,
2019
May20,2019
May 20,
2024
100,0003.15%
Interestpayableannually
andprincipalrepayable
in full
uponmaturity
Shenzhen
StockExchangeInvestor eligibility (if any) For qualified investors / for professional investors; not applicable for foreign bondsApplicable trading mechanism
Match to trade, click to trade, inquire to trade, bid to trade, negotiate to trade; notapplicable for foreign bondsRisk of termination of listing and trading(if any) and countermeasures
No
Overdue bonds
□ Applicable ?Not Applicable
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
□ Applicable ?Not Applicable
3. Intermediary Organizations
Name of bondproject
Name ofintermediaryorganization
Office address
Name of signing
accountants
Contact ofintermediaryorganization
Tel.19TCL01,19TCL02,19TCL03
CITIC SecuritiesCo., Ltd.
Citic Office Tower,
48 LiangmaqiaoRoad, ChaoyangDistrict, Beijing
-
Yang Fang, Deng
Xiaoqiang,Chen Donghui,
Zhou Junren
010 -6083357519TCL01,19TCL02,19TCL03
Guotai JunanSecurities Co., Ltd.
33F, One MuseumPlace, 669 Xinzha
Road, Shanghai
-
Sun Miaoyue, Wu
Lei, Li Hongyu,Wen Xiao, Liu
Xuanhua
021-3803197919TCL01,19TCL02,19TCL03
China DevelopmentBank Securities Co.,
Ltd.
F1-8, CDBBuilding, 29Fuchengmen Outer
Avenue, XichengDistrict, Beijing
- Zhao Zhipeng 010 -88300907
19TCL01,19TCL02,19TCL03
TF Securities Co.,
Ltd.
21F, No. 2,Tianfeng Building,No.217 ZhongbeiRoad, WuchangDistrict, Wuhan
City
- Liu Yipei 027-87618889
19TCL01,19TCL02,19TCL03
Shenwan HongyuanSecurities Co., Ltd.
45F, CenturyCommercial Plaza,
No. 989 Changle
Road, XuhuiDistrict, Shanghai
-
Yang Shangjun,Ouyang Wenjian,
Cao Peixian
0755-2399694919TCL01,19TCL02,19TCL03
Beijing Jia Yuan
Law Offices
F408, Yuanyang
Building , 158Fuxingmen InnerAvenue, Beijing
-
Wen Liangjuan,
Wang Ying
010 -6641337719TCL01,19TCL02,19TCL03
Da Hua CertifiedPublic Accountants
(Special General
Partnership)
Room 1101,Building 7, No. 16Xi Si Huan Zhong
Road, HaidianDistrict, Beijing
Li Bingxin,Zhang Yuanyuan, YangChunxiang
Jiang Xianmin 0755 -82900734
19TCL01,19TCL02,19TCL03
China ChengxinInternational Credit
Rating Co., Ltd.
Building 5, Galaxy
SOHO, No. 2Nanzhugan Hutong,Chaoyangmen InnerAvenue, Dongcheng
District, Beijing
-
Jia Xiaoqi, Guo
Ziyue
010 -66428877Whether the above organizations were changed during the Reporting Period
□Yes ?No
4. Use of the Capital Raised
Unit: RMB'0,000
Name of bondproject
TotalAmount
of
Raised
Funds
UsedAmount
UnusedAmount
Operation of special fund-
raising account (if any)
Rectification of
illegal use ofraised funds
(if any)
Whetherconsistent withthe purpose,usage plan andotheragreementspromised in theprospectus19TCL03 200,000 200,000 0
Set up a fund-raising accountto ensure that the funds raised
are earmarked for special
purposes
None Consistent19TCL02 100,000 100,000 0
Set up a fund-raising accountto ensure that the funds raisedare earmarked for special
purposes
None Consistent19TCL01 100,000 100,000 0
Set up a fund-raising accountto ensure that the funds raised
are earmarked for special
purposes
None ConsistentThe raised funds were used for construction projects
□ Applicable ?Not Applicable
The Company changed the usage of above funds raised from bonds during the Reporting Period
□ Applicable ?Not Applicable
5. Adjustments of credit rating results during the Reporting Period
□ Applicable ?Not Applicable
6. The implementation and changes of guarantees, debt repayment plans and other safeguard 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 ofissuanc
e
Value
date
Maturit
y
Outstandi
ngbalance
Coup
onrate
Way ofprincipa
lrepayme
nt andinterestpayment
Place
oftradin
g2023 Mid-Term 23TCL Group 1023801FebruaFebruaFebrua150,000 4.10% Interest Inter-
Notes of TCLTechnology GroupCorporation (Phase
1) (Sci-
Tech Innovation N
otes)
MTN001 (Sci-Tech Innovation N
otes)
51 ry 3,
2023
ry 7,2023
ry 7,2026
payableannuallyandprincipalrepayable in fulluponmaturity
bankmarket
2022 Mid-TermNotes of TCLTechnology GroupCorporation (Phase
3) (Sci-
Tech Innovation Notes)
22TCL Group
MTN003 (Sci-Tech Innovation N
otes)
1022814
July 4,
2022
July 6,
2022
July 6,2025
200,000 3.45%
Interestpayableannuallyandprincipalrepayable in fulluponmaturity
Inter-bankmarket
2022 Mid-TermGreen Notes ofTCL TechnologyGroup Corporation
(Phase 2)
22TCL Group
GN002
1322800
April
25,2022
April
27,2022
April
27,2025
150,000 3.30%
Interestpayableannually
andprincipa
lrepayable in full
uponmaturity
Inter-bankmark
et
2022 Mid-Term
Notes of TCLTechnology GroupCorporation (Phase
1)
22TCL Group
MTN001
1022800
January 12,2022
January 14,2022
January 14,2025
200,000 3.45%
Interestpayableannually
andprincipa
lrepayable in full
uponmaturity
Inter-bankmark
et
2021 Mid-Term
Notes of TCLTechnology GroupCorporation (Phase
1) (High-Growth
Bonds)
21TCL GroupMTN001 (High-Growth Bonds)
1021009
May10,2021
May12,2021
May12,2024
200,000 4.15%
Interestpayableannually
andprincipa
lrepayable in full
uponmaturity
Inter-bankmark
et
Investor eligibility (if any)
Mid-term notes are issued to institutional investors in the nationalinterbank bond market (excluding those prohibited from purchasing bynational laws and regulations)Applicable trading mechanismTransaction inquiry, request for quotation and click-to-buyRisk of termination of listing and trading (if any) and
countermeasures
NoOverdue bonds
□ Applicable ?Not Applicable
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
□ Applicable ?Not Applicable
3. Intermediary Organizations
Name of bond project
Name ofintermediaryorganization
Office address
Name ofsigningaccountants
Contact ofintermediaryorganization
Tel.21TCL Group MTN001 (High-Growth Bonds),22TCL Group GN002,22TCL Group MTN003 (Sci-Tech Innovation Notes)
Industrial andCommercialBank of China
No.55FuxingmenneiAvenue,XichengDistrict, BeijingCity
- Wu Siyi
010-81012556
22TCL Group MTN001,23TCL Group MTN001 (Sci-Tech Innovation Notes)
AgriculturalBank of China
No.69JianguomeneiAvenueDongchengDistrict, BeijingCity
-
LiuZhaoying
010-8510968821TCL Group MTN001 (High-Growth Bonds),22TCL Group MTN003 (Sci-Tech Innovation Notes),23TCL Group MTN001 (Sci-Tech Innovation Notes)
ChinaConstructionBankCorporation
No.25 JinrongAvenueXichengDistrict, BeijingCity
- Zhou Peng
010 -6759647822TCL Group MTN001
Bank of ChinaLimited
No.1FuxingmenneiAvenueBeijing City
- Zhang Shun
010-6659548222TCL Group GN002
ShanghaiPudongDevelopmentBank Co., Ltd.
No.12Zhongshan East1st Road,Shanghai
- Li Yansun
021-3188409021TCL Group MTN001 (High-Growth Bonds),22TCL Group MTN001, 22TCL GroupGN002, 22TCL Group MTN003 (Sci-Tech Innovation Notes),23TCL Group MTN001 (Sci-Tech Innovation Notes)
ChinaChengxinInternationalCredit RatingCo., Ltd.
Building 5,Galaxy SOHO,No. 2NanzhuganHutong,ChaoyangmenInner Avenue,DongchengDistrict, Beijing
-
Jia Xiaoqi,Guo Ziyue
010 -66428877
21TCL Group MTN001 (High-Growth Bonds),22TCL Group MTN001, 22TCL GroupGN002, 22TCL Group MTN003 (Sci-Tech Innovation Notes),23TCL Group MTN001 (Sci-Tech Innovation Notes)
Da HuaCertifiedPublicAccountants(SpecialGeneralPartnership)
Room 1101,Building 7, No.16 Xi Si HuanZhong Road,HaidianDistrict, Beijing
QiuJunzhou,JiangXianmin,Xiong Xin
JiangXianmin
0755 -8290073421TCL Group MTN001 (High-Growth Bonds),22TCL Group MTN001, 22TCL GroupGN002, 22TCL Group MTN003 (Sci-Tech Innovation Notes),23TCL Group MTN001 (Sci-
Beijing JiaYuan LawOffices
F408,YuanyangBuilding , 158FuxingmenInner Avenue,
-
WenLiangjuan,Wang Ying
010 -66413377
Tech Innovation Notes) BeijingWhether the above organizations were changed during the Reporting Period
□Yes ?No
4. Use of the Capital Raised
Unit: RMB'0,000Name of bond project
Totalamount
of
raised
funds
Amount
spent
Unusedamount
Operation of specialfund-raising account (if
any)
Rectification of
illegal use ofraised funds (ifany)
Whether consistentwith the purpose,usage plan and otheragreements promisedin the prospectus23TCL Group
MTN001(Sci-Tech Innovation Notes)
150,000 150,000 0
Set up a fund-raisingaccount to ensure that
the funds raised areearmarked for special
purposes
None Consistent22TCL Group
MTN003(Sci-Tech Innovation Notes)
200,000 200,000 0
Set up a fund-raisingaccount to ensure that
the funds raised areearmarked for special
purposes
None Consistent
22TCL Group GN002 150,000 150,000 0
Set up a fund-raisingaccount to ensure that
the funds raised areearmarked for special
purposes
None Consistent
22TCL Group
MTN001
200,000 200,000 0
Set up a fund-raisingaccount to ensure that
the funds raised areearmarked for special
purposes
None Consistent21TCL Group
MTN001(High-Growth Bonds)
200,000 200,000 0
Set up a fund-raisingaccount to ensure that
the funds raised areearmarked for special
purposes
None ConsistentThe raised funds were used for construction projects
□ Applicable ?Not Applicable
The Company changed the usage of above funds raised from bonds during the Reporting Period
□ Applicable ?Not Applicable
5. Adjustments of credit rating results during the Reporting Period
□ Applicable ?Not Applicable
6. The implementation and changes of guarantees, debt repayment plans and other safeguard measures
regarding debt repayment during the Reporting Period, and their impact on bond investor equity
□ 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
VI. Overdue Interest-bearing Debts Other Than Bonds at Period End
□ Applicable ?Not Applicable
VII. Any Violation of Rules and Regulations During the Reporting Period
□Yes ?No
VIII. Key Accounting Data and Financial Indicators of the Company for the past two years asat the end of the Reporting Period
Item End of the Reporting Period December 31, 2022 ChangeCurrent ratio
1.03 1.09 -5.50%Debt/asset ratio
62.1%63.3%-1.23%Quick ratio
0.75 0.78 -3.85%
2023 2022 ChangeNet profit after deductingnon-recurring gains andlosses (RMB0'000)
220,705 -171,729228.52%Debt to EBITDA ratio
15.0%12.1%2.9%Interest coverage ratio 1.80 0.92 95.65%Cash coverage ratio 5.55 4.32 28.67%EBITDA coverage ratio 6.36 5.17 23.02%Debt repayment ratio100%100%0.00Interest payment ratio100%100%0.00
TCL Technology Group Corporation
Auditor’s ReportDHSZ [2024] No. 0011018521
Da Hua Certified Public Accountants (Special General
Partnership)
Da Hua Certified Public Accountants (Special General Partnership)
TCL Technology Group CorporationAuditor’s Report and Financial Statements
(January 1, 2023 to December 31, 2023)
Content
PageI. Auditor’s Report
1-8II. Audited Financial Statements
Consolidated Balance Sheet
1-2Consolidated Income Statement
Consolidated Cash Flow Statement
4-5
Consolidated Statement of Changes inShareholders’ Equity
6-7
Balance Sheet of the Parent Company
8-9Income Statement of the Parent Company
Cash Flow Statement of the Parent Company
11-12Statement of Changes in Shareholder Equity
of the Parent Company
13-14
Notes to Financial Statements
15-178
Da Hua Certified Public Accountants (Special General Partnership)Floor 12, Building 7, No. 16 Xi Si Huan Zhong Road, Haidian District, Beijing [100039]
Phone: 86 (10) 5835 0011 Fax: 86 (10) 5835 0006
www.dahua-cpa.com
Page 1
Auditor’s Report
DHSZ [2024] No. 0011018521
To all Shareholders of TCL Technology Group Corporation:
I. OpinionWe have audited the financial statements of TCL Technology GroupCorporation (the “Company”), which include the consolidated and parent’sbalance sheets as at December 31, 2023, the consolidated and parent’s statementson income, statements on cash flows and statements on changes in shareholders’equity for the year then ended, as well as the notes to these financial statements.
In our opinion, the accompanying financial statements present fairly, in allmaterial respects, the consolidated and parent’s financial position of theCompany as at December 31, 2023, and the consolidated and parent’s operationsresults and cash flows the year then ended in accordance with the AccountingStandards for Business Enterprises.
II. Basis for Opinion
We conducted our audits in accordance with the Audit Standards forChinese Registered Accountants. Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for Audit of FinancialStatements section of our report. We are independent of the Company inaccordance with the China Code of Ethics for Certified Public Accountants, andwe have fulfilled our ethical responsibilities in accordance with the said Code ofEthics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinions.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 2
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, wereof most significance in our audit of the financial statements for the current period.These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not providea separate opinion on these matters.And key audit matters identified in our audit are summarized as follows:
Revenue recognition
Please refer to the accounting policies as stated in 38. “Revenue recognition” under Note III to thefinancial statements and 57. “Revenue” under Note V to the financial statements.
Key Audit Matters Audit response
The Company’s revenue for the currentperiod was approximately RMB174.4
illion, an increase of about RMB7.8
| b |
| b |
illion from the revenue of RMB166.6billion for the previous period.As operating revenue is one of theCompany’s key operating indicatorswith the inherent risk of themanagement manipulating the revenuerecognition time point for the purposeof achieving a specific objective orexpectation, and the revenuerecognition for the current period has amaterial influence on the financialstatements, we have identified revenuerecognition as a key audit matter.
The important audit procedures we carried out in respectto revenue recognition include:
? understand and assess whether the management's
design and operation of key internal controls inrespect to revenue recognition are effective;
? understand and assess whether the management's
selection and implementation of the policies relatedto revenue recognition complied with theAccounting Standards for Business Enterprises;
? select samples of recorded transactions with revenue
for the year and examined relevant supportingdocuments involved during the transaction process,including outbound delivery orders, customer receiptrecords, sale invoices, customs declarations, bills oflading and fund receipt proofs;
? select samples of the recorded transactions with
revenue around the balance sheet date and examinedoutbound delivery orders and other supportingdocuments to assess whether the revenue has beenrecorded for the appropriate accounting period;
? obtain the Company's sale list for the year and
carried out analytic review procedures on theoperating revenue to determine how reasonablechanges in the revenue and gross profit margin forthe current period were;
? conduct confirmation procedures with key accounts
and inquired about the sales amount and the accountreceivable balance incurred for the current period;
? examine whether the information in connection with
revenue was duly presented and disclosed in thefinancial statements.Based on the audit work executed, we believe that the Company's recognition of revenue complieswith relevant re
uirements of the Accountin
| q | g |
Standards for Business Enter
rises.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 3
III. Key Audit Matters (continued)Measurement of fixed assets and construction in progress
Please refer to the accounting policies as stated in 26. "Fixed assets" and 27. "Construction inprogress" under Note III to the financial statements and 20. "Fixed assets" and 21. "Constructionin
ro
| g |
ress" under Note V to the financial statements.
Key Audit Matters Audit response
As at December 31, 2023, the totalamount of fixed assets and constructionin progress presented in the Company’sconsolidated financial statements wasRMB193.4 billion, accounting for
50.52% of the total assets. The fixed
assets and construction in progressmainly included machinery andequipment and buildings required fordisplay products, new energyphotovoltaic products and materials.Matters such as the eligibility of assetsfor capitalization, the point of time atwhich construction in progress istransferred to fixed assets anddepreciation is provisioned, and theuseful life and residual value of therespective fixed assets involvemanagement's judgment, so weidentified the measurement of fixedassets and construction in progress askey audit matters.
The important audit procedures we carried out in respectto the measurement of fixed assets and construction inprogress include:
? understand and evaluate the effectiveness of the
design of internal controls related to fixed assets andconstruction in progress, and test the effectiveness ofthe implementation of key controls;
? obtain a list of new assets in the current period, and
carry out a spot check of procurement contracts,payment documents, invoices and acceptance slipsfor large-value assets;
? obtain the new settlement statements for
construction in the current period, examine themagainst the amounts recorded in the books, andreview the accuracy and completeness of the entries;
? discuss with the management and judge the accuracy
of the point of time when the construction in progressis transferred to fixed assets and the reasonablenessof the expected useful life of fixed assets;
? inspect the construction-in-progress site when
approaching the balance sheet date, understandingand evaluate the progress of the work and checkingit against the entries in the book;
? obtain the ownership certificate of fixed assets and
the company inventory sheet, and conduct on-sitechecks of important assets;
? obtain the statement of depreciation provision for
fixed assets and recalculating whether thedepreciation has been provisioned accurately;
? examine that the information in connection with
fixed assets and construction in progress has beenduly presented and disclosed in the financialstatements.Based on the audit work executed, we believe that the Company measured the fixed assets andconstruction in progress in accordance with relevant requirements of the Accounting Standards forBusiness Enter
rises.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 4
III. Key Audit Matters (continued)Related partiesPlease refer to “XI. Related parties and related transactions”under the notes to the financialstatements.
Key Audit Matters Audit response
In 2023, the Company’s routine relatedtransactions amounted to aboutRMB36.1 billion, representing anincrease of about 19.94% from theprevious period.The integrity of the disclosure of relatedparties and related transactions, theauthenticity of related transactions andthe fairness of transaction prices willpose an important impact on the fairpresence of the financial statements.Therefore, we identify the related
alance and transactions as key mattersin this audit.
The important audit procedures we carried out in respectto related transactions include:
? Examine and evaluate the internal controls adopted
by management for identifying and disclosing therelationships between related parties and relatedtransactions, and review the effectiveness of thedesign and implementation of the internal controls;
? Acquire the statements of management on the
integrity of the relationships between related partiesand related transactions, etc., as well as the list ofrelationships between related parties provided by themanagement, and examined this with theinformation acquired from other public channels;
? Examine the customers, suppliers and other
stakeholders that deal with the Company to identifywhether there were any omissions for the relatedparties. acquire the resolutions of the board ofdirectors and the general meeting in connection withrelated transactions, examine the decision-makingauthority and procedures of the related transactions,judged the legality and compliance of the relatedtransactions, and determine whether they had beenproperly authorized and approved;
? compare the prices for selling goods to the related
parties with those of similar products sold tounrelated parties to determine the fairness of theprices of related transactions;
? acquire the incurred amount and balance details of
related transactions, and examine the financialvouchers corresponding to the transactions and theattached contracts or orders, dispatch notes,statements, invoices and bank documents for theselected specific samples; and conduct confirmationprocedures for the incurred amounts and balances ofthe related transactions with important relatedparties.Based on audit procedures conducted, we are of the opinion that management has made reasonabledisclosure on the completeness of related party relationship, authenticity of related transactionsand faireness of consideration.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 5
IV. Other InformationThe Company’s management is responsible for the other information. Otherinformation comprises all of the information included in the Company’s 2023Annual Report, but does cover the financial statements and our auditor's reportthereon.Our opinion on the financial statements does not cover other informationand we do not express any form of assurance or conclusions thereon.In connection with our audit on the financial statements, our responsibilityis to read the other information and, in doing so, consider whether the otherinformation is materially inconsistent with the financial statements or ourknowledge obtained in the audits or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is amaterial misstatement for other information, we are required to report that fact.We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged withGovernance for Financial Statements
The Company's management is responsible for the preparation of thefinancial statements that provide a fair view in accordance with the AccountingStandards for Business Enterprises, and for designing, implementing andmaintaining such internal controls as the management determines is necessary toenable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible forassessing the Company's ability to continue as a going concern, disclosing, asapplicable, matters related to going concerns and using the going concerns as abasis of accounting unless the management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing theCompany's financial reporting process.
VI. Auditor's Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement, whether dueto fraud or error, and to issue an auditor's report that states our opinions.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 6
Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with the China Independent Auditing Standardswill always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if, individually or aggregate,they could reasonably be expected to influence the economic decisions of userstaken on the basis ofthese financial statements.As part of an audit in accordance with the China Independent AuditingStandards, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
1．Identifying and assessing the risks of material misstatements in financialstatements, and whether due to fraud or error, designing and performing auditprocedures responsive to those risks, and obtaining audit evidence that issufficient and appropriate to provide a basis for our opinions. The risk of notdetecting a material misstatement resulting from fraud is higher than for oneresulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the overriding of internal controls.2．Obtaining an understanding of internal controls relevant to the audit inorder to design audit procedures that are appropriate to the circumstances.3．Evaluating the appropriateness of accounting policies used anddetermine how reasonable accounting estimates and related disclosures made bythe management are.4．Concluding on the appropriateness of the management's use of the goingconcern assumption of accounting and, based on the audit evidence obtained,drawing a conclusion on whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists,we are required by the China Independent Auditing Standards to draw users'attention in our auditor's report on the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinions. Ourconclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Companyto cease to continue as a going concern.
5．Evaluating the overall presentation, structure and content of thefinancial statements and whether the financial statements represent theunderlying transactions and events in a manner that maintains fair presentation.
Auditor’s Report DHSZ [2024] No. 0011018521
Page 7
6．Obtaining sufficient and appropriate audit evidence regarding thefinancial information of the entities or business activities within the Company toexpress an opinion on the financial statements. We are responsible for directing,supervising and performing the Company audits and undertaking fullresponsibility for audit opinions.
We communicated with those charged with governance regarding, amongother matters, the planned scope and timing of the audit and significant auditfindings, including any noteworthy deficiencies in internal controls that weidentify during our audit.
We also provided those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence, andcommunicated with them on all relationships and other matters that mayreasonably be thought to bear an impact on our independence, and whereapplicable, related safeguards.
From the matters communicated with those charged with governance, wedetermined those matters that were of most significance in the audit of thefinancial statements of the current period and these therefore constitute the keyaudit matters. We describe these matters in our auditor's report unless law orregulation precluded public disclosure about the matters or when, in extremelyrare circumstances, we determined that a matter should not be communicated inour report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interests of such communication.
