Full Text of the 2024 Interim Report of TCL Technology Group Corporation
TCL科技集团股份有限公司TCL Technology Group Corporation
INTERIM REPORT 2024
August 2024
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of TCL Technology Group Corporation(hereinafter referred to as the “Company”) hereby guarantee the factuality, accuracy andcompleteness of the contents of this Report and its summary, and shall be jointly and severallyliable for any misrepresentations, misleading statements or material omissions therein.
Mr. Li Dongsheng, the person-in-charge of the Company, Ms. Li Jian, the person-in-charge of financial affairs (Chief Financial Officer), and Ms. Jing Chunmei, the person-in-charge of the financial department, hereby guarantee that the financial statements carried inthis Interim Report are factual, accurate, and complete.All the Company’s directors attended the Board meeting for the review of this InterimReport and its summary.
The future plans, development strategies or other forward-looking statements mentionedin this Report and its summary shall NOT be considered as promises of the Company toinvestors. Therefore, investors are kindly reminded to pay attention to possible investment risks.
The Company has no interim dividend plan, either in the form of cash or stock, nor for theconversion of capital reserve into share capital.
This Report and its summary have been prepared in both Chinese and English. Shouldthere be any discrepancies or misunderstandings between the two versions, the Chinese versionshall prevail.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Management Discussion and Analysis ...... 9
Part IV Corporate Governance ...... 31
Part V Environmental and Social Responsibility ...... 35
Part VI Significant Events ...... 44
Part VII Changes in Shares and Information about Shareholders ...... 57
Part VIII Preferred Shares ...... 65
Part IX Bonds ...... 66
Part X Financial Report ...... 69
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Documents Available for Reference
(I) The financial statements signed and stamped by the person-in-charge of theCompany, the Chief Financial Officer and person-in-charge of the financialdepartment.(II) The originals of all company documents and announcements that weredisclosed to the public during the Reporting Period.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Definitions
| Term | Refers to | Definition |
| The “Company”, the “Group”, “TCL”, “TCL TECH.”, or “we” | Refers to | TCL Technology Group Corporation |
| The “Reporting Period”, “current period” | Refers to | The period from January 1, 2024 to June 30, 2024. |
| TCL CSOT | Refers to | TCL China Star Optoelectronics Technology 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 to | Wuhan China Star Optoelectronics Technology Co., Ltd. |
| Wuhan China Star Optoelectronics Bandaoti | 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 to | Suzhou China Star Optoelectronics Technology Co., Ltd. |
| t1 | Refers to | The generation 8.5 (or G8.5) TFT-LCD production line at TCL CSOT |
| t2 | Refers to | The generation 8.5 (or G8.5) TFT-LCD production line at TCL CSOT |
| t3 | Refers to | The generation 6 (or G6) LTPS-LCD panel production line at Wuhan CSOT |
| t4 | Refers to | The generation 6 (or G6) flexible LTPS-AMOLED panel production line at Wuhan CSOT |
| Wuhan t3 production expansion project | Refers to | The generation 6 (or G6) of new display production line at Wuhan CSOT |
| t6 | Refers to | The generation 11 (or G11) new TFT-LCD display production line at Shenzhen CSOT |
| t7 | Refers to | The generation 11 (or G11) new ultra high definition display production line at Shenzhen CSOT |
| t9 | Refers to | The generation 8.6 (or G8.6) new oxide display production line at Guangzhou CSOT |
| t10 | Refers to | The generation 8.5 (or G8.5) TFT-LCD production line at Suzhou CSOT |
| GW | Refers to | Gigawatt, power unit for solar cells, 1GW = 1,000 megawatts |
| G12 | Refers to | 12-inch ultra-large DW-cut solar monocrystalline silicon square wafer, size: 44,096mm?, diagonal line: 295mm, side length: 210mm, with its size 80.5% larger than the conventional M2 |
| Maxeon, MAXEON | Refers to | MAXEON SOLAR TECHNOLOGIES, LTD., a company listed on the U.S. NASDAQ (NASDAQ: MAXN) |
| RMB | Refers to | Renminbi |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part II Corporate Information and Key Financial InformationI. Corporate Information
| Stock name | TCL TECH. | Stock code | 000100 |
| Place of listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | TCL科技集团股份有限公司 | ||
| Abbr. | TCL科技 | ||
| Company name in English | TCL Technology Group Corporation | ||
| Abbr. in English | TCL TECH. | ||
| Legal representative | Li Dongsheng | ||
II. Contact Information
| Board Secretary | |
| Name | Liao Qian |
| Office address | 10/F, Tower G1, International E Town, TCL Science Park, 1001 Nanshan District, Shenzhen, Guangdong Province, China |
| Tel. | 0755-33311666 |
| Email address | ir@tcl.com |
III. Other Information
1. Contact Information of the Company
Whether the registered address, office address and their zip codes, website address and email address of the Company changed duringthe Reporting Period.
□ Applicable ? Not Applicable
No changes occurred to the registered address, office address and their zip codes, website address, email address and other contactinformation of the Company during the Reporting Period. Please refer to the Annual Report 2023 for details.
2. Media for Information Disclosure and Place Where This Report is Lodged
Whether the media for information disclosure and place where this report is lodged changed during the Reporting Period.
□ Applicable ? Not Applicable
No changes occurred to the name and website of the stock exchange website and media on which the Company discloses its InterimReport and the place for lodging such reports during the Reporting Period. Please refer to the Annual Report 2023 for details.
3. Other Information
Whether other information changed during the Reporting Period.
□ Applicable ? Not Applicable
IV. Key Accounting Data and Financial IndicatorsIndicate whether there is any retrospectively adjusted or restated datum in the table below
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□Yes ?No
| H1 2024 | H1 2023 | Change | |
| Operating revenue (RMB) | 80,223,736,962 | 85,148,725,606 | -5.78% |
| Net profits attributable to the company’s shareholders (RMB) | 995,211,533 | 340,493,589 | 192.28% |
| Net profits attributable to the company’s shareholders after non-recurring gains and losses (RMB) | 558,757,061 | -600,066,840 | 193.12% |
| Net cash generated from operating activities (RMB) | 12,632,721,713 | 10,416,168,147 | 21.28% |
| Basic earnings per share (RMB/share) | 0.0535 | 0.0184 | 190.76% |
| Diluted earnings per share (RMB/share) | 0.0530 | 0.0181 | 192.82% |
| Weighted average return on equity (%) | 1.87 | 0.67 | Increase by 1.2 percentage points YoY |
| End of the Reporting Period | December 31, 2023 | Change | |
| Total assets (RMB) | 382,333,538,876 | 382,859,086,727 | -0.14% |
| Owners’ equity attributable to the company’s shareholders (RMB) | 52,369,539,906 | 52,921,867,086 | -1.04% |
V. Accounting Data Differences under China Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Differences in Net Profits and Equity under CAS and IFRS
□ Applicable ? Not Applicable
There is no difference in net profits and net assets between the financial statements prepared in accordance with InternationalAccounting Standards (IAS) and Chinese Accounting Standards (CAS) for the Reporting Period of the Company.
2. Differences in Net Profits and Equity under CAS and Foreign Accounting Standards
□ Applicable ? Not Applicable
There is no difference in net profits 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
VI. Non-Recurring Gains and Losses
? Applicable □ Not applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Unit: RMB
| Item | Amount |
| Gains and losses on disposal of non-current assets (inclusive of impairment allowance write-offs) | 48,439,054 |
| Public grants charged to current profits and loss (except for public grants which are closely related to the Company's daily operations, comply with national policies, are granted based on determined standards, and have a continuous impact on the Company's profits or losses) | 972,603,327 |
| The profits or losses generated from changes in fair value arising from financial assets and financial liabilities held by non-financial enterprises and the profits or losses from the disposal of such financial assets and financial liabilities, except for the effective hedging business related to the company’s normal business operations | -3,310,350 |
| Reversal of provision for impairment of receivables that have been individually tested for impairment | 30,500,000 |
| Non-operating income and expenses other than the above | 258,630,716 |
| Less: Amount affected by income tax | 156,219,258 |
| Amount affected by equity of minority shareholders (net of tax) | 714,189,017 |
| Total | 436,454,472 |
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.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part III Management Discussion and Analysis
I. Company-related Industry Outlook During the Reporting Period
In the first half of 2024, political and economic unpredictability continuously increasedworldwide, with intensified geopolitical conflicts and re-balancing of international trade systems.Meanwhile, major economies grappled with persistent inflationary pressures, resulting in heightenedpolicy uncertainties and subpar global economic growth. In response to the complicated challenges,the Company focused on the development of its display business and new energy photovoltaicbusiness, enhanced the resilience of its business, and optimized its competitive edge in pursuit ofhigh-quality and sustainable development.During the Reporting Period, TCL TECH. achieved a revenue of RMB80.224 billion; a net profitof RMB995 million attributable to the shareholders of listed companies, which is an increase of
192.28% year-on-year; and a net operating cash flow of RMB12.633 billion. Major factors thatinfluenced the Company’s performance included: the positive turnaround of the supply-demandrelationship in the display industry, the steady price appreciation of mainstream products, theCompany’s proactive optimization of business strategies and business structure, and significantlyimproved profitability. During the Reporting Period, the display business achieved an operatingrevenue of RMB49.877 billion, with a year-on-year increase of 40.39%, and a net profit of RMB2.696billion, with a year-on-year increase of RMB6.145 billion. The trade of the global energy transitionpersisted, with increasing demand for installed capacity in the new energy photovoltaic industry.Nonetheless, industry-wide supply-demand discrepancies resulted in a substantial year-on-yeardecline in photovoltaic product prices. During the Reporting Period, TZE achieved a revenue ofRMB16.213 billion, with a year-on-year decrease of 53.54%, which resulted in TCL Technology'snet profits attributable to the parent company decreased by RMB-914 million.
The Company strengthens its competitive edge in industry scale and leadership byenhancing its core competencies, building a solid operational foundation, and optimizing itsproduction capacity and product portfolio. As the competitive landscape of the display industrycontinues to improve, leading manufacturers have established a significant scale advantage. Duringthe Reporting Period, the Company’s display segment strategically realigned its production capacity
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
and product structure on the basis of incremental markets and continuously increased its market share,with its TV panel shipments ranking No. 2 globally, MNT panel shipments jumping to No. 2 globally,and ranking among the top 3 flexible OLED manufacturers in terms of shipments. At the end of theReporting Period, the Company’s monocrystalline silicon production capacity for its new energyphotovoltaic segment stood at 190GW. Cumulative shipments of photovoltaic materials during theReporting Period amounted to approximately 62GW, reflecting an 18.3% year-on-year increase. TheCompany ranked first in the industry with a 23.5% comprehensive market share for silicon wafers.The Company implements a strategic approach that focuses on fortifying its corecompetencies and rectifying shortcomings, to bolster the competitive edge of its core businesssegments, and increase both efficiency and effectiveness. The Company’s display businesscapitalized on the technological capabilities of its high-gen production lines to lead the continuousupgrading of larger-sized specification products, and to grasp the iterative demand for IT productsfueled by the AI revolution, to fill the gap in its mid-sized production capacity (e.g., the t9 productionline) and product layout. The small-sized OLED business successfully implemented a high-end anddifferentiated product strategy. Relying on its advantages in leading G12 and N-type wafertechnology, Industry 4.0, and flexible manufacturing processes, the Company’s new energyphotovoltaic business played a synergistic role across the core sections along the photovoltaic valuechain, and ultimately shored up the relative advantages in cost efficiency to navigate industry cyclesthrough relative competitiveness.With the implementation of its global strategy, the Company has built a globally integratedbusiness network anchored in the Chinese domestic market, and created a comprehensiveglobal industrial ecosystem. The Company’s display business improved its layout in its panelmodule plant in India and in its overseas business platform, to strengthen its capacity to serve globalcustomers and partners and satisfy the incremental needs of markets worldwide. The Company’s newenergy photovoltaic division is pursuing a cautious yet determined globalization strategy, diligentlyassessing and exploring potential industrial projects in strategic global locations. The Company willform a strategic partnership with its Saudi Arabian counterparts to establish the largest overseascrystalline silicon wafer manufacturing facility to date. By fully capitalizing on MAXEON’sdistinctive market advantages and technological innovations in international markets, the Companywill leverage the synergistic effects of global production and distribution channels, strengthening its
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
competitive position on a global scale.Through strategic realignment, the Company enhances its capabilities, streamlinesprocesses and structures, and establishes a diverse and globally integrated talent ecosystem.The Company’s strategy sets the course for future corporate growth, while its organizationalcapabilities provide the foundation for its operations. The Company has adopted a customer-centricbusiness model, and seamlessly integrated value creation and value realization processes. By buildinga robust, agile, and flat organizational structure, it has improved decision-making efficiency andresponsiveness to customer and market demands. Furthermore, the Company has implemented a clearaccountability framework for its industrial operations, emphasizing employee development and talentacquisition to bolster its organizational capacity. A diverse and inclusive talent ecosystem issupporting the Company’s strategic pursuit of global leadership.Looking ahead, as some companies shut down or divest their production capacities in theindustry, the display industry will see further optimization of its supply-side structure. Meanwhile,such trends as large-size displays and artificial intelligence will promote steady growth of displaydemand, and a sound supply-demand relationship is expected to drive continuous improvement in theCompany’s display business profitability. While the photovoltaic industry remains at the bottom ofthe cycle, the Company’s new energy photovoltaic business is taking a proactive stance. Byaccelerating organizational transformation, focusing on strengthening core competencies andaddressing weaknesses, and enhancing its operational resilience, the Company aims to navigatethrough the industry cycles with a competitive edge. By upholding the spirit of "Venturing Midstreamand Striving to Win", the Company will firmly grasp the opportunities brought by transformations inthe technology manufacturing industry and the global energy structure, and continue to implementthe business strategies of "improving operational quality and efficiency, enhancing strengths to shoreup weaknesses, innovation-driven development as well as accelerating global expansion" in order toachieve sustainable, high-quality development and take on a leading role in the global market.II. Main Businesses of the Company During the Reporting PeriodThe 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.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
(I) Display BusinessGlobal TV retail sales remained sluggish in the first half of 2024, but the optimization of thesupply-side competitive landscape and the trend towards on demand production have pushed theindustry onto a trend of healthy and sustainable development. TV panels have a steady and moderateincrease in prices driven by supply-side factors, e.g. maintenance shutdowns during the Chinese NewYear, and demand-side factors, e.g. inventory buildup for sporting events and the trend toward larger-sized TV panels. Small and medium-sized panels have experienced a rebound in sales, fueled byhardware product innovation and replacement demands, resulting in structural price hikes.By leveraging its strengths in terms of scale and efficiency, TCL CSOT has consistentlyoptimized its business and product mix with favorable price increases for key products, andsignificantly boosted operating performance. During the Reporting Period, the display businessachieved a revenue of RMB49.877 billion, with a year-on-year increase of 40.39%, and a netprofit of RMB2.696 billion, with a year-on-year increase of RMB6.145 billion while recordinga profit of RMB2.157 billion in the second quarter, with a year-on-year increase of 300.19%.The display business achieved a net cash flow from its operating activities of RMB13.2 billion,which is an increase of 60.9% from the same period last year.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. Capitalizing on the manufacturing efficiency and processadvantages of its G8.5 and G11 high-gen production lines, TCL CSOT led the way in improvingimage quality and reducing energy consumption for large-sized products, and collaborated withstrategic customers to enhance the penetration of premium TVs in the market and elevate the valueof key segments alongside the industry chain. During the Reporting Period, the Companyconsolidated its No. 2 position in terms of global market share of TV panels, with 81% of the shipment
TCL TECH.
Display
| New energy photovoltaic and other silicon materials | Industrial finance and investment |
Others
TCL CSOT
TCL CSOT
Moka
| Technology | Zhonghuan Photovoltaic |
Zhonghuan
| Advanced | TCL Finance | TCL Capital | Highly |
TPC
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area for products above 55 inches, and 55% of the shipment area for products above 65 inches, withthe average size increased by 1.2 inches compared to the same period of the last year; meanwhile, 55-inch and 75-inch products ranked No. 1 in the world, with the market share of 65-inch products rankedNo. 2 globally. In commercial markets such as interactive whiteboards, digital signage, and splicingscreens, the Company ranked among the top three in terms of global market share.In the mid-size panel segment, TCL CSOT seized growth opportunities in nicheapplications by deepening cooperation with new business clients in IT and vehicle-mounteddevices, and enhancing product competitiveness and market share. Aligned with mid-sized ITand vehicle-mounted devices, the t9 production line made steady progress in terms of productdevelopment and customer acquisition. The Company further diversified its product portfolio withIGZO oxide products put into SoP and shipments, and the Gen 6 LTPS line undergoing rapid productupgrades. Riding on the worldwide e-sports market and commercial PC replacement needs in Europeand the Americas, the Company significantly increased its monitor shipments, which are now rankedsecond globally. Our gaming monitors for e-sports hold the largest market share worldwide.Additionally, notebook and tablet shipments have shown steady growth, with our LTPS notebooksranked second and LTPS tablets ranked first globally. We have continued to focus on thepremiumization and large-size trends in vehicle-mounted devices, the shipment area of LTPS carscreens has ascended to the third largest in the world.In the field of small size, TCL CSOT drives business development with technologicalinnovation continuously optimizing the product and customer mix, and achieving significantgrowth in OLED shipments. In the first half of the year, the Company’s LTPS smartphone panelshipments secured the second position globally. Our flexible OLED smartphone panel shipments hit39 million units, marking a substantial 180% year-on-year growth, and our market share climbed tothird place globally. Furthermore, we ranked fourth globally in terms of foldable display shipments.The Company has pioneered innovative technologies in flexible OLEDs, e.g. foldable displays, LTPO,Pol-Less, and FIAA ultra-narrow bezels. As a supplier for top-tier flagship smartphone brands, wehave successfully elevated our average selling prices by increasing high-end products.The global market for display terminals maintained a steady pace throughout the year. Theincreasing demand for larger sizes will continue to fuel growth in the overall display segment. Thebenign competition in the supply-side industry will further drive the balanced development of
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industrial supply and demand. Corporate profitability is recovering with reasonable business returnsunder favorable circumstances.Recently, TCL CSOT participated in the bidding of 70% of LG Display (China) Co., Ltd. and100% of LG Display (Guangzhou) Co., Ltd., and has been chosen as the preferred bidder. Thispotential acquisition will enable TCL CSOT to diversify its display production line technologies andfurther consolidate the industry. TCL CSOT is committed to fostering a healthy and sustainableindustry, driving profitability, and enhancing overall industry value.(II) New Energy Photovoltaics and Other Silicon Materials BusinessIn the first half of 2024, global photovoltaic terminal installations continued to grow steadily.However, the rapid release of production capacity across the supply chain in the photovoltaic industryhas led to further supply-demand imbalances and intensified short-term competition. In the secondquarter of 2024, prices throughout the main industry chain product fell below costs, causing netlosses. At the end of June, the industry reached the bottom of the cycle, with many companiessuffering cash-cost losses and facing operational performance pressures. During the ReportingPeriod, TZE achieved a revenue of RMB16.213 billion, with a year-on-year decrease of 53.54%, anda net profit of negative RMB3.176 billion. Net cash flows from operating activities amounted toRMB128 million.TZE prioritizes technological innovation, cementing a leading position in G12 and N-typephotovoltaic materials technology. Through continuous cost reductions and efficiencyoptimizations, the Company is actively enhancing its relative comparative competitiveness. Byleveraging technological innovation and lean manufacturing, the Company has established acompetitive edge with ongoing efforts to enhance silicon material utilization, reduce furnace costs,and increase wafer output per kilogram, which are driving the industry’s transition to N-type andlarger-sized products. During the Reporting Period, the Company’s monocrystalline silicon capacityexpanded to 190GW, while photovoltaic material shipments grew by 18.3% year-on-year toapproximately 62GW. The Company secured a leading position in the industry with a 23.5% marketshare for silicon wafers. Notably, its N-type products achieved a 42% external sales market share,signifying a 6 percentage point increase from 2023. Although a comparably high depreciation rateper unit caused by different investment methods, the Company’s photovoltaic material business
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maintains a cost advantage of approximately 0.033 yuan/W more cost-competitive than the industry’ssecond-best player.TZE is solidifying its Industry 4.0 smart manufacturing capabilities and resolutelyimplementing a global leadership strategy. Building on its globally leading G12 silicon wafertechnology, Industry 4.0 flexible manufacturing capabilities, and a strong intellectual propertyportfolio, the Company is accelerating its internationalization efforts and expanding its localizedmanufacturing footprint overseas. In collaboration with RELC which is fully owned by SaudiArabia’s Public Investment Fund (PIF), and Vision Industries, the Company is building the world’slargest overseas crystal wafer plant to bolster its global competitiveness. The Company aims to fullycapitalize on Maxeon’s unique competitive advantages in its core markets and its proventechnological innovation capabilities. By fostering a collaborative ecosystem between globalproduction and distribution channels, the Company seeks to strengthen its competitive edge in theglobal marketplace (especially in North America).In the second half of 2024, the global photovoltaic industry remains at the bottom of the cycle,with fundamental changes in market conditions and intensifying competition. In the wake ofoperational challenges, TZE will uphold its bottom line of extreme cost efficiency, accelerateorganizational restructurings and management optimizations, and enhance its comparablecompetitiveness. The global renewable energy market presents ample growth opportunities, yet thedistribution of production capacity worldwide remains uneven. The Company’s management teambelieves that the Matthew effect within the photovoltaic industry will contribute to a more optimizedlong-term market structure and enhance profitability.III. Analysis of Core CompetitivenessSince its establishment in 1981, TCL has consistently demonstrated resilience and adaptability,successfully navigating through various market cycles. Through a sustained commitment toinnovation and transformation, the Company has emerged as a prominent technology manufacturinggroup in China. At present, TCL TECH has established a business structure centered on displays andnew energy photovoltaics. With a well-defined development roadmap and efficient operations, theCompany has a distinctive corporate culture and is well-poised for building its core competitivenessand sustainable development capabilities.Leading at scale: Continuously improving our business layout and building scale
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advantagesTCL CSOT, a preeminent global display company and a pioneer in domestic displaymanufacturing, has invested over RMB260 billion to establish 9 state-of-the-art panel lines and 5module factories, serving a diverse range of global clients. The Company leverages its strategic “TwinStar” production line layout to maximize synergies with a focus on both endogenous growth andepitaxial mergers and acquisitions, enabling it to expand its production capacity and build leadershipthrough size. By establishing its own production lines and acquiring Samsung’s Suzhou plant, TCLCSOT has gradually solidified its leading position in the global large-size panel market, activelyenhanced its value chain structure, increased module capacity, and further elevated its position alongthe value chain and increased profitability. TCL CSOT has passed through several industry cycles,transforming from a “follower” to a “peer” and then to a front-runner, which features high-qualitydevelopment by expanding its product portfolio from large-size panels to a full range of display sizes.TZE will leverage its competitive advantages in terms of capacity, product offerings, and coststructure, while driving technological innovations and operational transformations to bolster itsmarket position. The Company is committed to ongoing improvements in its flexible manufacturingcapabilities for photovoltaic silicon wafers, and is ensuring that it can meet the diverse needs of itscustomers. The Company’s patented technologies enable it to develop differentiated products,technologies, and manufacturing processes for photovoltaic cell modules.Leading in technology and ecology: Prioritizing the growth of high-tech sectors, andbuilding a first-mover advantage through ecological leadershipThe Company has established a strategic foothold in core technologies, e.g. displays and newenergy photovoltaics, capitalizing on its subsidiaries TCL COST and TZE. Through strategicpartnerships with upstream and downstream industry players, the Company has built a robust globalecosystem for technology and innovation, and is steadily advancing its technological leadership innext-generation display technologies as well as G12 and N-type photovoltaic materials. TheCompany has accumulated over 70,000 patent applications and has been instrumental in developingover 200 international and domestic technical standards, underscoring its unwavering commitment totechnological innovation and its status as a preeminent high-tech enterprise. The Company hassecured over 2,400 patents in quantum dot display technology, ranking second globally, which willensure the independent and controllable development of key technologies for next-generation
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displays. TCL TECH took the leads in establishing the “National Printing and Flexible DisplayInnovation Center” and the “National New Display Technology Innovation Center”, with 9 national-level enterprise open innovation platforms and 33 provincial-level innovation platforms obtaining therelevant qualifications.Leading in efficiency and management: navigating cycles with industry-leading efficiencyand effectivenessTCL has leveraged its substantial scale and technological prowess to achieve industry-leadinglevels of efficiency and effectiveness. Through ongoing management reforms and system upgrades,the Company has maintained its competitive edge. TCL CSOT leverages the synergy of its twinfactories to optimize production line planning and maximize capacity expansion. Throughmanagement reforms and process optimizations, TCL has strengthened end-to-end collaboration,resulting in improved overall operational efficiency. By pursuing cost excellence, we have establishedan end-to-end cost advantage, resulting in continuous improvements in product quality andperformance, as well as a leading competitive position in the industry. At the same time, TCL CSOThas established proven risk mitigation capabilities which have been honed through multiple industrycycle fluctuations. Looking ahead, TCL will make use of this core competency, and will be well-poised to navigate future uncertainties and achieve global leadership.Amidst the cyclical downturn in the new energy photovoltaic industry, TZE has steadfastlyadhered to its core business philosophy of “digging in”. The Company has comprehensivelyimplemented Industry 4.0 intelligent manufacturing systems, coupled with Operation 4.0 and Quality
4.0 management frameworks. Through the relentless optimization of production automation, laborproductivity, and operational efficiency, TZE has fortified its competitive edge in terms of efficiencyand cost, thereby positioning itself to successfully navigate the industry cycle and emerge as a leadingglobal player in the new energy photovoltaic sector.Corporate culture upgrade: With the mission of “leading technology, harmoniouscoexistence”, we are effectively addressing operational changes and competitionIn early 2020, TCL inaugurated a new phase of corporate culture, as articulated in the strategicdocument The Path to Global Leadership. The Company has adopted a core mission centered around“leading technology, harmonious coexistence”, underpinned by the core values of “change,innovation, accountability, and excellence”. This cultural transformation has empowered TCL
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employees to embrace change, break through limitations, and drive business optimizations andupgrades through active exploration and innovation. Guided by a commitment to responsibility anda relentless pursuit of excellence, TCL has dedicated itself to delivering superior products andservices to its valued customers. Amidst a complex and dynamic external business environment, TCLemployees will continue to uphold its core principles and values—“The Path to Global Leadership”.Demonstrating unwavering courage and determination, TCL will remain at the forefront of itsindustry, undeterred by competitive pressures. Through strategic adaptations and innovativeinitiatives, TCL will navigate the evolving business landscape and successfully transition into a newphase of growth.IV. Analysis of Core BusinessesOverviewSee the relevant contents in "I. Main businesses of the Company during the reporting period".Year-on-year changes in key financial information
Unit: RMB'0,000
| H1 2024 | H1 2023 | Change (%) | Reason for change | |
| Operating Revenue | 8,022,374 | 8,514,873 | -5.78% | No significant change |
| Operating cost | 7,038,438 | 7,426,760 | -5.23% | No significant change |
| Sales expenses | 113,557 | 120,670 | -5.89% | No significant change |
| Administrative expenses | 200,384 | 201,592 | -0.60% | No significant change |
| R&D expenses | 440,157 | 489,235 | -10.03% | No significant change |
| Financial expenses | 209,127 | 161,316 | 29.64% | No significant change |
| Income tax expenses | 5,221 | -9,980 | 152.32% | Primarily due to the increase in profits from the display business during the period |
| R&D investments | 426,586 | 546,528 | -21.95% | No significant change |
| Net cash generated from operating activities | 1,263,272 | 1,041,617 | 21.28% | No significant change |
| Net cash used in investing activities | -1,744,450 | -1,954,096 | 10.73% | No significant change |
| Net cash generated from financing activities | 269,747 | 310,146 | -13.03% | Mainly caused by a decrease in financing activities |
| Net increase in cash and cash equivalents | -207,327 | -593,138 | 65.05% | Mainly due to a year-on-year increase in net cash inflows from operating activities and a year-on-year decrease in net cash outflows from investing activities |
Significant changes to the profit structure or sources of the Company during the Reporting Period
□ Applicable ? Not Applicable
No significant changes to the profit structure or sources of the Company during the Reporting Period.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Breakdown of revenue
Unit: RMB'0,000
| H1 2024 | H1 2023 | Change (%) | |||
| Amount | As % of total revenue (%) | Amount | As % of total revenue (%) | ||
| Total revenue | 8,022,374 | 100% | 8,514,873 | 100% | -5.78% |
| By operating division | |||||
| Display business | 4,987,706 | 62.17% | 3,552,843 | 41.73% | 40.39% |
| New energy photovoltaics and other silicon materials business | 1,621,349 | 20.21% | 3,489,779 | 40.98% | -53.54% |
| Distribution business | 1,364,933 | 17.01% | 1,381,282 | 16.22% | -1.18% |
| Other and offsets | 48,385 | 0.61% | 90,968 | 1.07% | -46.81% |
| By product category | |||||
| Display devices | 4,987,706 | 62.17% | 3,552,843 | 41.73% | 40.39% |
| New energy photovoltaics and other silicon materials | 1,621,349 | 20.21% | 3,489,779 | 40.98% | -53.54% |
| Distribution of electronics | 1,364,933 | 17.01% | 1,381,282 | 16.22% | -1.18% |
| Other and offsets | 48,385 | 0.61% | 90,968 | 1.07% | -46.81% |
| By operating segment | |||||
| Mainland China | 5,389,603 | 67.18% | 5,881,602 | 69.07% | -8.37% |
| Overseas (including Hong Kong) | 2,632,771 | 32.82% | 2,633,271 | 30.93% | -0.02% |
Operating division, product category, or region contributing over 10% of revenue or operating profit? Applicable □ Not applicable
Unit: RMB'0,000
| Revenue | Operating cost | Gross profit margin | Change in revenue year-on-year (%) | Change in operating cost year-on-year (%) | Change in gross profit margin year-on-year (%) | |
| By operating division | ||||||
| Display business | 4,987,706 | 4,049,818 | 18.80% | 40.39% | 20.21% | 13.63% |
| New energy photovoltaics and other silicon materials business | 1,621,349 | 1,666,533 | -2.79% | -53.54% | -37.81% | -26.00% |
| Distribution business | 1,364,933 | 1,316,942 | 3.52% | -1.18% | -0.93% | -0.24% |
| By product category | ||||||
| Display devices | 4,987,706 | 4,049,818 | 18.80% | 40.39% | 20.21% | 13.63% |
| New energy photovoltaics and other silicon materials | 1,621,349 | 1,666,533 | -2.79% | -53.54% | -37.81% | -26.00% |
| Distribution of electronics | 1,364,933 | 1,316,942 | 3.52% | -1.18% | -0.93% | -0.24% |
| By operating segment | ||||||
| Mainland China | 5,389,603 | 4,954,407 | 8.07% | -8.37% | -6.73% | -1.61% |
| Overseas (including Hong Kong) | 2,632,771 | 2,084,032 | 20.84% | -0.02% | -1.45% | 1.15% |
Core business data in the recent term restated according to the changed methods of measurement that occurred in the Reporting Period
□ Applicable ?Not Applicable
V. Analysis of Non-Core Businesses
? Applicable □ Not applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Unit: RMB'0,000
| Amount | As % of gross profit | Source | Sustainability | |
| Return on investment | 42,176 | -101.40% | Mainly due to the recognition of return on investment from joint ventures and investment returns on financial assets, etc | No |
| Gain/loss of fair-value changes | 13,295 | -31.96% | Mainly due to the movement in fair value of financial assets during the holding period | No |
| Asset impairment | -205,965 | 495.18% | Falling price of inventory write-offs in line with the market | No |
| Non-operating income | 22,744 | -54.68% | Mainly due to claim income | No |
| Non-operating expenses | 7,814 | -18.79% | Mainly due to donations and losses from the retirement of long-term assets | No |
VI. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB'0,000
| End of the Reporting Period | December 31, 2023 | Weight Change | Main reason for change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 1,958,750 | 5.12% | 2,192,427 | 5.73% | -0.61% | No significant change |
| Accounts receivable | 2,311,643 | 6.05% | 2,200,365 | 5.75% | 0.30% | No significant change |
| Contract assets | 37,157 | 0.10% | 34,391 | 0.09% | 0.01% | No significant change |
| Inventories | 2,018,193 | 5.28% | 1,848,175 | 4.83% | 0.45% | No significant change |
| Investment property | 81,338 | 0.21% | 91,168 | 0.24% | -0.03% | No significant change |
| Long-term equity investments | 2,490,824 | 6.51% | 2,543,127 | 6.64% | -0.13% | No significant change |
| Fixed assets | 17,026,738 | 44.53% | 17,642,262 | 46.08% | -1.55% | Mainly due to a decrease in depreciation during the year |
| Construction in progress | 2,012,670 | 5.26% | 1,700,005 | 4.44% | 0.82% | No significant change |
| Right-of-use assets | 606,403 | 1.59% | 638,645 | 1.67% | -0.08% | No significant change |
| Short-term borrowings | 1,184,463 | 3.10% | 847,358 | 2.21% | 0.89% | No significant change |
| Contract liabilities | 146,557 | 0.38% | 189,947 | 0.50% | -0.12% | No significant change |
| Long-term borrowings | 12,030,446 | 31.47% | 11,766,221 | 30.73% | 0.74% | No significant change |
| Lease liabilities | 569,959 | 1.49% | 573,729 | 1.50% | -0.01% | No significant change |
2. Major Assets Overseas
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
3. Assets and Liabilities at Fair Value
? Applicable □ Not applicable
Unit: RMB'0,000
| Item | Beginning amount | Gain/loss of fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Impairment allowances established in the Reporting Period | Amount purchased in the Reporting Period | Amount sold in the Reporting Period | Others changes | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 2,615,568 | 4,731 | - | - | 3,404,415 | 3,113,176 | 10,693 | 2,922,232 |
| 2. Derivative financial assets | 10,801 | 9,294 | -7,607 | - | - | - | -4,586 | 15,509 |
| 3. Receivables financing | 95,441 | - | - | - | - | - | -33,545 | 61,896 |
| 4. Investments in other equity instruments | 38,665 | - | -20,643 | - | - | - | 61 | 38,725 |
| Subtotal of financial assets | 2,760,475 | 14,025 | -28,250 | - | 3,404,415 | 3,113,176 | -38,131 | 3,038,362 |
| Total of the above | 2,760,475 | 14,025 | -28,250 | - | 3,404,415 | 3,113,176 | -38,131 | 3,038,362 |
| Financial liabilities | 31,004 | -731 | -11,519 | - | 65,701 | 71,487 | 2,913 | 28,862 |
Other changed contentNoneSignificant changes to the measurement attributes of the major assets in the Reporting Period
□Yes ?No
4. Restricted Asset Rights as of the Period-End
| Restricted assets | Carrying amount (RMB'0,000) | Reason for restriction |
| Monetary assets | 39,307 | Deposited in the central bank as the required reserve |
| Monetary assets | 127,088 | Other monetary assets and restricted bank deposits |
| Notes receivable | 3,595 | Endorsement, and attached recourse and pledge |
| Fixed assets | 8,715,909 | As collateral for loan |
| Intangible assets | 389,966 | As collateral for loan |
| Held-for-trading financial assets | 45,420 | Pledge |
| Construction in progress | 140,140 | As collateral for loan |
| Accounts receivable | 90,649 | Pledge |
| Contract assets | 37,081 | Pledge |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Investment property | 960 | As collateral for loan |
| Other non-current assets due within one year | 43,747 | Pledge |
| Total | 9,633,864 |
VII. Investments Made
1. Total Investment Amount
? Applicable □ Not applicable
| Total investment amount in the Reporting Period (RMB’0,000) | Total investment amount in the same period last year (RMB’0,000) | Change (%) |
| 1,501,865 | 1,951,463 | -23.04% |
2. Major Equity Investments Made in the Reporting Period
□ Applicable ? Not Applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
4. Financial Assets Investments
(1) Securities Investments
? Applicable □ Not applicable
Unit: RMB'0,000
| Security type | Stock Code | Stock Abbr. | Initial investment cost | Accounting measurement method | Beginning carrying amount | Gain/loss of fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Amount purchased in the Reporting Period | Amount sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying amount | Accounting title | Funding Source |
| Stocks | 300842.SZ | DK Electronic Materials, Inc. | 2,430 | Fair value | 33,724 | -6,223 | - | - | 5,818 | -4,631 | 23,276 | Other non-current financial assets | Self-funded |
| Stocks | 688469.SH | UNT | 26,745 | Fair value | 23,408 | -4,794 | - | - | - | -4,794 | 18,614 | Other non-current financial assets | Self-funded |
| U.S. Treasury bill | US912797GB79 | TREASURY BILL | 1,414 | Fair value | - | 29 | 14,903 | 29 | 14,932 | Held-for-trading financial assets | Self-funded | ||
| Financial bonds | XS2587421681 | Nanyang Commercial Bank | 7,083 | Measurement at amortized cost | 7,251 | - | - | - | - | 261 | 7,295 | Debt investments | Self-funded |
| Bonds | XS2560662541 | LINK CB LTD | 4,455 | Fair value | 6,064 | -176 | - | - | - | -138 | 5,926 | Held-for-trading financial assets | Self-funded |
| Financial bonds | 223001.IB | 22 ICBC Macau Bond 01 | 5,000 | Measurement at amortized cost | 5,044 | - | - | - | - | 64 | 5,108 | Debt investments | Self-funded |
| Bonds | USF2941JAA81 | ELECTRICITE DE FRANCE SA | 2,919 | Fair value | 4,754 | -214 | - | 1,611 | 1,114 | -168 | 5,083 | Held-for-trading financial assets | Self-funded |
| Bonds | USG98149AG59 | WYNN MACAU LTD | 623 | Fair value | 859 | 128 | - | 4,298 | 403 | 133 | 4,888 | Held-for-trading financial assets | Self-funded |
| Bonds | US279158AL39 | ECOPETROL SA | 2,421 | Fair value | 4,590 | 1 | - | - | -11 | 18 | 4,619 | Held-for-trading financial assets | Self-funded |
| Bonds | USG5975LAA47 | MELCO RESORTS FINANCE | 1,328 | Fair value | 3,832 | 31 | - | 1,193 | 1,182 | 44 | 3,887 | Held-for-trading financial assets | Self-funded |
| Other securities investments held at the period-end | 227,091 | -- | 176,114 | 3,805 | -19,237 | 417,092 | 455,692 | 9,470 | 146,683 | ||||
| Total | 281,509 | -- | 265,641 | -7,413 | -19,237 | 439,097 | 464,197 | 288 | 240,310 | ||||
| Disclosure date of the board announcement approving securities investments | April 30, 2024 | ||||||||||||
| Date for disclosure and announcement on approving securities investment by the general meeting | May 25, 2024 | ||||||||||||
Note: The initial investment cost represents the initial investment cost in securities held at the end of the period.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
(2) Investments in Derivative Financial Instruments
? Applicable □ Not applicable
1) Derivative investments for hedging purposes made during the Reporting Period
? Applicable □ Not applicable
Unit: RMB'0,000
| Type of contract | Beginning amount | Ending amount | Gain/loss in the Reporting Period | Closing contractual amount as a percentage | |||
| of the closing net assets reported by the Company (%) | |||||||
| Contractual amount | Transaction limit | Contractual amount | Transaction limit | Contractual amount | Transaction limit | ||
| 1. Forward forex contracts | 3,039,040 | 114,095 | 4,725,237 | 182,334 | 27,459 | 34.18 | 1.32 |
| 2. Interest rate swaps | 407,686 | 12,231 | 314,600 | 9,438 | 2.28 | 0.07 | |
| Total | 3,446,726 | 126,326 | 5,039,837 | 191,772 | 27,459 | 36.46 | 1.39 |
| Accounting policies and specific accounting principles for hedging business during the Reporting Period and a description of whether there have been significant changes from those of the previous reporting period | No significant change. | ||||||
| Description of actual profits and losses during the Reporting Period | During the Reporting Period, profit from changes in the fair value of hedged items amounted to RMB124.85 million; losses from the delivery of due forward exchange contracts amounted to negative RMB58.09 million; and profit from the valuation of outstanding forward exchange contracts amounted to RMB91.65 million. | ||||||
| Description of the hedging effect | During the Reporting Period, the Company’s main foreign exchange risk exposures include exposures of assets and liabilities denominated in foreign currencies arising from business such as outbound sales, raw material procurement, and financing. The uncertain risks arising from the exchange rate fluctuations were effectively hedged by using derivative contracts with the same purchase amounts and maturities in opposite directions. | ||||||
| Funding source for derivative investment | Self-funded. | ||||||
| Analysis of risks and control measures associated with derivative investments held in the Reporting Period | 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. | ||||||
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | Risk analysis: |
| 1. Market risk: the financial derivatives business carried out by the Group is related to hedging and trading activities associated with the main business operations. There is a market risk associated with potential losses due to fluctuations in market prices, such as underlying interest rates and exchange rates, which affect the prices of financial derivatives; | |
| 2. Liquidity risk: the derivatives business carried out by the Group is an over-the-counter transaction operated by a financial institution, and there is a risk of incurring losses due to paying fees to the bank for liquidating or selling 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 missed trading opportunities in the derivative 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 follows the hedging principle mainly to fix costs and avoid risks. It is necessary for the financial derivatives business to align with the variety, size, direction, and duration of spot goods, and this should not involve any speculative trading. When selecting hedging instruments, only simple financial derivatives that are closely related to the main business operations and comply with the requirements of hedge accounting should be selected. Avoid engaging in complex business activities that go beyond the established scope of operations and involve risks and pricing that are difficult to understand; | |
| 2. The Group has formulated a special risk management system tailored to the risk characteristics of the financial 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 implement the business operations and risk management system of derivatives. Before the holding company engages in derivative business activities, the holding company must submit detailed business reports to the competent department of the Group, including information about its internal approval, main product terms, operational necessity, preparations, risk analysis, risk management strategy, fair value analysis, and accounting methods. Additionally, a special summary report of previously conducted operations should be submitted. Only after obtaining the opinion of the relevant professional departments within the Group may the holding company proceed with the operations. | |
| 3. Relevant departments should track the changes in the open market price or fair value of financial derivatives, promptly assess the risk exposure changes of invested financial derivatives, and compile reports to the board of directors on 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 profits attributable to the shareholders of the listed |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| company in the last year and exceed RMB10 million, the financial company should make timely disclosure thereof. | |
| Changes in market prices or fair value of derivative investments in the Reporting Period (fair value analysis should include the measurement method and related assumptions 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, interest rate swap contracts, and futures contracts to avoid and hedge against foreign exchange risks arising from operations and financing. During the Reporting Period, there were profits and losses of RMB124.85 million from changes in the fair value of hedged items and negative RMB149.74 million from derivatives. The fair value of derivatives is determined by the real-time quoted price of the foreign exchange market, and is based on the difference between the contractual price and the forward exchange rate quoted immediately on the foreign exchange market on the balance sheet date. |
| Legal matters involved | None |
| Disclosure date of the board announcement approving the derivative investments | April 29, 2024 |
| Disclosure date of the general meeting announcement approving the derivative investments | May 24, 2024 |
2) Derivative investments for speculative purposes during the Reporting Period
□ Applicable ? Not Applicable
There were no derivative investments for speculative purposes made by the Company during the Reporting Period.
5. Use of the capital raised
? Applicable □ Not applicable
(1) General Information about the Use of Raised Funds
? Applicable □ Not applicable
Unit: RMB'0,000
| Year of raising | Method of raising | Total amount raised | Net amount raised | Used in the current period | Total amount used | Total amount of changed-purpose funds during the Reporting Period | Total amount of changed-purpose funds | Total amount of changed-purpose funds as a % of total amount raised | Total proceeds that have not been used | Purpose and location of the unused amount | Amount left idle for over two years |
| 2024 | Public issuance of corporate bonds | 150,000 | 149,595 | 149,595 | 149,595 | Not applicable | Not applicable | Not applicable | 0 | Not applicable | 0 |
| 2024 | Public | 150,000 | 149,865 | 149,865 | 149,865 | Not | Not | Not | 0 | Not | 0 |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| issuance of corporate bonds | applicable | applicable | applicable | applicable | |||||||
| Total | -- | 300,000 | 299,460 | 299,460 | 299,460 | Not applicable | Not applicable | Not applicable | 0 | -- | 0 |
| Use of the Capital Raised | |||||||||||
| Pursuant to the approval of the China Securities Regulatory Commission under the registration number CSRC Permit [2022] No. 1561, the Company is authorized to issue up to RMB10 billion in corporate bonds to professional investors through a phased issuance. The net proceeds from “Sci-Tech Innovation Corporate Bonds Publicly Offered by TCL Technology Group Corporation to Professional Investors (Phase 1) in 2024” have been fully closed on February 1, 2024. On the date of this announcement, all proceeds raised have been fully utilized, and the actual use of proceeds is consistent with the intended use as stated in the prospectus. Net proceeds from “Sci-Tech Innovation Corporate Bonds Publicity Offered by TCL Technology Group Corporation Publicly Offered to Professional Investors (Phase 2) in 2024” were fully closed on April 11, 2024. On the date of this announcement, all proceeds raised have been fully utilized, and the actual use of proceeds is consistent with the intended use as stated in the prospectus. | |||||||||||
(2) Promised Use of Raised Funds
□ Applicable ? 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
The Company did not dispose of any major assets at the end of the Reporting Period.
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 profits
Unit: RMB'0,000
| Company name | Company Type of change | Principal activity | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net profits |
| TCL China Star Optoelectronics Technology Co., Ltd. | Subsidiary | Display | RMB33.08 billion | 19,657,554 | 7,235,770 | 4,409,606 | 249,498 | 247,992 |
| TCL Zhonghuan Renewable Energy Technology Co., | Subsidiary | New energy photovoltaics and other silicon | RMB4.04 billion | 12,519,637 | 5,593,539 | 1,621,349 | -338,126 | -317,576 |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Ltd. | materials business | |||||||
| Highly Information Industry Co., Ltd. | Subsidiary | Distribution business | RMB0.42 billion | 780,162 | 149,117 | 1,364,933 | 8,530 | 6,294 |
Acquisition and disposal of subsidiaries in the Reporting Period? Applicable □ Not applicable
| Company name | How subsidiaries were obtained or disposed of in the Reporting Period | Effects on overall operations and operating performance |
| Zhonghuan Advanced Korea Co., Ltd. | Newly established | No significant effect |
| MOKA TECHNOLOGY VIETNAM COMPANY LIMITED | Acquisition | No significant effect |
| Xi’an Maichi Technology Co., Ltd. | Newly established | No significant effect |
| Tianjin Binhai Huanxu New Energy Co., Ltd. | Newly established | No significant effect |
| Yixing Huanxu New Energy Co., Ltd. | Newly established | No significant effect |
| Tianjin Huiyi Digital Technology Co., Ltd. | Newly established | No significant effect |
| Yixing Huanxu Investment Management Co., Ltd. | Newly established | No significant effect |
| Shenzhen Zhixian Shijie Software Technology Co., Ltd. | Newly established | No significant effect |
| Shenzhen Zhilian Shuchuang Technology Co., Ltd. | Newly established | No significant effect |
| Guangzhou TCL High-Tech Development Co., Ltd. | Newly established | No significant effect |
| Tianjin Jincheng Internet Technology Co., Ltd. | Newly established | No significant effect |
| Diamond Union Ltd. | Acquisition | No significant effect |
| Huansheng New Energy (Inner Mongolia) Co., Ltd. | Newly established | No significant effect |
| Hangjinhouqi Guangsen New Energy Co., Ltd. | Newly established | No significant effect |
| Hohhot Mingfeng New Energy Co., Ltd. | Newly established | No significant effect |
| Hangjinhouqi Yusheng New Energy Co., Ltd. | Newly established | No significant effect |
| Inner Mongolia Chenhe New Energy Co., Ltd. | Newly established | No significant effect |
| Heilongjiang Huanju New Energy Co., Ltd. | Newly established | No significant effect |
| Huansheng Photovoltaic Technology (Lingwu City) Co., Ltd. | Newly established | No significant effect |
| Inner Mongolia Zhonghuan Construction Management Co., Ltd. | De-registered | No significant effect |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Jiangsu Mingjing Bandaoti Technology Co., Ltd. | De-registered | No significant effect |
| Ningxia Huanneng New Energy Co., Ltd. | Transferred | No significant effect |
| Tianjin Binhai New Area Huanju New Energy Co., Ltd. | Transferred | No significant effect |
| Ningxia Hongmao New Energy Co., Ltd. | Newly established | No significant effect |
| Lingwu Huishun New Energy Co., Ltd. | Newly established | No significant effect |
| Huansheng Photovoltaic Technology (Lingwu City) Co., Ltd. | Newly established | No significant effect |
Explanation of Principal Subsidiaries and Joint Stock Companies
None
X. Structured Bodies Controlled by the Company
□ Applicable ? Not Applicable
XI. Risks and Responses
1. Risk of Macroeconomic Fluctuations
The global economy has slowed down, and a series of factors are further elevating globaleconomic uncertainties, such as the Russia-Ukraine and Israel-Palestine geopolitical conflicts, a superyear for global elections, and the evolving landscape of trade bloc regulations. To date, global tradehas not exhibited any substantial signs of recovery. Despite a recent easing in inflation rates acrossmajor global economies, they have yet to return to expected levels. The high-interest rate policiespersistently adopted by the United States, European countries, and others have amplified economicand financial risks. The multifaceted risks and uncertainties outlined above are posing formidableobstacles to enterprises' global operations. Against this backdrop, the Company will continuouslyanalyze macroeconomic trends and assess influential risks. It will also prioritize its core businessstrategies, foster innovation, enhance its competitive advantages, and maximize commercial valuereturns. Meanwhile, the Company will firmly implement its global strategy, systematically fortify itsglobal supply chains to mitigate risks, and leverage its industry-specific advantages to mitigate theadverse effects of macroeconomic fluctuations.
