TCL Technology Group Corporation Interim Report 2021
TCL 科技集团股份有限公司TCL Technology Group Corporation
INTERIM REPORT 2021
10 August 2021
TCL Technology Group Corporation Interim Report 2021
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 3
Part II Corporate Information and Key Financial Information ...... 7
Part III Management Discussion and Analysis ...... 10
Part IV Corporate Governance ...... 40
Part V Environmental and Social Responsibility ...... 43
Part VI Significant Events ...... 49
Part VII Share Changes and Shareholder Information ...... 63
Part VIII Bonds ...... 69
Part IX Financial Statements ...... 75
TCL Technology Group Corporation Interim Report 2021
Part I Important Notes, Table of Contents and Definitions
The 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 andseverally liable for any misrepresentations, misleading statements or material omissionstherein.
Mr. Li Dongsheng, the Chairman of the Board, Ms. Du Juan, the person-in-charge offinancial affairs (Chief Financial Officer), and Mr. Xi Wenbo, the person-in-charge of thefinancial department, hereby guarantee that the financial statements carried in this Reportare factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of thisReport and its summary.
Any plans, development strategies or other forward-looking statements mentioned inthis Report and its summary shall NOT be considered as promises to investors. Therefore,investors are reminded to exercise caution when making investment decisions.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report has been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
TCL Technology Group Corporation Interim Report 2021
Definitions
| Term | Definition |
| The “Company”, the “Group”, “TCL”, “TCL Tech.” or “we” | TCL Technology Group Corporation and its consolidated subsidiaries, except where the context otherwise requires. |
| The “Current Period” | The period from 1 January 2021 to 30 June 2021. |
| TCL Industries | TCL Industries Holdings Co., Ltd. |
| TCL CSOT | TCL China Star Optoelectronics Technology Co., Ltd. |
| Zhonghuan Electronics | Tianjin Zhonghuan Electronics Group Co., Ltd. |
| Zhonghuan Semiconductor | Tianjin Zhonghuan Semiconductor Co., Ltd., a majority-owned subsidiary of the Company listed on the SME Board of the Shenzhen Stock Exchange (stock code: 002129.SZ) |
| TPC | Tianjin Printronics Circuit Corporation, a majority-owned subsidiary of the Company listed on the SME Board of the Shenzhen Stock Exchange (stock code: 002134.SZ) |
| Wuhan CSOT | Wuhan China Star Optoelectronics Technology Co., Ltd. |
| Guangdong Juhua | Guangdong Juhua Printed Display Technology Co., Ltd. |
| China Ray | Guangzhou China Ray Optoelectronic Materials Co., Ltd. |
| Highly | Highly Information Industry Co., Ltd., a majority-owned subsidiary of the Company listed on the National Equities Exchange and Quotations (stock code: 835281) |
| Moka International | Moka International Limited |
| TCL Microchip | TCL Microchip Technology (Guangdong) Co., Ltd. |
| Admiralty Harbour Capital | Admiralty Harbour Capital Limited |
| China Innovative | China Innovative Capital Management Limited |
| Zhonghuan Advanced | Zhonghuan Advanced Semiconductor Materials Co., Ltd. |
| t1 project | The generation 8.5 (or G8.5) TFT-LCD production line of TCL CSOT |
| t2 project | The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor) production line of TCL CSOT |
| t3 project | The generation 6 (or G6) LTPS-LCD panel production line of TCL CSOT |
| t4 project | The generation 6 (or G6) flexible LTPS-AMOLED panel production line of TCL CSOT |
| t6 project | The generation 11 (or G11) new TFT-LCD production line of TCL CSOT |
| t7 project | The generation 11 (or G11) new ultra-high-definition (UHD) TFT-LCD and AMOLED production line of TCL CSOT |
| t9 project | The generation 8.6 (or G8.6) new oxide semiconductor production line of Guangzhou CSOT |
| t10 project or the Samsung Suzhou plant | The generation 8.5 (or G8.5) TFT-LCD production line of Suzhou China Star Optoelectronics Technology Co., Ltd. |
| M10 project or the Samsung Suzhou module plant | Suzhou China Star Optoelectronics Display Co., Ltd. |
| GW | Gigawatt, power unit for solar cells, 1GW＝1,000 megawatt |
TCL Technology Group Corporation Interim Report 2021
| G12 | 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 SOLAR TECHNOLOGIES,PTE.LTD. |
TCL Technology Group Corporation Interim Report 2021
Documents Available for Reference(I) The financial statements signed and stamped by the Company’s legal representative, Chief FinancialOfficer and person-in-charge of the financial department.(II) The originals of all the Company’s announcements and documents that were disclosed to the publicduring the Reporting Period.
TCL Technology Group Corporation Interim Report 2021
Part II Corporate Information and Key Financial Information
I 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. (if any) | TCL科技 | ||
| Company name in English (if any) | TCL Technology Group Corporation | ||
| Abbr. (if any) | TCL TECH. | ||
| Legal representative | Li Dongsheng | ||
| Board Secretary | |
| Name | Liao Qian |
| Office address | 10/F, Tower G1, International E Town, TCL Science Park, 1001 Nanshan District, Shenzhen, Guangdong Province, China |
| Tel. | 0755-3331 1666 |
| Email address | ir@tcl.com |
TCL Technology Group Corporation Interim Report 2021
IV Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes ■ No
| Item | H1 2021 | H1 2020 | Change (%) |
| Revenue (RMB) | 74,298,646,758 | 29,333,210,856 | 153.29% |
| Net profit attributable to the company’s shareholders (RMB) | 6,783,884,807 | 1,208,065,986 | 461.55% |
| Net profit attributable to the company’s shareholders before non-recurring gains and losses (RMB) | 5,497,817,947 | 181,862,847 | 2923.06% |
| Net cash generated from/used in operating activities (RMB) | 13,895,714,157 | 7,347,810,779 | 89.11% |
| Basic earnings per share (RMB/share) | 0.5026 | 0.0932 | 439.27 % |
| Diluted earnings per share (RMB/share) | 0.4835 | 0.0893 | 441.43% |
| Weighted average return on equity (%) | 18.96% | 4.11 % | Up by 14.85 percentage points |
| 30 June 2021 | 31 December 2020 | Change (%) | |
| Total assets (RMB) | 302,205,481,260 | 257,908,278,887 | 17.18% |
| Owners’ equity attributable to the company’s shareholders (RMB) | 37,557,664,687 | 34,107,795,454 | 10.11% |
| Dividends paid for preference shares | N/A |
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 0.4835 |
| Total share capital at the end of the last trading session before the disclosure of this Report (share) | 14,030,788,362 |
TCL Technology Group Corporation Interim Report 2021
VI Non-Recurring Gains and Losses■ Applicable □ Not applicable
Unit: RMB
| Item | Amount |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 739,340,047 |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 359,192,482 |
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | 40,299,579 |
| Spin-off costs in staff arrangement, integration, etc. | - |
| Gain or loss on fair-value changes in held-for-trading and derivative financial assets and liabilities & investment income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | 210,273,097 |
| Non-operating income and expense other than the above | 244,569,559 |
| Other gains and losses that meet the definition of non-recurring gain/loss | - |
| Less: Corporate income tax | 82,885,697 |
| Non-controlling interests (net of tax) | 224,722,207 |
| Total | 1,286,066,860 |
TCL Technology Group Corporation Interim Report 2021
Part III Management Discussion and Analysis
I Main businesses of the Company during the reporting period
Part III Management Discussion and Analysis
I Main businesses of the Company during the reporting periodOverviewThe COVID-19 epidemic has yet to subside, geopolitical relations have entered a new landscape andinternational trade frictions pose multiple challenges to global economic development. However, thefact that international division of labor and comparative advantage determine the basis for theallocation of production factors, industrial chain and value chain distribution will remain unchanged.As a sound industrial layout and sound supply chain systems have already been established in China,the complex and volatile internal and external environment will further consolidate the strategicdirection of independent and controllable key and core technologies for scientific and technologicalenterprises, which will help accelerate the tackling of fundamental, high-end and core technologiesfortification, and will promote the upgrading of the industrial chain and manufacturing industry, thusushering in new development opportunities for China's technology sector.Dedicated to national strategic sectors that are high-tech, asset-heavy and long-cycle, the Companyfocused on the development of its core main businesses: semiconductor displays, and semiconductorphotovoltaics and semiconductor materials. With the accelerated trend of country-by-country shiftsand concentration of leadership in the semiconductor display industry driven by operation andmanagement efficiency, generations of production lines and scale effect, the competitive advantagesof Chinese enterprises have been brought to the fore, and the Company's semiconductor displaybusinesses have initiated a phase of overall leadership that spans from efficiency and products totechnologies and ecology. Meanwhile, the Company, empowered and supported by continuous reformand innovation, extreme management efficiency and global operational capacity, has made remarkableachievements in the layout of the new industrial track for semiconductor photovoltaics andsemiconductor materials businesses, and has successfully created a secondary growth curve once again.During the reporting period, the Company achieved operating revenue of CNY 74.3 billion, a year-on-year increase of 153.3%; net profit of CNY 9.25 billion, a year-on-year increase of 765%; net profit of
TCL Technology Group Corporation Interim Report 2021
CNY 6.78 billion attributable to the shareholders of listed companies, a year-on-year increase of
461.5%; comprehensively surpassing the budget. Wherein: (1) Benefiting from the upward prosperityof the industry, coupled with factors such as the fast-paced growth of its own capacity and theimprovement of product structure, the Company achieved, from the semiconductor display business,operating revenue of CNY 40.8 billion, a year-on-year increase of 93.6% under the same conditions,and net profit of CNY 6.61 billion, a year-on-year increase of CNY 6.75 billion; (2) Leveragingadvantages such as technological accumulation, leading capacity improvement and supply chainsynergy, through the reform of mechanisms and systems and the stimulation of organizational vitality,the Company saw significant year-on-year increases in both revenue and profit from its semiconductorphotovoltaics and semiconductor businesses. Zhonghuan Semiconductor achieved operating revenueof CNY 17.64 billion, a year-on-year increase of 104.1%, and net profit of CNY 1.89 billion, a year-on-year increase of 160.6%.The Company focused on investment in the research and development of core techniques, basictechnologies and new materials, to enhance the technical strength of key links in value chains andstrategic control points. During the reporting period, the Company invested CNY 5.09 billion inresearch and development, accounting for 7.0% of operating revenue, a year-on-year increase of 76.9%.To date, the number of PCT patent applications reached 13,170, and the number of patent applicationsin the field of quantum dot electroluminescence technology and materials has reached 1,480, rankingsecond in the world. In the field of semiconductor displays, the Company focused on promoting thedevelopment of new display technologies such as printed OLED/QLED, Mini-LED and Micro-LED,achieving ecological leadership among next-generation display technologies; in the field ofsemiconductor photovoltaics and semiconductor materials, the Company has established advantagesin 210 mm large silicon wafers and shingled photovoltaic modules, as well as the ecologies of relatedtechnologies, and is a leader in the technologies and production techniques of the 4-12-inch productsin China.Production capacity was further improved, scale advantage was increased, and structure of productsand customers were continuously optimized. CSOT Suzhou t10 (formerly Samsung Suzhou LCDfactory) and the supporting module factory (M10) were delivered and consolidated on April 1
st
; theUltra High Definition (UHD) Display Project t7 ramped up as scheduled, and the Company focusedon t9 investment and construction in the fields of high-end IT and commercial displays. The growthrate of the business scale for semiconductor displays will remain the highest in the industry. TheCompany has a total capacity of 70 GW for semiconductor photovoltaic materials, including a capacityof 39 GW for G12. The construction of the Ningxia Zhonghuan Phase VI Project began in March, the
TCL Technology Group Corporation Interim Report 2021
Diamond Wire Cut Ultra-thin Silicon Wafer Intelligent Factory Project implemented in Tianjin andInner Mongolia was put into operation smoothly, the Jiangsu G12 High-efficiency ShingledPhotovoltaic Modules Project has achieved a production capacity of 6 GW, the G12 High-efficiencyShingled Photovoltaic Modules Project in Tianjin has entered the construction stage, and themanufacturing capacity of the semiconductor photovoltaics industrial chain has rapidly improved. TheCompany will increase investment in Zhonghuan Advanced bases in Inner Mongolia, Tianjin andJiangsu, and promote the full coverage of all kinds of power semiconductor chips and integrated circuitchips; in addition, the Company has invested in the establishment of a semiconductor investment andoperation platform in order to strengthen the synergy of industrial chains, and is looking for industrialinvestment and layout opportunities in related fields, such as semiconductor integrated circuits.The Company has maintained a global supply chain management system and operation capabilities.The Company possesses globally unified management competencies in areas such as supply chainmanagement, intellectual property protection, risk control and compliant operations. At present, theplanned capacity of the CSOT factory in India is 8 million large-sized display modules and 30 millionsmall and medium-sized display modules, which can meet the local supporting needs of strategiccustomers; Moka Technology, a subsidiary of the Company, has established the capacity to supplycomplete machines and modules in Mexico; Zhonghuan Semiconductor has set up module factories inEurope and Mexico, and deployed battery capacity in Malaysia, the Philippines and Singapore.The Company accelerated digital transformation and continued to promote the upgrading of extremecost efficiency and agile manufacturing. The Company continued to devote itself to cultivating thefields of intelligent manufacturing and Industry 4.0, building TCL CSOT into an example of anintelligent factory, and established the first industrial interconnection total solution in the industry; also,Zhonghuan Semiconductor’s Industry 4.0 intelligent factory continued to promote digital andintelligent transformation and upgrading.This year marks the 40th anniversary of TCL's founding. Over the past 40 years, TCL has loyallydedicated itself to the manufacturing industry and met the challenges brought about by change,traveling upstream along the electronics industrial chain all the way from processing trade and terminalproduction to display device manufacturing, new energy and core material layouts. The Companyentered the semiconductor display industry in 2009 and gradually established TCL CSOT as a leaderin efficiency, profits and scale effect; in 2020, the Company, by delisting Zhonghuan Electronic andshifting its layout to the semiconductor photovoltaics and semiconductor materials track, clearlydefined its strategic direction, moving towards being a leading global technology group by
TCL Technology Group Corporation Interim Report 2021
coordinating its two core industries. With the accumulation of gradually deepening leading technology,advanced techniques and financial underpinnings, the Company will also complete the transformationfrom being a follower to becoming a leader, thus guiding China's technology sector to global ecologicalleadership based on a more solid foundation.Looking ahead, there will be two innate characters remaining unchanged in the semiconductor displayindustry, which are the improvement of the supply-demand relationship and the concentration ofleadership. The cyclical weakening trend of the industry will be made clear, and the relativecompetitive advantage of TCL CSOT will be further strengthened; the global consensus on improvingthe quality and efficiency of clean energy will drive the rapid growth of the semiconductorphotovoltaics industry; with the accelerated development of the semiconductor industry in China,historic opportunities and challenges coexist. The Company will build strategic control points in thefields of semiconductor displays, semiconductor photovoltaics and semiconductor materials, adhere tothe business strategy of “Improving Business Quality and Efficiency, Strengthening Advantages andMaking up for Disadvantages, Accelerating Global Layout, and Innovation-driven Development”,continuously improve competitiveness, develop sustainably and healthily, and become a globalindustry leader.
Operation of main businessesThe Company's main business structure consists of its semiconductor display business, semiconductorphotovoltaics and semiconductor materials businesses, industrial finance and investment platforms andother businesses. The Company will continue to optimize its business structure, and further concentrateits resources on the development of its main businesses, to achieve the strategic goal of being a globalleader in its two core industries: semiconductor displays, and semiconductor photovoltaics andsemiconductor materials.
TCL TechSemi-conductordisplay
| Semi-conductor display | Semi-conductor photovoltaic & Semi-conductor materials | Industrial finance & investment |
OtherTCL CSOT
| TCL CSOT | China Ray |
| Zhonghuan Photovoltaic | Zhonghuan Advanced | TCL Financial | TCL Capital |
| Highly | TPC |
Juhua
MokaTechnology
| Moka Technology | TCL Microchip | |
TCL Technology Group Corporation Interim Report 2021
(I) Semiconductor display businessThe supply-demand relationship of the semiconductor display industry has improved, industryconcentration has increased, product prices have continued to rise, and the overall profitability of theindustry has continued to improve. As a leading enterprise in the semiconductor display industry, TCLCSOT has fully benefited from the upward prosperity of the industry, while it continues to expand itsscale through organic growth and inorganic mergers and acquisitions, maintaining a leading positionof both efficiency and benefits in the global industry. During the reporting period, TCL CSOT achieveda sales area of 17.792 million square meters, a year-on-year increase of 25.3%, and TCL CSOTachieved, from the semiconductor display business, operating revenue of CNY 40.8 billion, a year-on-year increase of 93.6% under the same conditions, and net profit of CNY 6.61 billion, a year-on-yearincrease of CNY 6.75 billion, including net profit of CNY 4.21 billion in Q2 of 2021, an increase of76% over Q1.The business scale advantages of large-sized products were expanded, and the product structurecontinued to be enriched. Factories t1, t2 and t6 maintained full sales and produced at full capacity,and factory t7 ramped up as scheduled, factory t10 (formerly Samsung Suzhou LCD factory) began tobe consolidated in Q2. With regard to market share, the Company ranked #2 globally in terms of TVpanels, ranked #1 globally in terms of 55-inch products, ranked #2 globally in terms of 65-inch and75-inch products, and ranked #3 globally in terms of 32-inch products, and leaped to #1 globally interms of 8K and 120Hz high-end TV panels; the Company seized the rapid growth opportunities in thecommercial display market, and is rapidly increasing its market share in the markets of interactivewhiteboards, splicing screens and advertising machines, among which it ranked #1 globally in termsof its shipment volume for interactive whiteboards. During the reporting period, the structure of large-sized products was further optimized, and the proportion of non-TV screen operating revenue increasedfrom 16% to 22%; also, the customer portfolio was further optimized.Technical capacity in terms of small-sized products business was improved and the structure ofproducts and customers was optimized. Factory t3 continued to optimize the product portfolio of theLTPS production line, enhanced product competitiveness, accelerated the development and import ofmedium-sized products, increased the proportion of shipment volume of medium-sized products fornotebooks, vehicle-mounted devices and tablets to 23%, and maintained its position within the top fourglobally in terms of the shipment volume for LTPS mobile phone panels. The Phase I flexibleAMOLED production line of Factory t4 was scheduled to produce at full capacity, and the move-in ofPhase II and Phase III equipment was completed. Through differentiated technical reserves such asfolding (screens), under-screen camera placement and LTPO, product development and customer
TCL Technology Group Corporation Interim Report 2021
cooperation were accelerated in the high-end market, and the shipment volume more than doubledyear-on-year.Medium-sized products business grew rapidly in high-end market segments, and production capacityconstruction was accelerated. Through the production capacity adjustment of the existing productionlines, the Company sped up the strategic layout of medium-sized products and laid the foundation forcore customer cooperation. Focusing on high-end e-sports products in the display market, with thesecond largest market share in the world, the Company ranked #2 globally in terms of shipment volumefor LTPS notebook panels, improved its ranking to #1 globally in terms of the shipment volume forLTPS tablet PC panels, and introduced a number of Chinese and foreign leading corporations ascustomers into the field of vehicle-mounted products, with a rapid increase in shipment volume. Inorder to meet the needs of customers and resolve the production capacity bottleneck of IT products,the Company has invested in the G8.6 Oxide Semiconductor-based New Display Device ProductionLine t9 Project, which is expected to be put into operation in 2023.During the reporting period, the financial performance of the semiconductor display business consistsof the following:
| Project | Shipment area | Shipment volume | Revenue | Net profit | ||||
| 10,000 square meters | Year-on-year (%) | 10,000 pieces / 10,000 sets | Year-on-year (%) | CNY 100 million | Year-on-year (%) | CNY 100 million | Year-on-year (%) | |
| Large-sized products | 1698.8 | 24.3% | 2776.6 | 20.0% | 282.0 | 131.9% | 71.7 | 1384.6% |
| Medium-to-small sized products | 80.4 | 51.1% | 4898.7 | 25.4% | 106.4 | 44.7% | -3.5 | Loss reduced by CNY 20 million |
| Moka Technology (*) | - | - | 229.3 | -2.1% | 35.6 | 38.1% | 1.1 | Increased by CNY 120 million |
| Other and offsets | - | - | - | - | (16.4) | - | (3.1) | - |
| Total | - | - | - | - | 408 | 93.6% | 66.1 | Increased by CNY 6.75 billion |
TCL Technology Group Corporation Interim Report 2021
barriers to entry; the demand for traditional displays such as those for TVs, IT and mobile phonesmaintained steady growth, while emerging displays such as commercial displays and vehicle-mountedLCDs developed rapidly, while the growth of demand for large-sized products slowed down in thesecond half of the year, but in the long run, the supply and demand of the LCD industry will movetowards dynamic balance. TCL CSOT will maintain its continuous growth of revenue and consolidatethe advantages of highly efficient operation and operating benefits. TCL CSOT still faces greatchallenges in the OLED industry. In the first half of the year, the Company focused its energy onbreaking through the bottleneck of product technology, meeting the delivery needs of strategiccustomers, and making breakthroughs in key technologies such as foldable screens; it is expected thatthe sales volume will continue to grow in the second half of the year, which will gradually improveoperating benefits.In the context of the gradual stabilization of the industry landscape, the growth in capacity andstructural optimization of TCL CSOT will be the main driving force for its future performance growth,and the Company will accelerate its advancement from being a global leader in the large-sized displayfield to becoming a leader across all sizes centered on "Optimizing Production Line Structure andProduct Structure, Improving Customer Portfolio and Perfecting Industrial Ecology".The capacity and revenue of TCL CSOT will continue to grow at a high rate. The Company will havegrown from 3 high-generation lines (2 G8.5 lines and 1 G11 line) in 2020, to 4.5 lines by the end ofthe year (t10 has been consolidated and t7 Phase I has finished ramping up), and by 2025, the Companywill have 6 high-generation lines (t7 and t9 will reach their designed capacity). The capacity of TCLCSOT high-generation lines will exceed a compound annual growth rate (CAGR) of 18% in the nextfive years. Meanwhile, the full-capacity production of t4 flexible OLED production lines from PhaseI to Phase III will also bring significant revenue growth. Samsung Suzhou's module factory(M10),acquired by the Company, and Moka Technology, which provides integrated manufacturing ofcomplete modules, will promote the extension of the Company's value chains to the downstream.TCL CSOT will continue to optimize its business and product structures. With the replenishment ofmedium-sized product production capacity, TCL CSOT will form a full-product business layout oflarge, medium and small-sized products, with more balanced business and revenue structures, resultingin higher output value per unit area and revenue growth. Adhering to the high-end product strategy,TCL CSOT will give full play to the advantages of CSOT HVA technology and high-generationproduction lines, deepen cooperation with global leading brand customers, continue to increase itsshare in high-end markets such as oversized, 8K, 120Hz and curved-surface products, and deepen high-quality growth.
TCL Technology Group Corporation Interim Report 2021
TCL CSOT will leverage its management advantages to remain an industry leader in efficiency andbenefits. Through its extreme management capability and industrial synergy, TCL CSOT hasconsistently maintained industry-leading profitability levels since it began operations. With theexpansion of capacity and the enrichment of production lines, the Company will actively adjust thelayout strategies of production lines and products, giving full play to the advantages of production linesand reducing losses in capacity loss on production lines; the Company will strengthen digital andintelligent operation, improving intelligent manufacturing capability and improving the operationalefficiency of the whole industrial chain; the Company will give play to scale effect, improving theintegration of supplier resources and layout of the industrial chain, thus creating a more flexible andcost-competitive supply chain. With the depreciation of the existing production lines maturing oneafter another, it is expected that the proportion of depreciation accounting for revenue will graduallydecline, and CSOT's profitability will be further enhanced.TCL CSOT will continue to strengthen technological innovation, striving to become a leader in newdisplay technology. Through the “National Printing and Flexible Display Innovation Center” ofGuangdong Juhua, a subsidiary of the Company, and JOLED, of which TCL CSOT is a strategicshareholder, TCL CSOT is accelerating the research and development of mass production technologyfor printed display techniques, and actively promoting the development of OLED and QLED materialsunder its own IP through ChinaRay Optoelectronic, improving the construction of the printed displayecology. At the same time, by means of equity investment and strategic cooperation and other methods,the Company works with industrial chain partners to jointly promote the development of new displaytechnologies such as Mini-LED and Micro-LED, leading the trend of future technology development.(II) Semiconductor photovoltaics and semiconductor materials businessAs global resource consumption and ecological environment problems are becoming increasinglyprominent, China's goals for “emissions peak” and “carbon neutrality” are clearly put to the fore in thenational outline of the 14th Five-Year Plan(2021-2025), and the clean energy industry has entered aperiod of rapid growth. However, with the gradual controlling of the COVID-19 epidemic, globaleconomic recovery is expected to strengthen, and with strong demand for industrial products pushingup the prices of bulk raw materials, the supply chain and cost management capabilities pose challengesfor enterprises. In the face of external environmental fluctuations, Zhonghuan Semiconductor, throughproduct technology improvement and capacity expansion, integration of supply chain resources,management efficiency improvement and manufacturing mode transformation, has improved businessquality and efficiency, comprehensively improved corporate competitiveness, and firmly moved
TCL Technology Group Corporation Interim Report 2021
towards the strategic goal of becoming a global leader in the photovoltaics industry and a leader in thesemiconductor silicon wafer industry in China. During the reporting period, ZhonghuanSemiconductor experienced a total operating revenue of CNY 17.64 billion, a year-on-year increase of
104.1%, and net profit of CNY 1.89 billion, a year-on-year increase of 160.6%.
1. Semiconductor photovoltaics industry
In the first half of the year, as the photovoltaics industry ushered in rapid development, the Companymanifested its accumulated technological advantages, smoothly transformed its product structure, andcontinuously improved the scale of its production capacity. It continued to improve asset operationefficiency and investment income of production lines through technological innovation, processtechnology transformation and Industry 4.0 application in various operation scenarios. At the sametime, through strategic supply chain synergy and cooperation built up over time, ZhonghuanSemiconductor effectively responded to the pressure of a tight supply-demand relationship forpolysilicon raw materials and rapid short-term price increases, improved the material storage andsupply system, and strengthened its ability to deal with external risks, ensuring the stable growth ofproduct profits. During the reporting period, the operating revenue of the semiconductor photovoltaicsbusiness reached CNY 16.53 billion, a year-on-year increase of 106.9%.In terms of semiconductor photovoltaic materials, Zhonghuan Semiconductor continued to promotethe improvement of the production and marketing scale and quality of 210 mm products, andsynergized the upstream and downstream ecology of the industrial chain, in order to effectively meetthe needs of the whole photovoltaics industry chain in terms of benefits. At the end of the reportingperiod, the Company's production capacity of semiconductor photovoltaic materials increased to 70GW, an increase of more than 55% compared with that of the end of 2020 (of which G12 capacityaccounted for about 56%), and market share continued to increase. During the reporting period, siliconmaterial consumed by unit product decreased by nearly 2% year-on-year, the A-class rating of siliconwafers increased significantly, and the gross profit margin per unit product continued to improvequarter-on-quarter, and the profitability continued to improve, through optimization of processtechnologies.In terms of semiconductor photovoltaic modules, the Company continued to cooperate and innovatewith leading G12 PERC battery manufacturers in China, focusing on the research and development ofshingled photovoltaic modules, and implemented a differentiated competition strategy, promoting theexpansion of large-sized and high-powered modules with “G12 + shingled photovoltaics” technology,thus improving the ability to win orders in China and abroad. The production capacity of the G12 High-
TCL Technology Group Corporation Interim Report 2021
Efficiency Shingled Photovoltaic Modules project in the Jiangsu Province reached 6 GW; the G12High-Efficiency Shingled Photovoltaic Modules Project in Tianjin has officially entered theconstruction stage, with all equipment having entered the site simultaneously, and thus, overallcapacity scale is steadily improving.With the sound global layout of the Company, brand benefits are emerging, overseas business isgrowing significantly, and the Company ranks #1 globally in terms of share for export sales of siliconwafers. Maxeon, a subsidiary of the Company, expanded smoothly in the North American market andwon orders for high-efficiency solar modules at the GW level from Primergy in the first half of theyear. In the future, the Company will further expand its manufacturing system for batteries andmodules and the businesses of ground-mounted power stations and distributed power stations all overthe world.
2. Semiconductor materials industry
As the COVID-19 epidemic continues its trend toward normalization, the global demand for industrial,automotive and consumer electronics has recovered robustly, coupled with the surging demand for avariety of emerging chip applications and the continuing shortage of chips, leading to a sharp rise inthe price of upstream semiconductor materials. In the context of the shortage of key materials, theprogress of importing domestic Chinese semiconductor materials has noticeably accelerated, andChinese semiconductor material enterprises have also obtained considerable market substitution space.During the reporting period, the Company seized opportunities in industry upturns and domesticChinese market substitution, accelerated the verification of semiconductor material products andcustomer development, received recognition from major customers worldwide, rapidly expanded thescale of production and sales, and increased revenue by 65.8% year-on-year. At present, the productionlines put into operation by the Company have achieved full-capacity production. During the reportingperiod, the Company added EPI routes to 6-inch products and began to plan its end-customercertification, continued to increase the certification of 8-inch products such as Logic and CIS forChinese customers, accelerated the certification of new products for international customers, andcomprehensively benchmarked 12-inch products against leading international products, with bothproduct performance and quality receiving high praise by leading Chinese and foreign customers.Under the established strategic plan “9205”, the company accelerated production capacity expansionand sped up business expansion in product areas of all sizes, and carried out the new investmentprojects in Tianjin and Yixing factories smoothly, laying the foundation for the accelerateddevelopment of the semiconductor business. On the basis of consolidating its advantages in traditional
TCL Technology Group Corporation Interim Report 2021
power semiconductor products, the Company has become a powerful participant in digital logicproducts and storage products.
(III) Industrial finance and investmentDuring the reporting period, the Company's financial and treasury businesses focused on ensuring theCompany's demand for project funds, and further improved its ability to actively manage industrialfunds and risks, reduced costs and increased efficiency, controlled corporate receivables and foreignexchange risks, and supported the Company's core main businesses to move towards global leadership.TCL Capital explored investment and deployment opportunities in key areas that drive thedevelopment of the science and technology industry, such as new display types, semiconductor andcore materials and process equipment related to the industrial chain, and promoted technology andbusiness synergy, concurrently creating investment income. At the end of the reporting period, thefunds managed by TCL Capital reached a scale of about CNY 9.2 billion, with a total investment of116 projects. At present, TCL Capital holds shares of listed companies such as CATL, DKEM,Cambricon, Newtouch Software, Innoviz, Petro-King, ZJBC Information and HyUnion Holding;Admiralty Harbour Capital Limited achieved steady growth in its investment banking and assetmanagement business, completing 13 capital market and financial advisory projects during thereporting period and being approved as a member of Euroclear Bank to engage in related internationalsecurities clearing and custody business, further diversifying its business scope; China InnovativeCapital continued to focus on the industrial chain layout opportunities of the two core main businessesof the Company, investing in more than 132 listed companies, with steadily growing performance.
II Analysis of core competitivenessIn 2021, TCL will celebrate its 40th anniversary. For 40 years, TCL has continuously been worn as adistinctive badge of honor, a label engraved so as to never forget its original intention, its loyalcommitment to the manufacturing industry, and its courage to make bold changes and innovations. In2018, TCL made the most important change in its history, carrying out the strategic reorganizationfrom diversified to specialized operation, defining a strategy centered on the high-tech, capital-intensive and long-cycle development of the technology industry. The Company spun off its terminalbusiness and non-core businesses, and focused on industrial upgrades and strategic layout, committedto becoming a leading global technology industry group. In 2020, the Company officially changed its
TCL Technology Group Corporation Interim Report 2021
name to “TCL Technology”, delisted Zhonghuan Electronic in July of the same year, officially enteringthe fields of semiconductor photovoltaics and semiconductor materials, and also acquired SamsungSuzhou in August to consolidate its industry position and competitive advantages in the semiconductordisplay industry. Thereafter, the Company formed a business infrastructure based on three sectors, i.e.,semiconductor displays, semiconductor photovoltaics and semiconductor materials, and industrialfinance and investment. To date, the Company, with a clear development path, efficient operation anddistinct culture, has greatly improved its profitability under professional operation, and continuouslyimproved its core competitiveness and ability to develop sustainably.
Leading in scale: Dual driving force of global panel leadership and an upward industry cycle, withrapid performance growthAs a leading global enterprise in semiconductor displays and a pioneer in independent production lineconstruction in the display field in China, the Company leverages a convergence effect through the“Twin Star” production line layout, and continues to expand production capacity through organicgrowth and inorganic mergers and acquisitions: TCL CSOT has taken a firm foothold in the field ofTV panels through the construction of two G8.5 lines; subsequently, two G6 lines successfully cut intothe small-sized panels market, and the market share in terms of shipments now exceeds 10%; in recentyears, TCL CSOT has further expanded its production capacity of large-sized products through itsinvestment into and construction of two G11 lines and the merger and acquisition of the SamsungSuzhou t10 production line, establishing its global leadership position in the large-sized panels market;in 2021, the Company invested in the construction of the t9 production line for high value-added IT,commercial displays and other medium-sized products, so as to accelerate the strategic layout of full-sized products. At present, TCL CSOT ranks #2 globally in terms of shipment area for TV panels,ranks #1 globally in terms of the market share for 55-inch TV panels, and ranks #2 globally in termsof the market share for 65-inch and 75-inch TV panels; TCL CSOT ranks #4 globally in terms of theshipment for LTPS mobile phone panels coming off of the t3 production line; technology is rapidlyimproving for high-end and new form products coming off of the t4 flexible AMOLED productionline, and the Company is continuously deepening cooperation with global leading brand customers. Itis expected that the Company will rank #1 in the industry in terms of production capacity growth inthe next five years, and take pole position in terms of share in multiple categories.At the same time, TCL CSOT has also actively extended the value chain downward, and furtherimproved the Company's position and profitability on the value chain by expanding the productioncapacity of its independently constructed modules, and by acquiring Moka Technology and Samsung's
TCL Technology Group Corporation Interim Report 2021
module factory. The Company's core competitive advantage based on scale effect and supply chainsynergy will be further strengthened, and under the grand backdrop of industry prosperity recoveryand competition pattern optimization, TCL CSOT will usher in a dual-development stage of rapid scalegrowth and industry improvement, with its industry position and comprehensive competitiveness to befurther enhanced.
Leading in technology and ecology: Actively laying the groundwork for next-generation displaytechnologies and materials, building a first-mover advantage through ecological leadershipRelying on TCL CSOT, the Company accelerated the vertical layout of the industrial chain andcontinuously improved its upstream capacity for technological innovation. The Company, focused onbasic materials, next-generation display materials, key equipment in new techniques and other fieldsfor ecological layout, has constructed a TCL ecosystem within the display field, so as to form anecological leading advantage based on next-generation display technology.The "National Printing and Flexible Display Innovation Center" of Guangdong Juhua, a subsidiary ofthe Company, is the only national innovation center in the display field within China, and has built aglobal leading public platform for G4.5 printed display R&D, integrating industrial chain resourcesfrom all links including materials, techniques, processes and application verification. In 2020, TCLCSOT made a strategic investment in JOLED by contributing JPY 30 billion, where, through jointR&D and patent cooperation, TCL CSOT and JOLED will further accelerate the industrial massproduction of printed OLEDs, from materials to equipment, techniques and products, thus improvingthe Company's ecological construction in key links of the printed display industrial chain, leading thetrend of future technological development. In addition, the Company will continue to invest in Micro-LED display technology, establish a joint laboratory with San'an to focus on the development of Micro-LED technology, so as to promote the Company's ecological layout in this field from materials,techniques, equipment, and production line solutions to independent intellectual property, and form aprocess flow solution for Micro-LED commercial scale mass production.Through TCL Capital, the Company has invested in large numbers of industrial chain companies tolay the groundwork for cutting-edge technologies. At present, the Company ranks #5 among Chineseenterprises in terms of the cumulative number of PCT patent applications, and ranks #2 globally interms of quantum dot patents, and it is expected that the Company will establish a leading edge whenthe next generation of display technology arrives. In addition, two academicians joined the Companyas independent directors in 2020, which will also continue to promote the comprehensive innovationof the Company.
TCL Technology Group Corporation Interim Report 2021
Leading in management: TCL CSOT takes the lead in global efficiency and traverses the cycle withrelative competitivenessWhile establishing market scale, technology and ecological advantages, the Company continues tomaintain leading efficiency and benefit indicators in the industry. Since beginning operations in 2011,TCL CSOT has weathered two rounds of sharp fluctuation cycles in the display industry with tenconsecutive years of profitability, where the net margin has always been positive across the panel cycle,with extreme cost efficiency and lean management being key factors.Through the convergence effect of the "Twin Star" factories, the Company gives full play to thebenefits of efficient production line layout and production capacity expansion, further improving theutilization rate of production lines and production scheduling efficiency with the advantages ofindustrial chain integration and locking-in strategic customers through long-term orders, and promotesend-to-end cost and expense control through refined management and extreme efficiency costmeasures, to establish its relative competitiveness in the industry. In the past several rounds of cyclicalindustry fluctuations, the Company has continuously maintained an industry leading level of net profitmargin and EBITDA margin, making it a model of profitability within the panel industry. In the future,the Company will continue to leverage this core competency to navigate through industry developmentcycles and lead industry development.
New strategic track: Arranging the layout for semiconductor and photovoltaics businesses to open upa secondary growth curveFocusing on the enterprise development concept and the national planning of strategic emergingindustries, the Company actively seeks new tracks that are technology-intensive and capital-intensivewith long development cycles that can give full play to and continue to enhance TCL's core competence.Additionally, it successfully delisted the Zhonghuan mixed ownership reform project in July 2020.Located along the high-quality dual tracks of semiconductor and photovoltaics businesses, ZhonghuanSemiconductor is mainly engaged in the R&D and production of semiconductor photovoltaic materialsand semiconductor materials. As the most rudimentary material in the semiconductor industry, siliconis a perfect fit for TCL's core demand for new growth momentum in both photovoltaic energy andsemiconductor industries, in which Zhonghuan is engaged.With the Company's implementation of a series of strategic and operational arrangements such asindustrial synergy and operational efficiency optimization in the first half of the year, Zhonghuanstrengthened its strategic, operational and resource allocation capabilities, rapidly accelerated
TCL Technology Group Corporation Interim Report 2021
production expansion under industry prosperity and capacity release, further consolidated its leadingposition in the industry, and began a transformation into sustainable and high-quality performanceresults, which has gradually grown into one of the main engines of TCL's scientific and technologicalperformance growth. With an inexhaustible source of development power, the two tracks converge tomake the Company a leader in the development of the global science and technology industry.
Industrial and financial synergy: Giving full play to the advantages of its industrial finance business,empowering the layout and development of the industrial chainThe Company's industrial finance and investment business has grown into an important operationplatform of the Company. By providing a stable and profitable balance panel cycle, strategicinvestment empowers the development of the main businesses. Industrial finance focuses onempowering industrial development, supporting business operation and investment expansion,provides resource guarantees for major investment projects, and generates revenue and gains withsurplus capital. TCL Capital focuses on investing in the industrial ecological chain, contributes toindustrial development and plays a positive role in building industry ecology.Industrial finance and investment businesses are conducive to the Company's industrial chain layoutcentered on its core main businesses, and the stable profit contribution brought in also helps balancethe impact of cyclical market fluctuations in the semiconductor display industry. The investmentventure capital funds TCL manages exceed CNY 9 billion in scale. Focusing on its core mainbusinesses, TCL has realized the coordinated development of industry and technology and investmentopportunities for entering new businesses, accumulating a number of successful cases, such asCambricon and YEESTOR, in the fields of core electronic devices, basic software and high-endgeneral chips.
Organizational and cultural guarantee: Creating a “Path to Global Leadership “ and strengtheningthe genes of corporate culture
As the corporate spirit formed during the ups and downs of TCL's development over the past 40 years,the connotation the "Spirit of an Eagle" is the concentrated embodiment of TCL's corporate values andunique competitiveness, which is the spiritual wealth and cohesion of the Company. At the beginningof 2020, the Company resolutely put forward the strategic goal of "Fighting Uphill, Catching Up andSurpassing, Global Leadership" , and released the new phase of corporate culture via the Path to GlobalLeadership. Guided by this goal, the Company is committed to reshaping an organizational culture of
TCL Technology Group Corporation Interim Report 2021
accountability, behavior, and performance orientation. The Company will continue to update, exploreand strengthen the connotation of the "Spirit of an Eagle", continue to deepen the construction of anorganizational team and the implementation of its corporate culture, and create conditions that leadhigh-level officers to be more broad-minded, middle-level managers to be more aggressive, andgrassroots staff to act more powerfully, so as to create a more dynamic corporate organizational cultureand make the "Path to Global Leadership" a new gene for every TCL team member and a powerfulspiritual weapon for the Company to compete in the market.