(There is no text below this page)
Page 1
(There is no text on this page, which is used for the signature and seal ofAuditor’s Report DHSZ [2024] No. 0011018521)
Da Hua Certified PublicAccountants (Special General
Partnership)
Chinese CPA:
Beijing ? China
(EngagementPartner)
Jiang XianminChinese CPA:
Xiong XinApril 28, 2024
TCL Technology Group CorporationConsolidated Balance Sheet___________(RMB’000)_____________
Note V
December 31, 2023January 1, 2023
Current assets
Monetary assets
21,924,271 35,378,501Held-for-trading financial assets
23,184,117 12,703,507Derivative financial assets
108,008 361,034Notes receivable
615,392 512,849Accounts receivable
22,003,651 14,051,661Receivables financing
954,410 1,103,128Prepayments
2,946,288 3,593,857Other receivables
5,706,855 4,033,248Inventories
18,481,755 18,001,122Contract assets
343,907 315,167Held-for-sale assets
162,416 - Non-current assets due within one year
580,695 -Other current assets
5,286,534 5,438,936Total current assets
102,298,299 95,493,010Non-current assets
Debt investments
122,349 741,703Long-term receivables
720,281 631,373Long-term equity investments
25,431,271 29,256,216Investments in other equity instruments
386,648 439,996Other non-current financial assets
2,971,566 2,928,827Investment property
911,679 946,449Fixed assets
176,422,621 132,477,672Construction in progress
17,000,052 52,053,834Right-of-use assets
6,386,446 5,110,124Intangible assets
18,419,544 16,783,931Development costs
2,541,493 3,179,207Goodwill
10,516,742 9,161,852Long-term deferred expenses
3,402,689 2,744,208Deferred income tax assets
2,246,222 1,753,887Other non-current assets
13,081,184 6,293,943Total non-current assets
280,560,787 264,503,222Total assets
382,859,086 359,996,232
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment:
JingChunmeiThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Balance Sheet (Continued)___________(RMB’000)_____________
Liabilities and shareholders' equity: Note V December 31, 2023 January 1, 2023Current liabilities
Short-term borrowings 298,473,582 10,215,911Borrowings from the Central Bank30 995,010 777,676Customer deposits and deposits from otherbanks and financial institutions
31 270,929 603,423Held-for-trading financial liabilities32 251,451 861,912Derivative financial liabilities33 58,591 70,735Notes payable34 5,610,802 6,365,660Accounts payable35 29,402,493 26,381,912Advances from customers36 678 1,402Contract liabilities37 1,899,468 2,336,008Employee compensation payable38 3,034,497 2,376,933Taxes and levies payable39 861,342 1,215,591Other payables40 22,171,402 24,190,352Non-current liabilities due within one year41 24,631,659 10,957,321Other current liabilities42 1,563,245 1,185,848Total current liabilities 99,225,149 87,540,684Non-current liabilities
Long-term borrowings 43117,662,209 118,603,165Bonds payable 449,113,848 12,006,851Lease liabilities 455,737,288 4,461,383Long-term payables 462,739,444 887,763Long-term employee compensation payable3829,645 472,538Deferred income 471,540,648 2,468,145Deferred income tax liabilities 271,427,487 1,319,428Estimated liabilities 48117,395 97,522Total non-current liabilities 138,367,964 140,316,795Total liabilities 237,593,113 227,857,479Share capital 4918,779,081 17,071,892Capital reserves 5010,752,055 12,522,793Less: Treasury share 511,094,943 1,314,581Other comprehensive income 52(945,798) (811,822)Surplus reserves 533,874,006 3,712,273Specific reserves 5411,343 2,301General risk reserve 558,934 8,934Retained earnings 5621,537,188 19,486,730Total equity attributable to shareholders of theparent company
52,921,866 50,678,520Non-controlling interests 92,344,107 81,460,233Total shareholders’ equity 145,265,973 132,138,753Total liabilities and shareholders' equity 382,859,086 359,996,232
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment:
JingChunmeiThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Consolidated Income Statement___________(RMB’000)_____________
Note V 20232022I. Total revenue 174,446,172166,632,146Including: Operating revenue 57174,366,657166,552,786Interest income 5879,51579,360Less: Operating cost 57148,767,597151,925,489Interest expenditures 5819,36223,530Taxes and levies 59801,938640,302Sales expenses 602,523,6871,950,528Administrative expenses 614,783,2473,540,611R&D expenses 629,522,8388,633,638Financial expenses 633,972,7283,422,895Including: Interest expenses 4,922,1204,468,008Interest income 939,719723,665Plus: Other income 643,538,2592,917,794Return on investment 652,591,8774,731,394Including: Return on investment injoint ventures and associates
1,363,661 2,898,739Exchange gain 5851617,914Gain on changes in fair value 6627,338(139,244)Credit impairment loss 67(173,065)(37,653)Asset impairment loss 68(4,813,965)(3,486,523)Asset disposal income 69(41,416)(79,825)II. Operating profit5,184,319419,010Plus: Non-operating income 7071,285790,112Less: Non-operating expenses 71203,780152,071III. Gross profit5,051,8241,057,051Less: Income tax expenses 72271,040(731,008)IV. Net profit4,780,7841,788,059(I) Classification by business continuity
1. Net profit from continuing operations
4,780,7841,788,059
2. Net profit from discontinued operations
--(II) Classification by ownership
1. Net profit attributable to the owners of
the parent company
2,214,934261,319
2. Net profit attributable to non-controlling
interests
2,565,8501,526,740V. Other comprehensive income, net of tax
(189,220)(327,034)(I) Other comprehensive income thatcannot be subsequently reclassified into profitor loss
(48,773)(18,149)(II) Other comprehensive income that may
e subsequently reclassified into profit or lossupon satisfaction of prescribed conditions
(140,447)(308,885)VI. Total comprehensive income
4,591,5641,461,025Total comprehensive income attributable tothe shareholders of the parent company
2,080,958(141,056)Total comprehensive income attributable tonon-controlling interests
2,510,6061,602,081VII. Earnings per share
(I) Basic earnings per share (RMB yuan)
0.11950.0174
(II) Diluted earnings per share (RMB yuan)
0.11790.0168
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge of theFinancialDepartment:
JingChunmeiThe attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Consolidated Cash Flow Statement___________(RMB’000)_____________
Note V2023
2022I. Cash flow from operating activities:
Proceeds from sale of commodities and rendering of services
139,948,369 137,297,835Net increase/(decrease) in deposits from customers, banks andother financial institutions
(332,494) (62,633)Net increase/(decrease) in borrowings from the Central Bank
217,333 (659,386)Cash received from interest, handling charge and commission
79,515 79,360Tax and levy rebates
8,198,667 11,020,947Cash generated from other operating activities
6,899,258 7,955,973
Sub-total of cash generated from operating activities
155,010,648 155,632,096
Payments for commodities and services
(104,274,934) (113,465,399)Net (increase)/decrease in loans and advances to customers
(210,100) 558,603Net (increase)/decrease in deposits with the Central Bank, banks
and other financial institutions
(19,240) 36,327Cash paid to and for employees
(12,223,510) (10,696,682)Taxes and levies paid
(4,194,531) (3,916,226)Cash used in other operating activities
(8,773,577) (9,722,343)
Sub-total of cash used in operating activities
(129,695,892) (137,205,720)
Net cash generated from operating activities
25,314,756 18,426,376
II. Net cash generated from investment activities:
Proceeds from disinvestments
55,718,288 48,642,124Proceeds from return on investments
2,188,135 1,100,618Net proceeds from disposal of fixed assets, intangible assets andother long-term assets
140,305 85,502Net proceeds from disposal of subsidiaries and other businessunits
1,566,356 1,432,795Cash generated from other investing activities
1,589,202 170,387
Sub-total of cash generated from investment activities
61,202,286 51,431,426
Payments for the acquisition and construction of fixed assets,intangible assets and other long-term assets
(29,574,296) (40,762,787)Payments for investments
(71,131,067) (56,242,405)Net payments for acquiring subsidiaries and other business units
(370,928) (50,133)Cash used in other investing activities
(923,051) (1,212,074)
Subtotal of cash used in investing activities
(101,999,342) (98,267,399)Net cash used in investing activities
(40,797,056) (46,835,973)
Legal representative: Li Dongsheng
Person-in-charge ofFinancial affairs:
Li Jian
Person-in-
charge of the
Financial
Department: Jing Chunmei
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 V2023
2022
III. Cash flow generated from financing activities:
Capital contributions received3,182,627
17,981,473Including: Net capital contributions by non-
controlling interests to subsidiaries
3,182,627
8,509,514Borrowings raised61,391,001
87,581,519Net cash received from bonds issue1,500,000
7,820,000Cash generated from other financing activities78 3,950,311
272,281
Sub-total of cash generated from financingactivities
70,023,939
113,655,273
Cash paid for debt repayment
(53,877,371)
(66,503,750)Cash paid for dividend and profit distribution orrepayment of interests
(6,317,209)
(9,640,363)Including: Dividends and profit paid by
subsidiaries to minority shareholders
(423,710)
(1,691,435)Cash used in other financing activities79 (8,037,595)
(6,110,504)
Subtotal of cash used in financing activities
(68,232,175)
(82,254,617)
Net cash generated from financing activities1,791,764
31,400,656
IV. Effect of exchange rate changes on cash and cash
equivalents
11,727
602,860
V. Net increase in cash and cash equivalents(13,678,809)
3,593,919
Add: Opening balance of cash and cash equivalents33,675,624
30,081,705
VI. Ending balance of cash and cash equivalents80 19,996,815
33,675,624
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-
charge of
theFinancialDepartment:
JingChunmeiThe 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)_____________
2023Equity attributable to shareholders of the parent company
Sharecapital
Otherequityinstruments
Capitalreserves
Treasuryshare
SpecialReserves
Othercomprehensiveincome
Surplusreserves
Generalriskreserve
Undistributed
profit
Non-controlling
interests
Shareholderequity TotalI. Balance at the end of the prior year17,071,892 -12,522,793(1,314,581)2,301(811,822)3,712,2738,93419,486,73081,460,233132,138,753Add: Change in accounting policies -
----------
II. Balance at the beginning of theperiod
17,071,892 -12,522,793(1,314,581)2,301(811,822)3,712,2738,93419,486,73081,460,233132,138,753III. Movement of the period 1,707,189 -(1,770,738)219,6389,042(133,976)161,733-2,050,45810,883,87413,127,220(I) Total comprehensive income -
----(136,719)--2,214,9342,510,6064,588,821(II) Capital contributed and reducedby shareholders
- -(131,061)219,638-----8,791,1758,879,752
1. Capital contributed by
shareholders
- --------8,815,9298,815,929
2. Share-based payments included in
owners' equity
- -242,757466,809-----336,1181,045,684
3. Amount of bond issuance included
in owners' equity
- ----------
4. Others - -(373,818)(247,171)-----(360,872)(981,861)(III) Profit distribution - ---9,042-161,733-(161,733)(417,907)(408,865)
1. Appropriation of surplus reserves - -----161,733-(161,733)--
2. Appropriation of general risk
reserve
- ---32,220----76,587108,807
3. Appropriation to shareholders - --------(437,951)(437,951)
4. Others - ---(23,178)----(56,543)(79,721)(IV) Internal transfer of owner'sequity
1,707,189 -(1,707,189)--2,743--(2,743)--
1. Capitalization of capital reserves
into capital (or share capital)
1,707,189 -(1,707,189)--------
2. Other comprehensive income
transferred into retained earnings
- ----2,743--(2,743)--(V) Others - -67,512-------67,512IV. Balance as at the end of theperiod
18,779,081 -10,752,055(1,094,943)11,343(945,798)3,874,0068,93421,537,18892,344,107145,265,973
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancial affairs: Li Jian
erson-
| P | i |
n-c
arge o
| f |
the FinancialDepartment: Jing Chunmei
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationConsolidated Statement of Changes in Shareholders’ Equity (Continued)
___________(RMB’000)_____________
2022Equity attributable to shareholders of the parent company
Sharecapital
Otherequityinstruments
Capitalreserves
Treasuryshare
SpecialReserves
Othercomprehensiveincome
Surplusreserves
Generalriskreserve
Undistributedprofit
Non-controlling
interests
Shareholderequity TotalI. Balance at the end of the prior year
14,030,642 200,3346,079,267(1,885,557)1,549(409,447)2,550,1738,93422,458,34076,611,057119,645,292Add: Change in accounting policies
- -------6,8099,75316,562II. Balance at the beginning of theperiod
14,030,642 200,3346,079,267(1,885,557)1,549(409,447)2,550,1738,93422,465,14976,620,810119,661,854III. Movement of the period
3,041,250 (200,334)6,443,526570,976752(402,375)1,162,100-(2,978,420)4,839,42312,476,897(I) Total comprehensive income
- ----(415,837)--261,3191,602,0811,447,564(II) Capital contributed and reducedby shareholders
3,041,250 (200,334)7,822,900570,976-----8,109,94819,344,740
1. Capital contributed by shareholders
3,041,250 -6,668,566------8,109,94817,819,764
2. Share-based payments included in
owners' equity
- -26,55976,664------103,223
3. Amount of bond issuance included
in owners' equity
(200,334)1,127,775997,083------1,924,524
4. Others
- --(502,771)------(502,771)(III) Profit distribution
- ---752-1,162,100-(3,212,103)(2,962,104)(5,011,355)
1. Appropriation of surplus reserves
- -----1,162,100-(1,162,100)(381,108)(381,108)
2. Appropriation of general risk
reserve
- ---752-----752
3. Appropriation to shareholders
- -------(2,050,003)(2,580,996)(4,630,999)
4. Others
- ----------(IV) Internal transfer of owner'sequity
- ----13,461--(13,461)--
1. Other comprehensive income
transferred into retained earnings
- ----13,461--(13,461)--(V) Others
- -(1,379,374)-----(14,174)(1,910,502)(3,304,050)IV. Balance as at the end of theperiod
17,071,892 -12,522,793(1,314,581)2,301(811,822)3,712,2738,93419,486,73081,460,233132,138,753
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancial affairs: Li Jian
Person-in-charge ofthe FinancialDepartment: Jing Chunmei
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationBalance Sheet of the Company___________(RMB’000)_____________
assets
Note XVIIDecember 31, 2023
January 1, 2023
Current assets
Monetary assets
2,646,890 17,821,922
Held-for-trading financialassets
14,178,884 5,936,208Derivative financial assets
66 15,578Accounts receivable
350,788 353,812Prepayments
9,241 3,693
Other receivables
2 19,614,272 4,961,948Inventories
- 5,380
Other current assets
1,629 34,838
Total current assets
36,801,770 29,133,379
Non-current assets
Long-term receivables
- 1,935,365Long-term equity investments
3 79,664,992 76,360,371Investments in other equityinstruments
4 - 5,000Other non-current financialassets
5 644,300 431,023Investment property
77,364 81,034Fixed assets
34,806 32,223Construction in progress
-
-Right-of-use assets
435,915 428,575Intangible assets
96,319 109,605Long-term deferred expenses
33,005 24,069Deferred income tax assets
7 7
Total non-current assets
80,986,708 79,407,272
Total assets
117,788,478 108,540,651
Legalrepresentative: Li Dongsheng
Person-in-chargeof Financialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment: Jing Chunmei
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 XVIIDecember 31, January 1, 2023
Current liabilities
Short-term borrowings
2,124,045 1,900,169
Accounts payable
202,691 140,563Contract liabilities
6,750 308Employee compensation payable
184,320 178,097Taxes and levies payable
12,415 63,908Other payables
26,818,710 22,036,683Non-current liabilities due within one year
6,167,442 5,605,919
Other current liabilities
3,656 2,430
Total current liabilities
35,520,029 29,928,077
Non-current liabilities
Long-term borrowings
19,963,555 15,280,955Bonds payable
6,992,012 9,922,133Lease liabilities
20,816 748Long-term employee compensation payable
26,215 84,188Deferred income
53,147 53,638
Total non-current liabilities
27,055,745 25,341,662
Total liabilities
62,575,774 55,269,739
Share capital
18,779,081 17,071,892Capital reserves
16,127,030 17,715,533Less: Treasury share
1,094,943 1,314,581
Other comprehensive income
(142,055) (128,195)
Surplus reserves
3,671,942 3,510,209
Retained earnings
17,871,649 16,416,054
Total shareholders’ equity
55,212,704 53,270,912
Total liabilities and shareholders' equity
117,788,478 108,540,651
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment: Jing Chunmei
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Income Statement of the Company___________(RMB’000)_____________
Note XVII
2023 2022
I. Operating revenue
1,719,960 1,593,213
Less: Operating cost
1,197,154 1,162,807
Taxes and levies
15,213 14,531Sales expenses
32,997 54,059Administrative expenses
496,759 323,594R&D expenses
95,705 171,276Financial expenses
1,126,842 1,282,688Including: Interest expenses
1,581,566 2,252,721Interest income
346,028 771,483Plus: Other income
11,680 8,705
Return on investment
2,360,797 12,483,556Of which: Share of profit or loss of joint
ventures and associates
1,213,417 1,308,061Gain on changes in fair value
492,641 (24,134)Credit impairment loss
(1,192) (266)Asset disposal income
1,065 1,540
II. Operating profit
1,620,281 11,053,659Plus: Non-operating income
3,372 575,077Less: Non-operating expenses
6,325 7,737
III. Gross profit
1,617,328 11,620,999Less: Income tax expenses
- -
IV. Net profit
1,617,328 11,620,999
V. Other comprehensive income
(13,860) (16,001)
VI. Total comprehensive income
1,603,468 11,604,998
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge of theFinancialDepartment: Jing Chunmei
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationCash Flow Statement of the Company___________(RMB’000)_____________
Note
XVII 2023 2022
I. Cash flow from operating activities:
Proceeds from sale of commodities andrendering of services
1,540,380 1,357,318Tax and levy rebates408 1,781Cash generated from other operatingactivities
1,065,410 1,029,029
Sub-total of cash generated from operatingactivities
2,606,198 2,388,128
Payments for commodities and services
(884,951) (1,054,192)Cash paid to and for employees
(179,035) (215,412)Taxes and levies paid
(175,341) (205,575)Cash used in other operating activities(9,420,940) (12,757,279)
Sub-total of cash used in operating activities
(10,660,267) (14,232,458)
Net cash generated from operating activities
8 (8,054,069) (11,844,330)
II. Cash flow from investing activities:
Proceeds from disinvestments
17,561,714 14,882,100Proceeds from return on investments
1,359,286 10,461,727Net proceeds from disposal of fixed assets,intangible assets and other long-term assets
- 24
Sub-total of cash generated from investmentactivities
18,921,000 25,343,851
Payments for the acquisition and constructionof fixed assets, intangible assets and otherlong-term assets
(13,483) (39,001)Payments for investments
(27,016,746) (17,545,211)Cash used in other investing activities- -
Subtotal of cash used in investing activities
(27,030,229) (17,584,212)
Net cash used in investing activities
(8,109,229) 7,759,639
Legalrepresentative: Li Dongsheng
Person-in-chargeof Financialaffairs: Li Jian
Person-in-charge of theFinancialDepartment: Jing Chunmei
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 XVII2023 2022
III. Cash flow generated from financing activities:
Capital contributions received
- 9,471,959Borrowings raised
18,920,000 23,388,555Net cash received from bonds issue
1,500,000 7,820,000Cash generated from other financing activities
205,647 991,657
Sub-total of cash generated from financingactivities
20,625,647
41,672,171
Cash paid for debt repayment
(17,827,419) (26,733,600)Cash paid for distribution of dividends and
profits or repayment of interests
(1,284,988) (3,195,747)Cash used in other financing activities
(276,715) (562,962)
Subtotal of cash used in financing activities
(19,389,122) (30,492,309)
Net cash generated from financing activities
1,236,525 11,179,862
IV. Effect of exchange rate changes on cash and
cash equivalents
(1,382) 73,720
V. Net increase in cash and cash equivalents (14,928,155) 7,168,891Add: Opening balance of cash and cash equivalents
17,570,270 10,401,379
VI. Ending balance of cash and cash equivalents9 2,642,115
17,570,270
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment: Jing Chunmei
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)_____________
2023Share capital
Other equityinstruments
Capitalreserves
Treasuryshare
Othercomprehensiveincome
Surplusreserves
Retainedearnings
Totalshareholders’equity
I. Balance at the end of the prior yea
17,071,892-17,715,533(1,314,581) (128,195)3,510,20916,416,05453,270,912Add: Change in accounting policies---- ----II. Balance at the beginning of the perio
rd
17,071,892-17,715,533(1,314,581) (128,195)3,510,20916,416,05453,270,912III. Movement of the period1,707,189-(1,588,503)219,638 (13,860)161,7331,455,5951,941,792(I) Total comprehensive income---- (13,860)-1,617,3281,603,468(II) Capital contributed and reduced byshareholders
--108,217219,638 ---327,855
1. Capital contributed by owners
---- ----
2. Capital contributed by holders of other
equity instruments
---- ----
3. Share-based payments included in
owners' equity
--108,217466,809 ---575,026
4. Amount of bond issue included in
owners' equity
---- ----
5. Others
---(247,171) ---(247,171)(III) Profit distribution---- -161,733(161,733)-
1. Appropriation of surplus reserves
---- -161,733(161,733)-
2. Appropriation to shareholders
---- ----
3. Others
---- ----(IV) Internal transfer of owner's equity1,707,189-(1,707,189)- ----
1. Capitalization of capital reserves into
capital (or share capital)
1,707,189-(1,707,189)- ----(V) Others--10,469- ---10,469IV. Balance as at the end of the period18,779,081-16,127,030(1,094,943) (142,055)3,671,94217,871,64955,212,704
Legal representative: Li Dongsheng
Person-in-charge of Financialaffairs: Li Jian
Person-in-charge of the
Financial Department:Jing Chunmei
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)_____________
2022
Share capital
Other equity
instruments
Capitalreserves
Treasuryshare
Othercomprehensiveincome
SurplusreservesRetained earnings
Totalshareholders’equityI. Balance at the end of the prior year
14,030,642 200,3349,900,679(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 theperiod
3,041,250 (200,334)7,810,865570,976 (16,001)1,162,1008,394,72520,763,581(I) Total comprehensive income
- --- (16,001)-11,620,99911,604,998(II) Capital contributed and reducedby shareholders
3,041,250 (200,334)7,823,531570,976 ---11,235,423
1. Capital contributed by owners
3,041,250 -6,668,566- ---9,709,816
2. Capital contributed by holders of
other equity instruments
- --- ----
3. Share-based payments included in
owners' equity
- -27,19076,664 ---103,854
4. Amount of bond issue included in
owners' equity
- (200,334)1,127,775997,083 ---1,924,524
5. Others
- --(502,771) ---(502,771)(III) Profit distribution
- -(12,666)- -1,162,100(3,212,103)(2,062,669)
1. Appropriation of surplus reserves
- --- -1,162,100(1,162,100)-
2. Appropriation to shareholders
- --- --(2,050,003)(2,050,003)
3. Others
- -(12,666)- ---(12,666)(IV) Others
- -3,989- --(14,171)(10,182)IV. Balance as at the end of theperiod
17,071,892 -17,715,533(1,314,581) (128,195)3,510,20916,416,05453,270,912
Legalrepresentative: Li Dongsheng
Person-in-charge ofFinancial affairs: Li Jian
Person-in-charge of theFinancial Department: Jing Chunmei
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
I General information
TCL Technology Group Corporation (hereinafter referred to as “the Company”) is alimited liability company established in Huizhou on July 17, 1997. It was changed to alimited liability company as a whole in 2002 and was listed on the Shenzhen StockExchange in January 2004. After years of new share placements, non-public reissuances,conversion into share capital, exercise of options and repurchase and cancellation ofshares, etc., the registered capital and share capital of the Company wereRMB18,779,080,767 as at December 31, 2023.
The main business structure of the Company and its subsidiaries consists of display, newenergy photovoltaic and materials, industrial finance and other businesses. The relevantinformation of the Company's subsidiaries is detailed in Note VIII.
The registered address of the Company is: TCL TECH Building, 17 Huifeng Third Road,Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province.
Approval and issue: These financial statements were authorized for issue by the Company’sBoard of Directors on April 28, 2024.
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 VIII, 1, (1) “Breakdown of important subsidiaries”. For thechan
es to the sco
| p |
e of the consolidated financial statements of the Re
ortin
| g |
Period
see
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
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 transactionsand events in accordance with the "Accounting Standards for Business Enterprises - BasicStandards" published by the Ministry of Finance and specific corporate accountingstandards, application guidelines for corporate accounting standards, corporate accountingstandards interpretations and other relevant regulations (hereinafter collectively referred toas "corporate accounting standards") for confirmation and measurement, combining theprovisions of “Regulations on Information Disclosure and Compilation of CompaniesOffering Securities to the Public No. 15 - General Provisions on Financial Reports” (revisedin 2023) published by CSRC.
2 Going concern basis
The Company has evaluated the ability to continue as a going concern for 12 months fromthe end of the Reporting Period and has not identified any issues or circumstances that resultin significant 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.If an asset is impaired, provision for impairment will be made accordingly based onrelevantrules.
4 Statement of compliance with corporate accounting standards
The financial statements are in compliance with the requirements of the AccountingStandards for Business Enterprises, and truly and completely reflect the financial position,operating results, cash flow and other relevant information of the Company during theReporting 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
An operations cycle refers to a period from the purchase of assets by an enterprise forprocessing to the realization of cash or cash equivalents. The Company takes a 12 months’period as an operations cycle and take the operating cycle as the criteria for liquidityclassification of assets and liabilities.
7 Functional currency for bookkeeping
The Company uses RMB as its functional currency. Its overseas subsidiaries use thecurrencies of the main economic environment in which they operate as their respectivefunctional currencies and their financial statements are converted into RMB and presentedin RMB thousands unless otherwise specified.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
8 Method and selection basis for determining importance criteria
Item Importance criteriaThe recovery, reversal and actual write-offof bad debt provisions for importantreceivables with bad debt provisions accruedon an individual basis
The amount of an individual item is greater thanRMB50 million.Important construction in progress
The ending carrying amount of an individual itemexceeds RMB10 billion.Important non-wholly-owned subsidiaries
The total asset of non-wholly-owned subsidiariesexceeds 10% of that of the Group or the totalrevenue of non-wholly-owned subsidiariesexceeds 10% of that of the Group.Important joint ventures or associates
The carrying amount of long-term equityinvestments in a single investee exceeds 5% of thetotal asset of the Group.Important prepayments, contract liabilities,accounts payable and other payables areaged for more than 1 year
The amount of an individual item exceeds 0.5% ofthe total asset of the Group.Important capitalized research anddevelopment projects
The cumulative expenditure of an individualproject exceeds 0.5% of the total asset of theGroup.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
9 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-stepcombination conform to one or more of the following, accounting for multiple transactions is treatedas 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 withother transactions.
(2) Business combinations involving enterprises under common control
A combination of enterprises that are ultimately controlled by the same party or parties before andafter the combination on a non-temporary basis constitutes a business combination under commoncontrol.
Assets and liabilities acquired by the Company in business combination are measured at the carryingamounts of assets and liabilities of the acquired party in the consolidated financial statements of theultimate controlling party as at the date of combination (including the goodwill resulting from theacquisition of the acquired party by the ultimate controlling party). The difference between thecarrying amount of net assets acquired in the combination and that of the consideration paid for thecombination (or the total par value of shares issued) is used to adjust the share capital premium inthe capital reserve, and when the share capital premium in the capital reserve is insufficient for offset,it is used to adjust the retained earnings. If there is a contingent consideration and it is necessary toconfirm estimated liabilities or assets, the difference between the amounts of the estimated liabilitiesor assets and the settlement amount of subsequent contingent consideration is used to adjust thecapital reserve (capital premium or share capital premium), and when the capital reserve isinsufficient, 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-termequity investments and the carrying amount of long-term equity investments before the combinationplus the carrying amount of the newly paid considerations on the date of combination is used toadjust the capital reserve; and when the capital reserve is insufficient for offset, it is used to adjustthe retained earnings. For equity investments held prior to the date of combination, no accountingtreatment is carried out for other comprehensive gains recognized by equity accounting or financialinstrument confirmation and measurement standards, and up to the disposal of the investment, theaccounting treatment shall be based on the same basis as the direct disposal of the assets or liabilitiesof the invested entity; other changes in the owner’s equity other than net profit or loss, othercomprehensive income or profit distribution of net assets of the invested company recognized asequity are not subject to accounting, and will be transferred to the current profit and loss untildisposal of the investment.
(3) Business combination not under common control
A combination of enterprises that are not ultimately controlled by the same party or parties beforeand after the combination constitutes a business combination not under common control.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
Accounting treatments for business combinations involving enterprises under and not undercommon control (continued)
(3) Business combination not under common control (continued)
Assets paid and liabilities incurred or assumed by the Company as a consideration for thebusiness 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.
The difference between the higher combination cost and lower share in the fair value of netidentifiable assets of the acquired party gained in the combination is recognized asgoodwill. If the combination cost is lower than the share in the fair value of net identifiableassets of the acquired party gained in the combination, the fair values of the identifiableassets, liabilities and contingent liabilities of the acquired party gained and the measurementof the combination cost are first reviewed; and if it is reviewed that the combination cost islower than the share in the fair value of net identifiable assets of the acquired party gainedin the combination, the difference between the lower combination cost and higher share inthe fair value of net identifiable assets of the acquired party gained in the combination isincluded in current profits and losses.
In the case where a business combination not under common control is realized throughmultiple exchanges and transactions, if it is a package transaction, each transaction will beaccounted for as a transaction for acquiring control; in the case it is not a packagetransaction, if the equity investment held before the date of combination is accounted forusing equity method, the sum of the carrying amount of equity investments of the acquiredparty held before the date of acquisition, plus the new investment cost on the date ofacquisition will be recognized as the initial cost of the investment; the remainingcomprehensive income recognized in equity investments using equity method before thedate of acquisition will be recorded, when the investment is disposed of on the same basisas those the investee adopted directly to dispose of the relevant assets or liabilities. If theequity investment held before the date of combination is accounted for by financialinstrument recognition and measurement criteria, the sum of the fair value of equityinvestment on the date of combination plus the new investment cost is taken as the initialinvestment cost on the date of combination. The difference between the fair value and thecarrying amount of the original equity, and the accumulated fair value changes originallyincluded in other comprehensive income should be transferred to return on investment forthe current period of the combination date.
(4) Expenses incurred from combination
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;
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
10 Methods for judging control and preparing consolidated financial statements
(1) Criteria for judging control
Control means having the power of control over the investee, enjoying variable returns byparticipating in the relevant activities of the investee, and having the ability to use the powerover the investee to influence the amount of returns.
The Company judges whether it controls the investee based on comprehensiveconsideration of all relevant facts and circumstances. Once any change in relevant facts andcircumstances causes the relevant elements involved in the definition of control to bechanged, the Company will conduct a reassessment. The relevant facts and circumstancesmainly include:
① The purpose for which the investee is established;
② The relevant activities of the investee and how to make decisions on such activities;
③ Whether the rights enjoyed by the investor enable it to currently lead the relevant
activities of the investee;
④ Whether the investor is entitled to variable returns by participating in the relevant
activities of the investee;
⑤ Whether the investor has the ability to exercise its power over the investee to affect the
amount of return;
⑥ The relationship between the investor and other parties.
(2) Consolidation scope
The scope of consolidation of the Company’s consolidated financial statements isdetermined on the basis of control, and all subsidiaries (including separate entitiescontrolled by the Company) are included into the consolidated financial statements.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
10 Methods for judging control and preparing consolidated financial statements (continued)
(3) Consolidation procedure
The Company prepares the consolidated financial statements based on the financialstatements of itself and its subsidiaries and other relevant information. The Companyprepares the consolidated financial statements in a manner that the whole group will betreated as an accounting entity to reflect the financial position, operating results, and cashflow of the group as a whole under unified accounting policies, in accordance with therecognition, measurement and presentation requirements of relevant accounting standardsfor business enterprises.
The accounting policies and accounting periods adopted by all subsidiaries included in theconsolidated financial statements are consistent with those of the Company. If theaccounting policies or accounting periods adopted by the subsidiaries are inconsistent withthose of the Company, necessary adjustments will be made in accordance with theCompany's accounting policies and accounting periods when preparing consolidatedfinancial statements.
The impact of intracompany transactions between the Company and its subsidiaries, andintracompany transactions between subsidiaries, on the consolidated balance sheet,consolidated income statement, consolidated cash flow statement and consolidatedstatement of changes in shareholders' equity is offset in the preparation of consolidatedfinancial statements. Where a transaction is recognized by the Company or its subsidiariesas the transaction subject, which is different from that under the consolidated financialstatement of the group, the transaction should be adjusted at the group level.
If the current losses shared by the minority shareholders of a subsidiary exceed the shareenjoyed by the minority shareholder in the initial owners' equity of the subsidiary, thebalance will still reduce the minority interests.
During the Reporting Period, if a subsidiary or business is added due to the businesscombination involving enterprises under common control, the opening balances of theconsolidated balance sheet are adjusted; the income, expenses and profits of the subsidiaryor business as from the beginning of the period of combination to the end of the ReportingPeriod are included in the consolidated income statement; the cash flows of the subsidiaryor business as from the beginning of the period of combination to the end of the ReportingPeriod are included in the consolidated cash flow statement, and the relevant items of thecomparative statements are adjusted as if the reporting entity after the combination hadexisted since the time point when the ultimate controller began to control.
If the Company is able to exercise control over the investee under common control due toadditional investment or for other reasons, it shall be deemed that the parties participatingin the combination had made adjustments based on their current state when the ultimatecontroller began to control. For the equity investment held before obtaining the control overthe acquired party, relevant gains and losses, other comprehensive income and otherchanges in net assets recognized between the date of obtaining the original equity or thedate when the acquiring party and the acquired party are under common control, whicheverlater, and the date of combination shall be used to offset thebeginning retained earnings orthe profits and losses of the comparative statement period.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
10 Methods for judging control and preparing consolidated financial statements (continued)
(3) Consolidation procedure (continued)
During the Reporting Period, if a subsidiary or business is added due to a businesscombination involving enterprises under non-common control, the opening balance of theconsolidated balance sheet is not adjusted; the income, expenses and profits of thesubsidiary or business from the date of acquisition to the end of the Reporting Period areincluded in the consolidated income statement; the cash flow of the subsidiary or businessfrom the date of acquisition to the end of the Reporting Period is included in theconsolidated cash flow statement.
If the Company is able to exercise control over the investee not under common control dueto additional investment or for other reasons, the Company shall remeasure the equity, ofthe purchased party held before the purchase date, at its fair value as at the purchase date,and the difference between the fair value and its carrying amount shall be recognized in thereturn on investment of the current period. If the equity of the purchased party held beforethe purchase date involves other comprehensive income accounted for under the equitymethod and other changes in owner’s equity other than net profit and loss, othercomprehensive income, and profit distribution, the relevant other comprehensive incomeand other changes in owner’s equity shall be converted into the return on investment of thecurrent period of on the purchase date, except for other comprehensive income arising fromthe investee’s remeasurement of the changes in net liabilities or net assets of defined benefitplans.
During the reporting period, if the Company disposes of a subsidiary or business, theincome, expenses and profits of the subsidiary or business for the period from the beginningof the period to the disposal date are included in the consolidated income statement; andthe cash flow of the subsidiary or business for the period from the beginning of the reportingperiod to the disposal date is included in the consolidated cash flow statement.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
10 Methods for judging control and preparing consolidated financial statements (continued)
(3) Consolidation procedure (continued)
When the Company loses control over the invested party due to disposal of part of the equity
investment or other reasons, the remaining equity investment after disposal will be re-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.
When the equity investment in a subsidiary is disposed of step by step through multiple transactionsuntil the loss of control, when the terms, conditions and economic influence of the transactions ofthe equity investment in the subsidiary conform to one or more of the following, it usually indicatesthat the multiple transaction items shall be accounted for as a transaction package:
① These transactions are made simultaneously or with consideration of influence on each other;
② These transactions can only achieve a complete business outcome when they are accounted for collectively;
③ The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
④ A transaction is uneconomical individually, but is economical when considered collectively with other transactions.
If transactions through which the equity investment in a subsidiary is disposed of until the loss ofcontrol constitute a transaction package, the Company will account for such transactions as onetransaction through which the subsidiary is disposed of with the loss of control over it; provided thatthe difference between the price for each disposal and the share in the net asset of the subsidiarycorresponding to the investment disposed of, before the loss of control, is recognized as othercomprehensive income in the consolidated financial statements and is transferred to the profits andlosses of period in which the loss of control occurs.
When transactions through which the equity investment in a subsidiary is disposed of until the lossof control do not constitute a transaction package, such transactions shall be accounted for i) beforethe loss of control, in accordance with the relevant policies for partial disposal of an equityinvestments in a subsidiary without losing control; and ii) upon the loss of control, in accordancewith the general accounting method for disposing of a subsidiary.
The difference, between the long-term equity investment obtained by the Company through thepurchase of minority interests and the share in the net asset of the subsidiary calculated continuouslyfrom the purchase date (or combination date) based on the new shareholding percentage, shall beused to adjust i) the share capital premium under the capital reserve in the consolidated balance sheetor ii) the retained earnings, if the share capital premium under the capital reserve is insufficient tooffset,.
The difference, between the disposal price obtained from the partial disposal of a long-term equityinvestment in a subsidiary without losing control and the share, corresponding to the long-termequity investment disposed of, in the net asset of the subsidiary calculated continuously from thepurchase date or combination date, shall be used to adjust i) the share capital premium under thecapital reserve in the consolidated balance sheet or ii), the retained earnings, if the share capitalpremium under the capital reserve is insufficient to offset.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
11 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 thejoint arrangement, other relevant facts and circumstances.Joint arrangements not reached through independent entities are classified as joint operations;joint arrangements reached through independent entities are usually classified as joint ventures;however, a joint arrangement that is indicated by conclusive evidence of meeting any of 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 enjoysubstantially all the output related to the joint arrangement, and the repayment of the liabilitiesrelating to 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 rightsto 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
12 Criteria for determining cash and cash equivalents
In the preparation of the cash flow statement, the Company recognizes cash holdings and depositsthat can be used for payment at any time as cash.
The Company recognizes cash that is easily converted into known amount with short holding period(generally due within three months from the date of purchase) and strong liquidity, and investmentswith low risk of changes in value (including investments in bonds within three months, whileexcluding equity investments), as cash equivalents.
13 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 sheet date,and the exchange differences resulted therefrom, except that the exchange differences arising fromspecial foreign currency loans related to the acquisition and construction of assets eligible forcapitalization should be treated in accordance with the principle of capitalization of borrowing costs,are all included in the current profit and loss. Foreign currency non-monetary items measured athistorical cost are still translated at the spot exchange rate on the transaction date, and the amount ofbase currency for bookkeeping is not changed.
Foreign currency non-monetary items measured at fair value are translated at the spot exchange rateson the date when the fair value is determined, and the exchange differences resulted therefrom areincluded in profit or loss in the current period as a change in fair value. In the case of foreign currencynon-monetary items that are at fair value through other comprehensive income, the exchangedifferences 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. Theowner’s equity items, except for the “Retained earnings” item, are translated at the spot exchangerate at the time of occurrence of the items. All the incurred items in the income statement aretranslated at the current average exchange rate of the period in which transactions occur. Thetranslation differences of foreign currency financial statement arising from the above translation areincluded 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 in the balancesheet are transferred from the other comprehensive income to the profit and loss. When the disposalof a portion of the equity investment or otherwise causes a decrease in the proportion of equity heldin the overseas operation without losing of control over the overseas operation, the translationdifferences in the foreign currency statements related to the part of the overseas operation disposedof will be attributed to minority interests, rather than to the profit and loss. When the overseasoperation disposed of is a portion of the equity of an associate or joint venture, the translationdifference of the foreign statements related to the overseas operation should be transferred to theprofit or loss for the period in proportion to the disposal of the overseas operation.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 Financial instruments
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 financialassets or liabilities and allocating interest income or interest expenses into each accounting period.
The effective interest rate refers to the interest rate used to discount the estimated future cash 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 assetor financial liability, adding or subtracting the difference between the initial recognition amount andthe maturity amount by using the effective interest method, and then deducting the accumulatedaccrued loss reserve (only applicable to financial assets).
(1) Classification and measurement of financial assets
According to the business model of the financial assets under management and the contractual cash
flow characteristics of the financial assets, the Company divides the financial assets into 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 December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 thecredit-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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 ashort-term profit model in the near future, or is a derivative (except for derivatives definedas financial 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 loanat an amount close to the amortized cost, the prepayment right does not need to be split.
The Company carries out subsequent measurement of such financial assets at fair value,and includes gains or losses arising from changes in fair value as well as dividends 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 theeconomic substance reflected by the financial instrument issued, rather than only in legalform, in combination with the definitions of financial liabilities and equity instruments.Financial liabilities are classified at initial recognition as measured at fair value throughprofit or loss, or other financial liabilities, or derivatives designated as effective hedginginstruments.
Financial liabilities are measured at fair value upon initial recognition. For financialliabilities at fair value through profit or loss, relevant transaction expenses are directlyincluded in current profits and losses; for other categories of financial liabilities, relevanttransaction expenses are included in the initial recognition amount.
Subsequent measurement of financial liabilities depends on their classification:
(a) Financial liabilities at fair value through profit or loss
Such financial liabilities include held-for-trading financial liabilities (including derivativesfalling under financial liabilities) and financial liabilities designated as measured at fairvalue upon initial recognition and through profit or loss.