2. Risk of Industry Prosperity Fluctuations
Despite the rebound in the panel industry in the first half of the year due to increasing demandfor larger displays and downstream applications, the industry will continue to grapple with growthchallenges due to sluggish global demand. The rapid expansion of production capacity across China’s
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
photovoltaic industry has led to a notable supply-demand imbalance, making it challenging to restoreequilibrium in the near term. The Company will closely monitor shifts in industry supply and demand,optimize capacity allocation, and foster healthy industry development. At the same time, it willenhance its investment in R&D, and continuously expand its advantages in terms of size andeffectiveness by creating high barriers to competition and broadening its business moat.
3. Corporate Supply Risks
There is a risk of commodity price fluctuations in the second half of 2024, which are affectedby the evolving international landscape and ongoing energy transition. Some individual suppliersmay have delivery risks due to the overall economic situation and squeezed price of end-products.The Company will develop its long-term partnerships with its suppliers through strategic cooperationand other means, and will enhance risk control for upstream material supply, so as to promptlyidentify and respond to risks.XII. Implementation of the “Joint Improvement of Quality and Investment Return” ActionPlanWhether the Company has disclosed the “Joint Improvement of Quality and Investment Returns” Action PlanAnnouncement.? Applicable □ Not applicable
To better implement the guidance on enhancing the quality and investment value of listedcompanies, the Company has developed the “Joint Improvement of Quality and Investment Returns”Action Plan, which is based on in-depth research on industry trends and careful consideration of ourfuture business trajectory. For a comprehensive overview, please refer to the progress report on the“Joint Improvement of Quality and Investment Returns” Action Plan. For more details, please see theJoint Improvement of Quality and Investment Returns Action Plan and the progress report on the JointImprovement of Quality and Investment Returns Action Plan disclosed on February 28, 2024, andMay 8, 2024, respectively.
The development of the company cannot be separated from the care and support of investors.The Company remains committed to its “investor-centric” approach, ensuring compliant and prudentoperations while safeguarding investor interests.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part IV Corporate Governance
I. Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Date of disclosure | Resolutions of the meeting |
| The 2023 Annual General Meeting | Annual general meeting | 20.38% | May 24, 2024 | May 25, 2024 | All proposals were adopted. Please refer to the Notice on Resolutions of General Meeting of 2023 disclosed on www.cninfo.com.cn on May 25, 2024 (Notice No.: 2024-044) |
| The First Extraordinary General Meeting of 2024 | Extraordinary general meeting | 11.24% | June 17, 2024 | June 18, 2024 | All proposals were adopted. Please refer to the Notice on the 1st Extraordinary General Meeting of 2024 disclosed on www.cninfo.com.cn on June 18, 2024 (Notice No.: 2024-053) |
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights
□Applicable ? Not applicable
II. Change of Directors, Supervisors and Senior Management
?Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Zhang Zuoteng | Vice Chairman of the Board | Elected | May 24, 2024 | The general meeting of the Company deliberated and approved the proposals for the election of the Board of Directors and Supervisory Committee. |
| Jin Li | Independent director | |||
| Wang Lixiang | Independent director | |||
| Wu Zhiming | Chairman of the Supervisory Committee | |||
| Zhuang Weidong | Shareholder Representative Supervisor | |||
| Zhu Wei | Employee Representative Supervisor | Elected | May 24, 2024 | She was elected by the workers’ congress of the Company. |
| Liang Weihua | Former Vice Chairman of the Board | Left office upon expiration of term | May 23, 2024 | The general meeting of the Company deliberated and approved the proposals for the election of the Board of Directors and Supervisory Committee. Some of the former directors and supervisors left office after their terms of office expired. |
| Wang Cheng | Former Director | Left office upon expiration of term | ||
| Gan Yong | Former Independent Director | Left office upon expiration of term |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Chen Shiyi | Former Independent Director | Left office upon expiration of term |
| Liu Xunci | Former Independent Director | Left office upon expiration of term |
| Zheng Tao | Former Chairman of the Supervisory Committee | Left office upon expiration of term |
| Qiu Haiyan | Former Shareholder Representative Supervisor | Left office upon expiration of term |
| Mao Tianxiang | Former Employee Representative Supervisor | Left office upon expiration of term |
III. Interim Dividend Plan and Share Capital Converted from Capital Reserve for theReporting Period
□ Applicable ? Not applicable
The Company has no interim dividend plan for profit distribution or conversion of capital reserve fund into share capitalIV. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees? Applicable □ Not applicable
1. Equity Incentives
□ Applicable ? Not applicable
2. Implementation of Employee Stock Ownership Plan
? Applicable □ Not applicableAll the valid employee stock ownership plans during the Reporting Period
| Name | Scope of employees | Number of employees | Total number of shares held （share） | Changes | Proportion to total share capital of listed companies | Funding source for implementing the plan |
| 2021-2023 Employee Stock Ownership Plan (Phase I) | The Company's middle and senior management and outstanding key staff | Less than 3,600 | 11,146,814 | Not applicable | 0.06% | Special incentive funds provisioned by the Company |
| 2021-2023 Employee Stock Ownership Plan (Phase II) | The Company's middle and senior management and outstanding key staff | Less than 3,600 | 21,628,535 | Not applicable | 0.12% | Special incentive funds provisioned by the Company |
| 2021-2023 Employee Stock Ownership Plan (Phase III) | The Company's middle and senior management and outstanding key staff | Less than 3,600 | 64,992,964 | Not applicable | 0.35% | Employees' legitimate income, performance-based bonus or other distribution permitted by laws and regulations |
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Note: At the end of the reporting period, 2024 Employee Stock Ownership Plan (Draft) and other related matters have been deliberatedand approved by the general meeting. The underlying shares under the ESOP have not been transferred/purchased.Shareholdings of Directors, Supervisors and Senior Management under the Employee Stock Ownership Plan during the ReportingPeriod
| Name | Position | Beginning amount in the Reporting Period | Ending amount in the Reporting Period | Proportion to total share capital of listed companies |
| Li Dongsheng | Chairman, CEO | About 17.89 million shares | About 8.75 million shares | 0.05% |
| Zhao Jun | Director, Senior Vice President | |||
| Liao Qian | Director, Board Secretary and Senior Vice President | |||
| Li Jian | CFO | |||
| Yan Xiaolin | Senior Vice President, CTO | |||
| Zhu Wei | Employee Representative Supervisor |
Changes of asset management institutions during the Reporting Period
□ Applicable ? Not applicable
Changes of equity caused by the holder’s disposal of shares 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 applicableDuring the reporting period, the Company’s ESOP participants exercised their shareholder rights to receive the profit distribution for2023, but did not participate in voting at the general meeting or exercise other shareholder rights.Other relevant information and explanations of the Employee Stock Ownership Plan during the Reporting Period.
□ Applicable ? Not applicable
Changes of the members of Employee Stock Ownership Plan Management Committee
□ Applicable ? Not applicable
Financial impact of Employee Stock Ownership Plan on the Company during the Reporting Period and related accounting treatment? Applicable □ Not applicableThe financial, accounting treatment and taxation involved in the Company’s shareholding plan shall be implemented according to lawsand regulations and normative documents on financial systems, accounting standards, taxation systems, etc. The holder of theshareholding plan shall pay the personal income tax generated due to the shareholding plan according to law, and can choose to sellthe corresponding amount of shares to the shareholding plan to cover personal income tax. The remaining shares will be attributed to
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
individuals.Termination of Employee Stock Ownership Plan during the Reporting Period? Applicable □ Not applicableBased on the agreements under the Phase III Global Partner Program (Draft), the shares attributable to employees under the Programwithin 2023 have been fully vested, sold and transferred to employees. In March 2024, shares attributed to the Company in the schemeof the current period were sold.Other instructions: none
3. Other Employee Incentives
□ Applicable ? Not applicable
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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 □NoPolicies and Industrial Standards in connection with Environmental Protection
The Company complies with a number of environmental protection policies, including: Law of the People’s Republic of Chinaon Environmental Protection, Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution, Law ofthe People’s Republic of China on the Prevention and Control of Water Pollution, Law of the People’s Republic of China on thePrevention and Control of Environmental Pollution by Solid Waste, Law of the People’s Republic of China on Soil Pollution Prevention,Law of the People’s Republic of China on Noise Pollution Prevention, Law of the People’s Republic of China on the Prevention andControl of Radioactive Pollution.
Industrial standards referred by the Company in environmental protection include: the Electronic Industry Water PollutantDischarge Standards, Battery Industry Pollutant Discharge Standards, Pollutant Discharge Standards for Urban Sewage TreatmentPlants, Environmental Noise Discharge Standards for Industrial Enterprise and Factories, Pollutant Discharge Standards for UrbanSewage Treatment Plants, Hazardous Waste Storage Pollution Control Standards and Malodorous Pollutant Discharge Standards, withthe aim to ensure the continuous and stable operation of various environmental protection facilities, achieve effective treatment of"three wastes" and meet emission standards.Administrative License for Environmental Protection
The Company complies with the laws and regulations related to environmental protection license during its construction, carriesout environmental impact evaluation, obtains sewage discharge permits, and files with the provincial and municipal regulators for itsoperation on a timely basis.Industrial Discharge Standards, and Details on Pollutant Discharge from Production and Operation
| Name of the Company or subsidiary | Key pollutants and types of specific pollutants | Major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge intensity | Governing discharge standards | Total discharge | Approved total discharge | Excessive discharge |
| TCL China Star Optoelectronics Technology Co., Ltd. | Waste water pollutants | COD | Discharged to Guangming Sewage Plant | 1 | North of the plant area | 145mg/L | 260mg/L | 524.56t | 2071.12t | None |
| COD | Discharged to the artificial wetland | 1 | Artificial wetland | 14mg/L | 30mg/L | 26.929t | 174.89t | None | ||
| Shenzhen China Star | Waste water pollutants | COD | Discharged to Guangming | 2 | Southeast corner of the | 39mg/L | 110mg/L | 130.967t | 1077.8t | None |
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| Optoelectronics Bandaoti Display Technology Co., Ltd. | Sewage Plant | plant | ||||||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | Waste water pollutants | COD | Indirectly discharged | 2 | Southwest and northwest corners of the plant | 62.53mg/L | 400 mg/L | 42.05t | 847.95t | None |
| Ammonia nitrogen | Indirectly discharged | 2 | Southwest and northwest corners of the plant | 13.50mg/L | 30mg/L | 1.3092t | 85.80t | None | ||
| Ag | Indirectly discharged | 2 | Southwest and northwest corners of the plant | 0.012mg/L | 0.1 mg/L | 0.00004t | 0.00105t | None | ||
| Air pollutants | Nitrogen oxides | Directly discharged | 14 | Southeast and southwest corners of the plant | 94 mg/m? | 150 mg/m? | 4.91t | 59.51t | None | |
| VOCS | Directly discharged | 5 | Southeast and southwest corners of the plant | 14.86 mg/m? | 50 mg/m? | 4.87t | 114.319t | None | ||
| PM (particulate matter) | Directly discharged | 11 | Southeast and southwest corners of the plant | 3.5 mg/m? | 60 mg/m? | 7.99t | 26.48t | None | ||
| Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | Waste water pollutants | COD | Indirectly discharged | 1 | Northwest corner of the plant | 110.54 mg/L | 400 mg/L | 34.57t | 570.80t | None |
| Ammonia nitrogen | Indirectly discharged | 1 | Northwest corner of the plant | 11.41mg/L | 30 mg/L | 0.92t | 57.10t | None | ||
| Ag | Indirectly discharged | 1 | Northwest corner of the plant | 0.039 mg/L | 0.3 mg/L | 0.0049t | 0.0315t | None | ||
| Air pollutants | Nitrogen oxides | Directly discharged | 10 | Northeastern corner of the plant | 46 mg/m? | 150 mg/m? | 11.83t | 139.84t | None | |
| VOCS | Directly discharged | 2 | Northeastern corner of the plant | 8.8 mg/m? | 50 mg/m? | 12.38t | 99.785t | None | ||
| PM (particulate matter) | Directly discharged | 10 | Northeastern corner of the plant | 12.6 mg/m? | 60 mg/m? | 12.31t | 36.70t | None | ||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Waste water pollutants | COD | Continuously discharged to Suzhou Huaxin Environmental Technology Co., Ltd. | 2 | Within the Wastewater Treatment Plant of Suzhou Huaxin Environmental Technology | 97.7mg/L | 500mg/L | 62.72t | 129.6t | None |
| 6mg/L | 100mg/L | 6.22t | 449.82t | None | ||||||
| Ammonia nitrogen | 1 | 0.289mg/L | 6mg/L | 0.578t | 22.68t | None | ||||
| Suzhou China Star Optoelectronics Display Co., Ltd. | Waste water pollutants | COD | Continuously discharged to Suzhou Industrial Park First Sewage | 1 | South gate of the plant area | 22.8mg/L | 500mg/L | 1.97t | 96.335t | None |
| Ammonia nitrogen | 0.298mg/L | 45mg/L | 1.79t | 5.65t | None |
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| Treatment Plant | ||||||||||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Organized | 1 | General discharge outlet | As per emission standard | DB12/356-2018 Integrated Wastewater Discharge Standard | 9.11t | 700.24t | None |
| Ammonia nitrogen | Organized | 1 | General discharge outlet | DB12/356-2018 Integrated Wastewater Discharge Standard | 0.77t | 33.03t | None | |||
| Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Organized | 1 | General discharge outlet | As per emission standard | DB12/356-2018 Integrated Wastewater Discharge Standard | 32.05t | 42.19t | None |
| Ammonia nitrogen | Organized | 1 | General discharge outlet | 6.20t | / | None | ||||
| Total nitrogen | Organized | 1 | General discharge outlet | 5.14t | / | None | ||||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Organized | 1 | General discharge outlet | As per emission standard | DB12/599-2015 Pollutant Discharge Standards for Urban Sewage Treatment Plants | 2.19t | 20.78t | None |
| Total phosphorus | Organized | 1 | General discharge outlet | 0.003t | 0.23t | None | ||||
| Ammonia nitrogen | Organized | 1 | General discharge outlet | 0.02t | 4.39t | None | ||||
| Total nitrogen | Organized | 1 | General discharge outlet | 0.14t | 1.48t | None | ||||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Organized | 1 | General discharge outlet | As per emission standard | GB8978-1996 Integrated Wastewater Discharge Standard | 77.59t | / | None |
| Total phosphorus | Organized | 1 | General discharge outlet | As per emission standard | GB8978-1996 Integrated Wastewater Discharge Standard | 1.19t | / | None | ||
| Ammonia nitrogen | Organized | 1 | General discharge outlet | As per emission standard | GB8978-1996 Integrated Wastewater Discharge Standard | 0.22t | / | None | ||
| Flouride | Organized | 1 | General discharge outlet | As per emission standard | GB8978-1996 Integrated Wastewater Discharge Standard | 2.51t | / | None | ||
| Zhonghuan Advanced Bandaoti | Waste water pollutants | Total phosphorus | Discharged to centralized industrial sewage | 2 | DW001 DW003 | As per emission standard | GB/T 31962 Wastewater Quality | 0.24t | 1.59t | None |
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| Technology Co., Ltd. | treatment plant | Standards for Discharged to Municipal Seweers GB8978-1996 Integrated Wastewater Discharge Standard GB8978-1996 Integrated Wastewater Discharge Standard GB16297-1996 Integrated Emission Standard of Air Pollutants | ||||||||
| Total nitrogen | Discharged to centralized industrial sewage treatment plant | 2 | DW001 DW003 | 43.40t | 157.19t | None | ||||
| COD | Discharged to centralized industrial sewage treatment plant | 2 | DW001 DW003 | 421.29t | 1851.36t | None | ||||
| Ammonia nitrogen | Discharged to centralized industrial sewage treatment plant | 2 | DW001 DW003 | 27.73t | 138.26t | None | ||||
| Huansheng Solar (Jiangsu) Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Organized | 1 | General discharge outlet | Discharged according to the standard | GB 30484--2013 Discharge Standard for Battery Industry Pollutants | 6.13t | 72.14t | None |
| Flouride | Organized | 1 | General discharge outlet | 0.57t | 2.23t | None | ||||
| Ammonia nitrogen | Organized | 1 | General discharge outlet | 0.01t | 0.20t | None | ||||
| Total nitrogen | Organized | 1 | General discharge outlet | 0.03t | 0.30t | None | ||||
| Total phosphorus | Organized | 1 | General discharge outlet | 0.00004t | 0.01t | None | ||||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | Waste water pollutants | Chemical oxygen requirement | Discharged to urban sewage treatment plant | 1 | General discharge outlet | Discharged according to the standard | GB39731-2020 Discharge Standard of Water Pollutants for Electronic Industry | 169.90t | 883.38t | None |
| Ammonia nitrogen | Discharged to urban sewage treatment plant | 1 | General discharge outlet | 0.04t | 2.37t | None | ||||
| Total nitrogen | Discharged to urban sewage treatment plant | 1 | General discharge outlet | 4.00t | 7.67t | None | ||||
| Total phosphorus | Discharged to urban sewage treatment plant | 1 | General discharge outlet | 0.50t | 0.70t | None |
Disposing of pollutants
During the Reporting Period, the pollutants generated by the Company and its subsidiaries were discharged in accordance withthe requirements 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 publicenvironmental 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 is
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
discharged 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 uniformly handledby the municipal public. All of the above disposals have been carried out according to laws and regulations.The factory noises generated by the Company come from the mechanical noises of production and 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.Emergency Response Plan for Environmental IncidentsThe 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 protectiontaxesThe Company pays the environmental protection taxes every quarter by the Financial Department, and the investments inenvironmental protection are calculated on an annual basis.Environmental Self-Monitoring Program
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The Company combines on-line monitoring and manual sampling and testing of various pollutants based on the environmentalimpact assessment approval and pollution discharge permit, clarifies monitoring indicators, execution standards and their limits,conducts quarterly testing of various pollution factors such as waste water/waste gas/ground water/plant boundary noise, and developsa self-monitoring plan based on the Company's own situation, as well as regularly employing qualified third party to test variouspollution factors with the reports kept on file. In addition to self-monitoring, the local environmental protection department alsoinfrequently supervises the environmental testing to ensure that emissions meet standards.Administrative punishments received with respect to environmental issues in the Reporting PeriodNoneOther environment information that should be publicly disclosedNoneMeasures taken to reduce its carbon emissions and their effects during the Reporting Period? Applicable □ Not applicableIn order to cope with global challenges such as climate change, energy security and environmental pollution, TCL TECH.continuously accelerated the green and low-carbon transformation of its energy structure in pursuit of the "dual carbon" goal. TheCompany actively responded to the requirements of the national greenhouse gas emission reduction strategy. In order to effectivelysupport the implementation of the Company's climate strategy, TCL pledged to the “3050” target commitment, i.e."reaching emissionpeak no later than 2030 and achieving carbon neutrality in its own operations no later than 2050" at the strategic level. In response tothese commitment targets, TCL TECH. established dedicated working groups at major business departments to address climate changes,responsible for implementing specific strategies and actions. TCL comprehensively promoted its climate governance from variousaspects, such as carbon metering supervision, carbon emission reduction management, carbon asset coordination, carbon tradingservices and carbon financial support, in combination with its own development status, market environment and policy orientation. Inaddition, the Company also carried out the ISO 14064 Greenhouse Gas Accounting and Verification through third-party agencies,scientifically formulated carbon emission reduction paths and related improvement measures after disassembling the Group's dualcarbon goals, as well as conducted annual self-evaluation to ensure the targets achieved.TCL TECH. always upholds the business philosophy of green and sustainable development. TCL CSOT, its main subsidiary,implemented a series of measures such as selection of energy-efficient equipment (100% major equipment equipped with frequencyconversion and automation equipment), smart energy system management and optimization of power supply to effectively reduceequipment energy consumption, and recovered waste heat and ice water energy and used solar energy for power generation, therebyreducing carbon emissions. TCL CSOT’s Wuhan Base sorted out and implemented 98 energy-saving projects in the first half of theyear, with an expected reduction of 15,991 tons of CO?, and generated 15.99 million kWh of photovoltaic power. TCL CSOT’s
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Shenzhen Base has completed 36 energy-saving projects, mainly focusing on the process innovation of factory equipment while keptproduction, saving about 24.5 million kWh of electricity and achieved energy-saving income of RMB13.65 million.
TZE, engaging in the new energy industry, actively explored energy saving and consumption reduction technology transformationbased on the process characteristics of different production products, and comprehensively improved the level of energy saving andconsumption reduction. During the reporting period, Ningxia Huanou adopted the technology of reusing waste heat from recyclingequipment and implemented the air compressor waste heat recovery project, saving approximately 2.129 million kWh of electricity.The projects such as HVAC system and process circulating water system free cooling were implemented, utilizing environmentalnatural cooling sources and other technologies, saving approximately 1.974 million kWh of electricity and effectively reducing itsdependence on conventional power energy. As of the end of the reporting period, the Company had achieved a renewable electricityconsumption of over 1.7 million MWh through green electricity trading in the electricity market and measures such as rooftopphotovoltaic power generation, with renewable electricity consumption accounting for approximately 39% of the total electricityconsumption.In the future, TCL TECH. will keep the sustainable development in mind, take long-term strategy as the guidance, constantlybreak through the boundaries, collaborate with the upstream and downstream of the industrial chain, create a cooperative ecologicalchain, and build a future-oriented open ecosystem, so as to contribute to achieve global net zero emissions and promote thetransformation of global clean energy.Other environmental related informationNoneReasons for not disclosing other environmental informationNot applicableRelevant information on environmental accidents occurring in the CompanyNoneII. Social ResponsibilityTCL Tech actively responds to national calls and focuses on four major areas (i.e. science and technology,education, culture and sports, and targeted relief), continuously strengthens investment in public charitableundertakings, integrates public charitable resources, and contributes to promoting social equity, consolidating andexpanding achievements of poverty alleviation and, and achieving rural revitalization and common prosperity. TheCompany has combined its advantageous industrial resources to implement projects such as “TCL PhotovoltaicLow-carbon School”, “TCL Smart Classroom”, “A.I. Home”, “Little Music+”, and “TCL Hope Project CandlelightAward Plan”, in assistance with the revitalization of rural education from such aspect as rural school educational
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
resources and infrastructure. By carrying out targeted donations for the needed, the Company consolidated andextended the achievements of poverty alleviation and pushed forward rural revitalization.To address the sustainable development issues for rural schools, TCL Charity Foundation cooperated with TCLZhonghuan to implement the TCL Photovoltaic Low-carbon School Project, building solar photovoltaic powergeneration systems free of charge on the roofs of the rural schools and donating the income from such powergeneration to the schools. The electricity so generated is fully integrated into the power grid, and the powergeneration income is used for improving the instructional environment and funding for students from poor families,creating a sustainable educational aid model. From March - June 2024, the Foundation donated roof-basedphotovoltaic power generation systems and income from 25 years of power generation by such equipment, to a totalof 6 schools in Xixiang County, Hanzhong City, Shaanxi Province, and Zhongkai Primary School in Huizhou,Guangdong Province, and it is expected that the photovoltaic power generation systems in the 7 schools willgenerate 10.06 million KWH of electricity throughout their life cycles. Up to now, the Foundation has donated 27Photovoltaic Low-carbon Schools in Shaanxi, Ningxia, Inner Mongolia and Guangdong, benefiting over 30,000students.To address the inequity of educational resources between urban and rural areas, TCL Charity Foundationestablishes TCL Smart Classrooms in urban and rural schools, including smart instructional equipment and software,to build multimedia smart classrooms, tailored and simultaneous classrooms between “urban and rural areas”. InJune 2024, TCL Charity Foundation started the donation for Smart Classrooms in Yuanshan Town Primary School,Lianping County, Heyuan City. Up to now, the Foundation has donated 4 Smart Classrooms in Shenzhen,Guangdong, Guilin, Guangxi and Heyuan, Guangdong benefiting more than 4,000 students.
In 2019, TCL Charity Foundation cooperated with the TCL Industrial Research Institute to launch the “A.I.Home” project, developed and designed the “Eagle Storytelling Machine”, and delivered the “Eagle Story Club”campaign in rural schools, bringing together children from rural schools, to improve their wellbeing and help themwith growing up. In 2024, TCL Charity Foundation distributed over 200 customized “Eagle Storytelling Machines”to left-behind children and migrant children; The seventh batches of pilot schools were selected for the “Eagle StoryClub” project. A total of 20 schools from 10 provinces including Sichuan, Yunnan, Guizhou, were selected as the“Eagle Story Club” pilot schools, and a total of 200 story boxes were distributed, benefiting 6,000 students.
To address the shortage of high-quality music education resources for children, TCL Charity Foundation andthe Education Foundation of the Beijing Central Conservatory of Music launched the "Little Music+" project,developed and designed the "Little Snow Music Machine", and carried out “Little Snow Music Class” in the rural
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schools to introduce both Chinese and international famous music works and appreciation to children who lackmusic resources and motivate kids to develop positive and optimistic characters. In 2024, the seventh batches ofpilot schools were selected for the “Little Snow Music Class” project. A total of 20 schools from 9 provincesincluding Guizhou, Guangxi, Henan, were selected as the “Little Snow Music Class” pilot schools, and a total of200 music boxes were distributed, benefiting more than 3,000 students.To promote the development of rural education, TCL Charity Foundation continues to implement the "TCLHope Project Candlelight Award Plan" to recruit and encourage rural teachers to stay in their jobs and contribute torural education. The project solicited excellent teachers from 194 counties and districts in 14 provinces that serveas the key counties in the National Rural Revitalization and the pairing support areas of Shenzhen. Each of thewinners received a personal award worth RMB9,500, including a cash reward and 7-day offline “Candlelight Class”training. In H1 2024, the 10th "TCL Hope Project Candlelight Award Plan" started its candidate selection, andfinally 400 outstanding rural teachers won the awards. Till now, the project applicants cover 523 counties in 23provinces across the country. More than 3,400 outstanding rural teachers from 2,000 schools have won the awards.A total investment of over RMB46 million has been made in this project.In addition, TCL Charity Foundation continues to launch projects such as targeted assistance and communitycharity. Through actions such as helping the needy, and pairing assistance, it supports, consolidates and expandsthe poverty alleviation achievements, builds harmonious urban and rural communities, and contributes to socialequity and harmonious development. In H1 2024, to enable more rural infants and young children to receive earlychildhood care services and improve the development of rural infants and young children to reach the nationalaverage level, TCL Charity Foundation supported the China Development Research Foundation with RMB 2million to carry out the “Sunshine Starting Point: 100,000 Rural Infants and Young Children Home Care GuidanceAction Plan”. TCL Charity Foundation supported the construction project of a smart "light storage and charging"integrated charging station in Checun Village, Taimei Town, Huizhou with RMB1 million, and donatedRMB100,000 to the Huizhou Charity Federation for rural revitalization construction in Henghe Town, BoluoCounty. In addition, TCL Charity Foundation launched an employee creative competition project, encouragingemployees to lend a help hand to disadvantaged groups, and initiated innovative and socially beneficial charitableprojects in support of the community development and the rural cultural and ethical progress from multipledimensions.
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Part VI Significant Events
I. Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Overdue at the Period-End
□ Applicable ? Not Applicable
During the Reporting Period, the Company has no commitments that were fully fulfilled or that are overdue and have not been fullyfulfilled by the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and OtherEntities in the Reporting Period as of the end of the period.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. Engagement and Disengagement of Independent Auditor
Whether the semi-annual financial report has been audited
□Yes ?No
The interim financial statements are unaudited.
V. Explanation of the Board of Directors and Supervisors Committee on the “Non-StandardAuditor’s Report”
□ Applicable ? Not Applicable
VI. Explanation of the Board of Directors on the “Non-Standard Auditor’s Report” for thePrevious Year
□ Applicable ? Not Applicable
VII. Insolvency and Reorganization
□ Applicable ? Not Applicable
No such cases in the Reporting Period.
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VIII. Lawsuits
Significant Lawsuits and Arbitrations
□ Applicable ? Not Applicable
No such cases in the Reporting Period.
IX. Punishments and Rectifications
□ Applicable ? Not Applicable
No significant punishments or rectifications in the Reporting Period.X. Credit Quality of the Company as well as its Controlling Shareholder and Actual Controller
□ Applicable ? Not Applicable
XI. Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable ? Not Applicable
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 major 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 major transactions regarding significant joint investments in third parties which occurred during the Company'sReporting 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 ? No
During the Reporting Period, the Company has no amounts due to and from related parties for non-operating purposes.
5. Transactions with Related Finance Companies
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
6. Transactions Between the Financial Company Controlled by the Company and Related Companies
? Applicable □ Not applicableDeposits
| Related parties | Relationship with the Company | Daily deposit ceiling (RMB’0,000) | Range of interest | Beginning balance (RMB’0,000) | Amount incurred in the current period | Ending balance (RMB’0,000) | |
| Total deposit amount in current period (RMB’0,000) | Total withdrawal amount in current period (RMB’0,000) | ||||||
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | 250,000.00 | 0.8%-1.15% | 30.3 | 423,929.98 | 416,046.86 | 7,913.42 |
Loans
| Related parties | Relationship with the Company | Loan limit (RMB’0,000) | Range of interest | Balance at the beginning of the period (RMB’0,000) | Amount incurred in the current period | Ending balance (RMB’0,000) | |
| Total loan amount in current period (RMB’0,000) | Total repayment amount in current period (RMB’0,000) | ||||||
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | 250,000.00 | - | - | - | - | - |
Credit or other financial business
| Related parties | Relationship with the Company | Business type | Total (RMB’0,000) | Ending balance (RMB’0,000) |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | Credit granting (bill discount) | The balance of comprehensive credit on any day shall not exceed RMB2.5 billion (including loans, notes discounting, and notes acceptance) | 72,552.63 |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | Credit granting (bill acceptance) | 54,404.35 |
7. Other Major Related-Party Transactions
? Applicable □ Not applicableRelated inquiries on the website for temporary disclosure of major related-party transactions
| Title of announcement | Date of interim disclosure | Website for disclosure |
| Announcement on the Related-party Transactions with Shenzhen Jucai Supply Chain Technology Co., Ltd. in 2024 | April 30, 2024 | www.cninfo.com.cn |
| Announcement on Continuing to Provide Financial Services by TCL Technology Group Finance Co., Ltd. to Related Parties and Renewing the Financial Services Agreement for Related-party Transactions | April 30, 2024 | |
| Announcement on the Expected Continuing Related-Party Transactions for 2024 | April 30, 2024 | |
| Report on the Execution of Daily Related-Party Transactions in 2023 | April 30, 2024 | |
| Announcement on the Launch of Accounts Receivable Factoring and the Related-party Transaction | April 30, 2024 | |
| Announcement on Adjustment of Daily Related-party Transaction Quotas among the Same Controlling Entity for 2023 | January 27, 2024 |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
XII. Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable ? Not Applicable
The Company has no significant entrustment in the Reporting Period.
(2) Contracting
□ Applicable ? Not Applicable
The Company has no significant contracting in the Reporting Period.
(3) Leases
□ Applicable ? Not Applicable
The Company has no significant leases in the Reporting Period.
2. Major Guarantees
? Applicable □ Not applicable
Unit: RMB'0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Guarantee line | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral | Counter guarantee | Term of guarantee | Expired or not | Guarantee for related parties or not |
| TCL Industries Holdings (HK) Limited | April 28, 2022 | 514,629 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | April 28, 2022 | 158,600 | December 17, 2021 | 1,325 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | 54 days | No | Yes |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | April 28, 2022 | 345,000 | August 29, 2019 | 5,132 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | 59 days | No | Yes |
| Tonly Technology Co., Ltd. | April 28, 2022 | 40,000 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL King Electrical Appliance (Chengdu) Co., Ltd. | April 28, 2022 | 51,653 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| Huizhou TCL Mobile Communication Co., Ltd. | April 28, 2022 | 212,507 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Mobile Communication (HK) Company Limited | April 28, 2022 | 29,225 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Home Appliances (Hefei) Co., Ltd. | April 28, 2022 | 68,280 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Home Appliances (Zhongshan) Co., Ltd. | April 28, 2022 | 4,929 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL | - | Yes | Yes |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Industrial Holding Co., Ltd. | ||||||||||
| TCL Air Conditioner (Wuhan) Co., Ltd. | April 28, 2022 | 13,480 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | April 28, 2022 | 31,749 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | April 28, 2022 | 2,522 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Home Appliances (Huizhou) Co., Ltd. | April 28, 2022 | 10,000 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | April 28, 2022 | 5,488 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | April 28, 2022 | 1,034 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| Shenzhen Shifen Daojia Service Technology Co., Ltd. | April 28, 2022 | 77 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Guangzhou TCL Science and Technology Development Co., Ltd. | April 28, 2022 | 84,700 | - | 0 | Joint liability guarantee | / | Counter guarantee provided by TCL Industrial Holding Co., Ltd. | - | Yes | Yes |
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | May 22, 2021 | 45,500 | - | 0 | Joint liability guarantee | / | With counter- guarantee | - | Yes | Yes |
| Guangzhou Qihang International Supply Chain Co., Ltd. | May 24, 2024 | 10,000 | - | 0 | Joint liability guarantee | / | With counter- guarantee | - | Yes | No |
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | May 24, 2024 | 46,000 | September 27, 2023 | 42,971 | Joint liability guarantee | / | With counter- guarantee | 86-361 days | No | No |
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | May 24, 2024 | 35,000 | April 28, 2020 | 20,100 | Joint liability guarantee | / | Guarantee in proportion to shareholding percentage | 7.5 years | No | No |
| Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. | May 24, 2024 | 40,000 | May 22, 2023 | 32,680 | Joint liability guarantee | / | Guarantee in proportion to shareholding percentage | 5.9 years | No | No |
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | May 24, 2024 | 180,000 | June 15, 2023 | 148,000 | Joint liability guarantee | / | Guarantee in proportion to shareholding percentage | 5 years | No | No |
| TCL Huanxin Bandaoti (Tianjin) Co., Ltd. | May 24, 2024 | 3,000 | - | 0 | Joint liability guarantee | / | Guarantee in proportion to shareholding percentage | - | Yes | No |
| Total approved line for such guarantees in Reporting Period (A1) | 314,000 | Total actual amount of such guarantees in Reporting Period (A2) | 88,801 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | 1,933,373 | Total actual balance of such guarantees at end of Reporting Period (A4) | 250,208 | |||||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral | Counter guarantee | Term of guarantee | Expired or not | Guarantee for related parties or not |
| TCL MOKA INTERNATIONAL LIMITED | May 24, 2024 | 100,000 | May 31, 2023 | 12,876 | Joint liability guarantee | / | / | 335 days-1.9 years | No | No |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| TCL Technology Investments Limited | May 24, 2024 | 220,000 | July 14, 2020 | 213,804 | Joint liability guarantee | / | / | 1 years | No | No |
| TCL China Star Optoelectronics Technology Co., Ltd. | May 24, 2024 | 2,420,000 | December 22, 2022 | 1,626,373 | Joint liability guarantee | / | / | 274 days-8.5 years | No | No |
| TCL Technology Group (Tianjin) Co., Ltd. | May 24, 2024 | 70,000 | August 31, 2022 | 60,000 | Joint liability guarantee | / | / | 3.2 years | No | No |
| TCL Technology Group Finance Co., Ltd. | May 24, 2024 | 150,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| TTE Electronics India Private Limited | May 24, 2024 | 10,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| Beijing Hecheng Nuoxin Technology Co., Ltd. | May 24, 2024 | 10,000 | September 9, 2023 | 10,000 | Joint liability guarantee | / | / | 71 days | No | No |
| Beijing Lingyun Data Technology Co., Ltd. | May 24, 2024 | 128,000 | April 21, 2023 | 32,246 | Joint liability guarantee | / | / | 56-292 days | No | No |
| Beijing Sunpiestore Technology Co., Ltd. | May 24, 2024 | 135,000 | September 4, 2023 | 121,213 | Joint liability guarantee | / | / | 66-328 days | No | No |
| Guangdong Juhua Printed Display Technology Co., Ltd. | May 24, 2024 | 5,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| Guangzhou China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | May 24, 2024 | 1,750,000 | March 7, 2022 | 1,261,297 | Joint liability guarantee | / | / | 2 days-5.7 years | No | No |
| Guangzhou Zhihui Shengke Co., Ltd. | May 24, 2024 | 30,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| Highly (Tianjin) E-Commerce Co., Ltd. | May 24, 2024 | 10,000 | April 21, 2023 | 6,236 | Joint liability guarantee | / | / | 274 days | No | No |
| Highly (Tianjin) Technology Co., Ltd. | May 24, 2024 | 100,000 | April 21, 2023 | 47,545 | Joint liability guarantee | / | / | 274 days | No | No |
| Highly Information Industry Co., Ltd. | May 24, 2024 | 424,000 | May 18, 2022 | 362,739 | Joint liability guarantee | / | / | 8 days-3.0 years | No | No |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Tianjin Huiyi Digital Technology Co., Ltd. | May 24, 2024 | 3,000 | June 24, 2024 | 3,000 | Joint liability guarantee | / | / | 3 years | No | No |
| Beijing Youyi Online Technology Co., Ltd. | May 24, 2024 | 4,000 | June 24, 2024 | 4,000 | Joint liability guarantee | / | / | 3 years | No | No |
| Xiaoyuzaixian (Beijing) Technology Co., Ltd. | May 24, 2024 | 3,000 | June 24, 2024 | 3,000 | Joint liability guarantee | / | / | 3 years | No | No |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | May 24, 2024 | 79,000 | April 21, 2023 | 18,890 | Joint liability guarantee | / | / | 50-274 days | No | No |
| Huizhou China Star Optoelectronics Technology Co., Ltd. | May 24, 2024 | 900,000 | March 23, 2021 | 565,681 | Joint liability guarantee | / | / | 12 days-4.7 years | No | No |
| Huizhou Moka Technology Development Co., Ltd. | May 24, 2024 | 20,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| Moka Technology (Guangdong) Co., Ltd. | May 24, 2024 | 450,000 | April 21, 2023 | 158,858 | Joint liability guarantee | / | / | 164 days-4.7 years | No | No |
| Qingdao Blue Business Consulting Co., Ltd. | May 24, 2024 | 1,000 | December 25, 2023 | 191 | Joint liability guarantee | / | / | 55 days | No | No |
| Shaanxi Titi Electronic Technology Co., Ltd. | May 24, 2024 | 10,000 | September 9, 2023 | 10,000 | Joint liability guarantee | / | / | 71 days | No | No |
| Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | May 24, 2024 | 940,600 | April 28, 2018 | 819,775 | Joint liability guarantee | / | / | 274 days-5.0 years | No | No |
| Suzhou China Star Optoelectronics Display Co., Ltd. | May 24, 2024 | 92,500 | August 30, 2022 | 50,959 | Joint liability guarantee | / | / | 8 years | No | No |
| Tianjin Printronics Circuit Corporation | May 24, 2024 | 53,000 | September 9, 2022 | 7,036 | Joint liability guarantee | / | / | 6.2 years | No | No |
| Tianjin TiTi Yunchuang Technology Co., Ltd. | May 24, 2024 | 5,000 | September 9, 2023 | 5,000 | Joint liability guarantee | / | / | 71 days | No | No |
| Tianjin WanfangNuoxin Technology Co., Ltd. | May 24, 2024 | 5,000 | September 9, 2023 | 5,000 | Joint liability guarantee | / | / | 71 days | No | No |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Tianjin Xincheng Pilot Technology Co., Ltd. | May 24, 2024 | 5,000 | September 9, 2023 | 5,000 | Joint liability guarantee | / | / | 71 days | No | No |
| Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | May 24, 2024 | 1,631,600 | March 1, 2018 | 1,085,655 | Joint liability guarantee | / | / | 2 days-3.7 years | No | No |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | May 24, 2024 | 1,670,500 | August 25, 2022 | 1,027,496 | Joint liability guarantee | / | / | 3 day-6.2 years | No | No |
| Chongqing Blue Business Consulting Co., Ltd. | May 24, 2024 | 7,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| China Star Optoelectronics International (HK) Limited | May 24, 2024 | 10,000 | - | 0 | Joint liability guarantee | / | / | - | Yes | No |
| Total guarantee line for subsidiaries approved in the Reporting Period (B1) | 11,452,200 | Total actual amount of such guarantees for subsidiaries in Reporting Period (B2) | 2,270,954 | |||||||
| Total guarantees line for subsidiaries approved at the end of the Reporting Period (B3) | 11,452,200 | Total balance of actual guarantees for subsidiaries at the end of the Reporting Period (B4) | 7,523,872 | |||||||
| Guarantees provided between subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral | Counter guarantee | Term of guarantee | Expired or not | Guarantee for related parties or not |
| Huhehaote Huanju New Energy Development Co., Ltd. | November 26, 2014 | 2,029 | August 5, 2016 | 2,029 | Joint liability guarantee | / | / | 9.5 years | No | No |
| Zhonghuan Energy (Inner Mongolia) Co., Ltd. | June 24, 2017 | 9,560 | July 21, 2017 | 9,560 | Joint liability guarantee | / | / | 15 years | No | No |
| Otog Banner Huanju New Energy Co., Ltd. | June 24, 2017 | 13,733 | August 30, 2017 | 13,733 | Joint liability guarantee | / | / | 10 years | No | No |
| Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. | March 22, 2021 May 26, 2022 | 403,324 | April 30, 2021 | 403,324 | Joint liability guarantee | / | / | 7 years | No | No |
| Ningxia Zhonghuan Solar Material Co., Ltd. | January 23, 2022 | 748,000 | May 30, 2022 | 600,000 | Joint liability guarantee | / | / | 7 years | No | No |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Tianjin Huanzhi New Energy Technology Co., Ltd. | May 26, 2022 | 27,700 | September 29, 2022 | 7,700 | Joint liability guarantee | / | 5 years | No | No | |
| Tianjin Huanou New Energy Technology Co., Ltd | May 26, 2022 | 115,000 | September 28, 2022 | 44,728 | Joint liability guarantee | / | / | 7 years | No | No |
| Wuxi Zhonghuan Applied Materials Co., Ltd. | May 26, 2022 | 96,589 | June 30, 2022 | 96,589 | Joint liability guarantee | / | / | 7 years | No | No |
| Huansheng New Energy (Jiangsu) Co., Ltd. | May 26, 2022 | 150,813 | September 30, 2022 | 105,647 | Joint liability guarantee | / | / | 5-7 years | No | No |
| Huansheng New Energy (Tianjin) Co., Ltd. | April 8, 2023 | 170,000 | February 28, 2024 | 36,000 | Joint liability guarantee | / | / | 7 years | No | No |
| Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | May 24, 2024 | 2,351,300 | April 28, 2018 | 1,944,518 | Joint liability guarantee | / | / | 1.9-4 years | No | No |
| Techigh Circuit Technology (Huizhou) Co., Ltd. | May 24, 2024 | 4,590 | June 27, 2024 | 160 | Joint liability guarantee | / | / | 1 years | No | No |
| Techigh Circuit Technology (Zhuhai) Co., Ltd. | May 24, 2024 | 24,225 | April 23, 2024 | 11,828 | Joint liability guarantee | / | / | 10 years | No | No |
| TCL MOKA INTERNATIONAL LIMITED | May 24, 2024 | 214,500 | April 30, 2024 | 8,110 | Joint liability guarantee | / | / | 5-90 days | No | No |
| Total guarantee line for subsidiaries approved in the Reporting Period (C1) | 2,594,615 | Total actual amount of such guarantees for subsidiaries in Reporting Period (C2) | 99,245 | |||||||
| Total guarantees line for subsidiaries approved at the end of the Reporting Period (C3) | 4,331,363 | Total balance of actual guarantees for subsidiaries at the end of the Reporting Period (C4) | 3,283,926 | |||||||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 14,360,815 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 2,459,000 | |||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 17,716,936 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 11,058,005 | |||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 211.15% | |||||||||
| Of which: | ||||||||||
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Balance of guarantees provided for shareholders, the actual controller and their related parties (D) | 6,457 |
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 1,662,198 |
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 8,439,528 |
| Total of the three above amounts (D+E+F) | 8,439,528 |
| Joint liability already borne or possibly borne with evidence 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 expiration date of the principaldebt, 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 Company transferred the guarantee limit that was formerly provided by the Company to Highly Information Industry Co., Ltd. to Tianjin Huiyi Digital Technology Co., Ltd., BeijingYouyi Online Technology Co., Ltd., and Xiaoyu Online (Beijing) Technology Co., Ltd., which are wholly-owned subsidiaries of Highly Information Industry Co., Ltd. The guarantee limits forthe mentioned three companies are RMB30 million, RMB40 million and RMB30 million respectively after adjustment. The Company has performed internal review procedures for the above-mentioned guarantee transfers. It's found that they did not violate the legal provisions on listed companies, and complied with the relevant requirements of the Announcement on ProvidingGuarantees for Subsidiaries in 2024 reviewed and approved at the 2023 Annual General Meeting held on May 24, 2024.
(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 itssubsidiary 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 RMB19.44518 billion. The joint guarantee has been filled in the “Company’s Guarantee forSubsidiaries” 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 RMB20.29 million.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
3. Entrusted Wealth Management
? Applicable □ Not applicable
Unit: RMB'0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Impairment allowance for unrecovered overdue amount of wealth management products |
| Bank’s wealth management product | Self-funded | 1,235,821.24 | 1,130,221.24 | 0 | 0 |
| Securities firm's wealth management product | Self-funded | 582,485.17 | 513,080.61 | 0 | 0 |
| Trust plan | Self-funded | 292,677.54 | 173,497.54 | 0 | 0 |
| Other | Self-funded | 196,039.42 | 96,038.58 | 0 | 0 |
| Total | 2,307,023.37 | 1,912,837.97 | 0 | 0 | |
The specific situation of high-risk entrusted financial management with a large single amount or low security, poor 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
4. Other Major Contracts
□ Applicable ? Not Applicable
The Company did not have any other major contracts that should be disclosed during the reporting period.
XIII. Other Significant Events
□ Applicable ? Not Applicable
There are no other significant events that need to be explained for the Reporting Period.XIV. Significant Events of Subsidiaries
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
| Before change | Increase/decrease in the Reporting Period (+/-) | After change | |||||||
| Shares | Percentage | New issues | Bonus shares | Shares converted from capital reserve | Others | Subtotal | Shares | Percentage | |
| I. Restricted Shares | 680,539,213 | 3.62% | 0 | 0 | 0 | 413,083 | 413,083 | 680,952,296 | 3.63% |
| 1. Shares held by state-owned legal entities | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by other domestic investors | 679,314,082 | 3.62% | 0 | 0 | 0 | 1,638,214 | 1,638,214 | 680,952,296 | 3.63% |
| Among which: Shares held by domestic legal entities | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic individuals | 679,314,082 | 3.62% | 0 | 0 | 0 | 1,638,214 | 1,638,214 | 680,952,296 | 3.63% |
| 3. Shares held by foreign investors | 1,225,131 | 0.007% | 0 | 0 | 0 | -1,225,131 | -1,225,131 | 0 | 0.00% |
| Among which: Shares held by foreign legal entities | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by foreign individuals | 1,225,131 | 0.007% | 0 | 0 | 0 | -1,225,131 | -1,225,131 | 0 | 0.00% |
| II. Non-restricted shares | 18,098,541,554 | 96.38% | 0 | 0 | 0 | -413,083 | -413,083 | 18,098,128,471 | 96.37% |
| 1. RMB-denominated ordinary shares | 18,098,541,554 | 96.38% | 0 | 0 | 0 | -413,083 | -413,083 | 18,098,128,471 | 96.37% |
| III. Total shares | 18,779,080,767 | 100.00% | 0 | 0 | 0 | 0 | 0 | 18,779,080,767 | 100.00% |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Reasons for changes in shares? Applicable □ Not applicable
1. On June 29, 2024, the Company disclosed the Voluntary Announcement on the Non-trading Transfer of Certain Shares of the Holdersunder the Employee Stock Ownership Plan. The Company has completed the second non-trading transfer under the 2021-2023Employee Stock Ownership Plan (Phase I) and the first non-trading transfer under the 2021-2023 Employee Stock Ownership Plan(Phase II). Among them, 3,234,162 shares were transferred to the current directors, supervisors and senior managers of the Companythrough non-trading transfer.