III Core Business AnalysisYear-on-year changes in key financial data:
Unit: RMB
| Item | H1 2021 | H1 2020 | Change (%) | Main reason for change |
| Revenue | 74,298,646,758 | 29,333,210,856 | 153.29% | Increase in the business size and acquisition of Zhonghuan Electronics, Moka and Suzhou CSOT |
| Cost of sales | 57,984,972,335 | 26,740,893,081 | 116.84% | Increase in the business size and acquisition of Zhonghuan Electronics, Moka and Suzhou CSOT |
| Selling expense | 901,175,676 | 324,665,389 | 177.57% | Increase in the business size and acquisition of Zhonghuan Electronics, Moka and Suzhou CSOT |
| Administrative expense | 2,023,367,685 | 770,003,011 | 162.77% | Increase in the business size and acquisition of Zhonghuan Electronics, Moka and Suzhou CSOT |
| R&D expense | 3,428,197,088 | 1,882,501,102 | 82.11% | Increase in the business size and acquisition of Zhonghuan Electronics |
| Finance costs | 1,818,982,875 | 916,022,280 | 98.57% | Increase in financings and acquisition of Zhonghuan Electronics |
| Income tax expense | 1,413,574,073 | 164,586,735 | 758.86% | Increase in the business size and acquisition of Zhonghuan Electronics |
| R&D investments | 5,092,406,554 | 2,878,922,049 | 76.89% | Increase in R&D investments and acquisition of Zhonghuan Electronics |
TCL Technology Group Corporation Interim Report 2021
| Net cash generated from/used in operating activities | 13,895,714,157 | 7,347,810,779 | 89.11% | Increase in revenue and acquisition of Zhonghuan Electronics |
| Net cash generated from/used in investing activities | -20,963,137,286 | -17,208,563,956 | -21.82% | - |
| Net cash generated from/used in financing activities | 13,396,966,630 | 13,235,850,184 | 1.22% | - |
| Net increase in cash and cash equivalents | 6,285,295,538 | 3,388,412,372 | 85.49% | Increase in net cash generated from operating activities |
| Item | H1 2021 | H1 2020 | Change (%) | ||
| Revenue | As % of total revenue (%) | Revenue | As % of total Revenue (%) | ||
| Total | 74,298,646,758 | 100% | 29,333,210,856 | 100% | 153% |
| By operating division | |||||
| Semi-conductor display | 40,756,294,616 | 54.85% | 19,512,204,757 | 66.52% | 108.88% |
| Semi-conductor and semi-conductor photovoltaic | 17,644,418,986 | 23.75% | N/A | N/A | N/A |
| Distribution business | 14,450,787,001 | 19.45% | 9,126,805,527 | 31.11% | 58.33% |
| Other businesses and internally offset accounts | 1,447,146,155 | 1.95% | 694,200,572 | 2.37% | 108.46% |
| By product category | |||||
| Semi-conductor display devices | 40,756,294,616 | 54.85% | 19,512,204,757 | 66.52% | 108.88% |
| Semi-conductor photovoltaic and materials | 17,644,418,986 | 23.75% | N/A | N/A | N/A |
| Distribution of electronics | 14,450,787,001 | 19.45% | 9,126,805,527 | 31.11% | 58.33% |
| Other businesses and internally offset accounts | 1,447,146,155 | 1.95% | 694,200,572 | 2.37% | 108.46% |
| By operating segment | |||||
| Mainland China | 47,092,569,870 | 63.38% | 20,814,424,616 | 70.96% | 126.25% |
| Overseas (including Hong Kong) | 26,206,209,311 | 35.27% | 8,277,832,855 | 28.22% | 216.58% |
| Others | 999,867,577 | 1.35% | 240,953,385 | 0.82% | 314.96% |
| Item | Revenue | Cost of sales | Gross profit margin | YoY change in revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
| By operating division | ||||||
TCL Technology Group Corporation Interim Report 2021
| Semi-conductor display | 40,756,294,616 | 28,873,834,558 | 29.15% | 108.88% | 64.25% | 19.25% |
| Semi-conductor and semi-conductor photovoltaic | 17,644,418,986 | 14,005,662,632 | 20.62% | N/A | N/A | N/A |
| Distribution business | 14,450,787,001 | 13,989,263,362 | 3.19% | 58.33% | 59.12% | -0.48% |
| By product category | ||||||
| Semi-conductor display devices | 40,756,294,616 | 28,873,834,558 | 29.15% | 108.88% | 64.25% | 19.25% |
| Semi-conductor photovoltaic and materials | 17,644,418,986 | 14,005,662,632 | 20.62% | N/A | N/A | N/A |
| Distribution of electronics | 14,450,787,001 | 13,989,263,362 | 3.19% | 58.33% | 59.12% | -0.48% |
| By operating segment | ||||||
| Mainland China | 47,092,569,870 | 39,665,139,690 | 15.77% | 126.25% | 105.82% | 8.36% |
| Overseas (including Hong Kong) | 26,206,209,311 | 17,839,147,339 | 31.93% | 216.58% | 140.22% | 21.64% |
| 30 June 2021 | 31 December 2020 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 27,374,279,411 | 9.06% | 21,708,904,743 | 8.42% | 0.64% | Increase in cash generated from operating activities |
| Accounts receivable | 18,908,014,427 | 6.26% | 12,557,614,486 | 4.87% | 1.39% | Increase in revenue and acquisition of Moka and Suzhou CSOT |
| Contract assets | 241,093,345 | 0.08% | 183,650,278 | 0.07% | 0.01% | No significant change |
| Inventories | 13,900,809,796 | 4.60% | 8,834,957,692 | 3.43% | 1.17% | Increase in the business size and acquisition of Moka and Suzhou CSOT |
| Investment property | 725,250,155 | 0.24% | 1,664,201,130 | 0.65% | -0.41% | No significant change |
| Long-term equity investments | 25,541,631,148 | 8.45% | 24,047,036,004 | 9.32% | -0.87% | No significant change |
| Fixed assets | 104,520,657,883 | 34.59% | 92,829,901,894 | 35.99% | -1.41% | Transfer from construction in progress |
| Construction in progress | 37,181,285,719 | 12.30% | 31,508,310,783 | 12.22% | 0.09% | Increases in t4, t7 and Zhonghuan Semiconductor |
| Right-of-use assets | 1,984,255,110 | 0.66% | - | 0.00% | 0.66% | Adoption of the new accounting standard governing leases |
| Short-term borrowings | 9,022,205,021 | 2.99% | 12,263,713,979 | 4.76% | -1.77% | Optimization of the debt structure |
| Contract liabilities | 2,635,068,426 | 0.87% | 2,004,004,181 | 0.78% | 0.09% | No significant change |
TCL Technology Group Corporation Interim Report 2021
| Long-term borrowings | 88,663,620,256 | 29.34% | 73,589,403,308 | 28.53% | 0.81% | Increase in financings |
| Lease liabilities | 886,515,076 | 0.29% | - | 0.00% | 0.29% | Adoption of the new accounting standard governing leases |
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Impairment allowances established in the Reporting Period | Increase in the Reporting Period | Decrease in the Reporting Period | Other changes | Ending amount | |
| Financial assets | |||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 8,355,640,976 | -20,788,107 | - | - | 10,859,967,803 | 7,188,105,004 | - | 12,006,715,668 | |
| 2. Derivative financial assets | 453,578,245 | -327,548,693 | -13,501,740 | - | 48,482,181 | 21,613,872 | - | 139,396,121 | |
| 3. Receivables financing | 2,176,743,646 | - | - | - | 463,483,332 | 914,749,085 | - | 1,725,477,893 | |
| 4. Other debt investments | 152,062,601 | - | 486,845 | - | - | 60,573,515 | - | 91,975,931 | |
| 5. Investments in other equity instruments | 1,333,675,630 | - | -185,629,042 | - | 3,111,150 | 50,972,771 | - | 1,100,184,967 | |
| Subtotal of financial assets | 12,471,701,098 | -348,336,800 | -198,643,937 | - | 11,375,044,467 | 8,236,014,248 | - | 15,063,750,580 | |
| Total of the above | 12,471,701,098 | -348,336,800 | -198,643,937 | - | 11,375,044,467 | 8,236,014,248 | - | 15,063,750,580 | |
| Financial liabilities | 912,804,772 | -34,140,376 | -12,719,661 | 405,900,261 | 8,211,611 | - | 1,263,633,385 | ||
| Restricted assets | Carrying amount (RMB’0,000) | Reason for restriction |
| Monetary assets | 51,991 | Deposited in the central bank as the required reserve |
TCL Technology Group Corporation Interim Report 2021
| Monetary assets | 236,066 | Other monetary assets |
| Notes receivable | 16,809 | Put in pledge |
| Fixed assets | 8,244,539 | As collateral for loan |
| Intangible assets | 239,140 | As collateral for loan |
| Held-for-trading financial assets | 87,412 | Put in pledge for loan |
| Construction in progress | 5,646 | As collateral for loan |
| Right-of-use assets | 5,827 | As collateral for lease |
| Accounts receivable | 37,371 | Put in pledge |
| Contract assets | 12,274 | Put in pledge |
| Total | 8,937,075 |
| Total investment amount in the Reporting Period (RMB) | Total investment amount in the same period of last year (RMB) | Change (%) |
| 18,214,544,743 | 15,240,085,210 | 19.52% |
| Investee | Principal activity | Way of investment | Amount of investment | The Company’s interest | Funding source | Co-investor | Term of investment | Type of the investee’s products | Investment progress as of the balance sheet date | Anticipated return on investment | Investment income/loss in the Reporting Period | Any legal matter involved or not | Date (if any)of disclosure | Index (if any) to disclosed information |
| TCL Microchip | Design of integrated circuit chips, semi-conductor power devices, etc. | Equiuty investment | 500,000,000 | 50% | Self-funded | TCL Industries | N/A | N/A | N/A | N/A | -1,170,261 | Not | 10 March 2021 | http://www.cninfo.com. cn |
TCL Technology Group Corporation Interim Report 2021
| Guangzhou CSOT | Manufacturing and sale of medium-size high-added-value IT displays (including monitors, notebooks and tablets), vehical-mounted displays, specialized displays for medical, industrial control, aviation devices, display panels for commercial use, etc. | Equiuty investment | 9,625,000,000 | 55% | Self-funded | State-owned enterprise undue the coordination of the People’s Government of Guangzhou Municipality and Guangzhou Development Zone Management Committee | N/A | N/A | N/A | N/A | 1,980,173 | Not | 9 April 2021 | http://www.cninfo.com. cn |
| Total | -- | -- | -- | -- | -- | -- | -- | -- | 809,912 | -- | -- | -- |
TCL Technology Group Corporation Interim Report 2021
4. Financial Investments
(1) Securities Investments
■ Applicable □ Not applicable
Unit: RMB’0,000
| Security type | Security code | Security name | Initial investment cost | Measurement method | Beginning carrying amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes recorded in equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying amount | Accounting title | Funding source |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 60,000.00 | Fair value | - | 265.42 | - | 60,000.00 | - | 265.42 | 60,265.42 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 60,000.00 | Fair value | - | 265.42 | - | 60,000.00 | - | 265.42 | 60,265.42 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 50,000.00 | Fair value | - | 208.89 | - | 50,000.00 | - | 208.89 | 50,208.89 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 50,000.00 | Fair value | - | 208.89 | - | 50,000.00 | - | 208.89 | 50,208.89 | Held-for-trading financial assets | Self-funded |
TCL Technology Group Corporation Interim Report 2021
| Bank’s wealth management product | Not applicable | Structureddeposit of the Bank of East Asia | 50,000.00 | Fair value | - | 205.56 | - | 50,000.00 | - | 205.56 | 50,205.56 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 40,001.00 | Fair value | - | 169.73 | - | 40,001.00 | - | 169.73 | 40,170.73 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 39,999.00 | Fair value | - | 169.72 | - | 39,999.00 | - | 169.72 | 40,168.72 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Xingyin Wealth Management Gold Snowball Solid Income No. 1 B-type Net Value Wealth Management Product (Lulufa) | 30,000.00 | Fair value | - | 34.37 | 30,000.00 | - | 34.37 | 30,034.37 | Held-for-trading financial assets | Self-funded | |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 25,001.00 | Fair value | - | 144.90 | - | 25,001.00 | - | 144.90 | 25,145.90 | Held-for-trading financial assets | Self-funded |
| Bank’s wealth management product | Not applicable | Linked structured deposit of the Bank of China | 24,999.00 | Fair value | - | 144.89 | - | 24,999.00 | - | 144.89 | 25,143.89 | Held-for-trading financial assets | Self-funded |
| Other securities investments held at the period-end | 1,158,941 .21 | 550,954 .41 | - 13,494. 31 | - 8,141.7 4 | 652,748.6 5 | 790,5 46.69 | 18,855. 66 | 506,113.3 2 | -- | -- | |||
| Total | 1,588,941 .21 | -- | 550,954 .41 | - 11,676. 54 | - 8,141.7 4 | 1,082,748. 65 | 790,5 46.69 | 20,673. 43 | 937,931.0 8 | -- | -- | ||
| Disclosure date of the board announcement approving the securities investments | 12 December 2020 | ||||||||||||
TCL Technology Group Corporation Interim Report 2021
| Disclosure date of the general meeting announcement approving the securities investments (if any) | 29 December 2020 |
| Funding source | Mostly foreign-currency revenue |
| Legal matters involved (if applicable) | Not applicable |
| Disclosure date of the board announcement approving the derivative investments (if any) | 28 April 2018 |
| Disclosure date of the general meeting announcement approving the derivative investments (if any) | Not applicable |
| Analysis of risks and control measures associated with derivative investments held in Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | In order to effectively manage the exchange and interest rate risks of foreign currency assets, liabilities and cash flows, the Company, after fully analyzing the market trend and predicting the operation (including orders and capital plans), adopts forward foreign exchange contracts, options and interest rate swaps to avoid future exchange rate and interest rate risks. As its business scale changes subsequently, the Company will adjust the exchange rate risk management strategy according to the actual market conditions and business plans. Risk analysis: 1. Market risk: the financial derivatives business carried out by the Group belongs to hedging and trading business related to main business operations, and there is a market risk of loss due to the fluctuation of underlying interest and exchange rates, which lead to the fluctuation of prices of financial derivatives; 2. Liquidity risk: the derivatives business carried out by the Group is an over-the-counter transaction operated by a financial institution, and there is a risk of loss due to paying fees to the bank for the operations of evening up or selling the derivatives below the buying prices; 3. Performance risk: the Group conducts the derivative business based on rolling budgets for risk management, and there is a risk of performance failure due to deviation between the actual operating results and budgets; 4. Other risks: in the case of specific business operations, if the operator fails to finish the prescribed procedures for report or approval, or fails to record the financial derivative business information accurately, timely and completely, it may result in loss of derivative business or trading opportunities. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or product information, the Group will face the legal risks and transaction losses therefrom. Measures taken for risk control: 1. Basic management principles: the Group strictly follows the hedging principle and the main purpose of locking costs and avoiding risks. It is required that the financial derivatives business to be carried out matches the variety, size, direction and duration of spot goods, and no speculative trading should be involved. In the selection of hedging instruments, only simple financial derivatives that are closely related to the main business operation and meet the requirements of hedge accounting treatment should be selected, and avoid complex business that exceeds the prescribed business scope or is difficult to recognize in terms of risk and pricing; 2. The Group has formulated a special risk management system tailored to the risk characteristics of the financial derivatives business, covering all key aspects such as pre-emptive prevention, in-process monitoring and post-processing. Professional personnel are rationally arranged for investment decision-making, business operations and risk control. Investment participants are required to fully understand the risks of financial derivatives investment and strictly implement the business operations and risk management systems of derivatives. Before starting the derivatives business, the holding company must submit to the management department of the Group detailed business reports including its internal approval, main product terms, operational necessity, preparations, risk analysis, risk management strategy, fair value analysis and accounting methods, and special summary reports on business operated. Operations can be implemented only after getting opinions from the professional department of the Group; 3. Relevant departments should track the changes in the open market price or fair value of financial derivatives, timely assess the risk exposure changes of invested financial derivatives, and make reports to the board of directors on business development; 4. When the combined impairment of the fair value of derivatives and changes in the value of |
TCL Technology Group Corporation Interim Report 2021
| the assets (if any) used for risk hedging by the Group results in a total loss or floating loss amounting to 10% of the recently audited net assets of the Company, and the absolute amount exceeds RMB10 million, the Group will disclose it in a timely manner. | |
| Changes in market prices or fair value of derivative investments in Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | With the rapid expansion of overseas sales, the Company keeps following the above rules in the operation of forward foreign exchange contracts, interest rate swap contracts and futures contracts to avoid and hedge foreign exchange risks arising from operation and financing. It saw a net loss of RMB65.44 million for the Reporting Period. The fair value of derivatives is determined by real-time quoted price of the foreign exchange market, based on the difference between the contractual price and the forward exchange rate quoted immediately in the foreign exchange market on the balance sheet date. |
| Major changes in accounting policies and specific accounting principles adopted for derivative investments in Reporting Period compared to last reporting period | No significant change |
| Opinion of independent directors on derivative investments and risk control | In view of the fact that certain raw materials of the core business of the Company are purchased overseas, a wide range of settlement currencies is involved. The Company reduces exchange losses and locks transaction costs by reasonable financial derivatives, which helps to reduce risk control costs and improve company competitiveness. Risks are effectively controlled as the Company has taken series of measures such as conducting a rigorous internal evaluation for the operation of financial derivatives business, establishing a corresponding regulatory mechanism, formulating reasonable accounting policies and specific accounting principles, setting limits for risk exposure management, and operating simple financial derivatives. The contracting agent for financial derivatives business of the Company is a sound financial agent with good credit standing. We are of the opinion that the financial derivatives transactions carried out by the Company in the first half of 2021 are closely related to the daily operation needs of the Company with controllable risks. The business is in line with the interests of minority shareholders of the company and the relevant laws and regulations. |
| Type of contract | Beginning amount | Ending amount | Gain/loss in Reporting Period | Ending contractual amount as % of the Company’s ending net assets | |||
| Contractual amount | Actual amount | Contractual amount | Actual amount | Contractual amount | Actual amount | ||
| 1. Forward forex contracts | 1,931,617 | 59,359 | 2,212,979 | 79,744 | -6,544 | 21.03 | 0.76 |
| 2. Interest rate swaps | 758,846 | 22,765 | 571,719 | 17,152 | 5.43 | 0.16 | |
| 3. Currency swaps | 310,520 | 15,526 | 32,301 | 1,615 | 0.31 | 0.02 | |
| Total | 3,000,983 | 97,650 | 2,816,999 | 98,510 | -6,544 | 26.77 | 0.94 |
TCL Technology Group Corporation Interim Report 2021
| Transaction party | Equity investment sold | Date of sale | Transaction price (RMB’000) | Net profit contributed to the Company from the period-begin to the date of sale (RMB’000) | Effect on the Company | Ratio of the net profit contributed by the sale of the equity investment to the Company’s total profit (%) | Pricing principle | Related-party transaction or not | Relationship between the transaction party and the Company | Equity investment involved has been all transferred or not | Executed as scheduled or not; if not, give reasons and measures taken | Disclosure date | Index to disclosed information |
| TCL Industries | 100% equity interests of Guangzhou Financial | June 2021 | 257,202 .01 | 4,776 | This transaction is in line with the development trend of the country’s industrial policy and the Company’s business development direction, which would have no significant impact on the Company’s business operations. | 0.1% | Based on valuation with reference to the market prices of transactions of the same kind | Yes | As Mr. Li Dongsheng serves as the Chairman of the Board in both the Company and TCL Industries, TCL Industries is a related corporation of the Company according to the Stock Listing Rules of the Shenzhen Stock Exchange. | Yes | Yes | 21 May 2021 | http:// www.cn info.co m.cn |
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net profit |
| TCL China Star Optoelectronics Technology Co., Ltd. | Subsidiary | Semi-conductor display devices | RMB30.468 billion | 20,241,530 | 8,591,142 | 3,884,160 | 725,352 | 627,684 |
| Highly Information Industry Co., Ltd. | Subsidiary | Distribution | RMB412 million | 537,752 | 118,368 | 1,445,079 | 16,780 | 12,510 |
TCL Technology Group Corporation Interim Report 2021
| Tianjin Zhonghuan Semiconductor Co., Ltd. | Subsidiary | Semi-conductor photovoltaic and semi-conductor materials | RMB3.033 billion | 6,603,881 | 2,975,577 | 1,764,442 | 210,057 | 188,623 |
| Subsidiary | How subsidiary was obtained or disposed of in the Reporting Period | Effects on overall operations and operating performance |
| Shenzhen Huatuo Trade Technology Co., Ltd. | Newly incorporated | No significant effect |
| Xiamen Xinying Display Technology Co., Ltd. | Newly incorporated | No significant effect |
| Shaanxi Xiaoyi E-commerce Service Co., Ltd. | Newly incorporated | No significant effect |
| Highly (Tianjin) Technology Co., Ltd. | Newly incorporated | No significant effect |
| Tianjin Wanfang Nuoxin Technology Co., Ltd. | Newly incorporated | No significant effect |
| Zhonghuan Advanced Semiconductor (Shanghai) Co., Ltd. | Newly incorporated | No significant effect |
| Yinchuan Zhonghuan Solar Material Co., Ltd. | Newly incorporated | No significant effect |
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Business combination not involving entities under common control | No significant effect |
| Suzhou China Star Optoelectronics Display Co., Ltd. | Business combination not involving entities under common control | No significant effect |
| Moka International Limited and its subsidiaries | Acquired | No significant effect |
| Huizhou Shengyao New Energy Technology Co., Ltd. | Newly incorporated | No significant effect |
| Inner Mongolia Huanya Hotel Management Co., Ltd. | Newly incorporated | No significant effect |
| Huludao Xincheng New Energy Technology Co., Ltd. | Acquired | No significant effect |
| Wuxi Zhonghuan Yangjie Semiconductor Co., Ltd. | Acquired | No significant effect |
| TCL Communication Technology (HK) Limited | De-registered | No significant effect |
| Tianjin Huanyan Technology Co., Ltd. | Transferred | No significant effect |
| Tianjin Huan’Ou International New Energy Technology Co., Ltd. | De-registered | No significant effect |
| Kangbao Shenghui New Energy Co., Ltd. | De-registered | No significant effect |
| Winshero Investment Limited | De-registered | No significant effect |
| Tianjin Xietong Real Estate Development Co., Ltd. | De-registered | No significant effect |
| TCL International Distribution (HK) Limited | De-registered | No significant effect |
| TCL Financial Holding Group (Guangzhou) Co., Ltd. and its subsidiaries | Transferred | No significant effect |
| Tianjin Huanxin Technology&Development Co., Ltd. | Increase in non-controlling interests | No significant effect |
| Tianjin Zhonghuan Xinyu Technology Co., Ltd. | Transferred | No significant effect |
TCL Technology Group Corporation Interim Report 2021
IX Structured Bodies Controlled by the Company
□ Applicable ■ Not applicable
X Risks Facing the Company and Countermeasures
1. Risk of Macroeconomic Fluctuations
In recent years, deglobalisation has accelerated the restructuring of the global economic landscape.The United States (US) crackdown and blockade against China in areas related to trade, technologyand financial activity has had a great impact on the Chinese economy and has also affected the globaleconomy. It is forecast that China’s economic growth will continue to lead the world this year.However, under the suppression and sanctions imposed by the US and some Western countries, theChinese economy and Chinese enterprises face significantly increased cost of trade with the US; manyscientific and technological projects are hindered; the development of some high-tech enterprises isrestricted. Moreover, although the economic recovery of different countries continues as the COVID-19 pandemic eases thanks to the continuous popularisation of vaccination, the virus is expected tobounce back from time to time in a long period of time. There are still uncertainties in the macroeconomy of China and the rest of the world that cannot be ignored, considering the combined effectof deglobalisation and the pandemic.Against this backdrop, the Company will continue its in-depth studies of the macroeconomic trendsand their impact. Based on China’s idea of a new “development pattern in which domestic economiccycle plays a leading role while international economic cycle remains its extension and supplement”,the Company will keep focusing on the professional operation strategies for the main business,endeavor to consolidate advantages and improve disadvantages, improve abilities, and catch up. Itwill promote the vertical development of the new energy and semi-conductor tracks to minimise thenegative impact of the macro economy, on the basis of maintaining the global leading advantages ofTCL CSOT’s balanced product market distribution as well as good customer quality and portfolio.
2. Risk of Industry Climate Fluctuations
As the pandemic has changed people’s way of working and living, downstream demand for panelshas exploded, and products have entered a rapid price increase cycle. In the first half of 2021, theLCD panel industry’s prosperity constantly improved. The price increase kept exceeding marketexpectations. In the meantime, it is not impossible that not only success, but failure can also beattributed to the pandemic. The pandemic may make raw material shipments fall short of expectations,may lead to economic setbacks and restrain consumer demand, and may also cause delays in the exitof production capacity in Japan and South Korea. Eventually, the industry climate may fluctuate and
TCL Technology Group Corporation Interim Report 2021
affect the Company’s performance.The Company will analyse in depth the trends of changes in industry supply and demand relations,predict production capacity allocation in advance, and increase R&D investment so as to create highbarriers to competition and broaden the business moat through the continuous improvement ofproducts’ technological content and added value as well as the constant expansion of the Company’sscale and benefit advantages. On top of that, taking advantage of the synergy formed by industry-finance integration in both the main business of semi-conductor display and the main business ofsemi-conductor photovoltaic and semi-conductor materials, the Company will keep improving theupstream and downstream layout to effectively soften the impact of industry climate fluctuations andfurther consolidate its leading position in the industry.
3. Risks Caused by Changes in Consumer Demand
The application scenarios of end consumers are also constantly changing. For example, short videoapplications such as Douyin have made for the creation of auto-rotate smart screens, and the COVID-19 pandemic has facilitated the development of under-display fingerprint scanning. If the Companycannot keep creating new products according to the demand of downstream applications, its businessgrowth may also be hindered.The Company will continue to focus on the needs of the industry and end customers, conduct in-depthresearch on mainstream customers in the industry, and constantly increase R&D investment. It willoptimise its business structure and enhance its product competitiveness with product technologyinnovation as the main driving force. Based on more thorough research and analysis of marketsegments, it will explore more emerging fields, actively make arrangements regarding emergingmarket segments, and develop new driving forces for growth.
4. Management Risks Brought by Restructuring, Transformation and M&AThe Company continuously intensified its efforts in horizontal and vertical expansion, focusing therestructuring on the semi-conductor display and materials business. Horizontally, it promoted theincrease of high-quality production capacity to help TCL CSOT expand its scale and efficiencyadvantages. Meanwhile, it entered the photovoltaic industry to further optimise the Company’sindustrial structure, realising the vertical development of the new energy and semi-conductor tracks.However, the restructuring, transformation and M&A have brought about substantial changes incapital structure, business structure, management structure, operations procedures and even corporateculture, which imposes extremely high requirements for the Company’s business management level.By adopting structural adjustment and process re-engineering, the Company will make certain that
TCL Technology Group Corporation Interim Report 2021
the new structures and new mechanisms can bring a longer-term transformation impetus and a soliderorganisational guarantee to the Company. It will also reshape the responsible and performance-oriented organisational culture through the upgrade of corporate culture to plant the idea of “globalleadership” in the mind of each TCL employee, ensuring that all employees will consciously set highermanagement goals for various tasks, take up the opportunities and challenges brought about by therestructuring, transformation and M&A with full enthusiasm, and achieve long-term, stable growthwith high quality.
5. Intellectual Property Risks
Competition in the semi-conductor display and materials field is becoming increasingly fierce. As theCompany keeps expanding its business scale and technological layout, patent disputes occur fromtime to time, and intellectual property risks become increasingly obvious. Ideological trends such as“counter-globalization” are more likely to further amplify related risks. If the Company’s intellectualproperty layout cannot meet the development needs of the Company at all times, once the Companyis involved in any major intellectual property dispute, its market competitiveness may be weakenedand its brand image may be negatively affected.The Company will continue to maintain high-intensity R&D investment, continuously enhance theprofessional capabilities of the core technical team, and constantly improve the layout of keytechnology and product patents through the “independent research + cooperative R&D” model.Meanwhile, it will keep perfecting the intellectual property management and protection mechanism,and through strategic cooperation with external professional institutions on intellectual property,strengthen risk-involved patent investigation, enhance patent risk early warning, reduce risk-involvedpatent threats, and comprehensively improve the ability to defend against intellectual property risks.
TCL Technology Group Corporation Interim Report 2021
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 2020 Annual General Meeting | Annual general meeting | 27.24 % | 30 April 2021 | 6 May 2021 | http://www.cnin fo.com.cn |
| The First Extraordinary General Meeting of 2021 | Extraordinary general meeting | 30.11 % | 13 May 2021 | 14 May 2021 | |
| The Second Extraordinary General Meeting of 2021 | Extraordinary general meeting | 20.08 % | 7 June 2021 | 8 June 2021 |
| Name | Office title | Type of change | Date of change | Reason for change |
| Liu Kun | Non-executive Director | Elected | 13 May 2021 | Nominated by Wuhan Optics Valley Industrial Investment Co., Ltd., a shareholder with an over-3% stake in the Company |
TCL Technology Group Corporation Interim Report 2021
Co., Ltd. 43,859,649 shares (or 0.31% of the Company’s total share capital) had been transferred in anon-deal manner on 19 January 2021 from the special securities account for repurchases to “TCLTechnology Group Corporation—the Securities Account for the Third Employee Stock OwnershipPlan”. The aforesaid number of transferred shares and relevant price were consistent with the approvalby the general meeting.The shares under this stock ownership plan would be locked up for a period of no less than 12 monthsstarting from the disclosure of the announcement on the completion of the transfer of target shares,i.e. from 19 January 2021 to 18 January 2022, during which these shares are not allowed for trading.
2. On 1 June 2021, the Company disclosed the Announcement on the Quota Allocation and EquityVesting of the Third Global Partner Plan. The Third Global Partner Plan (Draft) (hereinafter referredto as the “Third Stock Ownership Plan”) set out a company performance-related condition of a not-lower-than-30% growth in the net profit attributable to shareholders of the Company before non-recurring gains and losses in 2020 compared to 2019. According to the 2020 Annual IndependentAuditor’s Report for TCL Technology Group Corporation issued by Da Hua Certified PublicAccountants (Special General Partnership), the net profit attributable to shareholders of the Companybefore non-recurring gains and losses in 2020 amounted to RMB 2,933,248,153, up 1,147.56% from2019, which meant the performance-related condition for the Third Stock Ownership Plan wassatisfied.The management committee of the Third Stock Ownership Plan vested a total of approximately43,859,649 shares in the holders under the Third Stock Ownership Plan by way of internal registration,based on the satisfaction of company, business department and individual performance.(II) 2021-2023 Employee Stock Ownership Plan (Phase I)
1. Proposals including the Proposal on the 2021-2023 Employee Stock Ownership Plan (Phase I) ofTCL Technology Group Corporation (Draft), and the Management Methods for the 2021-2023Employee Stock Ownership Plan (Phase I) of TCL Technology Group Corporation, were approvedrespectively at the Ninth Meeting of the Seventh Board of Directors on 20 June 2021, the SeventhMeeting of the Seventh Supervisory Committee on 20 June 2021, and the Third Extraordianry GeneralMeeting of 2021. This stock ownership plan intended to obtain shares from the special securitiesaccount for repurchases through a non-deal transfer.(III) The 2019 Restricted Stock Incentive Plan and the Second Global Innovation Partner Plan
1. On 20 June 2021, the Proposal on the Satisfaction of the Unlocking Conditions for the SecondUnlocking Period under the 2019 Restricted Stock Incentive Plan and the Second Global InnovationPartner Plan was approved respectively at the Ninth Meeting of the Seventh Board of Directors, and
TCL Technology Group Corporation Interim Report 2021
the Seventh Meeting of the Seventh Supervisory Committee on 20 June 2021. A total of 1,351,316restricted shares of 85 awardees were unlocked, accounting for 0.0096% of the Company’s total sharecapital. The Company’s independent directors issued their independent opinion of consent, and theSupervisosry Committee issued their supervision opinion, with respect to the aforesaid matter.Meanwhile, the Proposal on the Repurchase and Retirement of Restricted Shares That Have BeenGranted to Certain Awardees under the 2019 Restricted Stock Incentive Plan But Are Still in Lockupand the Adjustment to the Repurchase Price was approved respectively at the Ninth Meeting of theSeventh Board of Directors, the Seventh Meeting of the Seventh Supervisory Committee, and theThird Extraordianry General Meeting of 2021. As such, it was agreed to repurchase and retire the145,941 restricted shares that had been granted to Zhang Kun and other nine awardees under the 2019Restricted Stock Incentive Plan but were still in lockup because they were deemed as no longereligible for the incentives due to reasons such as resignation. Meanwhile, pursuant to the IncentivePlan (Revised Draft), in the event of a bonus issue from capital reserves, dividend payout, stock split,share allotment, share capital reduction, etc., the repurchase price for restricted shares in lockup shallbe adjusted accordingly. Therefore, the relevant repurchase price was adjusted to RMB1.64/share.
2. On 24 June 2021, the Company disclosed the Reminder on the Shares Unlocked in the SecondUnlocking Period under the 2019 Restricted Stock Incentive Plan and the Second Global InnovationPartner Plan Being Allowed for Public Trading. A total of 1,351,316 restricted shares were allowedfor public trading on 28 June 2021.
TCL Technology Group Corporation Interim Report 2021
Part V Environmental and Social Responsibility
I Major Environmental Issues
| Name of the Company or subsidiary | Major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration (mg/L) | Governing discharge standards (mg/L) | Total discharge (metric ton) | Approved total discharge (metric tons/year) | Excessive discharge |
| TCL China Star Optoelectronics Technology Co., Ltd. | COD | Intermittently discharged to Guangming Sewage Plant | 1 | Northwestern corner of the plant area | 146mg/L | 260mg/L | 542.48t | / | None |
| Ammonia nitrogen | 7.78mg/L | 30mg/L | 28.91t | / | None | ||||
| COD | Continuously discharged to Dongkengshui | 1 | Artificial wetland to the north of the plant area | 14.61mg/L | 30mg/L | 26.55t | / | None | |
| Ammonia nitrogen | 0.23mg/L | 1.5mg/L | 0.42t | / | None | ||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | COD | Discharged after being treated in the sewage treatment system and meeting the relevant standards | 1 | Northwestern corner of the plant area | 36-75mg/L | 400mg/L | 126.73t | 353.55t | None |
| Ammonia nitrogen | 0.349- 0.387mg/L | 30mg/L | 12.67t | 35.36t | None |
TCL Technology Group Corporation Interim Report 2021
produced by each subsidiary are mainly process waste gases in the production process. For differenttypes of waste gases, each subsidiary has constructed corresponding waste gas treatment systems,such as waste gas stripping system, acidic waste gas treatment system, alkaline waste gas treatmentsystem, organic waste gas treatment system, waste gas treatment system for waste water treatmentstation, etc. for the collection of waste gases through pipelines to the corresponding waste gastreatment system, where waste gases are discharged at a high altitude after meeting relative standards.The concentration and total amount of waste water and exhaust gas discharged meet the relevantnational and local standards. The solid wastes generated by each subsidiary include general waste,hazardous waste and domestic garbage, of which, hazardous wastes are treated by an entrustedqualified hazardous waste disposal agency according to the regulations; general wastes are disposedof by a resource recycling firm after being classified in the plant area; while domestic garbage isdisposed of by the property management company by sending the garbage to qualified landfills. Allthe disposals meet the regulatory requirements. The factory noise generated by each subsidiary comesfrom the mechanical noises of production and power equipment, including refrigerators, coolingtowers, air compressors, fans, various types of pumps, etc.. The Company reduces the impact of noiseon the surrounding environment by the use of low-noise equipment, vibration reduction, noisereduction, etc., and noise reduction measures such as sound insulation and sound absorption in thefactories and equipment rooms. The monitoring results show that the factory boundary noise andemission of all subsidiaries meet the standards in a stable manner.Environmental Impact Assessment on Construction Projects and Other EnvironmentalProtection Administrative LicensesEach subsidiary complies with the laws and regulations of environmental impact assessment onconstruction projects and other environmental protection administrative licenses. During theReporting Period, every project went through the process of environmental impact assessment strictlyas required and abided by the laws and regulations with respect to administrative permit forenvironmental protection, with no violations during the period.Emergency Response Plan for Environmental IncidentsEach subsidiary has set up an environmental incident emergency organization led by the seniormanagement of the enterprise. They are required to identify and control environment-related risks andprepare an emergency response plan for environmental incidents, which has been filed with the localenvironmental protection department. In addition, regularly emergency drills are conducted forenvironmental incidents according to the plan to ensure the validity of emergency response plan.Wuhan CSOT, a subsidiary of the Company, has purchased environmental pollution liability insuranceas a means of strengthening internal risk control through the risk control capacity of green insurance,
TCL Technology Group Corporation Interim Report 2021
while ensuring that sudden and accidental environmental pollution can be effectively tackled underextreme special circumstances.Environmental Self-Monitoring ProgramEach subsidiary has formulated an environmental self-monitoring program in accordance withnational regulations, and monitors the discharge of pollutants by automatic online monitoring ormanual monitoring performed by a third-party qualified agency, with the monitoring frequency andmonitored items in strict compliance with the country’s laws and regulations at all levels. Themonitoring plans and annual monitoring reports can be checked on the corporate environmentalinformation platform managed by local environmental authorities or subsidiary websites.Administrative punishments received with respect to environmental issues in the ReportingPeriod:
No such cases in the Reporting Period.Other environment-related information that should be disclosed:
None.Other relevant information:
The Company and its subsidiaries always attach importance to social responsibility, environmentalprotection, green and low-carbon development, and other related work. Particularly, in active responseto the national strategy of achieving peak levels by 2030 and carbon neutrality by 3060 (the “3060Target”), CSOT planned the establishment of CSOT carbon neutrality goals and convened majorsuppliers to sign energy conservation and emission reduction commitments through open meetingsduring the Current Period; Wuhan CSOT took a series of technical and management measures in thefield of water resources conservation, which achieved good water-saving effects and won it the“Water-saving Enterprise” certificate issued by the Hubei Provincial Department of Water Resourcesand the Department of Economy and Information Technology of Hubei Province.II Social Responsibility
(1) Specifics of consolidating and extending the achievements of poverty alleviation and pushingforward rural revitalisationAs part of its social responsibilities, the Company actively responded to the national policy of“consolidating and extending the achievements of poverty alleviation and pushing forward all-roundrural revitalisation” by continuously promoting the consolidation of previous poverty eliminationproject results and concentrating its efforts on the field of education to push forward rural
TCL Technology Group Corporation Interim Report 2021
revitalisation with education.The "TCL Hope Engineering Candlelight Awards Program" jointly established by Shenzhen TCLPublic Welfare Foundation and CYDF in 2013 is one of the earliest public welfare projects for ruralteachers in the country. The investment to this project is over RMB38 million in eight years. Thepurpose of the award is to demonstrate the morality and professional dreams of outstanding ruralteachers who have worked hard in the grassroots education front in poverty-stricken areas for theirposts, and encourage more outstanding young teachers to take root in rural basic education andpromote rural education development.Since 2019, Shenzhen TCL Public Welfare Foundation has been promoting the “A.I. Go Home”project it launched. In cooperation with TCL Industrial Technology Research Institute, the Foundationemployed artificial intelligence technology to develop and design a storytelling robot named “Yi Ge”which can simulate the voices of parents and tell stories to left-behind children, thus strengthening theemotional connections between parents and children. With the help of the robot, children can hear thevoices of their parents more often in the process of growing up, so that mental health problems anddeviant behavior of left-behind children and migrant children caused by the long-time separation fromtheir parents can be prevented. According to the project plan, 2,000 "Yi Ge" storytelling robots willbe distributed in five years to directly serve 2,000 children and indirectly influence nearly 10,000people. The accumulative duration of services for left-behind children and migrant children hasexceeded 30,000 hours, bringing positive changes to such children.Candlelight Micro-loan is a targeted public welfare project provided by TCL Public WelfareFoundation and TCL Financial Group for rural teachers who demand small loan assistance, aiming toaddress the financial needs of rural teachers and their families in serious disease treatment, livingexpenses and skills training, among other aspects. This cross-field innovation of public welfare andmicrofinance has been improving the quality of life of rural educators working on the frontline andensures the development of rural education.In 2019, TCL Public Welfare Foundation and the Education Foundation of the Central Conservatoryof Music jointly set up the “Little Music +” project and released the “Xiao Xue” music robot. TheCentral Conservatory of Music will take advantage of its strong professional resources and organiseteachers and students of the Musicology Department to recommend 100 “Music Master WorksAppreciation” for students in rural areas, write the appreciation contents for 100 famous music piecesfrom a professional point of view, and make audio recordings for the appreciation, so as to providefirst-class and professional music education for rural students who have few opportunities to get intouch with music, enrich rural music art resources, and help students in rural areas improve their musicappreciation ability and music literacy. It is planned that 2,000 “Xiao Xue” robots will be distributed
TCL Technology Group Corporation Interim Report 2021
in five years. These robots will accompany children to enjoy music for more than 30,000 hours,directly serving 2,000 children, and indirectly affecting nearly 10,000 people.In order to improve the schooling conditions in the mountainous areas of Jiexi County, the Companydonated RMB1.32 million for the building of school basketball courts and supporting sports facilities,offering better outdoor sports venues to children in the mountainous areas. For the harmoniousdevelopment of communities, CSOT cooperated with sub-districts in providing care for the elderly incommunities and actively took part in pandemic prevention and control through methods andapproaches such as community care and pandemic support, with trade unions and volunteers as themain participants.
(2) Semi-annual summary of consolidating and extending the achievements of poverty alleviationDuring the Current Period (by 30 June 2021), TCL Public Welfare Foundation invested a total ofRMB7,085,000 in consolidating the achievements of poverty alleviation and pushing forward ruralrevitalisation.A total of 400 outstanding rural teachers were selected and given the dedication, innovation andleadership awards, respectively, in the 2021 “TCL Project Hope Candlelight Award Programme”. Foreach award, the winning teachers would be granted financial assistance and offline training supportworth RMB8,000, including a cash reward of RMB5,000 per person and an offline “Candlelight Class”training valued at RMB3,000. The rural teachers might choose to complete the training in places suchas Shanghai and Shenzhen.In 2021, six pilot schools of the second group for the “Yi Ge Story Club” of the “A.I. Go Home”project were established in six provinces. 25 Story Boxes were distributed, covering nearly 1,000people. The 25 classes of the six pilot schools would organise once a week an activity where a teacherleads the students to listen to contents told by a “Yi Ge” storytelling robot for approximately 15 to 20minutes.In 2021, the “Candlelight Micro-loan” project continued, providing loan support with interest lowerthan that of commercial loans for outstanding rural teachers selected in the “TCL Project HopeCandlelight Award Programme”, with a view to addressing the financial needs of rural teachers andtheir families in serious disease treatment, living expenses and skills training, among other aspects. Inthe first half of the year, a total of RMB100,000 was loaned to two teachers for personal housingrepairs.In 2021, the “Xiao Xue Music Class” of the “Little Music +” project had the second pilot runs in sixschools in six provinces. A total of 25 Xiao Xue Music Boxes were distributed, covering more than1,500 students. Teachers of the “Xiao Xue Music Class” would combine the music in the “Xiao Xue”
TCL Technology Group Corporation Interim Report 2021
music robot with the music curriculum to guide students on the appreciation of world classics.Additionally, in order to help students understand the connotations of the music and enhance theirimagination, it is planned to visually display the appreciation copies of 100 classic songs by designingand producing picture books of music stories.
(3) Plan for consolidating and extending the achievements of poverty alleviation in the second half ofthe yearIn the second half of the year, the Company will maintain continuous investment in the field of povertyalleviation through education, consolidate the achievements of poverty alleviation, and push forwardrural revitalisation with education. For this year’s 7th “TCL Project Hope Candlelight AwardProgramme”, the Company will continue to expand the existing award scale and publicity impact.Specifically, it will hold an “Award Ceremony” to commend the dedication of rural teachers; it willcontinue to strengthen interaction between netizens on the Internet platform so as to maintain socialattention and attract more social groups to pay attention to rural teachers.The coverage of the “A.I. Go Home” project will keep expanding. It is expected that the customisedvoice synthesis for 300 people will be completed, and exclusive customised “Yi Ge” storytellingrobots will be distributed to 300 families where they will play a companion role in strengthening thecontact between parents and children, with the aim of improving the mental health problems of left-behind children. Furthermore, another five to eight “Yi Ge Story Club” pilot schools will beestablished in the second half of the year, and more than 25 classes will join the “Yi Ge Story Club”and drive the participation of the schools on a class basis. More than 1,000 students are expected tobe covered.The coverage of the “Candlelight Micro-loan” project will be expanded. In addition to the award-winning teachers in the “TCL Project Hope Candlelight Award Programme”, all the trained teachersof the China Youth Development Foundation’s 2021 Hope Primary School Teacher Training Officemay also apply synchronously. We hope to meet the financial needs of some rural teachers and freerural teachers from worries through the project, so that they can better serve rural education.In the second half of the year, the scope of pilot schools will continue to be expanded for the “LittleMusic +” project. Expectedly, eight pilot schools will be added and 50 Xiao Xue Music Boxes will bedistributed to cover 3,000 students. Meanwhile, we will work with artists to complete the picturebooks of music stories. These picture books will serve as a powerful supplement to the “Little Music+” project and enrich the music teaching resources for rural children.
TCL Technology Group Corporation Interim Report 2021
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
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in asset restructuring | 20 designated holders of convertible bonds | About not reducing the Company’s convertible bonds | This organization agrees that it will not transfer its subscribed convertible bonds within six months from the date when this issuance ends and the registration is completed. Besides, it entrusts the Board of Directors of TCL Tech. to apply for lockup of the above subscribed convertible bonds with China Securities Depository and Clearing Corporation Limited (CSDC) Shenzhen Branch so as to ensure that the above subscribed convertible bonds will not be transferred within six months from the date when this issuance ends and the registration is completed. | 30 November 2020 | 6 months | Strictly abided by |
TCL Technology Group Corporation Interim Report 2021
V Explanations Given by the Board of Directors and the Supervisory Committee Regarding theIndependent Auditor's “Modified Opinion” on the Financial Statements of the ReportingPeriod
□ Applicable ■ Not applicable
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's“Modified Opinion” on the Financial Statements of Last Year
□ Applicable ■ Not applicable
VII Insolvency and Reorganization
□ Applicable ■ Not applicable
No such cases in the Reporting Period.VIII Legal Matters
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
2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ Applicable ■ Not applicable
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable ■ Not applicable
4. Amounts Due to and from Related Parties
□ Applicable ■ Not applicable
Indicate whether there were any amounts due to and from related parties for non-operating purposes.