A financial liability is a held-for-trading financial liability if it is mainly undertaken forrecent sale or repurchase, or is part of the identifiable portfolio of financial instrumentscentrally managed, and there is objective evidence that the enterprise has recently employeda short-term profit model, or is a derivative instrument, except derivatives designated aseffective hedging instruments and derivatives conforming to financial guarantee contracts.Held-for-trading financial liabilities (including derivatives falling under financialliabilities) are subsequently measured at fair value. All changes in fair values except forhedging accounting are included in current profits and losses.
The Company irrevocably designates financial liabilities as measured at fair value throughprofit or 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 theenterprise risk management or investment strategy stated in the official written documents,and is reported to key management personnel within the enterprise on this basis.
The Company subsequently measures such financial liabilities at fair value. Apart fromchanges in fair value that are brought about by changes in the Company’s own credit riskand included in other comprehensive income, other changes in fair value are included incurrent profits and losses. Unless including such changes in other comprehensive incomewill cause or expand accounting mismatch in profit or loss, the Company will include allchanges in fair value (including the amount affected by changes in its own credit risk) incurrent profits and losses.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 atamortized cost. Such financial liabilities are recognized by the effective interest method andsubsequently measured at amortized cost. Gains or losses arising from derecognition oramortization are included in the current profits and losses:
① Financial liabilities at fair value through profit or loss.
② Financial liabilities resulting from the transfer of financial assets that do not meet the
conditions for derecognition or continue to be involved in the transferred financial assets.
③ Financial guarantee contracts that do not fall under the first two categories hereof, and loan
commitments that do not fall under category (1) hereof and lend at a below-market interest rate.
Financial guarantee contracts refer to contracts that require the issuer to pay a specific amountto the contract holder who has suffered losses when a specific debtor fails to pay the debt inaccordance with the original or modified terms of the debt instrument. Financial guaranteecontracts that are not financial liabilities designated as measured at fair value through profit orloss are measured after initial recognition according to the loss reserve amount and of the initialrecognition amount, less the accumulated amortization amount during the guarantee period,whichever is higher.
(3) Derecognition of financial assets and liabilities
(a)Financial asset are derecognized, i.e. written off from its account and balance sheet if any of thefollowing conditions is met:
① The contractual right to receive cash flow from the financial asset is terminated; or
② The financial asset has been transferred, which meets the requirements for derecognition of
financial assets.
(b) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, suchfinancial liability (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 assetsor assumed liabilities) is included in the current profits and losses, if an agreement is signedbetween the Company and the lender to replace the existing financial liability by assuming anew one, and the contract terms of these two financial liabilities are substantially different, orthe contract terms of the existing financial liability (or part thereof) are substantially modified.
If the Company repurchases part of a financial liability, the carrying amount of the financialliability shall be distributed according to the proportion of the fair value of the continuingrecognition portion and the derecognition portion to the overall fair value on the repurchasedate. The difference between the carrying amount allocated to the derecognized portion and theconsideration paid (including transferred non-cash assets or liabilities assumed) shall beincluded in the current profits and losses.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 Financial instruments (continued)
(4) Recognition basis and measurement method of financial asset transfe
When a financial asset is transferred, the Company evaluates the risks and rewards retained ofthe financial 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 transfershall be separately recognized as assets or liabilities.
(b)If risks and rewards of the financial asset ownership are substantially retained, such financialasset shall continue to be recognized.
(c)In circumstances where the Company neither transfers nor retains risks and rewards of thefinancial asset ownership substantially (i.e. circumstances other than ① and ② of this article),based on whether it retains control over such financial asset,
r①
the financial asset shall be derecognized, and the rights and obligations generated or retainedin the transfer shall be separately recognized as assets or liabilities if such control is not retained;or
② the relevant financial asset shall continue to be recognized to the extent that it continues to
be involved in the transferred financial asset, and the relevant liabilities shall be recognizedaccordingly if such control is retained. The extent that it continues to be involved in thetransferred financial asset refers to the extent the Company bears the risks or rewards on changesin the value of the transferred financial asset.
When judging whether the transfer of financial assets meets the above conditions forderecognition of financial assets, the principle of substance over form shall be adopted. TheCompany divides the transfer of financial assets into overall transfer and partial transfer.
(a)If the overall transfer of financial assets meets the conditions for derecognition, the differencebetween the following two amounts shall be included in the current profits and losses:
①①
The carrying amount of the transferred financial asset on the date of derecognition.
② The sum of the consideration received for the transfer of financial assets and the amount of
the respective derecognized portion of the accumulated changes in fair value originally includedin other comprehensive income directly (the financial assets involved in the transfer arefinancial assets at fair 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 allocatedbetween the derecognition portion and the continuing recognition portion (in this case, theretained service asset shall be regarded as the continuing recognition part of the financial asset)according to the respective relative fair values on the transfer date, and the difference betweenthe following two amounts shall be included in the current profits and losses:
①①
The carrying amount of the derecognized portion on the derecognition date.
② The sum of the consideration received for the derecognized portion and the amount of the
corresponding derecognized portion of the accumulated changes in fair value originallyincluded in other comprehensive income (the financial assets involved in the transfer arefinancial assets at fair value through other comprehensive income).
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 creditrisk of relevant financial instruments has increased significantly since the initial recognition,measures its loss reserves and recognizes the expected credit loss and its changes respectivelyaccording to the following circumstances on each balance sheet date:
(a)If the credit risk of the financial instrument has not increased significantly since its initialrecognition, it is in the first stage, and its loss reserve shall be measured according to an amountequivalent to its expected credit loss over the next 12 months, and the interest income shall becalculated according to the book balance and the effective interest rate.
(b)If the credit risk of the financial instrument has increased significantly since initial recognition butno 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 any of financial assets classified as thosemeasured at fair value through other comprehensive income, the Company recognizes its credit lossreserve in other comprehensive income without reducing its carrying amount presented in thebalance sheet.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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 longer conforms tothe situation of significant increase in credit risk since initial confirmation; on the balance sheetdate of the current period, the Company has measured the loss reserve of the financialinstruments, the amount equivalent to the expected credit loss in the next 12 months, and thereversed amount of the loss reserve thus formed is included in the current profit and loss asimpairment profit.
(a) Significant increase in credit risk
In order to determine whether the credit risk of financial instruments has increased significantlysince the initial recognition, the Company uses the available reasonable and based forward-looking information and compares the risk of default of financial instruments on the balancesheet date with the risk of default on the initial confirmation date. When the Company appliesprovisions on depreciation of financial instruments to financial guarantee contracts, the initialrecognition date shall be regarded as the date when the Company becomes a party to makeirrevocable 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; thesechanges will reduce the debtor’s economic motivation to repay the loan within the time limitstipulated in the contract and could impact the probability of default;
④ Whether the debtor's expected performance and repayment behavior have changed
significantly;
⑤ Whether the Company's credit management methods for financial instruments have changed,
etc.
If, on the balance sheet date, the credit risk of the financial instrument is judged to be low bythe Company, the Company assumes that the credit risk of the financial instrument has notincreased significantly since the initial recognition. The financial instrument will be deemed tohave lower credit risk under the following circumstances: the default risk of the financialinstrument is lower; the borrower has a strong capacity to fulfill its contractual cash flowobligations in a short time; furthermore, even if there are adverse changes in the economicsituation and operating environment for a long period of time, it may not necessarily reduce theborrower’s ability to fulfill its contractual cash flow obligations.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 Financial instruments (continued)
(6) Impairment of financial instruments (continued)
(b) Financial assets with depreciation of credi
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:
① The 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 andcombined credit risk characteristics of relevant financial instruments, please refer to the accountingpolicies of relevant 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 theestimated future 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
14 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, thenet amount 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 settleon a net basis, or realize the financial assets and settle thefinancial liabilities at the same time.
15 Notes receivable
For the determination method and accounting treatment method of the Company's expectedcredit loss on notes receivable, please refer to 14(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.
Accounts receivable
For the determination method and accounting treatment method of the Company's expectedcredit loss on accounts receivable, please refer to 14(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 December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
17 Receivables financing
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 14(6) of note III Impairment of financial instruments.
18 Other receivables
For the determination method and accounting treatment method of the Company's expectedcredit loss of other receivables, please refer to 14(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.
19 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
19 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, inventoryvaluation allowance is accrued according to inventory category; for inventories related to theproduct series produced and sold in the same region with the same or similar end use or purpose,which is difficult to measure separately from other items, thus inventory valuation allowance isaccrued and 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.
20 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 14(6) of note III Impairment of financialinstruments.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
21 Held-for-sale non-current assets or disposal groups
(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 thepractice of selling such assets 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 saleshall be 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.
22 Debt Investments
For the determination method and accounting treatment methods of the Company’s expectedcredit loss of debt investments, please refer to 14(6) “Impairment of financial instruments”under Note III.
23 Long-term receivables
For the determination method and accounting treatment method of the Company's expected creditloss on long-term receivables, please refer to 14(6) of note III Impairment of financial instruments.
If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
24 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 (III), 9 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 acquiring party will be offsetfrom the equity 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 December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
24 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 investeeis accounted for by the cost method and measured at the initial investment cost. When thelong-term equity 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 theconsideration that have been declared but not yet paid when acquiring the investment, theCompany recognizes the investment income for the period the investee's cash dividends orprofits attributable to the Company will 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 areaccounted for using the equity method. Among them, the portion ofequity investments in affiliates,held indirectly 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 amountof the long-term equity investment should be adjusted accordingly; the Company's share in theprofits or cash dividends declared by the investee should be calculated, and the carrying amount ofthe long-term equity investment should be reduced accordingly; the carrying amount of the long-term equity investment should be adjusted based on changes in owners' equity of the investee otherthan net profit and 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
24 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 significantimpact 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 beused to adjust the carrying amount of the long-term equity investment and included in the non-operatingincome for 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 thosethe investee 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 the
equity 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
24 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 amount
of 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 December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
24 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 accordancewith 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 package transaction, the accounting treatment of individual financial statements andconsolidated financial statements should be distinguished as follows: :
(a) In the individual financial statements, the difference between each disposal price and thecarrying amount of the long-term equity investment corresponding to the disposed equitybefore the loss of control is recognized as other comprehensive income, and transferred tothe current profit and loss of the period in which the loss of control occurred;
(b) In the consolidated financial statements, the difference between each disposal price and the
disposal of investment corresponding to the share of the net assets of the subsidiary beforethe loss of control is recognized as other comprehensive income, and transferred to thecurrent profit and loss of the period 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
25 Investment property
The Company's investment property means the property held for the purpose of earningrent or capital appreciation, or both, including the land use rights that have been leased, theland use rights that are held for transfer upon appreciation, and the leased buildings. Inaddition, for the vacant buildings held by the Company for the purpose of leases, if theBoard of Directors makes a written resolution that expressly indicates that the buildingswill be used for leases and the intention of holding will not change in a short-term, thebuilding will also be reported as investment property.
An investment property of the Company will be recorded at its cost that comprises i) in caseof a purchased investment property, the purchase price, relevant taxes and other expensesdirectly attributable to the asset; or ii) in case of a self-constructed investment property, thenecessary expenses incurred before the asset is constructed to reach its intended serviceablestate.
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.
When the purpose of an investment property is changed to self-use, the Company shallconvert the investment property into a fixed asset or intangible asset from the date ofchange. When the purpose of a self-used property is changed to earning rent or capitalappreciation, the Company will convert the fixed asset or intangible asset into an investmentproperty from the date of change. When such a conversion occurs, the carrying amountbefore the conversion shall be used as the recorded value after the conversion.
When an investment property is disposed of, or when it permanently withdraws from useand no economic benefit is expected to be obtained from the disposal of it, the investmentproperty shall be derecognized. The disposal income from the sale, transfer, scrapping ordamage of an investment property, net of its carrying amount and related taxes and fees, isrecognized in the profits and losses of the current period.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
26 Fixed assets
(1) Recognition criteria for fixed assets
Fixed assets mean tangible assets held for the purpose of producing goods, rendering ofservices, leases or operation management, whose service life is more than one fiscal year.Fixed assets satisfying the following conditions are recognized:
(a) The economic benefits associated with the fixed assets are likely to flow into the enterprise;
(b) The cost of the fixed asset can be measured in a reliable way.
The Company's fixed assets are classified into buildings, machinery and equipment, officeand electronic equipment, transportation vehicles and fixed assets renovation in line withcapitalization conditions. Where each component of a fixed asset with a different servicelife provides economic benefits to the Company in different ways and applies differentdepreciation rates, it is recognized as 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% 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.
The methods for impairment testing and accrual of impairment provisions of fixed assetsare detailed in 31 “Long-term Asset Impairment” under Note III.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
27 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.
The methods for impairment testing and accrual of impairment provisions of construction inprogress are detailed in 31 “Long-term Asset Impairment” under Note III.
28 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, ancillary expenses,and exchange differences arising from foreign currency borrowings.
Borrowing costs that can be directly attributable to the acquisition, construction or production of assetseligible for capitalization are capitalized and included in the relevant asset cost. Other borrowing costsare recognized as expenses in the period in which they are incurred, and are included in the current profitand loss. Assets eligible for capitalization refer to fixed assets, investment property and inventories andother assets that require a substantial period of acquisition, construction or production activities to getready 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 cashpayments, transfer of non-cash assets, or assuming interest-bearing debts for the purpose ofacquisition, 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 beready for the 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, thecapitalization of the borrowing costs is suspended and recognized as the current expenses until theacquisition, construction or production of the assets starts again. When an asset satisfied the capitalizationconditions is ready for its intended use or sale, the capitalization is stopped and the borrowing costsincurred 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 borrowing costsare suspended for capitalization is not included. During the period of capitalization, if special borrowingsare made for the acquisition, construction or production of assets eligible for capitalization, the amountof the interest expenses actually incurred during the current period of the special borrowings, less theamount of interest income earned by depositing unused borrowing funds in a bank or investment incomeearned by temporary investment, is recognized as the amount of capitalization. When a general loan isoccupied for the purpose of purchasing, constructing or producing assets satisfied the capitalizationconditions, the amount of capitalization is determined according to the weighted average of theaccumulated asset expenditure exceeding the special loan portion multiplied by the capitalization rate ofthe general loan occupied; the capitalization rate is determined based on the weighted average interest rateof general borrowings.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
29 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 of
the 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 impairment reserves have been accrued are depreciated in future periods at theircarrying amount net of impairment reserves, with reference to the above principles.
In accordance with the provisions of Accounting Standards for Business Enterprises No. 8
- Asset Impairment, the Company determines whether right-of-use assets have beenimpaired and accounts for the recognized impairment losses, as detailed in 31 “Long-termAsset Impairment” under Note III.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
30 Intangible assets
Intangible assets refer to the identifiable non-monetary assets, owned or controlled by the Company,without physical form, including land use rights, intellectual property rights, and non-patentedtechnologies, etc.
Intangible assets are recorded at the actual cost at the time of acquisition. The service life ofintangible assets is analyzed and judged at the time of acquisition. Intangible assets with a finiteservice life are amortized on the shortest of the estimated service lives, the beneficial period of thecontract and the effective period specified by law from the time when the intangible assets areavailable for use. The amortization period is as follows:
Category Amortization yearsLand use rights
The shorter of the years of the land use rights and the operatingyears of the Company
Patents and non-patenttechnologies
10 years or the shorter of service life, beneficiary years andlegally valid yearsOthers Beneficiary period
The Company reviews the service life and amortization method of intangible assets with limitedservice life at least at the end of each year, and made adjustment if necessary.The methods for impairment testing and accrual of impairment provisions of intangible assets aredetailed in 31 “Long-term Asset Impairment” under Note III.
If an intangible asset is foreseen as unable to bring economic benefits to the Company, it is regardedas an intangible asset with an indefinite service life, which will be reviewed in each accountingperiod. If evidence indicates that the service life of the intangible asset is limited, then it is convertedto an intangible asset with limited service life. Intangible assets with indefinite service lives are notamortized.
The expenditures of the Company's internal research and development projects are classified intoexpenditures in the research phase and expenditures in the development phase. Research means anoriginal, planned survey of acquiring and understanding new scientific or technical knowledge.Development means the application of research results or other knowledge to a plan or design toproduce new or substantially improved materials, devices, products, etc. prior to commercialproduction or use.
The expenditures in the research phase of the Company's internal research and development projectsare included in the current profit and loss when incurred; expenditures in the development phase arerecognized as intangible assets only when the following conditions are all satisfied:
(1) It is technically feasible to complete the intangible asset to enable it to be used or sold;
(2) There is intent to complete the intangible asset and use or sell it;
(3) The intangible assets can bring economic benefits;
(4) There are sufficient technical, financial and other resources to support the development of
the intangible assets as well as ability to use or sell the intangible assets;
(5)
Expenditures attributable to the development stage of the intangible asset can be measuredin a reliable way.
If the above conditions cannot be all satisfied, the expenditures are included in the currentprofit and loss when incurred.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
31 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.
32 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.
33 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.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
34 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 plans
or 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 contract
expires, 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-term
employment benefits, post-employment benefits and termination benefits.
For other long-term employee benefits that meet the conditions of a defined contribution
plan, 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 employeeprovides services, and shall be included in profit or loss for the period or the underlyingasset costs.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
35 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 estimated liabilities areexpected to be compensated by a third party, the compensation amount is separatelyrecognized as an asset when it is basically confirmed to be received, and the recognizedcompensation amount should not exceed the carrying amount of the estimated liabilities.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
36 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 oflease payments, the Company uses the interest rate implicit in lease as the rate of discount. If theimplicit interest rate of the lease cannot be determined, the incremental loan interest rate of theCompany shall be used as the discount rate. Lease payments include:
(a)
The amount of fixed payments, net of amounts related to lease incentives, and the amountof substantive fixed payments;
(b) Variable lease payments that depend on indexation or ratio;
(c)
The exercise price of the purchase option, when applicable, if the Company is reasonablycertain that the option will be exercised;
(d) The amount required to be paid to exercise the option to terminate the lease if the lease term
reflects that the Company will exercise the option to terminate the lease;
(e)
The estimated amount payable based on the secured residual value provided by theCompany.
The Company calculates the interest expenses of lease liabilities for each period within the lease
term at a fixed rate of discount and includes them in profit or loss for the current period or cost ofthe related assets.
Variable lease payments that are not included in the measurement of lease liabilities should beincluded in profit or loss for the current period or cost of the related assets when they are actuallyincurred.
37 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
38 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 thespecific nature of commodities and services. The output method is to determine thefulfillment schedule according to the value of commodities transferred to the client (whilethe input method is to determine the fulfillment schedule according to the Company’s inputto fulfill the performance obligation). If the fulfillment schedule cannot be reasonablydetermined and the Company’s costs are predicted to be compensated, correspondingrevenue shall be recognized based on the specific cost amount until the fulfillment schedulecould be reasonably determined.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
38 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 salesrevenues when the client obtains the control over relevant commodities or services according to thedelivery condition agreed in the sales contract upon signed by the client after commodities are received.
(b) Technical service contract
If revenues are recognized within a certain period based on the technical service contract, correspondingrevenues shall be recognized according to the performance schedule.
(c) Royalty income
Accounted for according to the time and method of charging as stipulated in the relevant contract oragreement.
(d) Revenue from photovoltaic power stations
a. Centralized power stations: Power stations are combined to the grid. The revenue is recognized basedon the documents on power supply provided by the business departments of the Company, after theduration of continuous and trouble-free operation specified by the electric power company is met. b.Distributed power stations: Power stations are combined to the grid. The revenue is recognized based onthe documents on settlement 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 relevantcommodities, corresponding revenue shall be recognized according to the consideration amount(excluding the amount predicted to be returned due to sales return) predicted to be duly charged fromtransferring commodities to the client, and corresponding liabilities shall be recognized based on theamount predicted to be returned due to sales return. Meanwhile, when commodities are sold, the balancethrough deducting the predicted cost for taking back commodities from the carrying amount ofcommodities predicted to be returned (including the impairment of value of returned commodities) shallbe accounted for under “Returned Commodities Cost Receivable”.
(b)
For the contract containing the quality assurance article: it’s required to evaluate whether the qualityassurance involves any separable service except for the promise (to the client) that commodities conformto established standards. If the Company provides additional service, it shall be deemed as a singleperformance obligation and subject to the accounting treatment according to relevant revenue criteriaprovisions; otherwise, the quality assurance liability shall be subject to the accounting treatment accordingto the accounting criteria provisions on Contingency.
(c)For the sales contract containing the client’s additional purchase option: the Company shall evaluatewhether the option provides the client with any significant right. If any, it shall be deemed as a singleperformance obligation and the transaction price shall be apportioned to the performance obligation, andcorresponding revenues shall be recognized when the client executes the purchase option right and obtainsthe control over relevant commodities in the future or when the option becomes invalid. If the separableselling price applied to the client’s additional purchase option right cannot be directly observed, it’srequired to comprehensively consider the difference in discounts between the client’s execution of optionright and the client’s non-execution of option right and analyze the possibility for the client to execute theoption 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 December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
38 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 right licenseconstitutes any single performance obligation; if any, it is necessary to determine whether the performanceobligation fulfillment is fulfilled within a certain period or at a time point. If any IP right license is grantedto the client and royalties are charged based on the client’s actual sales or usage, corresponding revenuesshall be recognized at a later time between the following dates: the day when the client’s subsequentselling or usage occurs; the day when the Company fulfills relevant performance obligations.
(e) Major responsible person and agent: Based on whether the Company has control over the goods or servicebefore transferring it to the customer, it is determined whether the Company is the major responsibleperson or an agent in the transactions. If the Company is able to control the goods or service beforetransferring it to the customer, the Company shall be deemed as major responsible person and the revenueshall be recognized at the total amount of the consideration received or receivable; otherwise the Companyshall be deemed as an agent and the revenue shall be recognized at the amount of the commission orhandling fee to which it expects to be entitled. The amount of the commission or handling fee is determinedby deducting the amount payable to other relevant parties from the total amount of consideration receivedor receivable.
39 Contract costs
(1) Contract performance cost
For the cost resulting from performing the contract which is not included in other ASBE exceptthe revenue standards and meets the following conditions, the Company shall recognize it as anasset：
(a)
The cost is directly related to a current or predicted contract, including the direct labor, directmaterial and manufacturing expenses (or similar expenses), the cost borne by the client andother costs resulting from the contract;
(b)
The cost adds various resources that can be applied by the Company to fulfill due performanceobligations; and
(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 the initialrecognition.
(2) Contract acquisition cost
If the increment cost resulting from the Company’s acquisition of contract is predicted to berecovered, it shall be recognized as an asset as the contract acquisition cost. Increment Costrefers to the cost which only results from the contract acquisition, like the sales commission. Ifthe amortization period is less than one year, it shall be included in current profit and loss.
(3) Contract cost amortization
The asset related to the contract cost shall, by adopting 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 be includedinto current profit and loss.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
39 Contract costs (continued)
(4) Impairment of contract costs
For the asset related to the contract cost as mentioned above, if the carrying amount is higherthan the difference between the residual consideration predicted to be obtained from theCompany’s transfer of commodities related to the asset and the cost to be incurred due to suchtransfer, depreciation reserves shall be calculated and withdrawn for the surplus which shallalso be recognized as the asset impairment loss.
After the impairment allowances is established, if changes in depreciation factors duringprevious periods have made the above difference higher than the asset’s carrying amount, itshall be restituted to previously established asset impairment allowances and included in currentprofit and loss. However, the carrying amount of restituted assets shall not exceed the carryingamount of the asset on the date of restitution without establishing impairment allowances.
40 Public grants
(1) Type of change
Publicgrants are transfers of monetary or non-monetary assets from the public body to the Group at nilconsideration. According to the grants targets stipulated in the relevant policies documents, public grantsare classified into public grants related to assets and public grants related to income.
(2) Recognition of public grants
If a public grant is a monetary asset, it is measured at the amount received or receivable. If a publicgrantis a non-monetary asset, it is measured at fair value. If the fair value cannot be obtained in a reliable way,it is measured at the nominal amount (RMB1). Public grants measured at nominal amounts are recognizeddirectly in the current profits and losses.
(3) Accounting treatmen
Public grants related to assets offset the carrying amount of the underlying assets.
If the public grants related to income are used to compensate related costs or losses in the subsequentperiod, it is recognized as deferred income and included in the current profit and loss or offset costs in theperiod in which the related costs or losses are recognized; public grants used to compensate costs or lossesincurred by the enterprise are directly included in the current profits or losses or offset related costs. Forpublic grants related to the day-to-day activities of the enterprise, the R&D and VAT-related subsidiesand the taxation, or operation-based incentive public subsidies are included in other income; other publicgrants are written off against related costs based on the substance of economic activities. Public grantsnot related to daily activities of the Company are included in the non-operating income and expenditure.For preferential loans for policy discount, if the public finance department appropriates the discountedfunds to the lending bank, the borrowing cost is accounted for according to the principal of the loan andthe policy preferential interest rate, with the amount actually received as the entry value of the loan. If thepublic finance department directly appropriates the interest grant funds to the Company, the grants offsetthe related borrowing costs.
In case that a recognized public grant is required to be returned, the carrying amount of the asset is adjustedif the carrying amount of relevant assets is offset at the initial recognition; if there is related deferredincome, the book balance of deferred income is offset, and the excess is included in the current profit andloss; and in case of other circumstances, it is directly included in the current profit and loss.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)41 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 itis expected 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 ofassets or 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
not affect 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 toobtain taxable income that can be used to offset the deductible temporary difference in thefuture.
(2) Basis for recognition of deferred income tax liabilities
The Company recognizes the taxable temporary differences that should be paid but not paidfor the current and previous periods as deferred income tax liabilities. But deferred taxliabilities do 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 netbasis;
(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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
42 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 andconstitute a package deal, and if they are not considered as a whole, the overall businesspurpose cannot be understood.
(b)
The consideration amount of one contract among the two or multiple contracts depends onthe pricing or performance of other contracts.
(c) The rights to use assets transferred by the two or multiple contracts constitute one single
lease.
(3) Accounting treatment with the Company as lessee
On the commencement date of the lease term, the Company recognises the right-of-use assets 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 assetlease
An asset lease with a value of less than RMB40,000 or its foreign currency
equivalents
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
42 Leases (continued)
(3) Accounting treatment with the Company as lessee (continued)
The Company recognises the right-of-use assets and lease liabilities for short-term leases and low-valueasset leases other than those mentioned above.
(b)
The accounting policies for right-of-use assets and lease liabilities are detailed in Note III,29 and Note III, 36.
(4) Accounting treatment with the Company as lessor
(a) Lease classification:
The Company classifies leases into finance leases and operating leases at the inception of leases. A financelease refers to a lease where almost all the risks and rewards, related to the ownership of the leased asset(s),are substantially transferred, regardless of whether the ownership is transferred eventually. An operatinglease refers to all leases other than finance leases.Usually, the Company classifies a lease that meets any one or more of the following conditions as a financelease:
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 canbe reasonably determined at the inception of the lease that the lessee will exercise the option.
3) Although the ownership of the asset(s) is not transferred, the lease term accounts for the majority of
the service life of the leased asset(s).
4) At the inception of the lease, the present value of the lease payments receivable is almost equal to the
fair value of the leased asset(s).
5) The leased asset(s) is/are special in nature and can be only used by the lessee, unless there is a large
alteration.The Company may also classify a lease that falls under any one or more of the following circumstancesas a finance lease:
1) If the lessee cancels the lease, losses to the lessor caused by the cancellation will be borne by the lessee.
2) Gains or losses arising from fluctuations in the fair value of the residual value of the leased asset(s) are
borne by the lessee.
3) The lessee is able to renew the lease with a rental far lower than the market level to the next term.
(b) Accounting treatment of finance leases
On the commencement date of the lease term, the Company recognises the finance lease receivables forthe finance lease and derecognises the leased asset(s) of the finance lease.In the initial measurement of finance lease receivables, the sum of the unsecured residual value and thepresent value of the lease payments receivable not yet received on the commencement date of the leaseterm discounted at the interest rate implicit in lease is the entry value of the finance lease receivables.Lease payments receivable include:
1) The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive
fixed payments;
2) Variable lease payments that depend on indexation or ratios;
3) The exercise price of the purchase option, when applicable, if it is reasonably certain that the lessee
will exercise the purchase option;
4) The amount required to be paid by the lessee to exercise the option to terminate the lease if the lease
term reflects that the lessee will exercise the option to terminate the lease;
5) Secured residual value provided to the lessor by the lessee, a party related to the lessee, or an
independent third party that has the financial ability to perform the security provision obligation.The received variable lease payments that are not included in the measurement of the net investment inthe lease are included in profit or loss for the current period when they are actually incurred.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)42 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 recognise the transferred asset and at the same time recognise 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 recognisea financial asset equivalent to the transfer income.
43 Related parties
If one party controls, commonly controls or exerts a significant influence on the other party,and two or more parties are under the control, common control or significant influence ofthe other party, they constitute related parties. Enterprises that are solely controlled by thestate and do not have any other related party relationship shall not be deemed as relatedparties.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
44 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 a componentof 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 theamount reversed, and disposal profit and loss are presented in the income statement as profitand loss of discontinued operations.
In the balance sheet, the Company presents, independently from other assets, the held-for-sale non-current assets or assets in held-for-sale disposal groups, and presents,independently from other liabilities, the liabilities in held-for-sale disposal groups. Theheld-for-sale non-current assets or assets in held-for-sale disposal groups and the liabilitiesin held-for-sale disposal groups shall not offset each other, but shall be presented as currentassets and current liabilities respectively. In the income statement, the Company presentsthe profits and losses from going concern and the profits and losses from discontinuedoperations. For the discontinued operations reported in the current period, the Companyrepresents in the financial statements for the current period, the information, previouslypresented as the profits and losses from going concern, as the profits and losses fromdiscontinued operations for the comparable accounting period. If the discontinuedoperations are no longer eligible for being classified as held-for-sale categories, theCompany will represent in the financial statements for the current period, the information,previously presented as the profits and losses from discontinued operations, as the profitsand losses from going concern for the comparable accounting period.
45 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 instrumentsand hedged items, and documentation of the hedging relationship and the Company’s riskmanagement strategies and objectives for undertaking the hedge have been prepared.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
45 Hedge Accounting (continued)
(1) A hedging relationship qualifies for hedge accounting only if all of the following criteria
are met (continued)
(c) The hedging relationship meets the hedge effectiveness requirements.The hedging relationship meets the hedge effectiveness requirements only if all of the followingcriteria 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 instrument and the hedgeditem 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 hedging instrument that theCompany actually uses to hedge that quantity of hedged item. However, that designation shall notreflect an imbalance between the weightings of the hedged item and the hedging instrument thatwould create hedge ineffectiveness that could result in an accounting outcome that would beinconsistent with the purpose of hedge accounting.
(2) Fair value hedge accounting
(a) Gain or loss on the hedging instrument shall be recognised in profit or loss. If the hedging instrument
hedges a non-trading equity instrument (or a component thereof) that the Company has elected to bemeasured at fair value through other comprehensive income, the hedging gain or loss generated bythe hedging instrument shall be recognized in other comprehensive income.
(b) Gain or loss generated by the hedged item due to the hedged risk exposure shall be recognized inprofit or loss, and shall adjust the carrying amount of the recognized hedged item that is not measuredat fair value. If the hedged item is a financial asset (or a component thereof) measured at fair valuethrough other comprehensive income, the hedging gain or loss on the hedged item shall berecognized in profit or loss, and wll not be required for adjustment since the carrying amount hasbeen measured at fair value. However, if the hedged item is a non-trading equity instrument (or acomponent thereof) that the Company has elected to be measured at fair value through othercomprehensive income, the hedging gain or loss on the hedged item shall be recognized in othercomprehensive income, and will not be required for adjustment, since the carrying amount has beenmeasured at fair value.When a hedged item represents a defined commitment that has not been unrecognized (or acomponent thereof), the cumulative change in the fair value of the hedged item subsequent to itsdesignation caused by the hedge relationship is recognized as an asset or a liability with acorresponding gain or loss recognized in profit or loss. When a defined commitment is made toacquire an asset or assume a liability, the initial carrying amount of the asset or the liability isadjusted to include the cumulative change in the fair value of the hedged item that has beenrecognized.