2. During the Reporting Period, locked-up shares held by senior management increased by 413,083 shares, as non-restricted sharesdecreased by the same amount.Approval of changes in shares
□ Applicable ? Not Applicable
Transfer of share ownership? Applicable □ Not applicableOn June 29, 2024, the Company disclosed the Voluntary Announcement on the Non-trading Transfer of Certain Shares of Holdersunder the Employee Stock Ownership Plan. The Company has completed the second non-trading transfer under the 2021-2023Employee Stock Ownership Plan (Phase I) and the first non-trading transfer under the 2021-2023 Employee Stock Ownership Plan(Phase II). Among them, 3,234,162 shares were transferred to the current directors, supervisors and senior managers of the Companythrough non-trading transfer, and 42,158,024 shares were transferred to other holders through non-trading transfer.Progress on any share repurchase? Applicable □ Not applicableDuring the Reporting Period, the Company repurchased a total of 117,993,100 shares of the Company through centralized biddingfrom the special securities account for repurchase from June 4, 2024 to June 7, 2024, accounting for 0.63% of the total share capital ofthe Company. The highest and lowest trading price were RMB4.49 per share and RMB4.26 per share, respectively, and the totalpayment approximated to RMB520 million (excluding transaction fees).Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable ?Not Applicable
Effects of changes in shares on the basic earnings per share, diluted earnings per share, net asset per share attributable to the Company'sordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively
□ Applicable ?Not Applicable
Other information that the Company considers necessary or is required by the securities regulatory authorities to be disclosed
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
□ Applicable ?Not Applicable
2. Changes in Restricted Shares
? Applicable □ Not applicable
Unit: Share
| Name of shareholder | Number of restricted shares at period-begin | Number of released restricted shares of the period | Number of increased restricted shares of the period | Number of restricted shares at period-end | Reason for restriction | Date of restriction release |
| Others | 680,539,213 | 0 | 413,083 | 680,952,296 | Locked-up shares of senior management | Not applicable |
| Total | 680,539,213 | 0 | 413,083 | 680,952,296 | -- | -- |
II. Issuance and Listing of Securities
? Applicable □ Not applicable
| Name of stocks and their derivative securities | Issue date | Issue price (or interest rate) | Issue quantity | Listing date | Aggregate number of shares permitted to be traded | Transaction closing date | Index to disclosed information | Date of disclosure |
| Stocks | ||||||||
| Not applicable | ||||||||
| Convertible corporate bonds, convertible corporate bonds traded separately, corporate bonds | ||||||||
| Corporate bonds (24TCLK2，148683) | April 9, 2024 | 2.69% | 15,000,000 | April 19, 2024 | 15,000,000 | Not applicable | Please refer to the website: http://www.cninfo.com.cn/ | April 8, 2024 |
| Corporate bonds (24TCLK1, 148600) | January 30, 2024 | 2.64% | 15,000,000 | February 7, 2024 | 15,000,000 | Not applicable | January 29, 2024 | |
| Other derivative securities | ||||||||
| Not applicable | ||||||||
Description of Securities Issuance during the Reporting PeriodPursuant to the approval of the China Securities Regulatory Commission under the registration number CSRC Permit [2022] No. 1561,the Company is authorized to issue up to RMB10 billion in corporate bonds to professional investors through a phased issuance.
(1) On January 30, 2024, The Company issued Sci-Tech Innovation Corporate Bonds (Digital Economy) Publicly Offered by TCLTechnology Group Corporation to Professional Investors in 2024 (Phase 1), with bond abbreviation of “24TCLK1” and bond code of“148600”, alongside an issuance scale of RMB1.5 billion and a coupon rate of 2.64%.
(2) On April 9, 2024, the Company issued Sci-Tech Innovation Corporate Bonds (Digital Economy) Publicly Offered by TCLTechnology Group Corporation to Professional Investors in 2024 (Phase 2), with bond abbreviation of “24TCLK2” and bond code of
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
“148683”, alongside an issuance scale of RMB1.5 billion and a coupon rate of 2.69%.
III. Total Number of Shareholders and Their Shareholdings
Unit: share
| Total number of ordinary shareholders by the end of the reporting period | 582,209 | Total number of preferred shareholders with resumed voting rights by the end of the reporting period | 0 | |||||
| Shareholdings of ordinary shareholders with more than 5% or the top 10 shareholders of ordinary shares (excluding the lending of shares under refinancing) | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Number of shares held at the period-end | Increase/decrease during the reporting period | Number of restricted ordinary shares held | Number of non-restricted ordinary shares held | Shares in pledge, marked or frozen | |
| Status | Number | |||||||
| Li Dongsheng | Domestic individual/Domestic general legal entity | 6.74% | 1,265,347,805 | 1,294,616 | 673,839,802 | 591,508,003 | ||
| Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | In pledge | 293,668,015 | ||||||
| Hong Kong Securities Clearing Company Ltd. | Foreign legal entity | 3.56% | 667,733,276 | -369,879,267 | 667,733,276 | |||
| Huizhou Investment Holding Co., Ltd. | Public legal entity | 3.35% | 629,663,094 | -187,790,730 | 629,663,094 | |||
| Wuhan Optics Valley Industrial Investment Co., Ltd. | Public legal entity | 2.41% | 452,866,342 | -79,136,674 | 452,866,342 | In pledge | 226,430,000 | |
| China Securities Finance Corporation Limited | Domestic general legal entity | 2.19% | 410,554,710 | - | 410,554,710 | |||
| Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No. 2 Zhixin Fund | Fund, wealth management product, etc. | 1.18% | 222,000,000 | -4,736,512 | 222,000,000 | |||
| Industrial and Commercial Bank of China - Huatai-Pinebridge CSI 300 ETF | Fund, wealth management product, etc. | 1.18% | 221,615,930 | 81,578,200 | 221,615,930 | |||
| Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF | Fund, wealth management product, etc. | 1.04% | 195,242,960 | -8,836,800 | 195,242,960 | |||
| China Foreign Economy and Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng | Fund, wealth management product, etc. | 0.88% | 166,000,000 | -2,599,830 | 166,000,000 | |||
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Hongyuan Collective Fund Trust Scheme | ||||
| Strategic investor or general legal entity becoming top-10 ordinary shareholders due to private placement of new shares | Not applicable | |||
| Note on the above shareholders’ associations or concerted actions | 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. Li Dongsheng holds 898,453,069 shares and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) holds 366,894,736 shares, representing 1,265,347,805 shares in total and becoming the largest shareholder of the Company. | |||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | Not applicable | |||
| Explanation on repurchase accounts among top 10 shareholders | Not applicable | |||
| Shareholdings of top 10 non-restricted ordinary shareholders (excluding the lending of shares under refinancing and locked-up shares held by senior management) | ||||
| Name of shareholder | Number of non-restricted ordinary shares held at the end of the reporting period | Type of shares | ||
| Type of shares | Quantity | |||
| Hong Kong Securities Clearing Company Ltd. | 667,733,276 | RMB-denominated ordinary shares | 667,733,276 | |
| Huizhou Investment Holding Co., Ltd. | 629,663,094 | RMB-denominated ordinary shares | 629,663,094 | |
| Li Dongsheng | 591,508,003 | RMB-denominated ordinary shares | 591,508,003 | |
| Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | ||||
| Wuhan Optics Valley Industrial Investment Co., Ltd. | 452,866,342 | RMB-denominated ordinary shares | 452,866,342 | |
| China Securities Finance Corporation Limited | 410,554,710 | RMB-denominated ordinary shares | 410,554,710 | |
| Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No. 2 Zhixin Fund | 222,000,000 | RMB-denominated ordinary shares | 222,000,000 | |
| Industrial and Commercial Bank of China - Huatai-Pinebridge CSI 300 ETF | 221,615,930 | RMB-denominated ordinary shares | 221,615,930 | |
| Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF | 195,242,960 | RMB-denominated ordinary shares | 195,242,960 | |
| China Foreign Economy and Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hongyuan Collective Fund Trust Scheme | 166,000,000 | RMB-denominated ordinary shares | 166,000,000 | |
| Related or acting-in-concert parties among top 10 non-restricted ordinary shareholders, as well as between top 10 non-restricted ordinary shareholders and top 10 ordinary shareholders | Among the top 10 shareholders with non-restricted shares, 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. Li Dongsheng holds 224,613,267 non-restricted shares and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) holds 366,894,736 non-restricted shares, representing 591,508,003 non-restricted shares in total and becoming the largest shareholder of the Company. | |||
| Explanation for the top 10 ordinary shareholders participating in securities margin trading | At the end of the Reporting Period, Wuhan Optics Valley Industrial Investment Co., Ltd., among the shareholders above, held certain shares of the Company through a credit security account. | |||
Participation of shareholders holding more than 5%, top 10 shareholders, and top 10 non-restricted shareholders in the lending of sharesunder the refinancing business? Applicable □ Not applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Unit: Share
| Participation of shareholders holding more than 5%, top 10 shareholders, and top 10 non-restricted shareholders in the lending of shares under the refinancing business | ||||||||
| Name of shareholder (full name) | Shares in the ordinary account and credit account at the beginning of the period | Shares lent under refinancing at the beginning of the period that have not been returned | Shares in the ordinary account and credit account at the end of the period | Shares lent under refinancing at the end of the period that have not been returned | ||||
| Total number | Proportion to total share capital | Total number | Proportion to total share capital | Total number | Proportion to total share capital | Total number | Proportion to total share capital | |
| Industrial and Commercial Bank of China - Huatai-Pinebridge CSI 300 ETF | 140,037,730 | 0.75% | 136,900 | 0.001% | 221,615,930 | 1.18% | 0 | 0% |
| Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF | 204,079,760 | 1.09% | 1,602,800 | 0.01% | 195,242,960 | 1.04% | 193,000 | 0.001% |
Change in top 10 shareholders and top 10 non-restricted shareholders due to securities lending/returning under refinancing as comparedto the previous period
□ Applicable ? Not Applicable
Indicate whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conductedany promissory repo during the Reporting Period.
□Yes ?No
No such cases in the Reporting Period.IV. Change in Shareholdings of Directors, Supervisors, and Senior Management
? Applicable □ Not applicable
| Name | Position | Position Status | Number of shares held at the beginning of the reporting period | Increase of shares during the reporting period | Decrease of shares during the reporting period | Number of shares held at the end of the reporting period | Number of restricted shares granted at the beginning of the reporting period | Number of restricted shares granted during the reporting period | Number of restricted shares granted at the end of the reporting period |
| Li Dongsheng | Chairman, CEO | Incumbent | 897,158,453 | 1,294,616 | - | 898,453,069 | - | - | - |
| Zhang Zuoteng | Vice Chairman of the Board | Incumbent | - | - | - | - | - | - | - |
| Lin Feng | Director | Incumbent | - | - | - | - | - | - | - |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
| Shen Haoping | Director, Senior Vice President | Incumbent | - | - | - | - | - | - | - |
| Zhao Jun | Director, Senior Vice President | Incumbent | 942,854 | 328,684 | - | 1,271,538 | - | - | - |
| Liao Qian | Director, Board Secretary and Senior Vice President | Incumbent | 1,289,075 | 437,544 | - | 1,726,619 | - | - | - |
| Jin Li | Independent director | Incumbent | - | - | - | - | - | - | - |
| Wan Liangyong | Independent director | Incumbent | - | - | - | - | - | - | - |
| Wang Lixiang | Independent director | Incumbent | - | - | - | - | - | - | - |
| Wu Zhiming | Chairman of the Supervisory Committee | Incumbent | - | - | - | - | |||
| Zhuang Weidong | Shareholder Representative Supervisor | Incumbent | - | - | - | - | - | - | |
| Zhu Wei | Employee Representative Supervisor | Incumbent | 10,000 | 97,704 | - | 107,704 | - | - | - |
| Li Jian | CFO | Incumbent | 968,621 | 607,321 | - | 1,575,942 | - | - | - |
| Yan Xiaolin | Senior Vice President, CTO | Incumbent | 2,342,265 | 468,293 | - | 2,810,558 | - | - | - |
| Liang Weihua | Former Vice Chairman of the Board | Former | - | - | - | - | - | - | - |
| Wang Cheng | Former Director | Former | 333,183 | 416,113 | - | 749,296 | - | - | - |
| Gan Yong | Former Independent Director | Former | - | - | - | - | - | - | - |
| Chen Shiyi | Former Independent Director | Former | - | - | - | - | - | - | - |
| Liu Xunci | Former Independent Director | Former | - | - | - | - | - | - | - |
| Zheng Tao | Former Chairman of the Supervisory Committee | Former | - | - | - | - | - | - | - |
| Qiu Haiyan | Former Shareholder Representative Supervisor | Former | - | - | - | - | - | - | - |
| Mao Tianxiang | Former Employee Representative Supervisor | Former | 566,575 | 177,354 | - | 743,929 | - | - | - |
| Total | -- | -- | 903,611,026 | 3,827,629 | - | 907,438,655 | - | - | - |
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Note: 1. The increase in the number of shares held by the Company's directors, supervisors, and senior management during theReporting Period was due to the non-trading transfer of shares corresponding to holders' shares under the 2021-2023 Employee StockOwnership Plan (Phase 1) and the 2021-2023 Employee Stock Ownership Plan (Phase 2) to employees' securities accounts. For details,please refer to the Company's Announcement on the Non-Trading Transfer of Certain Shares of the Holders under the Employee StockOwnership Plan published on the designated media on June 29, 2024.
2. The number of shares held by directors Zhang Zuoteng, Jin Li, Wang Lixiang and supervisors Wu Zhiming, Zhuang Weidong andZhu Wei at the beginning of the period was the number of shares held on the date of their appointment as directors or supervisors ofthe Company.
V. Change of the Controlling Shareholder or the Actual ControllerMr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) becamepersons acting in concert by signing the Agreement on Concerted Action, holding 1,265,347,805 shares in total andbecoming the largest shareholder of the Company.
Change of the controlling shareholder in the Reporting Period
□ Applicable ? Not Applicable
Change of the actual controller in the Reporting Period
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part VIII Preferred Shares
□ Applicable ? Not Applicable
During the reporting period, the Company did not have preferred shares.
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
Part IX Bonds? Applicable □ Not applicableI. Enterprise Bonds
□ Applicable ? Not Applicable
No enterprise bonds in the Reporting Period.II. Corporate Bonds? Applicable □ Not applicable
1. General Information on Corporate Bonds
Unit: RMB'0,000
| Bond name | Abbr. | Bond code | Date of issuance | Value date | Maturity | Outstanding balance | Coupon rate | Way of principal repayment and interest payment | Place of trading |
| Sci-Tech Innovation Corporate Bonds (Digital Economy) Publicly Offered by TCL Technology Group Corporation to Professional Investors in 2024 (Phase 2) | 24TCLK2 | 148683 | April 9, 2024 | April 11, 2024 | April 11, 2029 | 150,000 | 2.69% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| Sci-Tech Innovation Corporate Bonds (Digital Economy) Publicly Offered by TCL Technology Group Corporation to Professional Investors in 2024 (Phase 1) | 24TCLK1 | 148600 | January 30, 2024 | February 1, 2024 | February 1, 2026 | 150,000 | 2.64% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| Corporate Bonds Publicly Offered by TCL Corporation to Qualified Investors in 2019 (Phase 3) | 19TCL03 | 112983 | October 17, 2019 | October 21, 2019 | October 21, 2024 | 44,000 | 2.95% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| Corporate Bonds Publicly Offered by TCL Corporation to Qualified Investors in 2019 (Phase 2) | 19TCL02 | 112938 | July 19, 2019 | July 23, 2019 | July 23, 2024 | 100,000 | 3.05% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange |
| Investor eligibility | For qualified investors / for professional investors; not applicable for foreign bonds | ||||||||
| Applicable trading mechanism | Match to trade, click to trade, inquire to trade, bid to trade, negotiate to trade; not applicable for foreign bonds | ||||||||
| Risk of termination of listing and trading and countermeasures | No | ||||||||
Overdue bonds
□ Applicable ? Not Applicable
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
2. Triggering and implementation of issuer or investor option clauses and investor protection clauses
□ Applicable ? Not Applicable
3. Adjustments of credit rating results during the Reporting Period
□ Applicable ? Not Applicable
4. The implementation and changes of guarantees, debt repayment plans and other safeguard measuresregarding debt repayment during the Reporting Period, and their impact on the equity of bond investors
□ 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. | Bond code | Date of issuance | Value date | Maturity | Bonds balance | Coupon rate | Way of principal repayment and interest payment | Place of trading |
| 2023 Mid-Term Notes of TCL Technology Group Corporation (Phase 1) (Sci-Tech Innovation Notes) | 23TCL Group MTN001 (Sci-Tech Innovation Notes) | 102380151 | February 3, 2023 | February 7, 2023 | February 7, 2026 | 150,000 | 4.10% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2022 Mid-Term Notes of TCL Technology Group Corporation (Phase 3) (Sci-Tech Innovation Notes) | 22TCL Group MTN003 (Sci-Tech Innovation Notes) | 102281474 | July 4, 2022 | July 6, 2022 | July 6, 2025 | 200,000 | 3.45% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2022 Mid-Term Green Notes of TCL Technology Group Corporation (Phase 2) | 22TCL Group GN002 | 132280040 | April 25, 2022 | April 27, 2022 | April 27, 2025 | 150,000 | 3.30% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| 2022 Mid-Term Notes of TCL Technology Group Corporation (Phase 1) | 22TCL Group MTN001 | 102280089 | January 12, 2022 | January 14, 2022 | January 14, 2025 | 200,000 | 3.45% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| Investor eligibility | Mid-term notes are issued to institutional investors in the national interbank bond market (excluding those prohibited from purchasing by national laws and regulations) | ||||||||
| Applicable trading mechanism | Transaction inquiry, request for quotation and click to trade | ||||||||
| Risk of termination of listing and trading 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
Full Text of the 2024 Interim Report of TCL Technology Group Corporation
3. Adjustments of credit rating results during the Reporting Period
□ Applicable ? Not Applicable
4. The implementation and changes of guarantees, debt repayment plans and other safeguard measuresregarding 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. Key accounting data and financial indicators of the Company for the past two years as atthe end of the Reporting Period
Unit: RMB'0,000
| Item | End of the Reporting Period | December 31, 2023 | Change |
| Current ratio | 1.01 | 1.03 | -1.94% |
| Debt/asset ratio | 63.84% | 62.06% | 1.78% |
| Quick ratio | 0.71 | 0.75 | -5.33% |
| H1 2024 | H1 2023 | Change | |
| Net profits after deducting non-recurring gains and losses | -161,879 | 49,891 | -424.47% |
| Debt to EBITDA ratio | 6.97% | 6.82% | 0.15% |
| Interest coverage ratio | 0.73 | 1.70 | -57.06% |
| Cash coverage ratio | 5.79 | 4.76 | 21.64% |
| EBITDA coverage ratio | 6.43 | 6.01 | 6.99% |
| Debt repayment ratio | 100% | 100% | 0.00 |
| Interest payment ratio | 100% | 100% | 0.00 |
Section X Unaudited Financial Report
(For the period from January 1, 2024 to June 30, 2024)
I. Auditor’s Report
Whether the 2024 interim report has been audited or not?
□ Yes √ No
The Company’s 2024 interim financial report has not yet been audited.
II. Financial StatementsThe unit of the notes to the financial report is: RMB’000.
| Content | Page | ||
| Consolidated Balance Sheet | 1-2 | ||
| Consolidated Income Statement | 3 | ||
| Consolidated Cash Flow Statement | 4-5 | ||
| Consolidated Statement of Changes in Shareholders’ Equity | 6-7 | ||
| Balance Sheet of the Parent Company | 8-9 | ||
| Income Statement of the Parent Company | 10 | ||
| Cash Flow Statement of the Parent Company | 11-12 | ||
| Statement of Changes in Shareholder Equity of the Parent Company | 13-14 | ||
| Notes to Financial Statements | 15-169 |
TCL Technology Group CorporationConsolidated Balance Sheet
(RMB’000)
| Note V | June 30, 2024 | January 1, 2024 | ||
| Current assets | ||||
| Monetary assets | 1 | 19,587,500 | 21,924,271 | |
| Held-for-trading financial assets | 2 | 25,226,582 | 23,184,117 | |
| Derivative financial assets | 3 | 155,087 | 108,008 | |
| Notes receivable | 4 | 199,917 | 615,392 | |
| Accounts receivable | 5 | 23,116,435 | 22,003,651 | |
| Receivables financing | 6 | 618,962 | 954,410 | |
| Prepayments | 7 | 2,676,779 | 2,946,288 | |
| Other receivables | 8 | 4,400,197 | 5,706,855 | |
| Inventories | 9 | 20,181,927 | 18,481,755 | |
| Contract assets | 10 | 371,574 | 343,907 | |
| Held-for-sale assets | - | 162,416 | ||
| Non-current assets due within one year | 11 | 599,083 | 580,695 | |
| Other current assets | 12 | 7,547,622 | 5,286,534 | |
| Total current assets | 104,681,665 | 102,298,299 | ||
| Non-current assets | ||||
| Debt investments | 13 | 144,853 | 122,349 | |
| Long-term receivables | 14 | 698,831 | 720,281 | |
| Long-term equity investments | 15 | 24,908,240 | 25,431,271 | |
| Investments in other equity instruments | 16 | 387,255 | 386,648 | |
| Other non-current financial assets | 17 | 3,995,736 | 2,971,566 | |
| Investment property | 18 | 813,380 | 911,679 | |
| Fixed assets | 19 | 170,267,383 | 176,422,621 | |
| Construction in progress | 20 | 20,126,696 | 17,000,052 | |
| Right-of-use assets | 21 | 6,064,032 | 6,386,446 | |
| Intangible assets | 22 | 18,322,601 | 18,419,544 | |
| Development costs | 23 | 2,180,888 | 2,541,493 | |
| Goodwill | 24 | 10,516,742 | 10,516,742 | |
| Long-term deferred expenses | 25 | 2,355,213 | 3,402,689 | |
| Deferred income tax assets | 26 | 2,372,450 | 2,246,222 | |
| Other non-current assets | 27 | 14,497,575 | 13,081,184 | |
| Total non-current assets | 277,651,875 | 280,560,787 | ||
| Total assets | 382,333,540 | 382,859,086 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 Balance Sheet (Continued)
(RMB’000)
| Liabilities and shareholders' equity: | Note V | June 30, 2024 | January 1, 2024 | |
| Current liabilities | ||||
| Short-term borrowings | 28 | 11,844,635 | 8,473,582 | |
| Borrowings from the Central Bank | 29 | 809,468 | 995,010 | |
| Customer deposits and deposits from other banks and financial institutions | 30 | 366,470 | 270,929 | |
| Held-for-trading financial liabilities | 31 | 208,434 | 251,451 | |
| Derivative financial liabilities | 32 | 80,185 | 58,591 | |
| Notes payable | 33 | 6,014,274 | 5,610,802 | |
| Accounts payable | 34 | 28,415,307 | 29,402,493 | |
| Advances from customers | 35 | 857 | 678 | |
| Contract liabilities | 36 | 1,465,572 | 1,899,468 | |
| Employee compensation payable | 37 | 2,826,227 | 3,034,497 | |
| Taxes and levies payable | 38 | 897,148 | 861,342 | |
| Other payables | 39 | 22,206,210 | 22,171,402 | |
| Non-current liabilities due within one year | 40 | 27,177,946 | 24,631,659 | |
| Other current liabilities | 41 | 1,536,846 | 1,563,245 | |
| Total current liabilities | 103,849,579 | 99,225,149 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 42 | 120,304,465 | 117,662,209 | |
| Bonds payable | 43 | 8,627,636 | 9,113,848 | |
| Lease liabilities | 44 | 5,699,585 | 5,737,288 | |
| Long-term payables | 45 | 2,577,466 | 2,739,444 | |
| Long-term employee compensation payable | 37 | 23,531 | 29,645 | |
| Deferred income | 46 | 1,567,859 | 1,540,648 | |
| Deferred income tax liabilities | 26 | 1,257,440 | 1,427,487 | |
| Estimated liabilities | 47 | 189,789 | 117,395 | |
| Total non-current liabilities | 140,247,771 | 138,367,964 | ||
| Total liabilities | 244,097,350 | 237,593,113 | ||
| Share capital | 48 | 18,779,081 | 18,779,081 | |
| Capital reserves | 49 | 10,349,364 | 10,752,055 | |
| Less: Treasury share | 50 | 919,322 | 1,094,943 | |
| Other comprehensive income | 51 | (767,601) | (945,798) | |
| Surplus reserves | 52 | 3,874,006 | 3,874,006 | |
| Specific reserves | 53 | 15,003 | 11,343 | |
| General risk reserve | 54 | 8,934 | 8,934 | |
| Retained earnings | 55 | 21,030,075 | 21,537,188 | |
| Total equity attributable to shareholders of the parent company | 52,369,540 | 52,921,866 | ||
| Non-controlling interests | 85,866,650 | 92,344,107 | ||
| Total shareholders’ equity | 138,236,190 | 145,265,973 | ||
| Total liabilities and shareholders' equity | 382,333,540 | 382,859,086 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 Income Statement
(RMB’000)
| Note V | January - June 2024 | January - June 2023 | ||
| I. Total revenue | 80,303,409 | 85,190,189 | ||
| Including: Operating revenue | 56 | 80,223,737 | 85,148,726 | |
| Interest income | 57 | 79,672 | 41,463 | |
| Less: Operating cost | 56 | 70,384,382 | 74,267,599 | |
| Interest expenditures | 57 | 14,885 | 9,976 | |
| Taxes and levies | 58 | 500,128 | 391,897 | |
| Sales expenses | 59 | 1,135,573 | 1,206,698 | |
| Administrative expenses | 60 | 2,003,836 | 2,015,924 | |
| R&D expenses | 61 | 4,401,567 | 4,892,354 | |
| Financial expenses | 62 | 2,091,275 | 1,613,163 | |
| Including: Interest expenses | 2,472,976 | 2,325,785 | ||
| Interest income | 381,577 | 415,285 | ||
| Plus: Other income | 63 | 1,135,393 | 1,199,925 | |
| Return on investment | 64 | 421,758 | 2,313,775 | |
| Including: Return on investment in joint ventures and associates | (49,289) | 1,220,326 | ||
| Exchange gain | 57 | (116) | (295) | |
| Gain on changes in fair value | 65 | 132,946 | 452,401 | |
| Credit impairment loss | 66 | (7,269) | (45,502) | |
| Asset impairment loss | 67 | (2,059,648) | (2,358,956) | |
| Asset disposal income | 68 | 39,940 | (40,012) | |
| II. Operating profit | (565,233) | 2,313,914 | ||
| Plus: Non-operating income | 69 | 227,436 | 26,030 | |
| Less: Non-operating expenses | 70 | 78,140 | 49,160 | |
| III. Gross profit | (415,937) | 2,290,784 | ||
| Less: Income tax expenses | 71 | 52,212 | (99,799) | |
| IV. Net profits | (468,149) | 2,390,583 | ||
| (I) Classification by business continuity | ||||
| 1. Net profits from continuing operations | (468,149) | 2,390,583 | ||
| 2. Net profits from discontinued operations | - | - | ||
| (II) Classification by ownership | ||||
| 1. Net profits attributable to shareholders of the Company | 995,213 | 340,493 | ||
| 2. Net profits attributable to non-controlling interests | (1,463,362) | 2,050,090 | ||
| V. Other comprehensive income, net of tax | 51 | 174,996 | (451,010) | |
| (I) Other comprehensive income that cannot be subsequently reclassified into profit or loss | 122,012 | (19,415) | ||
| (II) Other comprehensive income that may subsequently be reclassified into profit or loss upon satisfaction of prescribed conditions | 52,984 | (431,595) | ||
| VI. Total comprehensive income | (293,153) | 1,939,573 | ||
| Total comprehensive income attributable to the shareholders of the parent company | 1,173,410 | (23,753) | ||
| Total comprehensive income attributable to non-controlling interests | (1,466,563) | 1,963,326 | ||
| VII. Earnings per share | 72 | |||
| (I) Basic earnings per share (RMB yuan) | 0.0535 | 0.0184 | ||
| (II) Diluted earnings per share (RMB yuan) | 0.0530 | 0.0181 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the accounting department: | Jing Chunmei |
The attached notes to the financial statements form an integral part of the financial statements.
TCL Technology Group Corporation
Consolidated Cash Flow Statement
(RMB’000)
| Note V | January - June 2024 | January - June 2023 | ||
| I. Cash flow from operating activities: | ||||
| Proceeds from sale of commodities and rendering of services | 79,229,089 | 61,503,988 | ||
| Net increase/(decrease) in deposits from customers, banks and other financial institutions | 95,348 | (40,289) | ||
| Net increase/(decrease) in borrowings from the Central Bank | (186,534) | (50,474) | ||
| Cash received from interest, handling charge and commission | 63,657 | 41,463 | ||
| Tax and levy rebates | 2,678,607 | 4,842,869 | ||
| Cash generated from other operating activities | 73 | 3,396,202 | 5,588,817 |
| Sub-total of cash generated from operating activities | 85,276,369 | 71,886,374 |
| Cash paid for commodities and services | (58,121,474) | (48,233,115) | ||
| Net (increase)/decrease in loans and advances to customers | 143,975 | 27,311 | ||
| Net (increase)/decrease in deposits in the central bank and in interbank loans granted | (51,978) | 54,883 | ||
| Cash paid to and for employees | (6,676,204) | (6,043,453) | ||
| Taxes and levies paid | (2,603,937) | (2,226,234) | ||
| Cash used in other operating activities | 74 | (5,334,029) | (5,049,598) | |
| Sub-total of cash used in operating activities | (72,643,647) | (61,470,206) | ||
| Net cash generated from operating activities | 79 | 12,632,722 | 10,416,168 | |
| II. Cash flow generated from investing activities: | ||||
| Proceeds from disinvestments | 35,100,021 | 26,691,189 | ||
| Proceeds from return on investments | 1,844,013 | 1,202,097 | ||
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | 316,506 | 39,062 | ||
| Net proceeds from disposal of subsidiaries and other business units | 79 | - | - | |
| Cash generated from other investing activities | 75 | 352,014 | 1,640,766 | |
| Sub-total of cash generated from investment activities | 37,612,554 | 29,573,114 | ||
| Cash paid for the acquisition and construction of fixed assets, intangible assets and other long-term assets | (12,401,270) | (16,465,349) | ||
| Cash paid for investments | (42,087,664) | (31,830,252) | ||
| Net payments for acquiring subsidiaries and other business units | 79 | (4,284) | (342,527) | |
| Cash used in other investing activities | 76 | (563,835) | (475,943) | |
| Subtotal of cash used in investing activities | (55,057,053) | (49,114,071) | ||
| Net cash used in investing activities | (17,444,499) | (19,540,957) |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 V | January - June 2024 | January - June 2023 | ||
| III. Cash flow generated from financing activities: | ||||
| Cash received from capital contributions | 2,000 | 1,047,506 | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | 2,000 | 1,047,506 | ||
| Cash received from raising borrowings | 38,491,832 | 41,697,801 | ||
| Cash received from bonds issue | 3,000,000 | 1,500,000 | ||
| Cash generated from other financing activities | 77 | 422,120 | 1,895,912 | |
| Sub-total of cash generated from financing activities | 41,915,952 | 46,141,219 | ||
| Cash paid for debt repayment | (32,904,575) | (33,255,720) | ||
| Cash paid for distribution of dividends and profits or the repayment of interests | (4,383,419) | (3,471,466) | ||
| Including: Dividends and profits paid by subsidiaries to minority shareholders | (71,763) | (325,152) | ||
| Cash used in other financing activities | 78 | (1,930,490) | (6,312,578) | |
| Subtotal of cash used in financing activities | (39,218,484) | (43,039,764) | ||
| Net cash generated from financing activities | 2,697,468 | 3,101,455 | ||
| IV. Effect of exchange rate changes on cash and cash equivalents | 41,042 | 91,958 | ||
| V. Net increase in cash and cash equivalents | (2,073,267) | (5,931,376) | ||
| Add: Opening balance of cash and cash equivalents | 19,996,815 | 33,675,624 | ||
| VI. Ending balance of cash and cash equivalents | 79 | 17,923,548 | 27,744,248 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 Statement of Changes in Shareholders’ Equity (Continued)
(RMB’000)
| January - June 2024 | |||||
| Equity attributable to shareholders of the parent company | |||||
| Share capital | Other equity instruments | Capital reserves | Treasury share | Special Reserves | Other comprehensive income | Surplus reserves | General risk reserve | Undistributed profit | Non-controlling interests | Shareholders' equity Total | |||||||||||
| I. Balance at the end of the prior year | 18,779,081 | - | 10,752,055 | (1,094,943) | 11,343 | (945,798) | 3,874,006 | 8,934 | 21,537,188 | 92,344,107 | 145,265,973 | ||||||||||
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - |
II. Balance at the beginning of current period
| II. Balance at the beginning of current period | 18,779,081 | - | 10,752,055 | (1,094,943) | 11,343 | (945,798) | 3,874,006 | 8,934 | 21,537,188 | 92,344,107 | 145,265,973 | ||||||||||
| III. Movement of current period | - | - | (402,691) | 175,621 | 3,660 | 178,197 | - | - | (507,113) | (6,477,457) | (7,029,783) | ||||||||||
| (I) Total comprehensive income | - | - | - | - | - | 178,197 | - | - | 995,213 | (1,466,563) | (293,153) | ||||||||||
| (II) Capital contributed and reduced by shareholders | - | - | (392,181) | 175,621 | - | - | - | - | - | (4,208,043) | (4,424,603) | ||||||||||
| 1. Capital contributed by shareholders | - | - | - | - | - | - | - | - | - | (3,878,546) | (3,878,546) | ||||||||||
| 2. Share-based payments included in owners' equity | - | - | 96,276 | 696,104 | - | - | - | - | - | 109,652 | 902,032 | ||||||||||
| 3. Amount of bond issuance included in owners' equity | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| 4. Others | - | - | (488,457) | (520,483) | - | - | - | - | (439,149) | (1,448,089) | |||||||||||
| (III) Profit distribution | - | - | - | - | - | - | - | - | (1,502,326) | (802,851) | (2,305,177) | ||||||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | - | - | - | - | |||||||||||
| 2. Appropriation of general risk reserve | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| 3. Appropriation to shareholders | - | - | - | - | - | - | - | - | (1,502,326) | (802,851) | (2,305,177) | ||||||||||
| 4. Others | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| (IV) Internal transfer of owner's equity | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| 1. Capitalization of capital reserves into capital (or share capital) | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| (V) Specific reserves | - | - | - | - | 3,660 | - | - | - | - | - | 3,660 | ||||||||||
| 1. Accrued in current period | - | - | - | - | 17,674 | - | - | - | - | - | 17,674 | ||||||||||
| 2. Used in current period | - | - | - | - | (14,014) | - | - | - | - | - | (14,014) | ||||||||||
| (VI) Others | - | - | (10,510) | - | - | - | - | - | - | - | (10,510) |
IV. Balance as at the end of current period
| IV. Balance as at the end of current period | 18,779,081 | - | 10,349,364 | (919,322) | 15,003 | (767,601) | 3,874,006 | 8,934 | 21,030,075 | 85,866,650 | 138,236,190 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 Statement of Changes in Shareholders’ Equity (Continued)
(RMB’000)
| January - June 2023 | |||||||||||||||||||||
| Equity attributable to shareholders of the parent company | |||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury share | Special Reserves | Other comprehensive income | Surplus reserves | General risk reserve | Undistributed profit | Non-controlling interests | Shareholders' equity Total | |||||||||||
| I. Balance at the end of the prior year | 17,071,892 | - | 12,522,792 | (1,314,581) | 2,301 | (811,822) | 3,712,273 | 8,934 | 19,486,730 | 81,460,234 | 132,138,753 | ||||||||||
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| II. Balance at the beginning of current period | 17,071,892 | - | 12,522,792 | (1,314,581) | 2,301 | (811,822) | 3,712,273 | 8,934 | 19,486,730 | 81,460,234 | 132,138,753 | ||||||||||
III. Movement of current period
| III. Movement of current period | 1,707,189 | - | (2,097,784) | 195,545 | 4,490 | (364,246) | - | - | 340,493 | 7,708,866 | 7,494,553 | ||||||||||
| (I) Total comprehensive income | - | - | - | - | - | (364,246) | - | - | 340,493 | 1,963,326 | 1,939,573 | ||||||||||
| (II) Capital contributed and reduced by shareholders | - | - | (426,700) | 219,638 | - | - | - | - | - | 6,011,113 | 5,804,051 | ||||||||||
| 1. Capital contributed by shareholders | - | - | - | - | - | - | - | - | - | 6,657,075 | 6,657,075 | ||||||||||
| 2. Share-based payments included in owners' equity | - | - | 20,868 | 466,809 | - | - | - | - | - | - | 487,677 | ||||||||||
| 3. Amount of bond issuance included in owners' equity | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| 4. Others | - | - | (447,568) | (247,171) | - | - | - | - | - | (645,962) | (1,340,701) | ||||||||||
| (III) Profit distribution | - | - | - | - | - | - | - | - | (315,559) | (315,559) | |||||||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | - | - | - | - | - | ||||||||||
| 2. Appropriation of general risk reserve | - | - | - | - | - | - | - | - | - | 34,588 | 34,588 | ||||||||||
| 3. Appropriation to shareholders | - | - | - | - | - | - | - | - | - | (325,152) | (325,152) | ||||||||||
| 4. Others | - | - | - | - | - | - | - | - | - | (24,995) | (24,995) | ||||||||||
| (IV) Internal transfer of owner's equity | 1,707,189 | - | (1,683,096) | (24,093) | - | - | - | - | - | - | - | ||||||||||
| 1. Capitalization of capital reserves into capital (or share capital) | 1,707,189 | - | (1,683,096) | (24,093) | - | - | - | - | - | - | - | ||||||||||
| (V) Specific reserves | - | - | - | - | 4,490 | - | - | - | - | - | 4,490 | ||||||||||
| 1. Appropriation in current period | - | - | - | - | 16,191 | - | - | - | - | - | 16,191 | ||||||||||
| 2. Used in current period | - | - | - | - | (11,701) | - | - | - | - | - | (11,701) | ||||||||||
| (VI) Others | - | - | 12,012 | - | - | - | - | - | - | 49,986 | 61,998 | ||||||||||
| IV. Balance as at the end of current period | 18,779,081 | - | 10,425,008 | (1,119,036) | 6,791 | (1,176,068) | 3,712,273 | 8,934 | 19,827,223 | 89,169,100 | 139,633,306 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the financial department: | 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 XVII | June 30, 2024 | January 1, 2024 | |
| Current assets | ||||
| Monetary assets | 2,698,582 | 2,646,890 | ||
| Held-for-trading financial assets | 17,335,697 | 14,178,884 | ||
| Derivative financial assets | 66 | 66 | ||
| Accounts receivable | 1 | 191,593 | 350,788 | |
| Prepayments | 17,708 | 9,241 | ||
| Other receivables | 2 | 8,893,299 | 19,614,272 | |
| Inventories | - | - | ||
| Other current assets | 31,068 | 1,629 | ||
| Total current assets | 29,168,013 | 36,801,770 | ||
| Non-current assets | ||||
| Long-term receivables | - | - | ||
| Long-term equity investments | 3 | 80,261,168 | 79,664,992 | |
| Other non-current financial assets | 4 | 1,046,615 | 644,300 | |
| Investment property | 75,532 | 77,364 | ||
| Fixed assets | 31,238 | 34,806 | ||
| Construction in progress | - | - | ||
| Right-of-use assets | 430,132 | 435,915 | ||
| Intangible assets | 89,711 | 96,319 | ||
| Long-term deferred expenses | 30,004 | 33,005 | ||
| Deferred income tax assets | 7 | 7 | ||
| Other non-current assets | 1,500,000 | - | ||
| Total non-current assets | 83,464,407 | 80,986,708 | ||
| Total assets | 112,632,420 | 117,788,478 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationBalance Sheet of the Parent Company (Continued)
(RMB’000)
| Liabilities and shareholders' equity: | Note XVII | June 30, 2024 | January 1, 2024 | |
| Current liabilities | ||||
| Short-term borrowings | 2,402,033 | 2,124,045 | ||
| Accounts payable | 93,742 | 202,691 | ||
| Contract liabilities | 3,987 | 6,750 | ||
| Employee compensation payable | 163,871 | 184,320 | ||
| Taxes and levies payable | 7,115 | 12,415 | ||
| Other payables | 21,211,108 | 26,818,710 | ||
| Non-current liabilities due within one year | 10,864,418 | 6,167,442 | ||
| Other current liabilities | 9,164 | 3,656 | ||
| Total current liabilities | 34,755,438 | 35,520,029 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 16,584,755 | 19,963,555 | ||
| Bonds payable | 6,491,666 | 6,992,012 | ||
| Lease liabilities | 18,636 | 20,816 | ||
| Long-term employee compensation payable | 20,101 | 26,215 | ||
| Deferred income | 53,147 | 53,147 | ||
| Total non-current liabilities | 23,168,305 | 27,055,745 | ||
| Total liabilities | 57,923,743 | 62,575,774 | ||
| Share capital | 18,779,081 | 18,779,081 | ||
| Capital reserves | 16,190,416 | 16,127,030 | ||
| Less: Treasury share | 919,322 | 1,094,943 | ||
| Other comprehensive income | 1,239 | (142,055) | ||
| Surplus reserves | 3,671,942 | 3,671,942 | ||
| Retained earnings | 16,985,321 | 17,871,649 | ||
| Total shareholders’ equity | 54,708,677 | 55,212,704 | ||
| Total liabilities and shareholders' equity | 112,632,420 | 117,788,478 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationIncome Statement of the Company
(RMB’000)
| Note XVII | January - June 2024 | January - June 2023 | ||
| I. Operating revenue | 5 | 699,303 | 736,414 | |
| Less: Operating cost | 5 | 449,606 | 504,204 | |
| Taxes and levies | 4,191 | 8,793 | ||
| Sales expenses | 18,060 | 17,908 | ||
| Administrative expenses | 164,415 | 165,184 | ||
| R&D expenses | 51,723 | 22,282 | ||
| Financial expenses | 500,159 | 390,668 | ||
| Including: Interest expenses | 777,950 | 807,654 | ||
| Interest income | 194,975 | 321,244 | ||
| Plus: Other income | 1,179 | 4,995 | ||
| Return on investment | 6 | 895,659 | 1,788,747 | |
| Of which: Investment income from joint ventures and associates | 6 | 505,600 | 682,026 | |
| Gain on changes in fair value | 211,802 | 117,382 | ||
| Credit impairment loss | (3,811) | 10 | ||
| Asset disposal income | 11 | 1,093 | ||
| II. Operating profit | 615,989 | 1,539,602 | ||
| Plus: Non-operating income | 18 | 15 | ||
| Less: Non-operating expenses | 9 | 6,321 | ||
| III. Gross profit | 615,998 | 1,533,296 | ||
| Less: Income tax expenses | - | - | ||
| IV. Net profits | 615,998 | 1,533,296 | ||
| V. Other comprehensive income | 143,295 | 32,333 | ||
| VI. Total comprehensive income | 759,293 | 1,565,629 | ||
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationCash Flow Statement of the Company
(RMB’000)
| Note XVII | January - June 2024 | January - June 2023 | ||
| I. Cash flow from operating activities: | ||||
| Proceeds from sale of commodities and rendering of services | 805,134 | 687,718 | ||
| Tax and levy rebates | 1,427 | 1 | ||
| Cash generated from other operating activities | 5,677,470 | 420,249 | ||
| Sub-total of cash generated from operating activities | 6,484,031 | 1,107,968 | ||
| Cash paid for commodities and services | (505,721) | (397,613) | ||
| Cash paid to and for employees | (84,865) | (114,193) | ||
| Taxes and levies paid | (61,246) | (77,503) | ||
| Cash used in other operating activities | (322,436) | (5,065,900) | ||
| Sub-total of cash used in operating activities | (974,268) | (5,655,209) | ||
| Net cash generated from operating activities | 7 | 5,509,763 | (4,547,241) | |
| II. Cash flow from investing activities: | ||||
| Proceeds from disinvestments | 17,413,365 | 8,180,269 | ||
| Proceeds from return on investments | 1,327,458 | 1,131,472 | ||
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | - | - | ||
| Sub-total of cash generated from investment activities | 18,740,823 | 9,311,741 | ||
| Cash paid for the acquisition and construction of fixed assets, intangible assets and other long-term assets | (1,146) | (6,631) | ||
| Cash paid for investments | (22,881,623) | (12,791,025) | ||
| Cash used in other investing activities | - | - | ||
| Subtotal of cash used in investing activities | (22,882,769) | (12,797,656) | ||
| Net cash used in investing activities | (4,141,946) | (3,485,915) |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationCash Flow Statement of the Company (Continued)
(RMB’000)
| Note XVII | January - June 2024 | January - June 2023 | ||
| III. Cash flow generated from financing activities: | ||||
| Cash received from capital contributions | - | - | ||
| Cash received from raising borrowings | 8,630,000 | 11,780,000 | ||
| Cash received from bonds issue | 3,000,000 | 1,500,000 | ||
| Cash generated from other financing activities | 425,625 | 54,267 | ||
| Sub-total of cash generated from financing activities | 12,055,625 | 13,334,267 | ||
| Cash paid for debt repayment | (10,397,600) | (9,203,619) | ||
| Cash paid for distribution of dividends and profits or repayment of interests | (2,178,628) | (715,827) | ||
| Cash used in other financing activities | (812,165) | (269,708) | ||
| Subtotal of cash used in financing activities | (13,388,393) | (10,189,154) | ||
| Net cash generated from financing activities | (1,332,768) | 3,145,113 | ||
| IV. Effect of exchange rate changes on cash and cash equivalents | 293 | (53,755) | ||
| V. Net increase in cash and cash equivalents | 35,342 | (4,941,798) | ||
| Add: Opening balance of cash and cash equivalents | 2,642,115 | 17,570,270 | ||
| VI. Ending balance of cash and cash equivalents | 8 | 2,677,457 | 12,628,472 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationStatement of Changes in Shareholders’ Equity of the Company
(RMB’000)
| January - June 2024 | |||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury share | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | ||||||||||||
| I. Balance at the end of the prior year | 18,779,081 | - | 16,127,030 | (1,094,943) | (142,055) | 3,671,942 | 17,871,649 | 55,212,704 | |||||||||||
| Add: Change in accounting policies | - | - | - | - | - | - | - | - | |||||||||||
| II. Balance at the beginning of current period | 18,779,081 | - | 16,127,030 | (1,094,943) | (142,055) | 3,671,942 | 17,871,649 | 55,212,704 | |||||||||||
| III. Movement of current period | - | - | 63,386 | 175,621 | 143,294 | - | (886,328) | (504,027) | |||||||||||
| (I) Total comprehensive income | - | - | - | - | 143,294 | - | 615,998 | 759,292 | |||||||||||
| (II) Capital contributed and reduced by shareholders | - | - | 63,406 | 175,621 | - | - | - | 239,027 | |||||||||||
| 1. Capital contributed by owners | - | - | - | - | - | - | - | - | |||||||||||
| 2. Capital contributed by holders of other equity instruments | - | - | - | - | - | - | - | - | |||||||||||
| 3. Share-based payments included in owners' equity | - | - | 63,406 | 696,104 | - | - | - | 759,510 | |||||||||||
| 4. Amount of bond issue included in owners' equity | - | - | - | - | - | - | - | - | |||||||||||
| 5. Others | - | - | - | (520,483) | - | - | - | (520,483) | |||||||||||
| (III) Profit distribution | - | - | - | - | - | - | (1,502,326) | (1,502,326) | |||||||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | - | - | |||||||||||
| 2. Appropriation to shareholders | - | - | - | - | - | - | (1,502,326) | (1,502,326) | |||||||||||
| 3. Others | - | - | - | - | - | - | - | - | |||||||||||
| (IV) Internal transfer of owner's equity | - | - | - | - | - | - | - | - | |||||||||||
| 1. Capitalization of capital reserves into capital (or share capital) | - | - | - | - | - | - | - | - | |||||||||||
| (V) Others | - | - | (20) | - | - | - | - | (20) | |||||||||||
| IV. Balance as at the end of current period | 18,779,081 | - | 16,190,416 | (919,322) | 1,239 | 3,671,942 | 16,985,321 | 54,708,677 | |||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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 CorporationStatement of Changes in Shareholder Equity of the Company (Continued)
(RMB’000)
| January - June 2023 | |||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury share | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | ||||||||||||
| I. Balance at the end of the prior year | 17,071,892 | - | 17,715,533 | (1,314,581) | (128,195) | 3,510,209 | 16,416,054 | 53,270,912 | |||||||||||
| Add: Change in accounting policies | - | - | - | - | - | - | - | - | |||||||||||
| II. Balance at the beginning of current period | 17,071,892 | - | 17,715,533 | (1,314,581) | (128,195) | 3,510,209 | 16,416,054 | 53,270,912 | |||||||||||
| III. Movement of current period | 1,707,189 | - | (1,685,569) | 195,545 | 32,332 | - | 1,533,297 | 1,782,794 | |||||||||||
| (I) Total comprehensive income | - | - | - | - | 32,332 | - | 1,533,297 | 1,565,629 | |||||||||||
| (II) Capital contributed and reduced by shareholders | - | - | 17,836 | 219,638 | - | - | - | 237,474 | |||||||||||
| 1. Capital contributed by owners | - | - | - | - | - | - | - | - | |||||||||||
| 2. Capital contributed by holders of other equity instruments | - | - | - | - | - | - | - | - | |||||||||||
| 3. Share-based payments included in owners' equity | - | - | 17,836 | 466,809 | - | - | - | 484,645 | |||||||||||
| 4. Amount of bond issue included in owners' equity | - | - | - | - | - | - | - | - | |||||||||||
| 5. Others | - | - | - | (247,171) | - | - | - | (247,171) | |||||||||||
| (III) Profit distribution | - | - | - | - | - | - | - | - | |||||||||||
| 1. Appropriation of surplus reserves | - | - | - | - | - | - | - | - | |||||||||||
| 2. Appropriation to shareholders | - | - | - | - | - | - | - | - | |||||||||||
| 3. Others | - | - | - | - | - | - | - | - | |||||||||||
| (IV) Internal transfer of owner's equity | 1,707,189 | - | (1,683,096) | (24,093) | - | - | - | - | |||||||||||
| 1. Capitalization of capital reserves into capital (or share capital) | 1,707,189 | - | (1,683,096) | (24,093) | - | - | - | - | |||||||||||
| (V) Others | - | - | (20,308) | - | - | - | - | (20,308) | |||||||||||
| IV. Balance as at the end of current period | 18,779,081 | - | 16,029,964 | (1,119,036) | (95,863) | 3,510,209 | 17,949,351 | 55,053,706 | |||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial 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.