□ Yes ■ No
5. Transactions with Related Finance Companies or Finance Companies Controlled by the Company
■ Applicable □ Not applicable
TCL Technology Group Corporation Interim Report 2021
Deposits:
| Related party | Relationship with the Company | Daily deposit ceiling (RMB’0,000) | Range of interest | Beginning balance (RMB’0,000) | Deposit amount (RMB’0,000) | Ending balance (RMB’0,000) |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | 600,000.00 | 0.01%-2.25% | 252,815.49 | 4,516,182.34 | 176,910.38 |
| Related party | Relationship with the Company | Business type | Total line of credit (RMB’0,000) | Actual amount (RMB’0,000) |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | Comprehensive credit | 600,000.00 | 316,058.75 |
| Title of announcement | Date of disclosure | Website for disclosure |
| Announcement on TCL Tech Finance Co., Ltd. Continuing to Provide Financial Services for TCL Industries Holdings Inc. and Extending the Financial Service Agreement between Them and the Related-Party Transaction | 31 March 2021 | http://www.cninfo.com.cn |
| Announcement on the Expected Continuing Related-Party Transactions for 2021 | 11 March 2021 | |
| Announcement on the Incorporation of TCL Semiconductor Technology (Guangdong) Co., Ltd. and the Related-party Transaction | 11 March 2021 | |
| Announcement on the Related-party Transactions with Shenzhen Jucai Supply Chain Technology Co., Ltd. in 2021 | 11 March 2021 | |
| Announcement on the Capital Increase in Tianjin Huanxin Technology&Development Co., Ltd. and the Related-party Transaction | 22 May 2021 | |
| Announcement on the Launch of Accounts Receivable Factoring and the Related-party Transaction | 22 May 2021 | |
| Announcement on the Disposal of Equity Interests in Guangzhou Financial and the Related-party Transaction | 22 May 2021 |
| Related party | Relationship with the Company | Loan limit (RMB’0,000) | Range of interest | Beginning balance (RMB’0,000) | Loan amount (RMB’0,000) | Ending balance (RMB’0,000) |
| Subsidiary of TCL Industries Holdings Co., Ltd. | Related corporation | - | 0.7%-4.5% | 135,823.30 | 202,781.50 | 235,470.70 |
TCL Technology Group Corporation Interim Report 2021
XII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable ■ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable ■ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable ■ Not applicable
Notes to leases:
No significant leases in the Reporting Period.
2. Major Guarantees
Unit: RMB'0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | 2018-12-7 | 345,000 | 2019-8-29 | 315,141 | Joint-liability | TCL Industries Holdings Co., Ltd. provided counter-guarantees | 1 month-5 years | Not | Yes | |
| TCL King Electrical Appliances (Chengdu) Co., Ltd. | 2018-12-7 | 60,000 | - | - | Joint-liability | - | Not | Yes | ||
| Huizhou TCL Mobile Communication Co., Ltd. | 2018-12-7 | 450,000 | 2021-2-1 | 195,642 | Joint-liability | 1-6 months | Not | Yes | ||
| TCL Communication Technology Holdings Limited | 2018-12-7 | 120,000 | - | - | Joint-liability | - | Not | Yes | ||
| TCL Mobile Communication (HK) Company Limited | 2018-12-7 | 248,500 | 2021-3-23 | 97,814 | Joint-liability | 90-122 days | Not | Yes | ||
TCL Technology Group Corporation Interim Report 2021
| TCT Mobile Overseas Limited | 2018-12-7 | 6,625 | - | - | Joint-liability | - | Not | Yes | ||
| TCT Mobile (US) Inc. | 2018-12-7 | 84,500 | - | - | Joint-liability | - | Not | Yes | ||
| TCT Mobile International Limited | 2018-12-7 | 31,000 | - | - | Joint-liability | - | Not | Yes | ||
| TCT Mobile Italy S.R.L | 2018-12-7 | 1,600 | - | - | Joint-liability | - | Not | Yes | ||
| TCT MOBILE - TELEFONES LTDA. | 2018-12-7 | 12,000 | - | - | Joint-liability | - | Not | Yes | ||
| TCL Home Appliances (Hefei) Co., Ltd. | 2018-12-7 | 140,000 | 2020-12-3 | 72,372 | Joint-liability | 1 month-3 years | Not | Yes | ||
| TCL Home Appliances (Zhongshan) Co., Ltd. | 2018-12-7 | 16,000 | 2021-1-25 | 6,619 | Joint-liability | 43-246 days | Not | Yes | ||
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | 2018-12-7 | 158,600 | 2020-3-13 | 153,032 | Joint-liability | 36 days-3 years | Not | Yes | ||
| TCL Air Conditioner (Wuhan) Co., Ltd. | 2018-12-7 | 131,600 | 2021-1-19 | 81,445 | Joint-liability | 53-190 days | Not | Yes | ||
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | 2018-12-7 | 75,300 | 2021-1-25 | 38,181 | Joint-liability | 21-360 days | Not | Yes | ||
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | 2018-12-7 | 7,000 | 2021-1-29 | 2,594 | Joint-liability | 37-189 days | Not | Yes | ||
| TCL Home Appliances (Huizhou) Co., Ltd. | 2018-12-7 | 11,500 | 2021-6-18 | 10,000 | Joint-liability | 1 year | Not | Yes | ||
| TCL Intelligent Technology (Hefei) Co., Ltd. | 2018-12-7 | 800 | - | - | Joint-liability | - | Not | Yes | ||
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | 2018-12-7 | 25,000 | 2021-1-25 | 24,902 | Joint-liability | 30-190 days | Not | Yes | ||
| TCL Home Appliances (Hong Kong) Limited | 2018-12-7 | 20,000 | - | - | Joint-liability | - | Not | Yes |
TCL Technology Group Corporation Interim Report 2021
| Shenzhen TCL Hangxiang Supply Chain Service Co., Ltd. | 2018-12-7 | 500 | - | - | Joint-liability | - | Not | Yes | ||
| Zhongshan Hhappy Tree Network Technology Co., Ltd. | 2018-12-7 | 2,000 | - | - | Joint-liability | - | Not | Yes | ||
| TCL Tonly Electronics (Huizhou) Co., Ltd. | 2018-12-7 | 40,000 | 2015-11-4 | 7,777 | Joint-liability | 0.5 year—infinite | Not | Yes | ||
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | 2018-12-7 | 14,000 | - | - | Joint-liability | - | Not | Yes | ||
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | 2018-12-7 | 4,000 | 2021-3-29 | 1,291 | Joint-liability | 52 - 130 days | Not | Yes | ||
| TCL Capital (Hong Kong) Limited | 2018-12-7 | 100,000 | - | - | Joint-liability | - | Not | Yes | ||
| Huizhou Cool Friends Network Technology Co., Ltd. | 2018-12-7 | 13,000 | - | - | Joint-liability | - | Not | Yes | ||
| SHIFENDAOJIA Online Service Co., Ltd. | 2018-12-7 | 3,000 | 2021-4-16 | 21 | Joint-liability | 96-113 days | Not | Yes | ||
| TCL Technology Park Co., Ltd. | 2018-12-7 | 27,000 | - | - | Joint-liability | - | Not | Yes | ||
| Guangzhou Yunsheng Tianji Technology Co., Ltd. | 2018-12-7 | 110,000 | - | - | Joint-liability | - | Not | Yes | ||
| Guangzhou TCL Science and Technology Development Co., Ltd. | 2018-12-7 | 200,000 | 2018-12-18 | 121,000 | Joint-liability | 13 years | Not | Yes |
TCL Technology Group Corporation Interim Report 2021
| Shenzhen Bao’an TCL Haichuanggu Technology Park Development Co., Ltd. | 2018-12-7 | 20,000 | 2018-9-25 | 16,200 | Joint-liability | 3 years | Not | Yes | ||||
| TCL Industries Holdings (HK) Limited | 2018-12-7 | 800,000 | 2016-10-4 | 669,245 | Joint-liability | 1-5 years | Not | Yes | ||||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 2018-12-7 | 5,000 | 2021-4-14 | 587 | Joint-liability | 4-5 months | Not | Yes | ||||
| Huizhou Shenghua Industrial Co., Ltd. | 2018-12-7 | 9,000 | - | - | Joint-liability | - | Not | Yes | ||||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 2018-12-7 | 4,000 | - | - | Joint-liability | - | Not | Yes | ||||
| Huizhou Gaoshengda Technology Co., Ltd. | 2018-12-7 | 9,000 | - | - | Joint-liability | - | Not | Yes | ||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 2021-3-11 | 40,000 | 2020-12-23 | 39,735 | Joint-liability | With counter-guarantee | 186- 199 days | Not | Not | |||
| Qihang Import&Export Limited | 2021-3-11 | 6,000 | - | - | Joint-liability | With counter-guarantee | - | Not | Not | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 2021-3-11 | 110,000 | 2021-5-6 | 100 | Joint-liability | With counter-guarantee | 181 days | Not | Not | |||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 2021-3-11 | 55,000 | 2020-4-28 | 29,447 | Joint-liability | Guarantee in proportion to shareholding percentage | 8 years | Not | Not | |||
| Qihang Import&Export Limited | 2021-3-11 | 50,000 | 2021-5-8 | 581 | Joint-liability | With counter-guarantee | 237 days | Not | Not | |||
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | 2021-5-22 | 45,500 | 2020-9-4 | 28,500 | Joint-liability | With counter-guarantee | 1 year | Not | Yes | |||
| Guangzhou TCL Internet Microcredit Co., Ltd. | 2021-5-22 | 100,000 | 20212-26 | 48,000 | Joint-liability | With counter-guarantee | 1 year | Not | Yes | |||
| Total approved line for such guarantees in Reporting Period (A1) | 406,500 | Total actual amount of such guarantees in Reporting Period (A2) | 1,231,594 | |||||||||
TCL Technology Group Corporation Interim Report 2021
| Total approved line for such guarantees at end of Reporting Period (A3) | 3,712,025 | Total actual balance of such guarantees at end of Reporting Period (A4) | 1,960,228 | |||||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 2021-3-11 | 1,110,000 | 2016-4-13 | 510,618 | Joint-liability | 1 month-8 years | Not | Not | ||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 2021-3-11 | 3,650,000 | 2018-4-28 | 1,879,892 | Joint-liability | 3 month-8 years | Not | Not | ||
| TCL China Star Optoelectronics Technology Co., Ltd. | 2021-3-11 | 650,800 | 2015-4-21 | 284,833 | Joint-liability | 3 month-8 years | Not | Not | ||
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 2021-3-11 | 1,700,000 | 2017-12-22 | 1,137,491 | Joint-liability | 3 month-8 years | Not | Not | ||
| Huizhou China Star Optoelectronics Technology Co., Ltd. | 2021-3-11 | 990,000 | 2020-8-12 | 352,070 | Joint-liability | 1-8 years | Not | Not | ||
| China Star Optoelectronics International (HK) Limited | 2021-3-11 | 220,000 | 2020-12-5 | 161,503 | Joint-liability | 3 years | Not | Not | ||
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | 2021-3-11 | 150,000 | 2021-3-31 | 45,877 | Joint-liability | 43- 190 days | Not | Not | ||
| Wuhan China Display Optoelectronics Technology Co., Ltd. | 2021-3-11 | 50,000 | 2020-6-1 | 1,271 | Joint-liability | 1-5 years | Not | Not | ||
| Guangdong Juhua Printed Display Technology Co., Ltd. | 2021-3-11 | 20,000 | 2020-11-19 | 266 | Joint-liability | 6 months | Not | Not | ||
| TCL Tech Finance Co., Ltd. | 2021-3-11 | 200,000 | - | - | Joint-liability | - | Not | Not | ||
TCL Technology Group Corporation Interim Report 2021
| Highly Information Industry Co., Ltd. | 2021-3-11 | 383,000 | 2020-6-17 | 268,000 | Joint-liability | 263-633 days | Not | Not | ||
| Beijing Hecheng Nuoxin Technology Co., Ltd. | 2021-3-11 | 5,000 | - | - | Joint-liability | - | Not | Not | ||
| Beijing Lingyun Data Technology Co., Ltd. | 2021-3-11 | 131,500 | 2021-4-28 | 21,345 | Joint-liability | 89-394 days | Not | Not | ||
| Beijing Sunpiestore Technology Co., Ltd. | 2021-3-11 | 87,000 | 2020-6-19 | 20,000 | Joint-liability | 89-394 days | Not | Not | ||
| Shaanxi Titi Electronic Technology Co., Ltd. | 2021-3-11 | 3,000 | - | - | Joint-liability | 0.00 | Not | Not | ||
| TCL Technology Park (Huizhou) Co., Ltd. | 2021-3-11 | 180,000 | 2020-4-24 | 64,700 | Joint-liability | 1-10 years | Not | Not | ||
| TCL Technology Investments Limited | 2021-3-11 | 400,000 | 2020-7-14 | 194,100 | Joint-liability | 5 years | Not | Not | ||
| Ningbo TCL Equity Investment Ltd. | 2021-3-11 | 50,000 | - | - | Joint-liability | - | Not | Not | ||
| TCL Moka International Limited | 2021-4-28 | 360,000 | - | - | Joint-liability | - | Not | Not | ||
| US Moka Limited | 2021-4-28 | 210,000 | 20213-31 | 21,413 | Joint-liability | 90 days | Not | Not | ||
| Huizhou Moka Technology Development Co., Ltd. | 2021-4-28 | 50,000 | - | - | Joint-liability | - | Not | Not | ||
| Moka Technology (Guangdong) Co., Ltd. | 2021-4-28 | 400,000 | 2021-1-8 | 106,987 | Joint-liability | 1-6 months | Not | Not | ||
| Guangzhou China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 2021-4-10 | 1,750,000 | - | - | Joint-liability | - | Not | Not | ||
| Suzhou China Star Optoelectronics Display Co., Ltd. | 50,000 | - | - | Joint-liability | - | Not | Not | |||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | 10,000 | - | 1,400 | Joint-liability | 3 days | Not | Not |
TCL Technology Group Corporation Interim Report 2021
| Total approved line for such guarantees in the Reporting Period (B1) | 12,810,300 | Total actual amount of such guarantees in the Reporting Period (B2) | 1,546,089 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 12,810,300 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 5,071,766 | |||||||
| 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 (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Huhehaote Huanju New Energy Development Co., Ltd. | 2014 -11 -26 | 34,529 | 2015-4-13 | 34,529 | Joint-liability | 9.5 years | Not | Not | ||
| Zhonghuan Energy (Inner Mongolia) Co., Ltd. | 2017 -6 -24 | 12,920 | 2017-7-21 | 12,920 | Joint-liability | 15 years | Not | Not | ||
| Otog Banner Huanju New Energy Co., Ltd. | 2017 -6 -24 | 22,828 | 2017-8-18 | 22,828 | Joint-liability | 10 years | Not | Not | ||
| Qinhuangdao Tianhui Solar Energy Co., Ltd. | 2017 -11 -11 | 11,200 | 2018-1-19 | 11,200 | Joint-liability | 10 years | Not | Not | ||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | 2017 -11 -29 | 145,000 | 2018-5-31 | 145,000 | Joint-liability | 5 years | Not | Not | ||
| Qinhuangdao Tianhui Solar Energy Co., Ltd. | 2018 -9 -6 | 13,429 | 2019-4-23 | 13,429 | Joint-liability | 12 years | Not | Not | ||
| Guyuan Shengju New Energy Co., Ltd. | 2018 -9 -6 | 11,619 | 2018-10-8 | 11,619 | Joint-liability | 11 years | Not | Not | ||
| Zhangjiakou Shengyuan New Energy Co., Ltd. | 2018 -9 -6 | 15,690 | 2018-10-8 | 15,690 | Joint-liability | 11 years | Not | Not | ||
| Zhonghuan Hong Kong Holding Limited | 2018 -12 -8 | 45,221 | 2018-12-27 | 45,221 | Joint-liability | 3 years | Not | Not | ||
TCL Technology Group Corporation Interim Report 2021
| Zhonghuan Hong Kong Holding Limited | 2019 -8 -22 | 36,460 | 2019-10-16 | 36,460 | Joint-liability | 3 years | Not | Not | ||
| Zhonghuan Hong Kong Holding Limited | 2021-3-22 | 65,000 | 2021-3-26 | 53,124 | Joint-liability | 3 years | Not | Not | ||
| Inner Mongolia Zhonghuan Xiexin Solar Material Co., Ltd. | 2021-3-22 | 412,500 | 2021-4-30 | 341,300 | Joint-liability | 7 years | Not | Not | ||
| Huansheng Solar (Jiangsu) Co., Ltd. | 2021-3-22 | 60,000 | 2021-4-1 | 60,000 | Joint-liability | 5 years | Not | Not | ||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | 2021-1-21 | 131,500 | - | Joint-liability | - | Not | Not | |||
| Total approved line for such guarantees in the Reporting Period (C1) | 669,000 | Total actual amount of such guarantees in the Reporting Period (C2) | 454,424 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | 1,017,897 | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 803,321 | |||||||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 13,885,800 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 3,232,107 | |||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 17,540,222 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 7,835,315 | |||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 229.72% | |||||||||
| Of which: | ||||||||||
| Balance of guarantees provided for shareholders, the actual controller and their related parties (D) | 1,890,364 | |||||||||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 3,327,323 | |||||||||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 6,129,925 | |||||||||
| Total of the three amounts above (D+E+F) | 6,129,925 | |||||||||
| Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees (if any) | - | |||||||||
-Guarantees provided in breach of prescribed procedures (ifany)
TCL Technology Group Corporation Interim Report 2021
In the Reporting Period, the Company split the guarantee line for TCL China Star Optoelectronics Technology Co., Ltd., with RMB500million for subsidiary Suzhou China Star Optoelectronics Display Co., Ltd. and RMB100 million for subsidiary Suzhou China StarOptoelectronics Technology Co., Ltd. Upon that, the gurantee line for TCL China Star Optoelectronics Technology Co., Ltd. was nomore than RMB6.508 billion.
An internal review was carried out for the aforesaid split. The debt/asset ratios of both the subsidiaries with an increased line of guaranteewere not over 70%, which is in compliance with the Company’s Management Rules for Guarantees for External Parties and the requirementsof the Proposal on the Provision of Gurantees for Subsidiaries in 2021 approved at the 2020 Annual General Meeting on 30 April 2021.
3. Cash Entrusted for Wealth Management
□ Applicable ■ Not applicable
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Impairment allowances for unrecovered overdue amount |
| Bank’s wealth management product | Self-funded | 330,000.00 | 591,033.30 | 0 | 0 |
| Securities firm’s wealth management product | Self-funded | 26,000.00 | 20,000.00 | 0 | 0 |
| Trust plan | Self-funded | 20,000.00 | 0 | 0 | 0 |
| Other | Self-funded | 185,557.43 | 22,855.35 | 0 | 0 |
| Total | 561,557.43 | 633,888.65 | 0 | 0 | |
TCL Technology Group Corporation Interim Report 2021
High-risk wealth management transactions with a significant single amount, low liquidity and no principal protection:
□ Applicable ■ Not applicable
Wealth management transactions where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable ■ Not applicable
4. Significant Continuing Contracts
□ Applicable ■ Not applicable
Material difference between contract execution progress and contract stipulation with an over-30% impact of the total contract amount:
□ Applicable ■ Not applicable
5. Other Major Contracts
□ Applicable ■ Not applicable
No such cases in the Reporting Period.XIII Other Significant Events■ Applicable □ Not applicable
| Overview of the significant event | Disclosure date | Website for the disclosed relevant announcement |
| Announcement on the Completion of the Non-Deal Transfer under the Third Global Partner Plan | 22 January 2021 | www.cninfo.com.cn |
| Voluntary Announcement on Increasing the Equity-holdings in Tianjin Printronics Circuit Corporation | 4 February 2021 | |
| Announcement on the Progress of the Acquisition of 60% Equity Interests in Samsung Suzhou LCD Co. Ltd. and 100% Equity Interests in Samsung Display Suzhou Co., Ltd. | 8 February 2021 | |
| Voluntary Announcement on Increasing the Equity-holdings in Tianjin Printronics Circuit Corporation | 17 March 2021 | |
| Voluntary Announcement on Increasing the Equity-holdings in Tianjin Zhonghuan Semiconductor Co., Ltd. | 18 March 2021 | |
| Announcement on the Settlement of the Acquisition of 60% Equity Interests in Samsung Suzhou LCD Co. Ltd. and 100% Equity Interests in Samsung Display Suzhou Co., Ltd. | 2 April 2021 | |
| Preliminary Plan on 2021 Private Placement of A-shares | 10 April 2021 | |
| Announcement on the Construction of the Generation 8.6 (or G8.6) New Oxide Semiconductor Production Line of Guangzhou CSOT | 10 April 2021 | |
| Announcement on the Progress of the Acquisition of 100% Equity Interests in Moka International Limited | 24 April 2021 | |
| Announcement on the Adjustment to the Stock Conversion Price of Convertible Corporate Bonds | 11 May 2021 |
TCL Technology Group Corporation Interim Report 2021
| Reminder on the Commencement of Bonds-to-Stock Conversion of “TCL Private Convertible 2” | 28 May 2021 |
| Report on the Repurchase of Certain Public Shares in 2021 | 21 June 2021 |
| 2021-2023 Employee Stock Ownership Plan (Phase I) (Draft) | 21 June 2021 |
| Title of announcement | Date of disclosure | Website for disclosure |
| Announcement on the Construction of the Generation 8.6 (or G8.6) New Oxide Semiconductor Production Line of Guangzhou CSOT | 10 April 2021 | |
| Announcement on Capital Increase in TCL CSOT | 22 May 2021 |
Part VII Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 1,369,646,802 | 9.76% | 0 | 0 | 0 | -246,072,950 | -246,072,950 | 1,123,573,852 | 8.01% |
| 1.1 Shares held by the state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.2 Shares held by state-owned legal persons | 511,508,951 | 3.65% | 0 | 0 | 0 | 0 | 0 | 511,508,951 | 3.65% |
| 1.3 Shares held by other domestic investors | 767,573,072 | 5.46% | 0 | 0 | 0 | -155,899,669 | -155,899,669 | 611,673,403 | 4.36% |
| Among which: Shares held by domestic legal persons | 150,908,441 | 1.08% | 0 | 0 | 0 | -150,908,441 | -150,908,441 | 0 | 0.00% |
| Shares held by domestic natural persons | 616,664,631 | 4.38% | 0 | 0 | 0 | -4,991,228 | -4,991,228 | 611,673,403 | 4.36% |
| 1.4 Shares held by foreign investors | 90,564,779 | 0.65% | 0 | 0 | 0 | -90,173,281 | -90,173,281 | 391,498 | 0.0028% |
| Among which: Shares held by foreign legal persons | 90,532,347 | 0.65% | 0 | 0 | 0 | -90,532,347 | -90,532,347 | 0 | 0.00% |
| Shares held by foreign natural persons | 32,432 | 0.0002% | 0 | 0 | 0 | 359,066 | 359,066 | 391,498 | 0.0028% |
| 2. Unrestricted shares | 12,661,141,560 | 90.24% | 0 | 0 | 0 | 246,072,950 | 246,072,950 | 12,907,214,510 | 91.99% |
| 2.1 RMB-denominated ordinary shares | 12,661,141,560 | 90.24% | 0 | 0 | 0 | 246,072,950 | 246,072,950 | 12,907,214,510 | 91.99% |
| 3. Total shares | 14,030,788,362 | 100.00% | 0 | 0 | 0 | 0 | 0 | 14,030,788,362 | 100% |
Restricted Stock Incentive Plan and the Second Global Innovation Partner Plan Being Allowed for Public Trading. A total of 1,351,316restricted shares were allowed for public trading on 28 June 2021, as unrestricted shares increased by the same number. As such, thetotal shares of the Company remained unchanged.Approval of share changes:
□Applicable ■ Not applicable
Transfer of share ownership:
□Applicable ■ Not applicable
Progress on any share repurchase:
■Applicable □ Not applicableThe Company focuses on the development of its core business, namely the semi-conductor display business and the semi-conductorphotovoltaic and semi-conductor materials business. It is committed to becoming a global leading technology group. In the pattern reshapingdriven by technological innovation, scale advantages, efficiency and benefits, and industry chain synergy, major domestic enterprises haveestablished comparative advantages, industry concentration has increased significantly, and the strategic utilisation and value contribution ofthe industry chain links have gradually become prominent. Based on its confidence in the long-term development of the core business andthe continuous growth of corporate value, in order to protect the interests of investors and take into account the needs of employee incentives,the Company convened the Ninth Meeting of the Seventh Board of Directors on 20 June 2021, at which the Proposal on the Repurchase ofCertain Public Shares was approved. For details, see the Report on the Repurchase of Certain Public Shares in 2021 disclosed by the Companyon media designated for information disclosure.The Company implemented the share repurchase from 25 June 2021. Up to 26 July 2021, the Company has cumulatively repurchased
,
,588 shares (or 0.57% of the Company’s total share capital) in its special securities account for repurchases by way of centralizedbidding, with the highest trading price being RMB8.29/share, and the lowest trading price being RMB7.49/share. The total transaction amountwas approximately RMB629 million. The share repurchase has been implemented in a process in compliance with the applicable regulationsincluding the Specific Rules of the Shenzhen Stock Exchange for Share Repurchase by Listed Companies. The actual number of sharesrepurchased, repurchase price and amount used were in compliance with the repurchase plan approved at the Ninth Meeting of the SeventhBoard of Directors, with no difference with the disclosed Report on the Repurchase of Certain Public Shares in 2021. As such, the Companyhas completed the share repurchase.Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable ■ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders 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 regulator to be disclosed:
□ Applicable ■ Not applicable
2. Changes in Restricted Shares
■ Applicable □ Not applicable
Unit: share
| Shareholder | Beginning restricted shares | Unlocked in Reporting Period | Increase in Reporting Period | Ending restricted shares | Reason for restriction | Date of unlocking |
| Wuhan Optics Valley Industrial Investment Co., Ltd. | 511,508,951 | - | - | 511,508,951 | Restricted shares in a share offering | 2021-11-11 |
| Star Century Enterprises Limited | 90,532,347 | 90,532,347 | - | 0 | Restricted shares in a share offering | 2020-12-25 |
| Ningbo Xinglian Zhonglian Enterprise Management Partnership (Limited Partnership) | 32,311,279 | 32,311,279 | - | 0 | Restricted shares in a share offering | 2020-12-25 |
| Ningbo Xinglan Zhonglian Enterprise Management Partnership (Limited Partnership) | 42,521,163 | 42,521,163 | - | 0 | Restricted shares in a share offering | 2020-12-25 |
| Ningbo Xingyuan Zhonglian Enterprise Management Partnership (Limited Partnership) | 37,695,315 | 37,695,315 | - | 0 | Restricted shares in a share offering | 2020-12-25 |
| Ningbo Xingyong Zhonglian Enterprise Management Partnership (Limited Partnership) | 38,380,684 | 38,380,684 | - | 0 | Restricted shares in a share offering | 2020-12-25 |
| Other | 615,199,806 | 3,280,846 | - | 611,918,960 | Locked-up shares of senior management | 9999-99-99 |
| 2019 Restricted Stock Incentive Plan | 1,497,257 | 1,351,316 | - | 145,941 | Restricted shares granted as incentives | 2021-6-25 |
| Total | 1,369,646,802 | 246,072,950 | - | 1,123,573,852 | -- | -- |
| Name of stock and its derivative securities | Issue date | Issue price (or interest rate) | Issued number | Listing date | Number approved for public trading | Termination date of transaction | Index to disclosed information | Date of disclosure |
| Type: convertible corporate bonds, convertible corporate bonds with warrants, corporate bonds | ||||||||
| Corporate bonds （21TCLK1, 149434.SZ） | 2021-3-25 | 3.65% | 5,000,000 | 2021-4-7 | 5,000,000 | 2021-9-25 | http://www .cninfo.com.c n | 2021-3-29 |
| Number of ordinary shareholders at the period-end | 788,420 | Number of preference shareholders with resumed voting rights at the period-end (if any) | - | |||||||
| 5% or greater ordinary shareholders or top 10 ordinary shareholders | ||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Total ordinary shares held at the period-end | Increase/decrease in the Reporting Period | Restricted ordinary shares held | Unrestricted ordinary shares held | Shares in pledge, marked or frozen | |||
| Status | Shares | |||||||||
| Li Dongsheng and his acting-in-concert party | Domestic natural person/general legal person | 8.26% | 1,158,599,393 | 0 | 610,181,602 | 548,417,791 | Put in pledge by Li Dongsheng | 72,000,000 | ||
| Put in pledge by Jiutian Liancheng | 344,899,521 | |||||||||
| Huizhou Investment Holding Co., Ltd. | State-owned legal person | 5.30% | 743,139,840 | 0 | 0 | 743,139,840 | ||||
| Wuhan Optics Valley Industrial Investment Co., Ltd. | State-owned legal person | 3.65% | 511,508,951 | 0 | 511,508,951 | 0 | In pledge | 255,754,475 | ||
| Hong Kong Securities Clearing Company Ltd. | Foreign legal person | 3.26% | 457,823,997 | -65,918,570 | 0 | 457,823,997 | ||||
| China Securities Finance Corporation Limited | Domestic general legal person | 2.66% | 373,231,553 | 0 | 0 | 373,231,553 | ||||
| Tibet Tianfeng Enterprise Management Co., Ltd. | Domestic general legal person | 1.75% | 245,969,062 | -109,894,653 | 0 | 245,969,062 | ||||
| Sinatay Life Insurance Co., Ltd.－Conventional Product | Fund, wealth management product, etc. | 0.58% | 81,958,072 | 3,266,972 | 0 | 81,958,072 | ||||
| ICBC Credit Suisse Asset Management －Agricultural Bank of China-ICBC Credit Suisse China Securities Financial Asset Management Plan | Fund, wealth management product, etc. | 0.53% | 74,761,500 | 0 | 0 | 74,761,500 | ||||
| Southern Asset Management－Agricultural Bank of China－Southern China Securities Financial Asset Management Plan | Fund, wealth management product, etc. | 0.53% | 74,761,500 | 0 | 0 | 74,761,500 | ||||
| Zhong Ou Asset Management- Agricultural Bank of China- Zhong Ou China Securities Financial Asset Management Plan | Fund, wealth management product, etc. | 0.53% | 74,761,500 | 0 | 0 | 74,761,500 | ||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder in a rights issue (if any) | N/A | |||||||||
| Related or acting-in-concert parties among the shareholders above | Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert, Mr. Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Jiutian Liancheng”) are the biggest shareholder of the Company with a total of 1,158.5994 million shares. | |||||||||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | |||||||||
| Special account for share repurchases (if any) among the top 10 shareholders | The top 10 shareholders above do not include “The Securities Account of TCL Technology Group Corporation for Repurchases”. As of the end of the Reporting Period, there were 535,983,451 shares in the account. | |||||||||
| Top 10 unrestricted ordinary shareholders | ||||||||||
| Name of shareholder | Unrestricted ordinary shares held at the period-end | Shares by class | ||||||||
| Class | Shares | |||||||||
| Huizhou Investment Holding Co., Ltd. | 743,139,840 | RMB-denominated ordinary stock | 743,139,840 | |||||||
| Li Dongsheng and his acting-in-concert party | 548,417,791 | RMB-denominated ordinary stock | 548,417,791 | |||||||
| Hong Kong Securities Clearing Company Ltd. | 457,823,997 | RMB-denominated ordinary stock | 457,823,997 | |||||||
| China Securities Finance Corporation Limited | 373,231,553 | RMB-denominated ordinary stock | 373,231,553 | |||||||
| Tibet Tianfeng Enterprise Management Co., Ltd. | 245,969,062 | RMB-denominated ordinary stock | 245,969,062 | |||||||
| Sinatay Life Insurance Co., Ltd.－Conventional Product | 81,958,072 | RMB-denominated ordinary stock | 81,958,072 | |||||||
| ICBC Credit Suisse Asset Management －Agricultural Bank of China-ICBC Credit Suisse China Securities Financial Asset | 74,761,500 | RMB-denominated ordinary stock | 74,761,500 | |||||||
| Management Plan | |||
| Southern Asset Management－Agricultural Bank of China－Southern China Securities Financial Asset Management Plan | 74,761,500 | RMB-denominated ordinary stock | 74,761,500 |
| Zhong Ou Asset Management- Agricultural Bank of China- Zhong Ou China Securities Financial Asset Management Plan | 74,761,500 | RMB-denominated ordinary stock | 74,761,500 |
| Bosera Funds－Agricultural Bank of China－Bosera China Securities Financial Asset Management Plan | 74,761,500 | RMB-denominated ordinary stock | 74,761,500 |
| Related or acting-in-concert parties among top 10 unrestricted ordinary shareholders, as well as between top 10 unrestricted ordinary shareholders and top 10 ordinary shareholders | Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert, Mr. Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Jiutian Liancheng”) are the biggest shareholder of the Company with a total of 1,158.5994 million shares. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) | Shareholder Tibet Tianfeng Enterprise Management Co., Ltd. held 163,223,537 shares in the Company in its general securities account and 82,745,525 shares in its securities margin account, totaling 245,969,062 shares. | ||
Part VIII Bonds
Enterprise Bonds
□ Applicable ■ Not applicable
No enterprise bonds in the Reporting Period.