(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 amortized based on the effectiveinterest rate recalculated on the amortization commencement date, and recognized in the profit orloss. This amortization can commence from the adjustment date, but not later than the time when thehedging gain or loss adjustment is made for the termination of the hedged item. If the hedged itemis a financial asset (or a component thereof) measured at fair value through other comprehensiveincome, the cumulative recognized hedging gain or loss shall be amortized in the same manner andrecognized in the profit or loss, but the carrying amount of the financial asset (or a componentthereof) shall not be adjusted.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
45 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 ineffective
hedge (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 thecash flow hedge reserve to profit or loss in the same period or the period during which thehedged expected 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 is accounted for as part of the net investment shall be accounted for similarly to cashflow hedges:
(a) The portion of the gain or loss on the hedging instrument that is determined to be an effective
hedge 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 ineffective
hedge shall be recognized in the profit or loss.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
45 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 changesin 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 hedginginstrument, 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 CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
III Significant accounting policies and accounting estimates (continued)
46 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.
47 Correction of previous accounting errors
o previous accounting errors were identified and corrected in the Reporting Period.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 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.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
IV Taxes (continued)
5 Corporate income tax
The corporate income tax rate for the Company was 15% in the current period.
According to Article 28 of the Enterprise Income Tax Law of the People's Republic of China, a reducedcorporate income tax rate of 15% is applied to important high-tech enterprises that the public supports.
According to the relevant provisions of the Announcement on the Preferential Income Tax Policies forSmall and Micro Enterprises and Self-employed Businesses (Announcement No. 6 [2023] of the Ministryof Finance and the State Taxation Administration) and the Announcement of the Ministry of Finance andthe State Taxation Administration on Tax Policies for Further Supporting the Development of Small andMicro Enterprises and Self-employed Businesses (Announcement No. 12 [2023] of the Ministry of Financeand the State Taxation Administration), issued by the Ministry of Finance and the State TaxationAdministration in 2023, from January 1, 2023 to December 31, 2027, the annual taxable income of smalland low-profit enterprises not exceeding RMB1 million will be included in the taxable income at a reducedrate of 25%, and the enterprise income tax will be paid at the rate of 20%.
Except for the following subsidiaries entitling to preferential tax treatment and the overseas subsidies thatadopt local applicable tax rate, other entities under the Company are subject to the applicable tax rate of25%, or the preferential tax rate for small and micro enterprises.
Subsidiaries entitled to tax preferences:
Company Name
Preferential
tax rate
Reason
TCL China Star Optoelectronics TechnologyCo., Ltd.
15.00%High-tech enterprise
Wuhan China Star Optoelectronics TechnologyCo., Ltd.
15.00%High-tech enterprise
Shenzhen China Star Optoelectronics BandaotiDisplay Technology Co., Ltd.
15.00%High-tech enterprise
Wuhan China Star Optoelectronics BandaotiDisplay Technology Co., Ltd.
15.00%High-tech enterprise
Suzhou China Star Optoelectronics TechnologyCo., Ltd.
15.00%High-tech enterprise
Huizhou Kedate Smart Display Technology Co.,Ltd.
15.00%High-tech enterprise
China Display Optoelectronics Technology(Huizhou) Co., Ltd.
15.00%High-tech enterprise
Shenzhen Qianhai Maojia Software TechnologyCo., Ltd.
15.00%High-tech enterprise
Qingdao Blue Business Consulting Co., Ltd. 15.00%High-tech enterprise
Tianjin Huanbo Science and Technology Co.,Ltd.
15.00%High-tech enterprise
Tianjin Printronics Circuit Corporation 15.00%High-tech enterpriseTechigh Circuit Technology (Huizhou) Co., Ltd.15.00%High-tech enterprise
Shenzhen TCL High-Tech Development Co.,Ltd.
15.00%High-tech enterprise
TCL Financial Technology (Shenzhen) Co., Ltd.15.00%High-tech enterprise
Suzhou China Star Environmental ProtectionTechnology Co., Ltd.
15.00%
Corporate income tax is levied at areduced rate of 15% on eligiblethird-party enterprises, engaged inpollution prevention and control
Tianjin Huan'Ou BandaotiMaterial&Technology Co., Ltd.
15.00%High-tech enterprise
Tianjin Zhonghuan AdvancedMaterial&Technology Co., Ltd.
15.00%High-tech enterprise
Inner Mongolia Zhonghuan Solar Material Co.,Ltd.
15.00%High-tech enterprise
Inner Mongolia Zhonghuan Advanced BandaotiMaterial Co., Ltd.
15.00%
High-tech enterprise, encouragedbusiness in West China
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
IV Taxes (continued)
5 Corporate income tax (continued)
Company Name
Preferentialtax rate
Reason
Wuxi Zhonghuan Applied Materials Co.,Ltd.
15.00%High-tech enterprise
Inner Mongolia Zhonghuan CrystalMaterials Co., Ltd.
15.00%
High-tech enterprise,encouraged business in WestChina
Tianjin Huanzhi New Energy TechnologyCo., Ltd.
15.00%High-tech enterprise
Huansheng New Energy (Jiangsu) Co., Ltd.15.00%High-tech enterprise
Xuzhou Jingrui Bandaoti EquipmentTechnology Co., Ltd.
15.00%High-tech enterprise
Tianjin Huanou New Energy TechnologyCo., Ltd
15.00%High-tech enterprise
Huansheng New Energy (Tianjin) Co., Ltd.15.00%High-tech enterprise
Ningxia Zhonghuan Solar Material Co., Ltd.15.00%
Encouraged business in WestChina
Ningxia Zhonghuan New Energy Co., Ltd. 15.00%
Encouraged business in WestChina
Dushan Anju Photovoltaic Technology Co.,Ltd.
15.00%
Encouraged business in WestChina
Otog Banner Huanju New Energy Co., Ltd.15.00%
Encouraged business in WestChina
Sonid Left Banner Huanxin New EnergyCo., Ltd.
15.00%
Encouraged business in WestChina
Ningxia Huanou New Energy TechnologyCo., Ltd.
15.00%
Encouraged business in WestChina
Inner Mongolia TCL PhotoelectricTechnology Co., Ltd.
15.00%
Encouraged business in WestChina
Shaanxi Huanshuo Green New Energy Co.,Ltd.
15.00%
Encouraged business in WestChina
Zhonghuan Advanced Bandaoti TechnologyCo., Ltd.
12.50%
A high-tech enterprise and anenterprise engaged in integratedcircuit materials
Yixing Huanxing New Energy Co., Ltd. 12.50%
Public-supported publicinfrastructure project
Tianjin Binhai Huanneng New Energy Co.,Ltd.
12.50%
Public-supported publicinfrastructure project
Qinhuangdao Tianhui Solar Energy Co.,Ltd.
12.50%
Public-supported publicinfrastructure project
Guyuan Shengju New Energy Co., Ltd. 12.50%
Public-supported publicinfrastructure project
Zhangjiakou Shengyuan New Energy Co.,Ltd.
12.50%
Public-supported publicinfrastructure project
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
IV Taxes (continued)
5 Corporate income tax (continued)
Company Name
Preferential
tax rate
Reason
Phase III project of Hohhot Huanju NewEnergy Development Co., Ltd.
7.50%
Public-supported infrastructure
project, encouraged business in WestChina
Ongniud Banner Guangrun New EnergyCo., Ltd.
7.50%
Public-supported infrastructureproject, encouraged business in WestChina Tuquan Guanghuan New Energy Co., Ltd.7.50%
Public-supported infrastructureproject, encouraged business in WestChina
Inner Mongolia New Huanyu YangguangNew Energy Technology Co., Ltd.
7.50%
Public-supported infrastructureproject, encouraged business in WestChina Gengma Huanxing New Energy Co., Ltd. 7.50%
Public-supported infrastructureproject, encouraged business in WestChina
Dangxiong Youhao New EnergyDevelopment Co., Ltd.
7.50%
Public-supported infrastructureproject, encouraged business in WestChina Ningxia Huanneng New Energy Co., Ltd. Tax-free
Public-supported infrastructureproject, encouraged business in WestChina
Shangyi Shengyao New EnergyDevelopment Co., Ltd.
Tax-free
Public-supported publicinfrastructure project
Shaanxi Runhuan Tianyu TechnologyCo., Ltd.
Tax-free
Public-supported infrastructureproject, encouraged business in WestChina Hohhot Shuguang New Energy Co., Ltd. Tax-free
Public-supported publicinfrastructure project, encouragedbusiness in West China
Tianjin Binhai New Area Huanju NewEnergy Co., Ltd.
Tax-free
Public-supported publicinfrastructure project
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements
1 Monetary assets
December 31, 2023
January 1, 2023
Cash on hand583 480Bank deposits
19,807,150 33,161,505Deposits with the central bank
397,191 381,137Other monetary assets
1,719,347 1,835,379
21,924,271 35,378,501
Note Monetary assets with restricted use rights
December 31, 2023 January 1, 2023
TCL TECH Finance's statutory reserve deposits
with the central bank
341,091 321,852Other restricted monetary assets
1,586,365 1,381,025
1,927,456 1,702,877
On December 31, 2023, the Company’s bank deposits of RMB341,091,000 (December 31, 2022:
RMB321,852,000) were statutory deposit reserves deposited with the Central Bank by TCLTechnology Group Finance Co., Ltd., a subsidiary of the Company.
On December 31, 2023, the Company’s monetary assets offshore amounted to RMB1,533,937,000(December 31, 2022: RMB2,230,135,000), all of which were owned by the overseas subsidiariesof the Company.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
2 Held-for-trading financial assets
December 31, 2023
January 1, 2023
Financial assets classified as those measured at fair valuethrough profit or loss
23,184,117 12,703,507
Including: Debt instrument investments23,131,691 12,483,274
Equity instrument investments52,426 220,233
23,184,117 12,703,507
3 Derivative financial assets
December 31, 2023 January 1, 2023
Foreign exchange forwards and foreign exchange swaps73,645 206,398
Interest rate swaps34,363 154,636
108,008 361,034
4 Notes receivable
(1)Notes receivable by category
December 31, 2023 January 1, 2023
Bank acceptance notes615,059 512,767
Trade acceptance notes
333 82
615,392 512,849
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 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
December 31, 2023 January 1, 2023
Gross amount Allowance
Carryin
gamount
Gross amount Allowance
Carryingamount
Amount
Ratio(%)
Amoun
tPercentage
AmountRatio (%)
Amou
nt
Percentage
Notes receivablefor which theallowance fordoubtful accountswere establishedon the groupingbasis
615,392 100%--615,392512,849100% - - 512,849
Including: low-
riskportfolio
615,059 99.95%--615,059512,76799.98% - - 512,767
By aging analysis333 0.05%--333820.02% - - 82
615,392 100%--615,392512,849100% - - 512,849
(3)As at December 31, 2023, notes receivable in pledge were RMB499,930,000.
(4)As at December 31, 2023, endorsed or discounted notes receivable that were outstanding andderecognized amounted to RMB391,566,000 and endorsed or discounted notes receivable that wereoutstanding and not derecognized amounted to RMB9,923,000.
5 Accounts receivable
December 31, 2023 January 1, 2023
Accounts receivable22,362,875 14,505,731Less: allowance for doubtful accounts359,224 454,070
22,003,651 14,051,661
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
Accounts receivable (continued)
(1)Accounts receivable as at December 31, 2023 are classified as follows by how the doubtfuldebts were provisioned:
December 31, 2023Gross amount AllowanceLifetime
ECL rate
Gross amount
Accounts receivable for which the related
allowances for doubtful accounts wereestablished on the individual basis
234,41786.58% 202,962
Of which:
Accounts receivable 234,41786.58% 202,962
Accounts receivable for which the related
owances for doubtful accounts were
| l | |
| s | |
tablished on the grouping basis
22,128,4580.71% 156,262
Of which:
Group 1: by aging analysis 16,628,5900.39% 65,631Group 2: by tariff870,2340.01% 61Group 3: by photovoltaics3,742,0462.06% 77,006Group 4: other silicon materials
887,5881.53% 13,564
22,362,875 359,224
(2) The aging of accounts receivable is analysed as follows:
December 31, 2023January 1, 2023
AmountRatio (%)Amount Ratio (%)
Within 1 year
21,061,05994.18%13,254,660 91.37%
1 to 2 years
489,0842.19%350,702 2.42%
2 to 3 years
193,2560.86%339,078 2.34%
Over 3 years
619,4762.77%561,291 3.87%
22,362,875100%14,505,731 100%
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
Accounts receivable (continued)
(3)Allowances for doubtful accounts receivable are analysed as follows:
December 31, 2023
Beginning amount 454,070 New subsidiary 2,182 Accrued in current period 36,362 Reversal of current period (91,224) Write-off of current period (42,199) Reduced subsidiary (372) Exchange adjustment 405
Ending amount 359,224
(4) On December 31, 2023, the accounts receivable of the top five balances are as follows:
December 31, 2023 January 1, 2023
Total amount owed by the top five 10,129,405 5,422,959
Proportion of total accounts receivable 45.30% 37.38%
(5) Accounts receivable derecognized due to transfer
of financial assets
Item
Methods of transfer of
financial assets
Amountderecognized forthe period
Gain or loss on
derecognitionAccountsreceivable
Discounting and
factoring
7,223,995(47,893)
6 Receivables financing
December 31, 2023 January 1, 2023
Notes receivable financing 954,410 1,103,128
954,410 1,103,128
NoteAs at December 31, 2023, endorsed or discounted notes receivable that were outstanding andderecognized amounted to RMB16,096,035,000 and endorsed or discounted notes receivable thatwere outstanding and not derecognized amounted to RMB23,880,000.
As of December 31, 2023, the Company believes that financing for the receivables it held did nothave significant credit risks and will not cause significant losses due to default.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
7 Prepayments
(1) Prepayments are analyzed as follows:
December 31, 2023 January 1, 2023
Within 1 year2,798,957 3,586,208
1-2 years138,561 5,556
2-3 years7,423 1,530
Over 3 years
1,347 563
2,946,288 3,593,857
(2) As of December 31, 2023, the prepayments of the top five balances are as follows:
December 31, 2023 January 1, 2023
Total amount owed by the top five
1,790,548 2,655,698
As % of total prepayments
60.77% 73.90%
8 Other receivables
December 31, 2023 January 1, 2023
Dividends receivable 1,381,490 1,226 Other receivables 4,325,365 4,032,022
5,706,855 4,033,248
(1) Dividends receivable
December 31, 2023 January 1, 2023
Others 1,398,536 1,226Less: allowance for doubtfulaccounts
17,046-
1,381,490 1,226
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
8 Other receivables (continued)
(1) Dividends receivable (continued)
(a) Presentation of provision for bad debts on dividends receivable by category
December 31, 2023 January 1, 2023
Category
Gross amount Allowance
CarryingamountGross amountAllowance
Carryingamount
Amount
Ratio(%)
AmountPercentage
Amount
Ratio(%)
Amount Percentage
Allowancesfor baddebtsaccrued onanindividualbasis
1,398,536 100% 17,0461.22%1,381,4901,226100%- - 1,226
1,398,536 100% 17,0461.22%1,381,4901,226100%- - 1,226
(2) Other receivables
December 31, 2023 January 1, 2023
Other receivables4,691,1494,259,495Less: allowance fordoubtful accounts
365,784227,473
4,325,3654,032,022
(a) Nature of other receivables is analyzed as follows:
December 31, 2023January 1, 2023
Subsidy receivables 2,342,5351,868,634
Equity transferreceivables
618,7521,073,246
Security and deposits
497,819479,269
Others866,259610,873
4,325,3654,032,022
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
8 Other receivables (continued)
(2) Other receivables (continued)
(b) Presentation of provision for bad debts on other receivables by category
December 31, 2023 January 1, 2023
Category
Gross amount Allowance
Carryingamount
Gross amount Allowance
Carryingamount
Amount
Ratio(%)
Amount
Percent
age
Amount
Ratio(%)
Amount
Percenta
ge
Allowances for baddebtsaccrued onanindividualbasis
426,084 9.08% 293,60068.91%132,484177,3514.16%160,740 90.63% 16,611
Provisionsfor baddebtsaccrued ona portfoliobasis
4,265,065
90.92
%
72,1841.69%4,192,8814,082,14495.84%66,733 1.63% 4,015,411
4,691,149 100% 365,7847.80%4,325,3654,259,495100%227,473 5.34% 4,032,022
Among other receivables for which provisions for bad debts are accrued on an individual basis, importantother receivables are RMB234,837,000, and the balance of the provisions for bad debts correspondinglyaccrued is RMB211,353,000.
(c) Allowance for doubtful other receivables is analyzed as follows:
12-month
ECL
Lifetime ECL(credit notimpaired)
Lifetime ECL(credit impaired) Total
January 1, 2023 68,114134,78624,573 227,473
Transfer into the stage
(8,019)(105,368)113,387 - Return to the stage 1 127(29)(98) - Current accrual 13,657-204,386 218,043
Increase of newsubsidiaries
794-- 794
Reversal of currentperiod
(12,279)-(135) (12,414)
Write-off of currentperiod
-(424)(67,616) (68,040)
Decrease due todisposal of subsidiaries
(61)-- (61) Exchange adjustment (11)-- (11)
December 31, 2023 62,32228,965274,497 365,784
Among the amount written off in the current period, single other receivables with significance werewritten off by RMB52,122,000.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
Other receivables (continued)
(d)The aging of other receivables is analyzed as follows:
December 31, 2023
January 1, 2023
Carrying amount
Ratio (%)
Carrying amount
Ratio (%)
Within 1 year
3,192,63568.05%3,209,877 75.35%
1 to 2 years785,69016.75%417,448 9.80%
2 to 3 years371,4647.92%258,284 6.07%
Over 3 years341,3607.28%373,886 8.78%
4,691,149100% 4,259,495 100%
(e) As of December 31, 2023, the other receivables of the top five balances are as follows:
December 31, 2023January 1, 2023
Total amount owed by thetop five
3,006,544 2,324,850
As % of total otherreceivables
64.09% 54.58%
(f)
On December 31, 2023, there was no transfer of other receivables that did not conform to the conditionsfor derecognition in the balance of this account; no transaction arrangement for asset securitizationwith other receivables as the subject asset; and no financial instrument that was the subject ofsecuritization and did not conform to the conditions for derecognition.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
9 Inventories
(1)Inventories are classified as follows:
December 31, 2023 January 1, 2023
Carrying
balance
Provision fordepreciationof inventories/ provision forimpairment ofcontractperformance
costs
Carrying
amount
Carrying
balance
Provision fordepreciation
ofinventories /
provision
forimpairmentof contractperformancecosts
Carryingamount
Rawmaterials
6,605,273 636,5875,968,6865,604,506979,845 4,624,661
Work inprogress
3,656,706 659,0732,997,6333,674,059421,558 3,252,501
FinishedGoods
10,640,524 1,536,2919,104,23311,512,5971,705,750 9,806,847
Turnovermaterials
412,583 1,380411,203318,2911,178 317,113
21,315,086 2,833,33118,481,75521,109,4533,108,331 18,001,122
As of December 31, 2023, the Company had no inventory for liabilities guarantee.
(2) Provision for depreciation of inventories / provision for impairment of contract performance
January 1,
2023
Amount of increase inthe current period
Amount of decrease in the current
period
December31, 2023
Accruedin current
period
Others
Reversalof current
period
Write-offof current
period
Others
Rawmaterials
979,845 886,495 80,523(494,111)(813,741) (2,424) 636,587
Work inprogress
421,558 893,203 50,030(117,074)(588,911) 267 659,073
FinishedGoods
1,705,75
2,804,069 31,144(324,392)(2,679,109) (1,171) 1,536,291
Turnovermaterials
1,178 222 -(20)- - 1,380
3,108,331 4,583,989 161,697(935,597)(4,081,761) (3,328) 2,833,331
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
10 Contract assets
(1)Contract assets are classified as follows:
December 31, 2023 January 1, 2023
Carrying
balance
Allowance
fordoubtful
accounts
Carrying
amount
Carrying
balance
Allowance
fordoubtfulaccounts
Carrying
amount
Electricity chargesreceivable
362,058 18,151343,907327,54312,376 315,167
(2) Valuation allowances for contract assets are analyzed as follows:
January 1,2023
CurrentAccrual
Current Reversal
or write-off
Otherincreases
anddecreases
December
31, 2023
Electricitycharges
12,376 11,493(2,936)(2,782) 18,151
11 Held-for-sale assets
Item
Endingbalance
Impairment
allowance
Endingcarryingamount
Fairvalue
Estimated
disposal
cost
Estimated
disposal
period
Assetsforsale
162,416 -162,416252,69414,264
Within 1year
assets 162,416 -162,416252,69414,264
12 Non-current assets due within one year
December 31, 2023January 1, 2023
Other non-current assets due within one year 461,179 - Debt investments due within one year 119,516
-
580,695 -
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
13. Other current assets
December 31, 2023January 1, 2023
Short-term debt investments 28,563 939,864 VAT to be deducted, to be certified, etc. 4,244,948 3,775,842 Loans and advances to customers 845,764 640,917 Others 167,259 82,313
5,286,534 5,438,936
14 Debt Investments
December 31, 2023January 1, 2023
Treasury bonds and corporate bonds122,349 741,703
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
15 Long-term receivables
December 31, 2023 January 1, 2023
Discountrate
Grossamount
Allowance
Carryingamount
Grossamount
Allowance
Carryingamount
Financelease
720,281 - 720,281631,373-631,373
8.115%
Including:
Unrealizedfinancingincome
(518,000) - (518,000)(781,934)-
(781,934)
720,281 - 720,281631,373-631,373
16 Long-term equity investments
December 31, 2023 January 1, 2023
Grossamount
Impairment
allowance
Carrying
amount
Grossamount
Impairment
allowance
Carrying
amount
Associates(1)
26,404,102 1,452,98524,951,11729,065,027329,479 28,735,548
Jointventures(2)
529,657 49,503480,154570,17149,503 520,668
26,933,759 1,502,48825,431,27129,635,198378,982 29,256,216
As of December 31, 2023, the Company made impairment allowances for long-term equity investments in investees with poormanagement and insolvent assets.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 Long-term equity investments (continued)
(1) Associates
Increase or decrease in current periodName of investee
January 1,2023
Increase/decrease in
investment incurrent period
Investmentgains and
lossesrecognized byequity method
Othercomprehensiveincome adjustment
Otherequitychanges
Declared
Cashdividends or
profit
AccruedImpairment
allowance
Otherincreases
anddecreases
December 31,
2023
Bank of Shanghai Co., Ltd.
12,809,374-1,251,665(7,708) -(327,157)--13,726,174
China Innovative CapitalManagement Limited
944,392-25,698- ---210970,300
LG Electronics (Huizhou)Co., Ltd.
89,772-13,438- - -(13,400)---89,810
Shenzhen Qianhai QihangSupply Chain ManagementCo., Ltd.
27,358(40,000)(1,144)1,635 ---12,151-
Shenzhen Jucai SupplyChain Technology Co., Ltd.
15,273-4,3672 ------19,642
Shenzhen Tixiang BusinessManagement TechnologyCo., Ltd.
1,147-216- -----121,375
TCL Air Conditioner(Wuhan) Co., Ltd.
40,610-372- - -------40,982
TCL Finance (Hong Kong)Co., Limited
109,943-1,153- - -------111,096
Urumqi TCL EquityInvestment ManagementCo., Ltd.
1,090-(3)- - -------1,087
Hubei Changjiang HezhiEquity Investment FundPartnership (LimitedPartnership)
1,413,073(236,822)(16,932)- -------1,159,319
Ningbo DongpengWeichuang EquityInvestment Partnership(Limited Partnership)
365,51144,17745,027(1) -(29,243)--425,471Deqing Puhua Equity
Investment FundPartnership (LimitedPartnership)
126,213(8,668)31,573- - -------149,118
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 Long-term equity investments (continued)
(1) Associates (continued)
Increase or decrease in current periodName of investee
January 1,2023
Increase/decrease ininvestment in current
period
Investmentgains andlossesrecognized byequity method
Othercomprehensiveincome adjustment
Other equitychanges
DeclaredCash dividendsor profitdistribution
declared
Provision for
impairment
Other increases
and decreases
December 31,
2023
Ningbo Dongpeng Heli EquityInvestment Partnership (LimitedPartnership)
372,687(19,173)(42,773)- -(35,798)--274,943Wuxi TCL Aisikai BandaotiIndustry Investment FundPartnership (Limited Partnership)
310,930(5,061)(27,116)- -----278,753Wuxi TCL Venture Capital
Partnership (Limited Partnership)
36,850-(34)26 ------36,842Ningbo Meishan Bonded Port QiyuInvestment ManagementPartnership (Limited Partnership)
23,342-8,841- -------32,183Shanghai Gen Auspicious VentureCapital Partnership (LimitedPartnership)
15,057-3301,448 -(1,069)--15,766Nanjing Zijin A Dynamic
Investment Partnership (LimitedPartnership)
19,726(321)1,4552 -----20,862Huizhou Kaichuang Venture
Investment Partnership (LimitedPartnership)
8,695-(12)220 -----8,903Beijing A Dynamic VentureCapital Center (LimitedPartnership)
7,636-(3,498)- -----4,138Yixing Jiangnan Tianyuan Venture
Capital Company (LimitedPartnership)
4,820-(611)3 -----4,212Shenzhen Chuangdong New
Industry Investment FundEnterprise (Limited Partnership)
2,338-(3)- -----2,335Hubei Changjiang Hezhi Equity
Investment Fund Management Co.,Ltd.
11,553-1,574- -(3,000)---10,127Huizhou Kaimeng Angel
Investment Partnership (LimitedPartnership)
2,543-(53)- -----2,490Ningbo Jiutian Matrix Investment
Management Co., Ltd.
2,5976,800455- -------9,852Urumqi Qixinda Equity InvestmentManagement Co., Ltd.
4,502-873- -------5,375
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 Long-term equity investments (continued)
(1) Associates (continued)
Increase or decrease in current periodName of investee
January 1,
2023
Increase/decreasein investment in
current period
Investment
gains and
lossesrecognized
y equitymethod
Othercomprehensiveincome adjustment
Otherequitychanges
Declared
Cashdividends or
profitdistribution
declared
AccruedImpairment
allowance
Otherincreases
anddecreases
December
31, 2023Urumqi TCL Create
Dynamic Equity InvestmentManagement Co., Ltd.
759-(1)- ----758Beijing A Dynamic
Investment Consulting Co.,Ltd.
467-(4)- ----463Shanghai Gen AuspiciousInvestment ManagementCo., Ltd.
2,511-(23)- -(1,753)--735Nanjing A Dynamic Equity
Investment FundManagement Co., Ltd.
279-(2)- ----277Wuxi TCL Medical Imaging
Technology Co., Ltd.
25,837(644)(7,341)- ---15318,005Aijiexu New Electronic
Display Glass (Shenzhen)Co., Ltd.
880,249-(19,476)- -(3,700)--857,073TCL Ventures Fund L.P.29,018(19,698)1,562- -3,656-(14,538)-Getech Ltd.83,660-(1,560)(5) -----82,095Guangdong InnovativeLingyue IntelligentManufacturing andInformation TechnologyIndustry Equity InvestmentFund Partnership (LimitedPartnership)
502,444328,43059,337- - -(19,937)--870,274Guangdong Utrust
Emerging Industry EquityInvestment FundPartnership (LimitedPartnership)
167,809-13,024- - -----180,833
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 Long-term equity investments (continued)
(1) Associates (continued)
Increase or decrease in current periodName of investee
January 1,2023
Increase/decrease in
investment incurrent period
Investment
gains and
lossesrecognized byequity method
Othercomprehensiveincome adjustment
Otherequitychanges
Declared
Cashdividends or
rofitdistribution
declared
AccruedImpairment
allowance
Otherincreases
anddecreases
December 31,
2023Shenzhen XinhuoyichengRecreational and SportsIndustry Co., Ltd.
1,388-(112)- - ------1,276
JOLED Incorporation 159,302-(17,043)- - --(134,687)(7,572)-Sichuan Shengtian NewEnergy Development Co.,Ltd.
508,492-32,440- - -(9,128)---531,804SunPower Systems
International Limited
28,345-1,861- - -----30,206Zhonghuan Aineng (Beijing)Technology Co., Ltd.
4,118-(1,625)- - -----2,493Inner Mongolia Zhongjing
Science and TechnologyResearch Institute Co., Ltd.
136,682-(357)- - -----136,325Hunan Guoxin Bandaoti
Technology Co., Ltd.
9,825-64- - -----9,889Maxeon Solar Technologies,
Ltd.
1,620,417290,027(338,643)- - --(1,013,423)64,390622,768Xinjiang Goens EnergyTechnology Co., Ltd. (Note)
3,919,465(1,123,330)557,009- - -(3,353,144)---Ruihuan (Inner Mongolia)Solar Power Co., Ltd.
-(12,000)-- ---12,000-Tianjin Zhonghuan HaiheIntelligent ManufacturingFund Partnership (LimitedPartnership)
657,61538,51036,561- - -(4,986)--727,700Zhonghuan Feilang (Tianjin)
Technology Co., Ltd.
5,125(2,000)1,142- - ----4,267Ningbo Zhongxin Venture
Capital Partnership (LimitedPartnership)
144,968(698)(1,959)- - ----142,311
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 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
Investmentgains andlossesrecognized
y equitymethod
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared
Cashdividends or
bp
rofitdistribution
declared
AccruedImpairment
allowance
Otherincreases and
decreases
December
31, 2023
TCL Huanxin Bandaoti (Tianjin) Co., Ltd.
393,94689,460(52,272)- -------431,134
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
1,012-475- -------1,487
Inner Mongolia Huanye Material Co., Ltd.
6,163-1,059- -------7,222
Shenzhen Shutuo Technology Co., Ltd.38,202-2,409- ------(1,364)39,247
Shenzhen Qianhai Sailing InternationalSupply Chain Management Co., Ltd.
69,540-(42,523)(44) 1,164---28,137
Wuhan Guochuangke OptoelectronicEquipment Co., Ltd.
25,910(7,202)498- ------30,69549,901
Zhihui Xinyuan Commercial (Huizhou) Co.,Ltd.
3,936-6,455- -------10,391
Purplevine Holdings Limited
1,629-(1,398)- ------10,16410,395
Xinxin Bandaoti Technology Co., Ltd. 1,798,784-(34,120)- ------(1,764,664)-
Inner Mongolia Xinhua BandaotiTechnology Co., Ltd.
117,886440,000(9,984)- ------1,237549,139
Inner Mongolia Xinhuan Silicon EnergyTechnology Co., Ltd.
127,8471,668,000(50,230)- -------1,745,617
Shanghai Feilihua Shichuang TechnologyCo., Ltd.
41,054-2,035- ------6,70349,792
Jiangsu Jixin Bandaoti Silicon MaterialResearch Institute Co., Ltd.
--3,628- ----8,78712,415
Xi’an Simovi New Material Co., Ltd. -30,000334- ----53930,873
Guangdong TCL New Technology Co., Ltd. -1,767-- ----1,767
Hubei Consumer Finance Co., Ltd. 166,077-13,332- ----179,409
Tianjin Qiyier Communication &Broadcasting Co., Ltd.
287,755(58,722)13,694- -(2,548)-(56,696)183,483
28,735,5481,402,8321,463,104(4,422) 1,164(3,801,207)(1,148,110)(1,697,792)24,951,117
Note: Xinjiang Xiexin New Energy Materials Technology Co., Ltd. was renamed as Xinjiang Goens Energy TechnologyCo., Ltd. in May 2023.
Note: Xinxin Bandaoti Technology Co., Ltd. was acquired by Zhonghuan Advanced Bandaoti Technology Co., Ltd., a subsidiary of the Company, in February 2023 and became a subsidiary of theCompany.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
16 Long-term equity investments (continued)
(2) Joint ventures
Increase or decrease in current period
Name of investeeJanuary 1, 2023
Increase/decrease
in investment in
current period
Investment gains andlosses recognized by
equity method
Othercomprehensive
incomeadjustment
Other equity
changes
DeclaredCash dividends
or profitdistribution
declared
AccruedImpairment
allowance
Otherincreases and
decreases
ecember 31, 2023
Zhangjiakou Qixin Equity Investment
Fund Partnership
86,975-(22,184)- -(13,105)--51,686
Tianjin Huanyan Technology Co., Ltd.
140,793-(810)- ----139,983
TCL Huizhou City, Kai EnterpriseManagement Limited
1,347-12- ----1,359
Huizhou TCL Human Resources ServiceCo., Ltd.
6,274-2,656- ----8,930
TCL Microchip Technology (Guangdong)Co., Ltd.