I General information
| TCL Technology Group Corporation (hereinafter referred to as "the Company") is a limited liability company established in Huizhou on July 17, 1997. It was changed to a limited liability company as a whole in 2002 and was listed on the Shenzhen Stock Exchange in January 2004. After years of new share placements, non-public reissuances, conversion into share capital, exercise of options and repurchase and cancellation of shares, etc., the registered capital and share capital of the Company were RMB 18,779,080,767 as at June 30, 2024. The main business structure of the Company and its subsidiaries consists of display, new energy photovoltaic and other silicon materials, industrial finance and other businesses. The relevant information 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 August 26, 2024.
II Scope of consolidated financial statements
| As at the end of the Reporting Period, for subsidiaries included in the consolidated financial statements, please refer to Note VIII, 1, (1) "Breakdown of important subsidiaries". For the changes to the scope of the consolidated financial statements of the Reporting Period, see Note VII. |
III Significant accounting policies and accounting estimates
1 Basis for the preparation of financial statements
| The preparation of financial statements of the Company is based on the actual transactions and events in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" published by the Ministry of Finance and specific corporate accounting standards, application guidelines for corporate accounting standards, corporate accounting standards interpretations and other relevant regulations (hereinafter collectively referred to as "corporate accounting standards") for confirmation and measurement, combining the provisions of "Regulations on Information Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports" (revised in 2023) published by CSRC. |
2 Going concern basis
| The Company has evaluated the ability to continue as a going concern for 12 months from the end of the Reporting Period and has not identified any issues or circumstances that result in significant doubts about its ability to continue as a going concern. Therefore, the financial statements have been prepared on a going concern basis. |
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 onrelevant rules. |
4 Statement of compliance with corporate accounting standards
| The financial statements are in compliance with the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the financial position, operating results, cash flow and other relevant information of the Company during the Reporting Period. |
5 Accounting period
The Company adopts the calendar year as an accounting period, and its fiscal year is from January1 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 for processing 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 liquidity classification of assets and liabilities. |
7 Functional currency for bookkeeping
| The Company uses RMB as its functional currency. Its overseas subsidiaries use the currencies of the main economic environment in which they operate as their respective functional currencies and their financial statements are converted into RMB and presented in RMB thousands unless otherwise specified. |
| III | Significant accounting policies and accounting estimates (continued) |
8 Method and selection basis for determining importance criteria
| Item | Importance criteria |
| The recovery, reversal and actual write-off of bad debt provisions for important receivables with bad debt provisions accrued on an individual basis | The amount of an individual item is greater than RMB 50 million. |
| Important construction in progress | The ending carrying amount of an individual item exceeds RMB 10 billion. |
| Important non-wholly-owned subsidiaries | The total asset of non-wholly-owned subsidiaries exceeds 10% of that of the Group or the total revenue of non-wholly-owned subsidiaries exceeds 10% of that of the Group. |
| Important joint ventures or associates | The carrying amount of long-term equity investments in a single investee exceeds 5% of the total asset of the Group. |
| Important prepayments, contract liabilities, accounts payable and other payables are aged for more than 1 year | The amount of an individual item exceeds 0.5% of the total asset of the Group. |
| Important capitalized research and development projects | The cumulative expenditure of an individual project exceeds 0.5% of the total asset of the Group. |
| III | Significant accounting policies and accounting estimates (continued) |
9 Accounting treatments for business combinations involving enterprises under and not undercommon control
| (1) | When the terms, conditions and economic influence of transactions in the process of a step-by-step combination conform to one or more of the following, accounting for multiple transactions is treated as a package transaction: |
| (a) | These transactions are made simultaneously or with consideration of influence on each other; |
| (b) | These transactions can only achieve a complete business outcome when they are accounted for collectively; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transactions; |
| (d) | A transaction is uneconomical individually, but is economical when considered collectively with other transactions. |
| (2) | Business combinations involving enterprises under common control |
| A combination of enterprises that are ultimately controlled by the same party or parties before and after the combination on a non-temporary basis constitutes a business combination under common control. | |
| Assets and liabilities acquired by the Company in business combination are measured at the carrying amounts of assets and liabilities of the acquired party in the consolidated financial statements of the ultimate controlling party as at the date of combination (including the goodwill resulting from the acquisition of the acquired party by the ultimate controlling party). The difference between the carrying amount of net assets acquired in the combination and that of the consideration paid for the combination (or the total par value of shares issued) is used to adjust the share capital premium in the 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 to confirm estimated liabilities or assets, the difference between the amounts of the estimated liabilities or assets and the settlement amount of subsequent contingent consideration is used to adjust the capital reserve (capital premium or share capital premium), and when the capital reserve is insufficient, it is used to adjust the retained earnings. | |
| For a business combination that is ultimately realized through multiple transactions, if it is a package transaction, each transaction is treated as a transaction that acquires control; if it is not a package transaction, on the date of acquisition of control, the difference between the initial cost of long-term equity investments and the carrying amount of long-term equity investments before the combination plus the carrying amount of the newly paid considerations on the date of combination is used to adjust the capital reserve; and when the capital reserve is insufficient for offset, it is used to adjust the retained earnings. For equity investments held prior to the date of combination, no accounting treatment is carried out for other comprehensive gains recognized by equity accounting or financial instrument confirmation and measurement standards, and up to the disposal of the investment, the accounting treatment shall be based on the same basis as the direct disposal of the assets or liabilities of the invested entity; other changes in the owner’s equity other than net profits or loss, other comprehensive income or profit distribution of net assets of the invested company recognized as equity are not subject to accounting, and will be transferred to the current profit and loss until disposal of the investment. | |
| (3) | Business combination not under common control |
| A combination of enterprises that are not ultimately controlled by the same party or parties before and after the combination constitutes a business combination not under common control. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 9 | Accounting treatments for business combinations involving enterprises under and not under common control (continued) |
| (3) | Business combination not under common control (continued) |
| Assets paid and liabilities incurred or assumed by the Company as a consideration for the business combination are measured at fair value on the date of purchase, and the difference between the fair value and their carrying amount is recognized in current profits and losses. | |
| The difference between the higher combination cost and lower share in the fair value of net identifiable assets of the acquired party gained in the combination is recognized as goodwill. If the combination cost is lower than the share in the fair value of net identifiable assets of the acquired party gained in the combination, the fair values of the identifiable assets, liabilities and contingent liabilities of the acquired party gained and the measurement of the combination cost are first reviewed; and if it is reviewed that the combination cost is lower than the share in the fair value of net identifiable assets of the acquired party gained in the combination, the difference between the lower combination cost and higher share in the fair value of net identifiable assets of the acquired party gained in the combination is included in current profits and losses. | |
| In the case where a business combination not under common control is realized through multiple exchanges and transactions, if it is a package transaction, each transaction will be accounted for as a transaction for acquiring control; in the case it is not a package transaction, if the equity investment held before the date of combination is accounted for using equity method, the sum of the carrying amount of equity investments of the acquired party held before the date of acquisition, plus the new investment cost on the date of acquisition will be recognized as the initial cost of the investment; the remaining comprehensive income recognized in equity investments using equity method before the date of acquisition will be recorded, when the investment is disposed of on the same basis as those the investee adopted directly to dispose of the relevant assets or liabilities. If the equity investment held before the date of combination is accounted for by financial instrument recognition and measurement criteria, the sum of the fair value of equity investment on the date of combination plus the new investment cost is taken as the initial investment cost on the date of combination. The difference between the fair value and the carrying amount of the original equity, and the accumulated fair value changes originally included in other comprehensive income should be transferred to return on investment in the current period which matches the combination date. | |
| (4) | Expenses incurred from combination |
| The agency fees paid for audits, legal services, assessments and consultations and other directly related expenses incurred in the business combination are recognized in profit or loss during the period in which they are incurred. The transaction costs for the issuance of equity securities for the business combination that may be directly attributed to equity transactions can be deducted from equity; | |
| 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 by participating in the relevant activities of the investee, and having the ability to use the power over the investee to influence the amount of returns. | |
| The Company judges whether it controls the investee based on comprehensive consideration of all relevant facts and circumstances. Once any change in relevant facts and circumstances causes the relevant elements involved in the definition of control to be changed, the Company will conduct a reassessment. The relevant facts and circumstances mainly 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 is determined on the basis of control, and all subsidiaries (including separate entities controlled by the Company) are included into the consolidated financial statements. | |
| (3) | Consolidation procedure |
| The Company prepares the consolidated financial statements based on the financial statements of itself and its subsidiaries and other relevant information. The Company prepares the consolidated financial statements in a manner that the whole group will be treated as an accounting entity to reflect the financial position, operating results, and cash flow of the group as a whole under unified accounting policies, in accordance with the recognition, measurement and presentation requirements of relevant accounting standards for business enterprises. | |
| The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with those of the Company. If the accounting policies or accounting periods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustments will be made in accordance with the Company's accounting policies and accounting periods when preparing consolidated financial statements. |
| III | Significant accounting policies and accounting estimates (continued) |
10 Methods for judging control and preparing consolidated financial statements (continued)
| (3) | Consolidation procedure (continued) |
| The impact of intracompany transactions between the Company and its subsidiaries, and intracompany transactions between subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement and consolidated statement of changes in shareholders' equity is offset in the preparation of consolidated financial statements. Where a transaction is recognized by the Company or its subsidiaries as the transaction subject, which is different from that under the consolidated financial statement 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 share enjoyed by the minority shareholder in the initial owners' equity of the subsidiary, the balance will still be used to offset the equity of minority interests. During the Reporting Period, if a subsidiary or business is added due to the business combination involving enterprises under common control, the opening balances of the consolidated balance sheet are adjusted; the income, expenses and profits of the subsidiary or business as from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary or business as from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated cash flow statement, and the relevant items of the comparative statements are adjusted as if the reporting entity after the combination had existed 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 to additional investment or for other reasons, it shall be deemed that the parties participating in the combination had made adjustments based on their current state when the ultimate controller began to control. For the equity investment held before obtaining the control over the acquired party, relevant gains and losses, other comprehensive income and other changes in net assets recognized between the date of obtaining the original equity or the date when the acquiring party and the acquired party are under common control, whichever later, and the date of combination shall be used to offset the beginning retained earnings or the profits and losses of the comparative statement period. During the Reporting Period, if a subsidiary or business is added due to a business combination involving enterprises under non-common control, the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary or business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flow of the subsidiary or business from the date of acquisition to the end of the Reporting Period is included in the consolidated cash flow statement. If the Company is able to exercise control over the investee not under common control due to additional investment or for other reasons, the Company shall remeasure the equity, of the 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 the return on investment of the current period. If the equity of the purchased party held before the purchase date involves other comprehensive income accounted for under the equity method and other changes in owner’s equity other than net profits and loss, other comprehensive income, and profit distribution, the relevant other comprehensive income and other changes in owner’s equity shall be converted into the return on investment of the current period which matches the purchase date, except for other comprehensive income arising from the investee’s remeasurement of the changes in net liabilities or net assets of defined benefit plans. During the reporting period, if the Company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business for the period from the beginning of the period to the disposal date are included in the consolidated income statement; and the cash flow of the subsidiary or business for the period from the beginning of the reporting period to the disposal date is included in the consolidated cash flow statement. |
| 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-measured based on its fair value by the Company on the date of loss of control. The difference of the sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets and goodwill of the original subsidiary that should be enjoyed in accordance with the original share-holding ratio since the date of acquisition or combination, is accounted for the return on investment in the current period of loss of control. Other comprehensive income or net profits and loss related to the original subsidiary's equity investment, other comprehensive income and other changes in owners' equity other than profit distribution, will be converted into current return on investment when control is lost, except for other comprehensive gains arising from the re-measurement of net liabilities of the Benefit Plan made by the invested party or changes in net assets. When the equity investment in a subsidiary is disposed of step by step through multiple transactions until the loss of control, when the terms, conditions and economic influence of the transactions of the equity investment in the subsidiary conform to one or more of the following, it usually indicates that 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 of control constitute a transaction package, the Company will account for such transactions as one transaction through which the subsidiary is disposed of with the loss of control over it; provided that the difference between the price for each disposal and the share in the net asset of the subsidiary corresponding to the investment disposed of, before the loss of control, is recognized as other comprehensive income in the consolidated financial statements and is transferred to the profits and losses of the current period in which the loss of control occurs. When transactions through which the equity investment in a subsidiary is disposed of until the loss of control do not constitute a transaction package, such transactions shall be accounted for i) before the loss of control, in accordance with the relevant policies for partial disposal of an equity investments in a subsidiary without losing control; and ii) upon the loss of control, in accordance with the general accounting method for disposing of a subsidiary. The difference, between the long-term equity investment obtained by the Company through the purchase of minority interests and the share in the net asset of the subsidiary calculated continuously from the purchase date (or combination date) based on the new shareholding percentage, shall be used to adjust i) the share capital premium under the capital reserve in the consolidated balance sheet or ii) the retained earnings, if the share capital premium under the capital reserve is insufficient to offset,. The difference, between the disposal price obtained from the partial disposal of a long-term equity investment in a subsidiary without losing control and the share, corresponding to the long-term equity investment disposed of, in the net asset of the subsidiary calculated continuously from the purchase date or combination date, shall be used to adjust i) the share capital premium under the capital reserve in the consolidated balance sheet or ii), the retained earnings, if the share capital premium under the capital reserve is insufficient to offset. | |
| 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 the joint arrangement, other relevant facts and circumstances. Joint arrangements not reached through independent entities are classified as joint operations; joint arrangements reached through independent entities are usually classified as joint ventures; however, a joint arrangement that is indicated by conclusive evidence of meeting any of the following conditions and meeting the provisions of relevant laws and regulations is classified as a joint operation: ① The legal form of the joint arrangement shows that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ② The contractual terms of the joint arrangement stipulates that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ③ Other relevant facts and circumstances show that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. For example, the parties enjoy all the output substantially related to the joint arrangement, and the repayment of the liabilities relating to the arrangement continues relying on the support of the parties. | |
| (2) | Accounting treatment 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 accounting standards for business enterprises: ① Its assets, including its share of any assets held jointly; ② Its liabilities, including its share of any liabilities incurred jointly; ③ Its revenue from the sale of its share of the output arising from the joint operations; ④ Its share of the revenue from the sale of the output by the joint operations; and ⑤ Its expenses, including its share of any expenses incurred jointly. | |
| If investing or selling assets (except those that constitute a business), etc., into or to the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the joint operation. The Company will recognize in full the asset impairment loss arising if the assets invested or sold are impaired in compliance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment, etc. | |
| If purchasing assets (except those that constitute a business), etc., from the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the Company. The Company will recognize its share of the asset impairment loss arising if the assets purchased are impaired in compliance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment, etc. | |
| The Company does not enjoy joint control over the joint operations. If the Company has rights to the assets, and obligations for the liabilities, relating to the joint operation, it shall still be accounted for by the above principles; otherwise, it shall be accounted for by the relevant accounting standards for business enterprises. |
| III | Significant accounting policies and accounting estimates (continued) |
12 Criteria for determining cash and cash equivalents
| In the preparation of the cash flow statement, the Company recognizes cash holdings and deposits that can be used for payment at any time as cash. | |
| The Company recognizes cash that is easily converted into known amount with short holding period (generally due within three months from the date of purchase) and strong liquidity, and investments with low risk of changes in value (including investments in bonds which due within three months, while excluding 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 base currency at the spot exchange rate on the transaction date. | |
| Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date, and the exchange differences resulted therefrom, except that the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization should be treated in accordance with the principle of capitalization of borrowing costs, are all included in the current profit and loss. Foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the transaction date, and the amount of base currency for bookkeeping is not changed. | |
| Foreign currency non-monetary items measured at fair value are translated at the spot exchange rates on the date when the fair value is determined, and the exchange differences resulted therefrom are included in current profits and loss as a change in fair value. In the case of foreign currency non-monetary items that are at fair value through other comprehensive income, the exchange differences incurred are included in other comprehensive income. |
| (2) | Translation of foreign currency financial statement | ||
| When the Company translates the financial statements of overseas operations, the assets and liabilities in the balance sheet are translated at the spot exchange rate on the balance sheet date. The owner’s equity items, except for the "Retained earnings" item, are translated at the spot exchange rate at the time of occurrence of the items. All the incurred items in the income statement are translated at the current average exchange rate of the period in which transactions occur. The translation differences of foreign currency financial statement arising from the above translation are included in other comprehensive income. | |||
| When disposing of an overseas operation, the translation differences in the foreign currency financial statements related to the overseas operation listed in other comprehensive income in the balance sheet are transferred from the other comprehensive income to the profit and loss. When the disposal of a portion of the equity investment or otherwise causes a decrease in the proportion of equity held in the overseas operation without losing of control over the overseas operation, the translation differences in the foreign currency statements related to the part of the overseas operation disposed of will be attributed to minority interests, rather than to the current profits and losses. When the overseas operation disposed of is a portion of the equity of an associate or joint venture, the translation difference of the foreign statements related to the overseas operation should be transferred to the profit or loss for the period in proportion to the disposal of the overseas operation. | |||
| 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 or liability. | |
| The effective interest method refers to the method of calculating the amortized cost of financial assets or liabilities and allocating interest income or interest expenses into each accounting period. | |
| The effective interest rate refers to the interest rate used to discount the estimated future cash flow of a financial asset or financial liability during its expected duration to the book balance of the financial asset or the amortized cost of the financial liability. When determining the effective interest rate, the expected cash flow is estimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment, extension, call options or other similar options), but the expected credit loss is not considered. | |
| The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the repaid principal from the initial recognition amount of the financial asset or financial liability, adding or subtracting the difference between the initial recognition amount and the maturity amount by using the effective interest method, and then deducting the accumulated accrued loss reserve (only applicable to financial assets). | |
| (1) | Classification and measurement of financial assets |
| According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets, the Company divides the financial assets into the following three categories: | |
| (a) | Financial assets measured at amortized cost. |
| (b) | Financial assets measured at fair value through other comprehensive income. |
| (c) | Financial assets measured at fair value through profit or loss. |
| Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider financing components for no more than one year, the initial measurement shall be made at the transaction price. | |
| For financial assets measured at fair value through profit or loss, transaction expenses are directly recognized in the current profit and loss. For other financial assets, transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial assets depends on their classification. All related financial assets affected will be reclassified when and only when the Company changes its business model of managing financial assets. | |
| (a) | Financial assets classified as those measured at amortized cost |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial asset is to collect the contractual cash flow, then the Company classifies the financial asset as measured at amortized cost. Financial assets of the Company that are classified as those measured at amortized cost include monetary assets, notes receivable, accounts receivable, other receivables, long-term receivables, debt investments, etc. |
| III | Significant accounting policies and accounting estimates (continued) |
| 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 effective interest method, and carries out subsequent measurement at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in current profits and losses. The Company calculates and determines the interest income based on the book balance of financial assets multiplied by the effective interest rate except for the following circumstances: | |
| ① For purchased or originated credit-impaired financial assets, the Company calculates and determines their interest income at the amortized cost of the financial assets and the credit-adjusted effective interest rate since the initial recognition. ② For financial assets not credit-impaired at the time of being purchased or originated but in the subsequent period, the Company calculates and determines their interest income at the amortized cost and the effective interest rate of the financial assets in the subsequent period. If the financial instrument is no longer credit-impaired due to the improvement of its credit risk in the subsequent period, the Company calculates and determines the interest income by multiplying the effective interest rate by the book balance of the financial asset. | |
| (b) | Financial assets classified as those measured at fair value through other comprehensive income |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial assets is both to collect contractual cash flow and for its sale, then the Company classifies the financial assets as measured at fair value through other comprehensive income. | |
| The Company recognizes interest income from such financial assets with the effective interest method. Except that the interest income, impairment loss and exchange difference are recognized as the current profit and loss, other changes in fair value are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in current profits and losses. | |
| Notes and accounts receivable measured at fair value through other comprehensive income are reported as receivables financing, and such other financial assets are reported as other debt investments. Among them, other debt investments maturing within one year from the balance sheet date are reported as the current portion of non-current assets, and other debt investments maturing within one year are reported as other current assets. | |
| 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-trading equity instrument investments as financial assets measured at fair value through other comprehensive income on the basis of individual financial assets. | |
| Changes in the fair value of such financial assets are included in other comprehensive income without allowance for impairment. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the retained earnings. During the investment period when the Company holds the equity instrument, the dividend income is recognized and included in the current profit and loss when the Company's right to receive dividends has been established, the economic benefits related to dividends are likely to flow into the Company, and the amount of dividends can be measured reliably. The Company reports such financial assets under the item of investments in other equity instruments. | |
| An investment in equity instruments is a financial asset measured at fair value through current profits and losses when it is obtained mainly for recent sale, or is part of the identifiable portfolio of financial assets centrally managed when initially recognized and objective evidence exists for a short-term profit model in the near future, or is a derivative (except for derivatives defined as financial guarantee contracts and designated as effective hedging instruments). | |
| (d) | Financial assets classified as 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 other comprehensive income, or not designated as measured at fair value through other comprehensive income, financial assets are all classified as those measured at fair value through profit or loss. | |
| The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. | |
| The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. | |
| 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 current profits and losses |
| At the time of initial recognition, the Company may irrevocably designate financial assets as measured at fair value through current profits and losses on the basis of individual financial assets in order to eliminate or significantly reduce accounting mismatches. | |
| If the mixed contract contains one or more embedded derivative instruments and its main contract is not any financial asset as above, the Company may designate the whole of the mixed contract as a financial instrument measured at fair value through current profits and losses. Except under the following circumstances: | |
| ① Embedded derivatives do not significantly change the cash flow of mixed contracts. ② When determining initially whether similar mixed contracts need to be split, it is substantially clear that embedded derivatives contained in them should not be split without analysis. If the prepayment right embedded in a loan allows the holder to prepay the loan at an amount close to the amortized cost, the prepayment right does not need to be split. | |
| The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. | |
| The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 14 | Financial instruments (continued) |
| (2) | Classification and measurement of financial liabilities |
| The Company classifies a financial instrument or its components into financial liabilities or equity instruments upon initial recognition according to the contract terms of and the economic substance reflected by the financial instrument issued, rather than only in legal form, in combination with the definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair value through profit or loss, or other financial liabilities, or derivatives designated as effective hedging instruments. | |
| Financial liabilities are measured at fair value upon initial recognition. For financial liabilities measured at fair value through current profits and losses, relevant transaction expenses are directly included in current profits and losses; for other categories of financial liabilities, relevant transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial liabilities depends on their classification: | |
| (a) | Financial liabilities measured at fair value through current profits and losses |
| Such financial liabilities include held-for-trading financial liabilities (including derivatives falling under financial liabilities) and financial liabilities designated as measured at fair value upon initial recognition and through current profits and losses. | |
| A financial liability is a held-for-trading financial liability if it is mainly undertaken for recent sale or repurchase, or is part of the identifiable portfolio of financial instruments centrally managed, and there is objective evidence that the enterprise has recently employed a short-term profit model, or is a derivative instrument, except derivatives designated as effective hedging instruments and derivatives conforming to financial guarantee contracts. Held-for-trading financial liabilities (including derivatives falling under financial liabilities) are subsequently measured at fair value. All changes in fair values except for hedging accounting are included in current profits and losses. | |
| The Company irrevocably designates financial liabilities as measured at fair value through current profits and losses at the time of initial recognition in order to provide more relevant accounting information, provided: | |
| ① Such financial liabilities can eliminate or significantly reduce accounting mismatches. ② The financial liability portfolio or the portfolio of financial assets and liabilities is managed and evaluated for performance on the basis of fair value according to the enterprise risk management or investment strategy stated in the official written documents, and is reported to key management personnel within the enterprise on this basis. | |
| The Company subsequently measures such financial liabilities at fair value. Apart from changes in fair value that are brought about by changes in the Company’s own credit risk and included in other comprehensive income, other changes in fair value are included in current profits and losses. Unless including such changes in other comprehensive income will cause or expand accounting mismatch in profit or loss, the Company will include all changes in fair value (including the amount affected by changes in its own credit risk) in current profits and losses. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 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 at amortized cost. Such financial liabilities are recognized by the effective interest method and subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in current profits and losses: | |
| ① Financial liabilities measured at fair value through current profits and losses. ② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets. ③ Financial guarantee contracts that do not fall under the first two categories hereof, and loan commitments that do not fall under category (1) hereof and lend at a below-market interest rate. | |
| Financial guarantee contracts refer to contracts that require the issuer to pay a specific amount to the contract holder who has suffered losses when a specific debtor fails to pay the debt in accordance with the original or modified terms of the debt instrument. Financial guarantee contracts that are not financial liabilities designated as measured at fair value through profit or loss are measured after initial recognition according to the loss reserve amount and of the initial recognition amount, less the accumulated amortization amount during the guarantee period, whichever is higher. | |
| (3) | Derecognition of financial assets and liabilities |
| (a) | Financial asset are derecognized, i.e. written off from its account and balance sheet if any of the following conditions is met: |
| ① The contractual right to receive cash flow from the financial asset is terminated; or ② The financial asset has been transferred, which meets the requirements for derecognition of financial assets. | |
| (b) | Conditions for derecognition of financial liabilities |
| If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability (or part thereof) is derecognized. | |
| The existing financial liability is derecognized with a new one recognized, and the difference between the carrying amount and the consideration paid (including transferred non-cash assets or assumed liabilities) is included in current profits and losses, if an agreement is signed between the Company and the lender to replace the existing financial liability by assuming a new one, and the contract terms of these two financial liabilities are substantially different, or the contract terms of the existing financial liability (or part thereof) are substantially modified. | |
| If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall be distributed according to the proportion of the fair value of the continuing recognition portion and the derecognition portion to the overall fair value on the repurchase date. The difference between the carrying amount allocated to the derecognized portion and the consideration paid (including transferred non-cash assets or liabilities assumed) shall be included in current profits and losses. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 14 | Financial instruments (continued) |
| (4) | Recognition basis and measurement method of financial asset transfer |
| When a financial asset is transferred, the Company evaluates the risks and rewards retained of the financial asset ownership: | |
| (a) | If almost all the risks and rewards of the financial asset ownership are transferred, such financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities. |
| (b) | If risks and rewards of the financial asset ownership are substantially retained, such financial asset shall continue to be recognized. |
| (c) | In circumstances where the Company neither transfers nor retains risks and rewards of the financial asset ownership substantially (i.e. circumstances other than ① and ② of this article), based on whether it retains control over such financial asset, |
| ① the financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities if such control is not retained; or ② the relevant financial asset shall continue to be recognized to the extent that it continues to be involved in the transferred financial asset, and the relevant liabilities shall be recognized accordingly if such control is retained. The extent that it continues to be involved in the transferred financial asset refers to the extent the Company bears the risks or rewards on changes in the value of the transferred financial asset. | |
| When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance over form shall be adopted. The Company divides the transfer of financial assets into overall transfer and partial transfer. | |
| (a) | If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profits and losses: |
| ① The carrying amount of the transferred financial asset on the date of derecognition. ② The sum of the consideration received for the transfer of financial assets and the amount of the respective derecognized portion of the accumulated changes in fair value originally included in other comprehensive income directly (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). | |
| (b) | If the financial asset is partially transferred and the transferred part meets the conditions for derecognition, the carrying amount of the financial asset before transfer shall be allocated between the derecognition portion and the continuing recognition portion (in this case, the retained service asset shall be regarded as the continuing recognition part of the financial asset) according to the respective relative fair values on the transfer date, and the difference between the following two amounts shall be included in the current profits and losses: |
| ① The carrying amount of the derecognized portion on the derecognition date. ② The sum of the consideration received for the derecognized portion and the amount of the corresponding derecognized portion of the accumulated changes in fair value originally included in other comprehensive income (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). |
| III | Significant accounting policies and accounting estimates (continued) |
| 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, the financial asset shall continue to be recognized and the consideration received shall be recognized as a financial liability. | |
| (5) | Determination of fair value of financial assets and liabilities |
| The fair value of a financial asset or liability with an active market shall be determined by the quoted price in the active market, unless the financial asset has a sell-off period for the asset itself. For the financial assets restricted for the assets themselves, the compensation amount demanded by market participants due to the risk of not being able to sell the financial assets on the open market within the specified period shall be deducted from the quoted price in the active market. Quoted prices in the active market includes those for related assets or liabilities that can be easily and regularly obtained from exchanges, dealers, brokers, industry groups, pricing or regulatory agencies, and can represent actual and recurring market transactions on the basis of fair trade. | |
Financial assets initially acquired or derived or financial liabilities assumed shall be determined onthe basis of market transaction price.
| The fair value of financial assets or liabilities without an active market shall be determined by valuation techniques. At the time of valuation, the Company adopts valuation techniques that are applicable under the current circumstances and are supported by sufficient available data and other information, selects input values consistent with the characteristics of relevant assets or liabilities considered by market participants in the transactions thereof, and gives priority to the use of relevant observable input values whenever possible. If the relevant observable input value cannot be obtained or be feasibly obtained, the unobservable input value shall be used. | |
| Based on the expected credit loss, the Company conducts impairment accounting of financial assets classified as those measured at amortized cost, financial assets classified as those measured at fair value through other comprehensive income and financial guarantee contracts and recognizes loss reserves. |
| III | Significant accounting policies and accounting estimates (continued) |
| 14 | Financial instruments (continued) |
| (6) | Impairment of financial instruments |
| Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchased or originated financial assets of the Company shall be discounted at the credit-adjusted effective interest rate of such financial assets. | |
| For receivables arising from transactions regulated by the income criteria, the Company uses the simplified measurement method to measure the loss reserve according to the amount equivalent to the expected credit loss during the entire duration. | |
| For credit-impaired purchased or originated financial assets, only the accumulated changes in the expected credit losses during the entire duration since the initial recognition are recognized as loss reserves on the balance sheet date. On each balance sheet date, the amount of change in the expected credit loss during the entire duration is included in the current gains and losses as impairment losses or gains. Even if the expected credit loss during the entire duration on the balance sheet date is less than that reflected in the estimated cash flow upon initial recognition, the favorable change in the expected credit loss is recognized as impairment gains. | |
| In addition to other financial assets adopting the above simplified measurement method and other than the credit-impaired purchased or originated ones, the Company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial recognition, measures its loss reserves and recognizes the expected credit loss and its changes respectively according to the following circumstances on each balance sheet date: | |
| (a) | If the credit risk of the financial instrument has not increased significantly since its initial recognition, it is in the first stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss over the next 12 months, and the interest income shall be calculated according to the book balance and the effective interest rate. |
| (b) | If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in the second stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss throughout its life, and the interest income shall be calculated according to the book balance and the effective interest rate. |
| (c) | If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and the Company shall measure its loss reserve according to an amount equivalent to its expected credit loss throughout its life, and calculate the interest income at the amortized cost and the effective interest rate. |
| The increase or reversed amount of the credit loss reserve for financial instruments shall be included in the current profits and losses as impairment losses or gains. Except for financial assets classified as those measured at fair value through other comprehensive income, the credit loss reserve will offset the carrying amount of the financial assets. For financial assets classified as those measured at fair value through other comprehensive income, the Company recognizes its credit loss reserve in other comprehensive income without reducing its carrying amount presented in the balance sheet. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 14 | Financial instruments (continued) |
| (6) | Impairment of financial instruments (continued) |
| In the previous accounting period, the Company has measured the loss reserve, the amount equivalent to the expected credit loss of the financial instruments throughout its life. However, on the balance sheet date of the current period, the financial instrument no longer conforms to the situation of significant increase in credit risk since initial confirmation; on the balance sheet date of the current period, the Company has measured the loss reserve of the financial instruments, the amount equivalent to the expected credit loss in the next 12 months, and the reversed amount of the loss reserve thus formed is included in current profits and losses as impairment profit. | |
| (a) | Significant increase in credit risk |
| In order to determine whether the credit risk of financial instruments has increased significantly since the initial recognition, the Company uses the available reasonable and based forward-looking information and compares the risk of default of financial instruments on the balance sheet date with the risk of default on the initial confirmation date. When the Company applies provisions on depreciation of financial instruments to financial guarantee contracts, the initial recognition date shall be regarded as the date when the Company becomes a party to make irrevocable commitments. | |
| For the assessment of whether the credit risk has increased significantly, the Company will consider the following factors: | |
| ① According to whether the actual or expected debtor's operations results have changed significantly; ② Whether the regulatory, economic or technological environment of the debtor has undergone significant adverse changes; ③ Whether the following items have changed significantly: the value of collateral as debt mortgage, or the guarantee provided by a third party, or the quality of credit enhancement; these changes will reduce the debtor’s economic motivation to repay the loan within the time limit stipulated in the contract and could impact the probability of default; ④ Whether the debtor's expected performance and repayment behavior have changed significantly; ⑤ Whether the Company's credit management methods for financial instruments have changed, etc. | |
| If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by the Company, the Company assumes that the credit risk of the financial instrument has not increased significantly since the initial recognition. The financial instrument will be deemed to have lower credit risk under the following circumstances: the default risk of the financial instrument is lower; the borrower has a strong capacity to fulfill its contractual cash flow obligations in a short time; furthermore, even if there are adverse changes in the economic situation and operating environment for a long period of time, it may not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations. | |
| III | Significant accounting policies and accounting estimates (continued) | |
| 14 | Financial instruments (continued) | |
| (6) | Impairment of financial instruments (continued) | |
| (b) | Financial assets with depreciation of credit | |
| If one or more events have adverse effects on the expected future cash flow of a financial asset, the financial asset will become a financial asset that has suffered credit impairment. The following observable information can be regarded as evidence of credit impairment of financial assets: | ||
| ② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.; ③ The creditor gives concessions to the debtor due to economic or contractual considerations related to the debtor's financial difficulties; the concessions will not be made under any other circumstances; ④ There is a great possibility of bankruptcy or other financial restructuring of the debtor; ⑤ The issuer or debtor has financial difficulties, resulting in the disappearance of the active market for the financial assets; ⑥ Purchasing or generation of a financial asset with a large discount, which reflects the fact of credit loss. | ||
| Credit impairment of financial assets may not be caused by separately identifiable events, but may be caused by the combined effect of multiple events. | ||
| (c) | Determination of expected credit loss | |
| The expected credit losses of financial instruments is assessed individually and collectively. During the assessment of the expected credit losses, the Company will take into account reasonable and reliable information about past events, the current situation and future economic situation forecast. | ||
| The Company divides financial instruments into different combinations on the basis of common credit risk characteristics. Common credit risk characteristics adopted by the Company include: financial instrument type, credit risk rating, aging combination, overdue aging combination, contract settlement cycle, debtor's industry, etc. To understand the individual evaluation criteria and combined credit risk characteristics of relevant financial instruments, please refer to the accounting policies of relevant financial instruments for details. | ||
| The Company adopts the following methods to determine the expected credit losses of relevant financial instruments: | ||
| ① In terms of financial assets, credit loss is equivalent to the present value of the difference between the contract cash flow that the Company shall receive and the expected cash flow. ② In terms of the financial guarantee contract, credit loss is equal to the expected amount of payment made by the Company to the holder of the contract for credit loss incurred, less the present value of the difference between the amount expected to be collected from the holder of the contract, the debtor or any other party. ③ If, on the balance sheet date, a financial asset has suffered credit impairment, but one does not purchase or generate a financial asset that has suffered credit impairment, the credit loss is equivalent to the difference between the book balance of the financial asset and the present value of the estimated future cash flow discounted at the original actual interest rate. | ||
| Factors reflected in the Company's method of predicting credit losses by quantitative finance tools include: unbiased probability weighted average amount determined by evaluating a series of possible results; time value of money; reasonable and reliable information about past events, current situation and future economic situation forecast that can be obtained on the balance sheet date without unnecessary extra costs or efforts. | ||
| III | Significant accounting policies and accounting estimates (continued) | |
| 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 be fully or partially recovered, the book balance of the financial asset will be written off directly. This write-off constitutes the derecognition of relevant financial assets. | ||
| (7) | Offset of financial assets and financial liabilities | |
| In the balance sheet, financial assets and financial liabilities are shown separately without offsetting each other. However, if the following conditions are met at the same time, the net amount after offset will be listed in the balance sheet: | ||
| (a) | The Company has the legal right, which is currently enforceable, to offset the confirmed amount; | |
| (b) | The Company plans to settle on a net basis, or realize the financial assets and settle the financial liabilities at the same time. | |
15 Notes receivable
| For the determination method and accounting treatment method of the Company's expected credit loss on notes receivable, 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 of a single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide notes receivable into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. |
16 Accounts receivable
| For the determination method and accounting treatment method of the Company's expected credit loss on accounts receivable, please refer to 14(6) of note III Impairment of financial instruments. | |
| As for the accounts receivable, if there is objective evidence that the Company will not be able to recover the money according to the original terms of the accounts receivable, the Company will separately determine its credit loss. | |
| If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of single instrument, the Company will divide the accounts receivable into several combinations according to the credit risk characteristics, and calculate the expected credit loss on the basis of the combinations (with reference to the experience of historical credit loss, and in combination with the current situation with the judgment of future economic situation) |
| III | Significant accounting policies and accounting estimates (continued) |
17 Receivables financing
| Accounts receivable classified as those measured at fair value through other comprehensive income, with a maturity of i) less than one year (including one year) from the initial recognition date, are listed as receivables financing; or ii) more than one year from the initial recognition date, are listed as other debt investments. For the relevant accounting policies, 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 expected credit loss of other receivables, please refer to 14(6) of note III Impairment of financial instruments. | |
| For other receivables for which there is objective evidence that the Company will not be able to recover the amount according to the original terms of the receivables, the Company will separately determine its credit loss. | |
| If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide other receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. |
19 Inventories
| (1) | Classification of inventories |
| Inventories refer to, among other things, finished products or goods held by the Company for sale in its daily activities, work in progress in production, materials and supplies consumed in the production or provision of labor services. Inventories mainly include but are 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, processing costs, and other costs. Inventories are shipped in transit by weighted average method. |
| 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 inventory valuation allowance |
| After conducting a comprehensive counting at the end of the period, inventory valuation allowance shall be accrued or adjusted based on whichever lower of the cost and net realizable value 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 the inventory less the estimated sales cost and relevant taxes and fees; for material inventories that need to be processed, in the normal production and operations process, the net realizable value is determined by the amount of the estimated selling expenses of finished products produced less the estimated cost occurred at the time of completion, the estimated selling expenses and related taxes; for inventories held for the execution of sales contracts or labor contracts, the net realizable value is calculated on the basis of the contract price, and if the quantity of inventories held is more than the quantity specified in sales contracts, the net realizable value of excess inventories is calculated based on the general sales price. | |
| At the end of the period, inventory valuation allowance is accrued according to individual inventory items; but for a large number of inventories with lower unit prices, inventory valuation allowance is accrued according to inventory category; for inventories related to the product series produced and sold in the same region with the same or similar end use or purpose, which is difficult to measure separately from other items, thus inventory valuation allowance is accrued and combined with other items. | |
| If the influencing factors of the write-down of inventory value have disappeared, the amount written-down is recovered and reversed to the amount of inventory valuation allowance already accrued, and the amount reversed is included in current profits and losses. | |
| (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 customer and has the right to receive a consideration depending on other factors than the passage of time. The right of the Company to unconditionally receive the considerations from customers (i.e., only depending on the passage of time) is listed independently as receivables. | ||
| For the determination method and accounting treatment method of the Company’s expected credit loss on contract assets, please refer to 14(6) of note III Impairment of financial instruments. | ||
| 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 following conditions as components held for sale: ① they can be sold immediately under the current status according to the practice of selling such assets or disposal groups in similar transactions; ② The sale is likely to occur, that is, the Company has made a resolution on the sale plan, obtained the approval from the regulatory authorities (if applicable), and obtained a confirmed purchase commitment that the sale is expected to be completed in one year. | |
| The confirmed purchase commitment refers to a legally binding purchase agreement concluded by and between the Company and another party, which contains important terms such as transaction price, time and sufficiently severe penalty for breach of contract, so that there will be little possibility of major adjustments to or cancellation of the agreement. | |
| (2) | Accounting treatment for held-for-sale assets |
| The Company shall not depreciate or amortize non-current assets or disposal groups held for sale. If the carrying amount is higher than the amount of fair value net of selling expenses, the former shall be written down to the latter. The amount written down shall be recognized as asset impairment loss and included in the current profit and loss, and the impairment allowance for assets held for sale shall be accrued at the same time. | |
| The non-current asset or disposal group classified as being held for sale on the date of acquisition shall be initially measured at whichever initially measured amount is lower under the assumption that it is not classified as being held for sale and the amount of fair value net of selling expenses. | |
| The above principles are applicable to all non-current assets, except investment real estate subsequently measured by the fair value model, biological assets measured by the amount of fair value net of selling expenses, assets formed by employee compensation, deferred income tax assets, financial assets regulated by the relevant accounting standards of financial instruments, and rights arising from insurance contracts regulated by the relevant accounting standards of insurance contracts. |
22 Debt Investments
| For the determination method and accounting treatment methods of the Company’s expected credit 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 credit loss 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 of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situations, divide long receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. |
| III | Significant accounting policies and accounting estimates (continued) |
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 for business 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 is recognized as initial investment cost. The initial investment cost includes expenses, taxes and other necessary expenses directly related to the acquisition of the long-term equity investment. | |
| For long-term equity investment acquired by issuing equity securities, the fair value of equity securities issued is recognized as initial investment cost; the transaction costs arising from issuing or acquiring the own equity instruments of the acquirer will be offset from the equity in directly attributable transactions. | |
| Provided that the non-monetary asset exchange contains commercial substance and the fair value of the assets received or assets surrendered can be reliably measured, the initial investment cost of the long-term equity investment received with non-monetary assets is determined based on the fair value of the assets surrendered, except that there is conclusive evidence that indicates that the fair value of assets received is more reliable. For non-monetary assets that do not satisfy the above condition, the carrying amount of assets surrendered and related taxes and fees payable are recognized as the initial investment cost of the long-term equity investment. | |
| The initial investment cost of a long-term equity investment acquired by debt restructuring is determined on the basis of fair value. |
| 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 investee is accounted for by the cost method and measured at the initial investment cost. When the long-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 the consideration that have been declared but not yet paid when acquiring the investment, the Company recognizes the investment income for the period the investee's cash dividends or profits 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 are accounted for using the equity method. Among them, the portion of equity 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 value share of identifiable net assets of the investee enjoyed in the investment is not used to adjust the initial investment cost of the long-term investment; the difference between the lower initial investment cost and the higher fair value share of identifiable net assets of the investee enjoyed at the time of conducting the investment is included in current profits and losses. After the Company acquires a long-term equity investment, the investment income and other comprehensive income should be recognized respectively based on the Company's share in the net profits and loss and other comprehensive income realized by the investee, and the carrying amount of the long-term equity investment should be adjusted accordingly; the Company's share in the profits or cash dividends declared by the investee should be calculated, and the carrying amount of the long-term equity investment should be reduced accordingly; the carrying amount of the long-term equity investment should be adjusted based on changes in owners' equity of the investee other than net profits and loss, other comprehensive income, and profit distribution, and included in owners' equity. Before the Company recognizes its share in the net profits and loss of the investee, the net profits of the investee is adjusted based on the fair value of the identifiable assets of the investee as at the acquisition of the investment. Any unrealized profit and loss from internal transactions between the Company and its affiliates or joint ventures attributed to the Company based on the Company's, will be 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 amount of the long-term equity investment is insufficient for the offset, the investment loss is continued to be recognized, and the carrying amount of long-term receivable items is offset, subject to other carrying amount of the long-term equity constitutes the net investment in the investee. Finally, after the above-mentioned treatment, if the Company still bears additional obligations in accordance with the investment contract or agreement, the provision are recognized according to the estimated obligations and included in the current investment losses. If the investee realizes profit in the future period, the Company shall, after deducting the unconfirmed loss share, conduct the process in the reverse order of the above to write down the book balance of the recognized liabilities and recover other long-term equity that substantially constitutes net investment of the investee and the carrying amount of the long-term equity, and then recover the recognition of the profit as return on investment. |
| 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 significant impact on the investee that is accounted for based on the financial instrument recognition and measurement standards, if as a result of additional investment or otherwise, the equity investment enables the Company to exercise significant impact on or joint control (rather than control) over the investee, the sum of the fair value of the originally held equity investment determined under the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and the new investment 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 higher share of the fair value of the identifiable net assets of the investee as at the date of the additional investment calculated based on the new shareholding percentage after the additional investment is made, shall be used to adjust the carrying amount of the long-term equity investment and included in the non-operating income for the period. | |
| (b) | Transfer from fair value measurement or equity method to cost method |
| The remaining comprehensive income recognized in the equity investments using equity method before the date of acquisition is accounted for, when the investment is disposed of, on the same basis as those the 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 the relevant provisions of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the cumulative changes in fair value originally included in other comprehensive income should be transferred to the profit or loss for the period when the investment is accounted 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 the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and the difference between the fair value and carrying amount as at the date of losing the joint control or significant impact should be included in current profits and losses. Other comprehensive income recognized for the original equity investment accounted for using equity method should be accounted for on the same basis as the direct disposal of the underlying assets or liabilities 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 or significant 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 as if it were accounted for using equity method from the time when it is acquired. | |
| 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 cannot exercise joint control or significant impact on the investee should be accounted for based on the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, in preparation of the individual financial statements of the Company, and the difference between the fair value and carrying amount as at the date of losing the control should be included in current profits and losses. | |
| (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 current profits and losses. For a long-term equity investment accounted for using equity method, when the investment is disposed of, the part originally included in other comprehensive income should be accounted for in the corresponding proportion and on the same basis as the direct disposal of the underlying assets or liabilities by the investee. When the terms, conditions and economic influence of transactions of the equity investment of the subsidiary conform to one or more of the following, accounting for multiple transactions is treated as a package transaction: | |
| (a) | These transactions are made simultaneously or with consideration of influence on each other; |
| (b) | These transactions can only achieve a complete business outcome when they are accounted for collectively; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transactions; |
| (d) | A transaction is uneconomical individually, but is economical when considered collectively with other transactions. |
| When an enterprise loses control over the original subsidiary due to disposal of part of the equity investment or other reasons, if the transactions do not belong to a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: | |
| (a) | In the individual financial statements, the disposed equity should be accounted for in accordance with the "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment"; meanwhile, the remaining equity should be recognized as long-term equity or other related financial assets based on its carrying amount. If the remaining equity after disposal can be used to exercise common control or significant influence on the original subsidiary, it shall be accounted for in accordance with the relevant provisions on the conversion of the cost method into the equity method. |
| 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 accordance with its fair value on the date of loss of control. The difference between the sum of the consideration acquired from the disposal of the equity and the fair value of the remaining equity, less the share of net assets of the original subsidiary that should be enjoyed in accordance with the original shareholding ratio from the date of acquisition, is included in the current profit and loss of the period in which loss of control occurred. Other comprehensive income related to the original subsidiary's equity investment should be converted into current investment income when control is lost. The Company shall disclose in the notes the fair value of the remaining equity after disposal on the date of loss of control and the amount of relevant gains or losses arising from the disposal remeasured based on the fair value. |
| If the transactions of disposal of equity investment in a subsidiary until the loss of control is a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: : | |
| (a) | In the individual financial statements, the difference between each disposal price and the carrying amount of the long-term equity investment corresponding to the disposed equity before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred; |
| (b) | In the consolidated financial statements, the difference between each disposal price and the disposal of investment corresponding to the share of the net assets of the subsidiary before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred. |
| (5) | Criteria for judgment of joint control and significant impact |
| If the Company exerts joint control over an arrangement with other participants in accordance with the relevant agreement, and decision on activities that has significant impact on the return of the arrangement requires the unanimous consent of the participants sharing the control, the Company and other participants will be deemed to have joint control over the arrangement - a joint venture arrangement. | |
| If a joint venture arrangement is entered into through an independent entity, and the Company has right over the net assets of the independent entity based on the relevant agreements, the independent entity shall be deemed as a joint venture and accounted for using equity method. If based on the relevant agreement, the Company does not have rights to the net assets of the individual entity, the individual entity shall be deemed as a joint operation, and the items related to the share of interests in the joint operation should be recognized and accounted for in accordance with the provisions of relevant Accounting Standards for Business Enterprises. | |
| Significant impact means the investor’s power to participate in the decision-making of the financial and operating policies of the investee, but by which the investor cannot control or commonly control together with other parties the formulation of the policies. Significant impact on the investee will be determined 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. |