Corporate Bonds
■ Applicable □ Not applicable
General Information of Corporate Bonds
| Bond name | Abbr. | Bond code | Date of issuance | Value date | Maturity | Outstanding balance (RMB’0,000) | Coupon rate (annualized) | Way of principal repayment and interest payment | Place of transaction |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Tranche 1) | 17TCL01 | ||||||||
| 112518 | 18 April 2017 | 19 April 2017 | 19 April 2022 | 100,000 | 3.40% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Tranche 2) | 17TCL02 | ||||||||
| 112542 | 6 July 2017 | 7 July 2017 | 7 July 2022 | 15,700 | 3.45% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Tranche 1) | 18TCL01 | ||||||||
| 112717 | 5 June 2018 | 6 June 2018 | 6 June 2023 | 17,001.90 | 4.00% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Tranche 2) | 18TCL02 | ||||||||
| 112747 | 17 August 2018 | 20 August 2018 | 20 August 2023 | 200,000 | 5.30% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Tranche 1) | 19TCL01 | ||||||||
| 112905 | 17 May 2019 | 20 May 2019 | 20 May 2024 | 100,000 | 4.33% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Tranche 2) | 19TCL02 | ||||||||
| 112938 | 19 July 2019 | 23 July 2019 | 23 July 2024 | 100,000 | 4.30% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Tranche 3) | 19TCL03 | ||||||||
| 112983 | 17 October 2019 | 21 October 2019 | 21 October 2024 | 200,000 | 4.20% | Interest payable annually and principal repayable in full upon maturity | Shenzhen Stock Exchange | ||
| TCL Technology Groupo Corporation’s Technology Innovation Short-Term Corporate Bonds Publicly Offered in 2021 to Qualified Investors (Tranche 1) | 21TCLK1 | ||||||||
| 149434 | 25 March 2021 | 29 March 2021 | 25 September 2021 | 50,000 | 3.65% | Principal repayable in full upon maturity with interest | Shenzhen Stock Exchange | ||
| Investor eligibility (if any) | N/A |
| Trading system applicable | N/A |
| Risk of termination of listing and trading (if any) and countermeasures | None |
| Bond name | Abbr. | Bond code | Date of issuance | Value date | Maturity | Outstanding balance (RMB’0,000) | Coupon rate (annualized) | Way of principal repayment and interest payment | Place of transaction |
| TCL Corporation’s Medium-Term Notes in 2018 (Tranche 1) | |||||||||
| 18TCL-MTN001 | 101801408. IB | 2018-11-29 | 2018-12-03 | 2021-12-03 | 200,000 | 4.58% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market | |
| TCL |
| Technology Groupo Corporation’s Medium-Term Notes in 2020 (Tranche 1) | 20TCL-MTN001 | 102000509. IB | 2020-03-25 | 2020-03-27 | 2023-03-27 | 300,000 | 3.60% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market |
| TCL Technology Groupo Corporation’s Medium-Term Notes in 2021 (Tranche 1) (High-Growth Debt) | |||||||||
| 21TCL-MTN001 (High-Growth Debt) | |||||||||
| 102100966. IB | 2021-05-10 | 2021-05-12 | 2024-05-12 | 200,000 | 4.15% | Interest payable annually and principal repayable in full upon maturity | Inter-bank market | ||
| Investor eligibility (if any) | N/A | ||||||||
| Trading system applicable | N/A | ||||||||
| Risk of termination of listing and trading (if any) and countermeasures | None | ||||||||
| Name | Price before adjustment (RMB/share) | Adjusted price (RMB/share) | Commencement date for the adjustment |
| TCL Private Convertible 1（convertible bond code：124016） | 3.91 | 3.79 | 19 May 2021 |
| TCL Private Convertible 2（convertible bond code：124017） | 8.00 | 7.88 | 19 May 2021 |
| Serial No. | Name of holder | Nature of holder | Number of convertible corporate bonds held at the period-end | Amount of convertible corporate bonds held at the period-end (RMB) | Percentage of convertible corporate bonds held at the period-end |
| 1 | Wuhan Optics Valley Industrial Investment Co., Ltd. | State-owned legal person | 6,000,000 | 600,000,000 | 100.00% |
| Serial No. | Name of holder | Nature of holder | Number of convertible corporate bonds held at the period-end | Amount of convertible corporate bonds held at the period-end (RMB) | Percentage of convertible corporate bonds held at the period-end |
| 1 | GF Securities Co., Ltd. | Domestic general legal person | 3,900,000 | 390,000,000 | 15.00% |
| 2 | Guosen Securities Co., Ltd. | State-owned legal person | 3,000,000 | 300,000,000 | 11.54% |
| 3 | Fullgoal Fund Management Co., Ltd. | Domestic general legal person | 2,500,000 | 250,000,000 | 9.62% |
| 4 | Western Securities Co., Ltd. | State-owned legal person | 1,700,000 | 170,000,000 | 6.54% |
| 5 | China Life Pension Sustaining Fixed Income Pension Product No. 9- China Merchants Bank Co., Ltd. | Fund, wealth management product, etc. | 1,300,000 | 130,000,000 | 5.00% |
| 6 | China Life Pension Hongxin Fixed Income Pension Product- Industrial And Commercial Bank Of China Limited | Fund, wealth management product, etc. | 1,300,000 | 130,000,000 | 5.00% |
| 7 | ICBC Credit Suisse Asset Management Co., Ltd. | Domestic general legal person | 1,000,000 | 100,000,000 | 3.85% |
| 8 | Shenwan Hongyuan Group Co., Ltd. | Domestic general legal person | 1,000,000 | 100,000,000 | 3.85% |
| 9 | China Life Yongfeng Enterprise Annuity Collective Plan- Agricultural Bank Of China Limited | Fund, wealth management product, etc. | 1,000,000 | 100,000,000 | 3.85% |
| 10 | China Life Insurance (Group) Company Enterprise Annuity Plan- Agricultural Bank Of China Limited | Fund, wealth management product, etc. | 1,000,000 | 100,000,000 | 3.85% |
| Item | 30 June 2021 | 31 December 2020 | Change |
| Current ratio | 105.64% | 92.50% | 13.14% |
| Debt/asset ratio | 65.17% | 65.08% | 0.09% |
| Quick ratio | 78.66% | 66.36% | 12.30% |
| H1 2021 | H1 2020 | Change | |
| Net profit before non-recurring gains and losses | 7,741,176,412 | -10,667,258 | 72669.51% |
| Debt/EBITDA ratio | 10.68% | 5.12% | 5.56% |
| Interest cover (times) | 5.12 | 1.22 | 319.02% |
| Cash-to-interest cover (times) | 7.23 | 5.81 | 24.48% |
| EBITDA-to-interest cover (times) | 8.55 | 3.93 | 117.66% |
| Debt repayment ratio (%) | 100% | 100% | 0.00 |
| Interest payment ratio (%) | 100% | 100% | 0.00 |
TCL Technology Group CorporationPart IX Unaudited Financial Statements
(For the period from 1 January 2021 to 30 June 2021)
| Contents | Page | ||
| I | Unaudited Financial Statements | ||
| 1．Consolidated Balance Sheet | 1-2 | ||
| 2．Consolidated Income Statement | 3 | ||
| 3．Consolidated Cash Flow Statement | 4-5 | ||
| 4．Consolidated Statement of Changes in Shareholders’ Equity | 6-7 | ||
| 5．Balance Sheet of the Company as the Parent | 8-9 | ||
| 6．Income Statement of the Company as the Parent | 10 | ||
| 7．Cash Flow Statement of the Company as the Parent | 11-12 | ||
| 8．Statement of Changes in Shareholders’ Equity of the Company as the Parent | 13-14 | ||
| 9．Notes to Financial Statements | 15-161 |
| Assets: Current assets: | Note V | 30 June 2021 | 31 December 2020 | |||||||
| Monetary assets | 1 | 27,374,279 | 21,708,905 | |||||||
| Held-for-trading financial assets | 2 | 9,548,577 | 5,300,046 | |||||||
| Derivative financial assets | 3 | 139,396 | 453,578 | |||||||
| Notes receivable | 4 | 2,626,222 | 595,685 | |||||||
| Accounts receivable | 5 | 18,908,014 | 12,557,614 | |||||||
| Receivables financing | 6 | 1,725,478 | 2,176,744 | |||||||
| Prepayments | 7 | 2,439,441 | 1,355,653 | |||||||
| Other receivables | 8 | 3,523,014 | 2,793,640 | |||||||
| Inventories | 9 | 13,900,810 | 8,834,958 | |||||||
| Contract assets | 10 | 241,093 | 183,650 | |||||||
| Assets held for sale | 11 | 217,314 | 360,936 | |||||||
| Other current assets | 12 | 8,701,788 | 9,367,055 | |||||||
| Total current assets | 89,345,426 | 65,688,464 | ||||||||
| Non-current assets: | ||||||||||
| Loans and advances to customers | 13 | 288,749 | 981,876 | |||||||
| Debt investments | 14 | - | 119,350 | |||||||
| Other debt investments | 15 | 91,976 | 152,063 | |||||||
| Long-term receivables | 16 | 809,720 | 778,889 | |||||||
| Long-term equity investments | 17 | 25,541,631 | 24,047,036 | |||||||
| Investments in other equity instruments | 18 | 1,100,185 | 1,333,676 | |||||||
| Other non-current financial assets | 19 | 2,458,139 | 3,055,595 | |||||||
| Investment property | 20 | 725,250 | 1,664,201 | |||||||
| Fixed assets | 21 | 104,520,658 | 92,829,902 | |||||||
| Construction in progress | 22 | 37,181,286 | 31,508,311 | |||||||
| Right-of-use assets | 23 | 1,984,255 | - | |||||||
| Intangible assets | 24 | 12,430,511 | 10,054,045 | |||||||
| Development costs | 25 | 2,522,995 | 2,103,995 | |||||||
| Goodwill | 26 | 9,125,489 | 6,943,265 | |||||||
| Long-term prepaid expense | 27 | 1,565,459 | 2,536,670 | |||||||
| Deferred income tax assets | 28 | 2,095,661 | 1,578,088 | |||||||
| Other non-current assets | 29 | 10,418,091 | 12,532,853 | |||||||
| Total non-current assets | 212,860,055 | 192,219,815 | ||||||||
| Total assets | 302,205,481 | 257,908,279 | ||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||
| Liabilities and shareholders’ equity: Current liabilities: | Note V | 30 June 2021 | 31 December 2020 | |
| Short-term borrowings | 30 | 9,022,205 | 12,263,714 | |
| Borrowings from central bank | 31 | 1,104,750 | 469,834 | |
| Customer deposits and deposits from other banks and financial institutions | 32 | 2,247,362 | 2,850,139 | |
| Held-for-trading financial liabilities | 33 | 1,134,251 | 527,901 | |
| Derivative financial liabilities | 34 | 129,382 | 384,904 | |
| Notes payable | 35 | 5,408,824 | 4,725,612 | |
| Accounts payable | 36 | 24,863,736 | 16,468,932 | |
| Advances from customers | 37 | 41,155 | 78,597 | |
| Contract liabilities | 38 | 2,635,068 | 2,004,004 | |
| Financial assets sold under repurchase agreements | 39 | - | 50,080 | |
| Employee benefits payable | 40 | 2,618,595 | 1,856,664 | |
| Taxes and levies payable | 41 | 1,417,716 | 670,059 | |
| Other payables | 42 | 19,599,708 | 14,869,433 | |
| Current portion of non-current liabilities | 43 | 13,658,542 | 13,429,670 | |
| Other current liabilities | 44 | 695,655 | 366,971 | |
| Total current liabilities | 84,576,949 | 71,016,514 | ||
| Non-current liabilities | ||||
| Long-term borrowings | 45 | 88,663,620 | 73,589,403 | |
| Bonds payable | 46 | 17,663,129 | 18,040,773 | |
| Lease liabilities | 47 | 886,515 | - | |
| Long-term payables | 48 | 528,172 | 1,280,300 | |
| Long-term employee benefits payable | 40 | 27,482 | 27,858 | |
| Deferred income | 49 | 1,589,724 | 1,509,867 | |
| Deferred income tax liabilities | 28 | 3,024,467 | 2,386,497 | |
| Total non-current liabilities | 112,383,109 | 96,834,698 | ||
| Total liabilities | 196,960,058 | 167,851,212 | ||
| Share capital | 50 | 14,030,788 | 14,030,788 | |
| Other equity instruments | 51 | 230,241 | 230,241 | |
| Capital reserves | 52 | 4,135,444 | 5,442,385 | |
| Less: Treasury stock | 53 | 2,195,019 | 1,913,029 | |
| Other comprehensive income | 74 | (381,394) | (145,573) | |
| Surplus reserves | 54 | 2,452,892 | 2,452,892 | |
| Specific reserve | 55 | 667 | 211 | |
| General reserve | 56 | 361 | 386 | |
| Retained earnings | 57 | 19,283,685 | 14,009,494 | |
| Total equity attributable to shareholders of the Company as the parent | 37,557,665 | 34,107,795 | ||
| Non-controlling interests 67,687,758 | 55,949,272 | |||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
| 5.1 Other comprehensive income that will not be reclassified to profit or loss | (184,359) | (13,382) | ||||||||
| 5.2 Other comprehensive income that may subsequently be reclassified to profit or loss upon satisfaction of prescribed condition | (33,130) | (75,558) | ||||||||
| 6. Total comprehensive income | 9,034,478 | 980,184 | ||||||||
| Attributable to shareholders of the Company as the parent | 6,548,064 | 1,139,598 | ||||||||
| Attributable to non-controlling interests | 2,486,414 | (159,414) | ||||||||
| 7. Earnings per share | 75 | |||||||||
| 7.1 Basic earnings per share (RMB yuan/share) | 0.5026 | 0.0932 | ||||||||
| 7.2 Diluted earnings per share (RMB yuan/share) | 0.4835 | 0.0893 | ||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||
| 1. | Cash flows from operating activities： | Note V | H1 2021 | H1 2020 | |
| Proceeds from sale of commodities and rendering of services | 60,061,126 | 30,776,853 | |||
| Net increase/(decrease) in customer deposits and deposits from other banks and financial institutions | (602,777) | 2,262,400 | |||
| Net increase/(decrease) in borrowings from central bank | 634,916 | 831,500 | |||
| Net increase in loans from other financial institutions | - | 500,000 | |||
| Interest, fees and commissions received | 74,133 | 85,692 | |||
| Tax and levy rebates | 2,530,415 | 1,409,112 | |||
| Cash generated from other operating activities | 76 | 5,032,866 | 1,133,384 | ||
| Subtotal of cash generated from operating activities | 67,730,679 | 36,998,941 | |||
| Payments for commodities and services | (42,679,165) | (23,358,384) | |||
| Net (increase)/decrease in loans and advances to customers | (720,348) | (106,115) | |||
| Net (increase)/decrease in deposits in central bank and other banks and financial institutions | (309,934) | 319,970 | |||
| Cash paid to and for employees | (4,424,050) | (2,545,709) | |||
| Taxes and levies paid | (2,179,393) | (2,253,748) | |||
| Cash used in other operating activities | 77 | (3,522,074) | (1,707,145) | ||
| Subtotal of cash used in operating activities | (53,834,964) | (29,651,131) | |||
| Net cash generated from in operating activities | 82 | 13,895,715 | 7,347,810 | ||
| 2. Cash flows from investing activities： Proceeds from disinvestment | 13,223,437 | 10,040,824 | |||
| Return on investment | 945,622 | 245,980 | |||
| Net proceeds from the disposal of subsidiaries and other business units | 511,576 | 199,303 | ||||||||
| Cash generated from other investing activities | 78 | 7,079 | - | |||||||
| Subtotal of cash generated from investing activities | 14,815,119 | 10,486,253 | ||||||||
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | (13,684,031) | (12,491,013) | ||||||||
| Payments for investments | (17,853,045) | (15,202,884) | ||||||||
| Net payments for the acquisition of subsidiaries and other business units | (4,139,505) | - | ||||||||
| Cash used in other investing activities | 79 | (101,676) | (920) | |||||||
| Subtotal of cash used in investing activities | (35,778,257) | (27,694,817) | ||||||||
| Net cash used in investing activities | (20,963,138) | (17,208,564) | ||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||
| 3. Cash flows from financing activities： | Note V | H1 2021 | H1 2020 | |
| Capital contributions received | 8,413,591 | 2,262,240 | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | 8,413,591 | 2,262,240 | ||
| Borrowings raised | 34,898,543 | 28,360,521 | ||
| Net proceeds from issuance of bonds | 2,499,800 | 4,403,000 | ||
| Cash generated from other financing activities | 80 | 249,287 | 71,503 | |
| Subtotal of cash generated from financing activities | 46,061,221 | 35,097,264 | ||
| Repayment of borrowings | (25,245,482) | (18,182,122) | ||
| Interest and dividends paid | (4,358,673) | (3,066,421) | ||
| Including: Dividends paid by subsidiaries to non-controlling interests | (219,635) | (275,264) | ||
| Cash used in other financing activities | 81 | (3,060,099) | (612,872) | |
| Subtotal of cash used in financing activities | (32,664,254) | (21,861,415) | ||
| Net cash generated from financing activities | 13,396,967 | 13,235,849 | ||
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | (44,249) | 13,317 | ||
| 5. Net increase in cash and cash equivalents | 6,285,295 | 3,388,412 | ||
| Add: Cash and cash equivalents, beginning of the period | 18,208,417 | 17,637,743 | ||
| 6. Cash and cash equivalents, end of the period | 83 | 24,493,712 | 21,026,155 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
| H1 2021 | |||||||||||||||||||||||||||||
| Equity attributable to shareholders of the Company as the parent | Non-controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Specific reserve | Other comprehensive income | Surplus reserves | General reserve | Retained earnings | |||||||||||||||||||||
| 1. Balance as at the end of the prior year | 14,030,788 | 230,241 | 5,442,385 | (1,913,029) | 211 | (145,573) | 2,452,892 | 386 | 14,009,494 | 55,949,272 | 90,057,067 | ||||||||||||||||||
| Add: Adjustment for change in accounting policy | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
| 2. Balance as at the beginning of the year | 14,030,788 | 230,241 | 5,442,385 | (1,913,029) | 211 | (145,573) | 2,452,892 | 386 | 14,009,494 | 55,949,272 | 90,057,067 | ||||||||||||||||||
| 3. Increase/decrease in the period | - | - | (1,306,941) | (281,990) | 456 | (235,821) | - | (25) | 5,274,191 | 11,738,486 | 15,188,356 | ||||||||||||||||||
| 3.1 Total comprehensive income | - | - | - | - | (119,950) | - | - | 6,783,885 | 2,486,414 | 9,150,349 | |||||||||||||||||||
| 3.2 Capital increased and reduced by shareholders | - | - | (1,306,941) | (281,990) | - | - | - | - | - | 9,503,873 | 7,914,942 | ||||||||||||||||||
| 3.2.1 Capital increased by shareholders | - | - | - | - | - | - | - | - | - | 8,424,541 | 8,424,541 | ||||||||||||||||||
| 3.2.2 Share-based payments included in owners’ equity | - | - | 122 | 118,064 | - | - | - | - | - | - | 118,186 | ||||||||||||||||||
| 3.2.3 Bonds included in owners’ equity | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
| 3.2.4 Others | - | - | (1,307,063) | (400,054) | - | - | - | - | - | 1,079,332 | (627,785) | ||||||||||||||||||
| 3.3 Profit distribution | - | - | - | - | 456 | - | - | (25) | (1,625,565) | (251,801) | (1,876,935) | ||||||||||||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
| 3.3.2 Appropriation to general reserve | - | - | - | - | 456 | - | - | (25) | 25 | - | 456 | ||||||||||||||||||
| 3.3.3 Appropriation to shareholders | - | - | - | - | - | - | - | - | (1,625,590) | (251,801) | (1,877,391) | ||||||||||||||||||
| 3.3.4 Others | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
| 3.4 Transfers within owners’ equity | - | - | - | - | - | (115,871) | - | - | 115,871 | - | - | ||||||||||||||||||
| 3.4.1 Other comprehensive income transferred to retained earnings | - | - | - | - | - | (115,871) | - | - | 115,871 | - | - | ||||||||||||||||||
| 4. Balance as at the end of the period | 14,030,788 | 230,241 | 4,135,444 | (2,195,019) | 667 | (381,394) | 2,452,892 | 361 | 19,283,685 | 67,687,758 | 105,245,423 | ||||||||||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | ||||||||||||||||||||||||
| 2020 | |||||||||||||||||||||||||||||
| Equity attributable to shareholders of the Company as the parent | Non-controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Specific reserve | Other comprehensive income | Surplus reserves | General reserve | Retained earnings | |||||||||||||||||||||
| 1. Balance as at the end of the prior year | 13,528,439 | - | 5,716,667 | (1,952,957) | - | (534,082) | 2,238,368 | 361 | 11,115,150 | 33,771,198 | 63,883,144 | ||||||||||||||||||
| Add: Adjustment for change in accounting policy | - | - | - | - | - | - | - | - | (83) | (99) | (182) | ||||||||||||||||||
| 2. Balance as at the beginning of the year | 13,528,439 | - | 5,716,667 | (1,952,957) | - | (534,082) | 2,238,368 | 361 | 11,115,067 | 33,771,099 | 63,882,962 | ||||||||||||||||||
| 3. Increase/decrease in the period | 502,349 | 230,241 | (274,282) | 39,928 | 211 | 388,509 | 214,524 | 25 | 2,894,427 | 22,178,173 | 26,174,105 | ||||||||||||||||||
| 3.1 Total comprehensive income | - | - | - | - | 388,481 | - | - | 4,388,159 | 696,089 | 5,472,729 | |||||||||||||||||||
| 3.2 Capital increased and reduced by shareholders | 502,349 | 230,241 | (274,282) | 39,928 | - | - | - | - | - | 21,740,157 | 22,238,393 | ||||||||||||||||||
| 3.2.1 Capital increased by shareholders | 511,509 | - | 1,488,791 | - | - | - | - | - | - | 3,273,095 | 5,273,395 | ||||||||||||||||||
| 3.2.2 Share-based payments included in owners’ equity | (9,160) | - | (16,814) | 39,928 | - | - | - | - | - | - | 13,954 | ||||||||||||||||||
| 3.2.3 Bonds included in owners’ equity | - | 230,241 | - | - | - | - | - | - | - | - | 230,241 | ||||||||||||||||||
| 3.2.4 Others | - | - | (1,746,259) | - | - | - | - | - | - | 18,467,062 | 16,720,803 | ||||||||||||||||||
| 3.3 Profit distribution | - | - | - | - | 211 | - | 214,524 | 25 | (1,493,704) | (258,073) | (1,537,017) | ||||||||||||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | - | 214,524 | - | (214,524) | 16,983 | 16,983 | ||||||||||||||||||
| 3.3.2 Appropriation to general reserve | - | - | - | - | - | - | - | 25 | (25) | - | |||||||||||||||||||
| 3.3.3 Appropriation to shareholders | - | - | - | - | - | - | - | - | (1,279,155) | (275,056) | (1,554,211) | ||||||||||||||||||
| 3.3.4 Others | - | - | - | - | 211 | - | - | - | - | - | 211 | ||||||||||||||||||
| 3.4 Transfers within owners’ equity | - | - | - | - | - | 28 | - | - | (28) | - | - | ||||||||||||||||||
| 3.4.1 Other comprehensive income transferred to retained earnings | - | - | - | - | - | 28 | - | - | (28) | - | - | ||||||||||||||||||
| 4. Balance as at the end of the period | 14,030,788 | 230,241 | 5,442,385 | (1,913,029) | 211 | (145,573) | 2,452,892 | 386 | 14,009,494 | 55,949,272 | 90,057,067 | ||||||||||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | ||||||||||||||||||||||||
| Assets Current assets | Note XV | 30 June 2021 | 31 December 2020 | |
| Monetary assets | 7,960,888 | 2,208,790 | ||
| Held-for-trading financial assets | 6,191,177 | 1,221,657 | ||
| Notes receivable | 9,160 | 6,000 | ||
| Accounts receivable | 1 | 292,772 | 175,787 | |
| Prepayments | 53,948 | 97,963 | ||
| Other receivables | 2 | 10,837,350 | 25,555,924 | |
| Inventories | 20,092 | 5,997 | ||
| Other current assets | 2,064,721 | 2,333 | ||
| Total current assets | 27,430,108 | 29,274,451 | ||
| Non-current assets | ||||
| Long-term equity investments | 3 | 71,620,969 | 65,094,459 | |
| Investments in other equity instruments | 4 | 15,000 | 15,000 | |
| Other non-current financial assets | 5 | 1,172,821 | 1,145,022 | |
| Investment property | 86,718 | 88,687 | ||
| Fixed assets | 41,932 | 46,012 | ||
| Construction in progress | 2,358 | 11,441 | ||
| Right-of-use assets | 463,840 | - | ||
| Intangible assets | 56,739 | 42,311 | ||
| Long-term prepaid expense | 30,100 | 469,425 | ||
| Deferred income tax assets | 7 | 7 | ||
| Total non-current assets | 73,490,484 | 66,912,364 | ||
| Total assets | 100,920,592 | 96,186,815 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
TCL Technology Group CorporationBalance Sheet of the Company as the Parent (Continued)
(RMB’000)
(RMB’000)
| Liabilities and shareholders’ equity: Current liabilities | Note XV | 30 June 2021 | 31 December 2020 | |||||||||
| Short-term borrowings | 3,286,694 | 3,670,231 | ||||||||||
| Derivative financial liabilities Notes payable Accounts payable | 14,095 - 299,910 | 16,513 - 129,701 | ||||||||||
| Advances from customers | 1,482 | - | ||||||||||
| Contract liabilities | 18,194 | 1,872 | ||||||||||
| Employee benefits payable | 264,703 | 220,510 | ||||||||||
| Taxes and levies payable | 12,587 | 26,071 | ||||||||||
| Other payables | 30,769,244 | 26,377,029 | ||||||||||
| Current portion of non-current liabilities | 6,452,300 | 6,141,029 | ||||||||||
| Other current liabilities | 774 | 316 | ||||||||||
| Total current liabilities | 41,119,983 | 36,583,272 | ||||||||||
| Non-current liabilities Long-term borrowings | 13,022,000 | 12,087,500 | ||||||||||
| Bonds payable | 14,333,447 | 14,092,345 | ||||||||||
| Lease liabilities | 19,774 | - | ||||||||||
| Long-term employee benefits payable | 21,618 | 21,991 | ||||||||||
| Deferred income | 44,258 | 42,652 | ||||||||||
| Total non-current liabilities | 27,441,097 | 26,244,488 | ||||||||||
| Total liabilities | 68,561,080 | 62,827,760 | ||||||||||
| Share capital | 14,030,788 | 14,030,788 | ||||||||||
| Other equity instruments | 230,241 | 230,241 | ||||||||||
| Capital reserves | 9,825,536 | 9,846,835 | ||||||||||
| Less: Treasury stock | 2,195,019 | 1,913,029 | ||||||||||
| Other comprehensive income | (10,041) | 141,998 | ||||||||||
| Surplus reserves | 2,250,828 | 2,250,828 | ||||||||||
| Retained earnings | 8,227,179 | 8,771,394 | ||||||||||
| Total shareholders’ equity | 32,359,512 | 33,359,055 | ||||||||||
| Total liabilities and shareholders’ equity | 100,920,592 | 96,186,815 | ||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||||
| Note XV | H1 2021 | H1 2020 | ||
| 1. Revenue | 6 | 773,672 | 486,384 | |
| Less: Cost of sales | 6 | 635,555 | 384,058 | |
| Taxes and levies | 9,370 | 4,022 | ||
| Selling expense | 14,403 | 11,918 | ||
| Administrative expense | 228,082 | 141,988 | ||
| R&D expense | 64,151 | 51,618 | ||
| Finance costs | 840,141 | 543,831 | ||
| Including: Interest expense | 1,232,115 | 844,394 | ||
| Interest income | 411,290 | 303,902 | ||
| Add: Other income | 1,757 | 15,329 | ||
| Return on investment | 7 | 1,851,151 | 1,391,855 | |
| Including: Share of profit or loss of joint ventures and associates | 7 | 627,705 | 617,216 | |
| Gain on changes in fair value | 41,889 | 98,825 | ||
| Credit impairment loss Asset disposal income | 19 - | 601 - | ||
| 2. Operating profit | 876,786 | 855,559 | ||
| Add: Non-operating income | 206,554 | 486,288 | ||
| Less: Non-operating expense | 1,965 | 7,579 | ||
| 3. Gross profit Less: Income tax expense | 1,081,375 - | 1,334,268 - | ||
| 4. Net profit | 1,081,375 | 1,334,268 | ||
| 5. Other comprehensive income | (152,039) | 64,718 | ||
| 6. Total comprehensive income | 929,336 | 1,398,986 | ||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
TCL Technology Group CorporationCash Flow Statement of the Company as the Parent
(RMB’000)
(RMB’000)
| Note XV | H1 2021 | H1 2020 | |||
| 1. Cash flows from operating activities： | |||||
| Proceeds from sale of commodities and rendering of services | 618,146 | 832,527 | |||
| Tax and levy rebates | - | 1,073 | |||
| Cash generated from other operating activities | 21,091,888 | 112,440 | |||
| Subtotal of cash generated from operating activities | 21,710,034 | 946,040 | |||
| Payments for commodities and services | (487,959) | (717,268) | |||
| Cash paid to and for employees | (97,433) | (108,049) | |||
| Taxes and levies paid | (133,486) | (19,721) | |||
| Cash used in other operating activities | (1,102,683) | (964,363) | |||
| Subtotal of cash used in operating activities | (1,821,561) | (1,809,401) | |||
| Net cash generated from operating activities | 8 | 19,888,473 | (863,361) | ||
| 2. Cash flows from investing activities： Proceeds from disinvestment | 7,176,816 | 3,069,748 | |||
| Return on investment | 1,855,032 | 4,989,820 | |||
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | - | 1 | |||
| Subtotal of cash generated from investing activities | 9,031,848 | 8,059,569 | |||
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | (15,930) | (12,165) | |||
| Payments for investments | (20,669,875) | (10,584,137) | |||
| Cash used in other investing activities | - | (920) | |||
| Subtotal of cash used in investing activities | (20,685,805) | (10,597,222) | |||
| Net cash used in investing activities | ( 11,653,957) | (2,537,653) | |||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
TCL Technology Group CorporationCash Flow Statement of the Company as the Parent (Continued)
(RMB’000)
(RMB’000)
| 3. Cash flows from financing activities： | Note XV | H1 2021 | H1 2020 | |
| Capital contributions received | - | - | ||
| Borrowings raised | 8,200,000 | 19,360,252 | ||
| Net proceeds from issuance of bonds | 2,499,800 | 4,403,000 | ||
| Cash generated from other financing activities | - | 60,000 | ||
| Subtotal of cash generated from financing activities | 10,699,800 | 23,823,252 | ||
| Repayment of borrowings | (10,571,804) | (10,824,628) | ||
| Interest and dividends paid | (2,236,916) | (1,707,229) | ||
| Cash used in other financing activities | (409,734) | (16,524) | ||
| Subtotal of cash used in financing activities | (13,218,454) | (12,548,381) | ||
| Net cash generated from/used in financing activities | (2,518,654) | 11,274,871 | ||
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | (18,448) | (3,269) | ||
| 5. Net increase in cash and cash equivalents | 5,697,414 | 7,870,588 | ||
| Add: Cash and cash equivalents, beginning of the period | 2,196,283 | 3,941,090 | ||
| 6. Cash and cash equivalents, end of the period | 9 | 7,893,697 | 11,811,678 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
TCL Technology Group CorporationStatement of Changes in Shareholders’ Equity of the Company as the Parent
(RMB’000)
| H1 2021 | ||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | |||||||||||||
| 1. Balance as at the end of the prior year | 14,030,788 | 230,241 | 9,846,835 | (1,913,029) | 141,998 | 2,250,828 | 8,771,394 | 33,359,055 | ||||||||||||
| Add: Adjustment for change in accounting policy | - | - | - | - | - | - | - | - | ||||||||||||
| 2. Balance as at the beginning of the year | 14,030,788 | 230,241 | 9,846,835 | (1,913,029) | 141,998 | 2,250,828 | 8,771,394 | 33,359,055 | ||||||||||||
| 3. Increase/decrease in the period | - | - | (21,299) | (281,990) | (152,039) | - | (544,215) | (999,543) | ||||||||||||
| 3.1 Total comprehensive income | - | - | - | - | (152,039) | - | 1,081,375 | 929,336 | ||||||||||||
| 3.2 Capital increased and reduced by shareholders | - | - | (21,299) | (281,990) | - | - | - | (303,289) | ||||||||||||
| 3.2.1 Capital increased by owners | - | - | - | - | - | - | - | - | ||||||||||||
| 3.2.2 Share-based payments included in owners’ equity | - | - | (2,960) | 118,064 | - | - | - | 115,104 | ||||||||||||
| 3.2.3 Bonds included in owners’ equity | - | - | - | - | - | - | - | - | ||||||||||||
| 3.2.4 Others | - | - | (18,339) | (400,054) | - | - | - | (418,393) | ||||||||||||
| 3.3 Profit distribution | - | - | - | - | - | - | (1,625,590) | (1,625,590) | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | - | - | - | ||||||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | - | (1,625,590) | (1,625,590) | ||||||||||||
| 3.3.3 Others | - | - | - | - | - | - | - | - | ||||||||||||
| 4. Balance as at the end of the period | 14,030,788 | 230,241 | 9,825,536 | (2,195,019) | (10,041) | 2,250,828 | 8,227,179 | 32,359,512 | ||||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||||||||||||
TCL Technology Group CorporationStatement of Changes in Shareholders’ Equity of the Company as the Parent (Continued)
(RMB’000)
| 2020 | ||||||||||||||||||||
| Share capital | Other equity instruments | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | |||||||||||||
| 1. Balance as at the end of the prior year | 13,528,439 | - | 8,382,776 | (1,952,957) | 56,064 | 2,036,304 | 8,119,833 | 30,170,459 | ||||||||||||
| Add: Adjustment for change in accounting policy | - | - | - | - | - | - | - | - | ||||||||||||
| 2. Balance as at the beginning of the year | 13,528,439 | - | 8,382,776 | (1,952,957) | 56,064 | 2,036,304 | 8,119,833 | 30,170,459 | ||||||||||||
| 3. Increase/decrease in the period | 502,349 | 230,241 | 1,464,059 | 39,928 | 85,934 | 214,524 | 651,561 | 2,958,355 | ||||||||||||
| 3.1 Total comprehensive income | - | - | - | - | 85,934 | - | 2,145,240 | 2,231,174 | ||||||||||||
| 3.2 Capital increased and reduced by shareholders | 502,349 | 230,241 | 1,464,059 | 39,928 | - | - | - | 2,236,577 | ||||||||||||
| 3.2.1 Capital increased by owners | 511,509 | - | 1,488,791 | - | - | - | - | 2,000,300 | ||||||||||||
| 3.2.2 Share-based payments included in owners’ equity | (9,160) | - | (20,025) | 39,928 | - | - | - | 10,743 | ||||||||||||
| 3.2.3 Bonds included in owners’ equity | - | 230,241 | - | - | - | - | - | 230,241 | ||||||||||||
| 3.2.4 Others | - | - | (4,707) | - | - | - | - | (4,707) | ||||||||||||
| 3.3 Profit distribution | - | - | - | - | - | 214,524 | (1,493,679) | (1,279,155) | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | 214,524 | (214,524) | - | ||||||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | - | (1,279,155) | (1,279,155) | ||||||||||||
| 3.3.3 Others | - | - | - | - | - | - | - | - | ||||||||||||
| 4. Balance as at the end of the period | 14,030,788 | 230,241 | 9,846,835 | (1,913,029) | 141,998 | 2,250,828 | 8,771,394 | 33,359,055 | ||||||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||||||||||||
TCL Technology Group CorporationNotes to Financial Statements(For the period from 1 January 2021 to 30 June 2021)(The amounts in tables are expressed in thousands of RMB)
| I | General information |
| (I) | Place of incorporation and form of organization |
| TCL Technology Group Corporation (hereinafter referred to as the “Company”) is a limited liability company incorporated in the People's Republic of China (hereinafter referred to as "China") on 17 July 1997 under the Company Law of the People's Republic of China (hereinafter referred to as the “Company Law”). As per the approval documents of YBH [2002] No. 94 and YFH [2002] No. 134 issued by the People’s Government of Guangdong Province, and YJMH [2002] No. 112 and YJMH [2002] No. 184 issued by the Economic and Trade Commission of Guangdong Province, the Company was changed to a joint stock limited company with a registered capital of RMB1,591,935,200, which was approved by Guangdong Province Administration for Industry and Commerce on 19 April 2002. The registration number is 4400001009990. Upon the approval of ZJFXZ [2004] Document No. 1 issued by the China Securities Regulatory Commission (CSRC) on 2 January 2004, the Company was allowed to issue 590,000,000 shares to the public on 7 January 2004 and 404,395,944 ordinary shares denominated in RMB (A shares) to all public shareholders of TCL Communication Equipment Co., Ltd. (hereinafter referred to as " TCL Communication Equipment") in a stock-for-stock deal, which were listed on the Shenzhen Stock Exchange on 30 January 2004. The shares issued to the public were all priced online, with a par value of RMB1 and an issue price of RMB4.26 per share, raising a total of RMB2,513,400,000. Upon the completion of this deal, the registered capital of the Company increased to RMB2,586,331,144, and on 16 July 2004, the Company was approved by the Guangdong Province Administration for Industry and Commerce to change its business license to Business License QGYZZ No. 003362. Upon the completion of the shareholder structure reform and the expiration of the share lockup period, the foreign shareholding ratio in the Company was less than 10%. On 11 September 2007, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. Upon the approval of the CSRC on 7 January 2009 with the ZJXK [2009] Document No. 12, the Company privately placed 350,600,000 ordinary shares denominated in RMB (A shares) to designated investors on 23 April 2009, with a par value of RMB1 and an issue price of RMB2.58 per share, raising a total of RMB904,548,000. Upon the completion of this deal, the registered capital of the Company increased from RMB2,586,331,144 to RMB2,936,931,144, and on 2 June 2009, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. Upon the approval of the CSRC on 27 May 2010 with the ZJXK [2010] Document No. 719, the Company privately placed 1,301,178,273 ordinary shares denominated in RMB (A shares) to designated investors on 26 July 2010, with a par value of RMB1 and an issue price of RMB3.46 per share, raising a total of RMB4,502,076,824.58. Upon the completion of this deal, the registered capital of the Company increased from RMB2,936,931,144 to RMB4,238,109,417, and on 19 September 2010, the Company was approved by Guangdong Province Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. On 19 May 2011, the Company carried out a bonus issue of 10 additional shares for every 10 shares to all the shareholders with capital reserves, representing a total of 4,238,109,417 new shares, with a par value of RMB1 per share. Upon the completion of this bonus issue, the registered capital of the Company increased from RMB4,238,109,417 to RMB8,476,218,834, and on 27 June 2011, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. During the years of 2013 and 2014, the exercise of 58,870,080 stock options increased the total share capital of the Company from 8,476,218,834 shares to 8,535,088,914 shares. |
| I | General information (continued) |
| (I) | Place of incorporation and form of organization (continued) |
| Upon the approval of the CSRC on 13 February 2014 with the ZJXK [2014] Document No. 201, the Company privately placed 917,324,357 ordinary shares denominated in RMB (A shares) to designated investors on 30 April 2014, with a par value of RMB1 and an issue price of RMB2.18 per share, raising a total of RMB1,999,767,098.26. Upon the completion of this deal, the registered capital of the Company increased from RMB8,535,088,914 to RMB9,452,413,271, and on 10 June 2014, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 440000000011990. In the year of 2015, 48,357,920 stock options were exercised under an incentive plan of the Company, and upon the approval of the CSRC on 28 January 2015 with the ZJXK [2015] Document No.151, the Company issued 2,727,588,511 shares in a private placement. As such, the total share capital of the Company increased from 9,452,413,271 shares to 12,228,359,702 shares. In the year of 2016, 923,340 stock options were exercised under an incentive plan of the Company, and the share capital of the Company increased from 12,228,359,702 shares to 12,229,283,042 shares. Later, 15,601,300 shares were repurchased and retired, and the share capital of the Company decreased from 12,229,283,042 shares to 12,213,681,742 shares. On 26 April 2016, the Company was approved by Huizhou Administration for Industry and Commerce to change its business license to Business License No. 91441300195971850Y (unified social credit code). In the year of 2017, the Company purchased an interest in subsidiary TCL China Star Optoelectronics Technology Co., Ltd. by means of a new issue of 1,301,290,321 shares. Upon the completion of this deal, the total share capital of the Company increased from 12,213,681,742 shares to 13,514,972,063 shares. In 2018, the Proposal on the Grant of Restricted Stock to Awardees was approved at the 7th Meeting of the 6th Board of Directors, and a total of 34,676,444 shares were subscribed for under the restricted stock incentive plan. Upon the completion of this deal, the total share capital of the Company increased from 13,514,972,063 shares to 13,549,648,507 shares. In 2019, the Company repurchased and retired 21,209,788 restricted shares that had been granted to certain awardees under the 2018 Restricted Stock Incentive Plan & Global Innovation Partner Plan but were still in lockup. As such, the total share capital of the Company decreased from 13,549,648,507 to 13,528,438,719 shares. In 2020, the Proposal on the Intended Change of the Company’s Full Name and Stock Name was approved respectively at the 23rd Meeting of the 6th Board of Directors and the First Extraordinary General Meeting of 2020. As such, the name of the Company has been changed from “TCL Corporation” to “TCL Technology Group Corporation” (abbreviation from “TCL CORP.” to “TCL TECH.”) since 7 February 2020, with the stock name changed from “TCL CORP.” to “TCL TECH.” and the stock code of “000100” unchanged. In July 2020, the Company repurchased and retired 9,159,308 restricted shares that had been granted under the 2018 and 2019 Restricted Stock Incentive Plans but were still in lockup. As such, the total share capital of the Company decreased from 13,528,438,719 to 13,519,279,411 shares. In October 2020, the Company issued 511,508,951 new shares to acquire a non-controlling interest in subsidiary Wuhan China Star Optoelectronics Technology Co., Ltd. As such, the total share capital of the Company increased from 13,519,279,411 to 14,030,788,362 shares. | |
| As at 30 June 2021, the total issued share capital of the Company were 14,030,788,362 shares. Please refer to Note V, 50 for details. | |
| The registered address of the Company is: TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province. | |
| I | General information (continued) |
| (II) | Scope of business |
| The Company and its subsidiaries (collectively referred to as the “Company") are primarily engaged in the research, development, production and sales of semi-conductor, electronic products and communication devices, new optoelectronic products, liquid crystal display devices, import and export of goods and technologies (excluding goods and technologies that are prohibited from import and export or require an administrative approval for import and export), venture capital business and venture capital consultation, entrepreneurial management services for start-up enterprises, participation in the initiation of venture capital institutions and investment management advisory institutions, immovable property leasing, IT services, conference services, computer technical services and development service of electronic products and technologies, development and sale of software, patent transfer, customs clearance services, consulting services, payment and settlement (where any approval from any relevant department is required according to law, it must be obtained before carrying out the relevant operating activities). | |
| (III) | Authorization of financial statements for issue |
| These financial statements were authorized for issue by the Company’s Board of Directors on 9 August 2021. | |
| II | Scope of the consolidated financial statements |
| As at the end of the Reporting Period, for subsidiaries included in the consolidated financial statements, please refer to Note VII, 1, (1) Breakdown of important subsidiaries. For the changes to the scope of the consolidated financial statements of the Reporting Period, see Note VI. | |
| III | Significant accounting policies and accounting 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 the Information Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports” (revised in 2014) published by CSRC. | |
| 2 | Going concern basis |
| The Company has evaluated the ability to continue as a going concern for 12 months from the end of the Reporting Period and has not identified any issues or circumstances that result in significant doubts about its ability to continue as a going concern. Therefore, the financial statements have been prepared on a going concern basis. | |
| 3 | Statement of compliance with corporate accounting standards |
| The financial statements are in compliance with the requirements of the corporate accounting standards, and truly and completely reflect the financial status, operating results, cash flow and other relevant information of the Company during the Reporting Period. |
| III | Significant accounting policies and accounting estimates (continued) |
| 4 | Accounting period |
| The Company adopts the calendar year as accounting year, and a fiscal year is from January 1 to December 31 of the Gregorian calendar. | |
| 5 | Operating cycle |
| The Company does not take the operating cycle as the criteria for liquidity classification of assets and liabilities. | |
| 6 | Base currency for bookkeeping |
| The base currency for bookkeeping and the preparation of financial statements are all in RMB, and are presented in the unit of RMB’000 in all the tables herein unless otherwise specified. | |
| 7 | Accounting treatments for business combinations involving enterprises under and not under common control |
| (1) | When the terms, conditions and economic influence of transactions in the process of a step-by-step combination conform to one or more of the following, accounting for multiple transactions is treated as 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 treated as a whole; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transactions; |
| (d) | A transaction is uneconomical when treated alone, but is economical when considered together with other transactions. |
| (2) | Business combinations involving enterprises under common control |
| (a) | Individual financial statement |
| The assets and liabilities acquired by the Company in business combinations are measured in accordance with the book value of assets and liabilities of the combined party on the date of combination (including the goodwill of the ultimate controlling party resulting from the acquisition of the combined party). The difference between the book value of net assets acquired in the combination and the book value of the consideration paid for the combination (or the total par value of shares issued) is used to adjust the capital stock premium in the capital reserve, and when the capital stock premium in the capital reserve is insufficient for offset, it is used to adjust the retained earnings. If there is a contingent consideration and it is necessary to confirm the provisions or assets, the difference between the estimated amount of liabilities or assets and the settlement amount of subsequent contingent consideration is used to adjust the capital reserve (capital stock premium), and when the capital reserve is insufficient, it is used to adjust the retained earnings. |
| III | Significant accounting policies and accounting estimates (continued) |
| 7 | Accounting treatments for business combinations involving enterprises under and not under common control (continued) |
| (2) | Business combinations involving enterprises under common control (continued) |
| (a) | Individual financial statements (continued) |
| For a business 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 investment and the book value of long-term equity investment before the combination plus the book value of the new paid consideration 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 owner's equity other than net profit or loss, other comprehensive income or profit distribution of net assets of the invested company recognized by equity method are not subject to accounting, and will be transferred to the current profit and loss until the disposal of the investment. | |
| The agency fees paid for audits, legal services, assessments and other related expenses incurred in the business combination are recognized in profit or loss in 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; transaction costs directly related to the issuance of a debt instrument as a combination consideration, are treated as an initial recognized amount included in the debt instrument. | |
| If the combined party has a consolidated financial statement, the initial investment cost of the long-term equity investment is determined based on the owner's equity attributable to the Company as the parent in the consolidated financial statements of the combined party. | |
| (b) | Consolidated financial statements |
| The assets and liabilities acquired by the combining party in the business combination are measured in accordance with the book value of the owner's equity of the combined party in the consolidated financial statements of the ultimate controlling party. | |
| For the case where a business combination is finally realized through multiple transactions, if it is a package transaction, each transaction is treated as a transaction for acquiring control; if it is not a package transaction, the long-term equity investment held by the combing party before the combination, the gains and losses, other comprehensive income and other changes in owners' equity have been recognized between the date of acquisition or the date of the combining party and the combined party under the final control of the same party, whichever is later, and the date of combination, are used to offset the initial retained earnings or current profit and loss during the comparative reporting period respectively. | |
| If the accounting policies adopted by the combined parties are inconsistent with those adopted by the Company, the Company shall make adjustments in accordance with the accounting policies of the Company on the date of combination, and on this basis, confirm the consolidated financial statements in accordance with the provisions of Accounting Standards for Business Enterprises. |
| III | Significant accounting policies and accounting estimates (continued) |
| 7 | Accounting treatments for business combinations involving enterprises under and not under common control (continued) |
| (3) | Business combinations involving enterprises not under common control |
| The assets paid and liabilities incurred or assumed of the Company as a consideration for the business combination are measured at fair value on the date of purchase, and the difference between the fair value and the book value is recognized in profit or loss. Where a future event that may affect the combination costs is agreed in the combination contract, if the estimated future events are likely to occur on the date of purchase and the amount of the impact on combination costs can be reliably measured, it is also included in the combination costs. | |
| The agency fees paid for audits, legal services, assessments and other related expenses incurred in the business combination are recognized in profit or loss in the period in which they are incurred. The transaction costs for the issuance of equity securities for the business combination that may be directly attributed to equity transactions can be deducted from equity. | |
| The difference between the higher combination cost and lower fair value of identifiable net assets of the acquired party gained in the combination is recognized as goodwill by the Company. In case that the cost of combination is less than the fair value of the identifiable net assets of the acquired party gained in the combination, and the difference is still less than the fair value of identifiable net assets of the acquired party gain in the combination after review, the difference is included in the current profit and loss by the Company. | |
| For the case where a business combination involving enterprises not under common control is finally realized through multiple transactions step by step, if it is a package transaction, each transaction is treated as a transaction for acquiring control; if it is not a package transaction; if it is not a package transaction, the individual financial statements and consolidated financial statements are distinguished for related accounting treatment. | |
| (a) | In the individual financial statements, if the equity investment held before the date of combination is accounted for by equity method, the sum of the book value of equity investment of the acquired party held before the date of acquisition plus the new investment cost on the date of acquisition is recognized as the initial cost of the investment; the other comprehensive income confirmed by equity method before the date of acquisition is accounted for, when the investment is disposed, on the same basis as those the invested party adopted directly to dispose the relevant assets or liabilities. |
| If the equity investment held before the date of combination is accounted for by financial instrument recognition and measurement criteria, the sum of the fair value of equity investment on the date of combination plus the new investment cost is taken as the initial investment cost on the date of combination. The difference between the fair value and the book value of the original equity interest, and the accumulated fair value changes originally included in other comprehensive income should be transferred to return on investment in the current period of combination date. | |