285,27960,000(79,117)- 12,034---278,196
520,66860,000(99,443)- 12,034(13,105)--480,154
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
Long-term equity investments (continued)
(3) Impairment allowances for long-term equity investments
January 1,2023
Increase inthe period
Decrease
in theperiod
Otherchanges
December
31, 2023
Note
Pride TelecomLimited
1,624 --(210)1,414Note 1
Huaxia CPV(Inner Mongolia)Power Co., Ltd.
49,503 ---49,503Note 1
JOLEDIncorporation
318,604 134,687-(15,143)438,148Note 2
Maxeon SolarTechnologies,Ltd.
- 1,013,423--1,013,423Note 3
Ruihuan (InnerMongolia) SolarPower Co., Ltd.
9,251 -(9,251)--
378,982 1,148,110(9,251)(15,353)1,502,488
Note 1 Provisions for impairment were accrued for the long-term equity investments in these
investees at recoverable amounts because continuous operations loss occurred to theseinvestees with poor management.Note 2 This company has made an application to the Tokyo District Court for initiating a bankruptcy
reorganization procedure named “civil regeneration”, and the Company has fully accruedprovisions for impairment of long-term equity investments at their carrying amount.Note 3 This company’s products were mainly affected by such factors of the market location as the
economy, policies and prices, and its performance did not meet expectations. Since H2 2023,its stock price has began to decline significantly. With reference to the market price of thiscompany’s stock (calculated at its closing price on NASDAQ as at December 29, 2023), theCompany recognized a recoverable amount of RMB622,768,000 net of disposal costs andaccrued A provision for impairment of RMB1,013,423,000 for long-term equityinvestments.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
17 Investments in other equity instruments
December 31, 2023 January 1, 2023
Stocks 17,127 66,706 Equity of unlisted companies 369,521 373,290
386,648 439,996
Item name
ConfirmedDividendincomerecognized
AccumulatedProfits
Accumulatedlosses
Amount of other
comprehensiveincometransferred toretainedearnings
easons
| R | |
| d | |
esignated as
easured at fair
| m | |
| v | |
alue and
hose changes
| w |
| a |
re included in
ther
| o | |
| c | |
omprehensive
ncome
Stocks -
3,243(193,481)
-Being heldlong term forstrategicpurposes
Equity ofunlistedcompanies -
10, 561(25,959)
-Being heldlong term forstrategicpurposesTotal - 13, 804(219,440)-
18 Other non-current financial assets
December 31, 2023January 1, 2023
Equity investments 2,770,2512,928,827 Debt investments 201,315-
2,971,5662,928,827
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
19 Investment property
Houses andbuildings
Land use
rights
Total
Gross amount:
January 1, 2023
1,067,479 205,633 1,273,112
Increase
109,86315,961 125,824
Reclassified from fixed assets andintangible assets
109,86315,961 125,824Decreases(55,862)(1,918) (57,780)
Reclassified to fixed assets andintangible assets
(50,022)- (50,022)
Other decreases(5,840)(1,918) (7,758)
December 31, 2023
1,121,480219,676 1,341,156
Accumulated depreciation andamortization:
January 1, 2023
235,474 38,402 273,876
Increase
91,2586,388 97,646
Accrued in current period22,9254,511 27,436
Reclassified from fixed assets andintangible assets
68,3331,877 70,210
Decreases(9,899)(37) (9,936)
Reclassified to fixed assets andintangible assets
(9,372)- (9,372)
Other decreases
(527)(37) (564)
December 31, 2023
316,83344,753 361,586
Investment property, net:
December 31, 2023
804,647174,923 979,570
January 1, 2023
832,005 167,231 999,236
Impairment allowance:
January 1, 2023
52,787 - 52,787
Increase
15,104 - 15,104
Increase in the period
15,104 - 15,104
Decreases
-- -
Decrease in the period
-- -
December 31, 2023
67,891- 67,891
Investment property, net:
December 31, 2023
736,756174,923 911,679
January 1, 2023
779,218 167,231 946,449
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
20 Fixed assets
Houses and
buildings
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 27,226 225,122,237 Increase 10,408,101 60,125,440600,01951,401119,609 8,972 71,313,542Acquisition
and other
111,974 880,705120,98831,6891,000 4,422 1,150,778New
subsidiary
1,771,267 3,259,42812,9732,618- - 5,046,286Reclassifiedfrominvestmentproperty
50,022 ---- - 50,022Reclassifiedfromconstructionin progress
8,474,838 55,985,307466,05817,094118,609 4,550 65,066,456 Decreases (443,133) (6,668,274)(81,971)(6,171)(135,438) (9,032) (7,344,019)Writtendown withpublicgrants
(3,846) (1,281,698)(790)-- - (1,286,334)Reclassifiedtoinvestmentproperty
(109,863) ---- - (109,863)Otherdecreases
(329,424) (5,386,576)(81,181)(6,171)(135,438) (9,032) (5,947,822)Exchangeadjustment
10,072 (2,214)1,526343- 771 10,498
December31, 2023
54,954,646 228,210,6003,256,808306,6672,345,600 27,937 289,102,258
Accumulated
depreciation:
January 1,
2023
7,827,013 80,699,683 1,726,432 165,109 514,036 15,930 90,948,203 Increase 1,987,325 19,623,572297,11842,07484,502 4,762 22,039,353 Accrual 1,851,730 18,753,835287,12440,81284,502 4,762 21,022,765Newsubsidiary
126,223 239,0539,9941,262- - 376,532Reclassified
frominvestmentproperty
9,372 ---- - 9,372Otherincreases
- 630,684--- - 630,684 Decreases (149,952) (1,680,893)(56,278)(4,043)(18,972) (5,799) (1,915,937)Reclassified
toinvestmentproperty
(68,333) ---- - (68,333)Other
decreases
(81,619) (1,680,893)(56,278)(4,043)(18,972) (5,799) (1,847,604)Exchangeadjustment
1,146 501722245- 286 2,900
December31, 2023
9,665,532 98,642,8631,967,994203,385579,566 15,179 111,074,519
Fixed assets,
net:
December
31, 2023
45,289,114 129,567,7371,288,814103,2821,766,034 12,758 178,027,739January 1,2023
37,152,593 94,055,9651,010,80295,9851,847,393 11,296 134,174,034
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
20 Fixed assets (continued)
Houses
andbuildings
Machineryequipment
Office
andelectronicequipment
Transportation
equipment
Powerstations
Others
TotalImpairmentallowance:
January 1,
2023
766,317 832,173 35,290 111 62,059 412 1,696,362Accrued incurrentperiod
- 3,407--- - 3,407Write-off of
currentperiod
(4,602) (74,865)(80)-- - (79,547)Other
transfersout
(15,104) ---- - (15,104)December
31, 2023
746,611 760,71535,21011162,059 412 1,605,118
Fixed
assets,carryingamount:
December
31, 2023
44,542,503 128,807,0221,253,604103,1711,703,975 12,346 176,422,621January 1,
2023
36,386,276
93,223,792 975,512 95,874
1,785,334
10,884
132,477,672
Please refer to Item 82 of Note V for information on fixed asset pledge. As at December 31, 2023, the gross
amount of the fixed assets that were fully depreciated and still in use was RMB50,139,955,000.
Fixed assets with pending ownership certificates at the end of the current period:
Carrying amount
Expected
time of obtainingownership certificate
Houses and buildings
(Note)
18,258,415
Expected to becompleted in 2024
Note As at December 31, 2023, the fixed assets with pending ownership certificates of the Company were mainly
the buildings and constructions of CSOT’s t3, t5 and t9 manufacturing bases, as well as the buildings andconstructions of Inner Mongolia Zhonghuan Crystal Material Co., Ltd., Tianjin Zhonghuan AdvancedMaterial&Technology Co., Ltd. and Tianjin Huanhai Industrial Park Co., Ltd.
21 Construction in progress
(1) Schedule of construction in progress
December 31, 2023January 1, 2023
Construction in progress17,013,179 52,063,442Less: Impairment allowance13,127 9,608
17,000,05252,053,834
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
21 Construction in progress (continued)
(2) Changes to construction in progress
Project name
Budget January 1, 2023
Increase in theperiod
Transfer-in incurrent periodFixed assets
Othermovements
December31, 2023
Accumulatedinvestment in theproject as % of
budget
Projectprogress
Cumulativecapitalized
interest
Including:
capitalized interestin current period
Interestcapitalization rate for
current
period Funding source
t9 production line ofLCD panel
31,500,000 10,383,892 3,368,415(13,098,442)(290,227)363,63874.77%
Underconstruction
274,494130,1083.68%
Proprietary funds,proceeds from shareoffering and loansLarge-diameterbandaoti silicon wafersfor integrated circuit
5,410,520 1,630,505 2,069,243(259,497)(452,287)2,987,96479.36%
Underconstruction
5,3264,6883.35%
Self-funded andfinanced funds 50GW (G12) solar-grade monocrystallinesilicon material smartfactory project
10,979,740 3,667,153 3,153,523(5,798,298)(96,391)925,98696.83%
Underconstruction
152,09659,9972.26%
Self-funded andfinanced fundsSmart factory with anannual output of 35GWhigh-purity solar ultra-thin monocrystallinesilicon
3,650,050 - 1,325,407(332,793)-992,61436.31%
Underconstruction
3,8703,8702.90%
Self-funded andfinanced funds
Bandaoti silicon wafersfor integrated circuit
10,500,000 - 2,278,929(744,148)(351,462)1,183,31962.01%
Underconstruction
385,7736416.15%
Self-funded andfinanced funds Production line of 8-12-inch bandaotisilicon wafers forintegrated circuit
5,707,172 1,130,031 620,597(457,989)(33,164)1,259,47587.46%
Underconstruction
20,62819,0953.35%
Self-funded andfinanced funds
Others
Not applicable 35,242,253
19,586,151(44,375,289)(1,166,060)9,287,055
52,053,834 32,402,265(65,066,456)(2,389,591)17,000,052
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
22 Right-of-use assets
Houses andbuildings
Transportation
equipment
Machineryequipment
Land use
rights
TotalGross amount:
January 1, 2023 4,293,124 1,4301,110,462134,541 5,539,557Increase 1,732,859 750366,69943,265 2,143,573
New subsidiary 35,402 -212,139- 247,541Leased in 1,192,877 750-43,265 1,236,892Other increases 504,580 -154,560- 659,140Decreases (70,742) (302)(280,790)(55,039) (406,873)
Reduced subsidiary - -(241,052)(55,039) (296,091)Reduction due tocontract revision
(9,122) --- (9,122)Other decreases (61,620) (302)(39,738)- (101,660)Exchange adjustment 8,543 17-- 8,560December 31, 2023 5,963,784 1,8951,196,371122,767 7,284,817
Accumulateddepreciation:
January 1, 2023 227,403 912189,88611,232 429,433Increase 395,404 630158,91116,240 571,185
New subsidiary 13,212 -32,082- 45,294Accrual 382,192 630126,82916,240 525,891Decreases (49,711) (302)(50,065)(3,304) (103,382)
Other decreases (49,711) (302)(50,065)(3,304) (103,382)Exchange adjustment 1,131 4-- 1,135December 31, 2023 574,227 1,244298,73224,168 898,371
Right-of-use assets,carrying amount:
December 31, 2023 5,389,557 651897,63998,599 6,386,446January 1, 2023 4,065,721 518920,576123,309 5,110,124
Impairment allowance:
January 1, 2023 - --- -December 31, 2023 - --- -
Right-of-use assets,carrying amount
December 31, 2023 5,389,557 651897,63998,599 6,386,446January 1, 2023 4,065,721 518 920,576 123,309 5,110,124
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V
Notes to Consolidated Financial Statements (Continued)23 Intangible assets
Land userights
Non-patenttechnologies/patents
Others TotalGross amount:
January 1, 2023 9,216,25711,350,4771,995,65022,562,384Increase 308,0482,561,245952,2363,821,529New subsidiary 306,180405,374170,486882,040Purchase 1,868284,256162,447448,571
Reclassified from investmentproperty
----
Reclassified from developmentcosts
-1,871,615-1,871,615Others --619,303619,303Decreases (138,422)(100,663)(16,359)(255,444)Sale and disposal (43,966)(14,625)(7,786)(66,377)
Reclassified to investmentproperty
(15,961)--(15,961)Reduced subsidiary (3,144)-(426)(3,570)Other decreases (75,351)(86,038)(8,147)(169,536)Exchange adjustment -1,4964651,961December 31, 2023 9,385,88313,812,5552,931,99226,130,430
Accumulated amortization:
January 1, 2023 1,018,4073,685,498926,4325,630,337Increase 280,1791,406,581318,1582,004,918Accrual 264,5411,382,848259,9561,907,345New subsidiary 15,63823,73358,20297,573Decreases (18,739)(39,779)(12,343)(70,861)Sale and disposal (3,842)(5,913)(6,900)(16,655)
Reclassified to investmentproperty
(1,877)--(1,877)Reduced subsidiary (157)-(426)(583)Other decreases (12,863)(33,866)(5,017)(51,746)Exchange adjustment -(2,484)269(2,215)December 31, 2023 1,279,8475,049,8161,232,5167,562,179Intangible assets, net：
December 31, 2023 8,106,0368,762,7391,699,47618,568,251January 1, 2023 8,197,8507,664,9791,069,21816,932,047Impairment allowance:
January 1, 2023 23,562113,40611,148148,116Accrual ----Exchange adjustment -591-591December 31, 2023 23,562113,99711,148148,707Intangible assets, carrying amount:
December 31, 2023 8,082,4748,648,7421,688,32818,419,544January 1, 2023 8,174,2887,551,5731,058,07016,783,931
As at December 31, 2023, the total carrying amount of land use rights for which the title certificate has not beenregistered properly was RMB12,745,000.Please refer to Item 82 of Note V for information on collateralized intangible assets.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
24 Development costs
Development expenditures are presented as follows:
December 31, 2023January 1, 2023
Display 1,455,1102,172,507New energy photovoltaic & materials1,086,3831,006,700
2,541,4933,179,207
25 Goodwill
(1) Gross amount of goodwill
Name of investee or item
incurring goodwill
January 1,
2023
Increase
in theperiod
Decrease
in theperiod
December
31, 2023
TCL Medical Radiological
Technology (Beijing) Co., Ltd. Note 1
28,967-- 28,967Qingdao Blue Business
Consulting Co., Ltd. Note 2
2,452-- 2,452Tianjin Huan'Ou Bandaoti
Material&Technology Co., Ltd. Note 3
214,683-- 214,683TCL Technology Group (Tianjin)
Co., Ltd. Note 4
6,726,130-- 6,726,130Moka International Limited Note 51,728,973-- 1,728,973Suzhou China Star
Optoelectronics Technology Co.,Ltd. Note 6
486,603-- 486,603Huizhou Kedate Smart Display
Technology Co., Ltd. Note 7
3,011-- 3,011Suzhou China Star
Environmental ProtectionTechnology Co., Ltd. Note 8
-43,408 - 43,408Xinxin Bandaoti Technology
Co., Ltd. Note 9
- 1,180,005 - 1,180,005Techigh Circuit Technology
(Huizhou) Co., Ltd.
Note
- 131,477- 131,477
9,190,8191,354,890 - 10,545,709
(2) Goodwill impairment allowance
Name of investee
January 1,
2023
Increase
in theperiod
Decrease
in theperiod
December 31,
2023
TCL Medical Radiological
Technology (Beijing) Co., Ltd.
28,967-- 28,967
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
25 Goodwill (continued)
(2) Goodwill impairment allowance (continued)
Note 1 In 2010, the Company acquired a 51.82% interest in TCL Medical Radiological Technology (Beijing)
Co., Ltd. (hereinafter referred to as “TCL Medical Radiological Technology”) with capital of RMB52,319,000. Thus, the difference between the accumulated investment of the Company in TCLMedical Radiological Technology (corresponding to 51.82% equity) and the fair value of the netidentifiable assets of TCL Medical Radiological Technology attributable to the Company on thesettlement date (equal to RMB28,967,000) was recorded in the Company's goodwill. An impairmentallowance of RMB 28,967,000 had been made on such goodwill in 2018.
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 toa 60% 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 this item.
Note 3 Tianjin Huan’Ou Bandaoti Material&Technology Co., Ltd. is a subsidiary of TCL Technology Group
(Tianjin) Co., Ltd., which the Company has acquired in a business combination not involving entitiesunder common control.
Note 4 The Company completed its acquisition of 100% stake in TCL Technology Group (Tianjin) Co., Ltd.
(former name: Tianjin Zhonghuan Electronic Information Group Co., Ltd.) on October 1, 2020 witha cash consideration of RMB12,500,000,000. At the date of acquisition, the Group obtained theeffective control of TCL Technology Group (Tianjin) Co., Ltd., and included such company into theconsolidated financial statements. On the date of transaction, the difference between the accumulatedinvestment of the Company in TCL Technology Group (Tianjin) Co., Ltd. (corresponding to the 100%equity) and the fair value of the net identifiable assets of TCL Technology Group (Tianjin) Co., Ltd.attributable to the Company on the settlement date (equal to RMB6,726,130,000) was recorded in thisitem. The goodwill mainly consists of 2 asset groups: the new energy photovoltaic and other siliconmaterials and the Tianjin Printronics Circuit Corp.
Note 5 In April 2021, the Company acquired 100% interest in Moka International Limited with a cash
consideration of RMB2,800,000,000. Thus, the difference between the accumulated investment of theCompany in Moka International Limited (corresponding to the 100% equity) 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 this item.
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% equity) 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 inthis item.
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 betweenthe investment of the Company in Huizhou Kedate Smart Display Technology Co., Ltd.(corresponding to the 100% equity) and the fair value of the net identifiable assets of Huizhou KedateSmart Display Technology Co., Ltd. attributable to the Company on the settlement date (equal toRMB3,011,000) was recorded in this item.
Note 8Suzhou China Star Optoelectronics Technology Co., Ltd., a subsidiary of the Company, completed the acquisitionof 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. in May 2023 at a cashconsideration of RMB344,942,000. As at the date of this transaction, the difference (RMB43,408,000) betweenthe investment amount i.e. the 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd.held by Suzhou China Star Optoelectronics Technology Co., Ltd. and the fair value of the identifiable net assetsof the equity was recorded in this item.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
25 Goodwill (continued)
(2) Goodwill impairment allowance (continued)
Note 9 Zhonghuan Advanced Bandaoti Technology Co., Ltd., formerly Zhonghuan Advanced Bandaoti
Material Co., Ltd., a subsidiary of the Company, completed the acquisition of 100% equity of XinxinBandaoti Technology Co., Ltd. in February, 2023 at a consideration of RMB7,399,683,000 by issuingequity securities. As at the date of this transaction, the difference (RMB1,180,005,000) between theinvestment amount i.e. the 100% equity of Xinxin Bandaoti Technology Co., Ltd. held by ZhonghuanAdvanced Bandaoti Technology Co., Ltd. and the fair value of the identifiable net assets of the equitywas recorded in this item.
Note 10 Tianjin Printronics Circuit Corporation, a subsidiary of the Company, completed the acquisition of
the equity of and increased investment in Techigh Circuit Technology (Huizhou) Co., Ltd. in October2023 at a consideration of RMB423,103,000 in cash. As at the date of this transaction, the difference(RMB131,477,000) between the investment amount i.e. the 51% equity of Techigh CircuitTechnology (Huizhou) Co., Ltd. held by the Company and the fair value of the identifiable net assetsof the equity are recognized in this item.
(3) Goodwill impairment test
As at December 31, 2023, the recoverable amounts of the asset group of Blue Business Consulting
usiness, asset group of new energy photovoltaic and material, asset group of Moka InternationalLimited, asset group of Huizhou Kedate Smart Display Technology Co., Ltd., asset group of SuzhouChina Star Optoelectronics Technology Co., Ltd., asset group of Suzhou China Star EnvironmentalProtection Technology Co., Ltd., asset group of Xinxin Bandaoti Technology Co., Ltd., and assetgroup of Techigh Circuit Technology (Huizhou) Co., Ltd., including goodwill, were calculated usingthe expected discounted future cash flow method based on the budget approved by the management(for a budget period of 5 to 10 years). The estimated perpetual annual growth rate was adopted tocalculate the future cash flow exceeding the budget period. The perpetual annual growth rate(primarily 0% - 3%) adopted by the management was consistent with predicted data on the industry.The management determines the revenue growth rate and determines the EBITDA (mainly 2.62%-
29.10%) based on historical experience and forecasts of market development, combined with the
Company’s future development strategic plan and adopt a discount rate (mainly 11.35%-14.19%) thatreflects specific risks of the relevant asset groups. The recoverable amount of the Tianjin PrintronicsCircuit Corp asset group is determined based on the higher of the present value of the estimated futurecash flows of the asset or the fair value less costs of disposal. After the management analyzed therecoverable amount of each asset group based on these assumptions, no provision for impairment wasrequired for the goodwill of any of the above asset groups as of December 31, 2023.
26 Long-term deferred expenses
January 1,
2023
Increase in
the period
Amortizationin the period
Others
December
31, 2023
Improvement expense onleased fixed assets
1,441,265425,924(265,966)(67) 1,601,156
Others 1,302,9432,381,820(1,882,719)(511) 1,801,533
2,744,2082,807,744(2,148,685)(578) 3,402,689
V Notes to Consolidated Financial Statements (Continued)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
27 Deferred income tax assets and deferred income tax liabilities
(1) Un-offset deferred income tax assets
December 31, 2023 January 1, 2023
Deductibletemporarydifference
Deferredincome tax
assets
Deductibletemporarydifference
Deferred
incometax assets
Deductible losses
24,627,5804,048,12819,383,933 3,055,974Asset impairment
allowances
3,817,375629,4824,132,996 785,212
Provisions
831,604130,466559,584 91,408
Changes in fair value
143,30222,17015,398 2,792
Lease liabilities
4,309,382486,276195,722 29,358
Others
2,423,324469,3821,924,357 200,865
36,152,5675,785,90426,211,990 4,165,609
(2) Un-offset deferred income tax liabilities
December 31, 2023
January 1, 2023
Taxable
temporarydifferences
Deferred
taxliabilities
Taxabletemporarydifferences
Deferredincome tax
liabilities
Accelerated depreciationof fixed assets
15,603,1882,606,51813,198,261 2,046,374
One-off tax deductionfor fixed assets
7,829,9221,172,2856,818,647 1,021,284
Increase in value ofassets as assessed inbusiness combinationnot involving entitiesunder common control
2,841,620529,7691,627,106 378,993
Changes in fair value
301,79370,908331,292 71,725
Right-of-use assets
4,083,249472,4631,139 171
Others
522,095115,226951,687 212,603
31,181,8674,967,16922,928,132 3,731,150
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
27 Deferred income tax assets and deferred income tax liabilities (continued)
(3)
There were no deferred income tax assets or liabilities presented on a net basis afteroffsetting
Item
Amount subject to
mutual offset ofdeferred incometax assets against
liabilities at theend of the period
Closing balance ofdeferred income taxassets or liabilities after
offset
Deferred income tax assets (3,539,682)2,246,222
Deferred income tax liabilities
(3,539,682)1,427,487
Item
Amount subject to
mutual offset ofdeferred incometax assets against
liabilities at thebeginning of the
period
Opening balance ofdeferred income taxassets or liabilities after
offset
Deferred income tax assets (2,411,722)1,753,887Deferred income tax liabilities (2,411,722)1,319,428
(4) Unrecognized deferred income tax assets
December 31, 2023January 1, 2023
Deductible temporary difference1,712,962306,669
Deductible losses 13,284,65810,302,065
14,997,62010,608,734
(5)
Deductible losses in respect of unrecognized deferred income tax assets will expirein the following years:
December 31, 2023January 1, 2023
2022
-268,388
2023
581472,917
2024
129,992472,157
2025
286,860440,443
2026
952,9251,242,203
2027 onwards
11,914,3007,405,957
13,284,65810,302,065
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
28 Other non-current assets
December 31, 2023 January 1, 2023
Grossamount
Impairment
allowance
Carrying
amount
Grossamount
Impairment
allowance
Carrying
amount
Other13,081,184 -13,081,1846,293,943- 6,293,943
13,081,184 -13,081,1846,293,943- 6,293,943
Note Other non-current assets mainly include prepayments for engineering equipment, paymentsfor land use rights, etc.
29 Short-term borrowings
December 31, 2023January 1, 2023
Unsecured borrowings 8,437,47810,214,632 Borrowings secured by pledge 19,076- Interest payable 17,0281,279
8,473,58210,215,911
As at December 31, 2023, the Company’s short-term pledged loans were equivalent to
RMB19,076,000, pledged with held-for-trading financial assets equivalent to RMB21,143,000.As of December 31, 2023, the Company does not have any short-term borrowings that have expiredand have not been repaid.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
30 Borrowings from the Central Bank
As at December 31, 2023, the balance of the borrowings of TCL Technology Group FinanceCo., Ltd. (a subsidiary of the Company) from the Central Bank was RMB995,010,000(December 31, 2022: RMB777,676,000).
31 Customer deposits and deposits from banks and other financial institutions
December 31, 2023January 1, 2023
Customer deposits and deposits from otherbanks and financial institutions
270,929603,423
Customer deposits and deposits from banks and other financial institutions are the depositsof related and nonrelated enterprises absorbed by TCL Technology Group Finance Co., Ltd.,a subsidiary of the Company, within the business scope approved by the regulatory authority.
32 Held-for-trading financial liabilities
December
31, 2023
January 1,
2023
Financial liabilities measured at fair value through profit or loss.251,451 861,912
33 Derivative financial liabilities
December 31, 2023January 1, 2023
Derivative financial liabilities 58,59170,735
34 Notes payable
December 31, 2023January 1, 2023
Bank acceptance notes 5,518,1135,731,632Trade acceptance notes 92,689634,028
5,610,8026,365,660As of December 31, 2023, the Company had no notes payable that were due but not paid.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
35 Accounts payable
December 31, 2023 January 1, 2023
Amounts due to suppliers 29,402,493 26,381,912
As of December 31, 2023, there were no significant accounts payable aged over one year.
36 Advances from customers
December 31, 2023January 1, 2023
Advances from customers
6781,402
As of December 31, 2023, the Company had no significant accounts receivable aged over one year.
37 Contract liabilities
December 31, 2023January 1, 2023
Advances from customers 1,899,4682,336,008
As at December 31, 2023, the Company had no significant contract liability aged over one year.
38 Employee benefits payable and long-term employee benefits payable
(1)Employee compensation payable December 31, 2023January 1, 2023
Short-term employee benefits
payable
3,016,7082,341,429 Defined contribution plans payable 14,59926,353 Dismissal benefits payable 3,1909,151
3,034,4972,376,933
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
Employee compensation payable and long-term employee compensation payable (continued)
(1) Employee benefits payable (continued)
(a)Short-term employee benefits presented
January 1, 2023
Increase in
the period
Decrease in the
period December 31, 2023
Wages, bonuses, allowances and
subsidies
2,034,23810,940,235(10,065,459) 2,909,014 Employee services and benefits -459,819(459,819) - Social insurance benefits 38,105377,454(382,854) 32,705Including: medical insurancepremium
36,751344,899(349,642) 32,008Employment injuryinsurance premiums
69519,295(19,311) 679 Maternity insurance 65913,260(13,901) 18 Housing fund 27,917376,200(385,390) 18,727Trade union funds and staffeducation funds
49,418209,842(204,139) 55,121 Others 191,75135,609(226,219) 1,141
2,341,42912,399,159(11,723,880) 3,016,708
(b) Defined contribution plans
January 1, 2023
Increase inthe period
Decrease in theperiod December 31, 2023
Basic pension insurance 25,381755,073(766,244) 14,210 Unemployment insurance 97222,945(23,528) 389
26,353778,018(789,772) 14,599
(2) Long-term employee compensation payable
December 31, 2023January 1, 2023
Supplementary pension insurance 23,276 25,101 Other long-term benefits 6,369 447,437
29,645 472,538
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
39 Taxes and levies payable
December 31, 2023January 1, 2023
Corporate income tax
406,607 731,839 Value-added tax 112,854 211,873 Individual income tax 31,238 42,611 Urban maintenance and construction tax 72,993 60,858 Education surcharges 52,134 43,495 Others 185,516 124,915
861,342 1,215,591
Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates.
40 Other payables
December 31, 2023January 1, 2023
Dividends payable 54,251 40,010 Other payables 22,117,151 24,150,342
22,171,402 24,190,352
(1) Dividends payable
December 31, 2023January 1, 2023
Other non-controlling interests54,251 40,010
54,251 40,010
(2) Other payables
December 31, 2023January 1, 2023
Payables for engineering equipment16,886,446 19,130,372
Unpaid expenses2,653,858 2,195,904
Security and deposits396,797 353,207
Others2,180,050 2,470,859
22,117,151 24,150,342
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
41 Non-current liabilities due within one year
December 31,
2023
January 1, 2023
Long-term borrowings due within one year(Note 1)
43 18,603,703 4,341,300
Bonds payable due within one year (Note 2)
4,436,729 5,170,383
Lease liabilities due within one year
520,010 295,010
Long-term payables due within one year
377,513 179,127
Interest payable due within one year
391,958 552,181
Long-term employee compensation payable duewithin one year
301,746 419,320
24,631,659 10,957,321
Note 1 The interest rates of the Company’s long-term borrowing due within one year ranged from 2.3% to
4.8% 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 19TCL 01: Issued in May 2019, with a term of 5 years, the closing balance as
at December, 31 of RMB999,932,000.
② Medium-term note 21TCL Group MTN001 (high-growth bond): Issued in May 2021, with a
term of 3 years, the closing balance as at December, 31 of RMB1,999,418,000.
③ Corporate bond 19TCL 02: Issued in July 2019, with a term of 5 years, the closing balance as
at December, 31 of RMB998,749,000.
④ Corporate bond 19TCL 03: Issued in October 2019, with a term of 5 years, the closing balance
as at December, 31 of RMB438,630,000.
42 Other current liabilities
December 31, 2023January 1, 2023
After-sales service expense (note)1,311,853 844,293
Output tax to be transferred202,571 175,626
Others48,821 165,929
1,563,245 1,185,848
Note After-sales service expense expected to occur within 1 year is presented in other current liabilities.
V Notes to Consolidated Financial Statements (Continued)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
43 Long-term borrowings
December 31, 2023 January 1, 2023
Borrowings secured by collateral 39,851,294 42,317,366 Borrowings secured by pledge 5,595,835 6,675,371 Unsecured borrowings 90,818,783 73,951,728
136,265,912 122,944,465
Including: long-term loans due within one year (18,603,703) (4,341,300)
117,662,209 118,603,165
The maturities of the Company's long-term borrowings vary from 2023 to 2043.
As at December 31, 2023, the long-term borrowings secured by collateral were equivalent toRMB39,851,294,000 (December 31, 2022: RMB42,317,366,000), which were secured by thecollaterals of the land use right, houses and buildings, machinery and equipment of aboutRMB97,095,652,000 (December 31, 2022: RMB110,182,749,000); the long-term pledged
orrowings were equivalent to RMB5,595,835,000 (December 31, 2022: RMB6,675,371,000),which were pledged by the collaterals of the 60% equity in Suzhou China Star OptoelectronicsTechnology Co., Ltd., 100% equity in Suzhou China Star Optoelectronics Display Co., Ltd. andaccounts receivable and contract assets of about RMB505,109,000 (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 2.40% to 7.75%).
44 Bonds payable
December 31, 2023 January 1, 2023
Corporate bonds2,121,837 4,518,438
MTN6,992,011 7,488,413
9,113,848 12,006,851
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V
otes to Consolidated Financial Statements (Continued)44 Bonds payable (continued)
(1) Movements in bonds payable
Bond name Par value Issue date Maturity
Issuedamount
January 1,
2023
Issued incurrentperiod
Accruedinterest as
per parvalue
Amortization
of premiumor discount
Repaid
incurrentperiod
Others(note)
December 31,
2023
19TCL01 1,000,000
May 20,2019
51,000,0001,000,264 -31,500(109)-(1,000,155)- 19TCL02 1,000,000
July 23,2019
51,000,000996,522 -30,5001,104-(997,626)- 19TCL03 2,000,000
October 21,2019
52,000,000436,934 -12,9801,268-(438,202)- TCL TEC1 1,957,483
July 14,2020
51,957,4832,084,718 -39,8406,507-30,6122,121,837
21TCL Group MTN001 (High-Growth Bonds)
2,000,000
May 10,2021
32,000,0001,997,821 -82,809525-(1,998,346)- 22TCL Group MTN001 2,000,000
January 14,2022
32,000,0001,997,392 -68,8411,148--1,998,540 22TCL Group GN002 1,500,000
April 27,2022
31,500,0001,497,217 -49,3861,198--1,498,415
22TCL Group MTN003 (Scienceand Technology Notes)
2,000,000July 6, 202232,000,0001,995,983 -68,8411,597--1,997,580
23TCL Group MTN001 (Scienceand Technology Notes)
1,500,000
February 7,2023
31,500,000- 1,500,00055,124(2,524)--1,497,476
Total 14,957,483 ————14,957,483 12,006,851 1,500,000439,82110,714-(4,403,717)9,113,848
NN
ote Others are bonds payable within one year which are reclassified to non-current liabilities due within one year and exchange adjustment.