| III | Significant accounting policies and accounting estimates (continued) |
25 Investment property
| The Company's investment property means the property held for the purpose of earning rent or capital appreciation, or both, including the land use rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant buildings held by the Company for the purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that the buildings will be used for leases and the intention of holding will not change in a short-term, the building will also be reported as investment property. | |
| An investment property of the Company will be recorded at its cost that comprises i) in case of a purchased investment property, the purchase price, relevant taxes and other expenses directly attributable to the asset; or ii) in case of a self-constructed investment property, the necessary expenses incurred before the asset is constructed to reach its intended serviceable state. | |
| The Company adopts the cost model for subsequent measurement of investment property. For the purpose of depreciation or amortization method, the same amortization policy adopted for buildings as fixed assets and land use rights as intangible assets are used. When the purpose of an investment property is changed to self-use, the Company shall convert the investment property into a fixed asset or intangible asset from the date of change. When the purpose of a self-used property is changed to earning rent or capital appreciation, the Company will convert the fixed asset or intangible asset into an investment property from the date of change. When such a conversion occurs, the carrying amount before 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 use and no economic benefit is expected to be obtained from the disposal of it, the investment property shall be derecognized. The disposal income from the sale, transfer, scrapping or damage of an investment property, net of its carrying amount and related taxes and fees, is recognized in current profits and losses. | |
| 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 of services, leases or operation management, whose service life is more than one fiscal year. Fixed assets satisfying the following conditions are recognized: | ||||
| (a) | The economic benefits associated with the fixed assets are likely to flow into the enterprise; | |||
| (b) | The cost of the fixed asset can be measured in a reliable way. | |||
| The Company's fixed assets are classified into buildings, machinery and equipment, office and electronic equipment, transportation vehicles and fixed assets renovation in line with capitalization conditions. Where each component of a fixed asset with a different service life provides economic benefits to the Company in different ways and applies different depreciation rates, it is recognized as a single fixed asset. | ||||
| Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase price, related taxes, and other expenses attributable to the fixed asset before it is ready for the intended use, such as the expenses on transportation, handling, installation and professional services, etc. When determining the cost of fixed assets, discard expenses should be considered. Subsequent expenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included in the cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which they arise. | ||||
| Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed assets is determined according to the estimated service life and estimated residual value (the estimated residual value is 0-10% of the original value). The depreciation rate of classified fixed assets is as follows: | ||||
| Asset Category | Estimated Service Life | Annual Depreciation Rate | ||
| Houses and buildings | 20-50 years | 1.8%-5% | ||
| Machinery equipment | 5-15 years | 6%-20% | ||
| Office and electronic equipment | 2-5 years | 18%-50% | ||
| Transportation equipment | 3-5 years | 18%-33.33% | ||
| Power stations | 20-25 years | 3.8%-4.75% | ||
| Others | 4-5 years | 18%-25% | ||
| Fixed assets renovation is amortized evenly over the benefit period. | ||||
| All fixed assets are subject to depreciation, except for fixed assets that have been fully depreciated and continue to be used, and the land that is priced and recorded separately. Fixed assets are depreciated on a monthly basis. Fixed assets added are not depreciated in the current month when being added but from the following month; fixed assets reduced are still depreciated in the current month when being reduced, and no depreciation is made from the following month. Fixed assets that are not profitable for the Company or not used temporarily (other than seasonally deactivated) are recognized as idle fixed assets. The estimated life expectancy and depreciation rate of idle fixed assets should be re estimated, and depreciation is directly included in the current profit and loss. | ||||
| The methods for impairment testing and accrual of impairment provisions of fixed assets are detailed in 31 "Long-term Asset Impairment" under Note III. | ||||
| 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 purchase and construction of fixed assets or investment property before being ready for the expected usable status, including engineering materials costs, labor costs, related taxes and fees, borrowing costs that should be capitalized and indirect costs that should be apportioned. Construction in progress is accounted for separately according to individual projects. | |
| After the construction in progress is ready for its intended use, it must be transferred to fixed assets or investment property, whether the final accounting procedures are completed or not. | |
| The methods for impairment testing and accrual of impairment provisions of construction in progress 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 of borrowings, including interest on borrowings, amortization of discounts or premiums, ancillary expenses, and exchange differences arising from foreign currency borrowings. | |
| Borrowing costs that can be directly attributable to the acquisition, construction or production of assets eligible for capitalization are capitalized and included in the relevant asset cost. Other borrowing costs are recognized as expenses in the period in which they are incurred, and are included in the current profit and loss. Assets eligible for capitalization refer to fixed assets, investment property and inventories and other assets that require a substantial period of acquisition, construction or production activities to get ready for the intended use or sale status. | |
| Borrowing costs become capitalized when: | |
| (1) | The asset expenditure has occurred, including expenditure incurred in the form of cash payments, transfer of non-cash assets, or assuming interest-bearing debts for the purpose of acquisition, construction or production of assets that are eligible for capitalization; |
| (2) | Borrowing costs have occurred; |
| (3) | The acquisition, construction or production activities necessary to enable the assets to be ready for the intended usable or saleable state have commenced. |
| When an asset satisfied the capitalization conditions is abnormally interrupted during the process of acquisition, construction or production and the interruption period lasts for more than three months, the capitalization of the borrowing costs is suspended and recognized as the current expenses until the acquisition, construction or production of the assets starts again. When an asset satisfied the capitalization conditions is ready for its intended use or sale, the capitalization is stopped and the borrowing costs incurred in the future are included in the current profit and loss. | |
| The period of capitalization refers to the period from the time when the borrowing costs start to be capitalized to the point when the capitalization is stopped, and the period in which the borrowing costs are suspended for capitalization is not included. During the period of capitalization, if special borrowings are made for the acquisition, construction or production of assets eligible for capitalization, the amount of the interest expenses actually incurred during the current period of the special borrowings, less the amount of interest income earned by depositing unused borrowing funds in a bank or investment income earned by temporary investment, is recognized as the amount of capitalization. When a general loan is occupied for the purpose of purchasing, constructing or producing assets satisfied the capitalization conditions, the amount of capitalization is determined according to the weighted average of the accumulated asset expenditure exceeding the special loan portion multiplied by the capitalization rate of the general loan occupied; the capitalization rate is determined based on the weighted average interest rate of general borrowings. |
| III | Significant accounting policies and accounting estimates (continued) |
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 leased asset(s) to the condition agreed upon under the terms of the lease (excluding costs incurred to produce inventory). |
| After the commencement date of the lease term, the Company uses the cost model for subsequent measurement of right-of-use assets. | |
| If it is reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over its/their remaining service life. If it is not reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over the lease term or the remaining service life of the leased asset(s), whichever is shorter. Right-of-use assets for which impairment reserves have been accrued are depreciated in future periods at their carrying 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 been impaired and accounts for the recognized impairment losses, as detailed in 31 "Long-term Asset Impairment" under Note III. |
| 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-patented technologies, etc. | ||
| Intangible assets are recorded at the actual cost at the time of acquisition. The service life of intangible assets is analyzed and judged at the time of acquisition. Intangible assets with a finite service life are amortized on the shortest of the estimated service lives, the beneficial period of the contract and the effective period specified by law from the time when the intangible assets are available for use. The amortization period is as follows: | ||
| Category | Amortization years | |
| Land use rights | The shorter of the years of the land use rights and the operating years of the Company | |
| Patents and non-patent technologies | 10 years or the shorter of service life, beneficiary years and legally valid years | |
| Others | Beneficiary period | |
| The Company reviews the service life and amortization method of intangible assets with limited service life at least at the end of each year, and made adjustment if necessary. The methods for impairment testing and accrual of impairment provisions of intangible assets are detailed 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 regarded as an intangible asset with an indefinite service life, which will be reviewed in each accounting period. If evidence indicates that the service life of the intangible asset is limited, then it is converted to an intangible asset with limited service life. Intangible assets with indefinite service lives are not amortized. | ||
| The expenditures of the Company's internal research and development projects are classified into expenditures in the research phase and expenditures in the development phase. Research means an original, planned survey of acquiring and understanding new scientific or technical knowledge. Development means the application of research results or other knowledge to a plan or design to produce new or substantially improved materials, devices, products, etc. prior to commercial production or use. | ||
| The expenditures in the research phase of the Company's internal research and development projects are included in the current profit and loss when incurred; expenditures in the development phase are recognized as intangible assets only when the following conditions are all satisfied: | ||
| (1) | It is technically feasible to complete the intangible asset to enable it to be used or sold; | |
| (2) | There is intent to complete the intangible asset and use or sell it; | |
| (3) | The intangible assets can bring economic benefits; | |
| (4) | There are sufficient technical, financial and other resources to support the development of the intangible assets as well as ability to use or sell the intangible assets; | |
| (5) | Expenditures attributable to the development stage of the intangible asset can be measured in a reliable way. | |
| If the above conditions cannot be all satisfied, the expenditures are included in the current profit and loss when incurred. | ||
| III | Significant accounting policies and accounting estimates (continued) |
31 Impairment of long-term assets
| The Company determines whether there is any sign of possible impairment of the long-term assets on the balance sheet date. If there is any sign of impairment in a long-term asset, the Company estimates the recoverable amount thereof based on the individual asset. If it is difficult to estimate the recoverable amount of the individual asset, the recoverable amount of the asset is determined based 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 asset less the disposal expenses, or the present value of estimated future cash flows of the asset, whichever is higher. | |
| If the measurement results of the recoverable amount indicate that the recoverable amount of the long-term investment is lower than its carrying amount, the carrying amount of the long-term investment is written off to the recoverable amount, and the amount written by is recognized as asset impairment losses, which is included in current profits and losses, while provision for asset impairment is made. Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting period. | |
| After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired assets will be adjusted accordingly in the future periods, so that the adjusted carrying amount of the asset (deducting the expected net residual value) will be systematically amortized over the remaining service life of the asset. | |
| For the goodwill formed by business combination and the intangible assets with indefinite service life, impairment test is carried out every year regardless of whether there is any indication of impairment. | |
| In the impairment test of goodwill, the carrying amount of goodwill is apportioned to the asset group or asset group portfolio expected to benefit from the synergy of the business combination. When impairment tests are conducted on underlying asset groups or asset group portfolios that contain goodwill, impairment tests will be first conducted on the asset groups or asset group portfolios that do not contain goodwill, provided there is any sign of impairment in the asset groups or asset group portfolios related to the goodwill, and the recoverable amount will be calculated, and compared with the relevant carrying amount to recognize the corresponding impairment loss. Further impairment tests will be conducted on asset groups or asset group portfolios that contain goodwill, by comparing the carrying amount of such underlying asset groups or asset group portfolios (including the part of the carrying amount of the allocated goodwill) with their recoverable amount. If the recoverable amount of the underlying asset group or asset group portfolio is lower than its carrying amount, the impairment 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 be amortized over the current and future periods, and whose period of amortization is more than one year, such as the improvement expenses incurred in renting fixed assets by operating leases. Long-term deferred expenses are amortized on a straight-line basis within the beneficial period of the expense items. |
33 Contract liabilities
| The Company recognizes as contract liabilities the part of the obligation to transfer the goods to the customer due to received or receivable consideration from the customer. |
| III | Significant accounting policies and accounting estimates (continued) |
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 of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. | ||
| (a) | Short-term employee benefits | |
| Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, and short-term paid absences. During the accounting period when employees provide services, the Company recognizes the actual short-term remuneration as liabilities, and includes it in current profits and losses or related asset costs according to the beneficiaries of the services provided by employees. Non-monetary benefits are measured at their fair value. | ||
| (b) | Post-employment benefits | |
| The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the Reporting Period, the Company’s defined contribution plans mainly include basic pensions and unemployment insurance. | ||
| (c) | Termination benefits | |
| If the Company terminates the labor relationship with an employee before the labor contract expires, or offers compensation for encouraging the employee to accept the redundancies voluntarily, the liabilities arising from compensation for the termination of labor relations with the employee is determined, and also included in current profits and losses, at the time when the Company cannot unilaterally withdraw the termination of the labor relationship plan or redundancies proposal, or the time when the cost associated with reorganization involving payment of termination benefits is confirmed, whichever is earlier. | ||
| (d) | Other long-term employee benefits | |
| Other long-term employee benefits refer to all employee benefits except short-term employment benefits, post-employment benefits and termination benefits. | ||
| 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 accounting period when the employee provides services to the Company, and shall be included in profit or loss for the period or the underlying asset costs. For long-term employee benefits other than those mentioned above, on the balance sheet date, the benefit obligations arising from the defined benefit plan shall be attributed to the periods during which the employee provides services, and shall be included in profit or loss for the period or the underlying asset costs. | ||
| 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 other contingencies shall be recognized as provision, if i) it is a current obligation of the Company, ii) the fulfillment of this obligation is likely to result in an outflow of economic benefits, 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 best estimate of the expenditure required to perform the relevant current obligations. | |
| When determining the best estimate, the Company considers factors such as risks, uncertainties and time value of money related to contingent events. Where the time value of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows. | |
| The best estimates are handled as follows: | |
| In case there is a continuous range (or interval) of required expenditures, within which the possibility of occurrence of various results is the same, the best estimate is determined by the average of the middle value of the range, that is, the average of the upper and lower limits. | |
| In case there is no continuous range (or interval) of required expenditures, or there is a continuous range but the possibility of various results in the range is different, if the contingency involves a single item, the best estimate is determined based on the most probable amount; if a contingency involves multiple items, the best estimate is determined based on various possible outcomes and associated probabilities. | |
| If all or part of the expenses required by the Company to settle the estimated liabilities are expected to be compensated by a third party, the compensation amount is separately recognized as an asset when it is basically confirmed to be received, and the recognized compensation amount should not exceed the carrying amount of the estimated liabilities. |
| III | Significant accounting policies and accounting estimates (continued) |
36 Lease liabilities
| The Company initially measures lease liabilities at the present value of the lease payments outstanding on the commencement date of the lease term. When calculating the present value of lease payments, the Company uses the interest rate implicit in lease as the rate of discount. If the implicit interest rate of the lease cannot be determined, the incremental loan interest rate of the Company shall be used as the discount rate. Lease payments include: | |
| (a) | The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; |
| (b) | Variable lease payments that depend on indexation or ratio; |
| (c) | The exercise price of the purchase option, when applicable, if the Company is reasonably certain that the option will be exercised; |
| (d) | The amount required to be paid to exercise the option to terminate the lease if the lease term reflects that the Company will exercise the option to terminate the lease; |
| (e) | The estimated amount payable based on the secured residual value provided by the Company. |
| The Company calculates the interest expenses of lease liabilities for each period within the lease term at a fixed rate of discount and includes them in profit or loss for the current period or cost of the related assets. | |
| Variable lease payments that are not included in the measurement of lease liabilities should be included in profit or loss for the current period or cost of the related assets when they are actually incurred. |
37 Share-based payments
| The share-based payments of the Company are mainly equity-settled share-based payments, and only allow to be exercised by employees after the completion of their services in the waiting period. On each balance sheet date in the waiting period, based on the best estimate of the number of vesting equity instruments, the services obtained in the current period are included in the relevant costs or expenses and capital reserve based on the fair value at the grant date of the equity instruments. | |
| The fair value of equity instruments is determined by the external appraiser or management based on the binomial distribution method. The best estimate of the vesting equity instrument is determined by the management based on historical statistics on the vesting weights and turnover rates on the balance sheet date. | |
| Equity-settled share-based payments are measured based on the fair value of the equity instruments granted to employees. In case that the vesting right is available immediately after the grant, it is included in relevant cost or expense based on the fair value of the equity instrument on the grant date, and the capital reserve is increased accordingly. In case that the vesting right is available after the completion of services in the waiting period or satisfaction of stipulated performance conditions, on each balance sheet day during the waiting period, the services acquired in the current period are included into the relevant costs or expenses and capital reserve on the basis of the best estimate of the number of feasible equity instruments and at the fair value of the date on which the equity instruments are granted. No adjustments are made to the identified related costs or expenses or total owners' equity after the vesting date. |
| III | Significant accounting policies and accounting estimates (continued) |
38 Revenue recognition
| (1) | General principles applied to revenue recognition |
| The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). Performance Obligation means that, under the contract, the Company promises to transfer commodities or services that can be clearly distinguished to the client. "Obtain the control over relevant commodities or services" refers to the ability to completely dominate the use of commodities and obtain almost all economic benefits. From the contract’s effectiveness date, the Company shall evaluate the contract, recognize each single performance obligation included and determine whether each performance obligation is fulfilled within a certain period or at a time point. | |
| When any of the following conditions is met, for performance obligation to be fulfilled within a certain period, the Company shall recognize corresponding revenue within the period according to the performance schedule: | |
| (a) | While fulfilling the due obligation in the Company, the client obtains and consumes the resulting economic benefit; |
| (b) | The client is able to control the commodities under construction during the Company’s fulfillment; |
| (c) | Commodities generated from the Company’s fulfillment possess irreplaceable purpose and the Company has the right to charge all fulfilled performance obligations within the whole contract period; otherwise, the Company shall recognize corresponding revenue when the client obtains the control over relevant commodities or services. |
| For any performance obligation with a certain period, the Company shall apply the output method/input method to determine the appropriate fulfillment schedule based on the specific nature of commodities and services. The output method is to determine the fulfillment schedule according to the value of commodities transferred to the client (while the input method is to determine the fulfillment schedule according to the Company’s input to fulfill the performance obligation). If the fulfillment schedule cannot be reasonably determined and the Company’s costs are predicted to be compensated, corresponding revenue shall be recognized based on the specific cost amount until the fulfillment schedule could be reasonably determined. |
| III | Significant accounting policies and accounting estimates (continued) |
| 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 fulfillment conditions at a time point and other products, the Company shall recognize the realization of sales revenues when the client obtains the control over relevant commodities or services according to the delivery condition agreed in the sales contract upon signed by the client after commodities are received. | |
| (b) | Technical service contract |
| If revenues are recognized within a certain period based on the technical service contract, corresponding revenues shall be recognized according to the performance schedule. | |
| (c) | Royalty income |
| Accounted for according to the time and method of charging as stipulated in the relevant contract or agreement. | |
| (d) | Revenue from photovoltaic power stations |
| a. Centralized power stations: Power stations are combined to the grid. The revenue is recognized based on the documents on power supply provided by the business departments of the Company, after the duration of continuous and trouble-free operation specified by the electric power company is met. b. Distributed power stations: Power stations are combined to the grid. The revenue is recognized based on the 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 relevant commodities, corresponding revenue shall be recognized according to the consideration amount (excluding the amount predicted to be returned due to sales return) predicted to be duly charged from transferring commodities to the client, and corresponding liabilities shall be recognized based on the amount predicted to be returned due to sales return. Meanwhile, when commodities are sold, the balance through deducting the predicted cost for taking back commodities from the carrying amount of commodities predicted to be returned (including the impairment of value of returned commodities) shall be accounted for under "Returned Commodities Cost Receivable". |
| (b) | For the contract containing the quality assurance article: it’s required to evaluate whether the quality assurance involves any separable service except for the promise (to the client) that commodities conform to established standards. If the Company provides additional service, it shall be deemed as a single performance obligation and subject to the accounting treatment according to relevant revenue criteria provisions; otherwise, the quality assurance liability shall be subject to the accounting treatment according to the accounting criteria provisions on Contingency. |
| (c) | For the sales contract containing the client’s additional purchase option: the Company shall evaluate whether the option provides the client with any significant right. If any, it shall be deemed as a single performance obligation and the transaction price shall be apportioned to the performance obligation, and corresponding revenues shall be recognized when the client executes the purchase option right and obtains the control over relevant commodities in the future or when the option becomes invalid. If the separable selling price applied to the client’s additional purchase option right cannot be directly observed, it’s required to comprehensively consider the difference in discounts between the client’s execution of option right and the client’s non-execution of option right and analyze the possibility for the client to execute the option right and other relevant information. Then, corresponding reasonable estimate shall be made. |
| 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 license constitutes any single performance obligation; if any, it is necessary to determine whether the performance obligation fulfillment is fulfilled within a certain period or at a time point. If any IP right license is granted to the client and royalties are charged based on the client’s actual sales or usage, corresponding revenues shall be recognized at a later time between the following dates: the day when the client’s subsequent selling or usage occurs; the day when the Company fulfills relevant performance obligations. |
| (e) | Major responsible person and agent: Based on whether the Company has control over the goods or service before transferring it to the customer, it is determined whether the Company is the major responsible person or an agent in the transactions. If the Company is able to control the goods or service before transferring it to the customer, the Company shall be deemed as major responsible person and the revenue shall be recognized at the total amount of the consideration received or receivable; otherwise the Company shall be deemed as an agent and the revenue shall be recognized at the amount of the commission or handling fee to which it expects to be entitled. The amount of the commission or handling fee is determined by deducting the amount payable to other relevant parties from the total amount of consideration received or receivable. |
39 Contract costs
| (1) | Contract performance cost |
| For the cost resulting from performing the contract which is not included in other ASBE except the revenue standards and meets the following conditions, the Company shall recognize it as an asset: | |
| (a) | The cost is directly related to a current or predicted contract, including the direct labor, direct material and manufacturing expenses (or similar expenses), the cost borne by the client and other costs resulting from the contract; |
| (b) | The cost adds various resources that can be applied by the Company to fulfill due performance obligations; and |
| (c) | The cost is predicted to be recovered. |
| The asset shall be presented and reported in inventory or other non-current assets, which depends on whether the amortization period exceeds a normal operating cycle during the initial recognition. | |
| (2) | Contract acquisition cost |
| If the increment cost resulting from the Company’s acquisition of contract is predicted to be recovered, it shall be recognized as an asset as the contract acquisition cost. Increment Cost refers to the cost which only results from the contract acquisition, like the sales commission. If the amortization period is less than one year, it shall be included in current profit and loss. | |
| (3) | Contract cost amortization |
| The asset related to the contract cost shall, by adopting the same basis for the recognition of commodities or services revenues related to the asset, be amortized during the period of fulfilling the performance obligation or according to the fulfillment schedule and be included into current profit and loss. |
| III | Significant accounting policies and accounting estimates (continued) |
| 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 higher than the difference between the residual consideration predicted to be obtained from the Company’s transfer of commodities related to the asset and the cost to be incurred due to such transfer, depreciation reserves shall be calculated and withdrawn for the surplus which shall also be recognized as the asset impairment loss. | |
| After the provision for impairment is made, if changes in depreciation factors during previous periods have made the above difference higher than the asset’s carrying amount, it shall be restituted to previously established asset impairment allowances and included in current profit and loss. However, the carrying amount of restituted assets shall not exceed the carrying amount of the asset on the date of restitution without establishing impairment allowances. |
40 Public grants
| (1) | Type of change |
| Public grants are transfers of monetary or non-monetary assets from the public to the Group at nil consideration. According to the grants targets stipulated in the relevant public documents, public grants are 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 public grant is a non-monetary asset, it is measured at fair value. If the fair value cannot be obtained in a reliable way, it is measured at the nominal amount (RMB 1). Public grants measured at nominal amounts are recognized directly in the current profits and losses. | |
| (3) | Accounting treatment |
| 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 subsequent period, it is recognized as deferred income and included in the current profit and loss or offset costs in the period in which the related costs or losses are recognized; public grants used to compensate costs or losses incurred by the enterprise shall be directly included in current profits and losses or offset related costs. For public grants related to the day-to-day activities of the enterprise, the R&D and VAT-related subsidies and the taxation, or operation-based incentive public subsidies are included in other income; other public grants are written off against related costs based on the substance of economic activities. Public grants not related to daily activities of the Company are included in the non-operating income and expenditure. For preferential loans for policy discount, if the public finance department appropriates the discounted funds to the lending bank, the borrowing cost is accounted for according to the principal of the loan and the policy preferential interest rate, with the amount actually received as the entry value of the loan. If the public finance department directly appropriates the interest grant funds to the Company, the grants shall offset the related borrowing costs. | |
| In case that a recognized public grant is required to be returned, the carrying amount of the asset is adjusted if the carrying amount of relevant assets is offset at the initial recognition; if there is related deferred income, the book balance of deferred income is offset, and the excess is included in the current profit and loss; and in case of other circumstances, it is directly included in current profits and losses. |
| 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 the difference (temporary difference) between the tax basis and carrying amount of the underlying assets or liabilities. On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured based on the tax rate applicable during the period when it is 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 temporary differences to the extent that it is likely to acquire taxable income that can be used to offset the deductible temporary differences, deductible losses that can be carried forward to future years and tax credits. However, deferred income tax assets arising from the initial recognition of assets 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 corresponding deferred income tax asset will be recognized if the following criteria are met simultaneously: the temporary difference is likely to be reversed in the foreseeable future and it is likely to obtain taxable income that can be used to offset the deductible temporary difference in the future. | |
| (2) | Basis for recognition of deferred income tax liabilities |
| The Company recognizes the taxable temporary differences that should be paid but not paid for the current and previous periods as deferred income tax liabilities. But deferred tax liabilities 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 business combination and do not affect accounting profits or taxable income (or deductible losses) upon their occurrence; |
| (c) | For taxable temporary differences related to investments in subsidiaries and associates, the timing of the reversal of the temporary differences can be controlled and the temporary differences are unlikely to be reversed in the foreseeable future. |
| (3) | Deferred income tax assets and liabilities are presented on a net basis after, provided the following conditions are met: |
| (a) | An enterprise has the legal right to settle current income tax assets and liabilities on a net basis; |
| (b) | Deferred income tax assets and liabilities relate to income taxes levied by the same taxing authority on either the same taxable entity or different taxable entities which intend to either settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are reversed. |
| III | Significant accounting policies and accounting estimates (continued) |
42 Leases
| From the effectiveness date of a contract, the Company assesses whether the contract is a lease or includes any lease. If a party to the contract transfers the right allowing the control over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract is a lease or includes a lease. | |
| (1) | Lease contract split |
| If a contract contains multiple single leases at the same time, the Company will split the contract, and conduct accounting treatment of each single lease respectively. | |
| If a contract contains both lease and non-lease parts at the same time, the Company will split the lease and non-lease parts, conduct accounting treatment of the lease part in accordance with the accounting standards governing leases, and conduct accounting treatment of the non-lease part in accordance with other applicable corporate accounting standards. |
| (2) | Lease contract combination |
| With regard to two or multiple contracts containing leases concluded by the Company with the same counterparty or its related parties at the same or a similar time, when any of the following conditions is met, the contracts are combined into one contract for accounting treatment: | |
| (a) |
Two or multiple contracts are concluded based on an overall business purpose and constitute a packagedeal, and if they are not considered as a whole, the overall business purpose cannot be understood.
| (b) | The consideration amount of one contract among the two or multiple contracts depends on the pricing or performance of other contracts. |
| (c) | The rights to use assets transferred by the two or multiple contracts constitute one single lease. |
| (3) | Accounting treatment with the Company as lessee |
| On the commencement date of the lease term, the Company recognises the right-of-use assets and lease liabilities for the lease, unless it is a simplified short-term lease or low-value asset lease. | |
| (a) | Short-term leases and low-value asset leases |
| A short-term lease refers to a lease that does not include a purchase option and whose lease term does not exceed 12 months. A low-value asset lease refers to a lease where the value will be low when a single leased asset is a new asset. | |
| The Company does not recognize the right-of-use assets or lease liabilities for the following short-term leases and low-value asset leases. In each period within the lease term, the relevant lease payments are included in cost of the related assets or profit or loss for the current period on a straightline basis or according to other systemic and reasonable methods. |
| Item | Simplified leased asset type | |
| Short-term lease | A lease whose lease term does not exceed 12 months from the commencement date of the lease term | |
| Low-value asset lease | An asset lease with a value of less than RMB 40,000 or its foreign currency equivalents |
| 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-value asset leases other than those mentioned above. | |
| (b) | The accounting policies for right-of-use assets and lease liabilities are detailed in Note III, 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 finance lease refers to a lease where almost all the risks and rewards, related to the ownership of the leased asset(s), are substantially transferred, regardless of whether the ownership is transferred eventually. An operating lease refers to all leases other than finance leases. Usually, the Company classifies a lease that meets any one or more of the following conditions as a finance lease: 1) Upon expiry of the lease term, the ownership of the leased asset(s) is transferred to the lessee. 2) The lessee has the option to purchase the leased assets. As the agreed purchase price is low enough compared with the fair value of the leased asset(s) at the time the option is expected to be exercised, it can be reasonably determined at the inception of the lease that the lessee will exercise the option. 3) Although the ownership of the asset(s) is not transferred, the lease term accounts for the majority of the service life of the leased asset(s). 4) At the inception of the lease, the present value of the lease payments receivable is almost equal to the fair value of the leased asset(s). 5) The leased asset(s) is/are special in nature and can be only used by the lessee, unless there is a large alteration. The Company may also classify a lease that falls under any one or more of the following circumstances as a finance lease: 1) If the lessee cancels the lease, losses to the lessor caused by the cancellation will be borne by the lessee. 2) Gains or losses arising from fluctuations in the fair value of the residual value of the leased asset(s) are borne by the lessee. 3) The lessee is able to renew the lease with a rental far lower than the market level to the next term. | |
| (b) | Accounting treatment of finance leases |
| On the commencement date of the lease term, the Company recognises the finance lease receivables for the finance lease and derecognises the leased asset(s) of the finance lease. In the initial measurement of finance lease receivables, the sum of the unsecured residual value and the present value of the lease payments receivable not yet received on the commencement date of the lease term discounted at the interest rate implicit in lease is the entry value of the finance lease receivables. Lease payments receivable include: 1) The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; 2) Variable lease payments that depend on indexation or ratios; 3) The exercise price of the purchase option, when applicable, if it is reasonably certain that the lessee will exercise the purchase option; 4) The amount required to be paid by the lessee to exercise the option to terminate the lease if the lease term reflects that the lessee will exercise the option to terminate the lease; 5) Secured residual value provided to the lessor by the lessee, a party related to the lessee, or an independent third party that has the financial ability to perform the security provision obligation. The received variable lease payments that are not included in the measurement of the net investment in the lease are included in profits and losses for the current period when they are actually incurred. |
| 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 other systematic and reasonable methods to recognize the lease receipts of the operating lease as rental income; the Company capitalizes the initial direct expenses incurred in connection with the operating lease, amortizes them over the lease term on the same basis as that for the recognition of the rental income, and includes them in the current profit and loss by stage; the Company includes the variable lease payments, obtained in connection with the operating lease that are not included in the lease receipts, in current profits and losses when they actually incurred. | |
| (5) | Sale and leaseback |
| (a) | The Company as seller and lessee |
| If the asset transfer in a sale and leaseback transaction is a sale, the Company will measure the right-of-use assets formed by the sale and leaseback based on the portion of the original asset’s carrying amount that is related to the use right acquired by the leaseback, and recognize related gains or losses only for the right transferred to the lessor. If the fair value of the sales consideration is different from the fair value of the asset, or if the lessor does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the prepaid rent, or the amount above the market price as the additional financing provided by the lessor to the lessee; at the same time, the relevant sales gains or losses will be adjusted based on the fair value. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will continue to recognise the transferred asset and at the same time recognise a financial liability equivalent to the transfer income. | |
| (b) | The Company as buyer and lessor |
| If the asset transfer in a sale and leaseback transaction is a sale, the Company will conduct corresponding accounting treatment for asset purchase and apply the accounting standards governing leases to the accounting treatment of the asset lease. If the fair value of the sales consideration is different from the fair value of the asset, or if the Company does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the pre-collected rent, or the amount above the market price as the additional financing provided by the Company to the lessee; at the same time, the rental receipt will be adjusted based on the market price. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will recognise a financial asset equivalent to the transfer income. |
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 of the other party, they constitute related parties. Enterprises that are solely controlled by the state and do not have any other related party relationship shall not be deemed as related parties. |
| 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 component of discontinued operation: | |
| (1) | This component represents an independent main business or a separate main operation region. |
| (2) | This component is part of a related plan to dispose of an independent main business or a separate main operation region. |
| (3) | This component is a subsidiary acquired for the sole purpose of resale. Operating profit and loss, such as impairment losses for discontinued operations and the amount reversed, and disposal profit and loss are presented in the income statement as profit and 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. The held-for-sale non-current assets or assets in held-for-sale disposal groups and the liabilities in held-for-sale disposal groups shall not offset each other, but shall be presented as current assets and current liabilities respectively. In the income statement, the Company presents the profits and losses from going concern and the profits and losses from discontinued operations. For the discontinued operations reported in the current period, the Company represents in the financial statements for the current period, the information, previously presented as the profits and losses from going concern, as the profits and losses from discontinued operations for the comparable accounting period. If the discontinued operations are no longer eligible for being classified as held-for-sale categories, the Company will represent in the financial statements for the current period, the information, previously presented as the profits and losses from discontinued operations, as the profits and 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 instruments and hedged items, and documentation of the hedging relationship and the Company’s risk management strategies and objectives for undertaking the hedge have been prepared. |
| 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 following criteria are met: 1) There is an economic relationship between the hedged item and the hedging instrument. This economic relationship causes opposite changes in the value of the hedging instrument and the hedged item in face of the identical hedged risk. 2) The effect of credit risk does not dominate the value changes that result from that economic relationship. 3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item. However, that designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument that would create hedge ineffectiveness that could result in an accounting outcome that would be inconsistent 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 be measured at fair value through other comprehensive income, the hedging gain or loss generated by the 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 in profit or loss, and shall adjust the carrying amount of the recognized hedged item that is not measured at fair value. If the hedged item is a financial asset (or a component thereof) measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognized in profit or loss, and will not be required for adjustment since the carrying amount has been measured at fair value. However, if the hedged item is a non-trading equity instrument (or a component thereof) that the Company has elected to be measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognized in other comprehensive income, and will not be required for adjustment, since the carrying amount has been measured at fair value. When a hedged item represents a defined commitment that has not been unrecognized (or a component thereof), the cumulative change in the fair value of the hedged item subsequent to its designation caused by the hedge relationship is recognized as an asset or a liability with a corresponding gain or loss recognized in profit or loss. When a defined commitment is made to acquire an asset or assume a liability, the initial carrying amount of the asset or the liability is adjusted to include the cumulative change in the fair value of the hedged item that has been recognized. |
| (c) | If the hedged item is a financial instrument (or a component thereof) measured at amortized cost, the adjustment made to the carrying amount of the hedged item shall be amortized based on the effective interest rate recalculated on the amortization commencement date, and recognized in current profits and losses. This amortization can commence from the adjustment date, but not later than the time when the hedging gain or loss adjustment is made for the termination of the hedged item. If the hedged item is a financial asset (or a component thereof) measured at fair value through other comprehensive income, the cumulative recognized hedging gain or loss shall be amortized in the same manner and recognized in the profit or loss, but the carrying amount of the financial asset (or a component thereof) shall not be adjusted. |
| 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 effective hedge (i.e., the portion that is offset by the change in the cash flow hedge reserve) shall be recognized in other comprehensive income. The amount of cash flow hedging reserves shall be determined 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 recognized in other comprehensive income for each period is the change in cash flow hedging reserves for the 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 current profits and losses. |
| (c) | 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 forecast transaction for a non-financial asset or a non-financial liability becomes a defined commitment for which fair value hedge accounting treatment is applied, the Company shall remove that amount from the cash flow hedge reserve previously recognized in other comprehensive income and include it in the initial cost of the asset or the liability. 2) for cash flow hedges other than those covered by 1), that amount from the cash flow hedge reserve previously recognized in other comprehensive income shall be reclassified from the cash flow hedge reserve to current profits and losses in the same period or the period during which the hedged 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 will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered from other comprehensive income to current profits and losses. |
| (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 cash flow 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 instrument recognized in other comprehensive income shall be correspondingly transferred out and recognized in current profits and losses. |
| (b) | The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge shall be recognized in current profits and losses. |
| 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 changes in risk management objectives. |
| (b) | The hedging instrument has expired or been sold, or the contract has been terminated or has been exercised. |
| (c) | The economic relationship no longer exists between the hedged item and the hedging instrument, or the effect of credit risk start to dominate the value changes that result from that 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 then evaluate whether the hedging relationship meets the conditions for applying hedging accounting 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 remain applicable to the remaining unaffected portion. | |
| (6) | Fair value selection of credit risk exposure |
| When credit derivative instruments measured at fair value through current profits and losses are used to manage the credit risk exposure of a financial instrument (or a component thereof), the financial instrument (or a component thereof) can be designated as a financial instrument measured at fair value through current profits and losses during its initial recognition, subsequent measurement, 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 credit derivative; |
| (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. |
| 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 Business Enterprises No. 17 on the Company | |
| On October 25, 2023, the Ministry of Finance issued the Corporate Accounting Standards Interpretation No. 17 (Cai Kuai [2023] No. 21, hereinafter referred to as "Interpretation No. 17"). The Company has adopted the "Accounting for Sale and Leaseback Transactions" since January 1, 2024, and the adoption of the Interpretation No. 17 has had no significant impact on the consolidated and the Company's financial 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
| No previous accounting errors were identified and corrected in the Reporting Period. |
IV Taxes
| 1 | Value-added tax |
| In the Reporting Period, output tax was calculated at 3%, 5%, 6%, 9% or 13% of the taxable income of general taxpayers and the value added-tax was paid based on the difference after deducting the allowance deduction of input tax in the current period. The value added-tax payment for the Company’s directly exported goods is executed in accordance with the regulations of "Exemption, Offset and Refund". The tax refund rate is 0%-13% during the reporting period. | |
| 2 | Urban maintenance and construction tax |
| Subject to the relevant tax laws and regulations of the state and local regulations, urban maintenance and construction tax is paid based on the proportion stipulated by the state according to the individual circumstances of each member of the Company. | |
| 3 | Education surcharges |
| Education surcharges are paid according to the individual circumstances of each member of the Company based on the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. | |
| 4 | Property tax |
| Property tax is paid on the houses with property rights according to the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. |
| IV | Taxes (continued) | |||
| 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 reduced corporate 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 for Small and Micro Enterprises and Self-employed Businesses (Announcement No. 6 [2023] of the Ministry of Finance and the State Taxation Administration) and the Announcement of the Ministry of Finance and the State Taxation Administration on Tax Policies for Further Supporting the Development of Small and Micro Enterprises and Self-employed Businesses (Announcement No. 12 [2023] of the Ministry of Finance and the State Taxation Administration), issued by the Ministry of Finance and the State Taxation Administration in 2023, from January 1, 2023 to December 31, 2027, the annual taxable income of small and low-profit enterprises not exceeding RMB1 million will be included in the taxable income at a reduced rate of 25%, and the enterprise income tax will be paid at the rate of 20%. | ||||
| Except for the following subsidiaries entitling to preferential tax treatment and the overseas subsidies that adopt local applicable tax rate, other entities under the Company are subject to the applicable tax rate of 25%, or the preferential tax rate for small and micro enterprises. | ||||
| Subsidiaries entitled to tax preferences: | ||||
| Company Name | Preferential tax rate | Reason | ||
| TCL China Star Optoelectronics Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Suzhou China Star Optoelectronics Technology Co., 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 Technology Co., 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 enterprise | ||
| Techigh 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 Protection Technology Co., Ltd. | 15.00% | Corporate income tax is levied at a reduced rate of 15% on eligible third-party enterprises, engaged in pollution prevention and control | ||
| Zhonghuan Advanced Bandaoti Technology Co., Ltd. | 12.50% | A high-tech enterprise; an integrated circuit materials enterprise exempt from corporate income tax for the first two years starting from the tax year in which the first production and operation income is obtained, and subject to a 50% reduction in corporate income tax for the three years following such two years, namely being exempt from corporate income tax between 2021 and 2022 and subject to 50% reduction in corporate income tax between 2023 and 2025; and an integrated circuit enterprise | ||
| Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Tianjin Zhonghuan Advanced Material&Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| IV | Taxes (continued) | |||
| 5 | Corporate income tax (continued) | |||
| Company Name | Preferential tax rate | Reason | ||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | 15.00% | High-tech enterprise | ||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Huansheng New Energy (Jiangsu) Co., Ltd. | 15.00% | High-tech enterprise | ||
| Xuzhou Jingrui Bandaoti Equipment Technology Co., Ltd. | 15.00% | High-tech enterprise | ||
| Tianjin Huanou New Energy Technology Co., Ltd | 15.00% | High-tech enterprise | ||
| Huansheng New Energy (Tianjin) Co., Ltd. | 15.00% | High-tech enterprise | ||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | 15.00% | High-tech enterprise | ||
| Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. | 15.00% | High-tech enterprise, and encouraged business in West China | ||
| Inner Mongolia Zhonghuan Advanced Bandaoti Material Co., Ltd. | 15.00% | High-tech enterprise | ||
| Ningxia Zhonghuan Solar Material Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Huhehaote Huanju New Energy Development Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Sonid Left Banner Huanxin New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Otog Banner Huanju New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Ongniud Banner Guangrun New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Tuquan Guanghuan New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Inner Mongolia New Huanyu Yangguang New Energy Technology Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Ningxia Zhonghuan New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Ningxia Huanou New Energy Technology Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Inner Mongolia TCL Photoelectric Technology Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Shaanxi Huanshuo Green New Energy Co., Ltd. | 15.00% | Encouraged business in West China | ||
| Tianjin Binhai New Area Huanju New Energy Co., Ltd. | Tax-exempt | State-supported public infrastructure project | ||
| Tianjin Zhonghuan New Energy Co., Ltd. | Tax-exempt and 12.5% | State-supported public infrastructure project | ||
| Tianjin Binhai Huanxu New Energy Co., Ltd. | Tax-exempt | State-supported public infrastructure project | ||
| Hohhot Shuguang New Energy Co., Ltd. | Tax-exempt | State-supported public infrastructure project, and encouraged business in West China | ||
| Ningxia Huanneng New Energy Co., Ltd. | Tax-exempt | State-supported public infrastructure project, and encouraged business in West China | ||
| Dangxiong Youhao New Energy Development Co., Ltd. | 7.50% | State-supported public infrastructure project, and encouraged business in West China | ||
| Shaanxi Runhuan Tianyu Technology Co., Ltd. | 7.50% | State-supported public infrastructure project, and encouraged business in West China |
V Notes to Consolidated Financial Statements
1 Monetary assets
| June 30, 2024 | January 1, 2024 | |||
| Cash on hand | 556 | 583 | ||
| Bank deposits | 17,650,332 | 19,807,150 | ||
| Deposits with the central bank | 398,920 | 397,191 | ||
| Other monetary assets | 1,537,692 | 1,719,347 | ||
| 19,587,500 | 21,924,271 |
| Note | Monetary assets with restricted use rights | |||
| June 30, 2024 | January 1, 2024 | |||
| TCL Tech Finance's statutory reserve deposits with the central bank | 393,069 | 341,091 | ||
| Other restricted monetary assets | 1,270,883 | 1,586,365 | ||
| 1,663,952 | 1,927,456 | |||
| On June 30, 2024, the Company’s bank deposits of RMB393,069,000 (December 31, 2023: RMB341,091,000) were statutory deposit reserves deposited with the Central Bank by TCL Technology Group Finance Co., Ltd., a subsidiary of the Company. | ||||
| On June 30, 2024, the Company’s monetary assets offshore amounted to RMB2,564,865,000 (December 31, 2023: RMB1,533,937,000), all of which were owned by the overseas subsidiaries of the Company. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
2 Held-for-trading financial assets
| June 30, 2024 | January 1, 2024 | |||
| Financial assets classified as those measured at fair value through profit or loss | 25,226,582 | 23,184,117 | ||
| Including: Debt instrument investments | 25,182,899 | 23,131,691 | ||
| Equity instrument investments | 43,683 | 52,426 | ||
| 25,226,582 | 23,184,117 |
3 Derivative financial assets
| June 30, 2024 | January 1, 2024 | |||
| Foreign exchange forwards and foreign exchange swaps | 155,087 | 73,645 | ||
| Interest rate swaps | - | 34,363 | ||
| 155,087 | 108,008 |
4 Notes receivable
| (1) | Notes receivable by category | |||
| June 30, 2024 | January 1, 2024 | |||
| Bank acceptance notes | 197,052 | 615,059 | ||
| Trade acceptance notes | 2,865 | 333 | ||
| 199,917 | 615,392 | |||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 4 | Notes receivable (continued) | |||||||||||
| (2) | Presentation of provision for bad debts on notes receivable by category | |||||||||||
| June 30, 2024 | January 1, 2024 | |||||||||||
| Gross amount | Bad-debt Allowance | amount | Gross amount | Bad-debt Allowance | amount | |||||||
| Amount | Ratio (%) | Amount | Accrual percentage | Amount | Ratio (%) | Amount | Accrual percentage | |||||
| Notes receivable for which the allowance for doubtful accounts were established on the grouping basis | 199,917 | 100% | - | - | 199,917 | 615,392 | 100% | - | - | 615,392 | ||
| Including: low-risk portfolio | 199,917 | 100% | - | - | 199,917 | 615,392 | 100% | - | - | 615,392 | ||
| 199,917 | 100% | - | - | 199,917 | 615,392 | 100% | - | - | 615,392 | |||
| (3) | As at June 30, 2024, notes receivable in pledge were RMB 22,933,000. | |||||||||||
| (4) | As at June 30, 2024, endorsed or discounted notes receivable that were outstanding and derecognized amounted to RMB 87,000,000 and endorsed or discounted notes receivable that were outstanding and not derecognized amounted to RMB 13,020,000. | |||||||||||
5 Accounts receivable
| June 30, 2024 | January 1, 2024 | |||
| Accounts receivable | 23,482,100 | 22,362,875 | ||
| Less: allowance for doubtful accounts | 365,665 | 359,224 | ||
| 23,116,435 | 22,003,651 |
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||
| 5 | Accounts receivable (continued) | ||||||||||
| (1) | Accounts receivable as at June 30, 2024 are classified as follows by how the doubtful debts were provisioned: | ||||||||||
| June 30, 2024 | |||||||||||
| Gross amount | Bad-debt Allowance | ||||||||||
| Lifetime ECL rate | Gross amount | ||||||||||
| Accounts receivable for which the related allowances for doubtful accounts were established on the individual basis | 201,379 | 87.10% | 175,402 | ||||||||
| Of which: | |||||||||||
| Accounts receivable | 201,379 | 87.10% | 175,402 | ||||||||
| Accounts receivable for which the related allowances for doubtful accounts were established on the grouping basis | 23,280,721 | 0.82% | 190,263 | ||||||||
| Of which: | |||||||||||
| Group 1: by aging analysis | 16,946,902 | 0.44% | 74,597 | ||||||||
| Group 2: by tariff | 942,874 | 0.01% | 71 | ||||||||
| Group 3: by photovoltaics | 4,556,136 | 2.24% | 102,031 | ||||||||
| Group 4: other silicon materials | 834,809 | 1.62% | 13,564 | ||||||||
| 23,482,100 | 365,665 | ||||||||||
| (2) | The aging of accounts receivable is analysed as follows: | ||||||||||
| June 30, 2024 | January 1, 2024 | ||||||||||
| Amount | Ratio (%) | Amount | Ratio (%) | ||||||||
| Within 1 year | 21,833,601 | 92.98% | 21,061,059 | 94.18% | |||||||
| 1 to 2 years | 774,701 | 3.30% | 489,084 | 2.19% | |||||||
| 2 to 3 years | 233,622 | 0.99% | 193,256 | 0.86% | |||||||
| Over 3 years | 640,176 | 2.73% | 619,476 | 2.77% | |||||||
| 23,482,100 | 100.00% | 22,362,875 | 100.00% | ||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 5 | Accounts receivable (continued) | |||||||||
| (3) | Allowances for doubtful accounts receivable are analysed as follows: | |||||||||
| June 30, 2024 | ||||||||||
| Beginning amount | 359,224 | |||||||||
| New subsidiary | - | |||||||||
| Accrued in the period | 60,275 | |||||||||
| Reversal of current period | (51,686) | |||||||||
| Write-off of current period | (2,323) | |||||||||
| Reduced subsidiary | - | |||||||||
| Exchange adjustment | 175 | |||||||||
| Ending amount | 365,665 | |||||||||
| (4) | On June 30, 2024, the accounts receivable of the top five balances are as follows: | |||||||||
| June 30, 2024 | January 1, 2024 | |||||||||
| Total amount owed by the top five | 10,308,494 | 10,129,405 | ||||||||
| Proportion of total accounts receivable | 43.90% | 45.30% | ||||||||
| (5) | Accounts receivable derecognized due to transfer of financial assets | |||||||||
| Item | Methods of transfer of financial assets | Amount derecognized for the period | Gain or loss on derecognition | |||||||
| Accounts receivable | Factoring without recourse | 3,636,232 | (6,648) | |||||||
6 Receivables financing
| June 30, 2024 | January 1, 2024 | |||
| Notes receivable financing | 463,152 | 954,410 | ||
| Receivable financing | 155,810 | - | ||
| 618,962 | 954,410 | |||
| Note | As at June 30, 2024, endorsed or discounted receivables financing that were outstanding and derecognized on the balance sheet date amounted to RMB 14,588,309,000. | |||
| As of June 30, 2024, the Company believes that receivables financing it held did not have significant credit risks and will not cause significant losses due to default. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
7 Prepayments
| (1) | Prepayments are analyzed as follows: | |||
| June 30, 2024 | January 1, 2024 | |||
| Within 1 year | 2,543,100 | 2,798,957 | ||
| 1-2 years | 87,239 | 138,561 | ||
| 2-3 years | 40,480 | 7,423 | ||
| Over 3 years | 5,960 | 1,347 | ||
| 2,676,779 | 2,946,288 | |||
| (2) | As of June 30, 2024, the prepayments of the top five balances are as follows: | |||
| June 30, 2024 | January 1, 2024 | |||
| Total amount owed by the top five | 1,341,544 | 1,790,548 | ||
| As % of total prepayments | 50.12% | 60.77% | ||
8 Other receivables
| June 30, 2024 | January 1, 2024 | |||||
| Dividends receivable | 681,036 | 1,381,490 | ||||
| Other receivables | 3,719,161 | 4,325,365 | ||||
| 4,400,197 | 5,706,855 |
(1) Dividends receivable
| June 30, 2024 | January 1, 2024 | |||||
| Xinjiang Goens Energy Technology Co., Ltd. | 698,082 | 1,398,344 | ||||
| Tianjin Binhai Huanneng New Energy Co., Ltd. | - | 192 | ||||
| Less: allowance for doubtful accounts | 17,046 | 17,046 | ||||
| 681,036 | 1,381,490 |
| 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 | |||||||||||
| June 30, 2024 | January 1, 2024 | |||||||||||
| Category | Gross amount | Bad-debt Allowance | Carrying amount | Gross amount | Bad-debt Allowance | Carrying amount | ||||||
| Amount | Ratio (%) | Amount | Accrual percentage | Amount | Ratio (%) | Amount | Accrual percentage | |||||
| Allowances for bad debts accrued on an individual basis | 698,082 | 100% | 17,046 | 2.44% | 681,036 | 1,398,536 | 100% | 17,046 | 1.22% | 1,381,490 | ||
| 698,082 | 100% | 17,046 | 2.44% | 681,036 | 1,398,536 | 100% | 17,046 | 1.22% | 1,381,490 | |||
(2) Other receivables
| June 30, 2024 | January 1, 2024 | |||||
| Other receivables | 4,082,141 | 4,691,149 | ||||
| Less: allowance for doubtful accounts | 362,980 | 365,784 | ||||
| 3,719,161 | 4,325,365 | |||||
| (a) | Nature of other receivables is analyzed as follows: | |||||
| June 30, 2024 | January 1, 2024 | |||||
| Subsidy receivables | 1,662,166 | 2,342,535 | ||||
| Equity transfer receivables | 573,469 | 618,752 | ||||
| Security and deposits | 502,740 | 497,819 | ||||
| Others | 980,786 | 866,259 | ||||
| 3,719,161 | 4,325,365 | |||||
| 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 | ||||||||||||
| June 30, 2024 | January 1, 2024 | ||||||||||||
| Category | Gross amount | Bad-debt Allowance | Carrying amount | Gross amount | Bad-debt Allowance | Carrying amount | |||||||
| Amount | Ratio (%) | Amount | Accrual percentage | Amount | Ratio (%) | Amount | Accrual percentage | ||||||
| Allowances for bad debts accrued on an individual basis | 360,251 | 8.83% | 289,184 | 80.27% | 71,067 | 426,084 | 9.08% | 293,600 | 68.91% | 132,484 | |||
| Provisions for bad debts accrued on a portfolio basis | 3,721,890 | 91.17% | 73,796 | 1.98% | 3,648,094 | 4,265,065 | 90.92% | 72,184 | 1.69% | 4,192,881 | |||
| 4,082,141 | 100% | 362,980 | 8.89% | 3,719,161 | 4,691,149 | 100% | 365,784 | 7.80% | 4,325,365 | ||||
| (c) | Allowance for doubtful other receivables is analyzed as follows: | |||||||
| 12-month ECL | Lifetime ECL (credit not impaired) | Lifetime ECL (credit impaired) | Total | |||||
| January 1, 2024 | 62,322 | 28,965 | 274,497 | 365,784 | ||||
| Current accrual | 5,231 | 181 | - | 5,412 | ||||
| Increase of new subsidiaries | - | - | - | - | ||||
| Reversal of current period | (3,103) | - | (30) | (3,133) | ||||
| Write-off of current period | - | - | (27) | (27) | ||||
| Decrease due to disposal of subsidiaries | - | - | (5,000) | (5,000) | ||||
| Exchange adjustment | (56) | - | - | (56) | ||||
| June 30, 2024 | 64,394 | 29,146 | 269,440 | 362,980 | ||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||
| 8 | Other receivables (continued) | |||||||
| (d) | The aging of other receivables is analyzed as follows: | |||||||
| June 30, 2024 | January 1, 2024 | |||||||
| Carrying amount | Ratio (%) | Carrying amount | Ratio (%) | |||||
| Within 1 year | 2,168,310 | 53.11% | 3,192,635 | 68.05% | ||||
| 1 to 2 years | 1,102,900 | 27.02% | 785,690 | 16.75% | ||||
| 2 to 3 years | 386,450 | 9.47% | 371,464 | 7.92% | ||||
| Over 3 years | 424,481 | 10.40% | 341,360 | 7.28% | ||||
| 4,082,141 | 100.00% | 4,691,149 | 100.00% | |||||
| (e) | As of June 30, 2024, the other receivables of the top five balances are as follows: | ||||
| June 30, 2024 | January 1, 2024 | ||||
| Total amount owed by the top five | 2,204,659 | 3,006,544 | |||
| As % of total other receivables | 54.01% | 64.09% | |||
| (f) | On June 30, 2024, there was no transfer of other receivables that did not conform to the conditions for derecognition in the balance of this account; no transaction arrangement for asset securitization with other receivables as the subject asset; and no financial instrument that was the subject of securitization and did not conform to the conditions for derecognition. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
9 Inventories
| (1) | Inventories are classified as follows: | ||||||||||||
| June 30, 2024 | January 1, 2024 | ||||||||||||
| Carrying balance | Provision for depreciation of inventories / provision for impairment of contract performance costs | Carrying amount | Carrying balance | Provision for depreciation of inventories / provision for impairment of contract performance costs | Carrying amount | ||||||||
| Raw materials | 5,569,025 | 584,753 | 4,984,272 | 6,605,273 | 636,587 | 5,968,686 | |||||||
| Work in progress | 3,411,368 | 763,962 | 2,647,406 | 3,656,706 | 659,073 | 2,997,633 | |||||||
| Finished Goods | 13,763,489 | 1,629,919 | 12,133,570 | 10,640,524 | 1,536,291 | 9,104,233 | |||||||
| Turnover materials | 418,056 | 1,377 | 416,679 | 412,583 | 1,380 | 411,203 | |||||||
| 23,161,938 | 2,980,011 | 20,181,927 | 21,315,086 | 2,833,331 | 18,481,755 | ||||||||
| As of June 30, 2024, the Company had no inventory for liabilities guarantee. |
| (2) | Provision for depreciation of inventories / provision for impairment of contract performance costs: |
| January 1, 2024 | Amount of increase in the current period | Amount of decrease in the current period | June 30, 2024 | |||||||||||
| Accrued in the period | Others | Reversal of current period | Write-off of current period | Others | ||||||||||
| Raw materials | 636,587 | 223,068 | - | (56,533) | (218,497) | 128 | 584,753 | |||||||
| Work in progress | 659,073 | 753,666 | - | (82,360) | (566,419) | 2 | 763,962 | |||||||
| Finished Goods | 1,536,291 | 1,427,415 | - | (267,082) | (1,066,905) | 200 | 1,629,919 | |||||||
| Turnover materials | 1,380 | 2 | - | (5) | - | - | 1,377 | |||||||
| 2,833,331 | 2,404,151 | - | (405,980) | (1,851,821) | 330 | 2,980,011 | ||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
10 Contract assets
| (1) | Contract assets are classified as follows: |
| June 30, 2024 | January 1, 2024 | |||||||||||
| Carrying balance | Impairment allowance | Carrying amount | Carrying balance | Impairment allowance | Carrying amount | |||||||
| Electricity charges receivable | 394,432 | 22,858 | 371,574 | 362,058 | 18,151 | 343,907 | ||||||
| (2) | Valuation allowances for contract assets are analyzed as follows: | |||||||||
| January 1, 2024 | Current Accrual | Current Reversal or write-off | Other increases and decreases | June 30, 2024 | ||||||
| Electricity charges | 18,151 | 4,707 | - | - | 22,858 | |||||
11 Non-current assets due within one year
| June 30, 2024 | January 1, 2024 | ||||
| Other non-current assets due within one year | 470,114 | 461,179 | |||
| Debt investments due within one year | 128,969 | 119,516 | |||
| 599,083 | 580,695 |
12 Other current assets
| June 30, 2024 | January 1, 2024 | ||||
| VAT to be deducted, to be certified, etc. | 5,412,552 | 4,244,948 | |||
| Loans and advances to customers | 705,389 | 845,764 | |||
| Others (note) | 1,429,681 | 195,822 | |||
| 7,547,622 | 5,286,534 | ||||
Note: Others mainly include fixed income large-amount certificates of deposit that are subsequently measuredat amortized cost.