| (b) | In the consolidated financial statements, the equity of the acquired party held before the date of acquisition is re-measured according to the fair value of the equity on the date of acquisition. The difference between the fair value and the book value is included in the current return on investment; if the equity of the acquired party involves other comprehensive income under the equity method, etc., other comprehensive income related to it is converted into return on investment in the current period of acquisition date. |
| III | Significant accounting policies and accounting estimates (continued) |
| 8 | Method for compiling consolidated financial statements |
| The scope of consolidation of the Company's consolidated financial statements is determined on the basis of control, and all subsidiaries (including separate entities controlled by the Company as the parent) are included in the consolidated financial statements. | |
| The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with the Company. If the accounting policies or accounting periods adopted by the subsidiaries are inconsistent with the Company, necessary adjustments will be made in accordance with the Company's accounting policies and accounting periods when preparing consolidated financial statements. The consolidated financial statements are based on the financial statements of the Company and its subsidiaries as well as other relevant information, and are prepared by the Company after adjusting the long-term equity investments in the subsidiaries in accordance with the equity method based. | |
| The impact of internal transactions between the Company and its subsidiaries, and internal transactions between subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement and consolidated statement of changes in shareholders’ equity is offset in the preparation of consolidated financial statements. | |
| If the current losses shared by the minority shareholders of a subsidiary exceed the share enjoyed by the minority shareholder in the initial owner's equity of the subsidiary, the balance will still reduce the minority interests. | |
| During the Reporting Period, if a subsidiary or business is added due to the business combination involving enterprises under common control, the opening balance of the consolidated balance sheet is adjusted; the income, expenses and profits of the subsidiary or business from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary or business from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated cash flow statement. If a subsidiary or business is added due to a business combination involving enterprises under non-common control, the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary or business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary or business from the date of acquisition to the end of the Reporting Period are included in the consolidated cash flow statement. | |
| During the Reporting Period, if a subsidiary or business is added due to a business combination involving enterprises not under common control, the opening balance of the consolidated balance sheet is not adjusted; the income, expenses and profits of the subsidiary and business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flows of the subsidiary and business from the date of acquisition to the end of the Reporting Period are included in the consolidated cash flow statement. | |
| During the Reporting Period, if the Company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flows of the subsidiary or business from the beginning of the Reporting Period to the disposal date are included in the consolidated cash flow statement. | |
| III 8 | Significant accounting policies and accounting estimates (continued) Method for compiling consolidated financial statements (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 according to its fair value by the Company on the date of loss of control. The difference of the sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets and goodwill of the original subsidiary that should be enjoyed in accordance with the original share-holding ratio since the date of acquisition or combination, is accounted for the return on investment in the current period of loss of control. Other comprehensive income or net profit and loss related to the original subsidiary's equity investment, other comprehensive income and other changes in owner's equity other than profit distribution, will be converted into current return on investment when control is lost, except for other comprehensive gains arising from the re-measurement of net liabilities of the Benefit Plan made by the invested party or changes in net assets. |
| III | Significant accounting policies and accounting estimates (continued) |
| 9 | Criteria for determining cash and cash equivalents |
| In the preparation of the cash flow statement, the Company recognizes cash holdings and deposits that can be used for payment at any time as cash. | |
| The Company recognizes cash that is easily converted into known amount with short holding period (generally due within three months from the date of purchase) and strong liquidity, and investments with low risk of changes in value (including investments in bonds within three months, while excluding equity investments), as cash equivalents. | |
| 10 | Foreign currency business and translation of foreign currency statement |
| (1) | Foreign currency transactions |
| Foreign currency transactions between the Company and its subsidiaries are translated into base currency at the spot exchange rate on the transaction date. | |
| Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date, and the exchange differences resulted therefrom, except that the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization should be treated in accordance with the principle of capitalization of borrowing costs, are all included in the current profit and loss. Foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the transaction date, and the amount of base currency for bookkeeping is not changed. | |
| Foreign currency non-monetary items measured at fair value are translated at the spot exchange rates on the date when the fair value is determined, and the exchange differences resulted therefrom are included in profit or loss in the current period as a change in fair value. In the case of foreign currency non-monetary items that are at fair value through other comprehensive income, the exchange differences incurred are included in other comprehensive income. |
| (2) | Translation of foreign currency financial statement |
| When the Company translates the financial statements of overseas operations, the assets and liabilities in the balance sheet are translated at the spot exchange rate on the balance sheet date. The owner's equity items, except for the "retained earnings" items, are translated at the spot exchange rate at the time of occurrence of items. All the incurred items in the income statement are translated at the current average exchange rate of the period in which transactions occur. | |
| The translation differences of foreign currency financial statement arising from the above translation are included in other comprehensive income. When disposing of an overseas operation, the translation differences in the foreign currency financial statements related to the foreign operation listed in other comprehensive income items in the balance sheet are transferred from the other comprehensive income item to the current profit and loss. All the incurred items in the cash flow statement are translated at the current average exchange rate of the period in which transactions occur. All the opening balance and actual amount of the previous year are listed on the basis of the amount translated in the previous year. |
| III | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments |
| When the Company becomes a party to a financial instrument, it recognizes a financial asset or liability. | |
| The effective interest method refers to the method of calculating the amortized cost of financial assets or liabilities and allocating interest income or interest expenses into each accounting period. | |
| The effective interest rate refers to the interest rate used to discount the estimated future cash flow of a financial asset or financial liability during its expected duration to the book balance of the financial asset or the amortized cost of the financial liability. When determining the effective interest rate, the expected cash flow is estimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment, extension, call options or other similar options), but the expected credit loss is not considered. | |
| The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the repaid principal from the initial recognition amount of the financial asset or financial liability, adding or subtracting the difference between the initial recognition amount and the maturity amount by using the effective interest method, and then deducting the accumulated accrued loss reserve (only applicable to financial assets). | |
| (1) | Classification and measurement of financial assets |
| According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets, the Company divides the financial assets into the following three categories: | |
| (a) | Financial assets at amortized cost. |
| (b) | Financial assets at fair value through other comprehensive income. |
| (c) | Financial assets at fair value through profit or loss. |
| Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider financing components for no more than one year, the initial measurement shall be made at the transaction price. | |
| For financial assets at fair value through profit or loss, transaction expenses are directly recognized in the current profit and loss. For other financial assets, transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial assets depends on their classification. All related financial assets affected will be reclassified when and only when the Company changes its business model of managing financial assets. | |
| (a) | Financial assets classified as measured at amortized cost |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial asset is to collect the contractual cash flow, then the Company classifies the financial asset as measured at amortized cost. Financial assets of the Company that are classified as measured at amortized cost include monetary assets, notes receivable, accounts receivable, other receivables, long-term receivables, debt investments, etc. |
| III | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments (continued) |
| (1) | Classification and measurement of financial assets (continued) |
| The Company recognizes interest income from such financial assets with the effective interest method, and carries out subsequent measurement at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in the current profit and loss. The Company calculates and determines the interest income based on the book balance of financial assets multiplied by the effective interest rate except for the following circumstances: | |
| ① For purchased or originated credit-impaired financial assets, the Company calculates and determines their interest income at the amortized cost of the financial asset and the credit-adjusted effective interest rate since the initial recognition. ② For financial assets not credit-impaired at the time of being purchased or originated but in the subsequent period, the Company calculates and determines their interest income at the amortized cost and the effective interest rate of the financial assets in the subsequent period. If the financial instrument is no longer credit-impaired due to the improvement of its credit risk in the subsequent period, the Company calculates and determines the interest income by multiplying the effective interest rate by the book balance of the financial asset. | |
| (b) | Financial assets classified as measured at fair value through other comprehensive income |
| The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial asset is both to collect contractual cash flows and for its sale, then the Company classifies the financial asset as measured at fair value through other comprehensive income. | |
| The Company recognizes interest income from such financial assets with the effective interest method. Except that the interest income, impairment loss and exchange difference are recognized as the current profit and loss, other changes in fair value are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the current profit and loss. | |
| Notes and accounts receivable at fair value through other comprehensive income are reported as receivables financing, and such other financial assets are reported as other debt investments. Among them, other debt investments maturing within one year from the balance sheet date are reported as the current portion of non-current assets, and other debt investments maturing within one year are reported as other current assets. | |
| (c) | Financial assets designated as measured at fair value through other comprehensive income |
| At the time of initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets at fair value through other comprehensive income on the basis of individual financial assets. | |
| Changes in the fair value of such financial assets are included in other comprehensive income without allowance for impairment. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the retained earnings. During the investment period when the Company holds the equity instrument, the dividend income is recognized and included in the current profit and loss when the Company's right to receive dividends has been established, the economic benefits related to dividends are likely to flow into the Company, and the amount of dividends can be measured reliably. The Company reports such financial assets under the item of investments in other equity instruments. |
| III | Significant accounting policies and accounting estimates (continued) | |
| 11 | Financial instruments (continued) | |
| (1) | Classification and measurement of financial assets (continued) | |
| An investment in equity instruments is a financial asset at fair value through profit or loss when it is obtained mainly for recent sale, or is part of the identifiable portfolio of financial assets centrally managed, and objective evidence exists for a short-term profit model in the near future when initially recognized, or is a derivative (except derivatives defined as financial guarantee contracts and designated as effective hedging instruments). | ||
| (d) | Financial assets classified as measured at fair value through profit or loss | |
| If failing to be classified as measured at amortized cost or at fair value through other comprehensive income, or not designated as measured at fair value through other comprehensive income, financial assets are all classified as measured at fair value through profit or loss. | ||
| The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. | ||
| The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. | ||
| (e) | Financial assets designated as measured at fair value through profit or loss | |
| At the time of initial recognition, the Company may irrevocably designate financial assets as measured at fair value through profit or loss on the basis of individual financial assets in order to eliminate or significantly reduce accounting mismatches. | ||
| If the mixed contract contains one or more embedded derivative instruments and its main contract is not any financial asset as above, the Company may designate the whole of the mixed contract as a financial instrument at fair value through profit or loss. Except under the following circumstances: | ||
| ① Embedded derivatives do not significantly change the cash flow of mixed contracts. ② When determining for the first time whether similar mixed contracts need to be split, it is almost 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) |
| 11 | 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 essence reflected by the financial instrument issued, rather than only in legal form, in combination with the definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair value through profit or loss, or other financial liabilities, or derivatives designated as effective hedging instruments. | |
| Financial liabilities are measured at fair value upon initial recognition. For financial liabilities at fair value through profit or loss, relevant transaction expenses are directly included in current profits and losses; For other categories of financial liabilities, relevant transaction expenses are included in the initial recognition amount. | |
| Subsequent measurement of financial liabilities depends on their classification: | |
| (a) | Financial liabilities at fair value through profit or loss |
| Such financial liabilities include held-for-trading financial liabilities (including derivatives falling under financial liabilities) and financial liabilities designated as measured at fair value upon initial recognition and through profit or loss. | |
| The 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. | |
| 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. Except changes in fair value that are brought about by changes in the Company's own credit risk are 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) |
| 11 | Financial instruments (continued) |
| (2) | Classification and measurement of financial liabilities (continued) |
| (b) | Other financial liabilities |
| The Company classifies financial liabilities except for the following items as measured at amortized cost. Such financial liabilities are recognized by the effective interest method and subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in the current profits and losses: | |
| ① Financial liabilities at fair value through profit or loss. ② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets. ③ Financial guarantee contracts that do not fall under the first two categories of this article, and loan commitments that do not fall under category (1) of this article 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: |
| ① The contractual right to receive cash flow from the financial asset is terminated; or ② The financial asset has been transferred, which meets the requirements for derecognition of financial assets. | |
| (b) | Conditions for derecognition of financial liabilities |
| If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability (or part thereof) is derecognized. | |
| The existing financial liability is derecognized with a new one recognized, and the difference between the carrying amount and the consideration paid (including transferred non-cash assets or assumed liabilities) is included in the current profits and losses, if an agreement is signed between the Company and the lender to replace the existing financial liability by assuming a new one, and the contract terms of these two financial liabilities are substantially different, or the contract terms of the existing financial liability (or part thereof) are substantially modified. | |
| If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall be distributed according to the proportion of the fair value of the continuing recognition portion and the derecognition portion to the overall fair value on the repurchase date. The difference between the carrying amount allocated to the derecognized portion and the consideration paid (including transferred non-cash assets or liabilities assumed) shall be included in the current profits and losses. |
| III | Significant accounting policies and accounting estimates (continued) |
| 11 | 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 almost all the risks and rewards of the financial asset ownership are retained, such financial asset shall continue to be recognized. |
| (c) | In circumstances when the Company neither transfers nor retains almost all the risks and rewards of the financial asset ownership (i.e. circumstances other than ① and ② of this article), according to 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 corresponding 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) |
| 11 | 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. | |
| The fair value of financial assets or liabilities without an active market shall be determined by valuation techniques. At the time of valuation, the Company adopts valuation techniques that are applicable under the current circumstances and are supported by sufficient available data and other information, selects input values consistent with the characteristics of relevant assets or liabilities considered by market participants in the transactions thereof, and gives priority to the use of relevant observable input values whenever possible. If the relevant observable input value cannot be obtained or be feasibly obtained, the unobservable input value shall be used. |
| III | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments (continued) |
| (6) | Impairment of financial instruments |
| Based on the expected credit loss, the Company conducts impairment accounting of financial assets classified as measured at amortized cost, financial assets classified as measured at fair value through other comprehensive income and financial guarantee contracts and recognizes loss reserves. | |
| Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchased or originated financial assets of the Company shall be discounted at the credit-adjusted effective interest rate of such financial assets. | |
| For receivables arising from transactions regulated by the income criteria, the Company uses the simplified measurement method to measure the loss reserve according to the amount equivalent to the expected credit loss during the entire duration. | |
| For credit-impaired purchased or originated financial assets, only the accumulated changes in the expected credit losses during the entire duration since the initial recognition are recognized as loss reserves on the balance sheet date. On each balance sheet date, the amount of change in the expected credit loss during the entire duration is included in the current gains and losses as impairment losses or gains. Even if the expected credit loss during the entire duration on the balance sheet date is less than that reflected in the estimated cash flow upon initial recognition, the favorable change in the expected credit loss is recognized as impairment gains. | |
| In addition to other financial assets adopting the above simplified measurement method and other than the credit-impaired purchased or originated ones, the Company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial recognition, measures its loss reserves and recognizes the expected credit loss and its changes respectively according to the following circumstances on each balance sheet date: | |
| (a) | If the credit risk of the financial instrument has not increased significantly since its initial recognition and is in the first stage, its loss reserve shall be measured according to an amount equivalent to its expected credit loss in the next 12 months, and the interest income shall be calculated at the book balance and the effective interest rate. |
| (b) | If the credit risk of the financial instrument has increased significantly since the initial recognition but no credit impairment has occurred, it is in the second stage, then 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 at the book balance and the effective interest rate. |
| (c) | If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and the Company shall measure its loss reserve according to an amount equivalent to its expected credit loss throughout its life, and calculate the interest income at the amortized cost and the effective interest rate. |
| The increase or reversed amount of the credit loss reserve for financial instruments shall be included in the current profits and losses as impairment losses or gains. Except for financial assets classified as measured at fair value through other comprehensive income, the credit loss reserve will offset the carrying amount of the financial assets. For financial assets classified as measured at fair value through other comprehensive income, the Company recognizes its credit loss reserve in other comprehensive income without reducing its carrying amount presented in the balance sheet. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments (continued) |
| (6) | Impairment of financial instruments (continued) |
| In the previous accounting period, the Company has measured the loss reserve, the amount of which is equivalent to the expected credit loss of the financial instrument 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 instrument, the amount of which is equivalent to the expected credit loss in the next 12 months, and the reversed amount of the loss reserve thus formed is included in the current profit and loss as impairment profit. | |
| (a) | Significant increase of 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 the actual or as expected, whether the debtor's operating 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 or 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 ability 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) |
| 11 | 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: | |
| ① The issuer or debtor is in serious financial difficulties; 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 asset; ⑥ Purchasing or originating 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 Company's assessment of the expected credit losses of financial instruments is based on single items and combinations. During the evaluation, the company will take into account reasonable and reliable information about past events, 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 originate 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) |
| 11 | 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. |
| III | Significant accounting policies and accounting estimates (continued) |
| 13 | Accounts receivable |
| For the determination method and accounting treatment method of the Company's expected credit loss on accounts receivable, please refer to 11(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) | |
| 14 | Other receivables |
| For the determination method and accounting treatment method of the Company's expected credit loss of other receivables, please refer to 11(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. | |
| 15 | Inventories |
| (1) | Classification of inventories |
| The Company classifies inventories into raw materials, in-process products, development costs, and finished products, goods shipped in transit, turnover materials and molds with an expected benefit period of less than one year, depending on the purpose of holding the inventories. Turnover materials include low-value consumables and packaging materials. | |
| (2) | Valuation method for inventories shipped in transit |
| All types of inventories are accounted for at actual cost, and actual costs include purchase costs, processing costs and other costs. Inventories are shipped in transit by weighted average method. |
| III | Significant accounting policies and accounting estimates (continued) |
| 15 | Inventories (continued) |
| (3) | Basis for determining the net realizable value of inventories and accrual method for inventory valuation allowance |
| Closing inventories are measured at cost or net realizable value, whichever is lower. In cases that difference exists due to the net realizable value is less than the cost of inventories, inventory valuation allowance is made based on individual inventory item or inventory category, and the difference is recognized in the current profit and loss. | |
| For inventories of goods directly used for sale, such as finished goods, merchandise inventories and materials for sale, in the normal production and operation process, the net realizable value is determined by the amount of the estimated selling price 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 operation process, the net realizable value is determined by the amount of the estimated selling price of finished products produced less the estimated cost to be 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, and that is difficult to be measured separately from other items, inventory valuation allowance is accrued combined with other items. | |
| If the influencing factors of the write-down of inventory value have disappeared, the amount written-down is recovered and reversed to the amount of inventory valuation allowance already accrued, and the amount reversed is included in the current profit and loss. | |
| (4) | Inventory system |
| The Company adopts a perpetual inventory system for inventory management. | |
| (5) | Amortization method of turnover materials |
| The Company amortizes turnover materials by the one-off amortization method, and the molds with a benefit period of less than one year are amortized within the period of not exceeding one year according to the expected benefit period. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 16 | Long-term equity investments |
| Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and the Company’s long-term equity investments in its associates and joint ventures. | |
| Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Company has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances. Associates are the investees that the Company has significant influence on their financial and operating policies. | |
| Investments in subsidiaries are presented in the Company’s financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in a joint venture and associates are accounted for using the equity method. | |
| (1) | Recognition of initial investment cost |
| (a) | Long-term equity investment formed by business combination |
| For long-term equity investment acquired by business combination involving enterprises under common control, the book value of assets and liabilities of the combined party in the consolidated financial statements of the ultimate controlling party as at the date of combination (including the goodwill formed by the ultimate controlling party's acquisition of the combined party) is recognized as investment cost. For long-term equity investment formed by combination, the share of the book value of shareholders’ equity of the combined party acquired on the date of combination is recognized as initial investment cost. The difference between the initial investment cost and assets paid as the consideration for combination, the book value of liabilities incurred or assumed and the total par value of shares issued, is used to adjust capital reserve, and when the capital reserve is insufficient, it is used to adjust retained earnings. | |
| For long-term equity investment acquired by business combinations involving enterprises not under common control, the combination cost is recognized as investment cost of the long-term equity investment. The combination cost is the fair value of assets paid, the liabilities incurred or assumed, and the equity securities issued to acquire the control of acquired party on the date of acquisition. The difference between the higher combination cost and lower fair value of identifiable net assets of the acquired party acquired in the combination is recognized as goodwill; the difference between the lower combination cost and higher fair value of identifiable net assets of the acquired party acquired in the combination is included in the current profit and loss after review. For business combination involving enterprises not under common control realized step by step through multiple transactions, the sum of the book value of equity investment held by the acquirer before the date of acquisition and the new investment cost on the date of acquisition is recognized as initial investment cost, and the combination cost includes the sum of assets paid, the liabilities incurred or assumed by the acquirer, and the fair value of equity securities issued. | |
| (b) | Long-term equity investment acquired by other means |
| For long-term equity investment acquired by cash payment, the actual acquisition price is recognized as initial investment cost. The initial investment cost includes expenses, taxes and other necessary expenses directly related to the acquisition of the long-term equity investment; the transaction costs incurred when issuing or acquiring the own equity instruments of acquirer attributed directly to equity transactions can be deducted from the equity. | |
| For long-term equity investment acquired by issuing equity securities, the fair value of equity securities issued is recognized as initial investment cost. |
| III | Significant accounting policies and accounting estimates (continued) |
| 16 | Long-term equity investments (continued) |
| Provided that the non-monetary asset exchange contains commercial substance and the fair value of the assets received or assets surrendered can be reliably measured, the initial investment cost of the long-term equity investment received with non-monetary assets is determined based on the fair value of the assets surrendered, except that there is conclusive evidence indicates that the fair value of assets received is more reliable. For non-monetary assets that do not satisfy the above condition, the book value of assets surrendered and related taxes and fees payable are recognized as the initial investment cost of the long-term equity investment. | |
| The initial investment cost of a long-term equity investment acquired by debt restructuring is determined on the basis of fair value. | |
| (2) | Subsequent measurement and recognition of related profit and loss |
| (a) | Subsequent measurement |
| The Company adopts the cost method to account for the long-term equity investments under the control of investee, and the consolidated financial statements are adjusted in accordance with the equity method in preparation. | |
| The Company adopts the equity method to account for the long-term equity investments in associates and joint ventures. The difference between the higher initial investment cost and the fair value share of identifiable net assets of the investee enjoyed in the investment is not used to adjust the initial investment cost of the long-term investment; the difference between the lower initial investment cost and the fair value share of identifiable net assets of the investee enjoyed at the time of conducting the investment is included in the current profit and loss. | |
| (b) | Recognition of profit and loss |
| Under the cost method, in addition to the actual payment or the cash dividends or profits included in the consideration that have been declared but not yet paid, the Company recognizes the investment income according to the cash dividends or profits that the investee declared to pay. | |
| Under the equity method, when the investment enterprise confirms that it should enjoy the net profit or net loss of the investee, it should adjust the net profit of the investee based on the fair value of identifiable assets of the investee at the time of conducting the investment before the confirmation, and the part of profit and loss of internal transaction between the investor and associates and joint venture that should be attributed to the investor according to the shareholding ratio, should be offset, and the investment profit and loss should be confirmed on this basis. When the Company confirms that it should assume the loss occurred by the investee, the process hereunder is followed: first, the book value of the long-term equity investment is offset. Secondly, if the book value of the long-term equity investment is insufficient for the offset, the investment loss is continued to be recognized, and the book value of long-term receivable items is offset, subject to other book value of the long-term equity that substantially constitutes the net investment of the investee. Finally, after the above-mentioned treatment, if the Company still bears additional obligations in accordance with the investment contract or agreement, the provisions are recognized according to the estimated obligations and included in the current investment losses. | |
| If the investee realizes profit in the future period, the Company shall, after deducting the unconfirmed loss share, conduct the process in the reverse order of the above to write down the book balance of the confirmed liabilities and recover other long-term equity that substantially constitute net investment of the investee and the book value of the long-term equity, and recognize the profit as return on investment. | |
| Other changes in the owner's equity other than net profit or loss, other comprehensive income and profit distribution of the investee, are used to adjust the book value of the long-term equity investment and included in capital reserve. The unrealized profit and loss from internal transactions between the Company and the investee attributed to the Company according to the shareholding ratio, is offset, and the investment profit and loss is recognized on this basis. In respect of the internal transaction losses incurred by the Company and the investee, for the part recognized asset impairment losses, the corresponding unrealized losses are not offset. |
| III | Significant accounting policies and accounting estimates (continued) |
| 16 | Long-term equity investments (continued) |
| (3) | Step-by-step disposal of investment in subsidiaries |
| When the terms, conditions and economic influence of transactions of the equity investment of the subsidiary conform to one or more of the following, accounting for multiple transactions is treated as a package transaction: | |
| (a) | These transactions are made simultaneously or with consideration of influence on each other; |
| (b) | These transactions can only achieve a complete business outcome as a whole; |
| (c) | The occurrence of a transaction depends on the occurrence of at least one of the other transaction; |
| (d) | A transaction alone is uneconomical, but is economical when considered together with other transactions. |
| When an enterprise loses control over the original subsidiary due to disposal of part of the equity investment or other reasons, if the transactions do not belong to a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: | |
| (a) | In the individual financial statements, the disposed equity should be accounted for in accordance with the “Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investment”; meanwhile, the remaining equity should be recognized as long-term equity or other related financial assets based on its book value. If the remaining equity after disposal can be used to exercise common control or significant influence on the original subsidiary, it shall be accounted for in accordance with the relevant provisions on the conversion of the cost method into the equity method. |
| (b) | In the consolidated financial statements, the remaining equity should be re-measured in accordance with its fair value on the date of loss of control. The difference between the sum of the consideration acquired from the disposal of the equity and the fair value of the remaining equity, less the share of net assets of the original subsidiary that should be enjoyed in accordance with the original share-holding ratio from the date of acquisition, is included in the current profit and loss of the period in which loss of control occurred. Other comprehensive income related to the original subsidiary's equity investment should be converted into current investment income when control is lost. The Company shall disclose in the notes the fair value of the remaining equity after disposal on the date of loss of control and the amount of relevant gains or losses arising from the disposal remeasured based on the fair value. |
| If the transactions of disposal of equity investment in a subsidiary until the loss of control is a package transaction, the accounting treatment of individual financial statements and consolidated financial statements should be distinguished as follows: : | |
| (a) | In the individual financial statements, the difference between each disposal price and the book value of the long-term equity investment corresponding to the disposed equity before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred; |
| (b) | In the consolidated financial statements, the difference between each disposal price and the disposal of investment corresponding to the share of the net assets of the subsidiary before the loss of control is recognized as other comprehensive income, and transferred to the current profit and loss of the period in which the loss of control occurred. |
| III | Significant accounting policies and accounting estimates (continued) |
| 16 | Long-term equity investments (continued) |
| (4) | Basis for determining control, common control and significant influence on the investee |
| Control means having the power of control over the investee, enjoying variable returns by participating in the relevant activities of the investee, and having the ability to use the power over the investee to influence the amount of returns. | |
| Common control means the control that is common to an arrangement in accordance with the relevant agreement, and the decisions of relevant activities of the arrangement must be made upon agreement of the Company and other parties sharing the control rights. | |
| Significant influence means the power to participate in the decision-making of the financial and operating policies of the investee, but by which cannot control or commonly control together with other parties the formulation of the policies. | |
| (5) | Impairment test and allowance for impairment |
| On the balance sheet date, if there is any indication that the long-term equity investment is impaired due to continuous decline in the market price or deterioration of operating conditions of the investee, the recoverable amount of long-term equity investment is determined according to the net value of a single long-term equity investment less the disposal expenses or the present value of expected future cash flows of the long-term equity investment, whichever is higher. When the recoverable amount of the long-term equity investment is lower than the book value, the book value of assets is written-off to the recoverable amount, and the amount written-down is recognized as asset impairment losses, which is included in the current profit and loss, and the corresponding allowance for asset impairment is made. | |
| For long-term equity investments without significant influence or quotation in an active market and whose fair value cannot be measured in a reliable way, the impairment loss is determined by the difference between the book value and the present value determined by discounting the future cash flows of similar financial assets at the current market rate of return. | |
| Other long-term equity investments with signs of impairment other than goodwill arising from business combination, if the measurement of recoverable amount indicates that the recoverable amount of the long-term equity investment is lower than its book value, the difference is recognized as impairment losses. | |
| Goodwill arising from a business combination is tested for impairment annually, regardless of whether there is any indication of impairment. | |
| Once the impairment loss of long-term equity investment is confirmed, it will not be reversed. | |
| 17 | Investment property |
| The Company's investment property means the property held for the purpose of earning rent or capital appreciation, or both, including the land use rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant buildings held by the Company for the purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that the buildings will be used for leases and the intention of holding will not change in a short-term, the building will also be reported as investment property. | |
| The Company adopts the cost model for subsequent measurement of investment property. For the purpose of depreciation or amortization method, the same amortization policy adopted for buildings as fixed assets and land use rights as intangible assets are used. |
| III | Significant accounting policies and accounting estimates (continued) | |||
| 18 | Fixed assets | |||
| (1) | Recognition criteria for fixed assets | |||
| Fixed assets mean tangible assets held for the purpose of producing goods, rendering of services, leases or operation management, whose service life is more than one fiscal year. Fixed assets satisfying the following conditions are recognized: | ||||
| (a) | The economic benefits associated with the fixed assets are likely to flow into the enterprise; | |||
| (b) | The cost of the fixed asset can be measured in a reliable way. | |||
| The Company's fixed assets are classified into buildings, machinery and equipment, office and electronic equipment, transportation vehicles and fixed assets renovation in line with capitalization conditions. Where each component of a fixed asset with a different service life provides economic benefits to the Company in different ways and applies different depreciation rates, it is recognized as a single fixed asset. | ||||
| Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase price, related taxes, and other expenses attributable to the fixed asset before it is ready for the intended use, such as the expenses on transportation, handling, installation and professional services, etc. When determining the cost of fixed assets, discard expenses should be considered. Subsequent expenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included in the cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which they arise. | ||||
| Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed assets is determined according to the estimated service life and estimated residual value (the estimated residual value is 0-10% of the original value). The depreciation rate of classified fixed assets is as follows: | ||||
| Asset Category | Estimated Service Life | Annual Depreciation Rate | ||
| Houses and buildings | 20-50 years | 2-5% | ||
| Machinery and equipment (exclude mold) | 5-18 years | 5-20% | ||
| Mold (with benefit period more than one year) | 1-3 years | 33-100% | ||
| Office and electronic equipment | 3-22 years | 4-33% | ||
| Transportation equipment | 4-8 years | 12-25% | ||
| Other devices | 4-5 years | 20-25% | ||
| Power stations | 25 years | 4% | ||
| Fixed assets renovation is amortized evenly over the benefit period. | ||||
| III Significant accounting policies and accounting estimates (continued) 18 Fixed assets (continued) (1) Recognition criteria for fixed assets (continued) 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. |
| 19 | 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. |
| III | Significant accounting policies and accounting estimates (continued) |
| 20 | Borrowing costs |
| Borrowing costs refer to interest and other related costs incurred by the Company as a result of borrowings, including interest on borrowings, amortization of discounts or premiums, ancillary expenses, and exchange differences arising from foreign currency borrowings. | |
| Borrowing costs that can be directly attributable to the acquisition, construction or production of assets eligible for capitalization are capitalized and included in the relevant asset cost. Other borrowing costs are recognized as expenses in the period in which they are incurred, and are included in the current profit and loss. Assets eligible for capitalization refer to fixed assets, investment property and inventories (only refers to inventories with an acquisition, construction and production process for more than one year) that require a substantial period of acquisition, construction or production activities to get ready for the intended use or sale status. | |
| Borrowing costs refer to the interest of borrowings, the amortization of discounts or premiums, auxiliary expenses and exchange differences arising from foreign currency borrowings incurred by the Company. Borrowing costs begin to be capitalized when the following three conditions are all satisfied: | |
| (1) | Asset expenditure has occurred; |
| (2) | Borrowing costs have occurred; |
| (3) | The acquisition, construction or production activities necessary to enable the assets to be ready for the intended usable or saleable state have commenced. |
| When an asset satisfied the capitalization conditions is abnormally interrupted during the process of acquisition, construction or production and the interruption period lasts for more than three months, the capitalization of the borrowing costs is suspended and recognized as the current expenses until the acquisition, construction or production of the assets starts again. When an asset satisfied the capitalization conditions is ready for its intended use or sale, the capitalization is stopped and the borrowing costs incurred in the future are included in the current profit and loss. The period of capitalization refers to the period from the time when the borrowing costs start to be capitalized to the point when the capitalization is stopped, and the period in which the borrowing costs are suspended for capitalization is not included. | |
| During the period of capitalization, if special borrowings are made for the acquisition, construction or production of assets eligible for capitalization, the amount of the interest expenses actually incurred during the current period of the special borrowings, less the amount of interest income earned by depositing unused borrowing funds in a bank or investment income earned by temporary investment, is recognized as the amount of capitalization. When a general loan is occupied for the purpose of purchasing, constructing or producing assets satisfied the capitalization conditions, the amount of capitalization is determined according to the weighted average of the accumulated asset expenditure exceeding the special loan portion multiplied by the capitalization rate of the general loan occupied; the capitalization rate is determined based on the weighted average interest rate of general borrowings. |
| III | Significant accounting policies and accounting estimates (continued) | |
| 22 | Intangible assets | |
| Intangible assets are recorded at the actual cost at the time of acquisition. The service life of intangible assets is analyzed and judged at the time of acquisition. Intangible assets with a finite service life are amortized on the shortest of the estimated service lives, the beneficial period of the contract and the effective period specified by law from the time when the intangible assets are available for use. The amortization period is as follows: | ||
| Category | Amortization years | |
| Land use rights | The shorter of the years of the land use rights and the operating years of the Company | |
| Patents and non-patent technologies | 10 years or the shorter of service life, beneficiary years and legally valid years | |
| Other | Beneficiary period | |
| The Company reviews the service life and amortization method of intangible assets with limited service life at least at the end of each year, and made adjustment if necessary. | ||
| If an intangible asset is unforeseen 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 there is 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) |
| 23 | Long-term prepaid expense |