TCL Technology Group CorporationNotes to Financial Statements
For the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
45 Lease liabilities
December 31, 2023 January 1, 2023
Total lease liabilities 6,257,298 4,756,393
Less: Current portion of lease liabilities 520,010 295,010
Total 5,737,288 4,461,383
46 Long-term payables
December 31, 2023 January 1, 2023
Finance lease2,739,444 887,763
47 Deferred income
January 1, 2023
Increase in
the period
Decrease in
the period
December 31, 2023
Public grants 2,468,1457,380,522(8,308,019) 1,540,648
2,468,1457,380,522(8,308,019) 1,540,648
Items involving public grants
January 1,2023
Newgrants in
currentperiod
Amountrecorded inother income
in current
period
Amount used
to offsetcosts andexpenses in
currentperiod
Otherchanges
(note)
December
31, 2023Public grants
related toassets
953,042 1,012,020(3,196)(174,754)(1,545,932) 241,180Public grants
related toincome
1,515,103 6,368,502(2,904,735)(3,375,689)(303,713) 1,299,468
2,468,145 7,380,522(2,907,931)(3,550,443)(1,849,645) 1,540,648
Note "Other changes" were deferred income offset by the carrying amounts of relevant assets.
TCL Technology Group CorporationNotes to Financial Statements
For the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
48 Estimated liabilities
December 31, 2023 January 1, 2023
After-sales service fee of products
55,426 27,105
Pending litigation
61,969 70,379
Onerous contract
- 38
117,395 97,522
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
49 Share capital
January 1, 2023 Increase or decrease in current periodDecember 31, 2023
AmountRatio (%)New issues
Sharesconverted from
capital reserve
OthersSubtotalAmountRatio (%)
I. Restricted Shares3,420,22020.03%-342,022 (3,081,704)(2,739,682)680,5383.62%
II. Non-restricted shares13,651,67279.97%-1,365,167 3,081,7044,446,87118,098,54396.38%
III. Total shares17,071,892100%-1,707,189 -1,707,18918,779,081100%
As at December 31, 2023, the Company's total share capital was 18,779,081,000 shares.
Note
Except for Chairman of the Board Mr. Li Dongsheng who holds restricted shares subscribed for in a private placement, none of the other incumbent directors, supervisors orsenior management hold any restricted shares from a split-share structure reform or a private placement. The shares held by these personnel will stay partially frozen as per theRules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of the Company and the Changes thereof. The trading and informationdisclosure in relation to these shares shall be in strict compliance with the applicable laws, regulations and rules.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
50 Capital reserves
January 1, 2023
Increase inthe period
Decrease in
the periodDecember 31, 2023
Share capitalpremium
12,437,990423,212(2,371,931) 10,489,271
Other capital reserves84,803182,935(4,954) 262,784
12,522,793606,147(2,376,885) 10,752,055
51 Treasury share
January 1, 2023
Increase inthe period
Decrease inthe period
December 31, 2023
Treasury share
1,314,581247,171(466,809) 1,094,943
Increase in the period is mainly stock repurchases for the employee stock ownership plan or theequity incentives of the Company. On May 31, 2023, the 32nd meeting of the Seven-term Board ofDirectors was held to deliberate and approve the Proposal on the Repurchase of Certain Shares fromthe Social Public in 2023. The Company will repurchase its own shares via centralized bidding, andthe Company’s shares repurchased will be used for the employee stock ownership plans or equityincentives. As of December 31, 2023, the total number of shares repurchased was 64,993,000 sharesat the total consideration of RMB247,171,000.
Decrease in the year is mainly caused by the non-trading transfer and sale of the employee portionof the employee stock ownership plan.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VNotes to Consolidated Financial Statements (Continued)
52 Other comprehensive income
(1) Other comprehensive income items, income tax effects and reclassifications to profit or loss
20232022
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
8,024 (3,568) Share of the period 5,281 (3,568)Previous other comprehensive income reclassified to retained
earnings for current period
2,743 -
2. Changes in fair value of other equity instruments (56,797) (14,581)
Current gain/(loss)
(55,956) (19,688)
Previous other comprehensive income reclassified to retainedearnings for current period
- 16,811 Income tax effects recorded in other comprehensive income (841) (11,704)
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
(12,446) (13,936) Share of the period (12,446) (13,936) 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
(109,900) 91,730 Current gain/(loss) (117,269) 163,220
Previous other comprehensive income reclassified to profit forcurrent period
(7,580) (58,996) Income tax effects recorded in other comprehensive income 14,949 (12,494)
4. Differences arising from translation of foreign currency financial
statements of overseas operations
(18,101) (386,679)
5. Net income arising from disposal of overseas operations through
profit or loss
- - (189,220) (327,034)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)52 Other comprehensive income (continued)
(2) Changes in other comprehensive income items
Equity attributable to shareholders of the parent company
Change ofaccounting
policies
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 from
translationof foreigncurrency-denominated
financialstatements
Fair valuechanges ofother equityinstruments
Fair valuechanges ofother debtinstruments
Othercomprehensive
incometransferred to
retainedearningsSubtotal
Non-controlling
interests
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 of 2023
- (4,422)-(49,418)(24,180)(58,699)-2,743(133,976)(55,244)(189,220)
December 31, 2023 334,950 24,965(350,569)28,743(660,890)(216,409)-(106,588)(945,798)20,996(924,802)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
53 Surplus reserves
January 1, 2023
Increase
in theperiod
Decrease in
the period
December 31, 2023
Statutory surplus reserves 3,529,403161,733- 3,691,136Discretionary surplusreserves
182,870-- 182,870
3,712,273161,733- 3,874,006
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 ofthe Company, and the remaining amount shall not be lower than 25% of the registered capital.
After the appropriation to the statutory surplus reserves, the Company may appropriate thediscretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used tomake up the previous loss or increase the share capital.
54 Specific reserves
January 1, 2023
Appropriation
in the period
Decrease
in theperiodDecember 31, 2023
Production safety reserve2,30132,220(23,178) 11,343
55 General risk reserve
January 1, 2023
Appropriation
in the period
Decrease
in theperiodDecember 31, 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 Group Corporation,the Company's subsidiary - TCL Technology Group Corporation - appropriated 1% of its net profit asgeneral risk reserve in the previous years.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)56 Retained earnings
2023
2022
Beginning retained earnings19,486,730 22,458,340
Change of accounting policies- 6,810
Net profit for current period2,214,934 261,319
Decrease in the period(164,476) (3,239,739)
Including: Appropriation of surplus reserves(161,733) (1,162,100)
Distributed to ordinary shareholders as dividends- (2,050,003)
Others(2,743) (27,636)
Retained earnings at the end of the period21,537,188 19,486,730
57 Operating income and operating costs
2023 2022
Revenue
Operating
cost
Revenue
Operating
cost
Core business168,869,605144,899,893162,197,543 148,928,769
Non-core business5,497,0523,867,7044,355,243 2,996,720
174,366,657148,767,597166,552,786 151,925,489
(1) Business by operating segment
Revenue Operating cost Gross profit
2023
2022202320222023
2022
Domesticsales
119,940,278 119,139,823103,308,186 108,166,26916,632,092 10,973,554
Foreignsales
54,426,379 47,412,96345,459,411 43,759,2208,966,968 3,653,743
174,366,657 166,552,786148,767,597151,925,48925,599,060 14,627,297
(2)The total revenue from the sales to the top five customers was RMB51,360,608,000 andRMB50,092,171,000 respectively for 2023 and 2022, accounting for 29.5% and 30.1% of the revenue.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
57 Revenue and operating costs (continued)
(3)
Revenue and costs generated from the Company's trial sales are as follows:
2023 2022
Revenue1,447,163739,823Operating cost1,139,976721,126
58 Interest income/expense and exchange gain
2023 2022
Interest income
79,51579,360
Interest expenditures
19,36223,530
Exchange gain/(loss)
51617,914
The interest income, interest expense and exchange gain/(loss) above occurred with the Company'ssubsidiary TCL Technology Group Finance Co., Ltd., which are presented separately herein asrequired for a financial enterprise.
59 Taxes and levies
2023 2022
Property tax 406,693 265,880 Stamp tax 224,364 218,367 Urban maintenance and construction tax 74,151 68,890 Education surcharges 36,420 35,730 Land use tax 34,477 30,732 Others 25,833 20,703
801,938 640,302
The applicable tax and levy standards are detailedin Note IV.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
60 Sales expenses 2023 2022
Employee salaries and benefits668,705 601,948 After-sales service expense 841,951 400,771 Promotional and marketing expenses 272,074 298,422 Others 740,957 649,387
2,523,687 1,950,528
61 General and administrative expense
2023 2022
Employee salaries and benefits 2,014,617 1,337,491 Depreciation and amortization expenses 777,394 792,780 Expenses for hiring intermediaries 445,436 401,832 Digital development expenses 225,051 315,537 Others 1,320,749 692,971
4,783,247 3,540,611
62 R&D expenses
2023 2022
Depreciation and amortization expenses 4,132,169 2,983,043Material expenses 1,979,550 2,940,584Employee salaries and benefits 2,108,597 1,767,546Others 1,302,522 942,465
9,522,838 8,633,638
63 Financial expenses
2023 2022
Interest expenditures 4,922,120 4,468,008 Interest income (939,719) (723,665) Exchange loss / (gain) (137,852) (447,876) Others 128,179 126,428
3,972,728 3,422,895
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
64 Other income
2023 2022
R&D subsidies 2,536,169 2,454,585 VAT rebates on software 50,605 44,280 Over-deduction in taxable amount for VAT 408,348 1,381 Others 543,137 417,548
3,538,259 2,917,794
65 Return on investment
2023 2022
Gain on disposal of debt instruments at fairvalue through profit or loss
38,850 238,803
Gain on disposal of equity instruments at fairvalue through profit or loss
51,291 (15,097)
Gain on holding of equity instruments at fairvalue through profit or loss
116,577 18,758
Gain on holding of debt instruments at fairvalue through profit or loss
366,008 69,748 Share of net income of associates 1,463,104 2,958,218 Share of net income of joint ventures (99,443) (59,479)
Net income from disposal of long-term equityinvestments
(51,685) 1,823,568
Return on investment generated from thedisposal of equity in coal resource companies
699,071 - Others 8,104 (303,125)
2,591,877 4,731,394
66 Gain on changes in fair value
2023 2022
Held-for-trading financial assets (82,730) (257,067) Derivative financial assets 188,835 23,437 Held-for-trading financial liabilities (73,859) (1,678) Derivative financial liabilities (4,908) 96,064
27,338 (139,244)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
67 Credit impairment loss
2023 2022
Loss on uncollectible accounts receivable 54,862 (44,955) Loss on uncollectible other receivables (222,675) (6,172) Other financial assets (5,252) 13,474
(173,065) (37,653)
68 Asset impairment loss
2023 2022
Inventory valuation loss (3,648,392)(3,083,928) Impairment loss on long-term equity investments (1,148,110)(319,981)
Others (17,463)(82,614)
(4,813,965)(3,486,523)
69 Asset disposal income
2023 2022
Income/(loss) from disposal of fixed assets (42,660) (71,718) Others 1,244 (8,107)
(41,416) (79,825)
70 Non-operating income
20232022
Amount throughcurrent non-recurring gains
and losses
Gains on retired or damaged non-current assets220117 220 Public grants and others 71,065789,995 71,065
71,285790,112 71,285
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
71 Non-operating expense
20232022
Amount throughcurrent non-recurring
gains and losses
Losses on retired or damagednon-current assets
56,60319,377 56,603 Donation 58,14470,22258,144 Others 89,03362,47289,033
203,780152,071203,780
72 Income tax expenses
(1) Table of income tax expenses
2023 2022
Current income tax expense 817,257 734,639 Deferred income tax expense (546,217) (1,465,647)
271,040 (731,008)
(2) Accounting profit and income tax adjustment process
2023 2022
Gross profit5,051,824 1,057,051
Income tax expense calculated atstatutory/applicable tax rate
757,774 158,558
Impact of different tax rates applied tosubsidiaries
302,867 383,590
Impact of adjusting income tax in previousperiods
(227,744) (12,613)
Impact of non-taxable income(953,093) (704,581)
Impact of non-deductible costs, expenses andlosses
68,559 107,325
Impact of the use of deductible losses on deferredincome tax assets that were not recognized in theprevious periods
(213,931) (576,264)
Impact of unrecognized deferred income taxassets of deductible temporary differences ordeductible losses in the current period
677,201 730,522
Others(140,593) (817,545)
Income tax expense271,040 (731,008)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
73 Earnings per share
(1) Basic earnings per share
20232022
Net profit attributable to shareholders of the parent company 2,214,934 261,319
Weighted average outstanding ordinary shares (in thousandshares)
18,533,341 15,054,601
Basic earnings per share (RMB yuan) 0.1195 0.0174
(2) Diluted earnings per share
20232022
Net profit attributable to shareholders of the parent company2,214,934 261,319
Diluted weighted average outstanding ordinary shares (inthousand shares)
18,779,081 15,558,525
Diluted earnings per share (RMB yuan) 0.1179 0.0168
74 Cash generated from other operating activities
Other cash received from operating activities in the consolidated cash flow statement wasRMB6,899,258,000 (year-on-year: RMB7,955,973,000), which primarily consisted of currentpayments received,public grants and special appropriation, etc.
75 Cash used in other operating activities
Other cash paid for other operating activities in the consolidated cash flow statement wasRMB8,773,577,000 (year-on-year: RMB9,722,343,000), which primarily consisted of variousexpenses and current payments, etc.
76 Cash generated from other investing activities
Other cash received from investing activities in the consolidated cash flow statement wasRMB1,589,202,000 (year-on-year: RMB170,387,000), which primarily consisted of net cash receivedfrom subsidiaries and the receipt of project bid bonds, etc.
77 Cash used in other investing activities
Other cash paid for investing activities in the consolidated cash flow statement was RMB923,051,000(year-on-year: RMB1,212,074,000), which primarily consisted of the refund of project bid bonds andpayments for foreign exchange forward delivery.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
78 Cash generated from other financing activities
Other cash received from financing activities in the consolidated cash flow statement wasRMB3,950,311,000 (year-on-year: RMB272,281,000), which primarily consisted of finance leasepayments received, and deposits, etc.
79 Cash used in other financing activities
Other cash paid for financing activities in the consolidated cash flow statement wasRMB8,037,595,000 (yea
-on-year: RMB6,110,504,000), primarily consisted of the payments for the
| r | |
| r | |
epurchase of minority interests in subsidiaries, repurchase of the Company’s shares, and financial lease
ayments, etc.
80 Supplementary information for the cash flow statement
(1) Reconciliation of net profit to net cash generated from/used in operating activities
2023 2022
Net profit4,780,784 1,788,059Add: Asset impairment allowance4,987,030 3,524,176Depreciation of fixed assets21,034,479 19,290,088Depreciation of right-of-use assets525,891 322,032Amortization of intangible assets1,879,947 1,473,104Amortization of long-term prepaid expense2,148,685 1,613,307Loss/(Gain) on disposal of fixed assets, intangible assets andother long-term assets
41,416 79,825
Loss/(Gain) on retired or damaged fixed assets56,383 19,260
Loss/(Gain) on changes in fair value(27,338) 139,244
Financial expenses4,803,114 4,025,748 Return on investment (2,591,877) (4,731,394) Decrease/(Increase) in deferred income tax assets (492,335) 399,459 Increase/(Decrease) in deferred income tax liabilities 108,059 (1,839,558) Decrease/(Increase) in inventory (4,129,025) (4,643,791) Decrease/(Increase) in operating receivables (7,629,570) 4,576,161 Increase/(Decrease) in operating payables (906,091) (7,139,434) Others 725,204 (469,910)
Net cash generated from operating activities 25,314,756 18,426,376
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
Supplementary information for the cash flow statement (continued)
(2) Net cash payments for acquisition of subsidiaries in the current
period
2023 2022
Payments of cash and cash equivalents made in current perioddue to business combinations incurred in current period
571,830 51,000
Less: cash and cash equivalents held by subsidiary on
acquisition date
85,844 867
Add: Payments of cash and cash equivalents made in current
eriod due to business combinations incurred in previousperiods
- -
Net cash payments for acquisition of subsidiaries 485,986 50,133
(3) Net cash
pp
roceeds from disposal of subsidiaries in the currentperiod
2023 2022
Cash or cash equivalents received in current period due to
disposal of subsidiary in current period
366,568 174,803
Less: cash and cash equivalents held by subsidiary on the date
when the Company’s control over the subsidiary ceased
17,454 2,298
Add: Cash or cash equivalents received in current period due to
disposal of subsidiaries in prior periods
10,848 1,260,290
Net proceeds from the disposal of subsidiaries 359,962 1,432,795
(4) Breakdown of cash and cash equivalents
pD
ecember 31, 2023January 1, 2023 I. Cash 19,996,815 33,675,624 Including: Cash on hand 583 480 Bank deposits available for payment on demand 19,807,150 32,696,213Other monetary assets available for payment on
demand
132,982 919,646 Deposits with the central bank available for payment56,100 59,285 II. Cash equivalents - -
III. Ending balance of cash and cash equivalents 19,996,815 33,675,624
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)81 Net changes in cash and cash equivalents
20232022
Ending cash and cash equivalents 19,996,815 33,675,624 Less: Cash at the beginning of the year 33,675,624 30,081,705
Net increase in cash and cash equivalents (13,678,809) 3,593,919
Analysis of ending cash and cash equivalents:
Monetary assets at the end of the period 21,924,271 35,378,501 Less: Non-cash equivalents at the end of the period (note) 1,927,456 1,702,877
Ending cash and cash equivalents 19,996,815 33,675,624
Note: The closing non-cash equivalents primarily included interest receivable on bank deposits, the
statutory reserve deposits placed by TCL Technology Group Finance Co., Ltd. in the central bankand other monetary assets, detailed in Annex V, 1.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)82 Assets with restricted ownership or use rights
December 31, 2023 Reason for
restriction
Gross carrying
amount
Carrying
amount
Monetary assets 341,091341,091
Deposited in thecentral bank asthe requiredreserveMonetary assets 1,586,3651,586,365
Other monetary
funds andrestricted bankdepositsNotes receivable 503,636503,636 Pledge
Fixed assets
119,355,89193,479,143
As collateral for
loan
Intangible assets
4,595,3203,965,665
As collateral for
loanHeld-for-trading financial assets 369,642369,642 Pledge
Construction in progress
895,589895,589
As collateral for
loanAccounts receivable 860,084860,084 PledgeContract assets 361,312343,205 Pledge
Investment property
9,9099,738
As collateral for
loan
Other non-current assets duewithin one year
430,493430,493
Pledge
129,309,332102,784,651
83 Foreign currency monetary items
December 31, 2023 Foreign currency balanceConversion rate RMB balance
Monetary assets
Including: USD 603,0227.0827 4,271,024 HKD 126,8890.9064 115,012 EUR 6,5827.8469 51,648 JPY 2,596,5540.0501 130,087 SGD 8455.3750 4,542 INR 3,123,1150.0850 265,465
Accounts receivable
Including: USD
948,093 7.0827 6,715,058 HKD 470 0.9064 426 INR 4,593,5100.0850 390,448 EUR 3197.8469 2,503 JPY 13,2000.0501 661
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
83 Foreign currency monetary items (continued)
December 31, 2023 Foreign currency balanceConversion rate RMB balanceAccounts payable Including: USD 525,0827.0827 3,718,998 HKD 330,4060.9064 299,480 EUR 7,8137.8469 61,308 JPY 12,634,9610.0501 633,012 INR 581,4890.0850 49,427
Other receivables Including: USD 14,016 7.0827 99,271 HKD 15,539 0.9064 14,085 EUR 1,5907.8469 12,477 JPY 83,383 0.0501 4,177 PLN 865 1.8079 1,564 INR 70,348 0.0850 5,980 KRW 102,590 0.0055 564 MXN 20,8490.4175 8,704 SGD 925.3750 495
Other payables Including: USD 602,878 7.0827 4,270,004 HKD 417,938 0.9064 378,819 JPY 16,867,145 0.0501 845,044 INR 651,058 0.0850 55,340 PLN 28 1.8079 51 KRW 309,677 0.0055 1,701 MXN 24,202 0.4175 10,104 EUR 169 7.8469 1,326 TWD 2660.2307 61
Short-term borrowings Including: USD 2,6937.0827 19,074
Long-term borrowings Including: USD 91,4487.0827 647,699
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
V Notes to Consolidated Financial Statements (Continued)
84 Leases
(1) The Company acting as a lessee
In 2023, short-term lease rents, low-value asset rents and income obtained from subleasing right-of-use assets, for which the Group, acting as a lessee, chose simplified accounting, were not significant.
(2) The Company acting as a lessor
① Operating leases where the Company acts as a lessor
Item Rental income
Including: Income related tovariable lease payments notincluded in lease receiptsHouses and buildings 294,156
-Machinery equipment 7,848
-Total 302,004
-
② Finance leases where the Company acts as a lessor
Item
Sales gains and
losses
Financing
income
Income related to variablelease payments not includedin net lease investmentFinance lease
-62,878-Total
-62,878-
Annual undiscounted lease receipts for the next five years
Item
Annual undiscounted lease receiptsEnding amount Beginning amountYear 1 95,51888,974Year 2 88,03188,543Year 3 86,91088,031Year 4 86,91086,910Year 5 86,91086,910Total undiscounted lease receiptsafter five years
904,691991,602
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VI R&D expenses1 Presentation by nature of expenses
Item
Amount incurred in the current
period
Amount incurred in the
previous periodMaterial costs 3,855,668 4,945,218Labor costs 2,951,412 2,559,974Depreciations and amortizations 2,323,024 2,030,079Others 1,178,440 1,243,144
Total 10,308,544 10,778,415Including: Expensed R&D expenses 6,748,2886,490,988 Capitalized R&D expenses 3,560,256 4,287,427
2 Development expenses of R&D projects eligible for capitalization
Item
Balance at thebeginning of
the period
Increase in the periodDecrease in the period
EndingbalanceInternaldevelopment
costs
Others
Recognized as
intangible
assets
Included inprofits and
losses
OthersDisplay 2,172,507 2,837,141 - (1,228,183)(404,696) (1,921,659) 1,455,110New energyphotovoltaic &materials
1,006,700 723,115 - (643,432) - - 1,086,383
Total 3,179,207 3,560,256 - (1,871,615)(404,696) (1,921,659) 2,541,493
3. The Company had no significant outsourced projects under research.
VII Changes to the Consolidation Scope1 Newly consolidated entities for current period
Name of investee
Reason forchange Registered capital (RMB)
Contributionratio
Lumetech North America Corporation
Newlyincorporated
USD10,000,000 100.00%
Suzhou Zhonghuan Photovoltaic Materials Co.,Ltd.
Newlyincorporated
RMB50,000,000 100.00%
Ningxia Huanou New Energy Technology Co.,Ltd.
Newlyincorporate
RMB1,250,000,000 100.00%
Xinxin Bandaoti Technology Co., Ltd. Acquisition RMB6,513,000,000 100.00%
Jiangsu Mingjing Bandaoti Technology Co.,Ltd.
Acquisition RMB120,000,000 100.00%
Jiangsu Lixin Bandaoti Technology Co., Ltd. Acquisition RMB4,210,000,000 100.00%
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VII Chan
es to Consolidation Sco
| p |
e
continued
| ) |
1 Newly consolidated entities for current period (continued)
Name of investee
Reason forchange
Registered capital(RMB)
Contributionratio
Xuzhou Xinjing Bandaoti Technology Co.,Ltd.
Acquisition RMB4,210,000,000 100.00%
Jiangsu Huasheng Bandaoti Materials Co.,Ltd.
Acquisition RMB200,000,000 100.00%
Hong Kong NExcel Electronic TechnologyCo., Ltd.
Acquisition USD5,000,000 100.00%
Singapore NExcel Electronic TechnologyCo., Ltd.
Acquisition SGD100,000 100.00%
Xuzhou Jingrui Bandaoti EquipmentTechnology Co., Ltd.
Acquisition RMB150,000,000 100.00%
Meixin (Xuzhou) Silicon MaterialTechnology Co., Ltd.
Acquisition RMB22,000,000 100.00%
Ningxia Zhonghuan Industrial ParkManagement Co., Ltd.
Newlyincorporated
RMB10,000,000 100.00%
Guangzhou TCL Industrial ResearchInstitute Co., Ltd.
Newlyincorporated
RMB20,000,000 100.00%
Suzhou China Star EnvironmentalProtection Technology Co., Ltd.
Acquisition RMB100,000,000 100.00%
Huizhou Dongshen Jia'an EquityInvestment Partnership (LimitedPartnership)
Newlyincorporated
RMB1,561,000,000 99.94%
Inner Mongolia TCL PhotoelectricTechnology Co., Ltd.
Acquisition RMB200,000,000 100.00%
Ningbo Dongshen Zhixuan EquityInvestment Partnership (Limited
Newlyincorporated
RMB551,000,000 90.74%
TCL Financial Technology (Shenzhen) Co.,Ltd.
Acquisition RMB5,000,000 100.00%
Huansheng Photovoltaic (Guangdong) Co.,Ltd.
Newlyincorporated
RMB10,000,000 100.00%
Xuzhou Huanneng New Energy Co., Ltd.
Newlyincor
hi)p
orate
| d |
RMB1,000,000 100.00%
Lingwu Xuzhao New Energy Co., Ltd.
Newlyincor
orate
| d |
RMB1,000,000 100.00%
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VII Changes to Consolidation Scope (continued)1 Newly consolidated entities for current period (continued)
Name of investee Reason for change
Registered capital(RMB)
Contributionratio
Techigh Circuit Technology (Huizhou)Co., Ltd.
Acquisition RMB146,938,776 51.00%
Techigh Circuit Technology (Zhuhai) Co.,Ltd.
Acquisition RMB100,000,000 100.00%
Tairui (Hong Kong) Limited Acquisition HKD100,000 100.00%
Ningxia Zhonghuan Yuelanshan HotelManagement Co., Ltd.
Newlyincorporated
RMB1,000,000 100.00%
Zhangjiakou Shengming New Energy Co.,Ltd.
Newlyincorporated
RMB1,000,000 100.00%
Xiamen Dili Hongxin Venture CapitalPartnership Enterprise (LimitedPartnership)
Newlyincorporated
RMB131,000,000 95.80%
Xi'an Maituo Sunpie Technology Co.,Ltd.
Newlyincor
orate
| d |
RMB300,000 100.00%
Xi'an Shengtai Sunpie Technology Co.,Ltd.
Newlyincorporated
RMB300,000 100.00%
Xi’an Shengke Sunpie Technology Co.,Ltd.
Newlyincor
orate
| d |
RMB300,000 100.00%
Urumqi Sunpie Fengshang Trading Co.,Ltd.
Newlyincorporated
RMB500,000 100.00%
Urumqi Sunpie Zhixing Trading Co., Ltd.
Newlyincorporated
RMB500,000 100.00%
Foshan Sunpiestore Technology Co., Ltd.
Newlyincorporated
RMB100,000 100.00%
Zhuhai Sunpiestore Technology Co., Ltd.
Newlyincor
orate
| d |
RMB100,000 100.00%
Ningxia Hongyuan New Energy Co., Ltd.
Newlyincorporated
RMB1,000,000 100.00%
Ningxia Shengyao New Energy Co., Ltd.
Newlyincorporated
RMB1,000,000 100.00%
Lingwu Shangyuan New Energy Co., Ltd.
Newlyincor
orate
| d |
RMB1,000,000 100.00%
Xi’an Shengbo Sunpie Technology Co.,Ltd.
Newlyincorporated
RMB300,000 100.00%
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VII
Changes to Consolidation Scope (continued)
Newly consolidated entities for current period (continued)
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 StarEnvironmental Protection Technology Co., Ltd. at a cash consideration of RMB344,942,000, andincluded such company into the scope of consolidation.
Cash consideration344,942
Less: Share of fair value of identifiable net assets acquired301,534
Goodwill amount43,408
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
Fair value at acquisition
date
Carrying amount as at theacquisition dateTotal assets
358,206175,775
Total liabilities
56,67229,307
Net assets
301,534146,468
Less: non-controllinginterests
--
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 of RMB344,942,000.
(2) Acquisition of shares in TCL Internet Technology (Shenzhen) Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On June 30, 2023 (the “Acquisition Date”), the Group acquired 100% equity of TCL InternetTechnology (Shenzhen) Co., Ltd. with a cash consideration of RMB15,036,000, and includedsuch company into the scope of consolidation.Cash consideration 15,036Less: Share of fair value of identifiable net assets acquired 15,036Difference of lower goodwill / merger cost and higher share of fair value of identifiablenet assets acquired
-
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount as at the acquisition
dateTotal assets61,034 56,435
Total liabilities45,99845,998
Net assets15,036 10,437
Less: non-controllinginterests
--
Net assets acquired15,03610,437
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
(3) Acquisition of shares in Xinxin Bandaoti 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 Xinxin BandaotiTechnology Co., Ltd. by issuing equity securities, and included such company into the scope ofconsolidation.
Fair value of equity securities issued7,399,683Less: Share of fair value of identifiable net assets acquired6,219,678Goodwill amount1,180,005
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
Item
Fair value atacquisition date
Carrying amount as at the
acquisition date
Total assets
8,320,672 7,752,700Total liabilities
2,100,994 2,313,890Net assets
6,219,678 5,438,810Less: non-controlling interests
--Net assets acquired
6,219,678 5,438,810
(4) Acquisition of shares in Inner Mongolia TCL Photoelectric Technology Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On May 1, 2023 (the “Acquisition Date”), the Group acquired 100% equity of Inner Mongolia TCLPhotoelectric Technology Co., Ltd. at a cash consideration of RMB119,039,000, and included suchcompany into the scope of consolidation.
Cash consideration119,039Less: Share of fair value of identifiable net assets acquired119,039Difference of lower goodwill / merger cost and higher share of fair value ofidentifiable net assets acquired
-
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount as at theacquisition dateTotal assets213,871 194,735Total liabilities94,832 94,832Net assets119,039 99,903Less: non-controlling interests--Net assets acquired119,039 99,903
VII Changes to Consolidation Scope (continued)1 Newly consolidated entities for current period (continued)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
(5) Acquisition of the equity of Techigh Circuit Technology (Huizhou) Co., Ltd.
① The cost of acquisition and goodwill were recognized as follows:
On October 31, 2023 (the “Acquisition Date”), the Group acquired 51% equity of Techigh Circuit Technology(Huizhou) Co., Ltd. with a cash consideration of RMB423,103,000, and included the acquisition of the equityof such company into the scope of consolidation.
Cash consideration423,103Less: Share of fair value of identifiable net assets acquired291,626Difference of lower goodwill / merger cost and higher share of fair value ofidentifiable net assets acquired
131,477
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
Item
Fair value at acquisition
date
Carrying amount as at the
acquisition dateTotal assets591,880 531,819Total liabilities270,888 270,907Net assets320,992 260,913Less: non-controlling interests157,286127,847Net assets acquired (note)163,706 133,066
Note: The net asset obtained does not include amounts that have not been contributed.
③ SHENZHEN CHINA UNITED ASSETS APPRAISAL GROUP CO., LTD. has evaluated the
information above using the asset-based method, and issued an asset appraisal report (SCUPB Zi [2024]No. 20), with an appraised value of RMB320,992,000.