| V | Notes to Consolidated Financial Statements (Continued) |
13 Debt Investments
| June 30, 2024 | January 1, 2024 | |||
| Treasury bonds and corporate bonds | 144,853 | 122,349 | ||
14 Long-term receivables
| June 30, 2024 | January 1, 2024 | Discount rate | ||||||||||||
| Gross amount | Bad-debt Allowance | Carrying amount | Gross amount | Bad-debt Allowance | Carrying amount | |||||||||
| Finance lease | 698,831 | - | 698,831 | 720,281 | - | 720,281 | 8.115% | |||||||
| Including: Unrealized financing income | (488,379) | - | (488,379) | (518,000) | - | (518,000) | ||||||||
| 698,831 | - | 698,831 | 720,281 | - | 720,281 | |||||||||
15 Long-term equity investments
| June 30, 2024 | January 1, 2024 | |||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||
| Associates (1) | 25,864,741 | 1,452,985 | 24,411,756 | 26,404,102 | 1,452,985 | 24,951,117 | ||||||
| Joint ventures (2) | 545,987 | 49,503 | 496,484 | 529,657 | 49,503 | 480,154 | ||||||
| 26,410,728 | 1,502,488 | 24,908,240 | 26,933,759 | 1,502,488 | 25,431,271 | |||||||
| As of June 30, 2024, the Company made impairment allowances for long-term equity investments in investees with poor management and insolvent assets. | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 15 | Long-term equity investments (continued) |
(1) Associates
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit | Accrued Impairment allowance | Other increases and decreases | June 30, 2024 | ||||||||||
| China Innovative Capital Management Limited | 970,300 | - | (66,750) | - | - | - | - | - | 903,550 | ||||||||||
| LG Electronics (Huizhou) Co., Ltd. | 89,810 | - | 6,241 | - | - | (13,400) | - | - | 82,651 | ||||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 19,642 | - | 2,881 | 1 | 797 | - | - | - | 23,321 | ||||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 1,375 | - | (285) | - | - | - | - | - | 1,090 | ||||||||||
| TCL Air Conditioner (Wuhan) Co., Ltd. | 40,982 | - | (9,007) | - | - | - | - | - | 31,975 | ||||||||||
| TCL Finance (Hong Kong) Co., Limited | 111,096 | - | (20,243) | - | - | - | - | - | 90,853 | ||||||||||
| Urumqi TCL Equity Investment Management Co., Ltd. | 1,087 | - | (30) | - | - | - | - | - | 1,057 | ||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 1,159,319 | (219,966) | (32,314) | - | - | - | - | - | 907,039 | ||||||||||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 425,471 | (3,474) | (4,359) | 2 | - | - | (1,856) | - | - | 415,784 | |||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 149,118 | - | (28,581) | - | - | - | - | - | 120,537 | ||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 15 | Long-term equity investments (continued) | ||||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Provision for impairment | Other increases and decreases | June 30, 2024 | ||||||||||||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 274,943 | (1,499) | (36,716) | - | - | - | - | 1 | 236,729 | ||||||||||||
| Wuxi TCL Aisikai Bandaoti Industry Investment Fund Partnership (Limited Partnership) | 278,753 | (28,606) | (7,924) | - | - | - | - | - | 242,223 | ||||||||||||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) | 36,842 | - | 99 | 9 | - | - | - | - | 36,950 | ||||||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | 32,183 | - | (8,216) | - | - | - | - | - | 23,967 | ||||||||||||
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) | 15,766 | - | (4,187) | 74 | - | (3,426) | - | - | 8,227 | ||||||||||||
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) | 20,862 | (8,851) | 615 | 1 | - | - | - | - | 12,627 | ||||||||||||
| Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) | 8,903 | - | 2 | - | - | - | - | - | 8,905 | ||||||||||||
| Beijing A Dynamic Venture Capital Center (Limited Partnership) | 4,138 | - | 38 | - | - | - | - | - | 4,176 | ||||||||||||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) | 4,212 | (273) | (694) | 1 | - | - | - | - | 3,246 | ||||||||||||
| Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) | 2,335 | - | - | - | - | - | - | - | 2,335 | ||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 10,127 | - | (232) | - | - | - | - | 9,895 | |||||||||||||
| Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) | 2,490 | - | (14) | - | - | - | - | - | 2,476 | ||||||||||||
| Ningbo Jiutian Matrix Investment Management Co., Ltd. | 9,852 | - | 2,636 | - | - | (4,094) | - | - | 8,394 | ||||||||||||
| Urumqi Qixinda Equity Investment Management Co., Ltd. | 5,375 | - | (247) | - | - | - | - | - | 5,128 | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 15 | Long-term equity investments (continued) | |||||||||||||||||||
| (1) | Associates (continued) | |||||||||||||||||||
| Increase or decrease in current period | ||||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | June 30, 2024 | |||||||||||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | 758 | - | (1) | - | - | - | - | - | 757 | |||||||||||
| Beijing A Dynamic Investment Consulting Co., Ltd. | 463 | - | - | - | - | - | - | - | 463 | |||||||||||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 735 | - | 272 | - | - | - | - | - | 1,007 | |||||||||||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | 277 | - | - | - | - | - | - | - | 277 | |||||||||||
| Wuxi TCL Medical Imaging Technology Co., Ltd. | 18,005 | - | (1,510) | - | - | - | - | 23 | 16,518 | |||||||||||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 857,073 | - | 43,989 | - | (15,935) | - | - | - | 885,127 | |||||||||||
| Getech Ltd. | 82,095 | - | (23,889) | (8) | - | - | - | - | 58,198 | |||||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 870,274 | - | (83,343) | - | - | - | - | - | 786,931 | |||||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) | 180,833 | - | (8,780) | - | - | - | - | - | 172,053 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 15 | Long-term equity investments (continued) | |||||||||||||||||||
| (1) | Associates (continued) | |||||||||||||||||||
| Increase or decrease in current period | ||||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | June 30, 2024 | |||||||||||
| Shenzhen Xinhuoyicheng Recreational and Sports Industry Co., Ltd. | 1,276 | - | (8) | - | - | - | - | - | 1,268 | |||||||||||
| Sichuan Shengtian New Energy Development Co., Ltd. | 531,804 | - | 16,913 | - | - | (5,905) | - | - | 542,812 | |||||||||||
| SunPower Systems International Limited | 30,206 | - | - | - | - | - | - | - | 30,206 | |||||||||||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 2,493 | - | (396) | - | - | - | - | - | 2,097 | |||||||||||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 136,325 | - | (829) | - | - | - | - | - | 135,496 | |||||||||||
| Hunan Guoxin Bandaoti Technology Co., Ltd. | 9,889 | - | 27 | - | - | - | - | - | 9,916 | |||||||||||
| Maxeon Solar Technologies, Ltd. | 622,768 | 29,430 | (241,053) | - | - | - | - | - | 411,145 | |||||||||||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 727,700 | 14,970 | (10,180) | - | - | (2,705) | - | - | 729,785 | |||||||||||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 4,267 | - | 695 | - | - | - | - | - | 4,962 | |||||||||||
| Ningbo Zhongxin Venture Capital Partnership (Limited Partnership) | 142,311 | - | (1,260) | - | - | - | - | - | 141,051 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 15 | Long-term equity investments (continued) | ||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | June 30, 2024 | ||||||||||
| TCL Huanxin Bandaoti (Tianjin) Co., Ltd. | 431,134 | - | (28,565) | - | - | - | - | - | 402,569 | ||||||||||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 1,487 | - | - | - | - | - | - | - | 1,487 | ||||||||||
| Inner Mongolia Huanye Material Co., Ltd. | 7,222 | - | - | - | - | - | - | - | 7,222 | ||||||||||
| Shenzhen Shutuo Technology Co., Ltd. | 39,247 | - | (294) | - | - | - | - | - | 38,953 | ||||||||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 28,137 | - | (3,282) | 30 | - | - | - | - | 24,885 | ||||||||||
| Wuhan Guochuangke Optoelectronic Equipment Co., Ltd. | 49,901 | - | (1,818) | - | - | - | - | - | 48,083 | ||||||||||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 10,391 | (5,500) | (601) | - | - | - | - | - | 4,290 | ||||||||||
| Purplevine Holdings Limited | 10,395 | - | 2,504 | - | 1,752 | - | - | 72 | 14,723 | ||||||||||
| Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. | 549,139 | 40,000 | (1,938) | - | 543 | - | - | - | 587,744 | ||||||||||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | 1,745,617 | - | (195,180) | - | (59) | - | - | - | 1,550,378 | ||||||||||
| Shanghai Feilihua Shichuang Technology Co., Ltd. | 49,792 | - | 115 | - | 94 | (531) | - | - | 49,470 | ||||||||||
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. | 12,415 | - | (234) | - | - | - | - | - | 12,181 | ||||||||||
| Xi’an Simovi New Material Co., Ltd. | 30,873 | - | 1,033 | 20 | - | - | - | - | 31,926 | ||||||||||
| Guangdong TCL New Technology Co., Ltd. | 1,767 | - | - | - | - | - | - | - | 1,767 | ||||||||||
| Hubei Consumer Finance Co., Ltd. | 179,409 | - | 8,192 | - | - | - | - | - | 187,601 | ||||||||||
| Tianjin Qiyier Communication & Broadcasting Co., Ltd. | 183,483 | (19,979) | 4,726 | - | 46 | (1,390) | - | (21,442) | 145,444 | ||||||||||
| Others | 13,726,174 | - | 696,932 | 143,264 | (311) | (376,230) | - | - | 14,189,829 | ||||||||||
| 24,951,116 | (203,748) | (35,050) | 143,394 | (13,073) | (409,537) | - | (21,346) | 24,411,756 | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 15 | Long-term equity investments (continued) |
(2) Joint ventures
| Increase or decrease in current period | |||||||||||||||||||
| Name of investee | January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared Cash dividends or profit distribution declared | Accrued Impairment allowance | Other increases and decreases | June 30, 2024 | ||||||||||
| Zhangjiakou Qixin Equity Investment Fund Partnership | 51,686 | - | (9) | - | - | - | - | - | 51,677 | ||||||||||
| Tianjin Huanyan Technology Co., Ltd. | 139,983 | - | (79) | - | - | - | - | - | 139,904 | ||||||||||
| TCL Huizhou City, Kai Enterprise Management Limited | 1,359 | - | (15) | - | - | - | - | - | 1,344 | ||||||||||
| Huizhou TCL Human Resources Service Co., Ltd. | 8,930 | - | 3,445 | - | 228 | - | - | - | 12,603 | ||||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. | 278,196 | 30,000 | (17,581) | - | 341 | - | - | - | 290,956 | ||||||||||
| 480,154 | 30,000 | (14,239) | - | 569 | - | - | - | 496,484 | |||||||||||
(3) Impairment allowances for long-term equity investments
| V | Notes to Consolidated Financial Statements (Continued) |
| 15 | Long-term equity investments (continued) |
| January 1, 2024 | Increase in current period | Decrease in current period | Other changes | June 30, 2024 | Note | |||||||
| Pride Telecom Limited | 1,414 | - | - | - | 1,414 | Note 1 | ||||||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 49,503 | - | - | - | 49,503 | Note 1 | ||||||
| JOLED Incorporation | 438,148 | - | - | - | 438,148 | Note 2 | ||||||
| Maxeon Solar Technologies, Ltd. | 1,013,423 | - | - | - | 1,013,423 | Note 1 | ||||||
| 1,502,488 | - | - | - | 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 these investees 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 accrued provisions for impairment of long-term equity investments at their carrying amount. | |||||||||||
16 Investments in other equity instruments
17 Other non-current financial assets
| V | Notes to Consolidated Financial Statements (Continued) |
| June 30, 2024 | January 1, 2024 | |||||||||
| Stocks | 16,002 | 17,127 | ||||||||
| Equity of unlisted companies | 371,253 | 369,521 | ||||||||
| 387,255 | 386,648 | |||||||||
| Item name | Recognized Dividend income | Accumulated Profits | Accumulated losses | Amount of other comprehensive income transferred to retained earnings | Reasons designated as measured at fair value and whose changes are included in other comprehensive income | |||||
| Stocks | - | 3,055 | (195,424) | - | Being held long term for strategic purposes | |||||
| Equity of unlisted companies | 11,489 | 10,303 | (24,361) | - | Being held long term for strategic purposes | |||||
| Total | 11,489 | 13,358 | (219,785) | - | ||||||
| June 30, 2024 | January 1, 2024 | |||
| Equity investments | 3,392,106 | 2,770,251 | ||
| Debt investments | 603,630 | 201,315 | ||
| 3,995,736 | 2,971,566 |
| V | Notes to Consolidated Financial Statements (Continued) |
18 Investment property
| Houses and buildings | Land use rights | Total | |||||
| Gross amount: | |||||||
| January 1, 2024 | 1,121,480 | 219,676 | 1,341,156 | ||||
| Increase | 6,162 | - | 6,162 | ||||
| Reclassified from fixed assets and intangible assets | 6,162 | - | 6,162 | ||||
| Decreases | (90,516) | - | (90,516) | ||||
| Reclassified to fixed assets and intangible assets | (84,683) | - | (84,683) | ||||
| Other decreases | (5,833) | - | (5,833) | ||||
| June 30, 2024 | 1,037,126 | 219,676 | 1,256,802 | ||||
| Accumulated depreciation and amortization: | |||||||
| January 1, 2024 | 316,833 | 44,753 | 361,586 | ||||
| Increase | 24,963 | 2,361 | 27,324 | ||||
| Accrued in the period | 18,870 | 2,361 | 21,231 | ||||
| Reclassified from fixed assets and intangible assets | 6,093 | - | 6,093 | ||||
| Decreases | (13,396) | - | (13,396) | ||||
| Reclassified to fixed assets and intangible assets | (9,201) | - | (9,201) | ||||
| Other decreases | (4,195) | - | (4,195) | ||||
| June 30, 2024 | 328,400 | 47,114 | 375,514 | ||||
| Investment property, net: | |||||||
| June 30, 2024 | 708,726 | 172,562 | 881,288 | ||||
| January 1, 2024 | 804,647 | 174,923 | 979,570 | ||||
| Impairment allowance: | |||||||
| January 1, 2024 | 67,891 | - | 67,891 | ||||
| Increase | 17 | - | 17 | ||||
| Increase in current period | 17 | - | 17 | ||||
| Decreases | - | - | - | ||||
| Decrease in current period | - | - | - | ||||
| June 30, 2024 | 67,908 | - | 67,908 | ||||
| Investment property, net: | |||||||
| June 30, 2024 | 640,818 | 172,562 | 813,380 | ||||
| January 1, 2024 | 736,756 | 174,923 | 911,679 |
| V | Notes to Consolidated Financial Statements (Continued) |
19 Fixed assets
| Houses and buildings | Machinery equipment | Office and electronic equipment | Transportation equipment | Power stations | Others | Total | ||||||||
| Gross amount: | ||||||||||||||
| December 31, 2023 | 54,954,646 | 228,210,600 | 3,256,808 | 306,667 | 2,345,600 | 27,937 | 289,102,258 | |||||||
| Increase | 1,304,274 | 5,184,851 | 116,584 | 10,278 | 18,405 | 1,388,841 | 8,023,233 | |||||||
| Acquisition and other | 66,429 | 645,435 | 44,051 | 7,449 | - | 1,335,646 | 2,099,010 | |||||||
| Reclassified from investment property | 84,683 | - | - | - | - | - | 84,683 | |||||||
| Reclassified from construction in progress | 1,153,162 | 4,539,416 | 72,533 | 2,829 | 18,405 | 53,195 | 5,839,540 | |||||||
| Decreases | (107,000) | (1,149,108) | (35,688) | (3,275) | (120,885) | (163) | (1,416,119) | |||||||
| Written down with public grants | - | (152,012) | (323) | - | - | - | (152,335) | |||||||
| Reclassified to investment property | (6,162) | - | - | - | - | - | (6,162) | |||||||
| Decrease due to disposal of subsidiaries | - | - | - | - | (120,885) | - | (120,885) | |||||||
| Other decreases | (100,838) | (997,096) | (35,365) | (3,275) | - | (163) | (1,136,737) | |||||||
| Exchange adjustment | (1,855) | 1,988 | (808) | (75) | - | (524) | (1,274) | |||||||
| June 30, 2024 | 56,150,065 | 232,248,331 | 3,336,896 | 313,595 | 2,243,120 | 1,416,091 | 295,708,098 | |||||||
| Accumulated depreciation: | ||||||||||||||
| December 31, 2023 | 9,665,532 | 98,642,863 | 1,967,994 | 203,385 | 579,566 | 15,179 | 111,074,519 | |||||||
| Increase | 971,047 | 11,645,613 | 167,813 | 24,019 | 41,085 | 278,866 | 13,128,443 | |||||||
| Accrual | 961,804 | 11,267,724 | 167,793 | 24,019 | 41,085 | 40,910 | 12,503,335 | |||||||
| Reclassified from investment property | 9,201 | - | - | - | - | - | 9,201 | |||||||
| Other increases | 42 | 377,889 | 20 | - | - | 237,956 | 615,907 | |||||||
| Decreases | (7,324) | (370,542) | (24,478) | (2,056) | (2,469) | (22) | (406,891) | |||||||
| Reclassified to investment property | (6,093) | - | - | - | - | - | (6,093) | |||||||
| Decrease due to disposal of subsidiaries | - | - | - | - | (2,469) | - | (2,469) | |||||||
| Other decreases | (1,231) | (370,542) | (24,478) | (2,056) | - | (22) | (398,329) | |||||||
| Exchange adjustment | (813) | 407 | (413) | (106) | - | (280) | (1,205) | |||||||
| June 30, 2024 | 10,628,442 | 109,918,341 | 2,110,916 | 225,242 | 618,182 | 293,743 | 123,794,866 | |||||||
| Fixed assets, net: | ||||||||||||||
| June 30, 2024 | 45,521,623 | 122,329,990 | 1,225,980 | 88,353 | 1,624,938 | 1,122,348 | 171,913,232 | |||||||
| January 1, 2024 | 45,289,114 | 129,567,737 | 1,288,814 | 103,282 | 1,766,034 | 12,758 | 178,027,739 | |||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 19 | Fixed assets (continued) | |||||||||||||
| Houses and buildings | Machinery equipment | Office and electronic equipment | Transportation equipment | Power stations | Others | Total | ||||||||
| Impairment allowance: | ||||||||||||||
| January 1, 2024 | 746,611 | 760,715 | 35,210 | 111 | 62,059 | 412 | 1,605,118 | |||||||
| Accrued in the period | - | 56,770 | - | - | - | - | 56,770 | |||||||
| Write-off of current period | - | (9,208) | (6,402) | - | - | (412) | (16,022) | |||||||
| Other transfers out | (17) | - | - | - | - | - | (17) | |||||||
| June 30, 2024 | 746,594 | 808,277 | 28,808 | 111 | 62,059 | - | 1,645,849 | |||||||
| Fixed assets, carrying amount: | ||||||||||||||
| June 30, 2024 | 44,775,029 | 121,521,713 | 1,197,172 | 88,242 | 1,562,879 | 1,122,348 | 170,267,383 | |||||||
| January 1, 2024 | 44,542,503 | 128,807,022 | 1,253,604 | 103,171 | 1,703,975 | 12,346 | 176,422,621 | |||||||
| Please refer to Item 81 of Note V for information on fixed asset pledge. | ||||
| Fixed assets with pending ownership certificates at the end of the current period: | ||||
| Carrying amount | Reasons for pending ownership certificates: | |||
| Houses and buildings (Note) | 18,671,434 | In process | ||
| Note | As at June 30, 2024, 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 and constructions of Inner Mongolia Zhonghuan Crystal Material Co., Ltd., Ningxia Huanou New Energy Technology Co., Ltd. and Tianjin Huanhai Industrial Park Co., Ltd. | |||
20 Construction in progress
(1) Schedule of construction in progress
| June 30, 2024 | January 1, 2024 | |||
| Construction in progress | 20,139,823 | 17,013,179 | ||
| Less: Impairment allowance | 13,127 | 13,127 | ||
| 20,126,696 | 17,000,052 |
(2) Changes to construction in progress
| V | Notes to Consolidated Financial Statements (Continued) |
| 20 | Construction in progress (continued) |
| Project name | Budget | January 1, 2024 | Increase in current period | Fixed assets | Other movements | June 30, 2024 | as % of budget | progress | Cumulative capitalized interest | Including: capitalized interest in current period | Interest capitalizat ion rate for current period | Funding source | |||||||||||||
| t9 production line of LCD panel | 31,500,000 | 363,638 | 939,842 | (87,385) | (4,507) | 1,211,588 | 78% | Under construction | 300,733 | 26,239 | 3.2% | Proprietary funds, proceeds from share offering and loans | |||||||||||||
| Large-diameter Bandaoti silicon wafers for integrated circuit | 5,410,520 | 2,987,964 | 476,378 | (187,226) | (40,005) | 3,237,111 | 88% | Under construction | 23,979 | 3,352 | 3.4% | Self-funded and financed funds | |||||||||||||
| 50GW (G12) solar-grade monocrystalline silicon material smart factory project | 10,979,740 | 925,986 | 394,081 | (714,097) | (243,606) | 362,364 | 98% | Under construction | 150,163 | - | 2.3% | Self-funded and financed funds | |||||||||||||
| Smart factory with an annual output of 35GW high-purity solar ultra-thin monocrystalline silicon | 3,650,050 | 992,614 | 528,424 | (996,695) | - | 524,343 | 50% | Under construction | 20,615 | 16,745 | 2.9% | Self-funded and financed funds | |||||||||||||
| Production line of 8-12-inch Bandaoti silicon wafers for integrated circuit | 5,707,172 | 1,259,475 | 118,900 | (426,505) | (47,139) | 904,731 | 83% | Under construction | 5,895 | 569 | 3.4% | Self-funded and financed funds | |||||||||||||
| Bandaoti silicon wafers for integrated circuit | 10,500,000 | 1,183,319 | 703,895 | (324,236) | (28,741) | 1,534,237 | 69% | Under construction | 385,773 | - | 6.2% | Self-funded and financed funds | |||||||||||||
| Others | Not applicable | 9,287,056 | 6,449,396 | (3,103,396) | (280,734) | 12,352,322 | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | |||||||||||||
| 17,000,052 | 9,610,916 | (5,839,540) | (644,732) | 20,126,696 |
| V | Notes to Consolidated Financial Statements (Continued) |
21 Right-of-use assets
| Houses and buildings | Transportation equipment | Machinery equipment | Land use rights | Total | ||||||
| Gross amount: | ||||||||||
| January 1, 2024 | 5,963,784 | 1,895 | 1,196,371 | 122,767 | 7,284,817 | |||||
| Increase | 81,990 | - | - | 124,560 | 206,550 | |||||
| Leased in | 69,517 | - | - | 45,514 | 115,031 | |||||
| Other increases | 12,473 | - | - | 79,046 | 91,519 | |||||
| Decreases | (222,668) | (758) | (323,183) | - | (546,609) | |||||
| Reduction due to contract revision | (7,193) | - | - | - | (7,193) | |||||
| Other decreases | (215,475) | (758) | (323,183) | - | (539,416) | |||||
| Exchange adjustment | (15,824) | (29) | - | - | (15,853) | |||||
| June 30, 2024 | 5,807,282 | 1,108 | 873,188 | 247,327 | 6,928,905 | |||||
| Accumulated depreciation: | ||||||||||
| January 1, 2024 | 574,227 | 1,244 | 298,732 | 24,168 | 898,371 | |||||
| Increase | 171,632 | 144 | 56,044 | 10,261 | 238,081 | |||||
| Accrual | 171,632 | 144 | 56,044 | 10,261 | 238,081 | |||||
| Decreases | (148,476) | (758) | (119,609) | - | (268,843) | |||||
| Other decreases | (148,476) | (758) | (119,609) | - | (268,843) | |||||
| Exchange adjustment | (2,724) | (12) | - | - | (2,736) | |||||
| June 30, 2024 | 594,659 | 618 | 235,167 | 34,429 | 864,873 | |||||
| Right-of-use assets, carrying amount: | ||||||||||
| June 30, 2024 | 5,212,623 | 490 | 638,021 | 212,898 | 6,064,032 | |||||
| January 1, 2024 | 5,389,557 | 651 | 897,639 | 98,599 | 6,386,446 | |||||
| Impairment allowance: | ||||||||||
| January 1, 2024 | - | - | - | - | - | |||||
| June 30, 2024 | - | - | - | - | - | |||||
| Right-of-use assets, carrying amount | ||||||||||
| June 30, 2024 | 5,212,623 | 490 | 638,021 | 212,898 | 6,064,032 | |||||
| January 1, 2024 | 5,389,557 | 651 | 897,639 | 98,599 | 6,386,446 |
| V | Notes to Consolidated Financial Statements (Continued) |
22 Intangible assets
| Land use rights | /patents | Others | Total | |||||
| Gross amount: | ||||||||
| January 1, 2024 | 9,385,883 | 13,812,555 | 2,931,992 | 26,130,430 | ||||
| Increase | 18,540 | 844,995 | 116,934 | 980,469 | ||||
| New subsidiary | - | - | - | - | ||||
| Purchase | 18,540 | 51,989 | 113,683 | 184,212 | ||||
| Reclassified from investment property | - | - | - | - | ||||
| Reclassified from development costs | - | 793,006 | - | 793,006 | ||||
| Others | - | - | 3,251 | 3,251 | ||||
| Decreases | - | (79,280) | (4,715) | (83,995) | ||||
| Sale and disposal | - | - | (3,902) | (3,902) | ||||
| Other decreases | - | (79,280) | (813) | (80,093) | ||||
| Exchange adjustment | - | 435 | (389) | 46 | ||||
| June 30, 2024 | 9,404,423 | 14,578,705 | 3,043,822 | 27,026,950 | ||||
| Accumulated amortization: | ||||||||
| January 1, 2024 | 1,279,847 | 5,049,816 | 1,232,516 | 7,562,179 | ||||
| Increase | 127,823 | 754,749 | 159,874 | 1,042,446 | ||||
| Accrual | 127,823 | 754,749 | 159,874 | 1,042,446 | ||||
| New subsidiary | - | - | - | - | ||||
| Decreases | (1,292) | (47,544) | (374) | (49,210) | ||||
| Sale and disposal | (1,292) | (374) | (1,666) | |||||
| Other decreases | - | (47,544) | - | (47,544) | ||||
| Exchange adjustment | - | 207 | (201) | 6 | ||||
| June 30, 2024 | 1,406,378 | 5,757,228 | 1,391,815 | 8,555,421 | ||||
| Intangible assets, net： | ||||||||
| June 30, 2024 | 7,998,045 | 8,821,477 | 1,652,007 | 18,471,529 | ||||
| January 1, 2024 | 8,106,036 | 8,762,739 | 1,699,476 | 18,568,251 | ||||
| Impairment allowance: | ||||||||
| January 1, 2024 | 23,562 | 113,997 | 11,148 | 148,707 | ||||
| Accrual | - | - | - | - | ||||
| Exchange adjustment | - | 221 | - | 221 | ||||
| June 30, 2024 | 23,562 | 114,218 | 11,148 | 148,928 | ||||
| Intangible assets, carrying amount: | ||||||||
| June 30, 2024 | 7,974,483 | 8,707,259 | 1,640,859 | 18,322,601 | ||||
| January 1, 2024 | 8,082,474 | 8,648,742 | 1,688,328 | 18,419,544 |
| Please refer to Item 81 of Note V for information on collateralized intangible assets. |
| V | Notes to Consolidated Financial Statements (Continued) |
23 Development costs
| Development expenditures are presented as follows: | |||||
| June 30, 2024 | January 1, 2024 | ||||
| LCD panel projects | 1,372,049 | 1,455,110 | |||
| New energy photovoltaics and other silicon materials | 808,839 | 1,086,383 | |||
| 2,180,888 | 2,541,493 | ||||
24 Goodwill
| (1) | Gross amount of goodwill | ||||||||
| Name of investee or item incurring goodwill | January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | Note 1 | 28,967 | - | - | 28,967 | ||||
| Qingdao Blue Business Consulting Co., Ltd. | Note 2 | 2,452 | - | - | 2,452 | ||||
| Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. | Note 3 | 214,683 | - | - | 214,683 | ||||
| Tianjin Zhonghuan Electronic Information Group Co., Ltd. | Note 4 | 6,726,130 | - | - | 6,726,130 | ||||
| Moka International Limited | Note 5 | 1,728,973 | - | - | 1,728,973 | ||||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Note 6 | 486,603 | - | - | 486,603 | ||||
| Huizhou Kedate Smart Display Technology Co., Ltd. | Note 7 | 3,011 | - | - | 3,011 | ||||
| Suzhou China Star Environmental Protection Technology Co., Ltd. | Note 8 | 43,408 | - | - | 43,408 | ||||
| Xinxin Bandaoti Technology Co., Ltd. | Note 9 | 1,180,005 | - | - | 1,180,005 | ||||
| Techigh Circuit Technology (Huizhou) Co., Ltd. | Note 10 | 131,477 | - | - | 131,477 | ||||
| 10,545,709 | - | - | 10,545,709 | ||||||
| (2) | Goodwill impairment allowance | ||||||||
| Name of investee | January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 28,967 | - | - | 28,967 | |||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 24 | Goodwill (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 RMB 52,319,000. Thus, the difference between the accumulated investment of the Company in TCL Medical Radiological Technology (corresponding to 51.82% equity) and the fair value of the net identifiable assets of TCL Medical Radiological Technology attributable to the Company on the settlement date (equal to RMB 28,967,000) was recorded in the Company's goodwill. An impairment allowance of RMB 28,967,000 had been made on such goodwill in 2018. |
| Note 2 | In October 2016, Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired 60% interest in Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as "Blue Business Consulting") with consideration of RMB 10,000,000. Thus, the difference between the accumulated investment of Highly Information Industry Co., Ltd. in Blue Business Consulting (corresponding to a 60% interest) and the fair value of the net identifiable assets of Blue Business Consulting attributable to Highly Information Industry Co., Ltd. on the settlement date (equivalent to RMB 2,452,000) was recorded 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 entities under common control. |
| Note 4 | The Company completed its acquisition of 100% stake in TCL Technology Group (Tianjin) Co., Ltd. (former name: Tianjin Zhonghuan Electronic Information Group Co., Ltd.) on October 1, 2020 with a cash consideration of RMB 12,500,000,000. At the date of acquisition, the Group obtained the effective control of TCL Technology Group (Tianjin) Co., Ltd., and included such company into the consolidated financial statements. On the date of transaction, the difference between the accumulated investment of the Company in TCL Technology Group (Tianjin) Co., Ltd. (corresponding to the 100% 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 RMB 6,726,130,000) was recorded in this item. The goodwill mainly consists of 2 asset groups: the new energy photovoltaic and other silicon materials and the Tianjin Printronics Circuit Corp. |
| Note 5 | In April 2021, the Company acquired 100% interest in Moka International Limited with a cash consideration of RMB 2,800,000,000. Thus, the difference between the accumulated investment of the Company in Moka International Limited (corresponding to the 100% equity) and the fair value of the net identifiable assets of Moka International Limited attributable to the Company on the settlement date (equal to RMB 1,728,973,000) 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 of RMB 4,757,727,000. The difference between the accumulated investment of the Company in Suzhou China Star Optoelectronics Technology Co., Ltd. (corresponding to the total 70% equity) and the fair value of the identifiable net assets of Suzhou China Star Optoelectronics Technology Co., Ltd. attributable to the Company on the settlement date (equivalent to RMB 486,603,000) was recorded in this 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 RMB 51,000,000. As such, the difference between the 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 Kedate Smart Display Technology Co., Ltd. attributable to the Company on the settlement date (equal to RMB 3,011,000) was recorded in this item. |
| Note 8 | Suzhou China Star Optoelectronics Technology Co., Ltd., a subsidiary of the Company, completed the acquisition of 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. in May 2023 at a cash consideration of RMB 344,942,000. As at the date of this transaction, the difference (RMB 43,408,000) between the 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 assets of the equity was recorded in this item. |
| V | Notes to Consolidated Financial Statements (Continued) |
| 24 | Goodwill (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 Xinxin Bandaoti Technology Co., Ltd. in February, 2023 at a consideration of RMB 7,399,683,000 by issuing equity securities. As at the date of this transaction, the difference (RMB 1,180,005,000) between the investment amount i.e. the 100% equity of Xinxin Bandaoti Technology Co., Ltd. held by Zhonghuan Advanced Bandaoti Technology Co., Ltd. and the fair value of the identifiable net assets of the equity was 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 October 2023 at a consideration of RMB 423,103,000 in cash. As at the date of this transaction, the difference (RMB 131,477,000) between the investment amount i.e. the 51% equity of Techigh Circuit Technology (Huizhou) Co., Ltd. held by the Company and the fair value of the identifiable net assets of the equity are recognized in this item. |
| (3) | Goodwill impairment test |
| As at June 30, 2024, the asset group of Blue Business Consulting business, asset group of new energy photovoltaic and other silicon material, asset group of Moka International Limited, asset group of Huizhou Kedate Smart Display Technology Co., Ltd., asset group of Suzhou China Star Optoelectronics Technology Co., Ltd., asset group of Suzhou China Star Environmental Protection Technology Co., Ltd., asset group of Xinxin Bandaoti Technology Co., Ltd., asset group of Techigh Circuit Technology (Huizhou) Co., Ltd., and asset group of Tianjin Printronics, including goodwill, showed no indication of impairment, and no provision for impairment is required to be accrued for the goodwill of the above asset groups. | |
25 Long-term deferred expenses
| January 1, 2024 | Increase in current period | Amortization in the period | Others | June 30, 2024 | ||||||
| Improvement expense on leased fixed assets | 1,601,156 | 193,047 | (57,384) | (1,130,946) | 605,873 | |||||
| Others | 1,801,533 | 1,193,791 | (1,245,980) | (4) | 1,749,340 | |||||
| 3,402,689 | 1,386,838 | (1,303,364) | (1,130,950) | 2,355,213 | ||||||
| V | Notes to Consolidated Financial Statements (Continued) |
26 Deferred income tax assets and deferred income tax liabilities
| (1) | Un-offset deferred income tax assets | |||||||||
| June 30, 2024 | January 1, 2024 | |||||||||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |||||||
| Deductible losses | 24,711,789 | 3,868,404 | 24,627,580 | 4,048,128 | ||||||
| Asset impairment allowances | 2,565,037 | 436,831 | 3,817,375 | 629,482 | ||||||
| Provisions | 1,480,256 | 210,306 | 831,604 | 130,466 | ||||||
| Changes in fair value | 47,453 | 8,023 | 143,302 | 22,170 | ||||||
| Lease liabilities | 4,096,180 | 458,525 | 4,309,382 | 486,276 | ||||||
| Others | 5,683,441 | 903,158 | 2,423,324 | 469,382 | ||||||
| 38,584,156 | 5,885,247 | 36,152,567 | 5,785,904 | |||||||
| (2) | Un-offset deferred income tax liabilities |
| June 30, 2024 | January 1, 2024 | |||||||||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |||||||
| Depreciation of fixed assets | 23,419,943 | 3,611,138 | 23,433,110 | 3,778,803 | ||||||
| Increase in value of assets as assessed in business combination not involving entities under common control | 2,751,254 | 514,233 | 2,841,620 | 529,769 | ||||||
| Changes in fair value | 224,117 | 50,592 | 301,793 | 70,908 | ||||||
| Right-of-use assets | 4,239,013 | 540,656 | 4,083,249 | 472,463 | ||||||
| Others | 317,393 | 53,618 | 522,095 | 115,226 | ||||||
| 30,951,720 | 4,770,237 | 31,181,867 | 4,967,169 | |||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||
| 26 | 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 after offsetting | |||||
| Item | Amount subject to mutual offset of deferred income tax assets against liabilities at the end of the period | Closing balance of deferred income tax assets or liabilities after offset | ||||
| Deferred income tax assets | (3,512,797) | 2,372,450 | ||||
| Deferred income tax liabilities | (3,512,797) | 1,257,440 | ||||
| Item | Amount subject to mutual offset of deferred income tax assets against liabilities at the beginning of the period | Opening balance of deferred income tax assets or liabilities after offset | ||||
| Deferred income tax assets | (3,539,682) | 2,246,222 | ||||
| Deferred income tax liabilities | (3,539,682) | 1,427,487 | ||||
| (4) | Unrecognized deferred income tax assets | |||||
| June 30, 2024 | January 1, 2024 | |||||
| Deductible temporary difference | 3,652,888 | 1,712,962 | ||||
| Deductible losses | 21,240,310 | 13,284,658 | ||||
| 24,893,198 | 14,997,620 | |||||
| (5) | Deductible losses in respect of unrecognized deferred income tax assets will expire in the following years: | ||||
| June 30, 2024 | January 1, 2024 | ||||
| 2023 | - | 581 | |||
| 2024 | 158,859 | 129,992 | |||
| 2025 | 334,292 | 286,860 | |||
| 2026 | 928,226 | 952,925 | |||
| 2027 | 1,658,919 | 1,717,971 | |||
| 2028 onwards | 18,160,014 | 10,196,329 | |||
| 21,240,310 | 13,284,658 | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
27 Other non-current assets
| June 30, 2024 | January 1, 2024 | |||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||
| Other non-current assets | 14,497,575 | - | 14,497,575 | 13,081,184,444 | - | 13,081,184 | ||||||
| 14,497,575 | - | 14,497,575 | 13,081,184 | - | 13,081,184 | |||||||
28 Short-term borrowings
| June 30, 2024 | January 1, 2024 | ||||
| Unsecured borrowings | 11,792,095 | 8,437,478 | |||
| Borrowings secured by pledge | 43,132 | 19,076 | |||
| Interest payable | 9,408 | 17,028 | |||
| 11,844,635 | 8,473,582 | ||||
| As at June 30, 2024, the Company’s short-term pledged loans were equivalent to RMB 43,132,000, pledged with held-for-trading financial assets equivalent to RMB 48,691,000. | |||||
| As of June 30, 2024, the Company does not have any short-term borrowings that have expired and have not been repaid. | |||||
| Note | Other non-current assets mainly include prepayments for engineering equipment, payments for land use rights, fixed income large-amount certificates of deposit that are subsequently measured at amortized cost and time deposits., etc. |
| V | Notes to Consolidated Financial Statements (Continued) |
29 Borrowings from the Central Bank
| As of June 30, 2024, the balance of the borrowings of TCL Technology Group Finance Co., Ltd. (a subsidiary of the Company) from the central bank was RMB 809,468,000 (December 31, 2023: RMB 995,010,000). |
30 Customer deposits and deposits from banks and other financial institutions
| June 30, 2024 | January 1, 2024 | |||
| Customer deposits and deposits from other banks and financial institutions | 366,470 | 270,929 | ||
| Customer deposits and deposits from banks and other financial institutions are the deposits of 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. | ||||
31 Held-for-trading financial liabilities
| June 30, 2024 | January 1, 2024 | ||||
| Financial liabilities measured at fair value through profit or loss. | 208,434 | 251,451 | |||
32 Derivative financial liabilities
| June 30, 2024 | January 1, 2024 | |||
| Derivative financial liabilities | 80,185 | 58,591 |
33 Notes payable
| June 30, 2024 | January 1, 2024 | |||
| Bank acceptance notes | 5,498,276 | 5,518,113 | ||
| Trade acceptance notes | 515,998 | 92,689 | ||
| 6,014,274 | 5,610,802 | |||
| As of June 30, 2024, the Company had no notes payable that were due but not paid. | ||||
34 Accounts payable
| June 30, 2024 | January 1, 2024 | |||
| Amounts due to suppliers | 28,415,307 | 29,402,493 | ||
| As of June 30, 2024, there were no significant accounts payable aged over one year. | ||||
35 Advances from customers
36 Contract liabilities
37 Employee benefits payable and long-term employee benefits payable
| V | Notes to Consolidated Financial Statements (Continued) |
| June 30, 2024 | January 1, 2024 | ||||
| Advances from customers | 857 | 678 |
| As of June 30, 2024, the Company had no significant accounts receivable aged over one year. | |||||
| June 30, 2024 | January 1, 2024 | |||
| Advances from customers | 1,465,572 | 1,899,468 | ||
| As at June 30, 2024, the Company had no significant contract liability aged over one year. | ||||
(1)
| (1) | Employee compensation payable | |||
| June 30, 2024 | January 1, 2024 | |||
| Short-term employee benefits payable | 2,814,251 | 3,016,708 | ||
| Defined contribution plans payable | 8,854 | 14,599 | ||
| Dismissal benefits payable | 3,122 | 3,190 | ||
| 2,826,227 | 3,034,497 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
| 37 | Employee benefits payable and long-term employee benefits payable (continued) |
| (1) | Employee benefits payable (continued) |
(a)
| (a) | Short-term employee benefits presented | ||||||||
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | ||||||
| Wages, bonuses, allowances and subsidies | 2,909,014 | 5,676,156 | (5,866,353) | 2,718,817 | |||||
| Employee services and benefits | - | 224,415 | (224,415) | - | |||||
| Social insurance benefits | 32,705 | 204,139 | (207,046) | 29,798 | |||||
| Including: medical insurance premium | 32,008 | 185,640 | (188,388) | 29,260 | |||||
| Employment injury insurance premiums | 679 | 11,253 | (11,411) | 521 | |||||
| Maternity insurance | 18 | 7,246 | (7,247) | 17 | |||||
| Housing fund | 18,727 | 197,317 | (196,882) | 19,162 | |||||
| Trade union funds and staff education funds | 55,121 | 91,321 | (100,475) | 45,967 | |||||
| Other employee salaries | 1,141 | 1,333 | (1,967) | 507 | |||||
| 3,016,708 | 6,394,681 | (6,597,138) | 2,814,251 | ||||||
(b)
| (b) | Defined contribution plans | |||||||
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| Basic pension insurance | 14,210 | 394,869 | (400,446) | 8,633 | ||||
| Unemployment insurance | 389 | 14,949 | (15,117) | 221 | ||||
| 14,599 | 409,818 | (415,563) | 8,854 | |||||
(2)
| (2) | Long-term employee compensation payable | |||
| June 30, 2024 | January 1, 2024 | |||
| Supplementary pension insurance | 22,940 | 23,276 | ||
| Other long-term benefits | 591 | 6,369 | ||
| 23,531 | 29,645 | |||
38 Taxes and levies payable
39 Other payables
(1) Dividends payable
| June 30, 2024 | January 1, 2024 | |||
| Other non-controlling interests | 784,741 | 54,251 | ||
| 784,741 | 54,251 | |||
(2) Other payables
| June 30, 2024 | January 1, 2024 | |||
| Payables for engineering equipment | 15,590,638 | 16,886,446 | ||
| Unpaid expenses | 3,083,773 | 2,653,858 | ||
| Security and deposits | 445,749 | 396,797 | ||
| Others | 2,301,309 | 2,180,050 | ||
| 21,421,469 | 22,117,151 |
V
| V | Notes to Consolidated Financial Statements (Continued) |
| June 30, 2024 | January 1, 2024 | |||
| Corporate income tax | 348,806 | 406,607 | ||
| Value-added tax | 12,214 | 112,854 | ||
| Individual income tax | 95,882 | 31,238 | ||
| Urban maintenance and construction tax | 128,954 | 72,993 | ||
| Education surcharges | 92,127 | 52,134 | ||
| Others | 219,165 | 185,516 | ||
| 897,148 | 861,342 | |||
| Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates. | ||||
| June 30, 2024 | January 1, 2024 | |||
| Dividends payable | 784,741 | 54,251 | ||
| Other payables | 21,421,469 | 22,117,151 | ||
| 22,206,210 | 22,171,402 | |||
40 Non-current liabilities due within one year
| June 30, 2024 | January 1, 2024 | ||||
| Long-term borrowings due within one year (Note 1) | 42 | 21,204,427 | 18,603,703 | ||
| Bonds payable due within one year (Note 2) | 43 | 4,937,453 | 4,436,729 | ||
| Long-term payables due within one year | 358,810 | 377,513 | |||
| Interest payable due within one year | 293,180 | 391,958 | |||
| Lease liabilities due within one year | 44 | 366,658 | 520,010 | ||
| Long-term employee compensation payable due within one year | 17,418 | 301,746 | |||
| 27,177,946 | 24,631,659 |
| Note 1 | The interest rates of the Company’s long-term borrowing due within one year ranged from 2.1% to 4.625% in the current period (2023: from 2.3% to 4.8%). |
| Note 2 | The Company's bonds payable due within one year are mainly as follows: |
| ① Corporate bond 19TCL 02: Issued in July 2019, with a term of 5 years, the closing balance as at June, 30 of RMB 999,860,000. ② Corporate bond 19TCL 03: Issued in October 2019, with a term of 5 years, the closing balance as at June, 30 of RMB 439,475,000. ③ Medium-term note 22TCL Group MTN001 (high-growth bond): Issued in January 2022, with a term of 3 years, the closing balance as at June, 30 of RMB 1,999,239,000. | |
| ④ Corporate bond 22TCL 02: Issued in April 2022, with a term of 3 years, the closing balance as at June 30 was RMB 1,498,879,000. |
41 Other current liabilities
| June 30, 2024 | January 1, 2024 | ||||
| After-sales service expense (note) | 1,400,579 | 1,311,853 | |||
| Output tax to be transferred | 119,179 | 202,571 | |||
| Others | 17,088 | 48,821 | |||
| 1,536,846 | 1,563,245 | ||||
| Note | After-sales service expense expected to occur within 1 year is presented in other current liabilities. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
| V | Notes to Consolidated Financial Statements (Continued) |
42 Long-term borrowings
| June 30, 2024 | January 1, 2024 | ||||
| Borrowings secured by collateral | 40,435,285 | 39,851,294 | |||
| Borrowings secured by pledge | 4,636,002 | 5,595,835 | |||
| Unsecured borrowings | 96,437,605 | 90,818,783 | |||
| 141,508,892 | 136,265,912 | ||||
| Including: long-term loans due within one year | (21,204,427) | (18,603,703) | |||
| 120,304,465 | 117,662,209 | ||||
| The maturities of the Company's long-term borrowings vary from 2024 to 2043. | |||||
| As at June 30, 2024, the long-term borrowings secured by collateral were equivalent to RMB 40,435,285,000 (December 31, 2023: RMB 39,851,294,000), which were secured by the collaterals of the land use right, houses and buildings, machinery and equipment of about RMB 96,876,846,000 (December 31, 2023: RMB 97,095,652,000); the long-term pledged borrowings were equivalent to RMB 4,636,002,000 (December 31, 2023: RMB 5,595,835,000), which were pledged by the pledges of accounts receivable and contract assets of about RMB 499,737,000 (December 31, 2023: RMB 505,109,000). | |||||