| Long-term prepaid expenses refer to various expenses that the Company has paid and whose period of amortization is more than one year, such as the improvement expenses incurred in renting fixed assets by operating leases. Long-term prepaid expenses are amortized on a straight-line basis within the beneficial period of the expense items. |
| 24 | Impairment of long-lived assets |
| The impairment of assets other than inventories, financial assets and deferred income tax assets is determined by the Company as follows: | |
| On the balance sheet date, if there is evidence indicates that the asset is idle, there is a use termination plan or the market price drops sharply, or the external environment changes significantly, impairment test should be conducted. The difference between the recoverable amount of the asset and its book value is recognized as impairment loss and included in the current profit and loss, and corresponding allowance for asset impairment is made. For the goodwill formed by business combination and the intangible assets with indefinite service life, impairment test is carried out every year regardless of whether there is any indication of impairment. The recoverable amount is determined based on the net amount of fair value of assets less the disposal expenses, or the present value of estimated future cash flows of the assets, whichever is lower. The Company estimates the recoverable amount based on the individual assets. If it is difficult to estimate the recoverable amount of the individual assets, the recoverable amount of the asset is determined based on the asset group to which the asset belongs. After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired assets will be adjusted accordingly in the future period. | |
| Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting period. | |
| Treatment of goodwill impairment: in the impairment test of goodwill, the book value of goodwill is apportioned to the asset group or asset group portfolio expected to benefit from the synergy of business combination, and the book value of goodwill is apportioned to the relevant asset group or asset group combination in a reasonable way. In the case of impairment test, the asset group or asset group portfolio that does not contain goodwill is tested for impairment first to confirm the corresponding asset impairment loss, and then the asset group or asset group containing goodwill is tested for impairment to confirm the corresponding goodwill impairment loss. | |
| 25 | Asset transfer with repurchase conditions |
| When the Company sells products or transfers other assets, it signs a product or a transfer asset repurchase agreement with the purchaser, and determines whether the sales commodity satisfies the revenue recognition conditions according to the terms of the agreement. If the after-sales repurchase is a financing transaction, the Company does not recognize the sales revenue when the product or asset is delivered. If the repurchase price is greater than the difference between the sales prices, interest of the difference is accrued on time during the repurchase period, and included in finance costs. | |
| III | Significant accounting policies and accounting estimates (continued) |
| 26 | Provisions |
| When the Company is involved in any litigation, debt guarantee, contract loss or reorganization, which is likely in need of future delivery of assets or rendering of services, and the amount of which can be measured in a reliable way, it is recognized as provisions. | |
| (1) | Recognition criteria of provisions |
| When an obligation related to the contingent events satisfies all the following conditions, it is recognized by the Company as provisions: | |
| (a) | The obligation is the current obligation of the Company; |
| (b) | The fulfillment of the obligation is likely to cause economic benefits to flow out of the Company; |
| (c) | The amount of the obligation can be measured in a reliable way. |
| (2) | Measurement of provisions |
| The provisions 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 that 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 that 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 provisions are expected to be compensated by a third party, the compensation amount is separately recognized as an asset when it is basically confirmed to be received, and the recognized compensation amount should not exceed the book value of provisions. | |
| 27 | 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) |
| 28 | Employee benefits |
| Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. | |
| (a) | Short-term employee benefits |
| Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, and short-term paid absences. The employee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at their fair value. | |
| (b) | Post-employment benefits |
| The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the Reporting Period, the Company’s defined contribution plans mainly include basic pensions and unemployment insurance. | |
| (c) | Termination benefits |
| If the Company terminates the labor relationship with an employee before the labor contract expires, or offers compensation for encouraging the employee to accept the redundancies voluntarily, the liabilities arising from the termination of labor relations with the employee is determined, and also included in the current profit and loss, at the time when the group 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. | |
| 30 | 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 owner's equity after the vesting date. |
| III | Significant accounting policies and accounting estimates (continued) |
| 31 | Revenue recognition |
| The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). | |
| (1) | General principles applied to revenue recognition |
| The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). Performance Obligation means that, under the contract, the Company promises to transfer commodities or services that can be clearly distinguished to the client. “Obtain the control over relevant commodities or services” refers to the ability to completely dominate the use of commodities and obtain almost all economic benefits. From the contract’s effectiveness date, the Company shall evaluate the contract, recognize each single performance obligation included and determine whether each performance obligation is fulfilled within a certain period or at a time point. | |
| When any of the following conditions is met, for performance obligation to be fulfilled within a certain period, the Company shall recognize corresponding revenue within the period as scheduled: | |
| (a) | While fulfilling the due obligation in the Company, the client obtains and consumes the resulting economic benefit; |
| (b) | The client is able to control the commodities under construction during the Company’s fulfillment; |
| (c) | Commodities generated from the Company’s fulfillment possess irreplaceable purpose and the Company has the right to charge all fulfilled performance obligations within the whole contract period; otherwise, the Company shall recognize corresponding revenue when the client obtains the control over relevant commodities or services. |
| For any performance obligation with a certain period, the Company shall apply the output method/input method to determine the appropriate fulfillment schedule based on the specific nature of commodities and services. The output method is to determine the fulfillment schedule according to the value of commodities transferred to the client (while the input method is to determine the fulfillment schedule according to the Company’s input to fulfill the performance obligation). If the fulfillment schedule cannot be reasonably determined and the Company’s cost is predicted to be compensated, corresponding revenue shall be recognized based on the specific cost amount till the fulfillment schedule could be reasonably determined. | |
| III | Significant accounting policies and accounting estimates (continued) | |
| 30 | Revenue recognition (continued) | |
| (2) | Principles of handling revenues from specific transactions | |
| (a) | For the contract containing the sales return article: When the client obtains the control over relevant commodities, corresponding revenue shall be recognized according to the consideration amount (excluding the amount predicted to be returned due to sales return) predicted to be duly charged from transferring commodities to the client, and corresponding liabilities shall be recognized based on the amount predicted to be returned due to sales return. Meanwhile, when commodities are sold, the balance through deducting the predicted cost from taking back commodities from the book value of commodities predicted to be returned (including the impairment of value of returned commodities) shall be checked and calculated under “Returned Commodities Cost Receivable”. | |
| (b) | For the contract containing the quality assurance article: it’s required to evaluate whether the quality assurance involves any separable service except for the promise (to the client) that commodities conform to established standards. If the Company provides additional service, it shall be deemed as a single performance obligation and subject to the accounting treatment according to relevant revenue criteria provisions; otherwise, the quality assurance liability shall be subject to the accounting treatment according to the accounting criteria provisions on Contingency. | |
| (c) | For the sales contract containing the client’s additional purchase option: the Company shall evaluate whether the option provides the client with any significant right. If any, it shall be deemed as a single performance obligation and the transaction price shall be apportioned to the performance obligation, and corresponding revenues shall be recognized when the client executes the purchase option right and obtains the control over relevant commodities in the future or when the option becomes invalid. If the separable selling price applied to the client’s additional purchase option right cannot be directly observed, it’s required to comprehensively consider the difference in discounts between the client’s execution of option right and the client’s non-execution of option right and analyze the possibility for the client to execute the option right and other relevant information. Then, corresponding reasonable estimate shall be made. | |
| (d) | The contract licensing the IP right to the client: It’s required to evaluate whether the IP right license constitutes any single performance obligation; if any, it is necessary to determine whether the performance obligation fulfillment is fulfilled within a certain period or at a time point. If any IP right license is granted to the client and royalties are charged based on the client’s actual sales or usage, corresponding revenues shall be recognized at a later time between the following dates: the day when the client’s subsequent selling or usage occurs; the day when the Company fulfills relevant performance obligation. | |
| (3) | Specific revenue recognition method | |
| (a) | Product sales contract | |
| According to the contract terms, for the selling of products subject to performance obligation fulfillment conditions at a time point and other products, the Company shall recognize the realization of sales revenues when the client obtains the control over relevant commodities or services according to the delivery condition agreed in the sales contract upon signed by the client after commodities are received. | ||
| (b) | Technical service contract | |
| The Company shall recognize corresponding revenues by using the straight line method within the lease term agreed in the lease contract. | ||
| (c) | Royalties income | |
| If revenues are recognized within a certain period based on the technical service contract, corresponding revenues shall be recognized according to the performance schedule. | ||
| III | Significant accounting policies and accounting estimates (continued) | |
| 30 | Revenue recognition (continued) |
| (3) | Specific revenue recognition method (continued) |
| (d) | Revenue from photovoltaic power stations |
| a. Centralized power stations: Power stations are combined to the grid. The income will be confirmed based on the documents on power supply provided by the business departments of the Company, after the duration of continuous and trouble-free operation specified by the electric power company is met. b. Distributed power stations: Power stations are combined to the grid. The income will be confirmed based on the documents on settlement provided by the business departments of the Company. | |
| 31 | Contract cost |
| (1) | Contract performance cost |
| For the cost resulting from performing the contract which is not included in other ASBE except the revenue standards and meets the following conditions, the Company shall recognize it as an asset： | |
| (a) | The cost is directly related to a current or predicted contract, including the direct labor, direct material and manufacturing expenses (or similar expenses), the cost borne by the client and other costs resulting from the contract; |
| (b) | The cost adds various resources that can be applied by the Company to fulfill due performance obligations. |
| (c) | The cost is predicted to be recovered. |
| The asset shall be presented and reported in inventory or other non-current assets, which depends on whether the amortization period exceeds a normal operating cycle during the initial recognition. | |
| (2) | Contract acquisition cost |
| If the increment cost resulting from the Company’s acquisition of contract is predicted to be recovered, it shall be recognized as an asset as the contract acquisition cost. Increment Cost refers to the cost which only results from the contract acquisition, like the sales commission. If the amortization period is less than one year, it shall be included in current profit and loss. | |
| (3) | Contract cost amortization |
| The asset related to the contract cost shall adopt the same basis for the recognition of commodities or services revenues related to the asset, be amortized during the period of fulfilling the performance obligation or according to the fulfillment schedule and be included into current profit and loss. | |
| III | Significant accounting policies and accounting estimates (continued) | |
| 31 | Contract cost (continued) | |
| (4) | Impairment of contract cost | |
| For the asset related to the contract cost as mentioned above, if the book value is higher than the difference between the residual consideration predicted to be obtained from the Company’s transfer of commodities related to the asset and the cost to be incurred due to such transfer, depreciation reserves shall be calculated and withdrawn for the surplus which shall also be recognized as the asset impairment loss. | ||
| After the impairment allowances are established, if changes in depreciation factors during previous periods have made the above different higher than the asset’s book value, it shall be restituted to previously established asset impairment allowances and included in current profit and loss. However, the book value of restituted asset shall not exceed the book value of the asset on the date of restitution without establishing impairment allowances. | ||
| 33 | Government grants | |
| (1) | Category | |
| Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration. According to the grants targets stipulated in the relevant government documents, government grants are classified into government grants related to assets and government grants related to income. | ||
| (2) | Recognition of government grants | |
| If a government grant is a monetary asset, it is measured at the amount received or receivable. If a government grant is a non-monetary asset, it is measured at fair value. If the fair value cannot be obtained in a reliable way, it is measured at the nominal amount (RMB1). Government grants measured at nominal amounts are recognized directly in the current profit and loss. | ||
| (3) | Accounting treatment | |
| Government grants related to assets offset the book value of the underlying assets. | ||
| If the government grants related to income are used to compensate related costs or losses in the subsequent period, it is recognized as deferred income and included in the current profit and loss or offset costs in the period in which the related costs or losses are recognized; government grants used to compensate costs or losses incurred by the enterprise are directly included in the current profit or loss or offset related costs. For government grants related to the daily activities of the enterprise, the R&D and VAT-related subsidies are included in other income; other government grants offset related costs according to the nature of economic activities. Government grants not related to daily activities of the Company are included in the non-operating income and expenditure. For preferential loans for policy discount, if the government finance department appropriates the discounted funds to the lending bank, the borrowing cost is accounted for according to the principal of the loan and the policy preferential interest rate, with the amount actually received as the entry value of the loan. If the government finance department directly appropriates the interest grant funds to the Company, the grants offset the related borrowing costs. | ||
| In case that a confirmed government grant is required to be returned, the book value of the asset is adjusted if the book value of relevant assets is offset at the initial recognition; if there is related deferred income, the book balance of deferred income is offset, and the excess is included in the current profit and loss; in case of other circumstances, it is directly included in the current profit and loss. | ||
| III | Significant accounting policies and accounting estimates (continued) |
| 34 | Deferred income tax assets and deferred income tax liabilities |
| The income taxes of the Company include current income tax and deferred income tax. Both current income tax and deferred income tax are recognized in the current profit and loss as income tax expense or gain, except for the following: | |
| (1) | Adjusting goodwill due to income tax arising from business combination; |
| (2) | Income tax related to transactions or events directly included in shareholders' equity is included in shareholders’ equity. |
| On the balance sheet date, the Company recognizes the deferred income tax assets or deferred income tax liabilities in accordance with the balance sheet liability method on temporary differences between the book value of assets or liabilities and their tax base. | |
| The Company recognizes all taxable temporary differences as deferred tax liabilities except the taxable temporary differences incurred in the following transactions: | |
| (1) | Initial recognition of goodwill; or initial recognition of assets or liabilities arising from transactions with the following characteristics: the transaction is not a business combination, and does not affect the accounting profits or the amount of taxable income when occurs; |
| (2) | For taxable temporary differences related to investments in subsidiaries, associates and joint ventures, the timing of the reversal of the temporary differences can be controlled and the temporary differences are unlikely to be reversed in the foreseeable future. |
| The Company recognizes deferred income tax assets arising from deductible temporary differences, subject to the amount of taxable income likely to be obtained to offset the deductible temporary differences, except the deductible temporary differences incurred in the following transactions: | |
| (1) | The transaction is not a business combination, and does not affect the accounting profits or the amount of taxable income when occurs; |
| (2) | The deductible temporary differences related to investment in subsidiaries, associates and joint ventures cannot satisfy all the following: the temporary differences are likely to be reversed in the foreseeable future and are likely to be used for deduction of deductible taxable income for temporary differences in the future. |
| On the balance sheet date, the Company measures the deferred income tax assets and deferred income tax liabilities according to the tax law based on the applicable tax rate during the period of expectation of recovering the assets or paying off the liabilities, and reflects the income tax impact of the expected recovery of assets or liquidation of liabilities on the balance sheet date. | |
| On the balance sheet date, the Company reviews the book value of deferred income tax assets. If it is probable that no sufficient taxable income will be available in the future to offset the benefits of deferred tax assets, the book value of deferred tax assets is written down. When it is probable that sufficient taxable income will be available, the amount written-down will be reversed. |
| III | Significant accounting policies and accounting estimates (continued) |
| 35 | Leases (applicable before 31 December 2020) |
| (1) | Accounting treatment of operating leases |
| (a) | The rental fees paid by the Company for the lease of assets are apportioned on a straight-line basis over the entire lease term without deduction of the rent-free period and included in the current expenses. The initial direct costs associated with the lease transactions paid by the Company are included in the current expenses. |
| When the lessor of an asset bears the expenses related to the lease that should be borne by the Company, the Company deducts the part of the expenses from the total rent. The deducted rental expenses are apportioned during the lease term and included in the current expenses. | |
| (b) | The rental fees charged by the Company for renting out assets are apportioned on a straight-line basis over the entire lease term without deduction of the rent-free period and is recognized as rental income. The initial direct expenses related to lease transactions paid by the Company are included in the current expenses; if the amount is a significant one, it is capitalized and included in the current income in the same period as the lease income is recognized throughout the lease period. |
| When the Company bears the lease-related expenses that should be borne by the lessee, the Company deducts the part of the expenses from the total rental income, and distributes the deducted rental expenses within the lease term. | |
| (2) | Financial leased assets |
| On the date when lease starts, the Company recognizes the fair value of the leased asset or the present value of the minimum lease payment as the book value of the leased asset, whichever is lower, and recognizes the minimum lease payment amount as the book value of the long-term payable, and the difference between the two is recognized as unconfirmed financing expenses. The Company adopts the effective interest rate method to amortize the unrecognized financing expenses during the asset lease period and includes them in financial expenses. | |
| (3) | Financial leasing assets |
| On the date when lease starts, the Company recognizes the receivable of the financial lease, the difference between the sum of unsecured residual value and its present value as unrealized financing income, and recognizes the lease income in the future period of the lease. The initial direct costs incurred by the Company in connection with lease transactions are included in the initial measurement of financial lease receivable, and the amount of income recognized during the lease term is reduced. |
| Item | Simplified leased asset type |
| Short-term lease | A lease whose lease term does not exceed 12 months from the commencement date of the lease term |
| Low-value asset lease | An asset lease with a value of less than RMB40,000 or its foreign currency equivalents |
| the former lease standard | remeasurement | revised lease standard | |
| Fixed assets | 92,829,902 | (1,314,306) | 91,515,596 |
| Right-of-use assets | - | 1,856,862 | 1,856,862 |
| Long-term prepaid expense | 2,536,670 | (437,301) | 2,099,369 |
| Current portion of non-current liabilities | 13,429,670 | 19,402 | 13,449,072 |
| Lease liabilities | - | 912,551 | 912,551 |
| Long-term payables | 1,280,300 | (826,698) | 453,602 |
| (2) | Changes to accounting estimates | ||||
| No change occurred to the major accounting estimates in the Reporting Period. | |||||
| 40 | Correction of previous accounting errors | ||||
| No previous accounting errors were identified and corrected in the Reporting Period. | |||||
| IV | Taxes | ||||
| 1 | Value-added tax | ||||
| In the Reporting Period, output tax was calculated at 3%, 5%, 6%, 9% or 13% of the taxable income of general taxpayers and the value added-tax was paid based on the difference after deducting the allowance deduction of input tax in the current period. The value added-tax payment for the Company’s directly exported goods is executed in accordance with the regulations of “Exemption, Offset and Refund”. The tax refund rate is 0%-13%. | |||||
| 2 | Urban maintenance and construction tax | ||||
| Subject to the relevant tax laws and regulations of the state and local regulations, urban maintenance and construction tax is paid based on the proportion stipulated by the state according to the individual circumstances of each member of the Company. | |||||
| 3 | Education surcharges | ||||
| Education surcharges are paid according to the individual circumstances of each member of the Company based on the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. | |||||
| 4 | Dike protection fee | ||||
| Dike protection fee is paid according to relevant national tax regulations and local regulations. | |||||
| 5 | 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. | |||||
| 6 | Corporate income tax | ||||
| The corporate income tax rate for the Company was 25% in the Current Period (2020: 25%). | |||||
| According to Article 28 of the Enterprise Income Tax Law of the People's Republic of China, a reduced corporate income tax rate of 15% is applied to important high-tech enterprises that the government supports. | |||||
| IV | Taxes (continued) | |||
| 6 | Corporate income tax (continued) | |||
| The following subsidiaries are entitled to tax preferences, overseas subsidiaries adopt the local tax rates, and the other subsidiaries of the Company are all taxed at a rate of 25%. Subsidiaries entitled to tax preferences: | ||||
| Company name | Preferential tax rate | Reason | ||
| TCL China Star Optoelectronics Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Shenzhen TCL High-Tech Development Co., Ltd. | 15% | High-tech enterprise | ||
| Qingdao Blue Business Consulting Co., Ltd. | 15% | High-tech enterprise | ||
| Tianjin Huan’Ou Semiconductor Material&Technology Co., Ltd. | 15% | High-tech enterprise | ||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | 15% | High-tech enterprise | ||
| Huansheng Solar (Jiangsu) Co., Ltd. | 15% | High-tech enterprise | ||
| Zhangjiakou Huan’Ou International New Energy Technology Co., Ltd. | 15% | High-tech enterprise | ||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | 15% | High-tech enterprise | ||
| Ningxia Zhonghuan Solar Material Co., Ltd. | 15% | Encouraged business in West China | ||
| Inner Mongolia Zhonghuan Xiexin Solar Material Co., Ltd. | 15% | Encouraged business in West China, High-tech enterprise | ||
| Inner Mongolia Zhonghuan Advanced Semiconductor Material Co., Ltd. | 12.50% | Encouraged business in West China, High-tech enterprise | ||
| Shangqiu Yaowei Photovoltaic Power Generation Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Tianjin Huanyu Yangguang New Energy Technology Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Huludao Zhongrun Energy Technology Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Kangbao Huanju New Energy Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Qinhuangdao Tianhui Solar Energy Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Huludao Xincheng New Energy Technology Co., Ltd. | 12.50% | State-supported public infrastructure project | ||
| Dushan Anju Photovoltaic Technology Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Huhehaote Huanju New Energy Development Co., Ltd. | 7.5% | State-supported public infrastructure project, Encouraged business in West China | ||
| Sonid Left Banner Huanxin New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Otog Banner Huanju New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Yixing Huanxing New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project | ||
| Tianjin Binhai Huanneng New Energy Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Gaoqing Huanyuan Energy Technology Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Gaoqing Chengguang Energy Technology Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Guyuan Shengju New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project | ||
| IV | Taxes (continued) | |||
| 6 | Corporate income tax (continued) | |||
| Zhangjiakou Shengyuan New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project | ||
| Ningjin Jinchen New Energy Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Tianjin Zhonghuan New Energy Co., Ltd. | Tax-free | State-supported public infrastructure project | ||
| Ongniud Banner Guangrun New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Tuquan Guanghuan New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Inner Mongolia New Huanyu Yangguang New Energy Technology Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Gengma Huanxing New Energy Co., Ltd. | 7.50% | State-supported public infrastructure project, Encouraged business in West China | ||
| Dangxiong Youhao New Energy Development Co., Ltd. | Tax-free | State-supported public infrastructure project, Encouraged business in West China | ||
| Shangqiu Suoguang Energy Technology Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Shangqiu Suoneng Energy Technology Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Shangqiu Suoyuan Energy Technology Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Ulanqab Dishengsheng Energy Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Tongliao Guangdong New Energy Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Alxa League Huanju New Energy Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Jinxiang Haotian New Energy Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Shaanxi Runhuan Tianyu Technology Co., Ltd. | Tax-free | State-supported public infrastructure project, Encouraged business in West China | ||
| Inner Mongolia Zhonghuan Asset Management Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Inner Mongolia Huanya Hotel Management Co., Ltd. | 20% | Small meagre-profit enterprise with a preferential 12.5% taxable income | ||
| Zhonghuan Advanced Semiconductor Materials Co., Ltd. | Tax-free | High-tech enterprise, and integrated circuit-related enterprise | ||
| 7 | Individual income tax | |||
| Individual income tax of income paid to employees by the Company is withheld by the Company on behalf of employees in accordance with to the relevant national tax regulations. | ||||
| V | 1 | Notes to Consolidated Financial Statements Monetary assets | |||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| Cash on hand | 626 | 1,189 | |||
| Bank deposits | 23,727,289 | 17,744,850 | |||
| Deposits with the central bank | 519,911 | 209,978 | |||
| Interest receivable on deposits | 134,120 | 84,459 | |||
| Other monetary assets | 2,992,333 | 3,668,429 | |||
| 27,374,279 | 21,708,905 | ||||
| Note | Monetary assets with restricted use rights | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| TCL Tech Finance’s statutory reserve deposits with the central bank | 519,911 | 209,978 | |||
| Restricted amount of other monetary assets | 2,226,536 | 3,206,051 | |||
| Interest receivable on deposits | 134,120 | 84,459 | |||
| 2,880,567 | 3,500,488 | ||||
| 2 Held-for-trading financial assets | ||
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Financial assets at fair value through profit or loss | 9,548,577 | 5,300,046 |
| Including: Debt instrument investments | 8,837,274 | 4,628,306 |
| Equity instrument investments | 711,303 | 671,740 |
| 9,548,577 | 5,300,046 | |
| 3 Derivative financial assets | ||
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Foreign exchange forwards | 139,396 | 445,690 |
| Others | - | 7,888 |
| 139,396 | 453,578 | |
| 4 Notes receivable | ||
| (1) Notes receivable by category | ||
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Bank acceptance notes | 1,339,413 | 576,468 |
| Trade acceptance notes | 1,286,809 | 19,217 |
| 2,626,222 | 595,685 | |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 4 | Notes receivable (continued) | |||||||||||
| (1) | Notes receivable by category (continued) | |||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||
| Gross amount | Allowance for doubtful accounts | Carrying amount | Gross amount | Allowance for doubtful accounts | Carrying amount | |||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||
| Notes receivable for which the allowance for doubtful accounts were established on the individual basis | - | - | - | - | - | - | - | - | - | - | ||
| Notes receivable for which the allowance for doubtful accounts were established on the grouping basis | 2,626,222 | 100% | - | - | 2,626,222 | 595,685 | 100% | - | - | 595,685 | ||
| Of which: group with no recovery risk | 1,339,413 | 51% | - | - | 1,339,413 | 576,468 | 97% | - | - | 576,468 | ||
| By aging analysis | 1,286,809 | 49% | - | - | 1,286,809 | 19,217 | 3% | - | - | 19,217 | ||
| 2,626,222 | 100% | - | - | 2,626,222 | 595,685 | 100% | - | - | 595,685 | |||
| (2) | As at 30 Jun. 2021, notes receivable in pledge were RMB168,090 thousand. | |||||||||||
| (3) | As at 30 Jun. 2021, there were no endorsed or discounted notes receivable that were undue on the balance sheet date and were derecognized. | |||||||||||
| Gross amount | Allowance for doubtful accounts | |||
| Lifetime ECL rate | Gross amount | |||
| Accounts receivable for which the related allowances for doubtful accounts were established on the individual basis | 133,756 | 92.36% | 123,537 | |
| Of which: | ||||
| Accounts receivable1 | 133,756 | 92.36% | 123,537 | |
| Accounts receivable for which the related allowances for doubtful accounts were established on the grouping basis | 19,062,864 | 0.87% | 165,069 | |
| Of which: | ||||
| Group 1：by aging analysis | 14,481,327 | 1.14% | 164,966 | |
| Group 2：by related party grouping | 3,771,286 | 0.003% | 103 | |
| Group 3: Group with no recovery risk | 810,251 | - | - | |
| 19,196,620 | 288,606 | |||
| (2) The aging of accounts receivable is analysed as follows: | ||||
| Within 1 year | Amount 18,251,725 | Percentage 95.07% | Amount 11,810,255 | Percentage 91.99% |
| 1-2 years | 340,900 | 1.78% | 392,397 | 3.06% |
| 2-3 years | 401,425 | 2.09% | 400,671 | 3.12% |
| Over 3 years | 202,570 1.06% | 235,572 1.83% | ||
| 19,196,620 100% | 12,838,895 | |||
| V 5 | Notes to Consolidated Financial Statements (Continued) Accounts receivable (continued) | |||
| (3) | Allowances for doubtful accounts receivable are analysed as follows: | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Beginning amount | 281,281 | 45,020 | ||
| New subsidiaries | 33,481 | 199,462 | ||
| Current accrual | 38,813 | 76,552 | ||
| Reversal of current period | (60,647) | (26,300) | ||
| Write-off of current period | - | (12,439) | ||
| Reduced subsidiaries | (4,137) | - | ||
| Exchange adjustment | (185) | (1,014) | ||
| Ending amount | 288,606 | 281,281 | ||
| (4) There is no debt owed by shareholders holding 5% or more voting shares in this account balance. | ||||
| (5) As at 30 Jun. 2021, the accounts receivable of the top five balances are as follows: | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Total amount owed by the top five 7,981,376 | 6,443,402 | |||
| Proportion of total accounts receivable 41.58% | 50.19% | |||
| 6 Receivables financing | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Notes receivable financing 1,725,478 | 1,206,289 | |||
| Accounts receivable financing - | 970,455 | |||
| 1,725,478 | 2,176,744 | |||
| V 7 | Notes to Consolidated Financial Statements (Continued) Prepayments | |||
| (1) | Prepayments are analyzed as follows: | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Within 1 year | 2,438,126 | 1,352,128 | ||
| 1-2 years | 419 | 399 | ||
| 2-3 years | 341 | 414 | ||
| Over 3 years | 556 | 2,712 | ||
| 2,439,441 | 1,355,653 | |||
| (2) | As at 30 Jun. 2021, the prepayments of the top five balances are as follows: | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Total amount owed by the top five | 1,533,285 | 816,964 | ||
| As % of total prepayments | 62.85% | 60.26% | ||
| 8 | Other receivables | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Dividends receivable | 64,333 | - | ||
| Other receivables | 3,458,681 | 2,793,640 | ||
| 3,523,014 | 2,793,640 | |||
| (1) Dividends receivable | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Fantasia Holdings Group Co., Limited | 59,403 | - | ||
| Sichuan Shengtian New Energy Development Co., Ltd. | 4,930 | - | ||
| 64,333 | - | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||
| Equity transfer price | 1,579,658 | 100,802 | ||||||||
| Subsidy receivable | 975,964 | 1,612,041 | ||||||||
| External unit current account | 613,611 | 678,933 | ||||||||
| Deposit and security deposit | 114,722 | 343,367 | ||||||||
| Others | 174,726 | 58,497 | ||||||||
| 3,458,681 | 2,793,640 | |||||||||
| (b) Allowance for doubtful other receivables is analyzed as follows: | ||||||||||
| Lifetime ECL | Lifetime ECL | |||||||||
| 12-month ECL | (credit not | (credit | ||||||||
| impaired) | impaired) | Total | ||||||||
| Beginning amount | 64,800 | 113,836 | 74,534 | 253,170 | ||||||
| Current accrual | 3,877 | 2,724 | - | 6,601 | ||||||
| Increase due to new subsidiaries | - | - | 342 | 342 | ||||||
| Reversal of current period | - | (408) | (22) | (430) | ||||||
| Write-off in current period | - | - | (8,722) | (8,722) | ||||||
| Decrease due to disposal of subsidiary | - | - | (2,227) | (2,227) | ||||||
| Exchange adjustment | (183) | - | - | (183) | ||||||
| 30 Jun. 2021 | 68,494 | 116,152 | 63,905 | 248,551 | ||||||
| Gross amount | Inventory valuation allowance | Carrying amount | Gross amount | Inventory Carrying Valuation amount allowance | |||
| Raw materials | 5,433,586 | 360,876 | 5,072,710 | 2,698,477 | 196,354 | 2,502,123 | |
| Work in progress | 3,228,883 | 424,693 | 2,804,190 | 1,900,684 | 213,991 | 1,686,693 | |
| Finished goods | 6,213,471 | 491,078 | 5,722,393 | 4,606,092 | 273,232 | 4,332,860 | |
| Turnover materials | 302,334 | 817 | 301,517 | 317,162 | 3,880 | 313,282 | |
| 15,178,274 | 1,277,464 | 13,900,810 | 9,522,415 | 687,457 | 8,834,958 | ||
| 1 Jan. 2021 | Current accrual | New sub sidiaries | Current reversal | Current write-off | Disposal of subsidiary | Exchange adjustment | 30 Jun. 2021 | |
| Raw materials | 196,354 | 189,420 | 22,353 | (12,031) | (34,507) | (713) | - | 360,876 |
| Work in progress | 213,991 | 248,267 | 34,488 | (33,024) | (38,092) | (937) | - | 424,693 |
| Finished goods | 273,232 | 252,886 | 11,370 | (21,354) | (23,821) | (1,023) | (212) | 491,078 |
| Turnover materials | 3,880 | - | - | - | (3,063) | - | - | 817 |
| 687,457 | 690,573 | 68,211 | (66,409) | (99,483) | (2,673) | (212) | 1,277,464 |
| 30 Jun. 2021 | 31 Dec. 2020 | |||||
| Gross amount | Valuation allowance | Carrying amount | Gross amount | Valuation allowance | Carrying amount | |
| Electricity charges receivable | 246,375 | 5,282 | 241,093 | 186,516 | 2,866 | 183,650 |
| (2) | Valuation allowances for contract assets are analyzed as follows: | |||||||||||||
| 1 Jan. 2021 | Increase in current period | Increase due to newly acquired subsidiaries | Reversal in current period | Write- off in current period | Exchange adjustment | 30 Jun. 2021 | ||||||||
| Electr icity charg ges | 2,866 | 2,008 | 479 | (71) | - | - | 5,282 | |||||||
| 11 | Assets held for sale | |||||||||||||
| Ending carrying amount | Fair value | Expected disposal expense | Expected time of disposal | |||||||||||
| Assets held for sale | 217,314 | 219,509 | 2,195 | Within 1 year | ||||||||||
| As at 30 Jun. 2021, non-current assets expected to be disposed of within 1 year were presented as assets held for sale. | ||||||||||||||
| 12 | Other current assets | |||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||
| Short-term debt investments | 2,079,163 | 1,418,900 | ||||||||||||
| VAT to be deducted, to be certified, etc. | 3,823,646 | 3,697,455 | ||||||||||||
| Current portion of loans and advances to customers (note) | 2,554,365 | 4,104,903 | ||||||||||||
| Others | 244,614 | 145,797 | ||||||||||||
| 8,701,788 | 9,367,055 | |||||||||||||
| 15 | Other debt investments | ||||||||||||||
| Beginning amount | Interest accrual | Fair value change in current period | Ending amount | Cost | Cumulative fair value change | Loss allowances cumulatively recognized in other comprehensive income | |||||||||
| Trust plans | 152,063 | 918 | 487 | 91,976 | 90,050 | 1,008 | - | ||||||||
| Note | As at 30 Jun. 2021, there were no significant other debt investments. | ||||||||||||||
| 30 Jun. 2021 Gross Allowance Carrying amouont amount | 31 Dec. 2020 Gross Allowance Carrying amouont amount | Range of discount rate | |||||
| Finance lease | 809,720 | - | 809,720 | 778,889 | - | 778,889 | 7.125%- 9. 975% |
| Of which: unrealized financing income | (943,659) | - | (943,659) | (990,529) | - | (990,529) | |
| 809,720 - 809,720 | 778,889 - 778,889 | ||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||||
| (1) | Associates | ||||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||||
| China Innovative Capital Management Limited | 1,037,627 | - | - | (42,867) | - | - | - | - | - | 994,760 | |||||||||||||
| LG Electronics (Huizhou) Co., Ltd. | 90,381 | - | - | 5,014 | - | (12,200) | - | - | 83,195 | ||||||||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 39,561 | - | - | (1,615) | - | - | - | - | - | 37,946 | |||||||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,668 | - | - | 1,407 | - | - | - | - | - | 8,075 | |||||||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 2,465 | - | - | 503 | - | - | - | - | - | 2,968 | |||||||||||||
| TCL Air Conditioner (Wuhan) Co., Ltd. | 37,834 | - | - | (2,207) | - | - | - | - | 35,627 | ||||||||||||||
| TCL Finance (Hong Kong) Co., Limited | 23,124 | - | 83,704 | 4,677 | - | - | - | - | 111,505 | ||||||||||||||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 12,110 | - | - | (7,765) | - | - | - | - | - | 4,345 | |||||||||||||
| Shenzhen Tianyi Hemeng Education Co., Ltd. | 4,719 | - | - | (662) | - | - | - | - | - | 4,057 | |||||||||||||
| Urumqi TCL Equity Investment Management Co., Ltd. | 226 | - | - | 384 | - | - | - | - | - | 610 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 1,367,292 | - | (4,059) | 197,267 | - | - | - | - | - | 1,560,500 | |||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||||
| 17 | Long-term equity investments (continued) | |||||||||||||||||||||
| (1) | Associates (continued) | |||||||||||||||||||||
| Increase or decrease in current period | ||||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | ||||||||||||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 850,489 | - | (85,000) | 223,386 | (3) | - | (589,345) | - | (22) | 399,505 | ||||||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 194,671 | - | - | (717) | - | - | - | - | - | 193,954 | ||||||||||||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 511,859 | - | - | 25,340 | - | - | - | - | - | 537,199 | ||||||||||||
| Wuxi TCL Aisikai Semiconductor Industry Investment Fund Partnership (Limited Partnership) | 221,698 | - | (992) | 1,735 | - | - | (3,687) | - | - | 218,754 | ||||||||||||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) | 35,638 | - | - | (1) | (1) | - | - | - | - | 35,636 | ||||||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | 66,373 | - | - | (583) | - | - | - | - | - | 65,790 | ||||||||||||
| Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) | 44,084 | - | - | 15,292 | (9) | - | (3,805) | - | - | 55,562 | ||||||||||||
| Nanjing Zijin A Dynamic Investment Partnership (Limited Partnership) | 21,216 | - | - | (6) | (1) | - | - | - | - | 21,209 | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||||
| Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) | 8,709 | - | - | (4) | - | - | - | - | - | 8,705 | |||||||||||||
| Beijing A Dynamic Venture Capital Center (Limited Partnership) | 7,365 | - | - | (65) | - | - | - | - | - | 7,300 | |||||||||||||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) | 7,800 | - | - | 294 | (2) | - | - | - | - | 8,092 | |||||||||||||
| Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) | 11,436 | - | - | (1) | - | - | - | - | - | 11,435 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 6,107 | - | - | (102) | - | - | (2,250) | - | - | 3,755 | |||||||||||||
| Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) | 2,660 | - | - | (14) | - | - | - | - | - | 2,646 | |||||||||||||
| Ningbo Jiutian Matrix Investment Management Co., Ltd. (note) | 2,660 | - | - | (279) | - | - | - | - | - | 2,381 | |||||||||||||
| Urumqi Qixinda Equity Investment Management Co., Ltd. | 1,611 | - | - | 593 | - | - | - | - | - | 2,204 | |||||||||||||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | 759 | - | - | 2 | - | - | - | - | - | 761 | |||||||||||||
| Beijing A Dynamic Investment Consulting Co., Ltd. | 473 | - | - | (3) | - | - | - | - | - | 470 | |||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 509 | - | - | (7) | - | - | - | - | - | 502 | |||||||||||||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | 282 | - | - | 2 | - | - | - | - | - | 284 | |||||||||||||
| Wuxi TCL Medical Imaging Technology Co., Ltd. | 40,889 | - | - | (3,492) | - | - | - | - | (3) | 37,394 | |||||||||||||
| Beijing WeMed Medical Equipment Co., Ltd. | 4,340 | - | (230) | (813) | - | - | - | - | (3,297) | - | |||||||||||||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 542,770 | - | - | 52,200 | - | - | - | - | - | 594,970 | |||||||||||||
| TCL Ventures Fund L.P. | 54,220 | - | - | (148) | - | - | - | - | 226 | 54,298 | |||||||||||||
| Getech Ltd. | 26,147 | - | - | (886) | - | - | - | - | - | 25,261 | |||||||||||||
| Qingteng Intellectual Property Holding (Shenzhen) Co., Ltd. | - | - | 15,721 | 15,721 | |||||||||||||||||||
| TCL Environmental Technology Co., Ltd. | 98,010 | - | 25,811 | 7,751 | - | - | - | - | - | 131,572 | |||||||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 377,553 | - | - | (6,092) | - | - | - | - | - | 371,461 | |||||||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited | 150,677 | (1,779) | 148,898 | ||||||||||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||||
| Shenzhen Xinhuoyicheng Recreational and Sports Industry Co., Ltd. | 1,514 | - | - | (96) | - | - | - | - | - | 1,418 | |||||||||||||
| JOLED Incorporation | 1,192,994 | - | - | (113,426) | - | - | - | - | (88,184) | 991,384 | |||||||||||||
| Sichuan Shengtian New Energy Development Co., Ltd. | 457,190 | - | - | 12,209 | - | - | (4,930) | - | - | 464,469 | |||||||||||||
| Yanyuan Fengguang New Energy Co., Ltd. | 58,418 | - | - | 2,595 | - | - | - | - | - | 61,013 | |||||||||||||
| SunPower Systems International Limited | 26,367 | - | - | - | - | - | - | - | - | 26,367 | |||||||||||||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 6,067 | - | - | 1,167 | - | - | - | - | - | 7,234 | |||||||||||||
| Jiangsu Huanxin Semiconductor Co., Ltd. | 33,849 | - | - | - | - | - | - | - | (33,849) | - | |||||||||||||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 86,275 | - | - | 17,983 | - | - | - | - | - | 104,258 | |||||||||||||
| Hunan Guoxin Semiconductor Technology Co., Ltd. | 9,969 | - | - | (154) | - | - | - | - | - | 9,815 | |||||||||||||
| Maxeon Solar Technologies，Ltd. | 1,883,629 | - | 219,574 | (100,173) | - | 15,121 | - | - | - | 2,018,151 | |||||||||||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 463,779 | - | - | 357,114 | - | - | - | - | - | 820,893 | |||||||||||||
| Ruihuan (Inner Mongolia) Solar Power Co., Ltd. | 11,768 | - | - | (2,209) | - | - | - | - | - | 9,559 | |||||||||||||
| Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) | 464,614 | - | 55,389 | (6,432) | - | - | - | - | - | 513,571 | |||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||
| (1) | Associates (continued) | ||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||
| Tianjin Hope Equity Investment Fund Management Co., Ltd. | 413 | - | - | - | - | - | - | - | - | 413 | |||||||||||
| Zhonghuan Feilang (Tianjin) Technology Co., Ltd. | 5,126 | - | - | (239) | - | - | - | - | - | 4,887 | |||||||||||
| Tianjin Zhonghuan Tengliang Technology Co., Ltd. | 6,909 | - | - | - | - | - | - | - | - | 6,909 | |||||||||||
| Ningbo Zhongxin Venture Capital Partnership | - | - | 40,000 | 21 | - | - | - | - | 40,021 | ||||||||||||
| Tianjin Huanxin Technology&Development Co., Ltd. | - | - | 469,800 | (8,998) | - | - | - | - | (15,746) | 445,056 | |||||||||||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | - | - | 600 | - | - | - | - | - | 600 | ||||||||||||
| Others | 13,305,909 | - | (88,082) | 677,257 | (152,039) | - | (43,939) | - | (45,384) | 13,653,722 | |||||||||||
| 23,927,802 | - | 716,515 | 1,318,079 | (152,055) | 15,121 | (660,156) | - | (186,259) | 24,979,047 | ||||||||||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 17 | Long-term equity investments (continued) | ||||||||||||||||||||
| (2) | Joint ventures | ||||||||||||||||||||
| Increase or decrease in current period | |||||||||||||||||||||
| Name of investee | Beginning amount | Increase due to newly acquired subsidiaries | 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 | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | |||||||||||
| TCL Huizhou City, Kai Enterprise Management Limited | 1,308 | - | - | (1) | - | - | - | - | - | 1,307 | |||||||||||
| Huizhou TCL Human Resources Service Co., Ltd. | 2,121 | - | - | (175) | - | - | - | - | - | 1,946 | |||||||||||
| Zhangjiakou Qixin Equity Investment Fund Partnership | 115,805 | - | (20,122) | (1,481) | - | - | - | - | - | 94,202 | |||||||||||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | - | - | - | - | - | - | - | - | - | ||||||||||||
| Tianjin Huanyan Technology Co., Ltd. | - | (47,000) | (68) | 192,000 | 144,932 | ||||||||||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. | - | - | 335,000 | (1,170) | - | - | - | - | (13,633) | 320,197 | |||||||||||
| 119,234 | - | 267,878 | (2,895) | - | - | - | - | 178,367 | 562,584 | ||||||||||||
| 19 | Other non-current financial assets | ||
| 30 Jun. 2021 | 31 Dec. 2020 | ||
| Equity investments | 1,868,405 | 2,422,328 | |
| Debt investments | 589,734 | 633,267 | |
| 2,458,139 | 3,055,595 | ||
| 18 | Investments in other equity instruments | |||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||
| Equity instruments not held-for-trading | 1,100,185 | 1,333,676 | ||||||||
| Item name | Dividend income recognized | Accumulated gains | Accumulated losses | Amount of other comprehensive income transferred to retained earnings | Reasons designated as measured at fair value and whose changes are included in other comprehensive income | Reasons for other comprehensive income transferred to retained earnings | ||||