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 Development Co., 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
VII Changes to Consolidation Scope (continued)1 Newly consolidated entities for current period (continued)
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
2 Deconsolidated entities for current period(continued)
Name of investee
Time o
deconsolidation Reason for change
Qinhuangdao Tianhui Solar Energy Co., Ltd. April 2023 Transferred
Tianjin Huanhai Real Estate Development Co., Ltd. September 2023 De-registered
Tianjin Zhonghuan Hengda Technology Co., Ltd. October 2023 Transferred
TCL Lighting (Wuhan) Co., Ltd. October 2023 De-registered
Inner Mongolia Huanneng Resources Development
Co.
f,
Ltd.
October 2023 De-registered
Inner Mongolia Zhonghuan Electronic Materials Co.,Ltd. October 2023 De-registered
Tianjin Yingtuo Computer Control Technology Co.,Ltd. November 2023 Transferred
Meixin (Xuzhou) Silicon Material Technology Co.,Ltd. December 2023 De-registered
Shangyi Shengyao New Energy Development Co.,Ltd.
December 2023 Transferred
Inner Mongolia Zhonghuan Energy DevelopmentCenter (Limited Partnership) December 2023 De-registered
Guangdong TCL New Technology Co., Ltd. December 2023 Transferred
VII
Changes to Consolidation Scope (continued)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VII
Changes to Consolidation Scope (continued)
3 Subsidiaries disposed in current periodName ofsubsidiary
YixingHuanxingNew EnergyCo., Ltd.
TianjinBinhaiHuannengNew Energy
Co., Ltd.
Dushan
AnjuPhotovoltaicTechnology
Co., Ltd.
Shangyi Shengxin New
Energy Development
Co., Ltd.Price for equityinterest dis
osal
37,710 29,708 52,460 79,060% equity interestdis
pp
ose
| d |
100% 100%99%100%Way of equityinterest dis
osal
Sale SaleSaleSaleTime of loss ofcontrol
April 2023 April 2023April 2023April 2023Determinationbasis for time ofloss of control
Theoperatingrisk has been
transferre
pd
Theoperatingrisk has been
transferre
| d | d |
Theoperatingrisk has beentransferre
The operating risk has
been transferredDifferencebetween thedisposal priceand theCompany’sshare of thesubsidiary’s netassets in theconsolidatedfinancialstatementsrelevant to thedisposed equityinteres
dt
12,705 25,960(21,827)83,248
Name ofsubsidiary
Gengma
HuanxingNew Energy
Co., Ltd.
GuyuanShengjuNew Energy
Co., Ltd.
Zhangjiakou
ShengyuanNew Energy
Co., Ltd.
Qinhuangdao TianhuiSolar Energy Co., Ltd.Price for equityinterest dis
tp
osal
31,830 57,490 58,290 84,060% equity interestdis
pp
ose
| d |
99% 99%99%99%Way of equityinterest dis
osal
Sale SaleSaleSaleTime of loss ofcontrol
April 2023 April 2023April 2023April 2023Determinationbasis for time ofloss of control
The
operatingrisk has been
transferre
pd
Theoperatingrisk has beentransferre
| d | d |
Theoperatingrisk has been
transferre
The operating risk has
been transferredDifferencebetween thedisposal priceand theCompany’sshare of thesubsidiary’s netassets in theconsolidatedfinancialstatementsrelevant to thedisposed equityinteres
dt
(13,808) (9,721)(9,376)(37,954)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VII
Changes to Consolidation Scope (continued)
3 Subsidiaries disposed in current period (continued)
Name ofsubsidiary
Tianjin
ZhonghuanHengdaTechnology Co.,
Ltd.
Tianjin YingtuoComputer ControlTechnology Co.,
Ltd.
Guangdong
TCL NewTechnology Co.,
Ltd.
ShangyiShengyao New
EnergyDevelopmentCo., Ltd.Price forequity interestdis
osal
2,702 4747,069 81,810% equityinterestdis
pp
ose
| d |
100% 100%80% 99%Way of equityinterestdis
osal
Sale SaleSale SaleTime of lossof control
November 2023 November 2023December 2023 December 2023Determinationbasis for timeof loss ofcontrol
The operating
risk has been
transferred
The operating risk
has beentransferred
The operating
risk has been
transferred
The operating
risk has been
transferredDifferencebetween thedisposal priceand theCompany’sshare of thesubsidiary’snet assets intheconsolidatedfinancialstatementsrelevant to thedisposede
pq
uit
| y |
interes
(512) 1,329(2,475) 12,629
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VIII Interests in Other Entities
1 Interests in subsidiaries
(1) Principal subsidiaries
Name of investee
Place ofregistration
Nature ofbusiness
Principal place
of business
Shareholding ratio (%)How subsidiary
was obtainedDirect Indirect
TCL China Star Optoelectronics Technology Co.,Ltd.Shenzhen
Manufacturing
and sales Shenzhen
79.17% -
Incorporated
Shenzhen China Star Optoelectronics BandaotiDisplay Technology Co., Ltd.Shenzhen
Manufacturingand sales Shenzhen
- 54.31%
Incorporated
Guangzhou China Ray Optoelectronic MaterialsCo., Ltd.Guangzhou
Research anddevelopmentGuangzhou
- 100%
Incorporated
Wuhan China Star Optoelectronics TechnologyCo., Ltd.Wuhan
Manufacturing
and sales Wuhan
- 96.67%
Incorporated
Wuhan China Star Optoelectronics BandaotiDisplay Technology Co., Ltd.Wuhan
Manufacturingand sales Wuhan
- 57.14%
Incorporated
China Star Optoelectronics International (HK)LimitedHong KongSales Hong Kong
- 100%
Incorporated
China Display Optoelectronics TechnologyHoldings LimitedBermuda
Investmentholding Bermuda
- 64.20%
Businesscombination not
under common
control
China Display Optoelectronics Technology(Huizhou) Co., Ltd.Huizhou
Manufacturing
and sales Huizhou
- 100%
Incorporated
Wuhan China Display Optoelectronics TechnologyCo., Ltd.Wuhan
Manufacturing
and sales Wuhan
- 100%
Incorporated
Suzhou China Star Optoelectronics TechnologyCo., Ltd.Suzhou
Manufacturing
and sales Suzhou
- 100%
Businesscombination notunder common
control
Suzhou China Star Optoelectronics Display Co.,Ltd.
Suzhou
Manufacturing
and sales Suzhou
- 100%
Businesscombination notunder common
control
Guangzhou China Star Optoelectronics BandaotiDisplay Technology Co., Ltd.
Guangzhou
Manufacturingand sales Guangzhou
- 55.00%
Incorporated
TCL Culture Media (Shenzhen) Co., Ltd.
ShenzhenAd planningShenzhen
100% -
Incorporated
Highly Information Industry Co., Ltd.
Beijing
ProductdistributionBeijing
66.46% -
Incorporated
Beijing Sunpiestore Technology Co., Ltd.
Beijing Sales Beijing
- 53.45%
Incorporated
Beijing Lingyun Data Technology Co., Ltd.
Beijing Sales Beijing
- 60.00%
Incorporated
TCL Technology Group Finance Co., Ltd.
HuizhouFinancial Huizhou
82.00% 18.00%
Incorporated
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(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 ofbusiness
Principalplace ofbusiness
Shareholding ratio
(%)How subsidiary
was obtained Direct Indirect
Shenzhen Dongxi Jiashang EntrepreneurshipInvestment Co., Ltd. (Formerly Xinjiang TCLEquity Investment Co., Ltd.) Shenzhen
Investmentbusiness Shenzhen
100% -
Incorporated
Ningbo TCL Equity Investment Ltd. Ningbo
Investmentbusiness Shenzhen
100% -
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 Research Institute(Hong Kong) Limited Hong Kong
Research anddevelopment Hong Kong
- 100%
Incorporated
TCL Technology Investments Limited Hong Kong
Investment
business Hong Kong
100% -
Incorporated
TCL Zhonghuan Renewable EnergyTechnology Co., Ltd. Tianjin
Manufacturing
and sales Tianjin
2.55% 27.36%
Businesscombination notunder common
control
Tianjin Printronics Circuit Corporation Tianjin
Manufacturing
and sales Tianjin
- 26.86%
Businesscombination notunder common
control
Tianjin Huan'Ou BandaotiMaterial&Technology Co., Ltd. Tianjin
Manufacturing
and sales Tianjin
- 100%
Businesscombination notunder common
control
Wuxi Zhonghuan Applied Materials Co., Ltd. Wuxi
Manufacturingand sales Wuxi
- 98.08%
Businesscombination notunder common
control
Tianjin Huanzhi New Energy TechnologyCo., Ltd. Tianjin
Manufacturingand sales Tianjin
- 62.00%
Businesscombination notunder common
control
Inner Mongolia Zhonghuan Solar MaterialCo., Ltd.
InnerMongolia
Manufacturing
and sales
InnerMongolia
- 100%
Businesscombination notunder common
control
Tianjin Zhonghuan AdvancedMaterial&Technology Co., Ltd. Tianjin
Manufacturing
and sales Tianjin
- 100%
Businesscombination notunder common
control
Huansheng Solar (Jiangsu) Co., Ltd. Wuxi
Manufacturing
and sales Wuxi
- 83.73%
Businesscombination notunder common
control
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VIII Interests in Other Entities (Continued)
1 Interests in subsidiaries (Continued)
(1) Composition of key subsidiaries (Continued)
Name of investee
Place ofregistration
Nature ofbusiness
Principalplace ofbusiness
Shareholdingratio (%)
How subsidiary
was obtainedDirect Indirect
Tianjin Huanou International SiliconMaterial Co., Ltd. Tianjin
Procurement &sales Tianjin
- 100%
Businesscombination notunder commoncontrol
Zhonghuan Hong Kong Holding Limited Hong KongSales Hong Kong
- 100%
Businesscombination notunder common
control
Tianjin Huanrui Electronic TechnologyCo., Ltd. Tianjin
Procurement &sales Tianjin
- 100%
Businesscombination notunder common
control
Inner Mongolia Zhonghuan CrystalMaterials Co., Ltd.
InnerMongolia
Manufacturing
and sales
InnerMongolia
- 59.32%
Businesscombination notunder common
control
Inner Mongolia Zhonghuan AdvancedBandaoti Material Co., Ltd.
InnerMongolia
Manufacturingand sales
InnerMongolia
- 100%
Businesscombination notunder common
control
Zhonghuan Advanced BandaotiTechnology Co., Ltd. Wuxi
Manufacturing
and sales Wuxi
7.35% 35.30%
Businesscombination notunder common
control
Moka International Limited BVI
Investmentholding BVI
- 100%
Businesscombination notunder common
control
Moka Technology (Guangdong) Co., Ltd. Huizhou
Manufacturing
and sales Huizhou
- 100%
Businesscombination notunder common
control
(2) Subsidiaries with substantial non-controlling interests
Name of subsidiary
Non-controllingshareholding
ratio (%)
Profit or lossattributable to non-
controllingshareholders in the
current period
Dividends distributed
to non-controllingshareholders in the
current period
Closing equity of
non-controlling
interests
TCL China Star OptoelectronTechnology Co., Ltd.
20.83%(443,697)- 43,769,170
TCL Zhonghuan Renewable Ene
Technology Co., Ltd.
70.09%2,882,278355,925 47,631,075 Highly Information Industry Co., Ltd. 33.54%29,50534,990 552,086
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
VIII Interests in Other Entities (continued)
1 Interests in subsidiaries (Continued)
(2) Subsidiaries with substantial non-controlling interests (continued)
The key financial information of the above subsidiaries is as follows:
December 31, 2023
January 1, 2023
Currentassets
Non-currentassets
Totalassets
Currentliabilities
Non-currentliabilities
Totalliabilities
Current
assets
Non-current
assets
Totalassets
Currentliabilities
Non-currentliabilities
Totalliabilities
TCL China StarOptoelectronicsTechnology Co.,Ltd.
55,759,259 153,177,418 208,936,67766,215,55868,629,981134,845,539 40,115,151152,441,917192,557,06845,523,24273,184,255118,707,497
TCL ZhonghuanRenewable EnergyTechnology Co.,Ltd.
34,627,478 90,435,565 125,063,04322,324,09542,501,83664,825,931 31,829,52376,483,400108,312,92323,020,08238,232,99961,253,081
Highly InformationIndustry Co., Ltd.
7,086,563 179,985 7,266,5485,807,99024,5235,832,513 8,563,285149,3908,712,6757,191,61039,9617,231,571
2023
2022
Revenue Net profit
Totalcomprehensive
income
Net cash generate
from/used inoperating activitiesRevenueNet profit
Totalcomprehensive
income
Net cash generate
from/used inoperating activitiesTCL China StarOptoelectronicsTechnology Co., Ltd.
72,077,792 (480,560)(524,501)18,507,307 56,256,417(8,352,833)(8,445,005)11,012,565TCL ZhonghuanRenewable EnergyTechnology Co., Ltd.
59,146,463 3,898,8923,899,0665,181,163 67,010,1577,073,0437,073,0435,056,839Highly InformationIndustry Co., Ltd.
30,109,529 43,20043,200(205,171) 31,847,803264,253264,253(574,296)
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
VIII 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 ofbusiness
Strategic to theGroup’s activitiesor not
Shareholdingratio (%)
Direct Indirect
Associate
Bank of Shanghai Co.,Ltd.
ShanghaiFinancialYes 5.76% -
(2) Key financial information of major associates
December 31, 2023January 1, 2023
Bank of Shanghai Co.,
Ltd.
Bank of Shanghai Co.,
Ltd.
Total assets
3,085,516,4732,878,524,759
Total liabilities
2,846,467,3112,656,876,235
Non-controlling interests
470,332594,465
Equity attributable toshareholders of the parentcompany
238,578,830221,054,059
Carrying amount ofinvestment in associate
13,726,17412,809,374
20232022
Bank of Shanghai Co.,
Ltd.
Bank of Shanghai Co.,
Ltd.
Revenue
50,564,47453,112,478
Net profit attributable to theparent company
22,544,78922,280,215
Dividends from associate tothe Group in current period
327,157327,157
(3) The Company had no significant joint ventures in the Reporting Period.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
IX 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 at December 31, 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 December 31, 2023, the Group had no liquidity risk events.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
IX Risks Related to Financial Instruments (continued)
(3) Market risk
(a)Foreign exchange risk
The Group has carried out various economic activities around the world including manufacturing, selling,
investment and financing etc., and corresponding interest rate fluctuation risks exist in the Group’s foreigncurrency assets and liabilities and future foreign currency transactions.
The Group always regards "Locking the Cost and Avoiding Possible Risks" as the foreign currency risk
management goal. Through the natural hedging of settlement currency, matching with the foreign currencyliabilities, signing simple derivative products closely related to the owner's operation and meeting correspondinghedge accounting treatment requirements and applying other management methods, the foreign currency riskexposure can be controlled within a reasonable scope and the impact of interest rate fluctuations on the Group'soverall profit and loss will be reduced.
On December 31, 2023, foreign-currency asset and liability items with significant exposure to exchange risk
were mainly denominated in US dollars. After management, the total risk exposure of the US dollar-denominated items had a net asset exposure of USD186,459,000, equivalent to RMB1,320,635,000 based on thespot exchange rate on the balance sheet date. The differences arising from the translation of foreign currencyfinancial statements were not included.
The Group applies the following exchange rate of USD against RMB:
Average exchange rate
Exchange rate at
period-end
2023 December 31, 2023
USD/RMB 7.0558 7.0827
Provided that other risk variables remained unchanged except for the exchange rate, a 5%
depreciation/appreciation in RMB as a result of the changes in the exchange rate of RMB against USD wouldcause an increase/decrease of RMB66,032,000 in shareholders’ equity and net profit respectively of the Groupon December 31, 2023.
The above-mentioned sensitivity analysis is made based on the assumption that the exchange rate changes on the
balance sheet date, and financial instruments held by the Group on the balance sheet date exposed to theexchange risk are re-calculated based on the changed exchange rate. The above analysis does not includedifferences arising from the translation of foreign currency financial statements.
(b) Interest risk
The Group’s interest rate risk mainly results from interest-bearing bank borrowings adopting floating interest
rates, and the Group determined the proportion of fixed interest rates and floating interest rates based on themarket environment and its risk tolerance. Up until December 31, 2023, the Group’s liabilities with floatinginterest rates accounted for 66.06% of its total interest-bearing liabilities. And, the Group will continuouslymonitor the interest rates and make corresponding adjustments according to the specific market changes so as toavoid interest rate risk.
(4) Offset of financial assets and financial liabilities
As at the end of the reporting period, the amount offset between the financial assets and financial liabilities
recognized under executable master netting arrangements or similar agreements was RMB11,966,787,000.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
X Classification of Financial Instruments and Fair Value
Fair value of financial instruments and levels
1 Fair value is divided into the following levels in measurement and disclosure:
Level 1 refers to the (unadjusted) quotation of the same type of assets or liabilities on the activemarket; and the Company mainly adopts the closing price as the value of a financial asset. Financialinstruments of level 1 mainly include exchange listed stocks and bonds.
Level 2 refers to the directly or indirectly observable input of a financial asset or liability that doesnot belong to level 1.
Level 3 refers to the input of a financial asset or liability determined based on variables other than theobservable 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 techniques andparameters:
The Company’s receivables financing was bank acceptance notes and trade acceptance notes, ofwhich the market prices were determined based on the transfer or discounted amounts.
Derivative financial assets and liabilities are multiple IRS and CCS signed between the Group andfinancial institutions. The Company adopts the quotations provided by the financial institution invaluation.
Items measured at continuous level 3 fair value adopt the following valuation techniques andparameters (nature and quantity):
Other non-current financial assets measured at continuous level 3 fair value are mainly unlisted equityinvestments held by the Company. In measuring the fair value, the Company mainly adopts thevaluation technique of comparison with listed companies, taking into account the price of similarsecurities 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 Company adopts themethod of discounting future cash flows based on the agreed expected yield rate.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
X 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)
1,111,81422,067,8084,495 23,184,117
Derivative financial assets (seeNote V.3)
-108,008- 108,008
Receivables financing (see NoteV.6)
--954,410 954,410
Investments in other equityinstruments (see Note V. 17)
17,127-369,521 386,648
Other non-current financial assets(see Note V. 18)
1,520,553155,4281,295,585 2,971,566
Total assets continuously measuredat fair value
2,649,49422,331,2442,624,011 27,604,749
Financial liabilities
Item Level 1Level 2Level 3 Total
Held-for-trading financial
liabilities (see Note V, 32)
-56,589194,862 251,451Derivative financial liabilities (see
Note V, 33)
-58,591- 58,591
Total liabilities continuouslymeasured at fair value
-115,180194,862 310,042
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XI 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) became persons acting in concert by signing the Agreement on Concerted Action,holding 1,264,053,189 shares in total and 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% of a limited liability company’s total capital or over 50% of a joint stock company’s totalshare capital; or, despite the ownership of less than 50% of a limited liability company’s total capitalor less than 50% of a joint stock company’s total number of shares, who can still prevail in theresolution of a meeting of shareholders or a general meeting of shareholders according to the votingrights corresponding to their interest in the limited liability company’s total capital or the joint stockcompany’s total number of shares. According to the definition above, the Company has nocontrolling 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
Huaxia CPV (Inner Mongolia) Power Co., Ltd.Joint venture
Tianjin Huanyan Technology Co., Ltd.Joint venture
Tianjin Zhonghuan Haihe Intelligent Manufacturing FundPartnership (Limited Partnership)
Joint venture
TCL Huanxin Bandaoti (Tianjin) Co., Ltd.Joint venture’s subsidiary
Jiangsu Huanxin Bandaoti Co., Ltd.Joint venture’s subsidiary
Moxing Bandaoti (Guangdong) Co., Ltd.Joint venture’s subsidiary
Moxun Bandaoti Technology (Shanghai) Co., Ltd.Joint venture’s subsidiary
SunPower Systems International Limited
Associate
MAXEON SOLAR TECHNOLOGIES, LTD.
Associate
Inner Mongolia Zhongjing Science and Technology Research
Associate
Inner Mongolia Shengou Electromechanical Engineering Co.,
IiCLdd
Associate
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 (LimitedAssociate
TCL Finance (Hong Kong) Co., LimitedAssociate
Inner Mongolia Huanye Material Co., Ltd.Associate
Ruihuan (Inner Mongolia) Solar Power Co., Ltd.Associate
Zhonghuan Aineng (Beijing) Technology Co., Ltd.
Associate
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XIX Related parties and related-party transactions (continued)
The nature of related parties without control relationship(continued)
Company name
Relationship with the
Company
LG Electronics (Huizhou) Co., Ltd.
Associate
Wuxi TCL Medical Imaging Technology Co., Ltd.
Associate
China Innovative Capital Management Limited
Associate
Inner Mongolia Xinhua Bandaoti Technology Co., Ltd.
Associate
Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd.
Associate
JOLED Incorporation
Associate
Jiangsu Jixin Bandaoti Silicon Material Research Institute Co.,Ltd.
Associate
Getech Ltd. and its subsidiaries
Associate and its subsidiaries
TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries
Associate and its subsidiaries
Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd. and its subsidiaries
Associate and its subsidiaries
Shenzhen Jucai Supply Chain Technology Co., Ltd. and itssubsidiaries
Associate and its subsidiaries
Shenzhen Tixiang Business Management Technology Co., Ltd.
Associate and its subsidiaries
Tianjin Qiyier Communication & Broadcasting Co., Ltd. and itssubsidiaries
Associate and its subsidiaries
Purplevine Holdings Limited and its subsidiaries
Associate and its subsidiaries
Huizhou TCL Human Resources Service Co., Ltd. and its Joint ventures and its
SunPower Corporation
Associate’s subsidiary
SunPower Phils.Manufacture Ltd
Associate’s subsidiary
SunPower Systems Sarl
Associate’s subsidiary
SunPower Malaysia Manufacturing Sdn.Bhd.
Associate’s subsidiary
Elite Excellent Investments Limited
Associate’s subsidiary
Esteem Venture Investment Limited
Associate’s subsidiary
Huixing Holdings Limited
Associate’s subsidiary
Marvel Paradise Limited
Associate’s subsidiary
Union Dynamic Investment Limited
Associate’s subsidiary
Zijinshan Investment Co., Ltd.Associate’s subsidiary
Ningxia Zhongjing New Material Technology Co., Ltd.Associate’s subsidiary
TCL Industries Holdings Co., Ltd. and its subsidiariesOther relationships
Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and itssubsidiaries
Other relationships
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related Parties and Related-Party Transactions (Continued)
3 Major related-party transactions
(1) Selling raw materials and finished goods (Note 1)
2023
2022
TCL Industries Holdings Co., Ltd. and itssubsidiaries
17,595,123 10,607,152 SunPower Systems Sarl 1,209,116 1,912,424
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
1,208,487 1,631,738 SunPower Malaysia Manufacturing Sdn.Bhd. 886,746 482,562 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 89,680 50,095 SunPower Systems International Limited 79,537 195,077 Inner Mongolia Huanye Material Co., Ltd. 44,321 -
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
8,082 5,443
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
6,208 2,658 LG Electronics (Huizhou) Co., Ltd. 281 - Getech Ltd. and its subsidiaries 229 4,704 Purplevine Holdings Limited and its subsidiaries75 -
Tianjin Qiyier Communication & BroadcastingCo., Ltd. and its subsidiaries
48 39 MAXEON SOLAR TECHNOLOGIES, LTD. - 1,691 Moxing Bandaoti (Guangdong) Co., Ltd. - 44 SunPower Corporation - 37 Sunpower Phils.Manufacture Ltd - 10
21,127,933 14,893,674
(2) Purchasing raw materials and finished products (Note 2)
2023 2022
Aijiexu New Electronic Display Glass(Shenzhen) Co., Ltd.
3,207,376 2,768,083 Xinjiang Goens Energy Technology Co., Ltd. 2,234,753 5,741,285
TCL Industries Holdings Co., Ltd. and itssubsidiaries
1,978,057 1,439,403
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
1,399,132 1,235,277
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
1,255,571 766,831 Inner Mongolia Huanye Material Co., Ltd. 693,157 - JOLED Incorporation 363,394 -
Inner Mongolia Shengou ElectromechanicalEn
ineerin
| g |
Co.
Ltd.
311,243 228,127
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XI
Related Parties and Related-PartyTransactions (Continued)
3 Major related-party transactions
(2) Purchasing raw materials and finished products (Note 2) (continued)
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.
161,355 178,523
Jiangsu Huanxin Bandaoti Co., Ltd. 150,506 -
Ningxia Zhongjing New Material Technology Co.,Ltd.
28,697 -
TCL Intelligent Technology (Ningbo) Co., Ltd. 11,130 1,309
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
1,671 -
Inner Mongolia Xinhuan Silicon EnergyTechnolo
Co.
| , |
Ltd.
1,416 -
11,797,458 12,358,838
(3) Receiving funding (Note 3)
2023 2022
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
195,405 148,664
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
119,091 70,998
Huizhou TCL Human Resources Service Co.,Ltd. and its subsidiaries
36,962 22,413 Elite Excellent Investments Limited 8,892 8,762 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 7,406 8 Esteem Venture Investment Limited 5,500 5,416
ingbo Dongpeng Weichuang Equity InvestmentPartnershi
| N | |
| p | |
Limited Partnershi
| p) |
820 34,228 Huixing Holdings Limited 670 673 Marvel Paradise Limited 611 612 Union Dynamic Investment Limited 389 401 Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.205 300,000
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
98 41,862 Jiangsu Huanxin Bandaoti Co., Ltd. 98 42,552
ingbo Dongpeng Heli Equity InvestmentPartnership (Limited Partnership)
33 33
Shenzhen Tixiang Business ManagementTechnology Co., Ltd. and its subsidiaries
- 15,730 376,180 692,352
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI
Related Parties and Related-PartyTransactions (Continued)
3 Major related-party transactions
(continued)
(4)Leases
2023
2022Rental income
TCL Industries Holdings Co., Ltd. and itssubsidiaries
63,067 76,368
Aijiexu New Electronic Display Glass 62,878 66,902 Inner Mongolia Huanye Material Co., Ltd. 22,274 16,063 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 3,669 4,323
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
885 -
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
748 837 Getech Ltd. and its subsidiaries 669 1,065 Jiangsu Huanxin Bandaoti Co., Ltd. 466 - Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 400 368
Jiangsu Jixin Bandaoti Silicon Material ResearchInstitute Co.
Ltd.
144 - TCL Intelligent Technology (Ningbo) Co., Ltd. - 1
155,200 165,927
Rental expense
TCL Industries Holdings Co., Ltd. and its 60,396 62,456 Huaxia CPV (Inner Mongolia) Power Co., Ltd. 10,036 5,147 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 1,427 1,927
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
283 - TCL Intelligent Technology (Ningbo) Co., Ltd. 122 -
72,264 69,530
(5) Rendering or receipt of services
2023 2022
Providing labour service for related parties
327,066 293,468Receipt of services2,116,609 1,534,144
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XIRelated Parties and Related-Party
Major related-party transactions
(6) Receiving interest or paying interest (Note 3)
2023 2022
Interest received
15,619 22,837Interest paid43,049 18,040
(7) Remuneration of key management personnel (Note 4)
2023 2022
Remuneration of key management personnel 67,919 48,071
(8) Other related transactions
(a) In May 2023, the Group signed an equity transfer agreement with TCL Ace (Huizhou) Co., Ltd., asubsidiary 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 ofRMB119,039,000.
(b) 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.
(c) 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 Sailing Supply ChainManagement Co., Ltd. to Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. ata transaction price of RMB21,940,000.
(d) In October 2023, the Group signed an equity transfer agreement with TCL Digital Technology (Shenzhen)Co., Ltd., a subsidiary of TCL Industries Holdings Co., Ltd., to acquire 20% equity of Techigh CircuitTechnology (Huizhou) Co., Ltd. held by TCL Digital Technology (Shenzhen) Co., Ltd. at a transactionprice of RMB101,628,000.
(e) According to the terms of the Agreement by and between TCL TECHNOLOGY INVESTMENTSLIMITED and T.C.L. INDUSTRIES HOLDINGS (H.K.) LIMITED on the Transfer of the 100% Equityof Moka International Limited (“Equity Transfer Agreement”), when the net profit actually realized byMoka International Limited during the agreed performance commitment period exceeds the committedRMB760,000,000, the Company will reward the transferor with 50% of the excess profit as anadditional performance bonus (the total amount of the additional bonus will not exceed 20% of theequity transfer price). During the commitment period, Moka International Limited realized aconsolidated net profit of RMB1,480,966,000. According to the said Equity Transfer Agreement, theperformance bonus recognized for the current period is RMB360,483,000.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related Parties and Related-Party Transactions (Continued)
3 Major related-party transactions (continued)
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.
Note 3 Providing funding for or receiving funding from related parties and corresponding interest
received or paid
The Company set up a settlement center in 1997 and TCL Technology Group Finance Co., Ltd.in 2006 (together, the “Financial Settlement Center”). The Financial Settlement Center isresponsible for the financial affairs of the Company, including capital operation and allocation.The Center settles accounts with the Company’s subsidiaries, joint ventures and associates andpays the interest. It also allocates the money deposited by the subsidiaries, joint ventures andassociates in it to these enterprises and charges interest. The interest income and expense betweenthe Company 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 relatedparties’ deposits in the Center.
Note 4 The remunerations of key management personnel include fixed salaries, allowances and
performance bonuses received from the Company by the directors, supervisors and seniorexecutives of the Company during their terms of office, but do not include share-based payments.
Note 5 Transactions taken by TCL Financial Technology (Shenzhen) Co., Ltd. with the Group between
January and June 2023 are recorded into TCL Industries Holdings Co., Ltd. and its subsidiaries.
Note 6 The transactions between Xinjiang Goens Energy Technology Co., Ltd. and the Group in 2023
are related party transactions.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XI Related Parties and Related-Party Transactions (Continued)
4 Balances due from and to related parties (continued)
(1) Accounts receivable
December 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
3,686,514 2,149,032
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
144,349 292,275 SunPower Systems Sarl 46,943 258,443 SunPower Systems International Limited 13,163 76,749 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 12,527 12,651 Inner Mongolia Huanye Material Co., Ltd. 10,095 6,398 Zhonghuan Feilang (Tianjin) Technology Co., Ltd.2,500 1,522
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
785 -
Thunderbird Innovation Technology (Shenzhen)Co., Ltd. and its subsidiaries
658 - LG Electronics (Huizhou) Co., Ltd. 478 -
Tianjin Qiyier Communication & BroadcastingCo., Ltd. and its subsidiaries
54 44 Jiangsu Huanxin Bandaoti Co., Ltd. 32 - Huaxia CPV (Inner Mongolia) Power Co., Ltd. 22 183 SunPower Malaysia Manufacturing Sdn.Bhd. 6 2
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
- 1,163
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.
- 969 Tianjin Huanyan Technology Co., Ltd. - 289 Getech Ltd. and its subsidiaries - 281MAXEON SOLAR TECHNOLOGIES, LTD. - 104
3,918,126 2,800,105
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI
Related Parties and Related-PartyTransactions (Continued)
Balances due from and to related parties(continued)
(2) Accounts payable
December 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
1,246,215 1,311,176
Aijiexu New Electronic Display Glass (Shenzhen)Co., Ltd.
1,113,639 699,954
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
284,721 272,288
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
198,697 110,703
Inner Mongolia Shengou ElectromechanicalEngineering Co., Ltd.
46,226 57,847Getech Ltd. and its subsidiaries34,963 112,831Inner Mongolia Huanye Material Co., Ltd.31,915 25,090
Ningxia Zhongjing New Material TechnologyCo., Ltd.
26,819 -
Inner Mongolia Zhongjing Science andTechnology Research Institute Co., Ltd.
22,521 63,818Jiangsu Huanxin Bandaoti Co., Ltd.21,437 -
Huizhou TCL Human Resources Service Co., Ltd.and its subsidiaries
2,671 -TCL Huanxin Bandaoti (Tianjin) Co., Ltd.936 968TCL Intelligent Technology (Ningbo) Co., Ltd.244 -
Zhonghuan Feilang (Tianjin) Technology Co.,Ltd.
- 10
3,031,004 2,654,685
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related parties and related-party transactions (continued)
Balances due from and to related parties
(3) Other receivables
December 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and its subsidiaries133,502 576,402 Ningxia Zhongjing New Material Technology Co., Ltd.12,251 -
Shenzhen Jucai Supply Chain Technology Co., Ltd. andits subsidiaries
9,114 5,550Inner Mongolia Huanye Material Co., Ltd.8,120 4,061
Aijiexu New Electronic Display Glass (Shenzhen) Co.,Ltd.