| The interest rates of the Company’s long-term borrowing ranged from 2.1% to 4.75% in the current period (2023: from 2.30% to 7.79%). | |||||
43 Bonds payable
| June 30, 2024 | January 1, 2024 | |||
| Corporate bonds | 2,135,971 | 2,121,837 | ||
| MTN | 6,491,665 | 6,992,011 | ||
| 8,627,636 | 9,113,848 | |||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||
| 43 | Bonds payable (continued) | |||||||||||||||
| (1) | Movements in bonds payable | |||||||||||||||
| Bond name | Par value | Issue date | Maturity | Issued amount | January 1, 2024 | Issued in current period | Accrued interest as per par value | Amortization of premium or discount | Repaid in current period | Others (note) | June 30, 2024 | |||||
| TCL TEC 1 | 1,957,483 | July 14, 2020 | 5 | 1,957,483 | 2,121,837 | - | 19,821 | (611) | 14,745 | 2,135,971 | ||||||
| 22TCL Group MTN001 | 2,000,000 | January 14, 2022 | 3 | 2,000,000 | 1,998,540 | - | 34,375 | 699 | (1,999,239) | - | ||||||
| 22TCL Group GN002 | 1,500,000 | April 27, 2022 | 3 | 1,500,000 | 1,498,415 | - | 24,660 | 464 | (1,498,879) | - | ||||||
| 22TCL Group MTN003 (Sci-Tech Innovation Notes) | 2,000,000 | July 6, 2022 | 3 | 2,000,000 | 1,997,580 | - | 34,375 | 796 | - | 1,998,376 | ||||||
| 23TCL Group MTN001 (Sci-Tech Innovation Notes) | 1,500,000 | February 7, 2023 | 3 | 1,500,000 | 1,497,476 | - | 30,639 | 597 | - | 1,498,073 | ||||||
| ZQYWKJ2402010102-24TCLK1 | 1,500,000 | February 1, 2024 | 2 | 1,500,000 | - | 1,500,000 | 16,266 | (1,071) | - | 1,498,929 | ||||||
| ZQYWKJ2404120002-24TCLK2 | 1,500,000 | April 11, 2024 | 5 | 1,500,000 | - | 1,500,000 | 8,844 | (3,713) | - | 1,496,287 | ||||||
| Total | 11,957,483 | - | - | 11,957,483 | 9,113,848 | 3,000,000 | 168,980 | (2,839) | (3,483,373) | 8,627,636 | ||||||
| Note | Others are bonds payable within one year which are reclassified to non-current liabilities due within one year and exchange adjustment. | |||||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
44 Lease liabilities
| June 30, 2024 | January 1, 2024 | |||
| Total lease liabilities | 6,066,243 | 6,257,298 | ||
| Less: Current portion of lease liabilities | 366,658 | 520,010 | ||
| Total | 5,699,585 | 5,737,288 |
45 Long-term payables
| June 30, 2024 | January 1, 2024 | |||
| Finance lease | 2,577,466 | 2,739,444 | ||
46 Deferred income
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| Public grants | 1,540,648 | 2,035,951 | (2,008,740) | 1,567,859 | ||||
| 1,540,648 | 2,035,951 | (2,008,740) | 1,567,859 |
| Items involving public grants |
| January 1, 2024 | New grants in current period | Amount recorded in other income in current period | Amount used to offset costs and expenses in current period | Other changes (note) | June 30, 2024 | |||||||
| Public grants related to assets | 241,180 | 300,377 | (632) | (139,799) | (155,598) | 245,528 | ||||||
| Public grants related to income | 1,299,468 | 1,735,574 | (461,421) | (1,232,249) | (19,041) | 1,322,331 | ||||||
| 1,540,648 | 2,035,951 | (462,053) | (1,372,048) | (174,639) | 1,567,859 |
Note
| Note | "Other changes" were deferred income offset by the carrying amounts of relevant assets. |
| V | Notes to Consolidated Financial Statements (Continued) |
47 Estimated liabilities
| June 30, 2024 | January 1, 2024 | ||||
| After-sales service fee of products | 62,493 | 55,426 | |||
| Pending litigation | 127,296 | 61,969 | |||
| 189,789 | 117,395 |
| V | Notes to Consolidated Financial Statements (Continued) |
48 Share capital
| January 1, 2024 | Increase or decrease in current period | June 30, 2024 | |||||||||||||||
| Amount | Ratio (%) | New issues | Shares converted from capital reserve | Others | Subtotal | Amount | Ratio (%) | ||||||||||
| I. Restricted Shares | 680,538 | 3.62% | - | - | 413 | 413 | 680,951 | 3.63% | |||||||||
| II. Non-restricted shares | 18,098,543 | 96.38% | - | - | (413) | (413) | 18,098,130 | 96.37% | |||||||||
| III. Total shares | 18,779,081 | 100.00% | - | - | - | - | 18,779,081 | 100.00% | |||||||||
| As of June 30, 2024, 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 or senior management hold any restricted shares from a split-share structure reform or a private placement. The shares held by these personnel will stay partially frozen as per the Rules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of the Company and the Changes thereof. The trading and information disclosure in relation to these shares shall be in strict compliance with the applicable laws, regulations and rules. |
| V | Notes to Consolidated Financial Statements (Continued) |
49 Capital reserves
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| Share capital premium | 10,489,271 | 56,668 | (483,399) | 10,062,540 | ||||
| Other capital reserves | 262,784 | 65,532 | (41,492) | 286,824 | ||||
| 10,752,055 | 122,200 | (524,891) | 10,349,364 |
50 Treasury share
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| Treasury share | 1,094,943 | 520,482 | (696,103) | 919,322 |
| Increase in the period is mainly stock repurchases for the employee stock ownership plan or the equity incentives of the Company. On November 28, 2023, the 36th meeting of the Seven-term Board of Directors was held to deliberate and approve the "Proposal on the Second Repurchase of Certain Shares from the Social Public in 2023". The Company will repurchase its own shares via centralized bidding, and the Company’s shares repurchased will be used for the employee stock ownership plans or equity incentives. As of June 30, 2024, the repurchase plan had been fully completed, and the total number of shares repurchased was 117,993,000 shares at the total consideration of RMB 520 million. | |
| Decrease in the year is mainly caused by the non-trading transfer and sale of the employee portion of the employee stock ownership plan. |
| V | Notes to Consolidated Financial Statements (Continued) |
51 Other comprehensive income
(1) Other comprehensive income items, income tax effects and reclassifications to profit or loss
| January - June 2024 | January - June 2023 | |||
| I. Items that cannot be reclassified to profit or loss subsequently | 122,012 | (19,415) | ||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | 122,166 | 4,483 | ||
| Share of the period | 122,166 | 4,483 | ||
| Previous other comprehensive income reclassified to retained earnings for current period | - | |||
| 2. Changes in fair value of other equity instruments | (154) | (23,898) | ||
| Current gain/(loss) | 119 | (20,062) | ||
| Previous other comprehensive income reclassified to retained earnings for current period | - | - | ||
| Income tax effects recorded in other comprehensive income | (273) | (3,836) | ||
| II. Items that will be reclassified to profit or loss subsequently | 52,984 | (431,595) | ||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | 21,228 | 29,896 | ||
| Share of the period | 21,228 | 29,896 | ||
| 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 | 1,877 | (360,611) | ||
| Current gain/(loss) | (13,059) | (340,791) | ||
| Previous other comprehensive income reclassified to profit for current period | 16,073 | (23,262) | ||
| Income tax effects recorded in other comprehensive income | (1,137) | 3,442 | ||
| 4. Differences arising from translation of foreign currency financial statements of overseas operations | 29,879 | (100,880) | ||
| 5. Net income arising from disposal of overseas operations through profit or loss | - | - | ||
| 174,996 | (451,010) |
(2) Changes in other comprehensive income items
| V | Notes to Consolidated Financial Statements (Continued) |
| 51 | Other comprehensive income (continued) |
| Equity attributable to shareholders of the parent company | ||||||||||||
| Change of accounting policies | Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | Gain/loss on changes in fair value of financial assets | Gain/(Loss) on changes in cash flow hedges | Differences arising from translation of foreign currency-denominated financial statements | Fair value changes of other equity instruments | Fair value changes of other debt instruments | Other comprehensive income transferred to retained earnings | Subtotal | Non-controlling interests | Total other comprehensive income | ||
| January 1, 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) | |
| January 1, 2024 | 334,950 | 24,965 | (350,569) | 28,743 | (660,890) | (216,409) | - | (106,588) | (945,798) | 20,996 | (924,802) | |
| Movement from January to June 2024 | - | 143,396 | - | (9,792) | 44474 | 119 | - | - | 178,197 | (3,201) | 174,996 | |
| June 30, 2024 | 334,950 | 168,361 | (350,569) | 18,951 | (616,416) | (216,290) | - | (106,588) | (767,601) | 17,795 | (749,806) | |
| V | Notes to Consolidated Financial Statements (Continued) |
52 Surplus reserves
| January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| Statutory surplus reserves | 3,691,136 | - | - | 3,691,136 | ||||
| Discretionary surplus reserves | 182,870 | - | - | 182,870 | ||||
| 3,874,006 | - | - | 3,874,006 |
| As per China's Company Law, Articles of Association for Companies, accounting standards, the Company and several of its subsidiaries shall appropriate 10% of net profits as statutory surplus reserves until the reserve amount reaches 50% of the registered capital. According to the aforesaid laws and regulations, part of the statutory surplus reserves can be converted into share capital of the Company, and the remaining amount shall not be lower than 25% of the registered capital. | |
| After the appropriation to the statutory surplus reserves, the Company may appropriate the discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used to make up the previous loss or increase the share capital. |
53 Specific reserves
| January 1, 2024 | Appropriation in current period | Decrease in current period | June 30, 2024 | |||||
| Production safety reserve | 11,343 | 17,674 | (14,014) | 15,003 |
54 General risk reserve
| January 1, 2024 | Appropriation in the period | Decrease in current period | June 30, 2024 | |||||
| General risk reserve | 8,934 | - | - | 8,934 | ||||
| As per the General Rules on Financial Affairs of Financial Enterprises and the Guide to the Implementation of the General Rules on Financial Affairs of Financial Enterprises promulgated by the Ministry of Finance, as well as the Articles of Association of TCL Technology Group Finance Co., Ltd., the Company's subsidiary - TCL Technology Group Finance Co., Ltd. - appropriated 1% of its net profit as general risk reserve in the previous years. | ||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
55 Retained earnings
| January - June 2024 | January - June 2023 | |||
| Retained earnings at the beginning of the year | 21,537,188 | 19,486,730 | ||
| Change of accounting policies | - | - | ||
| Net profits for current period | 995,213 | 340,493 | ||
| Decrease in current period | (1,502,326) | - | ||
| Including: Appropriation of surplus reserves | - | - | ||
| Distributed to ordinary shareholders as dividends | (1,502,326) | - | ||
| Others | - | - | ||
| Retained earnings at the end of the period | 21,030,075 | 19,827,223 | ||
56 Operating revenue and operating costs
| January - June 2024 | January - June 2023 | |||||||
| Operating revenue | Operating cost | Operating revenue | Operating cost | |||||
| Core business | 77,594,877 | 68,292,912 | 82,810,846 | 72,687,776 | ||||
| Non-core business | 2,628,860 | 2,091,470 | 2,337,880 | 1,579,823 | ||||
| 80,223,737 | 70,384,382 | 85,148,726 | 74,267,599 | |||||
| (1) | Business by operating segment | |||||||||||
| Operating revenue | Operating cost | Gross profit | ||||||||||
| January - June 2024 | January - June 2023 | January - June 2024 | January - June 2023 | January - June 2024 | January - June 2023 | |||||||
| Domestic sales | 53,896,028 | 58,816,019 | 49,544,066 | 53,158,646 | 4,351,962 | 5,657,373 | ||||||
| Foreign sales | 26,327,709 | 26,332,707 | 20,840,316 | 21,108,953 | 5,487,393 | 5,223,754 | ||||||
| 80,223,737 | 85,148,726 | 70,384,382 | 74,267,599 | 9,839,355 | 10,881,127 | |||||||
| (2) | The sales revenue from the top five customers combined was RMB 27,053,817,000 and RMB 22,802,968,000 respectively for January-June, 2024 and January-June, 2023, accounting for 34.9% and 27.5% of the core business revenue. | |||||||||||
| V | Notes to Consolidated Financial Statements (Continued) |
| 56 | Operating Revenue and operating costs (continued) |
| (3) | Revenue and costs generated from the Company's trial sales are as follows: |
| January - June 2024 | January - June 2023 | |||
| Operating revenue | 255,217 | 457,949 | ||
| Operating cost | 225,302 | 417,719 | ||
57 Interest income/expense and exchange gain
| January - June 2024 | January - June 2023 | |||
| Interest income | 79,672 | 41,463 | ||
| Interest expenditures | 14,885 | 9,976 | ||
| Exchange gain/(loss) | (116) | (295) | ||
| The interest income, interest expense and exchange gain/(loss) above occurred with the Company's subsidiary TCL Technology Group Finance Co., Ltd., which are presented separately herein as required for a financial enterprise. | ||||
58 Taxes and levies
| January - June 2024 | January - June 2023 | |||
| Property tax | 190,296 | 190,060 | ||
| Stamp tax | 94,293 | 119,421 | ||
| Urban maintenance and construction tax | 110,639 | 35,287 | ||
| Education surcharges | 68,213 | 18,924 | ||
| Land use tax | 15,703 | 18,063 | ||
| Others | 20,984 | 10,142 | ||
| 500,128 | 391,897 |
| The applicable tax and levy standards are detailed in Note IV. |
| V | Notes to Consolidated Financial Statements (Continued) |
59 Sales expenses
| January - June 2024 | January - June 2023 | |||
| Employee salaries and benefits | 415,185 | 340,417 | ||
| After-sales service expense | 258,176 | 408,042 | ||
| Promotional and marketing expenses | 109,593 | 121,280 | ||
| Others | 352,619 | 336,959 |
| 1,135,573 | 1,206,698 |
60 General and administrative expense
| January - June 2024 | January - June 2023 | |||
| Employee salaries and benefits | 945,366 | 755,363 | ||
| Depreciation and amortization expenses | 389,201 | 391,849 | ||
| Expenses for hiring intermediaries | 260,367 | 225,762 | ||
| Digital development expenses | 57,650 | 64,244 | ||
| Others | 351,252 | 578,706 | ||
| 2,003,836 | 2,015,924 |
61 R&D expenses
| January - June 2024 | January - June 2023 | |||
| Depreciation and amortization expenses | 2,359,818 | 1,815,422 | ||
| Material expenses | 555,016 | 1,469,934 | ||
| Employee salaries and benefits | 1,140,394 | 1,053,804 | ||
| Others | 346,339 | 553,194 | ||
| 4,401,567 | 4,892,354 |
62 Financial expenses
| January - June 2024 | January - June 2023 | |||
| Interest expenditures | 2,472,976 | 2,325,785 | ||
| Interest income | (381,577) | (415,285) | ||
| Exchange loss / (gain) | (127,718) | (360,345) | ||
| Others | 127,594 | 63,008 | ||
| 2,091,275 | 1,613,163 |
| V | Notes to Consolidated Financial Statements (Continued) |
63 Other income
| January - June 2024 | January - June 2023 | |||
| R&D subsidies | 217,272 | 896,801 | ||
| VAT rebates on software | 17,952 | 20,873 | ||
| Over-deduction in taxable amount for VAT | 586,905 | 1,585 | ||
| Others | 313,264 | 280,666 | ||
| 1,135,393 | 1,199,925 |
64 Return on investment
| January - June 2024 | January - June 2023 | |||
| Gain on disposal of debt instruments at fair value through profit or loss | (8,447) | 23,310 | ||
| Gain on disposal of debt instruments measured at fair value through current profits and losses | 15,027 | 703,905 | ||
| Gain on holding of equity instruments measured at fair value through current profits and losses | 11,489 | 8,840 | ||
| Gain on holding of debt instruments measured at fair value through current profits and losses | 355,080 | 137,076 | ||
| Share of net income of associates | (35,050) | 1,257,953 | ||
| Share of net income of joint ventures | (14,239) | (37,627) | ||
| Net income from disposal of long-term equity investments | 36,917 | 360,377 | ||
| Others | 60,981 | (140,059) | ||
| 421,758 | 2,313,775 |
65 Gain on changes in fair value
| January - June 2024 | January - June 2023 | |||
| Held-for-trading financial assets | 47,309 | 483,079 | ||
| Derivative financial assets | 92,943 | 37,768 | ||
| Held-for-trading financial liabilities | (5,672) | (68,190) | ||
| Derivative financial liabilities | (1,634) | (256) | ||
| 132,946 | 452,401 |
| V | Notes to Consolidated Financial Statements (Continued) |
66 Credit impairment loss
| January - June 2024 | January - June 2023 | |||
| Loss on uncollectible accounts receivable | (8,589) | (42,425) | ||
| Loss on uncollectible other receivables | (2,279) | (3,760) | ||
| Other financial assets | 3,599 | 683 | ||
| (7,269) | (45,502) |
67 Asset impairment loss
| January - June 2024 | January - June 2023 | |||
| Inventory valuation loss | (1,998,171) | (2,217,911) | ||
| Impairment loss on long-term equity investments | - | (137,375) | ||
| Others | (61,477) | (3,670) | ||
| (2,059,648) | (2,358,956) |
68 Asset disposal income
| January - June 2024 | January - June 2023 | |||
| Income/(loss) from disposal of fixed assets | 17,926 | (18,624) | ||
| Income/(loss) from disposal of intangible assets | 21,683 | (22,271) | ||
| Others | 331 | 883 | ||
| 39,940 | (40,012) |
69 Non-operating income
| January - June 2024 | January - June 2023 | Amount through current non-recurring gains and losses | ||||
| Gains on retired or damaged non-current assets | 6 | 176 | 6 | |||
| Public grants and others | 227,430 | 25,854 | 227,430 | |||
| 227,436 | 26,030 | 227,436 |
| V | Notes to Consolidated Financial Statements (Continued) |
70 Non-operating expense
| January - June 2024 | January - June 2023 | Amount through current non-recurring gains and losses | ||||
| Losses on retired or damaged non-current assets | 29,203 | 2,392 | 29,203 | |||
| Others | 48,937 | 46,768 | 48,937 | |||
| 78,140 | 49,160 | 78,140 |
71 Income tax expenses
(1) Table of income tax expenses
| January - June 2024 | January - June 2023 | |||
| Current income tax expense | 350,489 | 577,065 | ||
| Deferred income tax expense | (298,277) | (676,864) | ||
| 52,212 | (99,799) |
(2) Accounting profit and income tax adjustment process
| January - June 2024 | January - June 2023 | |||
| Gross profit | (415,937) | 2,290,784 | ||
| Income tax expense calculated at statutory/applicable tax rate | (62,391) | 572,696 | ||
| Impact of different tax rates applied to subsidiaries | 437,578 | 20,717 | ||
| Impact of adjusting income tax in previous periods | 77,334 | (182,054) | ||
| Impact of non-taxable income | (751,090) | (344,175) | ||
| Impact of non-deductible costs, expenses and losses | 58,962 | 31,332 | ||
| Impact of the use of deductible losses carry forward without recognizing deferred income tax assets in the previous periods | 29,348 | (118,357) | ||
| Impact of unrecognized deferred income tax assets of deductible temporary differences or deductible losses in the current period | 368,522 | 384,393 | ||
| Others | (106,051) | (464,351) | ||
| Income tax expense | 52,212 | (99,799) | ||
| V | Notes to Consolidated Financial Statements (Continued) |
72 Earnings per share
(1) Basic earnings per share
| January - June 2024 | January - June 2023 | |||
| Net profits attributable to shareholders of the parent company | 995,213 | 340,493 | ||
| Weighted average outstanding ordinary shares (in thousand shares) | 18,588,572 | 18,519,475 | ||
| Basic earnings per share (RMB yuan) | 0.0535 | 0.0184 |
(2) Diluted earnings per share
| January - June 2024 | January - June 2023 | |||
| Net profits attributable to shareholders of the parent company | 995,213 | 340,493 | ||
| Diluted weighted average outstanding ordinary shares (in thousand shares) | 18,779,081 | 18,779,081 | ||
| Diluted earnings per share (RMB yuan) | 0.0530 | 0.0181 | ||
73 Cash generated from other operating activities
| Other cash received from operating activities in the consolidated cash flow statement was RMB 3,396,202,000 (year-on-year: RMB 5,588,817,000), which primarily consisted of current payments received, public grants and special appropriation, etc. |
74 Cash used in other operating activities
| Other cash paid for other operating activities in the consolidated cash flow statement was RMB 5,334,029,000 (year-on-year: RMB 5,049,598,000), which primarily consisted of various expenses and current payments, etc. |
75 Cash generated from other investing activities
| Cash received from other related investing activities in the consolidated cash flow statement was RMB 352,014,000 (year-on-year: RMB 1,640,766,000), which primarily consisted of current payments received, etc. |
76 Cash used in other investing activities
| Other cash paid for investing activities in the consolidated cash flow statement was RMB 563,835,000 (year-on-year: RMB 475,943,000), which primarily consisted of payments for foreign exchange forward delivery, etc. |
| V | Notes to Consolidated Financial Statements (Continued) |
77 Cash generated from other financing activities
| Other cash received from financing activities in the consolidated cash flow statement was RMB 422,120,000 (year-on-year: RMB 1,895,912,000), which primarily consisted of the sale of the Company’s stocks, etc. |
78 Cash used in other financing activities
| Other cash paid for financing activities in the consolidated cash flow statement was RMB 1,930,490,000 (year-on-year: RMB 6,312,578,000), primarily consisted of the payments for the repurchase of minority interests in subsidiaries, repurchase of the Company’s shares, and financial lease payments, etc. | |
79 Supplementary information for the cash flow statement
| (1) | Reconciliation of net profits to net cash generated from/used in operating activities | ||||
| January - June 2024 | January - June 2023 | ||||
| Net profits | (468,149) | 2,390,583 | |||
| Add: Asset impairment allowance | 2,066,917 | 2,404,458 | |||
| Depreciation of fixed assets | 12,514,781 | 9,763,566 | |||
| Depreciation of right-of-use assets | 238,081 | 224,847 | |||
| Amortization of intangible assets | 1,041,749 | 808,784 | |||
| Amortization of long-term deferred expenses | 1,303,364 | 1,025,787 | |||
| Loss/(Gain) on disposal of fixed assets, intangible assets and other long-term assets | (39,940) | 40,012 | |||
| Loss/(Gain) on retired or damaged fixed assets | 29,197 | 2,216 | |||
| Loss/(Gain) on changes in fair value | (132,946) | (452,401) | |||
| Financial expenses | 2,360,259 | 1,975,711 | |||
| Return on investment | (421,758) | (2,313,775) | |||
| Decrease/(Increase) in deferred income tax assets | (126,228) | (1,008,863) | |||
| Increase/(Decrease) in deferred income tax liabilities | (170,047) | 496,643 | |||
| Decrease/(Increase) in inventory | (3,698,344) | (324,976) | |||
| Decrease/(Increase) in operating receivables | 477,841 | (8,800,043) | |||
| Increase/(Decrease) in operating payables | (2,605,556) | 3,073,357 | |||
| Others | 263,501 | 1,110,262 | |||
| Net cash generated from operating activities | 12,632,722 | 10,416,168 | |||
| V | Notes to Consolidated Financial Statements (Continued) |
| 79 | Supplementary information for the cash flow statement (continued) |
| (2) | Net cash payments for acquisition of subsidiaries in the current period | |||
| January - June 2024 | January - June 2023 | |||
| Payments of cash and cash equivalents made in current period due to business combinations incurred in current period | 23,312 | 350,155 | ||
| Less: cash and cash equivalents held by subsidiary on acquisition date | 19,028 | 7,628 | ||
| Add: Payments of cash and cash equivalents made in current period due to business combinations incurred in previous periods | - | - | ||
| Net cash payments for acquisition of subsidiaries | 4,284 | 342,527 | ||
| (3) | Breakdown of cash and cash equivalents | |||
| June 30, 2024 | January 1, 2024 | |||
| I. Cash | 17,923,548 | 19,996,815 | ||
| Including: Cash on hand | 556 | 583 | ||
| Bank deposits available for payment on demand | 17,650,332 | 19,807,150 | ||
| Other monetary assets available for payment on demand | 266,809 | 132,982 | ||
| Deposits with the central bank available for payment | 5,851 | 56,100 | ||
| II. Cash equivalents | - | - | ||
| III. Ending balance of cash and cash equivalents | 17,923,548 | 19,996,815 | ||
| V | Notes to Consolidated Financial Statements (Continued) |
80 Net changes in cash and cash equivalents
| January - June 2024 | January - June 2023 | ||||
| Ending balance of cash and cash equivalents | 17,923,548 | 27,744,248 | |||
| Less: Cash at the beginning of the year | 19,996,815 | 33,675,624 | |||
| Net increase in cash and cash equivalents | (2,073,267) | (5,931,376) | |||
| Analysis of ending cash and cash equivalents: | |||||
| Monetary assets at the end of the period | 19,587,500 | 29,286,645 | |||
| Less: Non-cash equivalents at the end of the period (note) | 1,663,952 | 1,542,397 | |||
| Ending balance of cash and cash equivalents | 17,923,548 | 27,744,248 | |||
| Note: | The ending 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 bank and other monetary assets, detailed in Annex V, 1. | ||||
| V | Notes to Consolidated Financial Statements (Continued) |
81 Assets with restricted ownership or use rights
| June 30, 2024 | Reason for restriction | |||||
| Gross carrying amount | Carrying amount | |||||
| Monetary assets | 393,069 | 393,069 | Deposited in the central bank as the required reserve | |||
| Monetary assets | 1,270,883 | 1,270,883 | Other monetary funds and restricted bank deposits | |||
| Notes receivable | 35,953 | 35,953 | Endorsement with recourse and pledge | |||
| Fixed assets | 118,878,930 | 87,159,091 | As collateral for loan | |||
| Intangible assets | 4,589,567 | 3,899,659 | As collateral for loan | |||
| Held-for-trading financial assets | 454,204 | 454,204 | Pledge | |||
| Construction in progress | 1,401,401 | 1,401,401 | As collateral for loan | |||
| Accounts receivable | 906,493 | 906,493 | Pledge | |||
| Contract assets | 393,619 | 370,813 | Pledge | |||
| Investment property | 9,909 | 9,597 | As collateral for loan | |||
| Other non-current assets due within one year | 437,474 | 437,474 | Pledge | |||
| 128,771,502 | 96,338,637 | |||||
82 Foreign currency monetary items
| June 30, 2024 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Monetary assets | |||||
| Including: USD | 346,610 | 7.1268 | 2,470,220 | ||
| HKD | 122,141 | 0.9127 | 111,478 | ||
| INR | 1,223,933 | 0.0854 | 104,524 | ||
| EUR | 53,670 | 7.6193 | 408,928 | ||
| PLN | 2,528 | 1.7669 | 4,467 | ||
| JPY | 13,520,798 | 0.0442 | 597,619 | ||
| KRW | 916,323 | 0.0051 | 4,701 | ||
| SGD | 708 | 5.2445 | 3,713 | ||
| MXN | 21,871 | 0.3836 | 8,390 | ||
| VND | 8,115,114 | 0.0003 | 2,272 | ||
| CAD | 2 | 5.1918 | 10 | ||
| V | Notes to Consolidated Financial Statements (Continued) | ||||
| 82 | Foreign currency monetary items (continued) | ||||
| June 30, 2024 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Accounts receivable | |||||
| Including: USD | 1,314,347 | 7.1268 | 9,367,088 | ||
| HKD | 8,870 | 0.9127 | 8,096 | ||
| INR | 8,077,386 | 0.0854 | 689,809 | ||
| EUR | 8,590 | 7.6193 | 65,450 | ||
| JPY | 27,775 | 0.0442 | 1,228 | ||
| MXN | 1,464 | 0.3836 | 562 | ||
| VND | 31,163,654 | 0.0003 | 8,726 | ||
| Receivables financing | |||||
| Including: USD | 21,863 | 7.1268 | 155,810 | ||
| Accounts payable | |||||
| Including: USD | 534,728 | 7.1268 | 3,810,900 | ||
| HKD | 475,955 | 0.9127 | 434,404 | ||
| INR | 808,920 | 0.0854 | 69,082 | ||
| EUR | 8,765 | 7.6193 | 66,783 | ||
| JPY | 16,472,718 | 0.0442 | 728,094 | ||
| AUD | 17 | 4.7215 | 80 | ||
| VND | 1,731,373 | 0.0003 | 485 | ||
| Other receivables | |||||
| Including: USD | 23,468 | 7.1268 | 167,252 | ||
| HKD | 13,102 | 0.9127 | 11,958 | ||
| INR | 58,414 | 0.0854 | 4,989 | ||
| EUR | 1,590 | 7.6193 | 12,115 | ||
| PLN | 936 | 1.7669 | 1,654 | ||
| JPY | 27,047 | 0.0442 | 1,195 | ||
| KRW | 89,165 | 0.0051 | 457 | ||
| SGD | 91 | 5.2445 | 477 | ||
| MXN | 20,849 | 0.3836 | 7,998 | ||
| VND | 16,986,050 | 0.0003 | 4,756 | ||
| V | Notes to Consolidated Financial Statements (Continued) | ||||
| 82 | Foreign currency monetary items (continued) | ||||
| June 30, 2024 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Other payables | |||||
| Including: USD | 533,745 | 7.1268 | 3,803,894 | ||
| HKD | 424,184 | 0.9127 | 387,153 | ||
| INR | 392,141 | 0.0854 | 33,489 | ||
| EUR | 216 | 7.6193 | 1,646 | ||
| PLN | 175 | 1.7669 | 309 | ||
| JPY | 12,979,174 | 0.0442 | 573,679 | ||
| KRW | 315,418 | 0.0051 | 1,618 | ||
| SGD | 48 | 5.2445 | 252 | ||
| MXN | 26,967 | 0.3836 | 10,345 | ||
| TWD | 839 | 0.2188 | 184 | ||
| AUD | 11 | 4.7215 | 52 | ||
| VND | 65,203,314 | 0.0003 | 18,257 | ||
| Short-term borrowings | |||||
| Including: USD | 6,052 | 7.1268 | 43,131 | ||
| Long-term borrowings | |||||
| Including: USD | 2,650 | 7.1268 | 18,886 | ||
| Long-term borrowings due within one year | |||||
| Including: USD | 299,357 | 7.1268 | 2,133,457 | ||
83 Leases
（1） The Company acting as a lessee
From January to June 2024, short-term lease rents, low-value asset rents and income obtained fromsubleasing right-of-use assets, for which the Group, acting as a lessee, chose simplified accounting,were not significant.
| V | Notes to Consolidated Financial Statements (Continued) |
83 Leases (continued)
(2) The Company acting as a lessor
① Operating leases where the Company acts as a lessor
| Item | Rental income | Including: Income related to variable lease payments not included in lease receipts | |
| Houses and buildings | 94,236 | - | |
| Machinery equipment | 3,587 | - | |
| Total | 97,823 | - |
② Finance leases where the Company acts as a lessor
| Item | Sales gains and losses | Financing income | Income related to variable lease payments not included in net lease investment |
| Finance lease | - | 30,693 | - |
| Total | - | 30,693 | - |
Annual undiscounted lease receipts for the next five years
| Item | Annual undiscounted lease receipts | |
| Ending balance | Beginning balance | |
| Year 1 | 213,165 | 95,518 |
| Year 2 | 204,761 | 88,031 |
| Year 3 | 194,325 | 86,910 |
| Year 4 | 184,649 | 86,910 |
| Year 5 | 183,057 | 86,910 |
| Total undiscounted lease receipts after five years | 1,716,091 | 904,691 |
VI R&D expenses1 Presentation by nature of expenses
| Item | Amount incurred in the current period | Amount incurred in the previous period | |
| Material costs | 1,120,205 | 2,254,305 | |
| Labor costs | 1,356,702 | 1,269,485 | |
| Depreciations and amortizations | 1,229,349 | 1,320,351 | |
| Others | 559,602 | 621,141 | |
| Total | 4,265,858 | 5,465,282 |
Including: Expensed R&D expenses
| Including: Expensed R&D expenses | 2,868,939 | 3,554,646 | |
| Capitalized R&D expenses | 1,396,919 | 1,910,636 |
2 Development expenses of R&D projects eligible for capitalization
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance | |||
| Internal development costs | Others | Recognized as intangible assets | Included in profits and losses | Others | |||
| Display | 1,455,110 | 1,211,599 | - | (330,142) | (180,394) | (784,124) | 1,372,049 |
| New energy photovoltaics and other silicon materials | 1,086,383 | 185,320 | - | (462,864) | - | - | 808,839 |
| Total | 2,541,493 | 1,396,919 | - | (793,006) | (180,394) | (784,124) | 2,180,888 |
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 for change | Registered capital | Contribution ratio | |
| Guangzhou TCL High-Tech Development Co., Ltd. | New establishment | RMB5 million | 100.00% | |
| Shenzhen Zhixian Shijie Software Technology Co., Ltd. | New establishment | RMB15 million | 100.00% | |
| Shenzhen Zhilian Shuchuang Technology Co., Ltd. | New establishment | RMB12 million | 100.00% | |
| Xi'an Maichi Shangpai Technology Co., Ltd. | New establishment | RMB300,000 | 100.00% | |
| Tianjin Huiyi Digital Technology Co., Ltd. | New establishment | RMB30 million | 100.00% | |
| Tianjin Jincheng Internet Technology Co., Ltd. | New establishment | RMB10 million | 100.00% | |
| Zhonghuan Advanced Korea Co., Ltd. | New establishment | KRW500 million | 100.00% | |
| Tianjin Binhai Huanxu New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Yixing Huanxu New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Yixing Huanxu Investment Management Co., Ltd. | New establishment | RMB1 million | 100.00% |
Note: Business combinations not under the common control occurred in the current period
(1) Acquisition of the equity of MOKA TECHNOLOGY VIETNAM COMPANY LIMITED
① The cost of acquisition and goodwill were recognized as follows:
On January 1, 2024 (the "Acquisition Date"), the Group acquired 100% equity of MOKATECHNOLOGY VIETNAM COMPANY LIMITED at a cash consideration of RMB 60,061,000,and included such company into the scope of consolidation.
| Cash consideration | 60,061 |
| Less: Share of fair value of identifiable net assets acquired | 60,061 |
| Goodwill amount | - |
② Assets and liabilities of the acquired party as at the acquisition date are presented as follows:
| Fair value as at the acquisition date | Carrying amount as at the acquisition date | |||
| Total assets | 83,467 | 73,668 | ||
| Total liabilities | 23,406 | 23,406 | ||
| Net assets | 60,061 | 50,262 | ||
| Less: non-controlling interests | - | - | ||
| Net assets acquired | 60,061 | 50,262 |
2 Deconsolidated entities for current period
| Name of investee | Time of deconsolidation | Reason for change | |
| Inner Mongolia Zhonghuan Construction Management Co., Ltd. | January 2024 | De-registered | |
| Jiangsu Mingjing Bandaoti Technology Co., Ltd. | February 2024 | De-registered | |
| Ningxia Huanneng New Energy Co., Ltd. | February 2024 | Transferred | |
| Tianjin Binhai New Area Huanju New Energy Co., Ltd. | February 2024 | Transferred |
VII
| VII | Changes to Consolidation Scope (continued) |
| 1 | Newly consolidated entities for current period (continued) |
| Name of investee | Reason for change | Registered capital | Contribution ratio | |
| Huansheng New Energy (Inner Mongolia) Co., Ltd. | New establishment | RMB10 million | 100.00% | |
| Hangjinhou Banner Guangsen New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Hohhot Mingfeng New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Hangjinhou Banner Yusheng New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Inner Mongolia Chenhe New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Heilongjiang Huanju New Energy Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| Huansheng Photovoltaic Technology (Lingwu City) Co., Ltd. | New establishment | RMB1 million | 100.00% | |
| MOKA TECHNOLOGY VIETNAM COMPANY LIMITED | Acquisition | USD25 million | 100.00% | |
| Diamond Union Ltd. | Acquisition | HKD4.76 million | 100.00% |
| VII Changes to Consolidation Scope (continued) | |||
3 Subsidiaries disposed in current period
| Name of subsidiary | Ningxia Huanneng New Energy Co., Ltd. | Tianjin Binhai New Area Huanju New Energy Co., Ltd. | ||
| Price for equity interest disposal | ||||
| % equity interest disposed | 100% | 100% | ||
| Way of equity disposal | Sale | Sale | ||
| Time of loss of control | February 29, 2024 | February 29, 2024 | ||
| Determination basis for time of loss of control | The operating risk has been transferred | The operating risk has been transferred | ||
| Difference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest | (19,094) | 4,645 | ||
VIII Interests in Other Entities
1 Interests in subsidiaries
(1) Principal subsidiaries
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL China Star Optoelectronics Technology Co., Ltd. | Shenzhen | Manufacturing and sales | Shenzhen | 79.78% | - | Incorporated | |
| Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | Shenzhen | Manufacturing and sales | Shenzhen | - | 57.90% | Incorporated | |
| Guangzhou China Ray Optoelectronic Materials Co., Ltd. | Guangzhou | Research and development | Guangzhou | - | 100.00% | Incorporated | |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | 97.30% | Incorporated | ||
| Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | - | 57.14% | Incorporated | |
| China Star Optoelectronics International (HK) Limited | Hong Kong | Sales | Hong Kong | - | 100.00% | Incorporated | |
| China Display Optoelectronics Technology Holdings Limited | Bermuda | Investment holding | Bermuda | - | 64.20% | Business combination not under common control | |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and sales | Huizhou | - | 100.00% | Incorporated | |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | - | 100.00% | Incorporated | |
| VIII | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in subsidiaries (Continued) | ||||||
| (1) | Composition of key subsidiaries (Continued) | ||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Suzhou | Manufacturing and sales | Suzhou | - | 100.00% | Business combination not under common control | |
| Suzhou China Star Optoelectronics Display Co., Ltd. | Suzhou | Manufacturing and sales | Suzhou | - | 100.00% | Business combination not under common control | |
| Guangzhou China Star Optoelectronics Bandaoti Display Technology Co., Ltd. | Guangzhou | Manufacturing and sales | Guangzhou | - | 55.00% | Incorporated | |
| TCL Culture Media (Shenzhen) Co., Ltd. | Shenzhen | Ad planning | Shenzhen | 100.00% | - | Incorporated | |
| Highly Information Industry Co., Ltd. | Beijing | Product distribution | Beijing | 66.46% | - | Incorporated | |
| Beijing Sunpiestore Technology Co., Ltd. | Beijing | Sales | Beijing | - | 53.45% | Incorporated | |
| Beijing Lingyun Data Technology Co., Ltd. | Beijing | Sales | Beijing | - | 60.00% | Incorporated | |
| TCL Technology Group Finance Co., Ltd. | Huizhou | Financial | Huizhou | 82.00% | 18.00% | Incorporated | |
| Shenzhen Dongxi Jiashang Entrepreneurship Investment Co., Ltd. | Shenzhen | Investment business | Shenzhen | 100.00% | - | Incorporated | |
| Ningbo TCL Equity Investment Ltd. | Ningbo | Investment business | Shenzhen | 100.00% | - | Incorporated | |
| TCL Technology Park (Huizhou) Co., Ltd. | Huizhou | Property management | Huizhou | - | 100.00% | Incorporated | |
| TCL Research America Inc. | U.S. | Research and development | U.S. | - | 100.00% | Incorporated | |
| TCL Industrial Technology Research Institute (Hong Kong) Limited | Hong Kong | Research and development | Hong Kong | - | 100.00% | Incorporated | |
| VIII | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in subsidiaries (Continued) | ||||||
| (1) | Composition of key subsidiaries (Continued) | ||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL Technology Investments Limited | Hong Kong | Investment business | Hong Kong | 100.00% | - | Incorporated | |
| TCL Zhonghuan Renewable Energy Technology Co., Ltd. | Tianjin | Manufacturing and sales | Tianjin | 2.55% | 27.37% | Business combination not under common control | |
| Tianjin Printronics Circuit Corporation | Tianjin | Manufacturing and sales | Tianjin | - | 26.86% | Business combination not under common control | |
| Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. | Inner Mongolia | Manufacturing and sales | Inner Mongolia | - | 59.32% | Business combination not under common control | |
| Ningxia Zhonghuan Solar Material Co., Ltd. | Ningxia Hui Autonomous Region | Manufacturing and sales | Ningxia Hui Autonomous Region | - | 100.00% | Business combination not under common control | |
| Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. | Tianjin | Manufacturing and sales | Tianjin | - | 100.00% | Business combination not under common control | |
| Wuxi Zhonghuan Applied Materials Co., Ltd. | Jiangsu | Manufacturing and sales | Jiangsu | - | 98.08% | Business combination not under common control | |
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | Inner Mongolia | Manufacturing and sales | Inner Mongolia | - | 100.00% | Business combination not under common control | |
| Tianjin Huanou International Silicon Material Co., Ltd. | Tianjin | Sales | Tianjin | - | 100.00% | Business combination not under common control | |
| Zhonghuan Hong Kong Holding Limited | Hong Kong | Import and export | Hong Kong | - | 100.00% | Business combination not under common control | |
| Zhonghuan Advanced Bandaoti Technology Co., Ltd. | Jiangsu | Manufacturing and sales | Jiangsu | 7.35% | 35.30% | Business combination not under common control | |
| Huansheng Solar (Jiangsu) Co., Ltd. | Jiangsu | Manufacturing and sales | Jiangsu | - | 100.00% | Business combination not under common control | |
| Huansheng New Energy (Jiangsu) Co., Ltd. | Jiangsu | Manufacturing and sales | Jiangsu | - | 95.75% | Business combination not under common control | |
| Huansheng New Energy (Tianjin) Co., Ltd. | Tianjin | Manufacturing and sales | Tianjin | - | 95.5% | Business combination not under common control | |
| VIII | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in subsidiaries (Continued) | ||||||
| (1) | Composition of key subsidiaries (Continued) | ||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Shareholding ratio (%) | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| Tianjin Zhonghuan New Energy Co., Ltd. | Tianjin | Power generation, power transmission, power supply (distribution) | Tianjin | - | 100.00% | Business combination not under common control | |
| Tianjin Huanrui Electronic Technology Co., Ltd. | Tianjin | Purchase | Tianjin | - | 100.00% | Business combination not under common control | |
| Moka International Limited | BVI | Investment holding | BVI | - | 100.00% | Business combination not under common control | |
| Moka Technology (Guangdong) Co., Ltd. | Huizhou | Manufacturing and sales | Huizhou | - | 100.00% | Business combination not under common control | |
(2) Subsidiaries with substantial non-controlling interests
| Name of subsidiary | Non-controlling shareholding ratio (%) | Profit or loss attributable to minority shareholders in the current period | Dividends distributed to minority shareholders in the current period | Balance of minority interests at the end of the period | |
| TCL China Star Optoelectronics Technology Co., Ltd. | 20.22% | 731,069 | 13,326 | 40,420,323 | |
| TCL Zhonghuan Renewable Energy Technology Co., Ltd. | 70.09% | (2,261,307) | 735,495 | 43,468,734 | |
| Highly Information Industry Co., Ltd. | 33.54% | 26,985 | 5,813 | 573,259 |
| 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: | ||||||||||||||
| June 30, 2024 | January 1, 2024 | |||||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 49,051,248 | 147,524,292 | 196,575,540 | 56,329,265 | 67,888,573 | 124,217,838 | 55,759,259 | 153,177,418 | 208,936,677 | 66,215,558 | 68,629,981 | 134,845,539 | ||
| TCL Zhonghuan Renewable Energy Technology Co., Ltd. | 33,898,400 | 91,297,973 | 125,196,373 | 22,725,402 | 46,535,581 | 69,260,983 | 34,627,478 | 90,435,565 | 125,063,043 | 22,324,095 | 42,501,836 | 64,825,931 | ||
| Highly Information Industry Co., Ltd. | 7,623,817 | 177,802 | 7,801,619 | 6,281,096 | 29,356 | 6,310,452 | 7,086,563 | 179,985 | 7,266,548 | 5,807,990 | 24,523 | 5,832,513 | ||
| January - June 2024 | January - June 2023 | |||||||||
| Operating revenue | Net profits | Total comprehensive income | Net cash generate from/used in operating activities | Operating revenue | Net profit | Total comprehensive income | Net cash generate from/used in operating activities | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 44,096,058 | 2,479,923 | 2,566,892 | 14,129,920 | 30,600,624 | (3,619,167) | (3,976,323) | 6,612,328 | ||
| TCL Zhonghuan Renewable Energy Technology Co., Ltd. | 16,213,493 | (3,175,764) | (3,175,713) | 128,102 | 34,897,789 | 4,838,880 | 4,839,827 | 2,860,116 | ||
| Highly Information Industry Co., Ltd. | 13,649,333 | 62,945 | 62,945 | (611,454) | 13,812,825 | 78,707 | 78,707 | (605,431) | ||
| 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 | Principal place of business/place of registration | Nature of business | Strategic to the Group’s activities or not | Shareholding ratio (%) | ||
| Direct | Indirect | |||||
| Associate | ||||||
| Bank of Shanghai Co., Ltd. | Shanghai | Financial | Yes | 5.76% | - | |
Note: As of the date of issuance of this Report, Bank of Shanghai Co., Ltd. has not announced information on
its H1 2024 report.