| Equity instruments not held-for-trading | 3,090 | - | (54,428) | 115,871 | Financial assets not held-for-trading | Sold in current period | ||||
| V 20 | Notes to Consolidated Financial Statements (Continued) Investment property | ||||||
| Buildings and constructions | Land use rights | Total | |||||
| Gross amount: | |||||||
| 1 Jan. 2021 | 1,646,742 | 195,007 | 1,841,749 | ||||
| Increases | |||||||
| Increase in current period | 3,363 | - | 3,363 | ||||
| Reclassified from fixed assets and intangible assets | 172,328 | - | 172,328 | ||||
| Reclassified from construction in progress | 4,110 | - | 4,110 | ||||
| Decreases | |||||||
| Decrease in current period | - | - | - | ||||
| Reclassified to fixed assets and intangible assets | (1,005,478) | (104,012) | (1,109,490) | ||||
| 30 Jun. 2021 | 821,065 | 90,995 | 912,060 | ||||
| Accumulated depreciation and amortization | |||||||
| 1 Jan. 2021 | 115,212 | 10,263 | 125,475 | ||||
| Increases | |||||||
| Increase in current period | 49,300 | 1,687 | 50,987 | ||||
| Reclassified from fixed assets and intangible assets | 2,506 | - | 2,506 | ||||
| Decreases | |||||||
| Decrease in current period | - | - | - | ||||
| Reclassified to fixed assets and intangible assets | (39,483) | (4,748) | (44,231) | ||||
| 30 Jun. 2021 | 127,535 | 7,202 | 134,737 | ||||
| Investment property, net: | |||||||
| 30 Jun. 2021 | 693,530 | 83,793 | 777,323 | ||||
| 1 Jan. 2021 | 1,531,530 | 184,744 | 1,716,274 | ||||
| Impairment allowances: | |||||||
| 1 Jan. 2021 | 52,073 | - | 52,073 | ||||
| Increases | |||||||
| Increase due to newly acquired subsidiaries | - | - | - | ||||
| Decreases | |||||||
| Reclassified to fixed assets and intangible assets | - | - | - | ||||
| 30 Jun. 2021 | 52,073 | 52,073 | |||||
| Investment property, carrying amount: | |||||||
| 30 Jun. 2021 | 641,457 | 83,793 | 725,250 | ||||
| 1 Jan. 2021 | 1,479,457 | 184,744 | 1,664,201 | ||||
| 21 | Fixed assets Gross amount: | Buildings and constructions | Machinery equipment | Office and electronic equipment | Means of transport | Power stations | Others | Total | ||
| 31 Dec. 2020 | 24,344,118 | 107,045,621 | 4,236,113 | 140,658 | 2,369,816 | 9,227 | 138,145,553 | |||
| Change of accounting policy | - | (1,570,996) | - | - | - | - | (1,570,996) | |||
| 1 Jan. 2021 | 24,344,118 | 105,474,625 | 4,236,113 | 140,658 | 2,369,816 | 9,227 | 136,574,557 | |||
| Increases | ||||||||||
| Increase due to newly acquired subsidiaries | 5,991,686 | 17,004,318 | 562,940 | 51,211 | - | 10,089 | 23,620,244 | |||
| Purchase | 8,224 | 236,904 | 145,660 | 9,452 | 8,603 | 1,236 | 410,079 | |||
| Reclassified from investment property | 1,005,478 | - | - | - | - | - | 1,005,478 | |||
| Reclassified from construction in progress | 5,518,257 | 9,287,721 | 345,710 | 13,609 | 480 | 240 | 15,166,017 | |||
| Decrease | ||||||||||
| Written down with government grants | (131,150) | (82,569) | - | - | - | - | (213,719) | |||
| Decrease due to newly reduced subsidiaries | (45,077) | (663,743) | (70,836) | (308) | - | - | (779,964) | |||
| Reclassified to investment property | (172,328) | - | - | - | - | - | (172,328) | |||
| Other decreases | (4,228) | (1,569,022) | (57,451) | (8,204) | (18,348) | (43) | (1,657,296) | |||
| Exchange adjustment | 1,392 | (1,378) | (109) | 1 | - | (44) | (138) | |||
| 30 Jun. 2021 | 36,516,372 | 129,686,856 | 5,162,027 | 206,419 | 2,360,551 | 20,705 | 173,952,930 | |||
| Accumulated depreciation: | ||||||||||
| 31 Dec. 2020 | 3,137,624 | 38,615,003 | 1,781,623 | 89,472 | 336,269 | 5,592 | 43,965,583 | |||
| Change of accounting policy | - | (256,690) | - | - | - | - | (256,690) | |||
| 1 Jan. 2021 Increases | 3,137,624 | 38,358,313 | 1,781,623 | 89,472 | 336,269 | 5,592 | 43,708,893 | |||
| Increase due to newly acquired subsidiaries | 2,122,772 | 15,745,278 | 462,511 | 43,426 | - | 6,744 | 18,380,731 | |||
| Accrual | 516,854 | 6,314,567 | 208,097 | 12,461 | 45,658 | 306 | 7,097,943 | |||
| Reclassified from investment property | 39,483 | - | - | - | - | - | 39,483 | |||
| Decreases | ||||||||||
| Written down with government grants | (42,395) | (134,998) | - | - | - | - | (177,393) | |||
| Decrease due to newly reduced subsidiaries | (3,336) | (392,348) | (57,734) | (34) | - | - | (453,452) | |||
| Reclassified to investment property | (2,506) | - | - | - | - | (2,506) | ||||
| Other decreases | (947) | (603,550) | (27,585) | (6,247) | - | (43) | (638,372) | |||
| Exchange adjustment | 78 | (360) | (60) | (6) | - | (15) | (363) | |||
| 30 Jun. 2021 | 5,767,627 | 59,286,902 | 2,366,852 | 139,072 | 381,927 | 12,584 | 67,954,964 | |||
| Fixed assets, net: | ||||||||||
| 30 Jun. 2021 | 30,748,745 | 70,399,954 | 2,795,175 | 67,347 | 1,978,624 | 8,121 | 105,997,966 | |||
| 1 Jan. 2021 | 21,206,494 | 67,116,312 | 2,454,490 | 51,186 | 2,033,547 | 3,635 | 92,865,664 | |||
| 31 Dec. 2020 | 21,206,494 | 68,430,618 | 2,454,490 | 51,186 | 2,033,547 | 3,635 | 94,179,970 | |||
| Buildings and | Machinery | Office and | Means of | Power | Others | Total | |
| constructions | equipment | electronic equipment | transport | stations | |||
| Impairment allowances: | |||||||
| 1 Jan. 2021 | 771,541 | 170,409 | 404,553 | 3,565 | - - | 1,350,068 | |
| Increase due to newly acquired subsidiaries | - | 81,618 | 851 | - | - 412 | 82,881 | |
| Current accrual | - | 37,892 | 7,532 | - | - - | 45,424 | |
| Reclassified from investment property | - | - | - | - | - - | - | |
| Decrease due to newly reduced subsidiaries | (273) | (606) | - | - | - - | (879) | |
| Write-off in current period Exchange adjustment | - | - - | (186) | - - | - - - - | (186) - | |
| 30 Jun. 2021 | 771,268 | 289,313 | 412,750 | 3,565 | - 412 1,477,308 | ||
| Fixed assets, carrying amount | |||||||
| 29,977,477 | 70,110,641 | 2,382,425 | 63,782 | 1,978,624 | 7,709 | 104,520,658 |
| 20,434,953 | 66,945,903 | 2,049,937 | 47,621 | 2,033,547 | 3,635 | 91,515,596 |
| 20,434,953 | 68,260,209 | 2,049,937 | 47,621 | 2,033,547 | 3,635 | 92,829,902 |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||||||||
| 22 | Construction in progress | |||||||||||||||||||||||||
| Project name | Budget | Beginning amount | Increase due to newly acquired subsidiaries | Increase in current period | Reclassified to fixed assets in current period | Other decreases | 30 Jun. 2021 | Investment as % of budget | Progress | Cumulative capitalized interest | Of which: capitalized interest in current period | Interest capitalization rate for current period | Funding source | |||||||||||||
| t6 production line of LCD panel | 33,149,000 | 305,237 | - | 494,093 | (609,954) | (4,798) | 184,578 | 85% | 99% | 796,952 | - | - | Self-funded + external-loan-funded | |||||||||||||
| t7 production line of LCD panel | 35,337,000 | 9,338,643 | - | 7,332,969 | (8,215,250) | (34,753) | 8,421,609 | 60% | 74% | 278,767 | 151,647 | 4.12% | Self-funded + external-loan-funded | |||||||||||||
| t4 production line of LCD panel | 27,081,000 | 10,892,755 | - | 5,017,585 | (176,930) | - | 15,733,410 | 100% | 100% | 964,569 | 124,541 | 3.92% | Self-funded + external-loan-funded | |||||||||||||
| Huizhou modular integration project | 5,930,000 | 1,638,831 | - | 735,910 | (442,924) | (264,002) | 1,667,815 | 90% | 86% | 12,988 | - | - | Self-funded + external-loan-funded | |||||||||||||
| Production line of 8-12-inch semi-conductor silicon wafers for integrated circuit | 5,707,172 | 2,027,583 | - | 522,868 | (421,156) | (2,775) | 2,126,520 | 51% | 51% | - | - | - | Self-funded | |||||||||||||
| Industrialization phase V of monocrystalline silicon materials for renewable solar power batteries and monocrystalline silicon wafers for ultra-thin high-efficient solar power batteries | 9,125,010 | 1,417,284 | - | 2,187,078 | (1,220,370) | - | 2,383,992 | 72% | 72% | 35,364 | 35,364 | 4.35% | Self-funded | |||||||||||||
| Others | N/A | 5,887,978 | 105,257 | 5,767,809 | (4,079,433) | (1,018,250) | 6,663,362 | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
| 31,508,311 | 105,257 | 22,058,313 | (15,166,017) | (1,324,578) | 37,181,286 | |||||||||||||||||||||
| 23 Right of use assets | |||||||
| Gross amount: | Buildings and constructions | Means of transport | Machinery equipment | Total | |||
| 1 Jan. 2021 | 542,391 | 165 | 1,570,996 | 2,113,552 | |||
| Increases: Increase due to new subsidiary | 5,078 | 1,660 | 182 | 6,920 | |||
| Leased in | 44,195 | - | 238,938 | 283,133 | |||
| Reduced subsidiary | (12,461) | - | - | (12,461) | |||
| Decrease due to contract amendment | - | (167) | - | (167) | |||
| Other decreases | - | (248) | (47,995) | (48,243) | |||
| Exchange adjustment | (566) | (8) | - | (574) | |||
| 30 Jun. 2021 | 578,637 | 1,402 | 1,762,121 | 2,342,160 | |||
| Accumulated depreciation: 1 Jan. 2021 | - | - | 256,690 | 256,690 | |||
| Increases Increase due to new subsidiary | 423 | 1,100 | 116 | 1,639 | |||
| Accrual Increase due to contract amendment Decreases Change of accounting policy Reduced subsidiary | 45,522 - - (1,377) | 165 - - - | 67,047 - - - | 112,734 - - - (1,377) | |||
| Decrease due to contract amendment | - | (140) | - | (140) | |||
| Other decreases | - | (248) | (11,366) | (11,614) | |||
| Exchange adjustment | (27) | - | - | (27) | |||
| 30 Jun. 2021 | 44,541 | 877 | 312,487 | 357,905 | |||
| Right-of-use assets, net 30 Jun. 2021 | 534,096 | 525 | 1,449,634 | 1,984,255 | |||
| 1 Jan. 2021 | 542,391 | 165 | 1,314,306 | 1,856,862 | |||
| Impairment allowances: 1 Jan. 2021 Increase Accrual Decrease Lease expiration | - - - | - - - | - - - | - - - | |||
| Exchange adjustment | - | - | - | - | |||
| 30 Jun. 2021 | - | - | - | - | |||
| Right-of-use assets, carrying amount 30 Jun. 2021 | 543,041 | 525 | 1,449,634 | 1,984,255 | |||
| 1 Jan. 2021 | 542,391 | 165 | 1,314,306 | 1,856,862 | |||
| Land use rights | Non-patent technologies | Others | Total | ||||
| Gross amount: | /patents | ||||||
| 1 Jan. 2021 | 5,788,722 | 6,206,466 | 1,106,104 | 13,101,292 | |||
| Increases New subsidiary | 628,167 | - | 258,383 | 886,550 | |||
| Purchase | 845,684 | 421,702 | 44,233 | 1,311,619 | |||
| Reclassified from investment property | 104,012 | - | - | 104,012 | |||
| Reclassified from construction in progress | 54,404 | - | 60,758 | 115,162 | |||
| Reclassified from development costs Decreases Sale and disposal | - (42,312) | 757,202 (510) | - - (3,897) | 757,202 (46,719) | |||
| Reclassified to investment property | - | - | - | - | |||
| Reduced subsidiary Written down with government grants Exchange adjustment | (8,078) - (192) | (1,529) - (25,232) | (68,925) - 45 | (78,532) - (25,379) | |||
| 30 Jun. 2021 | 7,370,407 | 7,358,099 | 1,396,701 | 16,125,207 | |||
| Accumulated amortization: 1 Jan. 2021 | 569,351 | 1,864,170 | 535,315 | 2,968,836 | |||
| Increases New subsidiary | 36,622 | - | 129,384 | 166,006 | |||
| Accrual | 97,228 | 378,889 | 78,021 | 554,138 | |||
| Reclassified from investment property Decreases Sale and disposal | 4,748 (1,808) | - (226) | - - (65) | 4,748 - (2,099) | |||
| Reclassified to investment property | - | - | - | - | |||
| Reduced subsidiary | (2,924) | (170) | (65,986) | (69,080) | |||
| Written down with government grants | (3,595) | - | (490) | (4,085) | |||
| Exchange adjustment | - | (1,873) | 18 | (1,855) | |||
| 30 Jun. 2021 | 699,622 | 2,240,790 | 676,197 | 3,616,609 | |||
| Intangible assets, net： 30 Jun. 2021 | 6,670,785 | 5,117,309 | 720,504 | 12,508,598 | |||
| 1 Jan. 2021 | 5,219,371 | 4,342,296 | 570,789 | 10,132,456 | |||
| Impairment allowances： 1 Jan. 2021 | 23,562 | 32,625 | 22,224 | 78,411 | |||
| New subsidiary Accrual Write-off in current period Exchange adjustment | - - - - | - - - (324) | - - - - | - - - (324) | |||
| 30 Jun. 2021 | 23,562 | 32,301 | 22,224 | 78,087 | |||
| Intangible assets, carrying amount: 30 Jun. 2021 | 6,647,223 | 5,085,008 | 698,280 | 12,430,511 | |||
| 1 Jan. 2021 | 5,195,809 | 4,309,671 | 548,565 | 10,054,045 | |||
| V | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||||
| 25 | Development costs | ||||||||||||||||||||||
| Development costs are as follows： | |||||||||||||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||||||||||||||||||||
| Semi-conductor display | 1,722,961 | 1,383,727 | |||||||||||||||||||||
| Semi-conductor photovoltaic and semi-conductor materials | 800,034 | 720,268 | |||||||||||||||||||||
| 2,522,995 | 2,103,995 | ||||||||||||||||||||||
| 26 | Goodwill | ||||||||||||||||||||||
| (1) | Gross amount of goodwill | ||||||||||||||||||||||
| Name of investee or item incurring goodwill | Beginning amount | Increase in current period | Decrease in current period | Ending amount | |||||||||||||||||||
| Incurred in business combination | Increase due to newly acquired subsidiaries | Disposal and others | |||||||||||||||||||||
| 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 Zhonghuan Electronics Group Co., Ltd. | Note 3 | 6,726,130 | - | - | - | 6,726,130 | |||||||||||||||||
| Tianjin Huan’Ou Semiconductor Material&Technology Co., Ltd. | Note 4 | 214,683 | - | - | - | 214,683 | |||||||||||||||||
| Moka International Limited | Note 5 | - | 1,727,580 | - | - | 1,727,580 | |||||||||||||||||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Note 6 | - | 454,644 | - | - | 454,644 | |||||||||||||||||
| 6,972,232 | 2,182,224 | - | - | 9,154,456 | |||||||||||||||||||
| (2) | Goodwill impairment allowance | ||||||||||||||||||||||
| Name of investee | Beginning amount | Increase in current period | Decrease in current period | Ending amount | |||||||||||||||||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 28,967 | - | - | 28,967 | |||||||||||||||||||
| Note 1 | The Company acquired in 2010 a 51.82% interest in TCL Medical Radiological Technology (Beijing) Co., Ltd. (hereinafter referred to as “TCL Medical Radiological Technology”) with a capital of RMB 52,319 thousand. As such, the difference between the accumulated investment of the Company in TCL Medical Radiological Technology (corresponding to a 51.82% interest) and the fair value of the identifiable net assets of TCL Medical Radiological Technology attributable to the Company on the settlement date (equal to RMB 28,967 thousand) was recorded in the Company’s goodwill. An impairment allowance of RMB 28,967 thousand had been established on this goodwill item for 2018. | ||||||||||||||||||||||
| Note 2 | Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired in October 2016 a 60% interest in Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as “Blue Business Consulting”) with a capital of RMB 10,000 thousand. As such, 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 identifiable net assets of Blue Business Consulting attributable to Highly Information Industry Co., Ltd. on the settlement date (equivalent to RMB 2,452 thousand) was recorded in the Company’s goodwill. |
| Note 3 | The Company acquired on 1 October 2020 the 100% interest in Tianjin Zhonghuan Electronics Group Co., Ltd. (hereinafter referred to as “Zhonghuan Electronics”) with a cash payment of RMB12,500,000 thousand. As from the date of acquisition, the Group has obtained the control of Zhonghuan Electronics and has thus included it into the consolidated financial statements. As such, the difference between the accumulated investment of the Company in Zhonghuan Electronics (corresponding to the 100% interest) and the fair value of the identifiable net assets of Zhonghuan Electronics attributable to the Company on the settlement date (equal to RMB6,726,130 thousand) was recorded in the Company’s goodwill. |
| Note 4 | Tianjin Huan’Ou Semiconductor Material&Technology Co., Ltd. is a subsidiary of Zhonghuan Electronics, which the Company has acquired in a business combination not involving entities under common control. |
| Note 5 | The Company acquired in April 2021 the 100% interest in Moka International Limited with a cash payment of RMB2,800,000 thousand. As from the date of acquisition, the Group has obtained the control of Moka International Limited. As such, the difference between the accumulated investment of the Company in Moka International Limited (corresponding to the 100% interest) and the fair value of the identifiable net assets of Moka International Limited attributable to the Company on the settlement date (equal to RMB 1,727,580 thousand) was recorded in the Company’s goodwill. |
| Note 6 | The Company acquired in April 2021 a 60% interest in Suzhou China Star Optoelectronics Technology Co., Ltd. (formerly known as “Samsung Suzhou LCD Co. Ltd.” with a cash payment of RMB4,757,727 thousand. The difference between the accumulated investment of the Company in Suzhou China Star Optoelectronics Technology Co., Ltd. (corresponding to the total 70% interest) and the fair value of the identifiable net assets of Suzhou China Star Optoelectronics Technology Co., Ltd. attributable to the Company on the settlement date (equal to RMB454,644 thousand) was recorded in the Company’s goodwill. |
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | ||
| Deductible losses | 5,644,754 | 931,240 | 6,894,358 | 1,123,164 | |
| Asset impairment allowances | 3,008,765 | 678,875 | 863,644 | 157,705 | |
| Provisions | 582,063 | 104,157 | 348,755 | 63,881 | |
| Changes in fair value | 59,438 | 10,552 | 55,115 | 9,708 | |
| Others | 1,748,632 | 370,837 | 1,236,231 | 223,630 | |
| 11,043,652 | 2,095,661 | 9,398,103 | 1,578,088 |
| Improvement expense on leased fixed assets | 1,837,100 | (437,301) | 1,399,799 | 101,226 | - | (100,001) | (10,194) | (22) | 1,390,808 | ||||||||
| Others | 699,570 | - | 699,570 | 100,486 | 3,308 | (531,043) | (54,327) | (43,343) | 174,651 | ||||||||
| 2,536,670 | (437,301) | 2,099,369 | 201,712 | 3,308 | (631,044) | (64,521) | (43,365) | 1,565,459 |
| Deductible temporary difference | Deferred income tax liabilities | Deductible temporary difference | Deferred income tax liabilities | |
| 11,508,128 | 1,871,485 | 9,964,402 | 1,632,989 | |
| 3,259,401 | 633,410 | 1,677,938 | 330,039 | |
| 2,490,948 | 441,918 | 1,387,815 | 339,098 | |
| 252,256 | 37,838 | 120,200 | 18,030 | |
| 264,754 | 39,816 | 333,004 | 66,341 | |
| 17,775,487 | 3,024,467 | 13,483,359 | 2,386,497 |
| V 28 | Notes to Consolidated Financial Statements (Continued) Deferred income tax assets and deferred income tax liabilities (continued) | |||
| (5) | Deductible losses in respect of unrecognized deferred income tax assets will expire in the following years: | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| 2020 - | 85,905 | |||
| 2021 178,533 | 186,872 | |||
| 2022 276,375 | 278,304 | |||
| 2023 494,320 | 497,214 | |||
| 2024 481,369 | 487,234 | |||
| 2025 459,764 | 460,523 | |||
| 2026 onwards 2,003,965 | 809,291 | |||
| 3,894,326 | 2,805,343 | |||
| 29 | Other non-current assets | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| Advance payment for equipment and land use rights (Note) | 9,300,306 | 11,725,289 | |||
| Advance payment for patents | 246,994 | 244,462 | |||
| Others | 870,791 | 563,102 | |||
| 10,418,091 | 12,532,853 | ||||
| 33 | Held-for-trading financial liabilities | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Financial liabilities at fair value through profit or loss | 1,134,251 | 527,901 | ||
| 34 | Derivative financial liabilities | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Derivative financial liabilities | 129,382 | 384,904 | ||
| 35 | Notes payable | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Bank acceptance notes | 4,425,543 | 4,324,150 | ||
| Trade acceptance notes | 983,281 | 401,462 | ||
| 5,408,824 | 4,725,612 | |||
| There is no amount payable to shareholders holding 5% or more voting shares in the Company in the account balance. | ||||
| 36 | Accounts payable | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Amounts due to suppliers 24,863,736 | 16,468,932 | |||
| 38 | Contract liabilities | |
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Advances from customers 2,635,068 | 2,004,004 | |
| 39 | Financial assets sold under repurchase agreements | |
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Financial assets sold under repurchase agreements - | 50,080 | |
| 40 | Employee benefits payable and long-term employee benefits payable | |
| (1) | Employee benefits payable | |
| 30 Jun. 2021 | 31 Dec. 2020 | |
| Short-term employee benefits payable 2,578,549 | 1,828,681 | |
| Defined contribution plans payable 40,046 | 25,394 | |
| Dismissal benefits payable - | 2,589 | |
| 2,618,595 | 1,856,664 |
| The Company had no advances from customers of a large amount with an age of over one year. |
| There is no advance from shareholders holding 5% or more voting shares in this account balance. |
| V | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 40 | Employee benefits payable and long-term employee benefits payable (continued) | |||||||||||||
| (1) | Employee benefits payable (continued) | |||||||||||||
| (a) | Short-term employee benefits payable | |||||||||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |||||||||||
| Wages, bonuses, allowances and subsidies | 1,493,952 | 4,664,149 | (3,806,094) | 2,352,007 | ||||||||||
| Employee services and benefits | 20,028 | 199,099 | (168,219) | 50,896 | ||||||||||
| Social insurance benefits | 37,127 | 153,742 | (140,172) | 50,697 | ||||||||||
| Of which: medical insurance | 34,566 | 142,596 | (128,972) | 48,190 | ||||||||||
| Employment injury insurance | 1,016 | 5,475 | (5,329) | 1,162 | ||||||||||
| Maternity insurance | 1,545 | 5,671 | (5,871) | 1,345 | ||||||||||
| Housing fund | 36,660 | 125,161 | (124,885) | 36,936 | ||||||||||
| Trade union funds and staff education funds | 11,498 | 45,479 | (24,964) | 32,013 | ||||||||||
| Others | 229,416 | 17,139 | (190,567) | 55,988 | ||||||||||
| 1,828,681 | 5,204,769 | (4,454,901) | 2,578,549 | |||||||||||
| (b) | Defined contribution plans | |||||||||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |||||||||||
| Basic pension insurance | 24,005 | 231,470 | (217,095) | 38,380 | ||||||||||
| Unemployment insurance | 1,389 | 7,191 | (6,914) | 1,666 | ||||||||||
| 25,394 | 238,661 | (224,009) | 40,046 | |||||||||||
| (2) | Long-term employee benefits payable | |||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||
| Supplementary pension insurance (note) | 27,482 | 27,858 | ||||||||||||
| Note | This item is the supplementary pension insurance benefits payable to retired employees. | |||||||||||||
| V 41 | Notes to Consolidated Financial Statements (Continued) Taxes and levies payable | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| VAT | 148,286 | 75,769 | |||
| Corporate income tax | 1,054,653 | 471,670 | |||
| Individual income tax | 58,226 | 33,518 | |||
| City construction tax | 26,546 | 23,919 | |||
| Educational surcharge | 19,053 | 17,105 | |||
| Others | 110,952 | 48,078 | |||
| 1,417,716 | 670,059 | ||||
| Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates. | |||||
| 42 | Other payables | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| Dividends payable | 47,240 | 1,293 | |||
| Other payables | 19,552,468 | 14,868,140 | |||
| 19,599,708 | 14,869,433 | ||||
| (1) | Dividends payable | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| Other non-controlling interests | 47,240 | 1,293 | |||
| 42 | Other payables (continued) | ||
| (2) | Other payables | ||
| 30 Jun. 2021 | 31 Dec. 2020 | ||
| Payables for engineering equipment | 12,711,845 | 9,586,852 | |
| Amounts due to external entities | 5,421,288 | 4,192,022 | |
| Unpaid expenses | 1,274,233 | 879,629 | |
| Deposit and security deposit | 145,102 | 209,637 | |
| 19,552,468 | 14,868,140 | ||
| 43 | Current portion of non-current liabilities | ||||
| Note V | 30 Jun. 2021 | 1 Jan. 2021 | 31 Dec. 2020 | ||
| Current portion of long-term borrowings (note 1) | 45 | 5,029,308 | 4,360,381 | 4,360,381 | |
| Current portion of bonds payable | 7,499,441 | 8,146,771 | 8,146,771 | ||
| Current portion of lease liabilities | 47 | 380,291 | 236,574 | - | |
| Current portion of long-term payables | 152,316 | 143,938 | 361,110 | ||
| Current portion of interest payable | 597,186 | 561,408 | 561,408 | ||
| 13,658,542 | 13,449,072 | 13,429,670 | |||
| 44 | Other current liabilities | ||
| 30 Jun. 2021 | 31 Dec. 2020 | ||
| After-sales service expense (note) | 500,179 | 197,515 | |
| Others | 195,476 | 169,456 | |
| 695,655 | 366,971 | ||
| Note | After-sales service expense expected to occur within 1 year is reflected in current liabilities. |
| V 45 | Notes to Consolidated Financial Statements (Continued) Long-term borrowings | ||
| 30 Jun. 2021 | 31 Dec. 2020 | ||
| Borrowings secured by collateral | 40,839,344 | 39,413,026 | |
| Borrowings secured by pledge | 596,300 | 445,100 | |
| Unsecured borrowings | 52,257,284 | 38,091,658 | |
| 93,692,928 | 77,949,784 | ||
| Of which: Current portion of long-term borrowings | (5,029,308) | (4,360,381) | |
| 88,663,620 | 73,589,403 | ||
| The maturities of the Company’s long-term borrowings vary from 2021 to 2030. As at 30 Jun. 2021, long-term borrowings secured by collateral were RMB40,839,344 thousand (including amounts translated from other currencies) (31 Dec. 2020: RMB39,413,026 thousand), which were secured by the collaterals of land use rights, buildings and constructions and machinery equipment of RMB 84,299,614 thousand (including amounts translated from other currencies) (31 Dec. 2020: RMB83,524,779 thousand). Long-term borrowings secured by pledge were RMB 596,300 thousand (including amounts translated from other currencies) (31 Dec. 2020: RMB445,100 thousand), which were secured by the pledges such as rights of charge of RMB 304,321 thousand (including amounts translated from other currencies) (31 Dec. 2020: RMB 302,447 thousand). The interest rates of the Company's long-term borrowing ranged from 1.35% to 6.36% in the current period (2020: 1.35%-5.70%). | |||
| 46 | Bonds payable | ||
| 30 Jun. 2021 | 31 Dec. 2020 | ||
| Corporate bonds | 12,072,366 | 13,047,234 | |
| MTN | 5,590,763 | 4,993,539 | |
| 17,663,129 | 18,040,773 | ||
| Bond name | Par value | Issue date | Maturity | Issued amount | Increase due to newly acquired subsidiaries | Beginning amount | Issued in current period | Accrued interest as per par value | Amortization of premium or discount | Repaid in current period | Others (note 1) | Ending amount | |
| 17TCL01 | 1,000,000 | 2017-4-19 | 5 | 1,000,000 | - | 1,000,947 | - - (180) | - | (1,000,767) | - | |||
| 17TCL02 | 3,000,000 | 2017-7-7 | 5 | 3,000,000 | - | 157,000 | - - - | - | - | 157,000 | |||
| 18TCL01 | 1,000,000 | 2018-6-6 | 5 | 1,000,000 | - | 998,544 | - - 297 | (829,981) | - | 168,860 | |||
| 18TCL02 | 2,000,000 | 2018-8-20 | 5 | 2,000,000 | - | 1,996,841 | - - 594 | - | - | 1,997,435 | |||
| 19TCL01 | 1,000,000 | 2019-5-20 | 5 | 1,000,000 | - | 998,056 | - - 285 | - | - | 998,341 | |||
| 19TCL02 | 1,000,000 | 2019-7-23 | 5 | 1,000,000 | - | 998,009 | - - 277 | - | - | 998,286 | |||
| 19TCL03 | 2,000,000 | 2019-10-21 | 5 | 2,000,000 | - | 1,995,742 | - - 554 | - | - | 1,996,296 | |||
| 20TCL Tech MTN001 | 3,000,000 | 2020-3-27 | 3 | 3,000,000 | - | 2,994,641 | - - 1,189 | - | - | 2,995,830 | |||
| TCL Private Convertible 1 (Note 2) | 600,000 | 2020-11-11 | 2 | 600,000 | - | 572,190 | - |
| TCL Private Convertible 2 (Note3) | 2,600,000 | 2020-11-30 | 2 | 2,600,000 | - | 2,380,375 | - |
| Bond name | Par value | Issue date | Matu rity | Issued amount | Increase due to newly acquired subsidiaries | Beginning amount | Issued in current period | Accrued interest as per par value | Amortization of premium or discount | Repaid in current period | Others (note 1) | Ending amount |
| TCL TEC 1 | 1,957,483 | 2020-07-14 | 5 | 1,957,483 | - | 1,949,530 | - - | 3,900 | - | (22,474) | 1,930,956 | |
| Note 1 | Others are the current portion of bonds payable reclassified to the current portion of non-current liabilities. |
| Note 2 | TCL Private Convertible 1 is convertible corporate bonds with a maturity of two years. The stock convertible period starts from the first trading day 12 months after the completion of the offering and ends upon the maturity of the bonds. The interest rates for the first and second years are 2% and 1.5% respectively. |
| Note 3 | TCL Private Convertible 2 is convertible corporate bonds with a maturity of two years. The stock convertible period starts from the first trading day six months after the completion of the offering and ends upon the maturity of the bonds. The interest rates for the first and second years are 0.5% and 0.1% respectively. |
| (369) | - | (599,894) | - |
| - | - |
,
,
| 600,000 800,000 | 2019-8-23 2020-6-22 | 3 3 | 600,000 800,000 | - 599,871 - 798,764 | - - | - - | (358) 449 | - - | 599,513 799,213 |
| 2,000,000 | 2021-5-10 | 3 | 2,000,000 | - - | 2,000,000 | - | (4,580) | - - | 1,995,420 |
| 47 | Lease liabilities | |||
| Item Total lease liabilities | 30 Jun. 2021 1,266,806 | 1 Jan. 2021 1,149,125 | ||
| Less: current portion of lease liabilities | 380,291 | 236,574 | ||
| Total | 886,515 | 912,551 | ||
| V 48 | Notes to Consolidated Financial Statements (Continued) Long-term payables | ||||
| 30 Jun. 2021 | 1 Jan. 2021 | 31 Dec. 2020 | |||
| Long-term payables | 528,172 | 429,602 | 1,256,300 | ||
| Technological development fund | - | 24,000 | 24,000 | ||
| 528,172 | 453,602 | 1,280,300 | |||
| 49 | Deferred income | ||||
| 1 Jan. 2021 | Increase due to newly acquired subsidiaries | New grants in current period | Amount recorded in non-operating income in current period | Amount recorded in other income in current period | Amount used to offset costs and expenses in current period | Other changes | 30 Jun. 2021 | |||||||||
| Government grants related to assets | 483,641 | 4,721 | 363,715 | (939) | (71,438) | (9,716) | (416,360) | 353,624 | ||||||||
| Government grants related to income | 1,023,136 | 4,061 | 1,580,698 | (638) | (698,323) | (325,231) | (350,734) | 1,232,969 | ||||||||
| 1,506,777 | 8,782 | 1,944,413 | (1,577) | (769,761) | (334,947) | (767,094) | 1,586,593 | |||||||||
| Note | “Other changes” were deferred income offset by the carrying amounts of relevant assets. | |||||||||||||||
| Amount | Percentage | New issues | |
| 1. Restricted shares | 1,370,828 | 9.77% | - |
| 2. Unrestricted shares | 12,659,960 | 90.23% | - |
| 3. Total shares | 14,030,788 | 100% | - |
| V 51 | Notes to Consolidated Financial Statements (Continued) Other equity instruments | ||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | ||||
| Convertible bonds 230,241 | - | - | 230,241 | ||||
| 52 | Capital reserves | ||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | ||||
| Share premium 5,442,385 Other capital reserves - | 205 - | (1,307,146) - | 4,135,444 - | ||||
| 5,442,385 | 205 | (1,307,146) | 4,135,444 | ||||
| 53 | Treasury stock | ||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | ||||
| Incentive shares 105,492 | 400,055 | (118,065) | 387,482 | ||||
| Repurchased shares 1,807,537 | - | - | 1,807,537 | ||||
| 1,913,029 | 400,055 | (118,065) | 2,195,019 | ||||
| The decrease in incentive shares in the current period was primarily attributed to the repurchase and retirement of restricted shares. | |||||||
| 54 Surplus reserves | |||||||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | ||||
| Statutory surplus reserves | 2,270,022 | - | - | 2,270,022 | |||
| Discretionary surplus reserves | 182,870 | - | - | 182,870 | |||
| 2,452,892 | - | - | 2,452,892 | ||||
| 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. | |||||||
| V 55 | Notes to Consolidated Financial Statements (Continued) Specific reserve | |||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |
| Production safety reserve 211 | 456 | - | 667 | |
| 56 | General reserve | |||
| 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |
| General reserve 386 | - | (25) | 361 | |
| As per the General Rules on Financial Affairs of Financial Enterprises and the Guide to the Implementation of the General Rules on Financial Affairs of Financial Enterprises promulgated by the Ministry of Finance, as well as the Articles of Association of TCL Technology Group Corporation, this subsidiary appropriated 1% of its net profit as general reserve in the previous years. | ||||
| 57 | Retained earnings | |||
| H1 2021 | H1 2020 | |||
| Beginning retained earnings Changes in accounting policies Net profit for current period | 14,009,494 - 6,783,885 | 11,115,150 - 1,208,066 | ||
| Decrease in current period | (1,509,694) | (1,279,151) | ||
| Including: Appropriated as surplus reserves | - | - | ||
| Distributed to ordinary shareholders as dividends | (1,625,590) | (1,279,155) | ||
| Others | 115,896 | 4 | ||
| Ending retained earnings | 19,283,685 | 11,044,065 | ||
| H1 2021 | H1 2020 | ||||
| Revenue | Cost of sales | Revenue | Cost of sales | ||
| Core business | 73,298,779 | 57,504,287 | 29,092,257 | 26,698,363 | |
| Non-core business | 999,868 | 480,685 | 240,954 | 42,530 | |
| 74,298,647 | 57,984,972 | 29,333,211 | 26,740,893 | ||
| (1) Core business by operating segment | |||||
| Revenue Cost of sales Gross profit | |||||
| H1 2021 | H1 2020 | H1 2021 | H1 2020 | H1 2021 | H1 2020 | |||
| Domestic | 47,092,570 | 20,814,425 | 39,665,140 | 19,272,087 | 7,427,430 | 1,542,338 | ||
| Overseas | 26,206,209 | 8,277,832 | 17,839,147 | 7,426,276 | 8,367,062 | 851,556 | ||
| 73,298,779 | 29,092,257 | 57,504,287 | 26,698,363 | 15,794,492 | 2,393,894 |
| 59 | Interest income/expense and exchange gain | ||
| H1 2021 | H1 2020 | ||
| Interest income | 74,133 | 85,692 | |
| Interest expense | 12,564 | 16,278 | |
| Exchange gain/(loss) | 964 | 689 | |
| 60 Taxes and levies | |||
| H1 2021 | H1 2020 | ||
| City maintenance and construction tax | 58,808 | 6,053 | |
| Property tax | 105,646 | 43,614 | |
| Stamp tax | 65,852 | 29,668 | |
| Educational surcharge | 42,123 | 4,312 | |
| Land use tax | 14,563 | 3,280 | |
| Others | 7,318 | 357 | |
| 294,310 | 87,284 | ||
| The applicable tax and levy standards are detailed in Note IV. | |||
| 61 Selling expense | |||
| H1 2021 | H1 2020 | ||
| Employee salaries and benefits | 275,159 | 118,172 | |
| After-sales service expense | 337,843 | 70,833 | |
| Transport expense | 13,483 | 62,420 | |
| Branding expense | 30,668 | 11,858 | |
| Ad and sales promotion expense | 23,685 | 5,178 | |
| Others | 220,338 | 56,204 | |
| 901,176 | 324,665 | ||
| 62 Administrative expense | |||
| H1 2021 | H1 2020 | ||
| Employee salaries and benefits | 809,470 | 239,141 | |
| Depreciation and amortization expense | 361,440 | 159,465 | |
| Expense for hiring intermediary organizations | 443,769 | 93,429 | |
| Others | 408,689 | 277,968 | |
| 2,023,368 | 770,003 |
| V 63 | Notes to Consolidated Financial Statements (Continued) R&D expense | |||
| H1 2021 | H1 2020 | |||
| Depreciation and amortization expense | 1,231,865 | 828,746 | ||
| Material and lab expense | 1,335,606 | 549,480 | ||
| Employee salaries and benefits | 712,165 | 275,167 | ||
| Outsourced development cost | 53,166 | 44,397 | ||
| Others | 95,395 | 184,711 | ||
| 3,428,197 | 1,882,501 | |||
| 64 | Finance costs | |||
| H1 2021 | H1 2020 | |||
| Interest expense | 2,160,434 | 1,132,442 | ||
| Interest income | (187,547) | (250,867) | ||
| Exchange loss/(gain) | (201,680) | 27,234 | ||
| Others | 47,776 | 7,213 | ||
| 1,818,983 | 916,022 | |||
| 65 | Other income | |||
| H1 2021 | H1 2020 | |||
| R&D subsidies | 747,743 | 939,165 | ||
| Over-deduction in taxable amount for VAT | 7,905 | 1,307 | ||
| VAT rebates on software | 605 | 8,120 | ||
| Others | 53,781 | 3,824 | ||
| 810,034 | 952,416 | |||
| H1 2021 | H1 2020 | |||
| Proceeds from disposal of debt instruments at fair value through profit or loss 390,636 | 53,588 | |||
| Proceeds from disposal of equity instruments at fair value through profit or loss 50,360 | 21,704 | |||
| Proceeds from holding of equity instruments at fair value through profit or loss 3,708 | 22,482 | |||
| Proceeds from holding of debt instruments at fair value through profit or loss 107,165 | 111,645 | |||
| Proceeds from holding of equity instruments at fair value through other comprehensive income 3,090 | 1,136 | |||
| Share of net income of associates 1,318,079 | 871,340 | |||
| Share of net income of joint ventures (2,895) | 10,163 | |||
| Net income from disposal of long-term equity investments 849,880 | 288,383 | |||
| Others 68,182 (39,776) | ||||
| 2,788,205 | 1,340,665 | |||
| 67 | Gain on changes in fair value | |||
| H1 2021 | H1 2020 | |||
| Held-for-trading financial assets | (20,788) | 106,075 | ||
| Derivative financial assets | (327,549) | 16,811 | ||
| Held-for-trading financial liabilities | (11,045) | (8,860) | ||
| Derivative financial liabilities | 45,186 | 8 | ||
| (314,196) | 114,034 | |||
| 68 | Credit impairment loss | |||
| H1 2021 | H1 2020 | |||
| Loss on uncollectible accounts receivable | (21,834) | 4,180 | ||
| Loss on uncollectible other receivables | 6,171 | (175) | ||
| Other financial assets | 27,108 | (2,881) | ||
| 11,445 | 1,124 | |||
| V 69 | Notes to Consolidated Financial Statements (Continued) Asset impairment loss | |||||
| H1 2021 | H1 2020 | |||||
| Inventory valuation loss | 624,164 | 328,603 | ||||
| Loss on impairments of fixed assets | 45,424 | - | ||||
| Loss on impairment of contract assets | 1,937 | - | ||||
| Loss on impairment of other assets | 125,994 | 79 | ||||
| 797,519 | 328,682 | |||||
| 70 | Asset disposal income | |||||
| H1 2021 | H1 2020 | |||||
| Income/(loss) from disposal of fixed assets | (2,338) | 1,320 | ||||
| Income/(loss) from disposal of intangible assets | 27,166 | - | ||||
| Income from disposal of other non-current assets | (501) | - | ||||
| 24,327 | 1,320 | |||||
| 71 | Non-operating income | |||||
| Amount through | ||||||
| H1 2021 | H1 2020 | current non-recurring gains and losses | ||||
| Gains on retired or damaged non-current assets | - | 63 | - | |||
| Government grants and others | 267,948 | 491,876 | 267,948 | |||
| 267,948 | 491,939 | 267,948 | ||||
| 72 | Non-operating expense | |||||
| Amount through | ||||||
| H1 2021 | H1 2020 | current non-recurring gains and losses | ||||
| Losses on retired or damaged non-current assets | 2,394 | 139 | 2,394 | |||
| Others | 9,593 | 18,662 | 9,593 | |||
| 11,987 | 18,801 | 11,987 | ||||
| 73 | Income tax expense | |||||
| (1) | Income tax expense | |||||
| H1 2021 | H1 2020 | |||||
| Current income tax expense | 1,119,370 | 141,710 | ||||
| Deferred income tax expense | 294,204 | 22,877 | ||||
| 1,413,574 | 164,587 | |||||
| (2) | Accounting profit and income tax adjustment process | |||||
| H1 2021 | H1 2020 | |||||
| Gross profit | 10,665,541 | 1,233,711 | ||||
| Income tax expense calculated at statutory/applicable tax rate | 2,666,385 | 308,428 | ||||
| Impact of different tax rates applied to subsidiaries | (7,233) | (123,181) | ||||
| Impact of adjusting income tax in previous periods | (12,685) | 5,403 | ||||
| Impact of non-taxable income | (599,904) | (83,807) | ||||
| Impact of non-deductible costs, expenses and losses | 5,418 | 3,814 | ||||
| Impact of deductible losses on the use of previously unrecognized deferred income tax assets | (201,562) | (2,742) | ||||
| Impact of deductible temporary differences or deductible losses of | ||||||
| unrecognized deferred income tax assets in the current period | 81,396 | 95,350 | ||||
| Others | (518,241) | (38,678) | ||||
| Income tax expense | 1,413,574 | 164,587 | ||||
| V | Notes to Consolidated Financial Statements (Continued) | |||
| 74 | Other comprehensive income | |||
| (1) | Other comprehensive income items, income tax effects and reclassifications to profit or loss | |||
| H1 2021 | H1 2020 | |||
| I. Items that cannot be reclassified to profit or loss subsequently | ||||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | 1,270 | (6,233) | ||
| Amount attributable to the Company in the current period | 1,270 | (6,233) | ||
| Previous other comprehensive income reclassified to retained earnings for current period | ||||
| 2. Changes in fair value of other equity instruments | (185,629) | (7,149) | ||
| Current gain/(loss) | (84,931) | (7,145) | ||
| Previous other comprehensive income reclassified to retained earnings for current period | (115,871) | (4) | ||
| Income tax effects recorded in other comprehensive income | 15,173 | |||
| II. Items that will be reclassified to profit or loss subsequently | ||||
| 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | (153,326) | 65,127 | ||
| Amount attributable to the Company in the current period | (153,326) | 65,127 | ||
| Income tax effects recorded in other comprehensive income | - | |||
| 2. Changes in fair value of financial assets recorded in other comprehensive income | 487 | (637) | ||
| Current gain/(loss) | 487 | (637) | ||
| 3. Cash flow hedges | (4,105) | (76,988) | ||
| Current gain/(loss) | (782) | (118,895) | ||
| Previous other comprehensive income reclassified to profit for current period | - | (76,988) | ||
| Income tax effects recorded in other comprehensive income | (3,323) | |||
| 4. Differences arising from translation of foreign currency financial statements of overseas operations | 123,814 | (63,060) | ||
| 5. Net income arising from disposal of overseas operations through profit or loss | - | |||
| (217,489) | (88,940) | |||
V Notes to Consolidated Financial Statements (Continued)
Other comprehensive income (continued)
(2) Changes in other comprehensive income items
Equity attributable to shareholders of the Company as the parent
| Accounting policy Change | 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 | |
| 1 Jan. 2020 | 334,950 | 230,179 | (350,407) | (34,472) | (733,647) | 19,315 | - | - | (534,082) | (38,016) | (572,098) |
| Change in 2020 | - | 83,771 | (162) | 28,784 | 224,208 | 51,880 | - | 28 | 388,509 | 19,044 | 407,553 |
| 31 Dec. 2020 | 334,950 | 313,950 | (350,569) | (5,688) | (509,439) | 71,195 | - | 28 | (145,573) | (18,972) | (164,545) |
| Change in H1 2021 | - | (152,056) | - | (4,389) | 121,308 | (200,802) | 118 | - | (235,821) | 18,332 | (217,489) |
| 30 Jun. 2021 | 334,950 | 161,894 | (350,569) | (10,077) | (388,131) | (129,607) | 118 | 28 | (381,394) | (640) | (382,034) |
| TCL Technology Group Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2021 to 30 June 2021) |
| (The amounts in tables are expressed in thousands of RMB) |
| (1) Reconciliation of net profit to net cash generated from/used in operating activities | ||||||
| H1 2021 | H1 2020 | |||||
| Net profit | 9,251,967 | 1,069,124 | ||||
| Add：Asset impairment allowance | 808,964 | 329,806 | ||||
| Depreciation of fixed assets | 7,148,930 | 3,491,547 | ||||
| Depreciation of right-of-use assets | 112,734 | - | ||||
| Amortization of intangible assets | 554,138 | 301,654 | ||||
| Amortization of long-term prepaid expense | 631,044 | 440,611 | ||||
| Loss/(Income) from disposal of fixed assets, intangible assets and other long-lived assets | (24,327) | (1,320) | ||||
| Loss on retired or damaged fixed assets | 2,394 | 76 | ||||
| Loss/(Gain) on changes in fair value | 314,196 | (114,034) | ||||
| Financial Expenses | 1,970,354 | 1,175,265 | ||||
| Return on Investment | (2,788,205) | (1,340,665) | ||||
| Decrease/(Increase) in deferred income tax assets | (517,573) | (19,727) | ||||
| Increase/(Decrease) in deferred income tax liabilities | 637,970 | 42,461 | ||||
| Decrease/(Increase) in inventory | (5,690,016) | 136,545 | ||||
| Decrease/(Increase) in operating receivables | (9,741,065) | (3,060,866) | ||||
| Increase/(Decrease) in operating receivables | 13,615,809 | 4,335,225 | ||||
| Others | (2,391,599) | 562,108 | ||||
| Net cash generated from/used in operating activities | 13,895,715 | 7,347,810 | ||||
| (2) Net cash payments for acquisition of subsidiaries in the current period | ||||||
| H1 2021 | H1 2020 | |||||
| Payments of cash and cash equivalents made in current period due to business combinations incurred in current period | 9,768,401 | - | ||||
| Less: cash and cash equivalents held by subsidiary on acquisition date | 5,628,896 | |||||
| Add: Payments of cash and cash equivalents made in current period due to business combinations incurred in previous periods | - | - | ||||
| Net cash payments for acquisition of subsidiaries | 4,139,505 | - | ||||
| (3) Net cash proceeds from disposal of subsidiaries in the current period | ||||||
| Cash or cash equivalents received in current period due to disposal of subsidiary in current period | 1,412,399 | 219,596 | ||||
| Less: cash and cash equivalents held by subsidiary on the date when the Company’s control over the subsidiary ceased | 900,823 | 20,293 | ||||
| V | Notes to Consolidated Financial Statements (Continued) | ||||
| 82 | Supplementary information for the cash flow statement | ||||
| (4) | Breakdown of cash and cash equivalents | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||
| 1. Cash | 24,493,712 | 18,208,417 | |||
| Of which: Cash on hand | 626 | 1,189 | |||
| Bank deposits available for payment on demand | 23,727,289 | 17,744,850 | |||
| Other monetary assets available for payment on demand | 765,797 | 462,378 | |||
| 2. Cash equivalents | - | - | |||
| 3. Cash and cash equivalents, end of the period | 24,493,712 | 18,208,417 | |||
| 83 | Changes in cash and cash equivalents, net | ||||
| H1 2021 | H1 2020 | ||||
| Ending cash and cash equivalents | 24,493,712 | 21,026,155 | |||
| Less: Beginning cash | 18,208,417 | 17,637,743 | |||
| Net increase in cash and cash equivalents | 6,285,295 | 3,388,412 | |||
| Analysis of ending cash and cash equivalents： | |||||
| Ending monetary assets | 27,374,279 | 21,542,628 | |||
| Less: Ending non-cash equivalents (note) | 2,880,567 | 516,473 | |||
| Ending cash and cash equivalents | 24,493,712 | 21,026,155 | |||
| Note | The ending non-cash equivalents primarily included interest receivable on bank deposits, the statutory reserve deposits placed by TCL Tech Finance Co., Ltd. in the central bank and other monetary assets. For further information, see Note V, item 1. | ||||
| 84 | Assets with restricted ownership or use rights | |||
| 30 Jun. 2021 | Reason for restriction | |||
| Monetary assets | 519,911 | Statutory reserve deposits in the central bank | ||
| Monetary assets | 2,360,656 | Security deposits | ||
| Notes receivable | 168,090 | Pledge | ||
| Fixed assets | 82,445,386 | As collateral for loan | ||
| Intangible assets | 2,391,402 | As collateral for loan | ||
| Held-for-trading financial assets | 874,123 | As pledge for loan | ||
| Construction in progress | 56,461 | As collateral for loan | ||
| Right-of-use assets | 58,267 | As collateral for lease | ||
| Accounts receivable | 373,708 | Pledge | ||
| Contract assets | 122,745 | Pledge | ||
| 89,370,749 | ||||
| 85 Foreign currency monetary items | |||||
| 30 Jun. 2021 | |||||
| Foreign currency balance | Conversion rate | RMB balance | |||
| Monetary assets | |||||
| Including: USD | 1,096,209 | 6.4601 | 7,081,617 | ||
| HKD | 273,331 | 0.8320 | 227,411 | ||
| EUR | 7,437 | 7.6914 | 57,198 | ||
| JPY | 28,708 | 0.0585 | 1,679 | ||
| CHF | 117 | 7.0157 | 821 | ||
| Accounts receivable | |||||
| Including: USD | 1,251,035 | 6.4601 | 8,081,810 | ||
| HKD | 1,016,125 | 0.8320 | 845,416 | ||
| EUR | 0.2 | 7.6914 | 1 | ||
| Receivables financing | |||||
| Including: USD | 43,967 | 6.4601 | 284,034 | ||
| Accounts payable | |||||
| Including: USD | 359,874 | 6.4601 | 2,324,823 | ||
| HKD | 1,832,923 | 0.8320 | 1,524,992 | ||
| JPY | 3,166,854 | 0.0585 | 185,261 | ||
| AUD | 108 | 4.8567 | 526 | ||
| EUR | 0.04 | 7.6914 | 0.3 | ||
| CHF | 117 | 7.0157 | 821 | ||
| Including: USD | 3,786 | 6.4601 | 24,458 |
| HKD | 91,098 | 0.8320 | 75,794 |
| JPY | 11,970 | 0.0585 | 700 |
| PLN | 1,640 | 1.7015 | 2,790 |
| INR | 58,019 | 0.0870 | 5,048 |
| KRW | 102,390 | 0.0057 | 585 |
| EUR | 9 | 7.6914 | 69 |
| MXN | 8,512 | 0.3263 | 2,777 |
| Notes payable Including: USD | 28,334 | 6.4601 | 183,039 |
| EUR | 1,929 | 7.6914 | 14,833 |
| JPY | 1,185,272 | 0.0585 | 69,338 |
| Other payables Including: USD | 257,114 | 6.4601 | 1,660,981 |
| HKD | 457,153 | 0.8320 | 380,351 |
| JPY | 26,820,263 | 0.0585 | 1,568,985 |
| INR | 1,226,971 | 0.0870 | 106,746 |
| PLN | 155 | 1.7015 | 264 |
| KRW | 619 | 0.0057 | 4 |
| MXN | 11,778 | 0.3263 | 3,843 |
| EUR | 12 | 7.6914 | 89 |
| Short-term borrowings Including: USD | 226,996 | 6.4601 | 1,466,417 |
| Long-term borrowings Including: USD | 2,008,420 | 6.4601 | 12,974,594 |
| EUR | 142,000 | 7.6914 | 1,092,179 |
| VI 1 | Changes to Consolidation Scope Newly consolidated entities for current period | ||||
| Name of investee | Consolidated period | Reason for change | Registered capital | The Company’s interest | |
| Shenzhen Huatuo Trade Technology Co., Ltd. | Jan.-Jun. 2021 | Newly incorporated | RMB10,000,000 | 100.00% | |
| Xiamen Xinying Display Technology Co., Ltd. | Jan.-Jun. 2021 | Newly incorporated | RMB300,000,000 | 55.00% | |
| Shaanxi Xiaoyi E-commerce Service Co., Ltd. | Feb.-Jun. 2021 | Newly incorporated | RMB1,000,000 | 60.00% | |
| Shaanxi Runhuan Tianyu Technology Co., Ltd. | Feb.-Jun. 2021 | Combination not under common control | RMB65,800,000 | 100.00% | |
| Highly (Tianjin) Technology Co., Ltd. | Mar.-Jun. 2021 | Newly incorporated | RMB50,000,000 | 100.00% | |
| Zhonghuan Advanced Semiconductor (Shanghai) Co., Ltd. | Feb.-Jun. 2021 | Newly incorporated | RMB40,000,000 | 100.00% | |
| Ningxia Zhonghuan Solar Material Co., Ltd. | Mar.-Jun. 2021 | Newly incorporated | RMB100,000,000 | 100.00% | |
| RMB6,260,405,000 | 70% |
| RMB1,535,850,989 | 100.00% |
| Current assets | 3,971,903 | 3,969,241 | 2,662 |
| Non-current assets | 4,634,564 | 3,689,880 | 944,684 |
| Current liabilities | 1,069,818 | 1,069,818 | - |
| Less: non-controlling interests | - | - | - |
| Net assets acquired | 7,296,173 | 6,585,664 | 710,509 |
| Current assets | 1,425,877 | 1,424,467 | 1,410 |
| Non-current assets | 1,222,641 | 1,012,405 | 210,236 |
| Current liabilities | 341,207 | 341,207 | - |
| Less: non-controlling interests | - | - | - |
| Net assets acquired | 2,250,973 | 2,092,238 | 158,735 |
| VI 1 | Changes to Consolidation Scope (Continued) Newly consolidated entities for current period (continued) | ||
| Cash consideration | 2,800,000 | ||
| Fair value of contigent consideration | 181,220 | ||
| Less: Share of fair value of identifiable net assets acquired | 1,253,640 | ||
| Goodwill | 1,727,580 | ||
| ② | The assets and liabilities as at the acquisition date are as follows： | ||
| Fair value at acquisition date | Carrying value at Acquisition date | Increase in valuation | |
| Current assets 6,906,681 | 6,906,681 | - | |
| Non-current assets 515,635 | 217,038 | 298,597 | |
| Current liabilities 5,919,055 | 5,919,055 | - | |
| Less: non-controlling interests - Net assets acquired 1,253,640 | - 1,029,250 | - 224,390 | |
| Name of investee | Time of deconsolidation | Reason | |||
| Tianjin Huanyan Technology Co., Ltd. | Jan. 2021 | Transferred | |||
| TCL Communication Technology (HK) Limited | Mar. 2021 | De-registered | |||
| Tianjin Huan’Ou International New Energy Technology Co., Ltd. | Mar. 2021 | De-registered | |||
| Tianjin Zhonghuan Xinyu Technology Co., Ltd. | Mar. 2021 | Transferred | |||
| Kangbao Shenghui New Energy Co., Ltd. | Apr. 2021 | De-registered | |||
| Winshero Investment Limited | May 2021 | De-registered | |||
| Tianjin Xietong Real Estate Development Co., Ltd. | May 2021 | De-registered | |||
| TCL International Distribution (HK) Limited | Jun. 2021 | De-registered | |||
| TCL Financial Holding Group (Guangzhou) Co., Ltd. and its subsidiaries | Jun. 2021 | Transferred | |||
| Tianjin Huanxin Technology&Development Co., Ltd. and its subsidiaries | Jun. 2021 | Capital increase by non-controlling interests | |||