7,791 7,987TCL Huanxin Bandaoti (Tianjin) Co., Ltd.7,363 2,058Getech Ltd. and its subsidiaries5,127 3,994Moxun Bandaoti Technology (Shanghai) Co., Ltd.4,265 - Zhonghuan Aineng (Beijing) Technology Co., Ltd. 3,053 3,101 JOLED Incorporation 2,823 -
Shenzhen Qianhai Sailing International Supply ChainManagement Co., Ltd. and its subsidiaries
1,898 777
Inner Mongolia Xinhuan Silicon Energy TechnologyCo.
Ltd.
1,629 - MAXEON SOLAR TECHNOLOGIES,LTD. 1,105 -
Inner Mongolia Zhongjing Science and TechnologyResearch Institute Co.
,,
Ltd.
775 15 Jiangsu Huanxin Bandaoti Co., Ltd. 707 - LG Electronics (Huizhou) Co., Ltd. 336 212 Inner Mongolia Xinhua Bandaoti Technology Co., Ltd.219 -
Jiangsu Jixin Bandaoti Silicon Material ResearchInstitute Co.
,,
Ltd.
215 -
Huizhou TCL Human Resources Service Co., Ltd. andi
,ts
| subs |
i
i
| a |
ri
170 - Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 29 - Ruihuan (Inner Mongolia) Solar Power Co., Ltd. - 20,181
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
- 9 Wuxi TCL Medical Imaging Technology Co., Ltd. - 6
200,492 624,353
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related parties and related-party transactions(continued)
Balances due from and to related parties
(4) Other payables
December 31,
2023
January 1, 2023
TCL Industries Holdings Co., Ltd. and its subsidiaries607,576 81,858
Tianjin Zhonghuan Haihe Intelligent ManufacturingFund Partnership (Limited Partnership)
428,100 428,100 Getech Ltd. and its subsidiaries 112,086 166,525
Shenzhen Jucai Supply Chain Technology Co., Ltd.and its subsidiaries
82,487 120,677
Shenzhen Qianhai Sailing International Supply ChainMana
ement Co.
| , |
Ltd. and its subsidiaries
77,143 35,350
Huizhou TCL Human Resources Service Co., Ltd. andits subsidiaries
46,151 22,462
Aijiexu New Electronic Display Glass (Shenzhen) Co.,
9,317 9,317 Elite Excellent Investments Limited 8,892 8,762 Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 5,591 5,564 Esteem Venture Investment Limited 5,500 5,416
Inner Mongolia Shengou ElectromechanicalEn
dg
ineerin
| g |
Co.
Ltd.
2,796 1,444 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 2,575 1,924 Moxun Bandaoti Technology (Shanghai) Co., Ltd. 1,042 4,057 Huixing Holdings Limited 670 673 Marvel Paradise Limited 611 612
Thunderbird Innovation Technology (Shenzhen) Co.,Ltd. and its subsidiaries
401 - Union Dynamic Investment Limited 389 401
Ningbo Dongpeng Weichuang Equity InvestmentPartnership (Limited Partnership)
273 18,762Jiangsu Huanxin Bandaoti Co., Ltd.134 - China Innovative Capital Management Limited 86 29
Ningbo Dongpeng Heli Equity Investment Partnership
,(
Limited Partnershi
| p) |
66 66
Inner Mongolia Zhongjing Science and TechnologyResearch Institute Co., Ltd.
60 55
Ningxia Zhongjing New Material Technology Co.,Ltd.
58 - Huaxia CPV (Inner Mongolia) Power Co., Ltd. 45 45 TCL Intelligent Technology (Ningbo) Co., Ltd. 24 75
Jiangsu Jixin Bandaoti Silicon Material ResearchInstitute Co.
Ltd.
20 - CJ Speedex Logistics Co., Ltd. - 102
1,392,093 912,276
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related parties and related-party transactions(continued)
Balances due from and to related parties(continued)
(5) Non-
currentliabilities due within one year
December 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
14,042 19,555Huaxia CPV (Inner Mongolia) Power Co., Ltd. 2,775 4,972TCL Huanxin Bandaoti (Tianjin) Co., Ltd. - 957
16,817 25,484
(6) Prepayments
December 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
46,682 75 Getech Ltd. and its subsidiaries 15,695 16,890 Tianjin Huanyan Technology Co., Ltd. 6,466 30,438
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
399 2,862
Inner Mongolia Xinhuan Silicon EnergyTechnology Co., Ltd.
156 - Xinjiang Goens Energy Technology Co., Ltd. 152 8,386
Huizhou TCL Human Resources Service Co., Ltd.and its subsidiaries
133 - TCL Intelligent Technology (Ningbo) Co., Ltd. 44 -
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
- 2,633
69,727 61,284
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related parties and related-party transactions(continued)
Balances due from and to related parties(continued)
(7) Advances
fromcustomers
ecember 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
304 214
Shenzhen Jucai Supply Chain Technology Co., Ltd.and its subsidiaries
110 -
414 214
(8) Contract liabilities
DD
ecember 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
71,842 56,969
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
1,424 148,237
TCL Huanxin Bandaoti (Tianjin) Co., Ltd.67 -
SunPower Corporation46 -
Inner Mongolia Huanye Material Co., Ltd.32 -
73,411 205,206
(9) Lease liabilities
DD
ecember 31, 2023 January 1, 2023
TCL Industries Holdings Co., Ltd. and itssubsidiaries
40,772 1,345Huaxia CPV (Inner Mongolia) Power Co., Ltd. 8,690 1,260
49,462 2,605
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XI Related parties and related-party transactions
Balances due from and to related parties
(10) Deposits from related parties (note)
ecember 31, 2023 January 1, 2023
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
195,470 148,707
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd. and its subsidiaries
60,899 36,117 TCL Huanxin Bandaoti (Tianjin) Co., Ltd. 7,407 8
Huizhou TCL Human Resources Service Co., Ltd.and its subsidiaries
6,134 2,616
Ningbo Dongpeng Weichuang Equity InvestmentPartnership (Limited Partnership)
547 15,722 Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 269 300,086
TCL Air Conditioner (Wuhan) Co., Ltd. and itssubsidiaries
98 41,867 Jiangsu Huanxin Bandaoti Co., Ltd. 98 42,553 TCL Intelligent Technology (Ningbo) Co., Ltd. 1 -
Ningbo Dongpeng Heli Equity InvestmentPartnership (Limited Partnership)
- -
Shenzhen Tixiang Business ManagementTechnolo
D
gy
Co.
| , |
Ltd. and its subsidiaries
- 15,734
270,923 603,410
Note: These deposits are made by related parties in the Company’s subsidiaryTCL Technology Group Finance Co., Ltd.
(11) Other non-current assets
ecember 31, 2023 January 1, 2023
Purplevine Holdings Limited and its subsidiaries 174,422 216,468Getech Ltd. and its subsidiaries 4,429 3,176
Shenzhen Jucai Supply Chain Technology Co.,Ltd. and its subsidiaries
297 -
TCL Industries Holdings Co., Ltd. and itssubsidiaries
68 -
179,217 219,644
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XII 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
Range 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 the Company’sEmployee Stock Purchase Plan (Phase II) 2021-2023 (Draft) adopted by the resolution of the of the 19th Meeting of theSeventh-term Board of Directors and the 14th Meeting of the Seventh-term Board of Supervisors, 32.6211 million shareswere granted to no more than 3,600 awardees at the price of RMB4.35/share on July 22, 2022. In 2023, a total of 20,000shares granted by the Company became void due to the awardees’ 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 on the Company’sEmployee Stock Purchase Plan (Phase III) 2021-2023 (Draft) adopted by the resolution of the 32nd Meeting of theSeventh-term Board of Directors and the 21st Meeting of the Seventh-term Board of Supervisors, 64.99 million shareswere granted to no more than 3,600 awardees at the price of RMB3.94 on June 16, 2023.
The vesting arrangement of the restricted stock granted under the above incentive plan is shown in the following table:
Number of times Vesting period and ratioFirst non-trade transfer or sale
After 12 months from the date of vesting of the holder's respective quota
of the underlying shares, the Shareholding Plan may decide whether tosell 50% of the shares or to transfer 50% of the holder's respective sharesto the account of the holder of the Shareholding Plan, provided that suchtransfer and sales are then supported by the systems of SZSE and theRegistration and Settlement Corporation;Second non-trade transfer or sale
After 24 months from the date of vesting of the holder’s correspondingquota of the underlying shares, the Shareholding Plan may decidewhether to sell 50% of the shares or to transfer 50% of the holder’scorresponding shares to the account of the holder of the ShareholdingPlan provided that such transfer and sales are then supported by thesystems of SZSE and the Registration and Settlement Corporation.2 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 exercisable equityinstruments
On each balance sheet date within the vestingperiod, the Group determines the bestestimate
based on the latest number of employees eligibleto exercise their options, and revise theestimated number of exercisable equityinstruments.Reasons for significant differences between current andprevious estimates
NoneAccumulated amount of equity-settled share-basedpayment included in capital reserve
RMB134,949,000Total expense recognized for equity-settled share-basedpayments in the current period
RMB108,217,000
The Company has no cash-settled share-based payments.
The Company has no share-based payment modification or termination.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XII Share-based payments5 Share-based payments by the controlling subsidiaries TZE and Zhonghuan Advanced
(1) Stock option incentive plan
(a) Changes in stock options during the year
Number of stock options outstanding as at the beginning of the year
2,752Number of stock options granted by the Company in the current period
-Number of stock options of the Company exercised in the current period
Number of stock options of the Company voided in the current period
-Others
Number of stock options outstanding as at the end of the year
2,558
On July 6, 2021, TZE held its third extraordinary general meeting of 2021 where the Proposal for the 2021Stock Option Incentive Plans (Draft) and Its Summary (hereinafter referred to as the “Stock Option IncentivePlans for 2021”) was deliberated and adopted. On July 9, 2021, TZE held the 15th meeting of its 6th Board ofDirectors and the 7th meeting of its 6th Board of Supervisors, where the Proposal for Granting Stock Optionsto the Incentive Objects of the Stock Option Incentive Plans for 2021 was deliberated and adopted. As ofDecember 31, 2023, all Stock Option Incentive Plans for 2021 had entered the exercisable period.
(2) Employee stock ownership plan
(a) TZE’s employee stock ownership plan for 2021
On July 6, 2021, TZE held its third extraordinary general meeting of 2021 where the Proposal for theEmployee Stock Ownership Plan (Draft) and Its Summary for 2021 (hereinafter referred to as the “EmployeeStock Ownership Plan for 2021”) was deliberated and adopted. In 2021, TZE repurchased a total of 9,137,521shares by centralized bidding through the securities account opened specially for repurchasing shares, at anaverage repurchase price of RMB36.11 per share. Among the repurchased shares, 8,975,906 shares were usedfor the Employee Stock Ownership Plan for 2021.
(b) Employee equity incentives of Zhonghuan Advanced
On February 10, 2022, TZE held its first extraordinary general meeting of 2022, where the Proposal forCapital and Share Increase and Related Party Transactions of the Controlling Subsidiary ZhonghuanAdvanced Bandaoti Material Co., Ltd. was deliberated and adopted. Zhonghuan Advanced Bandaoti MaterialCo., Ltd. (hereinafter referred to as “Zhonghuan Leading”), a subsidiary of the Company, intended toimplement employee stock ownership through capital and share increase (hereinafter referred to as “StockOwnership Plan of Zhonghuan Advanced”). In 2022 and 2023, Zhonghuan Advanced granted, in lump sumrespectively, 969,480,000 shares and 155,520,000 shares to the operation management team, backboneemployees and persons who had made significant contributions to its business development, at a grant priceof RMB1.04 per share.
(c) TZE’s employee stock ownership plan for 2022
On August 30, 2022, TZE held its second extraordinary general meeting of 2022 where the Proposal for theEmployee Stock Ownership Plan (Draft) and Its Summary for 2022 (hereinafter referred to as the “Employee StockOwnership Plan for 2022”) was deliberated and adopted. In 2022, TZE repurchased a total of 9,515,263 shares bycentralized bidding through the securities account opened specially for repurchasing shares, at an average repurchaseprice of RMB41.09 per share. Among the repurchased shares, 9,492,797 shares were used for the Employee StockOwnership Plan for 2022. The remaining 161,615 shares repurchased in 2021 were also used for the EmployeeStock Ownership Plan for 2022. In summary, a total of 9,654,412 shares were used for the Employee StockOwnership Plan for 2022. The lock up period for the shares purchased for the Employee Stock Ownership Plan for2022 is
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XII Share-based payments (continued)
5 Share-based payments by the controlling subsidiaries TZE and Zhonghuan Advanced(continued)
(2) Employee stock ownership plan (continued)
(c) TZE’s employee stock ownership plan for 2022 (continued)
the period from September 8, 2022 to September 7, 2023. On June 30, 2023, the Management Committee for theEmployee Stock Ownership Plan for 2022 determined that the grant date of stock quota under the Employee StockOwnership Plan for 2022 should be July 1, 2023, and agreed to grant a total of approximately 9,654,412 shares toemployees who met the conditions of the Employee Stock Ownership Plan for 2022. As of December 31, 2023, allthe shares held under the Employee Stock Ownership Plan for 2022 had been granted to the holders.
(d) TZE’s employee stock ownership plan for 2023
On June 8, 2023, TZE held its second extraordinary general meeting of 2023 where the Proposal for the EmployeeStock Ownership Plan (Draft) and Its Summary for 2023 (hereinafter referred to as the “Employee StockOwnership Plan for 2023”) was deliberated and adopted. In the year, TZE repurchased a total of 14,381,400 sharesby centralized bidding through the securities account opened specially for repurchasing shares, at an averagerepurchase price of RMB48.65 per share. Among the repurchased shares, 14,369,514 shares were used for theEmployee Stock Ownership Plan for 2023. The remaining 22,466 shares repurchased in 2022 were also used forthe Employee Stock Ownership Plan for 2023. In summary, a total of 14,391,980 shares were used for theEmployee Stock Ownership Plan for 2023. The lock up period for the shares acquired for the Employee StockOwnership Plan for 2023 is from June 9, 2023 to June 8, 2024. As no grant date is specified in the Agreement onGranting the Employee Stock Ownership Plan for 2023 signed by and between TZE and its employees in the year,no shares had been granted under the Employee Stock Ownership Plan for 2023 as at December 31, 2023.
(3) 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 exercisable equityinstruments
On each balance sheet date within the vestingperiod, the Group determines the best
estimate based on the latest number ofemployees eligible to exercise their options, andrevise the estimated number of exercisableequity instruments.Reasons for significant differences between current andprevious estimates
NoneAccumulated amount of equity-settled share-basedpayment included in capital reserve
RMB500,835,000Total expense recognized for equity-settled share-basedpayments in the current period
RMB456,400,000
(4) TZE has no cash-settled share-based payments.
(5) Modification or termination of TZE’s share-based payment.
On August 23, 2023, the Employee Stock Ownership Plan for 2021 changed share-based payments settled in cashto share-based payments settled in equity, with a decrease of expenses by RMB29,227,000 in 2023.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XIII Commitments
1 Capital commitments
December 31, 2023
Contracted but not provisioned Note 133,203,372 Approved by Board but not contracted Note 21,524,475
34,727,847
Note
The capital commitments under contractual obligations but not provided for in the currentperiod primarily consisted of such commitments for construction of investment projectsand external investments.
Note
The capital commitments were approved by the Board but were not under contractualobligations in the current period primarily consist of new energy photovoltaic and materialproduction projects and CSOT’s LCD panel projects.
As of December 31, 2023, apart from the disclosures above, there were no other major
commitments that are required to be disclosed.
XIV Contingencies
Guarantees Provided for External Parties
As at December 31, 2023, the guarantee provided by the Company for the related party’s bank loans,commercial drafts, letters of credit, etc., was RMB2,360,399,000.
Obligor
Actualguarantee
amount
Type ofguarantee
Actualoccurrence
date
Term ofguarantee
Expiredor not
Subsidiary of TCL IndustriesHoldings Co., Ltd.
96,160
Jointliabilityguarantee
August 29,
2019
March 2,2021
November 4,2021
No
Aijiexu New Electronic DisplayGlass (Shenzhen) Co., Ltd.
230,559
Jointliabilityguarantee
April 28,
2020
8 years No
Shenzhen Qianhai SailingInternational Supply ChainManagement Co., Ltd.
480,480
Jointliabilityguarantee
March 1,
2023
58 days to
1 year
No
Inner Mongolia Xinhua BandaotiTechnology Co., Ltd.
233,200
Jointliabilityguarantee
May 22,2023
6.4 years No
Inner Mongolia Xinhuan SiliconEnergy Technology Co., Ltd.
1,320,000
Jointliabilityguarantee
June 15,2023
5.5 years No
2,360,399
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XIV Contingencies (continued)
As at December 31, 2023, the amount of credit granted by the Group for the note discounting, noteacceptance, and non-financing guarantees of related parties was RMB1,248,737,000.
XV Events after the Balance Sheet Date
From January 29 to February 6, 2024, TCL TECH completed the issuance of the 2024 TechnologyInnovation Corporate Bond (Digital Economy) (Phase I), with a value date of February 6, 2024, anissuance scale of RMB1.5 billion, with a duration of 2 years and a coupon rate of 2.64%.
From April 8 to April 11, 2024, TCL TECH completed the issuance of the 2024 TechnologyInnovation Corporate Bond (Digital Economy) (Phase II), with a value date of February 11, 2024,an issuance scale of RMB1.5 billion, with a duration of 5 years and a coupon rate of 2.69%.
According to the proposal for profit distribution for 2023 deliberated and approved by the Boardof Directors, the Company intends to distribute a cash dividend of RMB0.8 (tax-inclusive) to allits shareholders for every 10 shares in its total share capital consisting of 18,779,080,767 sharesthat were eligible for profit distribution as at April 28, 2024 (if the Company repurchased treasuryshares during equity distribution, such shares would not be eligible for the profit distribution), withno bonus shares given and no capital reserve converted into share capital, and with a total profit ofRMB1,502,326,000 distributed.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVI Other Important Matters
(I) Segment reporting
Basis for determining reporting segment and accounting policies
According to the Company’s internal organizational structure, management requirements andinternal reporting system, the Company’s business is divided into four reporting segments: thedisplay business, the new energy photovoltaic and materials business, the distribution businessand the other businesses. The Company's management regularly evaluates the operating results ofthese reporting segments to determine the allocation of resources and evaluate their performance.The Company’s four reporting segments are:
(1)
Display business: mainly includes the research and development, manufacturing and sales ofdisplay panels and display modules, as well as complete display processing.
(2)
ew energy photovoltaic and display materials business: mainly includes the manufacture and salesof silicon materials, display devices, new energy materials, and new energy; development, ando
Np
eration of hi
| g |
h-efficienc
| y | p |
hotovoltaic
ower station
| p |
ro
ects.
(3)Distribution business: mainly includes the sales of computers, software, tablet computers, mobilephones and other electronic products.
(4)Other businesses: other businesses besides the above, including industrial finance and investmentbusiness, technology development services and patent maintenance services provided by thecompany, etc.
Segment assets include all current assets such as tangible assets, intangible assets, other long-termassets 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 externaltransactions 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.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVI Other Important Matters (Continued)
(I) Segment reporting (continued)
2 Financial information of reporting segments
For the 12 months ending on December 31, 2023
displaybusiness
New energyphotovoltaics
and other
siliconmaterialsbusiness
Distribution
business
Otherbusinesses
andinternally
offsetaccounts
assets
Revenue 83,654,743 59,146,46330,109,5291,455,922 174,366,657 Net profit (7,407) 3,898,89243,200846,099 4,780,784Total
assets
235,586,824 125,063,0437,266,54814,942,671 382,859,086
Total
liabilities
159,403,780 64,825,9315,832,5137,530,889 237,593,113
For the 12 months ending on December 31, 2022
Display
andmaterialsbusiness
New energyphotovoltaics
and other
siliconmaterialsbusiness
Distribution
business
Otherbusinesses
andinternally
offsetaccounts
assets
Revenue 65,717,155 67,010,15731,847,8031,977,671 166,552,786 Net profit (7,625,065) 7,073,042264,2532,075,829 1,788,059Total
assets
175,429,564 108,312,9238,712,67567,541,070 359,996,232Total
liabilities
99,999,637 61,253,0817,231,56959,373,192 227,857,479
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVII Notes to the key items presented in the financial statements of the Company
1 Accounts receivable
December 31, 2023 January 1, 2023
Amount
Ratio(%) Allowance
Accrual
Ratio(%)
Amount
Ratio(%)
Allowance Percentage
Within1 year
351,594 100% 8060.23%353,877100%65 0.02%
2 Other receivables
December 31, 2023 January 1, 2023
Dividends receivable - - Other receivables 19,614,272 4,961,948
19,614,272 4,961,948
(a) Nature of other receivables is analyzed as follows:
December 31, 2023January 1, 2023
Equity transfer receivables 610 470,628 Security and deposits 2,841 1,795 Others 19,610,821 4,489,525
19,614,272 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 incurrent period
532-- 532
Reversal ofcurrent period
--(82) (82)
Write-off ofcurrent period
--- -
December 31,2023
1,607-31,636 33,243
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVII Notes to Financial Statements of the Parent Company (Continued)
2 Other receivables (continued)
(c) The aging of other receivables is analyzed as follows:
December 31, 2023 January 1, 2023
AmountRatio (%)Amount Ratio (%)
Within1 year
17,998,30291.61%3,944,909 78.98%
1 to 2years
673,3213.43%23,902 0.48%
2 to 3years
12,7760.06%225,690 4.52%
Over 3years
963,1164.90%800,240 16.02%
19,647,515100.00%4,994,741 100.00%
The outstanding other receivables were mostly current accounts with related parties.
The top five other receivables of the Company amounted to approximately RMB18,826,190,000(December 31, 2022: RMB4,008,688,000), accounting for 95.82% of the total other receivables ofthe Company (December 31, 2022: 80.26 %).
3 Long-term equity investments
December 31, 2023 January 1, 2023
Grossamount
llowance
fordoubtfulaccounts
Carrying
amount
Grossamount
AI
mpairmentallowance
Carrying
amount
Associates andjoint ventures (1)
16,717,864 -16,717,86417,171,275- 17,171,275
Subsidiaries (2)62,947,128 -62,947,12859,189,096- 59,189,096
79,664,992 -79,664,99276,360,371- 76,360,371
As of December 31, 2023, there are no major restrictions on the realization of investment and theremittance of return on long-term equity investments.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XVII Notes to Financial Statements of the Parent Company (Continued)3 Long-term equity investments (continued)
(1) Associates and joint ventures
Increase or decrease in current period
December 31, 2023January 1, 2023
Increase/decreasein investment incurrent period
Investment gains
and lossesrecognized byequity method
Othercomprehensive
incomeadjustment
Otherequitychanges
Declared cashdividends or profits
Provisionforimpairment
Otherincreases and
decreases
Bank of Shanghai Co., Ltd.
12,809,374-1,251,665(7,708) -(327,157)--13,726,174
China Innovative Capital Management Limited
944,392-25,698- ---210970,300
LG Electronics (Huizhou) Co., Ltd.89,772-13,438- -(13,400)--89,810
Shenzhen Qianhai Qihang Supply ChainManagement Co., Ltd.
27,358(40,000)(1,144)1,638 ---12,148-
Shenzhen Tixiang Business ManagementTechnology Co., Ltd.
1,147-216- ---121,375
Shenzhen Jucai Supply Chain Technology Co., Ltd.
15,273-4,3672 ----19,642
Guangdong Innovative Lingyue IntelligentManufacturing and Information TechnologyIndustry Equity Investment Fund Partnership(Limited Partnership)
502,444328,43059,337- -(19,937)--870,274
Guangdong Utrust Emerging Industry EquityInvestment Fund Partnership (Limited Partnership)
167,809-13,024- ----180,833
Xinxin Bandaoti Technology Co., Ltd.1,798,784-(34,120)- ---(1,764,664)-
Shenzhen Qianhai Sailing International SupplyChain Management Co., Ltd.
69,540-(42,523)(44) 1,164---28,137
Deqing Puhua Equity Investment Fund Partnership(Limited Partnership)
-163,760 (14,642)- ----149,118
Ningbo Meishan Bonded Port Qiyu InvestmentManagement Partnership (Limited Partnership)
-44,646(12,464)- ----32,182
Huizhou TCL Human Resources Service Co., Ltd.
6,274-2,656- ----8,930
TCL Microchip Technology (Guangdong) Co., Ltd.285,27960,000(79,117)- 12,034---278,196Others 453,829(58,722)27,026- -(2,548)-(56,692)362,893
17,171,275498,1141,213,417(6,112) 13,198(363,042)-(1,808,986)16,717,864
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
XVII
Notes to Financial Statements of the Parent Company (Continued)
3 Long-term equity investments (continued)
(2) Subsidiaries
Directshareholding
ratio (%)
January 1,
2023
Increase in theperiod
ecrease intheperiod
December
31, 2023
TCL China Star Optoelectronics
Technology Co., Ltd.
79.17%33,780,853268,400- 34,049,253TCL Technology Group Finance Co.,Ltd.
82.00%1,256,003-- 1,256,003TCL Technology Group (Tianjin)Co., Ltd.
100%15,000,0001,200,000- 16,200,000TCL Zhonghuan Renewable Energy
Technology Co., Ltd.
2.55%1,752,635177,098- 1,929,733TCL Culture Media (Shenzhen) Co.,Ltd.
100%361,414-- 361,414Shenzhen Dongxi Jiashang
Entrepreneurship Investment Co.,Ltd.
100%200,000-- 200,000Guangdong TCL Juxiang
Technology Co., Ltd. (FormerlyHuizhou Sailuote CommunicationCo., Ltd.)
100%110,000-- 110,000Highly Information Industry Co.,
Ltd.
66.46%107,296-- 107,296
TCL Communication Equipment(Huizhou) Co., Ltd.
75.00%79,500-- 79,500TCL Medical Radiological
Technology (Beijing) Co., Ltd.
100%58,497-- 58,497
Shenzhen TCL Strategic EquityInvestment Fund Partnership(Limited Partnership)
100%71,010-- 71,010
TCL Industrial Technology ResearchInstitute, Ltd. (Europe)
100%20,000-- 20,000
Wuhan TCL Industrial TechnologyResearch Institute, Ltd.
100%20,000-- 20,000Shenzhen TCL High-Tech
Development Co., Ltd.
100%20,000-- 20,000Beijing HAWK Cloud Information
Technology Co., Ltd.
100%20,000-- 20,000Huizhou Hongsheng Science and
Technology Development Co., Ltd.
100%1,000-- 1,000Tianjin Silica Material Technology
Co., Ltd.
100%2,800,000-- 2,800,000Xiamen TCL Technology IndustrialInvestment Co., Ltd.
100%211,000253,397 - 464,397TCL Internet Technology(Shenzhen) Co., Ltd.
100%15,000-- 15,000
Ningbo TCL Equity Investment Ltd. 100%300,000-- 300,000TCL Technology InvestmentsLimited
100%2,988,293-- 2,988,293Huizhou Dongshen Jia’an Equity
Investment Partnership (LimitedPartnership)
99.94%-10,000- 10,000TCL Financial Technology
(Shenzhen) Co., Ltd.
100%-15,036- 15,036Zhonghuan Advanced Bandaoti
Technology Co., Ltd.
7.35%-1,790,312- 1,790,312
Equity incentives of subsidiaries 16,59543,789- 60,384
59,189,0963,758,032- 62,947,128
For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note VIII.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVII Notes to Financial Statements of the Parent Company (Continued)
4 Investments in other equity instruments
December 31, 2023January 1, 2023
Equity of unlisted companies-5,000
5 Other non-current financial assets
December 31, 2023January 1, 2023
Equity investments442,985431,023
Debt investments201,315-
644,300431,023
6 Operating income and operating costs
2023 2022RevenueOperating
cost
Revenue Operating
cost
Core business 1,051,9581,049,5871,019,036 1,009,786 Non-core business 668,002147,567574,177 153,021
1,719,9601,197,1541,593,213 1,162,807
7 Return on investment
2023 2022Gain on disposal of debt instruments at fair value through
profit or loss - 244,997Gain on disposal of equity instruments at fair value through
profit or loss 298 -Profit from holding debt instruments at fair value through
profit or loss 140,134 - Debt instruments at amortized cost through profit or loss - -Profit from holding equity instruments at fair value through
profit or loss - 3,953 Gain on disposal of derivative financial assets/liabilities 9,659 - Dividends from subsidiaries 713,047 9,340,042 Share of profit of associates for current period 1,289,878 1,358,727 Share of profit of joint ventures for current period (76,461) (50,667) Net income from disposal of long-term investments 284,242 1,586,504
2,360,797 12,483,556As of December 31, 2023, there were no significant restrictions on the collection of return on
investment.
TCL Technology Group CorporationNotes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XVII 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 (RMB8,054,069,000).
9 Ending balance of cash and cash equivalents
The ending balance of cash and cash equivalents of the Company was RMB2,642,115,000.
10 Contingent liabilities
As of December 31, 2023, the contingent liabilities not provided for in the financial report
were as follows:
December 31, 2023
Guarantees for bank loans of subsidiaries 48,112,186
Guarantees such as trade notes, letters of credit and letters
of guarantee for subsidiaries 24,675,501
Guarantees for bank loans, trade notes, letters of credit, etc.
of related parties 2,360,399
XVIII Comparative Figures
Certain comparative data have been reclassified to comply with the presentation of the
current period.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023___________(RMB’000)_____________
IX Non-recurring profit and loss items and amount
2023 2022
Gain or loss on disposal of non-current assets(inclusive of impairment allowance write-offs)
275,255 1,757,839
Public grants through profit or loss (exclusiveof public grants closely related to theCompany’s normal business operations, incompliance with national policies, enjoyedaccording to determined criteria, and with acontinuous impact on the Company’s profitsand losses)
2,764,043 1,322,783
The profits or losses generated from changesin fair value arising from financial assets andfinancial liabilities held by non-financialenterprises and the profits or losses from thedisposal of such financial assets and financialliabilities, except for the effective hedgingbusiness related to the company’s normalbusiness operations
(114,259) (127,234)
Reversal of provision for impairment ofreceivables that have been individually testedfor impairment
22,894 37,746
Non-operating income and expenses otherthan the above
228,994 758,600
Income tax (603,198) (244,386)
Non-controlling interests effects (1,379,875) (545,817)
Non-recurring gains and losses attributable toordinary shareholders of the parent company
1,193,854 2,959,531
According to the relevant provisions of the Interpretative Announcement No. 1 onInformation Disclosure by Companies Issuing Securities to the Public - Non-recurringProfits and Losses (Revised in 2023), public grants closely related to the Company’snormal business operations, in compliance with national policies, enjoyed accordingto determined criteria, and with a continuous impact on the Company’s profits andlosses shall be presented as recurring profits and losses. The public grants presented asrecurring profits and losses by the Group in 2022 include asset-related public grants ofRMB150,765,000, which comply with the relevant provisions of InterpretativeAnnouncement No. 1 (Revised in 2023) and shall be presented as recurring profits andlosses. This change has no significant impact on the Company’s financial position andoperating results.
TCL Technology Group Corporation
Notes to Financial StatementsFor the period from January 1 to December 31, 2023
___________(RMB’000)_____________
XX Weighted Average Return on Equity (ROE) and Earnings per Share (EPS)
The Company calculates the ROE and EPS as follows in accordance with the Compilation RulesNo. 9 for Information Disclosure of Companies Offering Securities to the Public-Calculationand Disclosure of Return on Equity and Earnings per Share (Revised in 2010) issued by theChina Securities Regulatory Commission and relevant provisions of accounting standards:
Item Reporting
period Netprofitattributableto theparentcompanyfor thereportingperiod
Weighted
averagereturn onequity (%)
Earnings per share (RMB yuan)
Basicearnings per
share
Dilutedearnings pershare income
et profit attributable toordinary shareholders of theCompany
2,214,9344.27%0.1195 0.1179
NN
et profit attributable toordinary shareholders of theCompany before non-recurring gains and losses
1,021,0801.97%0.0551 0.0544
Company Name: TCL Technology Group Corporation
Date: April 28, 2024
The financial statements and the notes thereto from page 1 to page 178 are signed by:
Legalrepresentative:
LiDongsheng
Person-in-charge ofFinancialaffairs: Li Jian
Person-in-charge oftheFinancialDepartment:
JingChunmei