(2) The Company had no significant joint ventures in the Reporting Period.
IX Risks related to financial instruments
| The purpose of the Company’s risk management is to achieve a right balance between the risk and the benefit and maximally reduce the adverse impact of financial risks on the Company’s financial performance. Based on such purpose, the Company has established various risk management policies to recognize and analyze possible risks to be encountered by the Company, set an appropriate risk acceptable level and designed corresponding internal control procedures so as to control the Company’s risk level. In addition, the Company will regularly review these risk management policies and relevant internal control system in order to adapt to the market or handle various changes in the Company’s operating activities. Meanwhile, the Company’s internal audit department will also regularly or randomly check whether the implementation of internal control system conforms to relevant risk management policies. In fact, the Company has applied proper diversified investment and business portfolio to disperse various financial instrument risks and worked out corresponding risk management policies to reduce the risk of concentrating on one single industry, specific region or specific counterpart. | |
| The main risks arising from the Company's financial instruments are credit risk, liquidity risk, and market risk (mainly foreign exchange risk and interest rate risk). |
(1) Credit risk
| Credit risk refers to the risk of financial loss caused by any party of financial instruments to another party due to the failure in fulfilling performance obligations. The Group controls the credit risk based on the specific group classification, and credit risk mainly results from bank deposit, due from central bank, notes receivable, accounts receivable, loans and advances to customers and other receivables. | |
| The Group’s bank deposits and due from central bank are mainly deposited in stated-owned banks and other large and medium-sized listed banks. The Group considers no significant credit risk existed and no significant loss will be caused by the counterpart’s breach of contract. | |
| For notes receivable, accounts receivable, loans and advances to customers and other receivables, the Group has established relevant policies to control the credit risk exposure, and will evaluate the client’s credit qualification and determine corresponding credit period based on the client’s financial status, the possibility of obtaining guarantees from the third party, relevant credit records and other factors (like the current market situation). In the meantime, the Group will regularly monitor the client's credit records. For any client with unfavorable credit records, the Group will issue written reminders, shorten the credit period or cancel the credit period so as to keep the Group's overall credit risk controllable. | |
| As of June 30, 2024, no significant guarantee or other credit enhancements held due to the debtor mortgage was found in the Group. |
(2) Liquidity risk
| Liquidity risk refers to the risk of capital shortage the Company encounters when the Company is fulfilling the obligation of settlement in the form of cash or other financial assets. Various subsidiaries under the Group shall be responsible for predicting their own cash flow. The financial department of the headquarter shall firstly summarize predictions on the cash flow of various subsidiaries and then continuously monitor the short-term and long-term fund demand at the Group's level so as to maintain sufficient cash reserves and negotiable securities that can be realized at any time; meanwhile, special efforts shall also be made to continuously monitor whether provisions stated in the loan agreement are observed and to make major financial institutions promise to provide sufficient reserve funds so as to satisfy short-term and long-term capital demand. | |
| As of June 30, 2024, the Group had no liquidity risk events. |
| 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 foreign currency assets and liabilities and future foreign currency transactions. | |||||
| The Group always regards "Locking the Cost and Avoiding Possible Risks" as the foreign currency risk management goal. Through the natural hedging of settlement currency, matching with the foreign currency liabilities, signing simple derivative products closely related to the owner's operation and meeting corresponding hedge accounting treatment requirements and applying other management methods, the foreign currency risk exposure can be controlled within a reasonable scope and the impact of interest rate fluctuations on the Group's overall profit and loss will be reduced. | |||||
| (a) On June 30, 2024, 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 USD269,484,000, equivalent to RMB1,920,562,000 based on the spot exchange rate on the balance sheet date. The differences arising from the translation of foreign currency financial statements were not included. | |||||
| The Group applies the following exchange rate of USD against RMB: | |||||
| Average exchange rate | Exchange rate at period-end | ||||
| January - June 2024 | June 30, 2024 | ||||
| USD/RMB | 7.1074 | 7.1268 | |||
| Provided that other risk variables remained unchanged except for the exchange rate, a 5% depreciation/appreciation in RMB as a result of the changes in the exchange rate of RMB against USD would cause an increase/decrease of RMB96,028,000 in shareholders’ equity and net profits respectively of the Group on June 30, 2024. | |||||
| The above-mentioned sensitivity analysis is made based on the assumption that the exchange rate changes on the balance sheet date, and financial instruments held by the Group on the balance sheet date exposed to the exchange risk are re-calculated based on the changed exchange rate. The above analysis does not include differences arising from the translation of foreign currency financial statements. | |||||
| (b) | Interest risk | ||||
| The Group’s interest rate risk mainly results from interest-bearing bank borrowings adopting floating interest rates, and the Group determined the proportion of fixed interest rates and floating interest rates based on the market environment and its risk tolerance. Up until June 30, 2024, the Group’s liabilities with floating interest rates accounted for 67.27% of its total interest-bearing liabilities. And, the Group will continuously monitor the interest rates and make corresponding adjustments according to the specific market changes so as to avoid interest rate risk. | |||||
(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 RMB21,195,123,000.
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 active market; and the Company mainly adopts the closing price as the value of a financial asset. Financial instruments of level 1 mainly include exchange listed stocks and bonds. | |
| Level 2 refers to the directly or indirectly observable input of a financial asset or liability that does not belong to level 1. | |
| Level 3 refers to the input of a financial asset or liability determined based on variables other than the observable market data (non-observable input). | |
| 2 | Basis for determining the market value of items measured at continuous level 1 fair value |
| The Company adopts the active market quotation as the fair value of a level 1 financial asset. | |
| 3 | Items measured at continuous level 2 fair value adopt the following valuation techniques and parameters: |
| The Company’s receivables financing was bank acceptance notes and trade acceptance notes, of which the market prices were determined based on the transfer or discounted amounts. | |
| Derivative financial assets and liabilities are multiple IRS and CCS signed between the Group and financial institutions. The Company adopts the quotations provided by the financial institution in valuation. | |
| 4 | Items measured at continuous level 3 fair value adopt the following valuation techniques and parameters (nature and quantity): |
| Other non-current financial assets measured at continuous level 3 fair value are mainly unlisted equity investments held by the Company. In measuring the fair value, the Company mainly adopts the valuation technique of comparison with listed companies, taking into account the price of similar securities and liquidity discount. | |
| Held-for-trading financial assets measured at continuous level 3 fair value are mainly wealth management products held by the Company. In valuation of the fair value, the Company adopts the method of discounting future cash flows based on the agreed expected yield rate. | |
| X | Classification of Financial Instruments and Fair Value (continued) | |||||||
| 5 | Financial instruments measured in three levels of fair value | |||||||
| Financial assets | ||||||||
| Item | Level 1 | Level 2 | Level 3 | Total | ||||
| Held-for-trading financial assets (see Note V. 2) | 633,276 | 21,169,297 | 3,424,009 | 25,226,582 | ||||
| Derivative financial assets (see Note V.3) | - | 155,087 | - | 155,087 | ||||
| Receivables financing (see Note V.6) | - | - | 618,962 | 618,962 | ||||
| Investments in other equity instruments (see Note V. 16) | 16,002 | - | 371,253 | 387,255 | ||||
| Other non-current financial assets (see Note V. 17) | 356,850 | 300,690 | 3,338,196 | 3,995,736 | ||||
| Total assets continuously measured at fair value | 1,006,128 | 21,625,074 | 7,752,420 | 30,383,622 | ||||
| Financial liabilities | ||||||||
| Item | Level 1 | Level 2 | Level 3 | Total | ||||
| Held-for-trading financial liabilities (see Note V, 31) | - | 4,000 | 204,434 | 208,434 | ||||
| Derivative financial liabilities (see Note V, 32) | - | 80,185 | - | 80,185 | ||||
| Total liabilities continuously measured at fair value | - | 84,185 | 204,434 | 288,619 |
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 1,265,347,805 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 total share capital; or, despite the ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to their interest in the limited liability company’s total capital or the joint stock company’s total number of shares. According to the definition above, the Company has no controlling shareholder or actual controller. |
2 Related parties that do not control or are not controlled by the Company
| Information about such related parties： | ||
| Company Name | Relationship with the Company | |
| SunPower Systems International Limited | Associate | |
| LG Electronics (Huizhou) Co., Ltd. | Associate | |
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | Associate | |
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | Associate | |
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | Associate | |
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | Associate | |
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | Associate | |
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | Associate | |
| Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. | Associate | |
| JOLED Incorporation | Associate | |
| China Innovative Capital Management Limited | Associate | |
| MAXEON SOLAR TECHNOLOGIES,PTE.LTD. and its subsidiaries | Associate and its subsidiaries | |
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Purplevine Holdings Limited and its subsidiaries | Associate and its subsidiaries | |
| Tianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Getech Ltd. and its subsidiaries | Associate and its subsidiaries | |
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Wuxi TCL Venture Capital Partnership (Limited Partnership) and its subsidiaries | Associate and its subsidiaries | |
| XI | Related parties and related-party transactions (continued) | |
| 2 | The nature of related parties without control relationship (continued) | |
| Company name | Relationship with the Company | |
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) and its subsidiaries | Associate and its subsidiaries | |
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) and its subsidiaries | Associate and its subsidiaries | |
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) and its subsidiaries | Associate and its subsidiaries | |
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) and its subsidiaries | Associate and its subsidiaries | |
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | Joint venture | |
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | Joint venture | |
| Tianjin Huanyan Technology Co., Ltd. | Joint venture | |
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | Joint venture and subsidiary | |
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | Joint venture and subsidiary | |
| TCL Industries Holdings Co., Ltd. and its subsidiaries | Other relationships | |
| Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries | Other relationships | |
| Joint ventures and subsidiaries of TCL Industries Holdings Co., Ltd. and its subsidiaries | Other relationships | |
| XI | Related Parties and Related-Party Transactions (Continued) |
3 Major related-party transactions
(1) Selling raw materials and finished goods (Note 1)
| January - June 2024 | January - June 2023 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 10,125,470 | 7,423,420 | |||
| MAXEON SOLAR TECHNOLOGIES,PTE.LTD. and its subsidiaries | 713,021 | 1,524,583 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 98,112 | 677,985 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 26,751 | 51,496 | |||
| SunPower Systems International Limited | 13,026 | 79,537 | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 4,674 | 3,840 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 4,065 | 4,647 | |||
| LG Electronics (Huizhou) Co., Ltd. | 589 | - | |||
| Purplevine Holdings Limited and its subsidiaries | 71 | 75 | |||
| Tianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries | 10 | 16 | |||
| 10,985,789 | 9,765,599 |
(2) Purchasing raw materials and finished products (Note 2, Note 5)
| January - June 2024 | January - June 2023 | ||||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 2,320,232 | 2,329,164 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 870,360 | 703,978 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 680,552 | 628,990 | |||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | 572,585 | - | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 254,202 | 747,306 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 152,875 | 172,513 | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 111,848 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 72,702 | 119,831 | |||
| Getech Ltd. and its subsidiaries | 47,818 | 11,666 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 42,112 | - | |||
| Purplevine Holdings Limited and its subsidiaries | 11,615 | - | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 779 | 401 | |||
| Xinjiang Goens Energy Technology Co., Ltd. | - | 1,890,773 | |||
| 5,137,680 | 6,604,622 |
| XI | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major related-party transactions (continued) | ||||
(3) Receiving funding (Note 3)
| January - June 2024 | January - June 2023 | ||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 211,045 | 172,328 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 114,904 | 76,370 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 78,790 | 125 | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 63,758 | 30,005 | |||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) and its subsidiaries | 5,533 | 5,619 | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) and its subsidiaries | 1,486 | 1,483 | |||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) and its subsidiaries | 614 | 633 | |||
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) and its subsidiaries | 391 | 411 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 344 | 350,564 | |||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 34 | 33 | |||
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) and its subsidiaries | 11 | 9,082 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 2 | - | |||
| 476,912 | 646,653 |
(4) Funding
| January - June 2024 | January - June 2023 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 226 | - | |||
| 226 | - | ||||
| XI | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major related-party transactions (continued) | ||||
(5) Leases
| January - June 2024 | January - June 2023 | ||||
| Rental income | |||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 30,934 | 31,218 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 22,810 | 30,171 | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 11,519 | 9,668 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 2,996 | 2,752 | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 517 | 439 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 282 | 427 | |||
| Getech Ltd. and its subsidiaries | 251 | 376 | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 101 | - | |||
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. and its subsidiaries | 72 | - | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries | 23 | - | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 7 | ||||
| 69,512 | 75,051 | ||||
| Rental expense | |||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 26,382 | 33,563 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 4,732 | 4,926 | |||
| Tianjin Huanyan Technology Co., Ltd. | 2,214 | - | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 1,673 | - | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 1,379 | 703 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 123 | 70 | |||
| Getech Ltd. and its subsidiaries | 728 | - | |||
| 37,231 | 39,262 | ||||
(6) Rendering or receipt of services
| January - June 2024 | January - June 2023 | ||||
| Rendering of services | 163,883 | 127,756 | |||
| Receipt of services | 946,617 | 888,553 | |||
| XI | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major related-party transactions (continued) | ||||
(7) Receiving interest or paying interest (Note 3)
| January - June 2024 | January - June 2023 | ||||
| Interest received | 7,806 | 7,058 | |||
| Interest paid | 10,358 | 2,319 |
(8) Remuneration of key management personnel (Note 4)
| January - June 2024 | January - June 2023 | ||||
| Remuneration of key management personnel | 6,146 | 6,996 | |||
| Note 1 | Selling raw materials and finished products to related parties | ||||
| The Company sells raw materials, spare parts, auxiliary materials and finished goods to its joint ventures and associates at market prices, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profits but play an important role as to the Company’s continued operations. | |||||
| Note 2 | Purchasing raw materials and finished products from related parties | ||||
| The Company purchases raw materials and finished goods from its joint ventures and associates at prices similar to those paid to third-party suppliers, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profits 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 is responsible for the financial affairs of the Company, including capital operation and allocation. The Center settles accounts with the Company’s subsidiaries, joint ventures and associates and pays the interest. It also allocates the money deposited by the subsidiaries, joint ventures and associates in it to these enterprises and charges interest. The interest income and expense between the Company and the Center are calculated according to the interest rates declared by the People’s Bank of China. The funding amount provided refers to the outstanding borrowings due from the Center to related parties, while the funding amount received means the balances of related parties’ deposits in the Center. | |||||
| Note 4 | The remunerations of key management personnel 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, but do not include share-based payments. | ||||
| Note 5 | |||||
The transactions between Xinjiang Goens Energy Technology Co., Ltd. and the Group between January - June2023 are related party transactions.
| XI | Related Parties and Related-Party Transactions (Continued) |
4 Balances due from and to related parties (continued)
(1) Accounts receivable
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 3,869,121 | 3,686,514 | |||
| MAXEON SOLAR TECHNOLOGIES,PTE.LTD. and its subsidiaries | 371,113 | 46,949 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 155,512 | 144,349 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 14,405 | 12,559 | |||
| SunPower Systems International Limited | 13,640 | 13,163 | |||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 7,066 | - | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 5,751 | 10,095 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 2,732 | - | |||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 2,586 | 2,500 | |||
| Getech Ltd. and its subsidiaries | 289 | - | |||
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. and its subsidiaries | 100 | - | |||
| LG Electronics (Huizhou) Co., Ltd. | 191 | 478 | |||
| Tianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries | 65 | 54 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 30 | 22 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | - | 785 | |||
| Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries | - | 658 | |||
| 4,442,601 | 3,918,126 |
| XI | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Balances due from and to related parties (continued) | ||||
(2) Accounts payable
| June 30, 2024 | January 1, 2024 | ||||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 1,518,668 | 1,113,639 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,152,088 | 1,246,459 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 315,624 | 284,721 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 190,644 | 198,696 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 60,035 | 49,341 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 48,463 | 46,226 | |||
| Getech Ltd. and its subsidiaries | 33,073 | 34,963 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 20,111 | 22,373 | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 12,873 | 31,915 | |||
| Joint ventures and subsidiaries of TCL Industries Holdings Co., Ltd. and its subsidiaries | 599 | - | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | - | 2,671 | |||
| 3,352,178 | 3,031,004 |
| XI Related parties and related-party transactions (continued) Related Parties and Related-Party Transactions (Continued) | |||||
| 4 | Balances due from and to related parties (continued) | ||||
(3) Other receivables
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 193,382 | 133,531 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 21,363 | 13,026 | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 17,046 | 8,120 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 7,738 | 7,791 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 5,169 | 1,898 | |||
| Getech Ltd. and its subsidiaries | 5,120 | 5,127 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 4,144 | 9,114 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 3,619 | 12,335 | |||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 3,053 | 3,053 | |||
| MAXEON SOLAR TECHNOLOGIES,PTE.LTD. and its subsidiaries | 1,243 | 1,105 | |||
| Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. | 369 | 219 | |||
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. and its subsidiaries | 293 | 215 | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 176 | 170 | |||
| LG Electronics (Huizhou) Co., Ltd. | 10 | 336 | |||
| JOLED Incorporation | - | 2,823 | |||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | - | 1,629 | |||
| 262,725 | 200,492 |
| XI Related parties and related-party transactions (continued) X Related Parties and Related-Party Transactions (Continued) | |||||
| 4 | Balances due from and to related parties (continued) | ||||
(4) Other payables
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 557,168 | 613,191 | |||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 428,100 | 428,100 | |||
| Getech Ltd. and its subsidiaries | 80,009 | 112,086 | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 79,430 | 46,151 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 71,742 | 82,487 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 64,534 | 77,143 | |||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 9,317 | 9,317 | |||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) and its subsidiaries | 5,533 | 5,500 | |||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 4,594 | 2,796 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 1,493 | 3,751 | |||
| Tianjin Huanyan Technology Co., Ltd. | 1,099 | - | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) and its subsidiaries | 936 | 943 | |||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) and its subsidiaries | 614 | 611 | |||
| Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries | 465 | 401 | |||
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) and its subsidiaries | 391 | 389 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 76 | 118 | |||
| Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 67 | 66 | |||
| China Innovative Capital Management Limited | 57 | 86 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 45 | 45 | |||
| Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. and its subsidiaries | 20 | 20 | |||
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) and its subsidiaries | 11 | 8,892 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries | 8 | - | |||
| Joint ventures and subsidiaries of TCL Industries Holdings Co., Ltd. and its subsidiaries | 2 | - | |||
| 1,305,711 | 1,392,093 | ||||
| XI Related parties and related-party transactions (continued) Related Parties and Related-Party Transactions (Continued) | |||||
| 4 | Balances due from and to related parties (continued) | ||||
(5) Non-current liabilities due within one year
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 20,860 | 14,042 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | - | 2,775 | |||
| 20,860 | 16,817 | ||||
(6) Prepayments
| June 30, 2024 | January 1, 2024 | ||||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 66,755 | - | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 15,092 | 133 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 8,753 | - | |||
| Getech Ltd. and its subsidiaries | 7,539 | 15,695 | |||
| Tianjin Huanyan Technology Co., Ltd. | 6,466 | 6,466 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 3,685 | 399 | |||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | 1,747 | 156 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,691 | 46,726 | |||
| Xinjiang Goens Energy Technology Co., Ltd. | - | 152 | |||
| 111,728 | 69,727 |
| XI Related parties and related-party transactions (continued) Related Parties and Related-Party Transactions (Continued) | |||||
| 4 | Balances due from and to related parties (continued) | ||||
(7) Advances from customers
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 8,028 | 304 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 110 | 110 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries | 9 | - | |||
| 8,147 | 414 | ||||
(8) Contract liabilities
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 31,839 | 71,842 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 1,058 | 1,424 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 121 | 67 | |||
| MAXEON SOLAR TECHNOLOGIES,PTE.LTD. and its subsidiaries | 41 | 46 | |||
| Inner Mongolia Huanye Material Co., Ltd. and its subsidiaries | 22 | 32 | |||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. and its subsidiaries | 4 | - | |||
| 33,085 | 73,411 | ||||
(9) Lease liabilities
| June 30, 2024 | January 1, 2024 | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 43,473 | 40,772 | |||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | - | 8,690 | |||
| 43,473 | 49,462 |
| XI Related parties and related-party transactions (continued) Related Parties and Related-Party Transactions (Continued) | |||||
| 4 | Balances due from and to related parties (continued) | ||||
(10) Deposits from related parties (note)
| June 30, 2024 | January 1, 2024 | ||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 211,200 | 195,470 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 78,796 | 98 | |||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries | 67,716 | 60,899 | |||
| Huizhou TCL Human Resources Service Co., Ltd. and its subsidiaries | 7,432 | 6,134 | |||
| Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) and its subsidiaries | 550 | 547 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 344 | 270 | |||
| TCL Microchip Technology (Guangdong) Co., Ltd. and its subsidiaries | 2 | 7,505 | |||
| 366,040 | 270,923 | ||||
| Note: These deposits are made by related parties in the Company’s subsidiary TCL Technology Group Finance Co., Ltd. | |||||
(11) Other non-current assets
| June 30, 2024 | January 1, 2024 | ||||
| Purplevine Holdings Limited and its subsidiaries | 105,362 | 174,422 | |||
| Getech Ltd. and its subsidiaries | 12,064 | 4,429 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 684 | 68 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries | 297 | 297 | |||
| 118,407 | 179,216 |
XII Share-based payments
Overall share-based payments(excluding TZE and its subsidiaries)
| Total amount of each equity instrument granted by the Company in the current period | - | |
| Total amount of each equity instrument exercised by the Company in the current period | 14,332 | |
| Total amount of the Company’s equity instruments that expired in the current period | 2,043 | |
| Range of exercise prices of the Company’s stock options outstanding and remaining contract term at the end of the period | - | |
| Range of exercise prices of the Company’s other equity instruments outstanding and remaining contract term at the end of the period | - |
(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 (PhaseII) 2021-2023 deliberated and adopted at the Second Extraordinary General Meeting 2022, and the Proposal on theCompany’s Employee Stock Purchase Plan (Phase II) 2021-2023 (Draft) adopted by the resolution of the of the 19thMeeting of the Seventh-term Board of Directors and the 14th Meeting of the Seventh-term Board of Supervisors;
32.6211 million shares were granted to no more than 3,600 awardees at the price of RMB4.35 on July 22, 2022.From January to June 2024, a total of 2,043,000 restricted shares granted by the Company became void due to theawardees’ resignation.
(2) Employee Stock Ownership Plan (Phase III) 2021-2023
According to the Proposal on the Management Measures of the Company’s Employee Stock Ownership Plan (PhaseIII) 2021-2023 deliberated and adopted at the Second Extraordinary General Meeting of 2023, and the Proposal onthe Company’s Employee Stock Purchase Plan (Phase III) 2021-2023 (Draft) adopted by the resolution of the 32ndMeeting of the Seventh-term Board of Directors and the 21st Meeting of the Seventh-term Board of Supervisors,
64.99 million shares were 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 followingtable:
| Number of times | Vesting period and ratio | |
| First non-trade transfer or sale | After 12 months from the date of vesting of the holder's respective quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder's respective shares to the account of the holder of the Shareholding Plan, provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation; | |
| Second non-trade transfer or sale | After 24 months from the date of vesting of the holder’s corresponding quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder’s corresponding shares to the account of the holder of the Shareholding Plan provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation. |
Equity-settled share-based payments
| Method of determining the fair value of equity instruments on the date of grant | The Group determined the fair value of equity instruments on the grant date based on the fair value of the shares. | |
| Basis for determining the number of exercisable equity instruments | On each balance sheet date within the vesting period, the Group determines the best estimate based on the latest number of employees eligible to exercise their options, and revise the estimated number of exercisable equity instruments. | |
| Reasons for significant differences between current and previous estimates | None | |
| Accumulated amount of equity-settled share-based payment included in capital reserve | RMB 146,454,000 | |
| Total expense recognized for equity-settled share-based payments in the current period | RMB 72,595,000 |
The Company has no cash-settled share-based payments.
The Company has no share-based payment modification or termination.
XII Share-based payments5 Share-based payments by the controlling subsidiary TZE
（
）Stock option incentive plan
There were no options exercised during the reporting period. The remaining deadline for the exercise of thesecond batch options under the stock option incentive plan 2021 is July 8, 2024. It is planned that they will becancelled after the expiration date.
Changes in stock options during the year
| Number of stock options outstanding as at the beginning of the year | 2,558 | |
| Number 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 |
（
）Employee stock ownership plan
(a) 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 "EmployeeStock Ownership Plan for 2022") was deliberated and adopted. In 2022, TZE repurchased a total of 9,515,263shares by centralized bidding through the securities account opened specially for repurchasing shares, at anaverage repurchase price of RMB 41.09 per share. Among the repurchased shares, 9,492,797 shares were usedfor the Employee Stock Ownership Plan for 2022. The remaining 161,615 shares repurchased in 2021 werealso used for the Employee Stock Ownership Plan for 2022. In summary, a total of 9,654,412 shares were usedfor the Employee Stock Ownership Plan for 2022. The lock up period for the shares purchased for theEmployee Stock Ownership Plan for 2022 is from September 8, 2022 to September 7, 2023. On June 30, 2023,the Management Committee for the Employee Stock Ownership Plan for 2022 determined that the grant dateof stock quota under the Employee Stock Ownership Plan for 2022 should be July 1, 2023, and agreed to granta total of approximately 9,654,412 shares to employees who met the conditions of the Employee StockOwnership Plan for 2022.
(b) TZE’s employee stock ownership plan for 2023
The lock up period of the Company's 2023 Employee Stock Ownership Plan expired on June 8, 2024. As KPIswere not met, all the 14,391,980 underlying shares corresponding to the 2023 Employee Stock OwnershipPlan (the total number of shares is 17,989,975 after the conversion into share capital in 2022) and theircorresponding dividends and other rights would belong to the Company according to the provisions of the2023 Employee Stock Ownership Plan and would no longer belong to the holders. The management committeefor this phase of stock ownership plan would sell the shares at an appropriate time before the expiration of the2023 Employee Stock Ownership Plan, and the proceeds will belong to the Company.
The Company held the 43rd meeting of the Six-term Board of Directors on October 25, 2023 to deliberate andapprove the "Proposal on the Scheme for the Repurchase of Corporate Shares". The Company repurchased atotal of 4,999,968 shares by centralized bidding through a dedicated securities account for share repurchase,in order to use such shares to implement employee stock ownership plans or equity incentives.
XII Share-based payments (continued)
5 Share-based payments by the controlling subsidiary TZE (continued)
（
）Equity-settled share-based payments
| Method of determining the fair value of equity instruments on the date of grant | The Group determined the fair value of equity instruments on the grant date based on the fair value of the shares. | |
| Basis for determining the number of exercisable equity instruments | On each balance sheet date within the vesting period, the Group determines the best estimate based on the latest number of employees eligible to exercise their options, and revise the estimated number of exercisable equity instruments. | |
| Reasons for significant differences between current and previous estimates | None | |
| Accumulated amount of equity-settled share-based payment included in capital reserve | RMB 648,573,000 | |
| Total expense recognized for equity-settled share-based payments in the current period | RMB 147,738,000 |
（
）TZE has no cash-settled share-based payments.
（
）TZE has no share-based payment modification or termination.
XIII Commitments
1 Capital commitments
| June 30, 2024 | |||
| Contracted but not provisioned | Note 1 | 35,628,315 | |
| Approved by Board but not contracted | Note 2 | 502,018 | |
| 36,130,333 | |||
| Note 1 | The capital commitments under contractual obligations but not provided for in the current period primarily consisted of such commitments for construction of investment projects and external investments. |
| Note 2 | The capital commitments approved by the Board but are not under contractual obligations in the current period primarily consist of such commitments for display business projects. |
| As of June 30, 2024, 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 June 30, 2024, the guarantee provided by the Company for the related party’s bank loans, commercial drafts, letters of credit, etc., was RMB 2,502,078,000, as detailed below: |
| Obligor | Actual guarantee amount | Type of guarantee | Actual occurrence date | Term of guarantee | Expired or not | ||||||
| Subsidiary of TCL Industries Holdings Co., Ltd. | 64,570 | Joint liability guarantee | December 17, 2021 | 54 days | No | ||||||
| August 29, 2019 | 59 days | No | |||||||||
| Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. | 201,000 | Joint liability guarantee | April 28, 2020 | 7.5 | No | ||||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. | 429,708 | Joint liability guarantee | September 27, 2023 | 86-361 days | No | ||||||
| Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. | 326,800 | Joint liability guarantee | May 22, 2023 | 5.9 | No | ||||||
| Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. | 1,480,000 | Joint liability guarantee | May 24, 2024 | 5 | No | ||||||
| 2,502,078 | |||||||||||
| As at June 30, 2024, the amount of credit granted by the Group for the note discounting, note acceptance, and non-financing guarantees of related parties was RMB1,291,570,000. | |||||||||||
XV Events after the Balance Sheet Date
| 1 | In July 2024, TCL TECH completed the issuance of the 2024 Technology Innovation Corporate Bond (Digital Economy) (Phase III), with an issuance scale of RMB 2 billion. This phase of bonds are divided into two varieties. Among them, i) a Variety I bond has a maturity of 5 years providing the issuer with the options to redeem at the end of the third year and adjust the coupon rate and providing the investors with put options; the amount of Variety I bonds are RMB1 billion with a coupon rate of 2.29%; and ii) a Variety II bond has a maturity of 5 years, with a total amount of RMB 1 billion and a coupon rate of 2.46%. |
XVI Other Important Matters
(I) Segment reporting
| 1 | Basis for determining reporting segment and accounting policies |
| According to the Company’s internal organizational structure, management requirements and internal reporting system, the Company’s business is divided into four reporting segments: the display business, the new energy photovoltaic and other silicon materials business, the distribution business and the other businesses. The Company's management regularly evaluates the operating results of these reporting segments to determine the allocation of resources and evaluate their performance. The Company’s four reporting segments are: | |
| (1) | Display business: mainly includes the research and development, manufacturing and sales of display panels and display modules, as well as complete display processing. |
| (2) | New energy photovoltaic and other silicon materials business: mainly includes the manufacture and sales of other silicon materials, devices, new energy materials, and new energy; development and operation of high-efficiency photovoltaic power station projects. |
| (3) | Distribution business: mainly includes the sales of computers, software, tablet computers, mobile phones and other electronic products. |
| (4) |
Other businesses: other businesses besides the above, including industrial finance and investment business,technology development services and patent maintenance services provided by the company, etc.
| Segment assets include all current assets such as tangible assets, intangible assets, other long-term assets and receivables attributable to each segment. Segment liabilities include payables, bank loans and other long-term liabilities attributable to each segment. | |
| Segment operating results refer to the income generated by each segment (including external transactions income and inter-segment transaction income), net of expenses incurred by each segment, depreciation, amortization and impairment losses of assets attributable to each segment, gains or losses from changes in fair value, return on investment, non-operating income and income tax expenses. Transfer pricing of inter-segment income is calculated on terms similar to other foreign transactions. |
| XVI | Other Important Matters (Continued) | ||||||||||
| (I) | Segment reporting (continued) | ||||||||||
| 2 | Financial information of reporting segments | ||||||||||
| For the six-month period ending June 30, 2024 | |||||||||||
| Display | New energy photovoltaics and other silicon materials business | Distribution business | Other businesses and internally offset accounts | Total | |||||||
| Operating revenue | 49,877,063 | 16,213,493 | 13,649,333 | 483,848 | 80,223,737 | ||||||
| Net profits | 2,696,011 | (3,175,764) | 62,945 | (51,341) | (468,149) | ||||||
| Total assets | 221,429,601 | 125,196,373 | 7,801,619 | 27,905,947 | 382,333,540 | ||||||
| Total liabilities | 146,688,074 | 69,260,983 | 6,310,452 | 21,837,841 | 244,097,350 | ||||||
| For the six-month period ending June 30, 2023 | |||||||||||
| Display and materials business | New energy photovoltaics and other silicon materials business | Distribution business | Other businesses and internally offset accounts | Total | |||||||
| Operating revenue | 35,528,427 | 34,897,789 | 13,812,825 | 909,685 | 85,148,726 | ||||||
| Net profits | (3,448,872) | 4,838,880 | 78,707 | 921,868 | 2,390,583 | ||||||
| Total assets | 217,251,615 | 122,327,493 | 8,833,579 | 32,911,805 | 381,324,492 | ||||||
| Total liabilities | 144,644,005 | 63,920,179 | 7,364,037 | 25,762,965 | 241,691,186 | ||||||
XVII Notes to the key items presented in the financial statements of the Company
1 Accounts receivable
| June 30, 2024 | January 1, 2024 | ||||||||||||||||||||
| Amount | Ratio (%) | Bad-debt Allowance | Accrual Percentage | Amount | Ratio (%) | Bad-debt Allowance | Accrual Percentage | ||||||||||||||
| Within 1 year | 192,399 | 100% | 806 | 0.42% | 351,594 | 100% | 806 | 0.23% | |||||||||||||
2 Other receivables
| June 30, 2024 | January 1, 2024 | ||||
| Dividends receivable | 26,780 | - | |||
| Other receivables | 8,866,519 | 19,614,272 | |||
| 8,893,299 | 19,614,272 | ||||
| (a) | Nature of other receivables is analyzed as follows: | ||||
| June 30, 2024 | January 1, 2024 | ||||
| Security and deposits | 2,942 | 2,841 | |||
| Others | 8,863,577 | 19,611,431 | |||
| 8,866,519 | 19,614,272 | ||||
| (b) | Allowance for doubtful other receivables is analyzed as follows: | |||||||
| 12-month ECL | Lifetime ECL (credit not impaired) | Lifetime ECL (credit impaired) | Total | |||||
| January 1, 2024 | 1,607 | - | 31,636 | 33,243 | ||||
| Accrued in the period | 3,819 | - | - | 3,819 | ||||
| Reversal of current period | - | - | (8) | (8) | ||||
| Write-off of current period | - | - | (27) | (27) | ||||
| June 30, 2024 | 5,426 | - | 31,601 | 37,027 | ||||
| XVII | Notes to Financial Statements of the Parent Company (Continued) | ||||||||||
| 2 | Other receivables (continued) | ||||||||||
| (c) | The aging of other receivables is analyzed as follows: | ||||||||||
| June 30, 2024 | January 1, 2024 | ||||||||||
| Amount | Ratio (%) | Amount | Ratio (%) | ||||||||
| Within 1 year | 7,489,630 | 84.12% | 17,998,302 | 91.61% | |||||||
| 1 to 2 years | 62,866 | 0.71% | 673,321 | 3.43% | |||||||
| 2 to 3 years | 662,660 | 7.44% | 12,776 | 0.06% | |||||||
| Over 3 years | 688,390 | 7.73% | 963,116 | 4.90% | |||||||
| 8,903,546 | 100.00% | 19,647,515 | 100.00% | ||||||||
| The outstanding other receivables were mostly current accounts with related parties. | |||||||||||
| The top five other receivables of the Company amounted to approximately RMB 7,170,577,000 (December 31, 2023: RMB 18,826,190,000), accounting for 80.54% of the total other receivables of the Company (December 31, 2023: 95.82%). | |||||||||||
3 Long-term equity investments
| June 30, 2024 | January 1, 2024 | |||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||
| Associates and joint ventures (1) | 16,965,418 | - | 16,965,418 | 16,717,864 | - | 16,717,864 | ||
| Subsidiaries (2) | 63,295,750 | - | 63,295,750 | 62,947,128 | - | 62,947,128 | ||
| 80,261,168 | - | 80,261,168 | 79,664,992 | - | 79,664,992 | |||
| As of June 30, 2024, there are no major restrictions on the realization of investment and the remittance of return on long-term equity investments. | ||||||||
| 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 | June 30, 2024 | |||||||||||||||||
| January 1, 2024 | Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared cash dividends or profits | Provision for impairment | Other increases and decreases | |||||||||||
| China Innovative Capital Management Limited | 970,300 | - | (66,750) | - | - | - | - | - | 903,550 | |||||||||
| LG Electronics (Huizhou) Co., Ltd. | 89,810 | - | 6,241 | - | - | (13,400) | - | - | 82,651 | |||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 1,375 | - | (285) | - | - | - | - | - | 1,090 | |||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 19,642 | - | 2,881 | 1 | 797 | - | - | - | 23,321 | |||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 870,274 | - | (83,343) | - | - | - | - | - | 786,931 | |||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) | 180,833 | - | (8,780) | - | - | - | - | - | 172,053 | |||||||||
| Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. (HQ) | 28,137 | - | (3,282) | 30 | - | - | - | - | 24,885 | |||||||||
| XVII | Notes to Financial Statements of the Parent Company (Continued) | |||||||||||||||||
| 3 | Long-term equity investments (continued) | |||||||||||||||||
| (1) | Associates and joint ventures | |||||||||||||||||
| January 1, 2024 | Increase or decrease in current period | June 30, 2024 | ||||||||||||||||
| Increase/ decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustment | Other equity changes | Declared cash dividends or profits | Provision for impairment | Other increases and decreases | ||||||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 149,118 | - | (28,581) | - | - | - | - | - | 120,537 | |||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | 32,182 | - | (8,216) | - | - | - | - | - | 23,966 | |||||||||
| Huizhou TCL Human Resources Service Co., Ltd. (HQ) | 8,930 | - | 3,445 | - | 228 | - | - | - | 12,603 | |||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. (HQ) | 278,198 | 30,000 | (17,581) | - | 341 | - | - | - | 290,958 | |||||||||
| Others | 14,089,065 | (19,979) | 709,851 | 143,264 | (265) | (377,620) | - | (21,443) | 14,522,873 | |||||||||
| 16,717,864 | 10,021 | 505,600 | 143,295 | 1,101 | (391,020) | - | (21,443) | 16,965,418 | ||||||||||
| XVII | Notes to Financial Statements of the Parent Company (Continued) |
| 3 | Long-term equity investments (continued) |
(2) Subsidiaries
| Direct shareholding ratio (%) | January 1, 2024 | Increase in current period | Decrease in current period | June 30, 2024 | |||||
| TCL China Star Optoelectronics Technology Co., Ltd. (HQ) | 79.78% | 34,049,253 | 283,977 | - | 34,333,230 | ||||
| TCL Technology Group Finance Co., Ltd. | 82.00% | 1,256,003 | 321 | - | 1,256,325 | ||||
| TCL Technology Group (Tianjin) Co., Ltd. (HQ) | 100.00% | 16,200,000 | - | - | 16,200,000 | ||||
| TCL Zhonghuan Renewable Energy Technology Co., Ltd. (HQ) | 2.55% | 1,929,733 | - | - | 1,929,733 | ||||
| TCL Culture Media (Shenzhen) Co., Ltd. | 100.00% | 361,414 | - | - | 361,414 | ||||
| Shenzhen Dongxi Jiashang Entrepreneurship Investment Co., Ltd. (HQ) | 100.00% | 200,000 | - | - | 200,000 | ||||
| Guangdong TCL Juxiang Technology Co., Ltd. | 100.00% | 110,000 | - | - | 110,000 | ||||
| Highly Information Industry Co., Ltd. (HQ) | 66.46% | 107,296 | - | - | 107,296 | ||||
| TCL Communication Equipment (Huizhou) Co., Ltd. (HQ) | 75.00% | 79,500 | - | - | 79,500 | ||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. (HQ) | 100.00% | 58,497 | - | - | 58,497 | ||||
| Shenzhen TCL Strategic Equity Investment Fund Partnership (Limited Partnership) | 100.00% | 71,010 | - | 15,346 | 55,664 | ||||
| TCL Industrial Technology Research Institute, Ltd. (Europe) | 100.00% | 20,000 | - | - | 20,000 | ||||
| Wuhan TCL Industrial Technology Research Institute, Ltd. | 100.00% | 20,000 | 9 | - | 20,009 | ||||
| Shenzhen TCL High-Tech Development Co., Ltd. (HQ) | 100.00% | 20,000 | 155 | - | 20,155 | ||||
| Beijing HAWK Cloud Information Technology Co., Ltd. | 100.00% | 20,000 | - | - | 20,000 | ||||
| Huizhou Hongsheng Science and Technology Development Co., Ltd. | 100.00% | 1,000 | - | - | 1,000 | ||||
| Tianjin Silica Material Technology Co., Ltd. | 100.00% | 2,800,000 | - | - | 2,800,000 | ||||
| Xiamen TCL Technology Industrial Investment Co., Ltd. | 100.00% | 464,397 | 77,500 | - | 541,897 | ||||
| TCL Internet Technology (Shenzhen) Co., Ltd. (HQ) | 100.00% | 15,000 | - | - | 15,000 | ||||
| Ningbo TCL Equity Investment Ltd. | 100.00% | 300,000 | - | - | 300,000 | ||||
| TCL Technology Investments Limited (HQ) | 100.00% | 2,988,293 | - | - | 2,988,293 | ||||
| Huizhou Dongshen Jia’an Equity Investment Partnership (Limited Partnership) | 99.94% | 10,000 | - | - | 10,000 | ||||
| TCL Financial Technology (Shenzhen) Co., Ltd. | 100.00% | 15,036 | - | - | 15,036 | ||||
| Zhonghuan Advanced Bandaoti Technology Co., Ltd. (HQ) | 7.50% | 1,790,312 | - | - | 1,790,312 | ||||
| Equity incentives of subsidiaries | 60,384 | 2,005 | - | 62,389 | |||||
| 62,947,128 | 424,351 | (75,730) | 63,295,750 | ||||||
| For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note VIII. | |||||||||
| XVII | Notes to Financial Statements of the Parent Company (Continued) |
4 Other non-current financial assets
| June 30, 2024 | January 1, 2024 | |||
| Equity investments | 442,985 | 442,985 | ||
| Debt investments | 603,630 | 201,315 | ||
| 1,046,615 | 644,300 |
5 Operating revenue and operating costs
| January - June 2024 | January - June 2023 | |||||||
| Operating revenue | Operating cost | Operating revenue | Operating cost | |||||
| Core business | 386,446 | 380,021 | 433,463 | 431,097 | ||||
| Non-core business | 312,857 | 69,585 | 302,951 | 73,107 | ||||
| 699,303 | 449,606 | 736,414 | 504,204 | |||||
6 Return on investment
| January - June 2024 | January - June 2023 | |||
| Profit from holding debt instruments measured at fair value throughcurrent profits and losses | 176,467 | 104,795 | ||
| Gain on disposal of derivative financial assets/liabilities | - | 4,637 | ||
| Dividends from subsidiaries | 162,097 | 713,047 | ||
| Share of profit of associates for current period | 519,736 | 716,859 | ||
| Share of profit of joint ventures for current period | (14,136) | (34,833) | ||
| Net income from disposal of long-term investments | 51,495 | 284,242 | ||
| 895,659 | 1,788,747 | |||
| As of June 30, 2024, there were no significant restrictions on the collection of return on investment. | ||||
| XVII | Notes to Financial Statements of the Parent Company (Continued) |
7 Net cash generated from operating activities
| Net cash used in operating activities of the Company was RMB5,509,763,000. |
8 Ending balance of cash and cash equivalents
| The ending balance of cash and cash equivalents of the Company was RMB 2,677,457,000. |
9 Contingent liabilities
| As of June 30, 2024, the contingent liabilities not provided for in the financial report were as follows: |
| June 30, 2024 | ||
| Guarantees for bank loans of subsidiaries | 50,189,223 | |
| Guarantees such as trade notes, letters of credit and letters of guarantee for subsidiaries | 25,049,495 | |
| Guarantees for bank loans, trade notes, letters of credit, etc. of related parties | 2,502,078 | |
XVIII Comparative Figures
| Certain comparative data have been reclassified to comply with the presentation of the current period. |
XIX Non-recurring profit and loss items and amount
| January - June 2024 | January - June 2023 | |||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 48,439 | 321,753 | ||
| Public subsidies charged to current profits and losses (exclusive of public grants closely related to the Company’s normal business operations, in compliance with national policies, enjoyed according to determined criteria, and with a continuous impact on the Company’s profits and losses) | 972,603 | 1,267,259 | ||
| The profits or losses generated from changes in fair value arising from financial assets and financial liabilities held by non-financial enterprises and the profits or losses from the disposal of such financial assets and financial liabilities, except for the effective hedging business related to the company’s normal business operations | (3,310) | (42,740) | ||
| Reversal of provision for impairment of receivables that have been individually tested for impairment | 30,500 | 2,500 | ||
| Non-operating income and expenses other than the above | 258,631 | 707,421 | ||
| Income tax effects | (156,219) | (364,522) | ||
| Non-controlling interests effects | (714,189) | (951,111) | ||
| Non-recurring gains and losses attributable to ordinary shareholders of the parent company | 436,455 | 940,560 | ||
| According to the relevant provisions of the Interpretative Announcement No. 1 on Information Disclosure by Companies Issuing Securities to the Public - Non-recurring Profits and Losses (Revised in 2023), public grants closely related to the Company’s normal business operations, in compliance with national policies, enjoyed according to determined criteria, and with a continuous impact on the Company’s profits and losses shall be presented as recurring profits and losses. Public grants presented as non-recurring profits or losses for the period from January to June 2023 comprise of the public grants related to assets amounting to RMB 191,378,000, which should be classified as recurring profits or losses in accordance with the relevant provisions of the 2023 Explanatory Announcement No. 1. The change did not have any material impact on the Company's financial position and operation results. | ||||
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 Rules No. 9 for Information Disclosure of Companies Offering Securities to the Public-Calculation and Disclosure of Return on Equity and Earnings per Share (Revised in 2010)" issued by the China Securities Regulatory Commission and relevant provisions of accounting standards: | ||||||||
| Item | Net profits attributable to the parent company for the reporting period | Weighted average return on equity (%) | Earnings per share (RMB yuan) | |||||
| Basic earnings per share | Diluted earnings per share | |||||||
| Net profits attributable to ordinary shareholders of the Company | 995,213 | 1.87% | 0.0535 | 0.0530 | ||||
| Net profits attributable to ordinary shareholders of the Company before non-recurring gains and losses | 558,758 | 1.05% | 0.0301 | 0.0298 | ||||
Company Name: TCL Technology Group Corporation
Date: August 26, 2024
The financial statements and the notes thereto from page 1 to page 169 are signed by:
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Li Jian | Person-in-charge of the accounting department: | Jing Chunmei |