| 3 Subsidiaries disposed in current period | |||||
| Name of subsidiary | Tianjin Huanyan Technology Co., Ltd. | Tianjin Zhonghuan Tianjin Huanxin Xinyu Technology Technology& Co., Ltd. Development Co., Ltd. and its subsidiaries | TCL Financial Holding Group (Guangzhou) Co., Ltd. and its subsidiaries | ||
| Price for equity interest disposal | 93,845 | 100,669 | - | 2,572,020 | |
| % equity interest disposed | 50% | 100% | 55% | 100% | |
| Way of disposal | Transferred | Transferred | Increase in non-controlling interests | Transferred |
| Time of loss of control | Jan. 2021 | Mar. 2021 | 31 May 2021 | Jun. 2020 |
| VII | Interests in Other Entities | |||||||
| 1 | Interests in subsidiaries | |||||||
| (1) | Principal subsidiaries | |||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Company’s interest | How subsidiary was obtained | |||
| Direct | Indirect | |||||||
| TCL China Star Optoelectronics Technology Co., Ltd. | Shenzhen | Manufacturing and sales | Shenzhen | 83.02% | - | Incorporated | ||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Shenzhen | Manufacturing and sales | Shenzhen | - | 54.31% | Incorporated | ||
| Guangzhou China Ray Optoelectronic Materials Co., Ltd. | Guangzhou | Research and development | Guangzhou | - | 100% | Incorporated | ||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | 39.95% | 49.09% | Incorporated | ||
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | - | 57.14% | Incorporated | ||
| Shenzhen CPT Display Technology Co., Ltd. | Shenzhen | Manufacturing and sales | Shenzhen | - | 100% | Business combination not under common control | ||
| China Star Optoelectronics International (HK) Limited | Hong Kong | Sales | Hong Kong | - | 100% | Incorporated | ||
| China Display Optoelectronics Technology Holdings Limited | Bermuda | Investment holding | Bermuda | - | 64.21% | Business combination not under common control | ||
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and sales | Huizhou | - | 100% | Incorporated | ||
| Wuhan China Display Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and sales | Wuhan | - | 100% | Incorporated | ||
| Suzhou China Star Optoelectronics Technology Co., Ltd. | Suzhou | Manufacturing and sales | Suzhou | - | 70% | Business combination not under common control | ||
| Suzhou China Star Optoelectronics Display Co., Ltd. | Suzhou | Manufacturing and sales | Suzhou | - | 100% | Business combination not under common control | ||
| Beijing HAWK Cloud Information Technology Co., Ltd. | Beijing | Internet service | Beijing | 100% | - | Incorporated | ||
| TCL Culture Media (Shenzhen) Co., Ltd. | Shenzhen | Ad planning | Shenzhen | 100% | - | Incorporated | ||
| Highly Information Industry Co., Ltd. | Beijing | Product distribution | Beijing | 66.46% | - | Incorporated | ||
| Beijing Sunpiestore Technology Co., Ltd. | Beijing | Sales | Beijing | - | 60.00% | Incorporated | ||
| Beijing Lingyun Data Technology Co., Ltd. | Beijing | Sales | Beijing | - | 60.00% | Incorporated | ||
| TCL Tech Finance Co., Ltd. | Huizhou | Financial | Huizhou | 82.00% | 18.00% | Incorporated | ||
| Xinjiang TCL Equity Investment Ltd. | Xinjiang | Investment business | Shenzhen | 100% | - | Incorporated | ||
| VII | Interests in Other Entities (Continued) | ||||||||
| 1 | Interests in subsidiaries (continued) | ||||||||
| (1) | Principal subsidiaries (continued) | ||||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Company’s interest | How subsidiary was obtained | ||||
| Direct | Indirect | ||||||||
| Ningbo TCL Equity Investment Ltd. | Ningbo | Investment business | Shenzhen | 100% | - | Incorporated | |||
| TCL Technology Park (Huizhou) Co., Ltd. | Huizhou | Property management | Huizhou | - | 100% | Incorporated | |||
| TCL Research America Inc. | U.S. | Research and development | U.S. | - | 100% | Incorporated | |||
| TCL Industrial Technology Research Institute (Hong Kong) Limited | Hong Kong | Research and development | Hong Kong | - | 100% | Incorporated | |||
| TCL Technology Inverstment Limited | Hong Kong | Investment business | Hong Kong | 100% | - | Incorporated | |||
| Tianjin Zhonghuan Semiconductor Co., Ltd. | Tianjin | Manufacturing & sales | Tianjin | 2.57% | 27.23% | Business combination not under common control | |||
| Tianjin Printronics Circuit Corporation | Tianjin | Manufacturing & sales | Tianjin | - | 29.50% | Business combination not under common control | |||
| Tianjin Huan’Ou Semiconductor Material&Technology Co., Ltd. | Tianjin | Manufacturing & sales | Tianjin | - | 100% | Business combination not under common control | |||
| Wuxi Zhonghuan Applied Materials Co., Ltd. | Wuxi | Manufacturing & sales | Wuxi | - | 81.48% | Business combination not under common control | |||
| Tianjin Huanzhi New Energy Technology Co., Ltd. | Tianjin | Manufacturing & sales | Tianjin | - | 62.00% | Business combination not under common control | |||
| Inner Mongolia Zhonghuan Solar Material Co., Ltd. | Inner Mongolia | Manufacturing & sales | Inner Mongolia | - | 100% | Business combination not under common control | |||
| TianJin Zhonghuan Advanced Material&Technology Co., Ltd. | Tianjin | Manufacturing & sales | Tianjin | - | 60.00% | Business combination not under common control | |||
| Huansheng Solar (Jiangsu) Co., Ltd. | Wuxi | Manufacturing & sales | Wuxi | - | 77.00% | Business combination not under common control | |||
| Tianjin Huanou International Silicon Material Co., Ltd. | Tianjin | Procurement & sales | Tianjin | - | 100% | Business combination not under common control | |||
| Zhonghuan Hong Kong Holding Limited | Hong Kong | Sales | Hong Kong | - | 100% | Business combination not under common control | |||
| VII | Interests in Other Entities (Continued) | |||||||
| 1 | Interests in subsidiaries (continued) | |||||||
| (1) | Principal subsidiaries (continued) | |||||||
| Name of investee | Place of registration | Nature of business | Principal place of business | Company’s interest | How subsidiary was obtained | |||
| Direct | Indirect | |||||||
| Tianjin Huanrui Electronic Technology Co., Ltd. | Tianjin | Procurement & sales | Tianjin | - | 100% | Business combination not under common control | ||
| Inner Mongolia Zhonghuan Xiexin Solar Material Co., Ltd. | Inner Mongolia | Manufacturing & sales | Inner Mongolia | - | 59.32% | Business combination not under common control | ||
| Inner Mongolia Zhonghuan Advanced Semiconductor Material Co., Ltd. | Inner Mongolia | Manufacturing & sales | Inner Mongolia | - | 60.00% | Business combination not under common control | ||
| Zhonghuan Advanced Semiconductor Materials Co., Ltd. | Wuxi | Manufacturing & sales | Wuxi | - | 60.00% | 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 & sales | Huizhou | 100.00% | Business combination not under common control | |||
| (2) | Subsidiaries with substantial non-controlling interests | ||||
| Name of subsidiary | Non-controlling interests | Current period Profit or loss attributable to non-controlling interests | Current period Dividends distributed to non-controlling interests | Ending equity attributable to non-controlling interests | |
| TCL China Star Optoelectronics Technology Co., Ltd. | 16.98% | 1,046,746 | 53,965 | 46,342,270 | |
| Tianjin Zhonghuan Semiconductor Co., Ltd. (Note) | 70.20% | 1,450,679 | 139,141 | 23,739,097 | |
| Highly Information Industry Co., Ltd. | 33.54% | 39,687 | 45,889 | 435,326 | |
| VII | Interests in Other Entities (Continued) | |||||||||||||
| 1 | Interests in subsidiaries (continued) | |||||||||||||
| (2) | Subsidiaries with substantial non-controlling interests (continued) | |||||||||||||
| The key financial information of the above subsidiaries is as follows: | ||||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 70,848,252 | 131,567,052 | 202,415,304 | 52,305,465 | 64,198,415 | 116,503,880 | 57,189,005 | 117,985,042 | 175,174,047 | 55,328,869 | 55,005,109 | 110,333,978 | ||
| Tianjin Zhonghuan Semiconductor Co., Ltd. | 18,337,649 | 47,701,160 | 66,038,809 | 17,860,592 | 18,422,443 | 36,283,035 | 16,085,100 | 42,634,584 | 58,719,684 | 17,329,888 | 13,308,403 | 30,638,291 | ||
| Highly Information Industry Co., Ltd. | 5,269,995 | 107,528 | 5,377,523 | 4,062,638 | 131,201 | 4,193,839 | 4,771,001 | 67,485 | 4,838,486 | 3,653,818 | 113,762 | 3,767,580 | ||
| H1 2021 | H1 2020 | |||||||||
| Revenue | Net profit | Total comprehensive income | Net cash generate from/used in operating activities | Revenue | Net profit | Total comprehensive income | Net cash generate from/used in operating activities | |||
| TCL China Star Optoelectronics Technology Co., Ltd. | 38,841,597 | 6,276,842 | 6,268,999 | 14,481,000 | 19,512,205 | (139,252) | (210,542) | 6,728,060 | ||
| Tianjin Zhonghuan Semiconductor Co., Ltd. | 17,644,419 | 1,886,227 | 1,886,227 | 2,125,294 | - | - | - | - | ||
| Highly Information Industry Co., Ltd. | 14,450,787 | 125,103 | 125,103 | (437,244) | 9,126,806 | 100,311 | 100,311 | (529,200) | ||
| VII | Interests in Other Entities (Continued) | |||||
| 2 | Interests in joint ventures and associates | |||||
| (1) | Basic information about principal joint ventures and associates | |||||
| Name of investee | Principal place of business /place of registration | Nature of business | Strategic to the Group’s activities or not | The Company’s interest | ||
| Direct | Indirect | |||||
| Associate | ||||||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. (note) | Eastern Section, Horizontal Road No.4, Hongshaquan North Industrial Zone, Zhundong Economic & Technology Development Zone, Changji Prefecture, Xinjiang | R&D, production & sale of polycrystalline silicon & monocrystalline silicon; PV engineering consulting & project development; self-operation and agency-based operation of import&export of relevant goods and technologies (except for those not allowed) | Yes | - | 27% | |
| (2) | Key financial information of major associates | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Xinjiang Xiexin New Energy Material Technology Co., Ltd. | |||
| Total assets | 9,218,330 | 8,711,309 | ||
| Total liabilities | 6,164,703 | 6,990,937 | ||
| Non-controlling interests | N/A | N/A | ||
| Equity attributable to shareholders of the Company as the parent | 3,053,627 | 1,720,373 | ||
| Share of equity in proportion to the Company’s interest | 824,479 | 464,501 | ||
| Carrying amount of investment in associate | 820,892 | 463,779 | ||
| VII | Interests in Other Entities (Continued) | |||
| 2 | Interests in joint ventures and associates (continued) | |||
| (2) | Key financial information of major associates (continued) | |||
| H1 2021 | H1 2020 | |||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Xinjiang Xiexin New Energy Material Technology Co., Ltd. | |||
| Revenue | 2,905,071 | 1,081,209 | ||
| Net profit | 1,322,643 | 11,709 | ||
| Dividends from associate to the Group in current period | - | - | ||
| Note: | Other major associate is not presented herein for being listed company with financial statements pending disclosure. | |||
| (3) | Financial information of other joint ventures and associates combined respectively | |||
| H1 2021 | H1 2020 | |||
| Joint ventures: | ||||
| Aggregated carrying amount of investments | 562,584 | 54,008 | ||
| Aggregate of following items calculated in proportion to the Company’s interest | ||||
| Net profit (note) | (2,895) | 10,163 | ||
| Other comprehensive income (note) | - | - | ||
| Total comprehensive income | (2,895) | 10,163 | ||
| Associates: | ||||
| Aggregated carrying amount of investments | 24,158,154 | 7,338,987 | ||
| Aggregate of following items calculated in proportion to the Company’s interest | ||||
| Net profit (note) | 960,965 | 260,230 | ||
| Other comprehensive income (note) | (152,055) | (5,824) | ||
| Total comprehensive income | 808,910 | 254,406 | ||
| Note： | The net profit and other comprehensive income have taken into account the impacts of both the fair value of the identifiable assets and liabilities upon the acquisition of investment and accounting policies unifying. | |||
| (4) | The Company had no significant joint ventures in the Reporting Period. | |||
| VIII | Risks Related to Financial Instruments |
| The purpose of the Company’s risk management is to achieve a right balance between the risk and the benefit and maximally reduce the adverse impact of financial risks on the Company’s financial performance. Based on such purpose, the Company has established various risk management policies to recognize and analyze possible risks to be encountered by the Company, set an appropriate risk acceptable level and designed corresponding internal control procedures so as to control the Company’s risk level. In addition, the Company will regularly review these risk management policies and relevant internal control system in order to adapt to the market or handle various changes in the Company’s operating activities. Meanwhile, the Company’s internal audit department will also regularly or randomly check whether the implementation of internal control system conforms to relevant risk management policies. In fact, the Company has applied proper diversified investment and business portfolio to disperse various financial instrument risks and worked out corresponding risk management policies to reduce the risk of concentrating on one single industry, specific region or specific counterpart. | |
| Main risks caused by the Company’s financial instruments include the credit risk, the liquidity risk and the market risk (including the foreign exchange risk and the 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, bills receivable, account receivable, issued loan and monies advanced 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 at 30 Jun. 2021, no significant guarantee or other credit enhancements held due to the debtor’s 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 headquarters 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 effort 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 fund so as to satisfy the short-term and long-term capital demand. | |
| (3) | Market risk |
| VIII | Risks Related to Financial Instruments | ||||
| (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. | |||||
| On 30 Jun., foreign-currency asset and liability items with significant exposure to exchange risk were mainly denominated in the US dollar. After management, the total risk exposure of the US dollar-denominated items was net asset exposure of USD82,755 thousand, equivalent to RMB534,607 thousand 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 | ||||
| H1 2021 | 30 Jun. 2021 | ||||
| USD/RMB | 6.4682 | 6.4601 | |||
| Provided that other risk variables remained unchanged except 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 RMB26,730 thousand in the shareholders’ equity and net profit respectively of the Group on 30 Jun. | |||||
| 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 determines the proportion of fixed interest rates and floating interest rates based on the market environment and its risk tolerance. Up to 30 Jun. 2021, the Group’s liabilities with floating interest rates accounted for 64.57% of its total interest-bearing liabilities. And, the Group will continuously monitor the interest rates and make corresponding adjustments according to the specific market changes so as to avoid interest rate risk. | |||||
| IX | Classification of Financial Instruments and Fair Value |
| Fair value of financial instruments and levels | |
| 1. | Fair value is divided into the following levels in measurement and disclosure: |
| Level 1 refers to the (unadjusted) quotation of the same type of assets or liabilities on the active market; and the Company mainly adopts the closing price as the value of a financial asset. Financial instruments of level 1 mainly include exchange listed stocks and bonds. | |
| Level 2 refers to the directly or indirectly observable input of a financial asset or liability that does not belong to level 1. | |
| Level 3 refers to the input of a financial asset or liability determined based on variables other than the observable market data (non-observable input). | |
| 2. | Basis for determining the market value of items measured at continuous level 1 fair value |
| The Company adopts the active market quotation as the fair value of a level 1 financial asset. | |
| 3. | Items measured at continuous level 2 fair value adopt the following valuation techniques and parameters: |
| The Company’s receivables financing was bank acceptance notes and trade acceptance notes, of which the market prices were determined based on the transfer or discounted amounts. | |
| Derivative financial assets and liabilities are multiple IRS and CCS signed between the Group and financial institutions. The Company adopts the quotation 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. | |
| Item | Level 1 | Level 2 | Level 3 | Total | |||||||||
| Held-for-trading financial assets (see Note V, 2) | 435,658 | 8,712,519 | 400,400 | 9,548,577 | |||||||||
| Derivative financial assets (see Note V, 3) | - | 139,396 | - | 139,396 | |||||||||
| Receivables financing (see Note V, 6) | - | 1,725,478 | - | 1,725,478 | |||||||||
| Investments in other equity instruments (see Note V, 18) | 118,680 | - | 981,505 | 1,100,185 | |||||||||
| Other debt investments (see Note V, 15) | - | 91,976 | - | 91,976 | |||||||||
| Other non-current financial assets (see Note V, 19) | - | 955,825 | 1,502,314 | 2,458,139 | |||||||||
| Total assets continuously measured at fair value | 554,338 | 11,625,194 | 2,884,219 | 15,063,751 | |||||||||
| Financial liabilities | |||||||||||||
| Item | Level 1 | Level 2 | Level 3 | Total | |||||||||
| Held-for-trading financial liabilities (see Note V, 33) | - | 955,861 | 178,390 | 1,134,251 | |||||||||
| Derivative financial liabilities (see Note V, 34) | - | 129,382 | - | 129,382 | |||||||||
| Total liabilities continuously measured at fair value | - | 1,085,243 | 178,390 | 1,263,633 | |||||||||
| X | Related Parties and Related-Party Transactions | |
| 1 | Actual controller and its acting-in-concert parties | |
| The Company has no controlling shareholder. | ||
| Mr. Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) have become acting-in-concert parties due to the signing of the Concerted Action Agreement. They hold a total of 1,158.5994 million shares in the Company, which makes them the largest shareholder of the Company. | ||
| As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total share capital; or, despite the ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to his 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： | ||
| Related party | Relationship with the Company | |
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | Associate | |
| LG Electronics (Huizhou) Co., Ltd. | Associate | |
| JOLED Incorporation | Associate | |
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | |
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | Associate | |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | |
| Shenzhen Tixiang Business Management Technology Co., Ltd. | Associate | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | |
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | Associate | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | |
| Bank of Shanghai Co., Ltd. | Associate | |
| Fantasia Holdings Group Co. Limited | Associate | |
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | Associate | |
| TCL Intelligent Technology (Ningbo) Co., Ltd. | Associate | |
| TCL Finance (Hong Kong) Co., Limited | Associate | |
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | Associate | |
| X | Related Parties and Related-Party Transactions (Continued) | |
| 2 | Related parties that do not control or are not controlled by the Company (continued) | |
| Related party | Relationship with the Company | |
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | Associate | |
| Yanyuan Fengguang New Energy Co., Ltd. | Associate | |
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | Associate | |
| Ulanqab Xinyuan New Energy Co., Ltd. | Associate | |
| SunPower Systems International Limited | Associate | |
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | Associate | |
| Inner Mongolia Huanye Material Co., Ltd. | Associate | |
| Sichuan Shengtian New Energy Development Co., Ltd. | Associate | |
| Petro AP (Hong Kong) Company Limited | Associate | |
| Huizhou TCL Human Resources Service Co., Ltd. | Joint venture | |
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | Joint venture | |
| Huixing Holdings Limited | Associate’s subsidiary | |
| Shenzhen Xirang International Business Travel Co., Ltd. | Associate’s subsidiary | |
| Qihang Import & Export Limited | Associate’s subsidiary | |
| Qihang International Import & Export Limited | Associate’s subsidiary | |
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | Associate’s subsidiary | |
| Zijinshan Investment Co., Ltd. | Associate’s subsidiary | |
| Elite Excellent Investments Limited | Associate’s subsidiary | |
| Huizhou TCL Real Estate Development Co., Ltd. | Associate’s subsidiary | |
| Tianjin Huanxin Technology&Development Co., Ltd. | Joint venture’s subsidiary | |
| Jiangsu Huanxin Semiconductor Co., Ltd. | Joint venture’s subsidiary | |
| Anhui TCL Human Resources Service Co., Ltd. | Joint venture’s subsidiary | |
| Union Dynamic Investment Limited | Associate’s subsidiary | |
| SunPower Systems Sar | Associate’s subsidiary | |
| Petro AP S.A. | Associate’s subsidiary | |
| Marvel Paradise Limited | Associate’s subsidiary | |
| Esteem Venture Investment Limited | Associate’s subsidiary | |
| Getech Ltd. and its subsidiaries | Associate and its subsidiaries | |
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| TCL Environmental Technology Co., Ltd. and its subsidiaries | Associate and its subsidiaries | |
| TCL Industries Holdings Co., Ltd. and its subsidiaries | Under control of the same director | |
| CJ Speedex Logistics Co., Ltd. | Significantly influenced by the Company’s senior management | |
| Note 1: Transactions between Moka International Limited and its subsidiaries and the Company in January to March in the current period are included in TCL Industries Holdings Co., Ltd. and its subsidiaries. Note 2: Transactions between TCL Financial Holding Group (Guangzhou) Co., Ltd. and its subsidiaries and the Company in June in the current period are included in TCL Industries Holdings Co., Ltd. and its subsidiaries. | ||
| (1) | Selling raw materials and finished products to related parties Note 1 | ||
| H1 2021 | H1 2020 | ||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 9,060,288 | 5,240,451 | |
| SunPower Systems Sar | 642,868 | - | |
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 360,585 | 234,209 | |
| Qihang International Import & Export Limited | 130,212 | 107,240 | |
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 85,317 | 2,389 | |
| Tianjin Huanxin Technology&Development Co., Ltd. | 3,594 | - | |
| Qihang Import & Export Limited | 5,755 | 96,347 | |
| SunPower Systems International Limited | 2,511 | - | |
| Jiangsu Huanxin Semiconductor Co., Ltd. | 885 | - | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 791 | - | |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 661 | - | |
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 17 | - | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 137,086 | |
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | - | 508 | |
| 10,293,484 | 5,818,230 | ||
| (2) | Purchasing raw materials and finished products from related parties Note 2 | ||
| H1 2021 | H1 2020 | ||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 1,333,171 | 1,142,086 | |
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 1,078,653 | - | |
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 815,005 | 266,602 | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 375,137 | 63,237 | |
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 110,776 | - | |
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 50,755 | - | |
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 23,155 | 10,190 | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 3,635 | 141 | |
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 977 | 7 | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 120 | - | |
| 3,791,384 | 1,482,263 | ||
| X 3 | Related Parties and Related-Party Transactions (Continued) Major related-party transactions (continued) | ||||
| (3) | Receiving funding from related parties Note 3 | ||||
| H1 2021 | H1 2020 | ||||
| TCL Finance (Hong Kong) Co., Limited | 1,369,249 | 1,510,089 | |||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 400,000 | 1,839,450 | |||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 257,053 | 241 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 192,068 | 42,653 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 115,342 | 36,224 | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 86,875 | 77,054 | |||
| Qihang Import & Export Limited | 44,641 | 3,415 | |||
| Qihang International Import & Export Limited | 28,453 | 2,626 | |||
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 16,528 | 17,844 | |||
| Shenzhen Xirang International Business Travel Co., Ltd. | 6,155 | - | |||
| Anhui TCL Human Resources Service Co., Ltd. | 5,916 | - | |||
| Elite Excellent Investments Limited | 1,989 | 2,187 | |||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 1,724 | 2,574 | |||
| Huixing Holdings Limited | 674 | 661 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 100 | - | |||
| Marvel Paradise Limited | 586 | 650 | |||
| Union Dynamic Investment Limited | 392 | 478 | |||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 236 | 5 | |||
| Esteem Venture Investment Limited | 49 | 99 | |||
| Petro AP (Hong Kong) Company Limited | - | 122 | |||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | - | 14 | |||
| Zijinshan Investment Co., Ltd. | - | 1 | |||
| 2,528,030 | 3,536,387 | ||||
| (4) | Providing funding for related parties Note 3 | ||||
| H1 2021 | H1 2020 | ||||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 1,279,116 | - | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,170,000 | 2,733,731 | |||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 682,500 | - | |||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 2,438 | 244,714 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 22,428 | |||
| 3,134,054 | 3,000,873 | ||||
| (5) | Leases | |||
| H1 2021 | H1 2020 | |||
| Rental income | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 45,434 | 51,496 | ||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 41,998 | 19,986 | ||
| Tianjin Huanxin Technology&Development Co., Ltd. | 834 | - | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 531 | 29 | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 402 | 390 | ||
| Huizhou TCL Real Estate Development Co., Ltd. | 241 | 454 | ||
| Getech Ltd. and its subsidiaries | 241 | - | ||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | - | 161 | ||
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | - | 25 | ||
| 89,681 | 72,541 | |||
| (5) | Leases (continued) | |||
| H1 2021 | H1 2020 | |||
| Rental expense | ||||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 29,908 | 31,525 | ||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 478 | - | ||
| Tianjin Huanxin Technology&Development Co., Ltd. | 291 | - | ||
| 29,908 | 31,525 | |||
| (6) | Providing labour service for or accepting labour service from related parties | ||
| H1 2021 | H1 2020 | ||
| Providing labour service for related parties | 90,804 | 51,194 | |
| Accepting labour service from related parties | 335,790 | 170,430 | |
| (7) | Receiving interest from or paying interest to related parties | Note 3 | |
| H1 2021 | H1 2020 | ||
| Interest received | 45,475 | 59,029 | |
| Interest paid | 10,157 | 4,789 | |
| X 3 | Related Parties and Related-Party Transactions (Continued) Major related-party transactions (continued) | |||
| 4 | Balances due from and to related parties | |||
| (1) | Accounts receivable | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 2,692,979 | 2,580,564 | ||
| SunPower Systems Sar | 292,280 | - | ||
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 101,818 | 381,327 | ||
| Qihang International Import & Export Limited | 37,476 | 17,265 | ||
| Tianjin Huanxin Technology&Development Co., Ltd. | 13,485 | - | ||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 2,486 | 2,149 | ||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 743 | - | ||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 625 | - | ||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 244 | 13,825 | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 130 | 1,148 | ||
| Huizhou TCL Real Estate Development Co., Ltd. | 42 | 4 | ||
| Qihang Import & Export Limited | - | 112,535 | ||
| SunPower Systems International Limited | - | 99,791 | ||
| Wuxi Zhonghuan Yangjie Semiconductor Co., Ltd. | - | 6,983 | ||
| Bank of Shanghai Co., Ltd. | - | 45 | ||
| 3,142,308 | 3,215,636 | |||
| (2) | Accounts payable | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 426,030 | 385,787 | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 188,579 | 122,863 | ||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 623,252 | 32,336 | ||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 32,787 | 8,562 | ||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 27,202 | - | ||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 26,304 | 31,115 | ||
| Getech Ltd. and its subsidiaries | 19,889 | 21,594 | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 6,300 | 11,435 | ||
| Tianjin Huanxin Technology&Development Co., Ltd. Wuxi Zhonghuan Yangjie Semiconductor Co., Ltd. | 1,955 - | 1,365 | ||
| 1,352,298 | 615,057 | |||
| X 4 | Related Parties and Related-Party Transactions (Continued) Balances due from and to related parties (continued) | |||
| (3) | Other receivables | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 1,406,167 | 41,645 | ||
| Shenzhen Xirang International Business Travel Co., Ltd. | 3,863 | 2,755 | ||
| Zhonghuan Aineng (Beijing) Technology Co., Ltd. | 3,099 | 3,099 | ||
| Tianjin Huanxin Technology&Development Co., Ltd. | 1,905 | - | ||
| Petro AP S.A. | 1,204 | 1,218 | ||
| Ulanqab Xinyuan New Energy Co., Ltd. | 425 | 425 | ||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 240 | 66 | ||
| TCL Intelligent Technology (Ningbo) Co., Ltd. | 155 | - | ||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 92 | 218 | ||
| LG Electronics (Huizhou) Co., Ltd. | 50 | 26 | ||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 27 | - | ||
| Inner Mongolia Huanye Material Co., Ltd. | 12 | - | ||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 5 | - | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | - | 25,486 | ||
| Jiangsu Huanxin Semiconductor Co., Ltd. | - | 2 | ||
| 1,417,244 | 74,940 | |||
| X 4 | Related Parties and Related-Party Transactions (Continued) Balances due from and to related parties (continued) | |||
| (4) | Other payables | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 188,140 | 53,036 | ||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 164,022 | 266,838 | ||
| Getech Ltd. and its subsidiaries | 63,213 | 34,003 | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 55,194 | 14,556 | ||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 48,399 | 47,782 | ||
| Qihang Import & Export Limited | 44,642 | 31,363 | ||
| Qihang International Import & Export Limited | 28,453 | 34,717 | ||
| Petro AP (Hong Kong) Company Limited | 21,450 | 21,698 | ||
| Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. | 11,836 | 11,836 | ||
| Anhui TCL Human Resources Service Co., Ltd. | 5,921 | 2,548 | ||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 5,500 | 5,500 | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 5,096 | 243 | ||
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | 3,611 | 1,281 | ||
| Huizhou TCL Human Resources Service Co., Ltd. | - | 3,926 | ||
| Elite Excellent Investments Limited | 1,989 | 2,008 | ||
| Tianjin Huanxin Technology&Development Co., Ltd. | 863 | - | ||
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 727 | 500 | ||
| Huixing Holdings Limited | 674 | 667 | ||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 412 | 372 | ||
| Marvel Paradise Limited | 586 | 592 | ||
| Union Dynamic Investment Limited | 392 | 417 | ||
| CJ Speedex Logistics Co., Ltd. | 200 | 1,050 | ||
| Huizhou TCL Real Estate Development Co., Ltd. | 91 | 91 | ||
| Huaxia CPV (Inner Mongolia) Power Co., Ltd. | 54 | 45 | ||
| Esteem Venture Investment Limited | 49 | 90 | ||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 24 | 4 | ||
| Shenzhen Xirang International Business Travel Co., Ltd. | 13 | - | ||
| Inner Mongolia Shengou Electromechanical Engineering Co., Ltd. | 10 | - | ||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 4 | - | ||
| Yanyuan Fengguang New Energy Co., Ltd. | 7 | 28 | ||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 4 | 4 | ||
| JOLED Incorporation | - | 63,300 | ||
| TCL Finance (Hong Kong) Co., Limited | - | 11,419 | ||
| 651,576 | 609,914 | |||
| X 4 | Related Parties and Related-Party Transactions (Continued) Balances due from and to related parties (continued) | |||
| (5) | Prepayments | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 144,181 | 92 | ||
| Xinjiang Xiexin New Energy Material Technology Co., Ltd. | 87,615 | 28,520 | ||
| JOLED Incorporation | 11,395 | 1,962 | ||
| Getech Ltd. and its subsidiaries | 6,695 | 3,130 | ||
| Shenzhen Xirang International Business Travel Co., Ltd. | 2,930 | 4,162 | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 123 | - | ||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 35 | 35 | ||
| 252,974 | 37,901 | |||
| (6) | Advances from customers | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Tcl Industries Holdings Co., Ltd. and its subsidiaries | 1,480 | 341 | ||
| Tcl Environmental Technology Co., Ltd. and its subsidiaries | - | 34 | ||
| 1,480 | 375 | |||
| (7) | Contract liabilities | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Industries Holdings Co., Ltd. and its subsidiaries | 27,903 | 42,533 | ||
| SunPower Systems International Limited | 4,080 | - | ||
| TCL Environmental Technology Co., Ltd. and its subsidiaries | 131 | |||
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 111 | - | ||
| Huizhou TCL Real Estate Development Co., Ltd. | 38 | - | ||
| 32,263 | 42,533 | |||
| X 4 | Related Parties and Related-Party Transactions (Continued) Balances due from and to related parties (continued) | |||
| (8) | Dividends receivable | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Fantasia Holdings Group Co., Limited | 59,403 | - | ||
| Sichuan Shengtian New Energy Development Co., Ltd. | 4,930 | - | ||
| 64,333 | - | |||
| (9) | Deposits from related parties (note) | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| TCL Finance (Hong Kong) Co., Limited | 1,369,330 | 528,391 | ||
| Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. | 400,174 | 2,000,623 | ||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 192,628 | 103,136 | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 115,385 | 52,677 | ||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 95,062 | 1 | ||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 39,176 | 11,062 | ||
| Shenzhen Qianhai Qihang International Supply Chain Management Co., Ltd. | 16,542 | 98,476 | ||
| Shenzhen Xirang International Business Travel Co., Ltd. | 6,158 | 5,826 | ||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 1,726 | 3,328 | ||
| TCL Air Conditioner (Wuhan) Co., Ltd. and its subsidiaries | 266 | 1,232 | ||
| TCL Industries Holdings Co., Ltd. and its subsidiaries Petro AP (Hong Kong) Company Limited | 100 - | - 112 | ||
| 2,236,547 | 2,804,864 | |||
| 1 | Capital commitments | |||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Under contractual obligations but not provided for | Note 1 | 14,481,378 | 8,522,634 | |
| Approved by Board but not under contractual obligations | Note 2 | 172,384 | 189,019 | |
| 14,653,762 | 8,711,653 | |||
| Jan.-May 2021 | Jan.-Dec. 2020 | ||
| Revenue from discontinued operations | 168,312 | 361,300 | |
| Gross profit of discontinued operations | 63,259 | 175,739 | |
| Income tax expense of discontinued operations | 15,502 | 29,587 | |
| Net profit of discontinued operations | 47,757 | 146,152 | |
| Add: Net gain/loss on disposal of discontinued operations | 10,539 | - | |
| Total net profit of discontinued operations | 58,296 | 146,152 | |
| (II) | Segment reporting |
| XIV | Other Important Matters (Continued) | ||||||||||
| (II) | Segment reporting (continued) | ||||||||||
| 2 | Financial information of reporting segments | ||||||||||
| For the 6 months ended 30 Jun. 2021 | |||||||||||
| Semi-conductor display and materials business | Semi-conductor photovoltaic and materials business | Distribution business | Others and internally offset accounts | Total | |||||||
| Revenue | 40,756,295 | 17,644,419 | 14,450,787 | 1,447,146 | 74,298,647 | ||||||
| Gross profit | 7,656,644 | 2,106,103 | 167,885 | 734,909 | 10,665,541 | ||||||
| Income tax expense | 1,046,921 | 219,876 | 42,782 | 103,995 | 1,413,574 | ||||||
| Net profit | 6,609,723 | 1,886,227 | 125,103 | 630,914 | 9,251,967 | ||||||
| Total assets | 199,802,967 | 66,038,809 | 5,377,523 | 30,986,182 | 302,205,481 | ||||||
| Total liabilities | 112,805,489 | 36,283,034 | 4,193,839 | 43,677,696 | 196,960,058 | ||||||
| Other items | |||||||||||
| Depreciation and amortization expense | 6,926,888 | 1,411,961 | 8,121 | 99,878 | 8,446,848 | ||||||
| Capital expenditure | 10,616,137 | 3,036,386 | - | 31,508 | 13,684,031 | ||||||
| Net interest expense | 668,046 | 382,859 | 23,015 | 837,398 | 1,911,318 | ||||||
| For the 6 months ended 30 Jun. 2020 | |||||||||||
| Semi-conductor display and materials business | Semi-conductor photovoltaic and materials business | Distribution business | Others and internally offset accounts | Total | |||||||
| Revenue | 19,512,205 | - | 9,126,806 | 694,200 | 29,333,211 | ||||||
| Gross profit | (134,775) | - | 141,187 | 1,227,299 | 1,233,711 | ||||||
| Income tax expense | (1,604) | - | 40,876 | 125,315 | 164,587 | ||||||
| Net profit | (133,171) | - | 100,311 | 1,101,984 | 1,069,124 | ||||||
| Total assets | 140,989,292 | - | 4,325,649 | 39,518,293 | 184,833,234 | ||||||
| Total liabilities | 79,705,967 | - | 3,339,946 | 36,895,498 | 119,941,411 | ||||||
| Other items | - | ||||||||||
| Depreciation and amortization expense | 4,414,769 | - | 3,608 | (184,563) | 4,233,814 | ||||||
| Capital expenditure | 12,226,139 | - | - | 264,874 | 12,491,013 | ||||||
| Net interest expense | 242,341 | - | 17,893 | 551,927 | 812,161 | ||||||
| XV | Notes to Financial Statements of the Company as Parent | ||||||||||||||||
| 1 | Accounts receivable | ||||||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||||||||||||||
| Amount | Percentage | Allowance | Allowance ratio | Amount | Percentage | Allowance | Allowance ratio | ||||||||||
| Within 1 year | 292,930 | 100% | 157 | 0.05% | 175,944 | 100% | 157 | 0.09% | |||||||||
| As at 30 Jun. 2021, there was not such accounts receivable from any shareholder with a 5% or greater voting stock. | ||||||||||||||||
| 2 | Other receivables | |||||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||||
| Dividends receivable | - | - | ||||||||||||||
| Other receivables | 10,837,350 | 25,555,924 | ||||||||||||||
| 10,837,350 | 25,555,924 | |||||||||||||||
| (a) | Other receivables by nature are analyzed as follows: | |||||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||||
| Equity transfer receivables | 1,260,290 | - | ||||||||||||||
| Receivables from external entities | 94,530 | 216,836 | ||||||||||||||
| Security deposits | 2,033 | 2,354 | ||||||||||||||
| Others | 9,480,497 | 25,336,734 | ||||||||||||||
| 10,837,350 | 25,555,924 | |||||||||||||||
| (b) | Allowance for doubtful other receivables is analyzed as follows: | |||||||
| 12-month ECL | Lifetime ECL (credit not impaired) | Lifetime ECL (credit impaired) | Total | |||||
| 31 Dec. 2020 | 962. | - | 40,573 | 41,535 | ||||
| Adjustment for change in accounting policy | - | - | - | - | ||||
| 1 Jan. 2021 | 962. | - | 40,573 | 41,535 | ||||
| Accrued in current period | - | - | - | 244 | ||||
| Reversal in current period | - | - | (19) | (19) | ||||
| Write-off in current period | - | - | (8,588) | (8,588) | ||||
| 30 Jun. 2021 | 962. | - | 31,966 | 32,928 | ||||
| XV | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||||||
| 2 | Other receivables (continued) | |||||||||||||
| (c) | The aging of other receivables is analyzed as follows： | |||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||
| Within 1 year | 9,726,762 | 89.48% | 22,903,192 | 89.48% | ||||||||||
| 1-2 years | 713,170 | 6.56% | 1,554,740 | 6.07% | ||||||||||
| 2-3 years | 184,785 | 1.70% | 750,517 | 2.93% | ||||||||||
| Over 3 years | 245,561 | 2.26% | 389,010 | 1.52% | ||||||||||
| 10,870,278 | 100% | 25,597,459 | 100% | |||||||||||
| The outstanding other receivables were mostly current accounts with related parties. As at 30 Jun. 2021, there were no such other receivables from any shareholder with a 5% or greater voting stock. | ||||||||||||||
| The top five other receivables of the Company are about RMB9,518,220 thousand (31 Dec. 2020: RMB21,175,647 thousand), accounting for 87.56% (31 Dec. 2020：82.73%) of the total other receivables of the Company. | ||||||||||||||
| 3 | Long-term equity investments | |||||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||||||||||||
| Gross amount | Impair ment allowance | Carrying amount | Gross amount | Impair ment allowance | Carrying amount | |||||||||
| Associates and joint ventures (1) | 14,569,664 | - | 14,569,664 | 13,903,039 | - | 13,903,039 | ||||||||
| Subsidiaries (2) | 57,051,305 | - | 57,051,305 | 51,191,420 | - | 51,191,420 | ||||||||
| 71,620,969 | - | 71,620,969 | 65,094,459 | - | 65,094,459 | |||||||||
| As at 30 Jun. 2021, there are no major restrictions on the realization of investment and the remittance of return on long-term equity investments. | ||||||||||||||
| XV | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||||||||||
| 3 | Long-term equity investments (continued) | |||||||||||||||||
| (1) | Associates and joint ventures | |||||||||||||||||
| Increase/decrease in current period | ||||||||||||||||||
| Beginning amount | Increase/decrease in investment in current period | Investment gains and losses recognized by equity method | Other comprehensive income adjustments | Other equity changes | Cash dividends or profit distribution declared | Impairment allowance | Other increases and decreases | 30 Jun. 2021 | ||||||||||
| China Innovative Capital Management Limited | 1,037,627 | - | (42,867) | - | - | - | - | - | 994,760 | |||||||||
| LG Electronics (Huizhou) Co., Ltd. | 90,381 | - | 5,014 | - | - | (12,200) | - | - | 83,195 | |||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 39,561 | - | (1,615) | - | - | - | - | - | 37,946 | |||||||||
| Shenzhen Tixiang Business Management Technology Co., Ltd. | 2,465 | - | 503 | - | - | - | - | - | 2,968 | |||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,668 | - | 1,407 | - | - | - | - | - | 8,075 | |||||||||
| TCL Environmental Technology Co., Ltd. | 89,758 | 25,811 | 7,751 | - | - | - | - | - | 123,320 | |||||||||
| Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) | 377,553 | - | (6,092) | - | - | - | - | - | 371,461 | |||||||||
| Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) | 150,677 | - | (1,779) | - | - | - | - | - | 148,898 | |||||||||
| Huizhou TCL Human Resources Service Co., Ltd. | 2,121 | - | (175) | - | - | - | - | - | 1,946 | |||||||||
| TCL Microchip Technology (Guangdong) Co., Ltd. | - | 335,000 | (1,170) | (13,633) | 320,197 | |||||||||||||
| Others | 12,106,228 | (88,084) | 666,729 | (152,039) | - | (10,093) | - | (45,843) | 12,476,898 | |||||||||
| 13,903,039 | 272,727 | 627,706 | (152,039) | - | (22,293) | - | (59,476) | 14,569,664 | ||||||||||
| XV | Notes to Financial Statements of the Company as Parent (Continued) | ||||||||
| 3 | Long-term equity investments (continued) | ||||||||
| (2) | Subsidiaries | ||||||||
| Company’s direct interest | 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |||||
| TCL China Star Optoelectronics Technology Co., Ltd. | 83.02% | 27,432,498 | 5,268,400 | - | 32,700,898 | ||||
| TCL Tech Finance Co., Ltd. | 82% | 1,256,003 | - | - | 1,256,003 | ||||
| Tianjin Zhonghuan Electronics Group Co., Ltd. | 100% | 12,500,000 | - | - | 12,500,000 | ||||
| Tianjin Zhonghuan Semiconductor Co., Ltd. | 2.57% | 1,752,635 | - | - | 1,752,635 | ||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 39.95% | 4,217,000 | - | - | 4,217,000 | ||||
| TCL Financial Holdings Group (Guangzhou) Co., Ltd. | - | 772,000 | - | (772,000) | - | ||||
| Guangzhou TCL Internet Microcredit Co., Ltd. | - | 1,000,000 | - | (1,000,000) | - | ||||
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | - | 457,994 | - | (457,994) | - | ||||
| TCL Culture Media (Shenzhen) Co., Ltd. | 100% | 361,414 | - | - | 361,414 | ||||
| Xinjiang TCL Equity Investment Ltd. | 100% | 200,000 | - | - | 200,000 | ||||
| Huizhou Sailuote Communication Co., Ltd. | 100% | 110,000 | - | - | 110,000 | ||||
| Highly Information Industry Co., Ltd. | 66.46% | 107,296 | - | - | 107,296 | ||||
| TCL Communication Equipment (Huizhou) Co., Ltd. | 75.00% | 79,500 | - | - | 79,500 | ||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 100% | 58,497 | - | - | 58,497 | ||||
| Shenzhen TCL Strategic Equity Investment Fund Partnership (Limited Partnership) | 100% | 43,880 | 21,890 | - | 65,770 | ||||
| TCL Industrial Technology Research Institute, Ltd. (Europe) | 100% | 20,000 | - | - | 20,000 | ||||
| Wuhan TCL Industrial Technology Research Institute, Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Shenzhen TCL High-Tech Development Co., Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Beijing HAWK Cloud Information Technology Co., Ltd. | 100% | 20,000 | - | - | 20,000 | ||||
| Peer College Education Technology (Huizhou) Co., Ltd. | 100% | 5,000 | - | - | 5,000 | ||||
| Huizhou Hongsheng Science and Technology Development Co., Ltd. | 100% | 1,000 | - | - | 1,000 | ||||
| Beijing Zhiqujia Technology Co., Ltd. | 100% | 257,627 | - | - | 257,627 | ||||
| Ningbo TCL Equity Investment Ltd. | 100% | 300,000 | - | - | 300,000 | ||||
| XV | Notes to Financial Statements of the Company as Parent (Continued) | ||||||||
| 3 | Long-term equity investments (continued) | ||||||||
| (2) | Subsidiaries (continued) | ||||||||
| Company’s direct interest | 1 Jan. 2021 | Increase in current period | Decrease in current period | 30 Jun. 2021 | |||||
| TCL Technology Investments Limited | 100% | 188,293 | 2,800,000 | - | 2,988,293 | ||||
| Equity incentives of subsidiaries | 10,783 | 80 | (491) | 10,372 | |||||
| 51,191,420 | 8,090,370 | (2,230,485) | 57,051,305 | ||||||
| For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note V. | |||||||||
| XV | Notes to Financial Statements of the Company as Parent (Continued) | ||||||||||
| 4 | Investments in other equity instruments | ||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||||||||
| Equity instruments not held for trading | 15,000 | 15,000 | |||||||||
| 5 | Other non-current financial assets | ||||||||||
| 30 Jun. 2021 | 31 Dec. 2020 | ||||||||||
| Equity investments | 1,172,821 | 1,145,022 | |||||||||
| 6 | Revenue and cost of sales | ||||||||||
| H1 2021 | H1 2020 | ||||||||||
| Revenue | Cost of sales | Revenue | Cost of sales | ||||||||
| Core business | 618,241 | 606,953 | 382,812 | 377,010 | |||||||
| Non-core business | 155,431 | 28,602 | 103,572 | 7,048 | |||||||
| 773,672 | 635,555 | 486,384 | 384,058 | ||||||||
| 7 | Return on investment | ||||||||||
| H1 2021 | H1 2020 | ||||||||||
| Income from disposal of debt instruments at fair value through profit or loss | 62,402 | 10,177 | |||||||||
| Income from holding debt instruments at fair value through profit or loss | 19,419 | 2,729 | |||||||||
| Debt instruments at amortized cost through profit or loss | 877 | - | |||||||||
| Income from holding equity instruments at fair value through profit or loss | - | 12,265 | |||||||||
| Dividends from subsidiaries | 378,888 | 736,919 | |||||||||
| Share of profit of associates for current period | 629,051 | 626,648 | |||||||||
| Share of profit of joint ventures for current period | (1,345) | (9,432) | |||||||||
| Net income from disposal of long-term investments | 761,859 | 12,549 | |||||||||
| 1,851,151 | 1,391,855 | ||||||||||
| As at 30 Jun. 2021, there were no significant restrictions on the collection of return on investment. |
| XV | Notes to Financial Statements of the Company as Parent (Continued) | |||
| 8 | Net cash generated from/used in operating activities | |||
| Net cash used in operating activities of the Company as the parent was RMB19,888,473 thousand. | ||||
| 9 | Cash and cash equivalents, end of the period | |||
| Cash and cash equivalents, end of the period of the Company as the parent was RMB7,893,697 thousand. | ||||
| 10 | Contingent liabilities | |||
| As at 30 Jun. 2021, the contingent liabilities not provided for in the financial report are as follows: | ||||
| 30 Jun. 2021 | 31 Dec. 2020 | |||
| Guarantees for trade notes and letters of guarantee of subsidiaries | 11,166,067 | 10,903,205 | ||
| Guarantees for bank loans of subsidiaries | 39,551,592 | 33,054,210 | ||
| Guarantees for bank loans, trade notes, letters of credit, etc. of related parties | 19,602,282 | 16,144,884 | ||
| XVI | Comparative Data | |||
| Certain comparative data have been reclassified to comply with the presentation of the current period. | ||||
| XVII | Non-Recurring Gains and Losses | |||
| H1 2021 | H1 2020 | |||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 739,340 | 289,779 | ||
| Government grants through profit or loss (exclusive of government grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | ||||
| 359,192 | 355,098 | |||
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | 40,300 | 280,759 | ||
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | ||||
| 210,273 | 40,067 | |||
| Non-operating income and expense other than the above | 244,570 | 192,303 | ||
| Income tax effects | (82,886) | (78,214) | ||
| Non-controlling interests effects | (224,722) | (53,589) | ||
| Non-recurring gains and losses attributable to ordinary shareholders of the Company as the parent | 1,286,067 | 1,026,203 | ||
| The Company recognizes non-recurring gain and loss items in accordance with the provisions of (2008) No.43 "Explanatory Announcement No.1-Non-recurring Gains and Losses (2008)" issued by the China Securities Regulatory Commission. | ||||
| XVIII | 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 China Securities Regulatory Commission and relevant provisions of accounting standards: | ||||||||
| Item | Net profit attributable to the Company as parent for Reporting Period | Weighted average ROE | EPS (RMB yuan) | |||||
| Basic EPS | Diluted EPS | |||||||
| Net profit attributable to ordinary shareholders of the Company | 6,783,885 | 18.96% | 0.5026 | 0.4835 | ||||
| Net profit attributable to ordinary shareholders of the Company before non-recurring gains and losses | 5,497,818 | 15.37% | 0.4073 | 0.3918 | ||||
| Legal Representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |