TCL CORPORATION
TCL集团股份有限公司
INTERIM REPORT 2018
28 August 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of TCL Corporation (hereinafter referred to as the
“Company” or the “Group”) hereby guarantee the factuality, accuracy and completeness of
the contents of this Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.Mr. Li Dongsheng, Chairman of the Board of the Company, and Mr. Huang Xubin, the
Company’s Chief Financial Officer (CFO), equivalent to head for financial affairs and head of
the financial department, hereby guarantee that the financial statements carried in thisReport are factual, accurate and complete.This Report has been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Business Summary ...... 10
Part IV Management Discussion and Analysis ...... 14
Part V Significant Events ...... 39
Part VI Share Changes and Shareholder Information ...... 66
Part VII Directors, Supervisors and Senior Management ...... 73
Part VIII Corporate Bonds ...... 75
Part IX Financial Statements ...... 81
Definitions
| Term | Definition |
| The “Company”, the “Group”, “TCL”, “TCL Corp.” or “we” | TCL Corporation and its consolidated subsidiaries, except where the context otherwise requires |
| The “Reporting Period” | The period from 1 January 2018 to 30 June 2018 |
| RMB, RMB’000 | Expressed in the Chinese currency of Renminbi, expressed in thousands of Renminbi |
| TCL Electronics | TCL Electronics Holdings Limited, a majority-owned subsidiary of the Company listed on the Stock Exchange of Hong Kong (stock code: 01070.HK) |
| TCL Communication | TCL Communication Technology Holdings Limited |
| CSOT | Shenzhen China Star Optoelectronics Technology Co., Ltd. |
| Wuhan CSOT | Wuhan China Star Optoelectronics Technology Co., Ltd. |
| TCL Household Electric Appliance Group | Huizhou TCL Household Electric Appliance Group Co., Ltd. |
| Tonly Electronics | Tonly Electronics Holdings Limited, a majority-owned subsidiary of the Company listed on the Stock Exchange of Hong Kong (stock code: 01249.HK) |
| CDOT | China Display Optoelectronics Technology Holdings Limited, a majority-owned subsidiary of the Company listed on the Stock Exchange of Hong Kong (stock code: 00334.HK) |
| Highly | Highly Information Industry Co., Ltd., a majority-owned subsidiary of the Company listed on the National Equities Exchange and Quotations (stock code: 835281) |
| Guangdong Juhua | Guangdong Juhua Printed Display Technology Co., Ltd. |
| China Ray | Guangzhou China Ray Optoelectronic Materials Co., Ltd. |
| Bank of Shanghai | Bank of Shanghai Co., Ltd. (stock code: 601229.SH), with the Company holding a 4.99% interest |
| 712 Corp. | Tianjin 712 Communication & Broadcasting Co., Ltd. (stock code: 603712.SH), with the Company holding a 19.07% interest as its second largest shareholder |
| Fantasia | Fantasia Holdings Group Co., Limited |
| Getech | Getech Ltd. |
| Thunderbird Technology | Shenzhen Thunderbird Network Technology Co. |
| Huan Tech | Huan Tech Co., Ltd. |
| GoLive | GoLive Ltd. |
| HAWK | Shenzhen HAWK Internet Co., Ltd. |
| Educational Web | TCL Educational Web Ltd. |
| TCL Capital | Xinjiang TCL Equity Investment Co., Ltd. and Ningbo TCL Equity Investment Co., Ltd. |
| Tsinghua Unigroup | Tsinghua Unigroup Co., Ltd. |
| Activated users | The users who have used the Internet TV network service at least once |
| Active users | The different users visiting within seven days (the same user visiting more than once within seven days is deemed as one user) |
| t1 plant or t1 project | The generation 8.5 (or G8.5) TFT-LCD production line of CSOT |
| t2 plant or t2 project | The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor and AMOLED) production line of CSOT |
| t3 project | The generation 6 (or G6) LTPS? LCD/AMOLED panel production line of CSOT |
| t4 project | The generation 6 (or G6) flexible LTPS-AMOLED panel production line of CSOT |
| t6 project | The generation 11 (or G11) new TFT-LCD and AMOLED production line of CSOT |
| t7 project | The generation 11 (or G11) new ultra-high-definition (UHD) TFT-LCD and AMOLED production line of CSOT |
| TCL Technology Park | TCL Technology Park (Huizhou) Co., Ltd. |
| The “Incentive Plan” | The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation |
| The “Stock Ownership Plan” | The First Top 400 and Key Personnel Stock Ownership Plan and the Global Partner Plan of TCL Corporation |
Part II Corporate Introduction and Key Financial Information
I Corporate Introduction
| Stock name | TCL | Stock code | 000100 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | TCL集团股份有限公司 | ||
| Abbr. (if any) | TCL集团 | ||
| Company name in English (if any) | TCL Corporation | ||
| Abbr. (if any) | TCL Corp. | ||
| Legal representative | Li Dongsheng | ||
II Contact Information
| Board Secretary | |
| Name | Liao Qian |
| Address | 19/F, Tower B, TCL Building, Gaoxin South First Road, Shenzhen High-Tech Industrial Park, Shenzhen, Guangdong Province, China |
| Tel. | 0755-3331 1666 |
| Fax | 0755-3331 3819 |
| Email address | ir@tcl.com |
III Other Information
1. Contact Information of the Company
No changes occurred to the registered address, office address and their zip codes, website address and email address of the Companyin the Reporting Period.
| Registered address | Block 19, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province |
| Office address | TCL Technology Building, 17 Huifeng 3rd Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province |
| Zip code | 516001 |
| Company website | http://www.tcl.com |
| Email address | ir@tcl.com |
2. Media for Information Disclosure and Place where this Report is Kept
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period.
| Newspapers designated by the Company for information disclosure | Securities Times, China Securities Journal, Shanghai Securities News and Securities Daily |
| Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is kept | Board Office of TCL Corporation |
IV Key Financial Information
| Series No. | Item | H1 2018 | H1 2017 | Change (%) |
| 1 | Operating revenue (RMB) | 52,523,748,293 | 52,174,517,312 | 0.67% |
| 2 | Gross profit (RMB) | 9,399,768,981 | 10,156,485,100 | -7.45% |
| 3 | EBITDA | 6,743,386,144 | 5,917,050,093 | 13.97% |
| 4 | Profit before taxation (RMB) | 2,185,754,559 | 2,222,380,189 | -1.65% |
| 5 | Net profit (RMB) | 1,700,839,860 | 1,661,318,811 | 2.38% |
| Net profit attributable to the listed company’s shareholders (RMB) | 1,585,938,283 | 1,033,844,701 | 53.40% | |
| Net profit before non-recurring gains and losses (RMB) | 1,019,677,348 | 1,161,040,759 | -12.18% | |
| Net profit attributable to the listed company’s shareholders before non-recurring gains and losses (RMB) | 993,436,861 | 619,216,177 | 60.43% | |
| 6 | Basic earnings per share (RMB/share) (note) | 0.1173 | 0.0846 | 38.65% |
| Diluted earnings per share (RMB/share) | 0.1172 | 0.0846 | 38.53% | |
| Basic earnings per share before non-recurring gains and losses (RMB/share) | 0.0734 | 0.0507 | 44.77% |
| 7 | Weighted average return on equity (%) | 5.22% | 4.47% | Up by 0.75% |
| Weighted average return on equity before non-recurring gains and losses (%) | 3.27% | 2.68% | Up by 0.59% | |
| 8 | Net cash generated from/used in operating activities (RMB) | 4,375,228,294 | 3,472,540,487 | 26.00% |
| Net cash per share generated from/used in operating activities (RMB/share) | 0.3229 | 0.2569 | 25.69% | |
| 30 June 2018 | 31 December 2017 | Change (%) | ||
| 9 | Total assets (RMB) | 169,916,843,306 | 160,293,985,835 | 6.00% |
| 10 | Total liabilities (RMB) | 112,238,243,837 | 106,151,046,949 | 5.73% |
| 11 | Debt Asset ratio (%) | 66.05% | 66.22% | Down by 0.17% |
| Debt Asset ratio before borrowings obtained using bank deposit as a pledge and deferred income (%) | 64.22% | 64.55% | Down by 0.33% | |
| 12 | Total owners’ equity (RMB) | 57,678,599,469 | 54,142,938,886 | 6.53% |
| Owners’ equity attributable to the listed company’s shareholders (RMB) | 29,598,029,676 | 29,747,067,178 | -0.50% | |
| 13 | Share capital (share) | 13,549,648,507 | 13,514,972,063 | 0.26% |
| 14 | Equity per share attributable to the listed company’s shareholders (RMB/share) | 2.1844 | 2.2010 | -0.75% |
Note: 34,676,444 restricted shares were granted and listed in the Reporting Period, increasing the Company’s total number of shares
from 13,514,972,063 to 13,549,648,507. Earnings per share for both H1 2018 and H1 2017 were weighted averages based on thetotal share capital. Based on the total share capital on 30 June 2018, diluted earnings per share for H1 2018 were RMB0.1172, up38.53% from RMB0.0846 for H1 2017.
The total share capital at the end of the last trading session before the disclosure of this Report:
| Total share capital at end of last trading session before disclosure of this Report (share) | 13,549,648,507 |
| Fully diluted earnings per share based on latest total share capital above (RMB/share) | 0.1172 |
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises
(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Net Profit and Equity Differences under CAS and IFRS
No such differences for the Reporting Period.
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
No such differences for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable ■ Not applicable
XI Non-Recurring Gains and Losses
Unit: RMB
| Item | Amount | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 17,143,305 | Not applicable |
| 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 government’s uniform standards) | 525,524,829 | Not applicable |
| Gain or loss on fair-value changes in trading financial assets and liabilities & investment income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | -6,131,372 | An aggregate loss of RMB6.13 million on the fair-value changes of forward forex contracts and on settled such contracts in the Reporting Period |
| Other | 303,187,412 | Not applicable |
| Less: Corporate income tax | -158,561,662 | Not applicable |
| Minority interests (net of tax) | -88,661,090 | Not applicable |
| Total | 592,501,422 |
Part III Business Summary
I Core Business Scope of the Company in Reporting PeriodIn the Reporting Period, the Group accelerated business restructuring to concentrate more on its two
major industries—semiconductor displays and intelligent terminals. Supported by technology and
business model innovations, the Group also explored a new business area based on its core businessand competencies. As such, the Group has reclassified its main industries into the following threemajor business groups:
1. The Semiconductor Display Business GroupIt consists of CSOT, CDOT (0334.HK), new technologies and new business layout in relation tosemiconductor displays.2. The Intelligent Terminal Business GroupIt includes TCL Electronics (1070.HK) (including the commercial display operations), TCLCommunication, TCL Household Electric Appliance Group and new business related to theconsumer electronics such as smart homes.3. The Emerging Business Group
It is responsible for the overall management of the Group’s platform services, strategic emerging
business and financial control system.
Guangdong JuhuaChina Ray
China RayTCL Corporation
TCL CorporationIntelligent Terminals
Intelligent Terminals
TCL Electronics (commercial
displays inclusive)
TCL Electronics (commercial
displays inclusive)TCL Household Electric
Appliance Group
TCL Household Electric
Appliance Group
TCL Communication
TCL CommunicationCSOT
CSOTCDOT
CDOTPlatform services
Platform servicesStrategic emerging business
Strategic emerging businessFinancial control system
Financial control systemSemiconductor Displays
| Semiconductor Displays | Emerging Business |
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
See item IV under “Part IV Management Discussion and Analysis” herein.
2. Major Assets Overseas
□ Applicable ■ Not applicable
III Core Competitiveness AnalysisUpon 37 years of development, TCL has become a global conglomerate manufacturing smart
products and providing Internet application services. Up to now, it has been committed to becoming
an icon for China’s intelligent manufacturing and has made a series of remarkable achievements.
With the spirit of continuous innovation, the revolution to forge ahead and the courage to reform,TCL has successively promoted the internationalization, the vertical integration of the industrial
chain and the “Double +” strategy of “Smart Products + Internet” and “Products + Services”,
aiming to optimize resource allocation through global operations and improve operationalefficiency by way of the vertical integration of the consumer electronics operations. Keepingabreast of the times and leading technological advancements, TCL has gradually established itscompetitive advantages for the future.1. Great Strength in R&D and Product InnovationTCL owns 26 R&D centres worldwide, 4 CNAS-certified labs and close to 8,000 high-quality R&Dtechnicians, covering new semiconductor display technologies and materials such as OLED andQLED, artificial intelligence in industrial application and product terminals, as well as the big dataapplication, smart connection, etc. The National Printing and Flexible Display Innovation Centrelaunched by Guangdong Juhua is the first national innovation centre in the domestic display sector,while China Ray is part of the Printing OLED Key Material Industrialization DemonstrationProgramme as a specific R&D priority plan of China. Up to the end of the Reporting Period, TCLhas applied for accumulated 33,220 Chinese patents, 7,839 U.S. patents and 9,030 international
patents through PCT (including 647 ones during the Reporting Period). In addition, TCL’sinnovative products have achieved many honours, including the “Innovative Product for the Year”
for TCL Contamination-Free Drum-Inside-Drum Washing Machine at the 13
th
China Household
Appliances Innovation Award in 2017, as well as the “Quantum Dot Technology Golden Award” forTCL Electronics’ high-end flagship X6 XESS TV at IFA Berlin 2017.
2. Advantage of Integrated Vertical Industrial Chain
TCL is the first company in China set up the integrated vertical industrial chain of “LCDpanels-backlight modules-TV/mobile phones product”. Since 2008, it started to establish control
management over the upstream supply chain of consumer electronics and make plans for the corecomponents of home and mobile terminal products. With semiconductor displays as the corebusiness, TCL works on the R&D, design and manufacturing of key materials and components onthe upstream side, and integrates display terminal products on the downstream side. Through R&D,manufacturing technology and industrial scale improvements, TCL has formulated aninternationally competitive advantage in, collaborative industrial chain. In terms of home terminals,
CSOT’s t1 and t2 plants produce large-sized LCD panels, the intelligent manufacturing base in
Huizhou specializes in backlight modules, and TCL Electronics manufactures and markets theintelligent home terminals and provides Internet value-added services. As for mobile terminals,
CSOT’s t3 plant produces small- and medium-sized LTPS? LCD panels, CDOT specializes in
small- and medium-sized backlight units, and TCL Communication manufactures and markets themobile terminals and provides Internet value-added services. An open and collaborative supplychain is adopted for all the business units for better resource allocation.3. Global Operations and Distribution NetworkThrough branding efforts and cross-border mergers and acquisitions, TCL has become a leaderamong Chinese enterprises in internationalization. So far, TCL has more than 75,000 employeesacross Asia, Americas, Europe and Oceania, providing smart products and application services forover 100 million users around the world. Also, it boasts 26 R&D centres and 22 manufacturingbases worldwide, as well as sales offices in over 80 countries and regions to cover more than 160countries and regions. Domestically, through the expansion of its 3C Digital Home Experience
Centres and exclusive shops, TCL’s distribution network is able to reach every corner of the country.In all, the global operations and distribution network has become one of TCL’s core competitive
edges.4. Global Brand Recognition
TCL adopts a multi-brand strategy for the differentiated users. For TV brands, it has TCL, ROWA,Thunderbird, etc. for the domestic market, as well as TCL, Thomson and iFFalcon for theinternational market. In terms of communication products, it has TCL, Alcatel and Palm brands,also being licensed by BlackBerry to use its brand name globally. On the list of 2017 (The 23
rd
) Top100 Most Valuable Chinese Brands, TCL ranked No. 5 with a brand value of RMB80.656 billion,
topping China’s TV manufacturing industry for consecutive 12 years in a row. It is also award the
top 20 on the ranking of BrandZ Chinese Global Brand Company jointly released in February 2018by Google, Kantar Millward Brown and WPP. TCL has set up the international renowned brandrecognition. In terms of the North America market, it has been ranked as the fastest growing TVbrand in the U.S. market by the local media for three consecutive years. Due to the years ofoverseas branding efforts, TCL is well-received among overseas consumers.5. Scale Advantage and Leading Market Position
TCL’s products enjoy a leading market position in the global market. In H1 2018, CSOT’s LCD TVpanel shipment ranked the world’s fifth largest, with its 32" shipment being the second largest
worldwide, and its 55" shipment being the largest domestically. In addition, TCL owned the thirdlargest global market share by LCD TV sales volume, with the market share of its curved TVsremaining at the top of domestic brands. Meanwhile, its air conditioner sales volume ranked the
world’s fifth highest. With such an enormous scale, TCL is enjoying decreasing marginal costs and
expenses, as well as increasing profits.6. Internet Application and Service CompetencyBased on its existing intelligent terminals, In 2014, TCL greatly promoted a strategic transformation
towards “Intelligent Terminals + Internet” and “Products + Services” business model to provide
platforms and services for users in home, mobile and commercial scenarios. This transformationwas aimed to catch up the fast development of Internet and foster new competitiveness. Up to theend of June 2018, TCL had accumulated 27.35 million activated users at its home Internetapplication platforms, and accumulated 45.37 million activated users at the huan.tv terminals; andfor its mobile Internet application platforms, there were up to 428 million activated users, with 110
million active users on a monthly basis. TCL’s mobile Internet application and service competency
has improved rapidly, boosting fast revenue growth.
Part IV Management Discussion and Analysis
I OverviewIn H1 2018, the Group recorded operating revenue of RMB52.524 billion, representing a
year-on-year increase of 0.67%; core business revenue of RMB52.073 billion, rising 1.45%compared to H1 2017; EBITDA of RMB6.743 billion, growing by 13.97% from H1 2017; the netprofit of RMB1.701 billion, representing a 2.38% year-on-year increase; the net profit attributableto TCL shareholders of RMB1.586 billion, representing a considerable increase of 53.40%compared to H1 2017; and the net profit attributable to TCL shareholders before non-recurringgains and losses of RMB993 million, a strong growth of 60.43% compared to H1 2017.The Group achieved considerable year-on-year performance improvements primarily driven by the
following factors: (a) profitability of the overseas business continued to improve, TCL Electronics’
effort spent on key customer and distribution channel expansion produced remarkable results withfast growth in all the major markets, and TCL Communication achieved remarkable sharp decreasesin loss in major overseas markets due to its continuous cost reduction and efficiency improvement;(b) except for CSOT, all the other industries continued to achieve sustainable growth; and (c)attributable to the further transformation, net profit and labour efficiency both noticeable increaseswith a drop in the overall operating expenses.
The Group’s operating revenue grew at a slower pace was mainly driven by (a) CSOT reported a
year-on-year decline in revenue resulted from significantly lower prices for its main panel products;and (b) the communication business shrank in scale due to proactive transformation includingoptimize the business structure and organization process.During the Reporting Period, the Group accelerated its business and capital restructurings throughdisposing or selling part of its non-core industries or other ways to focus more on semiconductordisplays and intelligent terminals, as well as through developing a new business area based ontechnological and business model innovations in relation to the core business for new growth
drivens. Meanwhile, TCL will serve as the main platform for CSOT’s semiconductor display
industry. TCL Multimedia, having renamed as TCL Electronics in the Reporting Period, serving as
the main platform for the Group’s intelligent terminal industry. TCL Electronics is aiming to build
an international business group of TCL-brand intelligent terminals.
The semiconductor display industry layout is become more maturity, with the largestshipment of TV panels to major brand customers in China.With the production ramp-up continuously, the higher yield rate and higher utilization rate on itstwo G8.5 LCD panel production lines (t1 and t2), CSOT ranks fifth in global LCD TV panelshipment, first in TV panel shipment to major brand customers in China, first in domestic marketshare of its 55" products, and second in global market share of its 32" LCD panels. The t6 project(the G11 production line), which produces and markets 43", 65", 70" (21:9) and 75" QFHD displays,is anticipated to start production in this fourth quarter. The t7 project (another G11 production line)
is positioned to produce large-sized UHD and OLED displays. Meanwhile, CSOT’s four production
lines cover major large-sized products. CSOT is well positioned for a larger market share oflarge-sized displays with new technological development plans.As for small- and medium-sized displays, the Company concentrates on medium- and high-endproducts and new display technologies application, in order to improve its industrial capacity andproduct competitiveness rapidly. The t3 project (the G6 LTPS-LCD production line) is seeing anincreasing production capacity, yield rate and shippment. The t4 project (the G6 flexibleLTPS-AMOLED production line) is scheduled for production in H1 2019, the relevanttechnological identification and application are well underway on the existing G4.5 test productionline. The Company will speed up its product and customer layout to establish technological andefficiency competitiveness in the small- and medium-sized display sector.
At the end of the Reporting Period, the prices for CSOT’s major products have stabilized and show
an increasing trend. According to data from the independent agency, the 32-inch panel was quotedin this August at a price about 10 U.S. dollars higher than the bottom price in the second quarter.The LCD panel industry is showing a rising demand with the coming selling peak season of theterminal products, as well as with extended display applications in various scenarios, which is
expected to contribute to CSOT’s revenue growth in the second half of the year.
The global operation competency has improved and the brand terminal business has achievedsignificant growth.With a well-established global network covering R&D, products, distribution channels andmarketing, and featuring strong competencies of global management and localized operationscovering supply chain management, IP protection, risk control and compliance, TCL is able to dealwith various trade disputes and maintain steady growth in global business. It owns 26 R&D centres,10 joint labs, 22 manufacturing bases across the world, covering over 160 countries and regions.
TCL’s global competitiveness continued to improve as a global brand in the Reporting Period.
During this period, the sales volume have reached 13.51 million TV sets, grew by 37.8%year-on-year, of which the overseas sales volume went up 44.4% from a year ago, generating sales
revenue that accounted for 46.95% of the Group’s total overseas sales revenue.
Product and technological innovation is seen as a key drivers.During the Reporting Period, the Group invested a total of RMB2.558 billion in the R&D, mostly inthe strategic direction of new semiconductor display technologies and materials, artificialintelligence (AI) and big data, as well as intelligent manufacturing and the industrial Internet.In terms of new semiconductor display technologies and materials, Guangdong Juhua has been
approved as the “National Printed and Flexible Display Innovation Centre”, which is the onlynational innovation centre in China’s display sector. So far, it has established the world’s most
advanced public printed display platform, and has successfully developed multiple printed displayprototypes. As for QLED, a world-leading R&D team has been put in place and high-performancered-light and green-light quantum dot materials have been developed. Meanwhile, China Ray isundertaken development of the evaporated and printed OLED materials, as well as the national
“Printed OLED Key Material Commercialization Demonstration Programme”, where prototypes
have been sent to customers.As for the AI and big data sector, the Group owns multiple R&D centres. The Hong Kong R&DCentre specializes in intelligent terminal application, as well as key image and big data technologies.The R&D centre in the U.S. works on supporting Internet operation technologies for intelligentterminals. And the Wuhan R&D Centre set up in this April concentrates on algorithms in relation to
AI technologies such as image recognition, as well as voice recognition and understanding.During the Reporting Period, the Group was incorporating a subsidiary to develop an intelligentmanufacturing and industrial Internet system with an independent core intellectual properties (IP).Meanwhile, the plants of CSOT and the smart TV will adopt more intelligent systems to create newcompetitiveness in industrial manufacturing this year.During the Reporting Period, the Group applied for 647 international patents through PCT,representing a cumulative number of 9,030, covering Europe, the U.S., South Korea, etc. In addition,up to the end of the Reporting Period, the Group has cumulatively applied for 33,220 Chinesepatents and 7,839 U.S. patents. Among those, CSOT has applied for 12,672 Chinese patents and7,190 U.S. patents, indicating a domestically advanced level of patented technologies indomestically; in terms of the prioritized quantum dot sector, applications have been filed for 648
patents, ranking the world’s second highest in this sector.
The Group is committed to providing the intelligent vision world with the best smart experience forusers. As a result, the Group will strengthen the advantage of integrated vertical industrial chain,strive for higher marginal profits and lower costs through technological innovation and efficiencyimprovement, and keep improving its core competitiveness constantly. It will also enhance thecompetitiveness of its terminal products including smart TV, mobile phone and intelligenthousehold electrical appliance, and expand the emerging business area such as commercial displaysand vehicle-mounted displays, as well as plan for an intelligent terminal portal matrix for variousapplication scenarios. Being user-oriented, TCL will build household, individual and commercialeco-systems with premium products and services by means of strategic investment and cooperation.
II Performances of Core BusinessIn the Reporting Period, the Group accelerated business restructuring to concentrate more on its two
major industries—semiconductor displays and intelligent terminals. Supported by technology and
business model innovations, it also explored a new business area based on its core business andcompetencies. As such, the Group has reclassified its main industries into the following three majorbusiness groups:
1. The Semiconductor Display Business GroupIt consists of CSOT, CDOT (0334.HK) , new technologies and new business layout in relation tosemiconductor displays. 2. The Intelligent Terminal Business GroupIt includes TCL Electronics (1070.HK) (including the commercial display operations), TCLCommunication, TCL Household Electric Appliance Group and other new business related to theconsumer electronics such as smart homes.3. The Emerging Business Group
It is responsible for the overall management of the Group’s platform services, strategic emerging
business and financial control system.
(I) The Semiconductor Display Business Group1. CSOTCSOT is mainly engaged in the R&D, production and sales of semiconductor display panels and thecollaborative management of semiconductor display related industries. While further consolidatingits leading position as the TV LCD panel provider, CSOT is actively transforming to be amulti-application-scenario display interface provider. Focusing on this strategy, CSOT keepsoptimizing the product and customer structures of the existing LCD panel display business andactively working on development of new products with high added value such as commercialdisplays, notebook displays and vehicle-mounted displays for faster business transformation.Moreover, CSOT is promoting organizational structure optimization and business modeltransformation to further improve efficiency and reduce costs for leading efficiency and
Guangdong JuhuaChina Ray
China RayTCL Corporation
TCL CorporationIntelligent Terminals
Intelligent Terminals
TCL Electronics (commercial
displays inclusive)
TCL Electronics (commercial
displays inclusive)TCL Household Electric
Appliance Group
TCL Household Electric
Appliance Group
TCL Communication
TCL CommunicationCSOT
CSOTCDOT
CDOTPlatform services
Platform servicesStrategic emerging business
Strategic emerging businessFinancial control system
Financial control systemSemiconductor Displays
| Semiconductor Displays | Emerging Business |
effectiveness in the industry.During the Reporting Period, the two G8.5 lines of CSOT, t1 and t2 projects, maintained fullproduction and sales. A total of 1.750 million glass substrates were inputted, representing ayear-on-year increase of 7.49%. By means of continuous improvement of the product structure and
product competitiveness, CSOT’s large-sized LCD panel shipment remained the fifth in the global,
the market share of 32-inch LCD panel products accounted for the second largest in the worldwide,and the shipment of 55-inch UD products ranked second in the world. In the field of large-sizedLCD panels, CSOT consecutively ranked first in shipment to major domestic brand customers. Theproduction capacity and yield of the G6 LTPS-LCD production line (t3 project) continued toincrease, major brand customers were successfully introduced, and bulk shipments to many brandcustomers were materialized. The sales volume increased rapidly, with the proportion of full screenproducts rising significantly. During the Reporting Period, due to the impact of the cycle of thepanel industry, the average price of panels of major sizes was significantly lower than that of thesame period last year, and the performance of CSOT decreased year-on-year. However, with the
advantages of the Group’s integrated vertical industrial chain, optimization of the product mix,
reduction of costs and increase of efficiency, the business efficiency and profitability of CSOTremained ahead in the global industry. As a result, for H1 2018, CSOT recorded sales revenue ofRMB12.14 billion and the EBITDA of RMB4.113 billion.During the Reporting Period, the construction of the new production line of CSOT was progressingsmoothly. The roof-sealing of the plant of the G6 LTPS-AMOLED flexible production line (t4project) has been completed, and the equipment procurement and move-in are underway.Production is expected to start in the first half of 2019. CSOT has a G4.5 flexible AMOLED trailline in Wuhan, where the product and technology testing is underway, preparing for the rapid massproduction of t4 product. The G11 TFT-LCD and AMOLED new display production line (t6 project)had entered the stage of equipment loading and installation. This line is expected to start operationin the fourth quarter of this year, mainly producing 43-inch, 65-inch, 75-inch and otherultra-large-sized new display panels. The G11 UHD new display production line (t7 project) ismainly responsible for the production and sales of 65-inch and 70-inch (21:9) 8K UHD displays andAMOLED display products.
The first phase of the integrated intelligent module manufacturing base (High Generation ModuleProject) has been put into production, with an annual processing capacity of 40 million LCDmodules. Supporting the G8.5 and G11 production lines, this project is positioned to providehigh-end and large-sized display modules to solve problems for customers, and further enhance themanufacturing capability and competitive advantages of CSOT in the sector of semiconductordisplays.2. CDOTCDOT (0334.HK) is engaged in the R&D, production and sales of small- and medium-sizedTFT-LCD/OLED display modules.During the Reporting Period, due to the sluggish demand for smart phones around the world,shortage of some components and product strategy adjustments of certain customers, the sales
volume of CDOT’s products declined year-on-year. For the Reporting Period, CDOT reported sales
revenue of RMB1.26 billion, showing a year-on-year decrease of 15.6%. However, by activeinvestment in the R&D of new products and technologies, product portfolio adjustments, anincreased proportion of mid and high-end products and synergies with CSOT, the average price of
CDOT’s products maintained steady growth. Meanwhile, following the business strategy direction
of being a provider of multi-application-scenario display interface, CDOT is actively working withInternet companies to launch smart home products equipped with its display modules as a way toimprove its business composition and enhance its product competitiveness and profitability.3. Guangdong JuhuaGuangdong Juhua is mainly engaged in the research of key common technologies of printed andflexible display. It cooperates with universities, research institutes, internationally renowned
materials and equipment companies and domestic display industry leaders to set up China’s public
R&D platform for printed display.As the contractor of the "National Printed and Flexible Display Innovation Center", GuangdongJuhua is the first national innovation center in the display sector. It has applied for nearly 230invention patents and 50 patents have been granted. During the Reporting Period, Guangdong Juhuahas successfully developed the 31-inch printed OLED and 5-inch printed QLED, and completed thedevelopment of the 5-inch ultra-high resolution printed AMOLED display prototype with a
resolution ratio of 400 ppi, which is the highest resolution display device completed by the printedtechnology. Guangdong Juhua has established a world-class R&D team in the QLED field todevelop high-performance red-light and green-light quantum dot materials. Moreover, GuangdongJuhua has made remarkable progress in the research and development of the service efficiency andlife of Blue-ray devices.4. China RayChina Ray is mainly engaged in the development of new OLED key materials with independent IP,focusing on evaporated OLED small molecule materials and printed OLED materials.During the Reporting Period, China Ray sent to manufacturers green-light and red-light materialsamples based on the evaporation technique, and the R&D of new materials is progressing in asmoothly manner. To be in line with the national overall planning of new display materials andtechnologies, China Ray simultaneously promotes the development of printed OLED materials, andundertakes the national "Demonstration Project of Commercialization of Printed OLED DisplayKey Materials", taking the leading position in the field of solution processible green-light materials.
(II) The Intelligent Terminal Business Group1. TCL ElectronicsTCL Electronics is mainly engaged in the R&D, production and sales of large-screen displayterminals, and provides users with Internet value-added services and system solutions. TCLElectronics is aimed at becoming the TCL brand's intelligent terminal business group and achievingmarket leadership in China and around the world. It leverages its synergies with the semiconductordisplay business group to comprehensively enhance its cost and efficiency advantages and get intokey overseas markets to expand global business. It also enhances its application service competencyto improve user experience and customer loyalty. Moreover, TCL Electronics is actively working onthe next generation of display products. It promotes business development with technologicalinnovation. By keeping pushing new industries such as commercial displays and smart homes, TCLElectronics further improves its business composition.During the Reporting Period, the sales revenue of TCL Electronics increased by 14.2% year-on-yearto RMB17.15 billion (HK$21.05 billion). The net profit attributable to the Company as the parent
increased considerably by 237.5% year-on-year to RMB468 million (HK$572 million). Theaggregate sales volume of LCD TVs reached 13.51 million sets (including commercial displays),showing an increase of 37.8% year-on-year.By deepening its global strategy, TCL Electronics achieved sales volume of 8.285 million TV setsin overseas markets, representing an increase of 44.4% year-on-year. TV sales volume in Europeanmarket increased by 73.0% year-on-year, showing strong growth in France, Spain and Poland etc.market. The sales volume in emerging markets increased by 51.5% year-on-year, of which the salesvolume in Brazil market grew by 82.0% year-on-year, and the sales volume in Philippine marketranked third, while the sales volume in North America market has raisen to third. Facing thecomplicated domestic business environment and fierce market competition, TCL Electronicspressed on with its fine product strategy. It kept increasing the proportion of high-end products, andaccording to the China Market Monitor statistics, the brand price index of TCL Electronics for thefirst half of the year was 113, ranking first in China.2. TCL CommunicationTCL Communication operates three major brands, namely TCL, Alcatel and BlackBerry worldwide.It is committed to providing users with innovative mobile terminal products and services. TCLCommunication aims to become the world's leading brand of mobile terminal devices and establisha customer-oriented sales system to consolidate the core business of Alcatel. Relying on thetechnology R&D and resource advantages of the Group, it keeps strengthening product capability tomake TCL a mid-end brand to seize the development opportunities arising from the mid-end smartphone market.During the Reporting Period, due to the fiercer market competition and the impact of reforms andadjustments, 13.705 million units of TCL Communication products were sold with sales revenue ofRMB4.66 billion, representing a decrease of 32.1% year-on-year. However, by active organizationaladjustment, business unit restructuring and product structure optimization, TCL Communicationachieved a steady increase in the average selling price and gross profit margin, and the operatingexpenses decreased year-on-year. In the first half of the year, the deficit substantially reduced,among which, the North American performance was improved significantly, and profit was gainedfrom the North American business in the first half of the year.
The Group will substantially support the business transformation and performance improvementactions of TCL Communication. The management is confident to promote the sustainableimprovement of business and performance of TCL Communication.3. TCL Household Electric Appliance GroupTCL Household Electric Appliance Group is mainly engaged in the R&D, production and sales ofair conditioners, refrigerators, washing machines and health electrical products. It maintains itsmarket position in the second lineup by large-scale development and product innovation. As a result,it further promote scale growth to optimize production costs and efficiency, and conduct productstructure optimization by continuous product innovation to achieve better profitability.During the Reporting Period, TCL Household Electric Appliance Group drove product upgradesbased on the category leading strategy. Collaborating on the marketing and brand advantages ofTCL Electronics, it improved its customer structure and optimized the domestic and foreign salesmix to achieve high-quality scale growth. In the first half of the year, TCL Household ElectricAppliance Group achieved sales revenue of RMB10.63 billion, representing a year-on-year increaseof 15.2%.
(III) The Emerging Business Group1. Platform Service Business
The Platform Service Business provides operational support for the Group’s core business andrealizes platform operation with the Group’s resources to support the development of the core
business.(1) TCL Finance Co., Ltd.TCL Finance is positioned to provide financial and management support to the industries andsubsidiaries within the Group, and to undertake the functions of efficiency improvement and riskmanagement of Group assets. During the Reporting Period, TCL Finance enhanced its financial
support to the Group’s business development according to the Group’s strategic goals, and further
improved its active management ability for capital and risks. The operation of TCL Finance isprogressing smoothly.(2) Supply Chain Finance and Consumer Finance
The supply chain finance business and the consumer finance business under the Group arepositioned to provide financial services for industrial chain partners, Group employees and Group
product consumers respectively. During the Reporting Period, relying on the “Jiandanhui" platform,
the supply chain finance business was improved internally and externally to provide quality andconvenient account receivable financing services for industry chain partners, especially small andmedium enterprises.(3) TCL Technology ParkTCL Technology Park is mainly engaged in the management of immovable property such as factorybuildings and land, as well as the related business and supporting services. It increases the return oncapital for industries and improves the overall debt asset ratio of the Group through professionaloperation.2. Strategic Emerging BusinessThe Group develops its strategic emerging business based on its core business and competencies. Inaddition to internal business expansion and independent development, the Group will expand itsstrategic emerging business also through incubation, investment, strategic cooperation, mergers andacquisitions to seize forward-looking innovation opportunities and foster new growth points.(1) Home Internet Application ServiceThe Group operates its TV+ global smart TV platform via Thunderbird Technology. During theReporting Period, the Company kept deepening its strategic cooperation with Tencent and Southern
New Media to build an operation platform featuring “TCL hardware + license provider + contentprovider”. In May 2018, Thunderbird Technology and JD.com signed the "Intentional Agreement on
Strategic Cooperation" for the cooperation focusing on basic capabilities of the Internet, content andservices, and ecological resources.Meanwhile, Thunderbird Technology formed a business model covering the TCL smart TV portaland the third-party living room large-screen portal together with Huan Tech and GoLive, and by thecollaboration with the smart home and commercial display industries, an intelligent large-screenecosystem for multiple application scenarios has been built, which has improved the platform
operation capability and value of TCL’s electronic intelligent terminal portal.Up to the end of the Reporting Period, the total number of activated users of the Company’s smart
Internet TV terminals reached 27.35 million, and the number of average daily active users (differentusers visiting within seven days, with the same user visiting more than once within seven daysdeemed as one user) was 12.81 million, with an average daily uptime of 5.15 hours. During theReporting Period, Thunderbird Technology achieved operating revenue of RMB126 million,representing an increase of more than three times year-on-year.(2) Mobile Internet Application ServiceThe Company provides system and application development and operation support for its TCLbranded smart phones through the mobile Internet business center of TCL Communication, andprovides mobile Internet application products and services to overseas open market users throughHAWK. The Company integrates its own and third party services and contents to jointly build amobile Internet ecosystem to promote profit pattern and business model innovation based on mobileintelligent terminals.During the Reporting Period, HAWK achieved rapid growth in the number of users and useractivity by improving the performance of application products such as cleaning and security as wellas optimizing channels. Up to the end of the Reporting Period, the mobile Internet applicationplatform of the Company has accumulated 428 million activated users, and the number of activeusers has reached 110 million, an increase of 70.87% year-on-year. With an increasing user numberand better single-user profit pattern efficiency, the mobile internet application service businessgenerated revenue of RMB102 million for the Reporting Period.(3) Sky-tech Cloud
Guangzhou Sky-tech Cloud Info Co., Ltd. (“Sky-tech Cloud”), a joint venture between the
Company and Cisco, is aimed at providing cloud-based, multi-terminal-accessible videocommunication and collaborative conferencing systems for Chinese enterprises and users, includingweb conferencing, online training, webcast and remote support, intelligent video cloud services, andintelligent customer service based on AI technology, which covers call centers, premium customerservice and other services. During the Reporting Period, Sky-tech Cloud made breakthroughs in theaccumulation of enterprise customers, as well as the development and marketing of its ownproducts. The intelligent customer service business, Tianke Cloud, developed rapidly. Theintelligent video business kicked off smoothly with significantly increased operating revenue.
(4) Industrial Internet and Intelligent ManufacturingDuring the Reporting Period, the Group integrated internal resources and established Getech Ltd.,which takes China's leading industry-level industrial Internet platform as strategic. Based on theyears of manufacturing accumulation of the Group, Getech has formed scenario-based intelligentmanufacturing solutions with independent IP to enhance the industrial manufacturing capabilities ofthe Group through internal implementation. In addition, it has entered the markets of IoT platforms,artificial intelligence, intelligent plants and other fields quickly by deep integration of industrialtechnology and information technology resources, providing intelligent manufacturing integratedsolutions for external parties. Moreover, Getech will actively build an industrial Internet base withthe local government to promote industrial intelligence upgrading.During the Reporting Period, the Group established an overseas merge and acquisition fund, namelyTCL Ventures Fund L.P., to join hands with the domestic Shenzhen TCL Strategic EquityInvestment Fund Partnership (Limited Partnership) to seek investment targets across the worldbased on the three strategic core technology directions of the Group for better competitiveness in
the Group’s core business and promote business upgrade.
3. Financial Control SystemFor business that are less relevant to the core business but of great potential for future developmentand returns, the Group manages such an investment portfolio primarily through a financial controlsystem.(1) Tonly ElectronicsTonly Electronics develops, manufactures and markets high-quality audio and video products andwireless smart connected products for the world's top consumer electronics brands.During the Reporting Period, Tonly Electronics promoted the intelligentization of products,focusing on intelligent voice speakers and intelligent products related to voice. Due to the rapiddevelopment of artificial intelligence and the Internet industry, product upgrades and customerdiversification have become industry trends. By cooperation with other well-known Internetcustomers to jointly develop various smart speakers, The market share of Tonly Electronicsincreased significantly. In addition, relying on the strong R&D team and technological advantagesin the audio sector, Tonly Electronics greatly expanded structural products of new forms and had
made shipments to a number of customers in batches, which has become a new force to drivebusiness growth. During the Reporting Period, Tonly Electronics achieved sales revenue ofRMB2.27 billion, representing a year-on-year increase of 26.5% and a net profit of RMB70 million.(2) Highly InformationHighly Information (835281) is a business platform specializing in the sales and service of ITproducts, covering domestic and foreign top-brand notebook computers, desktop computers, digitalproducts and related accessories.During the Reporting Period, following the strategy of "sales + service", Highly Information keptdiversifying its business and upgrading its professional management capabilities to make itself acomputing equipment provider in the intelligent era. Highly Information achieved sales revenue ofRMB7.08 billion and a net profit of RMB100 million in the first half of the year.(3) Open EdutainmentOpen Edutainment is the largest web-based degree course provider in China. It is a leader inweb-based degree course services and Chinese language proficiency online test services, and alsoactively develops Internet education and vocational education. During the Reporting Period, theenrollment for the degree courses of Educational Web was successfully completed, and teachertraining was steadily processing. On the basis of the existing business, Open Edutainmentintensified the integration of educational resources and B2C business development. Up to the end ofthe Reporting Period, the registered users of the Internet IT vocational education platform increasedby 35.4% year-on-year to 13.14 million, ranking first in the peer industry.(4) Venture Capital and Financial Investment BusinessWith TCL Capital as the carrier and supported by the industry background and professionalmanagement team of the new display and the integrated vertical intelligent terminal chain, theGroup focuses on financial investment in prospective and technologically innovative business. Up
to the end of the Reporting Period, the funds under TCL Capital’s management reached RMB10.135
billion, which focused on investments in new materials, new energy, major consumption andhigh-end manufacturing industries.
In addition, in the non-core financial investments, the Group cautiously evaluates financialinvestment opportunities. At present, it holds a 4.99% interest in Bank of Shanghai (601229.SH), a
19.07% interest in 712 Corp. (603712.SH) and a 20.08% interest in Fantasia Holdings (01777.HK).
III Analysis of Core Business
Revenue and Costs(1) Breakdown of Sales Revenue
Unit: RMB
| H1 2018 | H1 2017 | Change (%) | |||
| Sales revenue | As % of total sales revenue | Sales revenue | As % of total sales revenue | ||
| CSOT | 12,144,065,087 | 23.32% | 13,969,731,275 | 27.22% | -13.07% |
| TCL Electronics | 17,145,948,027 | 32.93% | 15,015,818,297 | 29.25% | 14.19% |
| TCL Household Electric Appliance Group | 10,633,312,285 | 20.42% | 9,226,969,203 | 17.98% | 15.24% |
| TCL Communication | 4,661,220,695 | 8.95% | 6,865,485,568 | 13.38% | -32.11% |
| Tonly Electronics | 2,270,307,562 | 4.36% | 1,795,341,159 | 3.50% | 26.46% |
| Highly Information | 7,084,621,500 | 13.61% | 7,005,583,818 | 13.65% | 1.13% |
| Others and eliminated intercompany accounts | -1,866,059,860 | Not applicable | -2,550,614,940 | Not applicable | |
| Total sales revenue | 52,073,415,296 | 100.00% | 51,328,314,380 | 100.00% | 1.45% |
(2) Sales Revenue by Operating Segment
Unit: RMB
| H1 2018 | H1 2017 | Change (%) | |||
| Sales revenue | As % of total sales revenue | Sales revenue | As % of total sales revenue | ||
| Domestic core business | 27,626,264,239 | 53.05% | 28,323,153,771 | 55.18% | -2.46% |
| Overseas core business | 24,447,151,057 | 46.95% | 23,005,160,609 | 44.82% | 6.27% |
| Total sales revenue | 52,073,415,296 | 100.00% | 51,328,314,380 | 100.00% | 1.45% |
(3) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable ■Not applicable
(4) Changes in Scope of Consolidated Financial Statements for Reporting Period
Compared with H1 2017, 14 newly incorporated subsidiaries were newly included in and 16 subsidiaries (eight dissolved and anothereight transferred) were excluded from the consolidation scope for H1 2018.
(5) Major Changes in Business Scope or Product or Service Range in Reporting Period
□ Applicable ■ Not applicable
(6) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 8,558,458,004 |
| Total sales to top five customers as % of total sales of Reporting Period (%) | 16.44% |
| Total sales to related parties among top five customers as % of total sales of Reporting Period (%) | 0.00% |
Information about the top five customers:
| No. | Customer | Sales revenue contributed for Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 2,968,717,040 | 5.71% |
| 2 | Customer B | 1,466,616,916 | 2.82% |
| 3 | Customer C | 1,422,013,524 | 2.73% |
| 4 | Customer D | 1,358,490,021 | 2.61% |
| 5 | Customer E | 1,342,620,503 | 2.58% |
| Total | 8,558,458,004 | 16.44% |
Major suppliers:
| Total purchases from top five suppliers (RMB) | 7,746,576,503 |
| Total purchases from top five suppliers as % of total purchases of Reporting Period (%) | 18.15% |
| Total purchases from related parties among top five suppliers as % of total purchases of Reporting Period (%) | 0.00% |
Information about the top five suppliers:
| No. | Supplier | Purchase in Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 2,383,781,204 | 5.59% |
| 2 | Supplier B | 2,126,063,432 | 4.98% |
| 3 | Supplier C | 1,584,449,303 | 3.71% |
| 4 | Supplier D | 908,528,272 | 2.13% |
| 5 | Supplier E | 743,754,292 | 1.74% |
| Total | 7,746,576,503 | 18.15% |
IV Analysis of Non-Core Business
□ Applicable ■ Not applicable
V Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 30 June 2018 | 31 December 2017 | Change in percentage (%) | Reason for significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary capital | 17,612,564,104 | 10.37% | 27,459,452,839 | 17.13% | -6.77% | A rise in cash payments for investment |
| Investment property | 1,553,569,605 | 0.91% | 859,890,091 | 0.54% | 0.38% | New investment properties |
| Construction in progress | 22,926,082,399 | 13.49% | 14,775,237,325 | 9.22% | 4.27% | More ongoing constructions for the t3 and G11 LCD panel production lines |
2. Assets and Liabilities at Fair Value
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for Reporting Period | Purchased in Reporting Period | Sold in Reporting Period | Ending amount |
| Financial assets | |||||||
| 1.Financial assets at fair value through profit or loss (exclusive of derivatives) | 1,543,843,738 | -180,679,730 | 1,363,164,008 | ||||
| 2.Derivative financial assets | 687,431,897 | -340,281,121 | 347,150,776 | ||||
| 3.Available-for-sale financial assets | 1,159,165,770 | 103,627,499 | 95,514,998 | 499,046,749 | 661,351,323 | 1,004,973,697 | |
| Subtotal of financial assets | 3,390,441,405 | -520,960,851 | 103,627,499 | 95,514,998 | 499,046,749 | 661,351,323 | 2,715,288,481 |
| Financial liabilities | 442,942,029 | 27,462,008 | 470,404,037 |
Significant changes in the measurement attributes of the major assets in the Reporting Period:
□ Yes ■ No
3. Restricted Asset Rights as at Period-End
| Restricted assets | Carrying amount (RMB) | Reason for restriction | As % of total assets | Remark |
| Monetary capital | 897,086,055 | Deposited by the finance subsidiary in the central bank as the required reserve | 0.53% | Restricted |
| Monetary capital | 211,673,211 | Other monetary capital | 0.12% | Restricted |
| Accounts receivable | 12,942,671 | Factored or put in pledge for loans | 0.01% | In pledge |
| Fixed assets | 35,515,676,837 | As collateral for loan | 20.90% | Collateralized |
| Intangible assets | 2,025,294,686 | As collateral for loan | 1.19% | Collateralized |
| Total | 38,662,673,460 | 22.75% |
VI Investments Made
1. Total Investment Amount
| Total investment amount in Reporting Period (RMB) | Total investment amount in same period of last year (RMB) | Change (%) |
| 1,342,350,000 | 4,466,741,029 | -69.95% |
2. Major Equity Investments Made in Reporting Period
Unit: RMB
| Investee | Core business scope of investee | Way of investment | Amount of investment | The Company’s interest in investee | Funding source | Joint investor | Term of investment | Type of investment | Investment progress as at balance sheet date | Projected earnings | Return on investment in Reporting Period | Any legal matter involved | Disclosure date (if any) | Index to disclosed information (if any) |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | G11 UHD New Display Production Line | With monetary capital | 7,000,000,000 | 35.89 | Self-funded | Shenzhen Major Industry Development Fund One Co., Ltd. | 7 years | UHD new displays | - | - | None | 22 May 2018 | http://www.cninfo.com.cn | |
| Total | -- | -- | -- | -- | -- | -- | -- | -- | - | - | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in Reporting Period
□Applicable ■Not applicable
4. Financial Investments(1) Securities Investments
| Security type | Security code | Security name | Initial investment cost | Measurement method | Beginning carrying amount | Gain/Loss on fair-value changes in Reporting Period | Accumulated fair-value changes charged to equity | Purchased in Reporting Period | Sold in Reporting Period | Gain/loss in Reporting Period | Ending carrying amount | Accounting title | Funding source |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Other securities investments held at period-end | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | ||
| Total | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | ||
| Disclosure date of announcement on Board’s consent for securities investments | 39 March 2017 |
| Disclosure date of announcement on general meeting’s consent for securities investments (if any) | 14 April 2017 |
(2) Investments in Derivative Financial Instruments
| Funding source | Mostly foreign-currency revenue |
| Legal matters involved (if applicable) | Not applicable |
| Disclosure date of board announcement approving derivative investment (if any) | 26 February 2011 |
| Disclosure date of general meeting announcement approving derivative investment (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 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 loss of RMB6.13 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 major changes |
| Opinion of independent directors on | In view of the fact that nearly half of the main business of the Company is overseas, a wide |
| derivative investments and risk control | 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. The independent directors believe that the financial derivatives transactions carried out by the Company in the first half of 2018 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. |
Unit: RMB’000
| Type of contract | Beginning amount | Ending amount | Gain/loss in Reporting Period | Ending contractual amount as % of the Company’s ending net assets | |||
| Contractual amount | Actual amount | Contractual amount | Actual amount | Contractual amount | Actual amount | ||
| 1. Forward forex contracts | 20,369,370 | 697,160 | 28,845,060 | 997,700 | -6,130 | 50.01 | 1.73 |
| 2. Interest rate swaps | 4,168,820 | 83,380 | 5,074,930 | 182,700 | 8.80 | 0.32 | |
| 3. Currency swaps | 1,633,550 | 31,840 | 1,323,320 | 39,700 | 2.29 | 0.07 | |
| Total | 26,171,740 | 812,380 | 35,243,310 | 1,220,100 | -6,130 | 61.10 | 2.12 |
VII Sale of Major Assets and Equity Investments
1. Sale of Major Assets
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
| Counterparty | Equity interests sold | Date of sale | Selling price (RMB’000) | Amount contributed by the equity interes | Effect of the sale on the Company | Amount contributed by the sale to net profit of the | Pricing principle | Related transaction or not | Relationship between counterparty and the Compan | Ownership fully transferred or not | Executed as scheduled or not, if not, state reason and actions | Disclosure date | Index to disclosed information |
| ts to net profit of the Company from period-beginning to date of sale (RMB’000) | Company as % of the Company’s net profit (%) | y | taken | ||||||||||
| EVE Energy Co., Ltd. | Huizhou Hyperpower Batteries Inc. | 28 December 2017 | 62,500 | - | This transaction is expected to help optimize the structure of the Company’s supply chain, with no major effects on the Company. | - | - | Not | Not applicable | Not | Not applicable | 29 December 2017 | http://www.cninfo.com.cn/cninfo-new/index |
VIII Major Subsidiaries
Major wholly/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net
profit:
Unit: RMB
| Name | Relationship with the Company | Core business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit attributable to the parent |
| TCL Electronics Holdings Limited (as a | Wholly/majority-owned subsidiary | Colour TVs | HK$1.748 billion | 19,710,602,338 | 8,366,920,055 | 17,300,342,594 | 626,344,363 | 467,957,675 |
| consolidated group) | ||||||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. (as a consolidated group) | Wholly/majority-owned subsidiary | LCD panels | RMB18.342 billion | 102,085,490,546 | 44,679,557,404 | 12,192,597,373 | 1,254,203,778 | 1,218,006,033 |
| Bank of Shanghai Co., Ltd. | Minority-owned subsidiary | Financial services | RMB7.8 billion | 1,918,725,038,000 | 153,177,717,000 | 19,749,818,000 | 9,929,881,000 | 9,371,747,000 |
IX Structured Bodies Controlled by the Company
□Applicable ■Not applicable
X Operating Performance Forecast for January-September 2018
□Applicable ■Not applicable
XI Risks Facing the Company and Countermeasures1. Impact of Macro-Environment
In the first half of 2018, the trade war between China and the U.S. escalated, with developedcountries such as the U.S. imposing a new round of protectionism measures, which has causeduncertainty to the global economy.Upon 37 years of development, TCL has become a globally renowned brand in the consumerelectronics sector. It optimizes the allocation of its resources through its global operations, includingsales offices in over 80 countries and regions, as well as manufacturing bases in Mexico, Poland,Southeast Asia, etc. In addition to the U.S., TCL boasts strong brand competitiveness and marketingcompetency in Latin America, Europe, the Middle East, the Asia Pacific region, etc. Domestically,
with a distribution network covering every corner of the country, TCL’s major products enjoy top
sales. These global operations assure the steady growth of the Company. Going forward, TCL willkeep abreast of the dynamics in the international situation and take effective measures to protect its
interests.2. Risk of Technological TransitionsNew technologies have emerged in an unprecedented pace in the past decade. Along with the
advancement of the “Made in China 2025” program, AI, cloud computing, big data, the industrial
Internet and other new technologies and materials have entered the commercialization stage andgiven rise to many new industries. This means opportunities, but also poses challenges to traditionalenterprises. In order to adapt to these external changes, an enterprise must strengthen its existingcompetitive edges, and at the same time building new technological strength, so as to achievecontinuous growth. In the time to come, TCL will enhance product and technological innovation,focus on AI and Internet application technologies, and take it as a priority to make breakthroughs inrelation to the semiconductor display technology and the related key materials.
Part V Significant Events
I Annual and Extraordinary General Meetings Convened during Reporting Period
1. General Meetings Convened during Reporting Period
| Meeting | Type | Investor participation ratio | Convened date | Date of resolution disclosure | Index to disclosed resolutions |
| First Extraordinary General Meeting of 2018 | Both on-site and online voting allowed | 37.36% | 19 March 2018 | 19 March 2018 | http://www.cninfo.com.cn |
| 2017 Annual General Meeting | Both on-site and online voting allowed | 40.56% | 18 May 2018 | 18 May 2018 | |
| Second Extraordinary General Meeting of 2018 | Both on-site and online voting allowed | 37.04% | 6 June 2018 | 6 June 2018 |
2. Extraordinary General Meetings Convened at Request of Preferred Shareholders with Resumed VotingRights
□Applicable ■Not applicable
II Interim Dividend Plan
The Company has no interim dividend plan, either in the form of cash or stock.
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and Other Entities Fulfilled in Reporting Period orOngoing at Period-End
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in time of IPO or refinancing | Huizhou Investment Holding Co., Ltd., Beijing Ziguang Investment Co., Ltd., Xinjiang Dongxing Huarui Equity Investment | Share lockup commitment | These holders of the shares obtained in this private | 26 February 2015 | 25 February 2018 | No violations |
| Partnership (Limited Partnership), Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership), CDB Innovation Capital Co., Ltd., BOSC Asset Management Co., Ltd., CDB Jingcheng (Beijing) Investment Fund Co., Ltd., CDB Equipment Manufacturing Industry Investment Fund Co., Ltd., CITIC Capital (Tianjin) Equity Investment Partnership (Limited Partnership), and Tianjin Chengbai Equity Investment Partnership (Limited Partnership) | placement of TCL shall not transfer these shares within 36 months starting from the end of this private placement. | |||
| Fulfilled on time | Yes | |||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | Not applicable | |||
IV Engagement and Disengagement of Independent Auditor
The interim financial statements are unaudited.
V Explanations Given by Board of Directors and Supervisory Committee Regarding
Independent Auditor's “Modified Opinion” on Financial Statements of Reporting Period
□Applicable ■Not applicable
VI Explanations Given by Board of Directors Regarding Independent Auditor's “ModifiedOpinion” on Financial Statements of Last Year
□Applicable ■Not applicable
VII Insolvency and Reorganization
No such cases in the Reporting Period.
VIII Legal Matters
Major lawsuits and arbitrations:
□Applicable ■Not applicable
Other legal matters:
□Applicable ■Not applicable
IX Punishments and Rectifications
No such cases in the Reporting Period.
X Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
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 totalshare capital; or, despite the ownership of less than 50% of a limited liability company’s totalcapital 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 jointstock company’s total number of shares. According to the definition above, the Company has no
controlling shareholder or actual controller.
On 19 May 2017, TCL Corporation (hereinafter referred to as “TCL” or the “Company”) was
notified by shareholders Mr. Li Dongsheng, Xinjiang Dongxing Huarui Equity Investment
Partnership (Limited Partnership) (hereinafter referred to as “Dongxing Huarui”) and Xinjiang
Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as
“Jiutian Liancheng”) that they intended to form acting-in-concert parties as a way to help improvethe Company’s governance competency and management efficiency, so as to maintain stable
management and development strategies. They have officially become acting-in-concert parties onTCL after signing the Acting-in-Concert Agreement in Relation to TCL Corporation (hereinafter
referred to as the “Agreement”) on 19 May 2017. Up to the disclosure date of this Report, these
three acting-in-concert parties combined is the biggest shareholder of TCL, with a total of1,499,833,496 shares in TCL (an 11.07% stake). The biggest shareholder is not involved in anyunsatisfied court judgments, large-amount overdue liabilities or the like.
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
1. On 2 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the GlobalInnovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on theMeasures for the Implementation of the 2018 Restricted Stock Incentive Plan and the GlobalInnovation Partner Plan of TCL Corporation, the Proposal on Asking the General Meeting toAuthorize the Board to Handle Matters Related to the 2018 Restricted Stock Incentive Plan andother proposals were approved at the Sixth Meeting of the Sixth Board of Directors. Meanwhile, the
Company’s independent directors expressed their independent opinion on whether these incentiveplans would be good for the Company’s sustained development and whether the interests of the
Company and its shareholders would be jeopardized in an observable way.2. On 2 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on theMeasures for the Implementation of the 2018 Restricted Stock Incentive Plan and the GlobalInnovation Partner Plan of TCL Corporation, and the Proposal on the Awardee List for the 2018Restricted Stock Incentive Plan were approved at the Third Meeting of the Sixth SupervisoryCommittee.
3. Following the publication of the awardee list within the Company, the Supervisory Committee’s
Statement Regarding the Review and Publication of the Awardee List for the 2018 Restricted StockIncentive Plan and the Global Innovation Partner Plan of TCL Corporation was disclosed to thepublic on 16 March 2018.
4. On 19 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the GlobalInnovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on theMeasures for the Implementation of the 2018 Restricted Stock Incentive Plan and the GlobalInnovation Partner Plan of TCL Corporation, and the Proposal on Asking the General Meeting toAuthorize the Board to Handle Matters Related to the 2018 Restricted Stock Incentive Plan wereapproved at the First Extraordinary General Meeting of 2018.
5. On 21 March 2018, the Proposal on the Grant of Restricted Stock to the Awardees, and theProposal on the Adjustments to the 2018 Restricted Stock Incentive Plan and the Global InnovationPartner Plan of TCL Corporation were approved at the Seventh Meeting of the Sixth Board ofDirectors and at the Fourth Meeting of the Sixth Supervisory Committee. As such, it was approved
to grant 35,944,000 restricted shares to 1,522 eligible awardees on 21 March 2018. The Company’s
independent directors expressed their independent opinion that the awardee determination methodand the grant date were in compliance with the applicable requirements.
6. On 3 April 2018, the First Meeting of the Holders of the First Top 400 and Key Personnel StockOwnership Plan and the Global Partner Plan of TCL Corporation was convened, where the Proposalon the Establishment of a Management Committee for the Stock Ownership Plan and otherproposals were approved, and Fu Heping was elected as the director of this management committee.
7. On 16 May 2018, the Company disclosed the Announcement on the Completion of the Grant ofRestricted Stock for 2018. This grant had been completed by the Board. As certain awardees hadvoluntarily waived their rights to some to-be-granted restricted shares due to lack of subscriptionfunds or other personal reasons, the number of the granted restricted shares had been reduced to34,676,444, which were listed on 16 May 2018.
8. During the period from 22 June 2018 to 25 July 2018, Shanghai Guotai Junan Securities Asset
Management Co., Ltd., the administrator of the Company’s Stock Ownership Plan, purchased a
total of 99,148,115.00 TCL shares from the secondary market at an average price of RMB2.82/share,
which was funded by TCL’s specialized fund of RMB279,682,200 for the Stock Ownership Plan.
These purchased shares will be locked up from 26 July 2018 to 25 July 2019.XII Major Related-Party Transactions
1. Continuing Related-Party Transactions
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price | Total value (RMB’000) | As % of total value of all same-ty | Approved transaction line (RMB’ | Over approved line or not | Method of settlement | Obtainable market price for | Disclosure date | Index to disclosed information |
| pe transactions | 000) | same-type transactions | |||||||||||
| Bank of Shanghai Co., Ltd. | A legal person of the Company’s director | Banking services | Routine services and other financial services, including deposits, loans, financings, interbank loans, note discounting, low-risk wealth management and intermediary services | The interest rate for the Company’s deposits in Bank of Shanghai shall not be lower than the benchmark interest rate stipulated by the People’s Bank of China for the same type of deposits for the same period, nor shall it be lower or higher than the interest rate of the Bank of Shangha | - | 9,309.3 | 1.3% | 714,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn |
| i for any third-party same-kind deposit for the same period. | |||||||||||||
| CJ Speedex Logistics Co., Ltd. | A legal person of the Company’s director | Labour services from related party | Logistics services including transportation and warehousing | Based on the market price and with a fair and reasonable pricing principle, the price is determined according to the operating costs plus the management expenses plus rational profits. The price is finalized in a logistics service agreement signed | - | 47,670.83 | 72.37% | 145,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn |
| by both parties. | |||||||||||||
| Shenzhen Thunderbird Network Technology Co. | A legal person of the Company’s director | Labour services from related party | Purchases and sales of whole TV sets and parts, etc. | Raw material costs + processing costs | - | 4,609.67 | 1.92% | 20,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn |
| Total | -- | -- | 53,211.43 | -- | 236,400 | -- | -- | -- | -- | -- | |||
| Large-amount sales return in detail | Not applicable | ||||||||||||
| Give the actual situation in the Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | Not applicable | ||||||||||||
| Reason for significant difference between transaction price and market reference price (if applicable) | Not applicable | ||||||||||||
2. Related-Party Transactions Regarding Purchases or Sales of Assets or Equity Interests
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
Unit: RMB’000
| Related party occupying the Company’s capital | Relationship with the Company | Accounting title of the Company | Balance at 1 January 2018 | Total capital occupied in Reporting Period | Total repayment in Reporting Period | Balance at 31 December 2017 | Reason for capital occupation | Nature of capital occupation |
| Active Industries International Limited | Associate | Other receivable | 161,795 | - | 76,121 | 85,674 | Current account | For operating purposes |
| Good Vision Limited | Associate | Account receivable | 5,454 | - | 5,454 | 0 | For selling products | For operating purposes |
| Good Vision Limited | Associate | Other receivable | - | 6,525 | 6,512 | 13 | For selling products | For operating purposes |
| Harvey Holdings Limited | Associate | Account receivable | 44 | - | 44 | - | Current account | For operating purposes |
| Harvey Holdings Limited | Associate | Interest receivable | 2,411 | 1,217 | 170 | 3,459 | Current account | For operating purposes |
| Harvey Holdings Limited | Associate | Other receivable | 42,353 | 66 | 7,495 | 34,924 | Current account | For operating purposes |
| Kaios Technologies Inc | Associate | Other receivable | 43,988 | 7,857 | 8,149 | 43,696 | Current account | For operating purposes |
| T2Mobile International Limited | Joint venture | Account receivable | 15,365 | - | 6,492 | 8,873 | Current account | For operating purposes |
| T2Mobile International Limited | Joint venture | Other receivable | - | 7 | 1 | 6 | Dividend distribution | For operating purposes |
| TCL Sun, Inc. | Joint venture | Account receivable | 73,999 | 13,046 | - | 87,045 | For selling products | For operating purposes |
| TCL Zhiyi Technology Huizhou Co., Ltd. | Joint venture | Account receivable | 6,764 | 8,647 | 11,899 | 3,512 | For selling products | For operating purposes |
| TCT Mobile-Telefones LTDA | Associate’s subsidiary | Account receivable | - | 17,964 | 17,964 | - | For selling products | For operating purposes |
| Beijing National Center for Open & Distance Education Co., Ltd. | Joint venture’s subsidiary | Account receivable | 98 | 7,674 | 7,270 | 502 | For selling products | For operating purposes |
| Beijing WeMed Medical Equipment Co., Ltd. | Associate | Other receivable | 3,777 | - | 3,777 | - | For selling products | For operating purposes |
| Wealthy Way Group Limited | Associate | Other receivable | - | - | - | - | Current account | For operating purposes |
| Guangdong Regency Optics-Electron Corp. | Associate | Other receivable | 184 | 10 | 57 | 137 | Current account | For operating purposes |
| Huan Tech Co., Ltd. | Associate | Other receivable | 3 | - | - | 3 | Current account | For operating purposes |
| Huan Tech Co., Ltd. | Associate | Account receivable | 566 | 18 | 584 | - | For selling products | For operating purposes |
| Honpe Technology (Shenzhen) Co., Ltd. | Associate’s subsidiary | Other receivable | - | 8 | - | 8 | Current account | For operating purposes |
| Honpe Technology (Shenzhen) Co., Ltd. | Associate’s subsidiary | Prepayment | 1,057 | - | 1,057 | - | Current account | For operating purposes |
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | Associate | Account receivable | - | 70 | 70 | For selling products | For operating purposes | |
| Huizhou TCL Real Estate Development Co., Ltd. | Associate’s subsidiary | Account receivable | 242 | 80 | - | 322 | For selling products | For operating purposes |
| Huizhou Gaoshengda Technology Co., Ltd. | Associate’s subsidiary | Interest receivable | - | 25 | - | 24 | Current account | For operating purposes |
| Huizhou Shenghua Industrial Co., Ltd. | Associate’s subsidiary | Account receivable | - | 792 | 792 | - | Current account | For operating purposes |
| LG Innotek Huizhou Co., Ltd. | Associate | Account receivable | 10,705 | - | 10,705 | - | For selling products | For operating purposes |
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Account receivable | - | 9,812 | 9,812 | - | For selling products | For operating purposes |
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Prepayment | 2,128 | - | 1,856 | 272 | For selling products | For operating purposes |
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Note receivable | 607 | 2,319 | 607 | 2,319 | For selling products | For operating purposes |
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Other receivable | 800 | - | - | 800 | Current account | For operating purposes |
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | Associate | Other receivable | - | 296 | - | 296 | Current account | For operating purposes |
| Qihang Import&Export Limited | Associate’s subsidiary | Account receivable | 162,963 | 305,799 | 385,727 | 83,034 | For selling products | For operating purposes |
| Qihang Import&Export Limited | Associate’s subsidiary | Other receivable | - | 205,873 | - | 205,873 | Current account | For operating purposes |
| Qihang Import&Export Limited | Associate’s subsidiary | Interest receivable | - | 157 | - | 157 | Current account | For operating purposes |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Other receivable | - | 331,442 | - | 331,442 | Current account | For operating purposes |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Dividend receivable | 88 | 1 | - | 89 | Dividend distribution | For operating purposes |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Account receivable | 167,674 | 75,100 | - | 242,773 | Current account | For operating purposes |
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | Other receivable | 3,676 | - | 3,676 | - | Current account | For operating purposes |
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | Prepayment | 1,784 | - | 1,784 | - | Current account | For operating purposes |
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | Account receivable | 404 | 3,426 | - | 3830 | Current account | For operating purposes |
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | Associate | Other receivable | 2,180 | - | 2,180 | - | Current account | For operating purposes |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | Other receivable | - | 1,280 | - | 1,280 | Current account | For operating purposes |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | Prepayment | - | 492 | - | 492 | Current account | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Account receivable | 299,867 | 497,368 | 403,942 | 393,293 | For selling products | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Other receivable | 49,500 | 115 | 27,498 | 22,117 | Current account | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Prepayment | 22,693 | 1,789 | - | 24,482 | Current account | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Interest receivable | 77 | 2 | - | 79 | Current account | For operating purposes |
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | Associate | Other receivable | - | 1 | - | 1 | Current account | For operating purposes |
| Shenzhen Thunderbird Network Media Co., Ltd. | Associate’s subsidiary | Other receivable | 695 | 129 | 194 | 630 | For selling products | For operating purposes |
| Shenzhen Thunderbird Network Media Co., Ltd. | Associate’s subsidiary | Account receivable | 70 | 347 | 70 | 347 | For selling products | For operating purposes |
| Shenzhen Thunderbird Network Technology Co. | Associate | Other receivable | 545 | 188 | 733 | - | For selling products | For operating purposes |
| Shenzhen Thunderbird Information | Associate’s subsidiary | Other receivable | 762 | 6 | 462 | 306 | For selling products | For operating purposes |
| Technology Co., Ltd. | ||||||||
| Shenzhen Thunderbird Smart Products Co., Ltd. | Associate’s subsidiary | Other receivable | 36 | 40 | - | 76 | For selling products | For operating purposes |
| Shenzhen Thunderbird Smart Products Co., Ltd. | Associate’s subsidiary | Account receivable | 3,810 | 13,647 | - | 17,457 | Current account | For operating purposes |
| Shenzhen Yisheng Kangyun Technology Development Co., Ltd. | Associate’s subsidiary | Other receivable | - | 67 | 67 | - | Current account | For operating purposes |
| CJ Speedex Logistics Co., Ltd. | Joint venture | Prepayment | 1,760 | 39,093 | - | 40,853 | Current account | For operating purposes |
| CJ Speedex Logistics Co., Ltd. | Joint venture | Account receivable | - | 2,284 | 2,284 | - | Current account | For operating purposes |
| Taiyang Electro-optic (Huizhou) Co., Ltd. | Associate | Dividend receivable | - | 1,163 | - | 1,163 | Dividend distribution | For operating purposes |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | Dividend receivable | - | 4,417 | - | 4,417 | Current account | For operating purposes |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | Other receivable | 6 | - | - | 6 | Current account | For operating purposes |
| Urumqi Dongpeng Chuangdong Equity Investment Management Partnership (Limited Partnership) | Associate | Account receivable | - | 17 | - | 17 | Current account | For operating purposes |
| Wuhan Lesheng Times Trading Co., Ltd. | Associate’s subsidiary | Prepayment | - | 8,052 | - | 8,052 | Current account | For operating purposes |
| Tibet Dongwei Investment Management Center (Limited Partnership) | Associate | Account receivable | - | 2 | - | 2 | Current account | For operating purposes |
| Xinjiang Dongpeng Weichuang Equity | Associate | Dividend receivable | 11,015 | - | 9,611 | 1,404 | For selling products | For operating purposes |
| Investment Partnership (Limited Partnership) | ||||||||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | Other receivable | 40,300 | - | 40,300 | - | Current account | For operating purposes |
| Xionghua Investment Co., Ltd. | Associate’s subsidiary | Other receivable | 17 | - | 17 | - | Current account | For operating purposes |
| Total | 1,142,259 | 1,568,730 | 1,055,364 | 1,655,625 |
5. Other Major Related-Party Transactions
No such cases in the Reporting Period.
XIII Occupation of the Company’s Capital by Controlling Shareholder or Its Related Parties
for Non-Operating Purposes
No such cases in the Reporting Period.
XIV Major Contracts and Their Execution
1. Entrustment, Contracting and Leases(1) Entrustment
No such cases in the Reporting Period.
(2) Contracting
No such cases in the Reporting Period.
(3) Leases
No such cases in the Reporting Period.
2. Major Guarantees(1) Guarantees
Unit: RMB'000
| Guarantees provided by the Company as the parent for external parties (exclusive of those for subsidiaries) | ||||||||
| Obligor | Disclosure date of announcement on guarantee line | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for related party or not |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 2018/4/28 | 50,000 | 2018/1/17 | 40,130 | Joint-liability | 6 months | Not | Not |
| Huizhou Shenghua Industrial Co., Ltd. | 2018/4/28 | 90,000 | 2017/12/29 | 74,400 | Joint-liability | 9 months | Not | Not |
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 2018/4/28 | 40,000 | 2018/2/2 | 23,380 | Joint-liability | 7 months | Not | Not |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 2018/4/28 | 1,100,000 | 2017/12/20 | 375,730 | Joint-liability | 1 year | Not | Not |
| Huizhou Gaoshengda Technology Co., Ltd. | 2018/4/28 | 90,000 | 2018/1/29 | 73,420 | Joint-liability | 6 months | Not | Not |
| Total approved line for such guarantees in Reporting Period (A1) | 1,729,200 | Total actual amount of such guarantees in Reporting Period (A2) | 724,480 | |||||
| Total approved line for such guarantees at end of Reporting Period (A3) | 1,729,200 | Total actual balance of such guarantees at end of Reporting Period (A4) | 587,060 | |||||
| Guarantees provided by the Company as the parent for subsidiaries | ||||||||
| Obligor | Disclosure date of announcem | Line of guarantee | Actual occurrence date (date of | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for related |
| ent on guarantee line | agreement signing) | party or not | ||||||
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | 2018/4/28 | 3,450,000 | 2017/10/16 | 849,840 | Joint-liability | 1 year | Not | Not |
| TCL Overseas Electronics (Huizhou) Ltd. | 2018/4/28 | 1,200,000 | 2018/1/26 | 534,060 | Joint-liability | 9 months | Not | Not |
| TCL King Electrical Appliances (Chengdu) Co., Ltd. | 2018/4/28 | 600,000 | 2017/7/6 | 169,480 | Joint-liability | 15 months | Not | Not |
| Huizhou TCL Mobile Communication Co., Ltd. | 2018/4/28 | 4,500,000 | 2017/7/24 | 2,390,810 | Joint-liability | 1 year | Not | Not |
| TCL Communication Technology Holdings Limited | 2018/4/28 | 1,200,000 | 2017/11/20 | 1,101,450 | Joint-liability | 3 years | Not | Not |
| TCL Mobile Communication (HK) Company Limited | 2018/4/28 | 1,800,000 | 2018/1/3 | 648,480 | Joint-liability | 6 months | Not | Not |
| TCT Mobile Overseas Limited | 2018/4/28 | 32,000 | 2018/1/6 | 11,750 | Joint-liability | 6 months | Not | Not |
| TCT Mobile (US) Inc. | 2018/4/28 | 845,000 | 2018/4/7 | 363,330 | Joint-liability | 6 months | Not | Not |
| TCT Mobile International Limited | 2018/4/28 | 310,000 | 2018/01/07 | 88,310 | Joint-liability | 6 months | Not | Not |
| TCT Mobile Italy S.R.L | 2018/4/28 | 16,000 | 2018/04/19 | 7,070 | Joint-liability | 6 months | Not | Not |
| TCT MOBILE-TELEFONESLTDA. | 2018/4/28 | 120,000 | 2018/5/31 | 102,770 | Joint-liability | 1 year | Not | Not |
| Wuhan China Star | 2018/4/28 | 7,500,000 | 2016/4/13 | 3,652,950 | Joint-liability | 70 months | Not | Not |
| Optoelectronics Technology Co., Ltd. | ||||||||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 2018/4/28 | 21,500,000 | 2017/4/17 | 15,239,590 | Joint-liability | 94 months | Not | Not |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 2018/4/28 | 6,000,000 | 2015/3/23 | 3,358,360 | Joint-liability | 57 months | Not | Not |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 2018/4/28 | 11,600,000 | 2017/9/29 | 5,365,200 | Joint-liability | 90 months | Not | Not |
| Huizhou China Star Optoelectronics Technology Co., Ltd. | 2018/4/28 | 5,000,000 | 2018/3/9 | 280,450 | Joint-liability | 5 months | Not | Not |
| China Star Optoelectronics International (HK) Limited | 2018/4/28 | 2,600,000 | 2018/1/8 | 298,460 | Joint-liability | 2 years | Not | Not |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | 2018/4/28 | 1,500,000 | 2018/1/5 | 450,750 | Joint-liability | 1 year | Not | Not |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | 2018/4/28 | 300,000 | 2018/5/11 | 10,790 | Joint-liability | 6 months | Not | Not |
| Guangdong Juhua Printed Display | 2018/4/28 | 300,000 | 2017/12/22 | 10,380 | Joint-liability | 135 months | Not | Not |
| Technology Co., Ltd. | ||||||||
| TCL Home Appliances (HeFei) Co., Ltd. | 2018/4/28 | 1,200,000 | 2017/10/11 | 908,750 | Joint-liability | 15 months | Not | Not |
| TCL Home Appliances (Zhongshan) Co., Ltd. | 2018/4/28 | 120,000 | 2018/1/15 | 90,060 | Joint-liability | 6 months | Not | Not |
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | 2018/4/28 | 1,300,000 | 2016/3/24 | 1,163,310 | Joint-liability | 3 years | Not | Not |
| TCL Air Conditioner (Wuhan) Co., Ltd. | 2018/4/28 | 1,250,000 | 2018/1/3 | 962,820 | Joint-liability | 8 months | Not | Not |
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | 2018/4/28 | 600,000 | 2018/1/12 | 340,680 | Joint-liability | 6 months | Not | Not |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | 2018/4/28 | 50,000 | 2018/5/24 | 19,640 | Joint-liability | 6 months | Not | Not |
| TCL Tonly Electronics (Huizhou) Co., Ltd. | 2018/4/28 | 200,000 | 2017/12/21 | 78,900 | Joint-liability | 4 years | Not | Not |
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | 2018/4/28 | 140,000 | 2018/6/11 | 35,030 | Joint-liability | 1 month | Not | Not |
| Huizhou TCL Light Electrical Appliances Co., Ltd. | 2018/4/28 | 55,000 | 2018/1/17 | 28,880 | Joint-liability | 6 months | Not | Not |
| Huizhou VERY Light Source Technology Co., | 2018/4/28 | 40,000 | 2018/1/5 | 36,210 | Joint-liability | 8 months | Not | Not |
| Ltd. | ||||||||
| Highly Information Industry Co., Ltd. | 2018/4/28 | 3,000,000 | 2016/6/23 | 1,520,000 | Joint-liability | 3 years | Not | Not |
| Beijing Hecheng Nuoxin Technology Co., Ltd. | 2018/4/28 | 200,000 | 2018/1/1 | 190,000 | Joint-liability | 3 years | Not | Not |
| Beijing Lingyun Data Technology Co., Ltd. | 2018/4/28 | 350,000 | 2017/6/1 | 274,470 | Joint-liability | 15 months | Not | Not |
| Beijing Sunpiestore Technology Co., Ltd. | 2018/4/28 | 500,000 | 2012/6/1 | 340,000 | Joint-liability | 79 months | Not | Not |
| Huizhou Cool Friends Network Technology Co., Ltd. | 2018/4/28 | 130,000 | 2016/6/24 | 81,990 | Joint-liability | 30 months | Not | Not |
| SHIFENDAOJIA Online Service Co., Ltd. | 2018/4/28 | 30,000 | 2017/12/12 | 29,250 | Joint-liability | 8 months | Not | Not |
| Guangzhou Yunsheng Tianji Technology Co., Ltd. | 2018/4/28 | 1,100,000 | 2017/9/28 | 402,000 | Joint-liability | 12 years | Not | Not |
| TCL Industries Holdings (HK) Limited | 2018/4/28 | 7,000,000 | 2016/10/4 | 3,980,440 | Joint-liability | 5 years | Not | Not |
| Huizhou TCL Environment Technology Co., Ltd. | 2018/4/28 | 60,000 | 2018/4/2 | 9,710 | Joint-liability | 3 months | Not | Not |
| Total approved line for such guarantees in Reporting Period (B1) | 96,368,000 | Total actual amount of such guarantees in Reporting Period (B2) | 39,661,060 | |||||
| Total approved line for such guarantees at end of Reporting Period (B3) | 96,368,000 | Total actual balance of such guarantees at end of Reporting Period (B4) | 45,426,420 | |||||
| Guarantees provided between subsidiaries | ||||||||
| Obligor | Disclosure | Line of | Actual | Actual | Type of | Term of | Having | Guarante |
| date of announcement on guarantee line | guarantee | occurrence date (date of agreement signing) | guarantee amount | guarantee | guarantee | expired or not | e for related party or not | ||
| - | - | - | - | - | - | - | - | - | |
| Total approved line for such guarantees in Reporting Period (C1) | - | Total actual amount of such guarantees in Reporting Period (C2) | - | ||||||
| Total approved line for such guarantees at end of Reporting Period (C3) | - | Total actual balance of such guarantees at end of Reporting Period (C4) | - | ||||||
| Total guarantee amount (total of three kinds of guarantees above) | |||||||||
| Total guarantee line approved in Reporting Period (A1+B1+C1) | 98,097,200 | Total actual guarantee amount in Reporting Period (A2+B2+C2) | 40,385,540 | ||||||
| Total approved guarantee line at end of Reporting Period (A3+B3+C3) | 98,097,200 | Total actual guarantee balance at end of Reporting Period (A4+B4+C4) | 46,013,480 | ||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 155% | ||||||||
| Of which: | |||||||||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | |||||||||
| Balance of debt guarantees provided directly or indirectly for obligors with over 70% debt asset ratio (E) | 16,902,850 | ||||||||
| Amount by which total guarantee amount exceeds 50% of the Company’s net assets (F) | 31,139,960 | ||||||||
| Total of three amounts above (D+E+F) | 48,042,810 | ||||||||
| Joint liability possibly borne or already borne in Reporting Period for outstanding guarantees (if any) | None | ||||||||
| Guarantees provided in breach of prescribed procedures (if any) | None | ||||||||
(2) Irregularities in Provision of Guarantees
No such cases in the Reporting Period.
3. Other Major Contracts
No such cases in the Reporting Period.
XV Corporate Social Responsibility (CSR)
1. Major Environmental Issues
| Name of the Company or subsidiary | Major pollutants | Discharge method | 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) | Excess discharge |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. (Phase I) | COD | Discharged after being duly treated in waste water treatment system | 1 | Northwest of plant | 72.5 | 260 | 237.4 | 1226.05 | None |
| Ammonia nitrogen | 3.64 | 30 | 12.0 | / | None | ||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. (Phase II) | COD | Discharged after being duly treated in waste water treatment system and going through artificial wetland system | 1 | Artificial wetland to north of plant | 18.77 | 30 | 36.3 | 174.89 | None |
| Ammonia nitrogen | 0.23 | 1.5 | 0.58 | 7.7 | None | ||||
| Wuhan China Star Optoelectronics Technology Co., Ltd. | COD | Discharged after being duly treated in waste water treatment system | 1 | Northwest of plant | 9.06-115.64 | 400mg/L | 55.65 | 353.55 | None |
| Ammonia nitrogen | 0.02--4.40 | 30 | 5.57 | 35.36 | None | ||||
| TCL-AOBO Environmental Protection And Development Co., Ltd. | PM (dust from physical crushing workshop) | Discharged at high altitude after being duly treated in bag | 1 | Exhaust funnel of physical crushing workshop | 2.86 | 120 | 0.096 | 5.76 | None |
| PM (plastic | 1 | Exhaust funnel | 3.7 | 120 | 0.061 | 5.76 | None |
| dust) | dust-cleaning system | of plastic treatment workshop | |||||||
| Shantou TCL Deqing Environmental Protection Development Co., Ltd. | PM | Discharged at high altitude after being duly treated in bag dust-cleaning system | 1 | Exhaust funnel of workshop B | 15.2 | 120 | 0.236 | 2.9 | None |
| Huizhou TCL Environment Technology Co., Ltd. | COD | Discharged after being duly treated in waste water treatment system | 1 | West of plant | 19.29 | 90 | 0.48 | 3.996 | None |
| Ammonia nitrogen | 1.73 | 10 | 0.035 | 0.444 | None |
Construction and Operation of Pollution Prevention FacilitiesDuring the Reporting Period, no major environmental pollution incidents occurred in either theCompany or any of its subsidiaries. An advanced sewage management system has been establishedfor each subsidiary, and regular monitoring and supervision and inspection mechanisms have beenadopted to ensure the emission and disposal of waste water, waste gas, solid waste and factorynoises generated during the operation are in compliance with the national and local laws andregulations.The waste water of each subsidiary company includes domestic waste water and industrial wastewater, of which domestic waste water is discharged into the local municipal sewage treatment pipenetwork after being pre-treated by oil separation and septic treatment, and industrial waste waterenters different treatment systems according to its characteristics, and is discharged subjected to thestandards after physical and chemical and biochemical treatment. The atmospheric pollutantsproduced 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 alkaline waste gas treatment system, acidic waste gas treatment system, organic waste gastreatment system, waste gas treatment system for waste water treatment station, cloth bag dedustingsystem, etc. for the collection of waste gases through pipelines to the corresponding waste gas
treatment system, where waste gases are discharged at a high altitude after meeting relativestandards. The concentration and total amount of waste water and exhaust gas discharged meet therelevant national and local standards. The solid wastes generated by each subsidiary include generalwaste, hazardous waste and domestic garbage, of which, hazardous wastes are treated by anentrusted qualified hazardous waste disposal agency according to the regulations; general wastes aredisposed of by a resource recycling firm after being classified in the plant area; while domesticgarbage is disposed of by the property management company. All the disposals meet the regulatoryrequirements. The factory noise generated by each subsidiary comes from the mechanical noises ofproduction and power equipment, including refrigerators, cooling towers, air compressors, fans,various types of pumps, etc.. The Company reduces the impact of noise on the surroundingenvironment by the use of low-noise equipment, vibration reduction, noise reduction, etc., and noisereduction measures such as sound insulation and sound absorption in the factories and equipmentrooms.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, and no violationsoccurred during the Reporting Period.Emergency Response Plan for Environmental IncidentsEach subsidiary has set up an environmental incident emergency organization led by the seniormanagement of the enterprise and prepared an environmental emergency response plan, which hasbeen filed with the local environmental protection department in accordance with relevant nationallaws and regulations. In addition, regularly emergency drills are conducted for environmentalincidents according to the plan to ensure the validity of emergency response plan.Environmental Self-Monitoring ProgramEach subsidiary has formulated an environmental self-monitoring program in accordance withnational regulations, and monitors the discharge of pollutants by manual monitoring or manualmonitoring performed by a third-party qualified agency. The monitoring plans and annualmonitoring reports can be checked on the key environmental monitoring information platform
managed by local environmental authorities or subsidiary websites.Other Environmental Information Required to Be DisclosedNoneOther Related Environmental InformationNone2. Measures Taken to Fulfill the Social Responsibility of Targeted Poverty Alleviation(1) Targeted Poverty Alleviation PlanningTo respond to the "Opinions of the China Securities Regulatory Commission on the Role of CapitalMarkets in Serving the Country in Poverty Alleviation", the Company has been fulfilling its socialresponsibilities in poverty alleviation and public service, especially in the field of education povertyalleviation. The "TCL Hope Engineering Candlelight Awards Program" jointly established byCYDF and Shenzhen TCL Public Welfare Foundation in 2013 is one of the earliest public welfareprojects for rural teachers rewards and funding in the country. The investment to this project is overRMB30 million in five years. The purpose of the award is to demonstrate the morality andprofessional dreams of outstanding rural teachers who have worked hard in the grassroots educationfront in poverty-stricken areas for their posts, and encourage more outstanding young teachers totake root in rural basic education and promote rural education development.(2) Summary of Work Done for Targeted Poverty Alleviation during H1 2018In the 2018 "Candlelight Awards Program", a total of 400 outstanding rural teachers were selected.The 100 rural teacher representatives who participated in the award ceremony were awarded the"Candlelight Award" for dedication, innovation and guidance. The award-winning teachers willreceive funding and training support. The individual award, which is worth RMB12,000, includes acash reward of RMB8,000 and a "candle classroom" training of RMB4,000 in online and offline"Flipped Classroom" per person. In 2018, the coverage of "Candlelight Micro-Loan" was expanded.Except for the outstanding teachers who were rewarded by the "TCL Hope Engineering CandlelightAwards", all the teachers under training in 2018 who belong to the Hope Primary School TeacherTraining Office of CYDF can apply for the loan.(3) Results of Targeted Poverty Alleviation Efforts
| Indicators | Measurement Unit | Quantity/Development |
| I. Overall summary | —— | —— |
| Of which: 1. Cash | RMB’000 | 5,436.8 |
| 2. Goods in cash | RMB’000 | |
| 3. Number of registered poor population who have been lifted from poverty | Person | |
| II. Investment breakdown | —— | —— |
| 1. Poverty alleviation by industrial development | —— | —— |
| Of which: 1.1 Types of poverty alleviation projects by industrial development | —— | |
| 1.2 Number of poverty alleviation projects by industrial development | —— | |
| 1.3 Investment amount in poverty alleviation projects by industrial development | RMB’000 | |
| 1.4 Number of registered poor population who have been lifted from poverty | Person | |
| 2. Poverty alleviation by employment transfer | —— | —— |
| Of which: 2.1 Investment amount for vocational skills training | RMB’000 | |
| 2.2 Number of persons accepting vocational skills training | Person-time | |
| 2.3 Number of registered poor population who have been employed with the Company’s help | Person | |
| 3. Poverty alleviation by migration | —— | —— |
| Of which: 3.1 Number of migrated population who have been employed with the Company’s help | Person | |
| 4. Poverty alleviation by education | —— | —— |
| Of which: 4.1 Investment amount in aiding students in poverty | RMB’000 | |
| 4.2 Number of students in poverty who got aid | Person | |
| 4.3 Investment amount in improvement of educational resources in poverty-stricken areas | RMB’000 | 5,400 |
| 5. Poverty alleviation by improving health | —— | —— |
| Of which: 5.1 Investment amount in medical and health resources in poverty-stricken areas | RMB’000 | |
| 6. Poverty alleviation by ecological protection | —— | —— |
| Of which：6.1 Project types | —— | |
| 6.2 Investment amount | RMB’000 | |
| 7. Guaranteed bottom | —— | —— |
| Of which: 7.1 Investment amount in assisting elderly, women and | RMB’000 |
| children left behind | ||
| 7.2 Number of elderly, women and children left behind who got aid | Person | |
| 7.3 Investment amount in impoverished disabled people | RMB’000 | |
| 7.4 Number of impoverished disabled people who got aid | Person | |
| 8. Poverty alleviation by public programmes | —— | —— |
| Of which: 8.1 Investment amount in poverty alleviation cooperation between the East and the West areas | RMB’000 | |
| 8.2 Investment amount in targeted poverty alleviation | RMB’000 | 36.8 |
| 8.3 Investment amount in public fund for poverty alleviation | RMB’000 | |
| 9. Other projects | —— | —— |
| Of which: 9.1. Number of projects | —— | |
| 9.2. Investment amount | RMB’000 | |
| 9.3. Number of registered poor population who have been lifted from poverty | Person | |
| III. Awards won (for what and at what levels) | —— | —— |
(4) Subsequent Plans for Targeted Poverty Alleviation
The Group will keep expanding the existing award scale and publicity impact of the TCL HopeEngineering Candlelight Awards Program, and improving user interaction on the Internet platformfor social concern. It will also expand the coverage of the Candlelight Micro-loan Project to solvethe financial needs of some rural teachers for their better services in rural education. In order toserve the national poverty alleviation work and respond to the call for targeted poverty alleviation,Shenzhen TCL Public Welfare Foundation initiated an "assistance program for retired privatesubstitute teachers" jointly with CYDF to solve the problem of low-paid and difficult living forretired private substitute teachers in poverty-stricken areas. This program helps and supports retiredprivate substitute teachers who contributed to education in poverty-stricken areas to improve theirliving conditions by funding services and social advocacy, and encourage them to develop for socialrespect and self-development.
XVI Other Significant Events
No such cases in the Reporting Period.
XVII Significant Events of Subsidiaries
| Title of current announcement | Disclosure date | Disclosure website |
| Voluntary Announcement on the Result of Subsidiary TCL Multimedia’s Rights Issue | 18 January 2018 | http://www.cninfo.com.cn |
| Reminder of the IPO Shares of Minority-Owned Subsidiary 712 Corp. Beginning Public Trading | 26 February 2018 | http://www.cninfo.com.cn |
| Announcement on the Establishment of a Strategic Investment Fund | 23 March 2018 | http://www.cninfo.com.cn |
| Voluntary Announcement on Subsidiary Thunderbird Technology Bringing in a Strategic Investment from JD.com | 2 May 2018 | http://www.cninfo.com.cn |
| Announcement on the Construction of the G11 New UHD Display Production Line | 22 May 2018 | http://www.cninfo.com.cn |
| Voluntary Announcement on the Acquisition by TCL Multimedia of an Interest in TCL Commercial Information Technology (Huizhou) Co., Ltd. | 1 June 2018 | http://www.cninfo.com.cn |
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in 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 | 4,513,615,359 | 33.40% | 34,676,444 | -2,726,573,811 | -2,691,897,367 | 1,821,717,992 | 13.44% | ||
| 1.1 Shares held by government | |||||||||
| 1.2 Shares held by state-owned legal persons | 1,244,019,136 | 9.20% | -1,244,019,136 | -1,244,019,136 | 0 | 0 | |||
| 1.3 Shares held by other domestic investors | 3,179,063,876 | 23.53% | 34,392,300 | -1,482,554,675 | -1,448,162,375 | 1,730,901,501 | 12.77% | ||
| Among which: Shares held by domestic legal persons | 2,694,327,349 | 19.94% | -1,483,569,375 | -1,483,569,375 | 1,210,757,974 | 8.94% | |||
| Shares held by domestic natural persons | 484,736,527 | 3.59% | 34,392,300 | 1,014,700 | 35,407,000 | 520,143,527 | 3.84% | ||
| 1.4 Shares held by foreign investors | 90,532,347 | 0.67% | 284,144 | 284,144 | 90,816,491 | 0.67% | |||
| Among which: Shares held by foreign legal persons | 90,532,347 | 0.67% | 90,532,347 | 0.67% | |||||
| Shares held by foreign natural persons | 284,144 | 284,144 | 284,144 | 0.00 | |||||
| 2. Unrestricted shares | 9,001,356,704 | 66.60% | 2,726,573,811 | 2,726,573,811 | 11,727,930,515 | 86.56% | |||
| 2.1 RMB-denominated ordinary shares | 9,001,356,704 | 66.60% | 2,726,573,811 | 2,726,573,811 | 11,727,930,515 | 86.56% | |||
| 3. Total shares | 13,514,97 | 100.00% | 34,676,44 | 0 | 34,676,44 | 13,549,64 | 100.00% | ||
| 2,063 | 4 | 4 | 8,507 |
Reasons for share changes:
During the Reporting Period, the 2,727,588,511 shares in a private placement in 2015 were unlocked on 26 February 2018, reducingthe restricted shares and increasing the unrestricted shares accordingly; director Mr. Bo Lianming resigned as director, increasing therestricted shares by 1,014,700 shares and decreasing the unrestricted shares accordingly; and 34,676,444 restricted shares weregranted and listed as incentives, increasing the total shares from 13,514,972,063 shares to 13,549,648,507 shares.Approval of share changes:
□Applicable ■Not applicable
Transfer of share ownership:
□Applicable ■Not applicableEffects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s
ordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□Applicable ■Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□Applicable ■Not applicable
2. Changes in Restricted Shares
Unit: share
| Shareholder | Beginning restricted shares | Unlocked in Reporting Period | Increase in Reporting Period | Ending restricted shares | Reason for restriction | Date of unlocking |
| Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) | 1,059,849,533 | 0 | 0 | 1,059,849,533 | IPO restricted shares | 2018-12-25 |
| Other | 484,736,527 | 0 | 1,014,700 | 485,751,227 | Locked-up shares of senior management | 9999-99-99 |
| Star Century Enterprises Limited | 90,532,347 | 0 | 0 | 90,532,347 | IPO restricted shares | 2020-12-25 |
| Duilong Xinglan Venture Investment Management | 42,521,163 | 0 | 0 | 42,521,163 | IPO restricted shares | 2020-12-25 |
| Partnership (Limited Partnership) | ||||||
| Duilong Xingyong Venture Investment Management Partnership (Limited Partnership) | 38,380,684 | 0 | 0 | 38,380,684 | IPO restricted shares | 2020-12-25 |
| Duilong Xingyuan Venture Investment Management Partnership (Limited Partnership) | 37,695,315 | 0 | 0 | 37,695,315 | IPO restricted shares | 2020-12-25 |
| Awardees of restricted stock incentives | 0 | 0 | 34,676,444 | 34,676,444 | Restricted shares granted as incentives | 2019-03-21 |
| Duilong Xinglian Venture Investment Management Partnership (Limited Partnership) | 32,311,279 | 0 | 0 | 32,311,279 | IPO restricted shares | 2020-12-25 |
| Total | 1,786,026,848 | 0 | 35,691,144 | 1,821,717,992 | -- | -- |
II Issuance and Listing of Securities
| 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 | Disclosure date |
| Stock | ||||||||
| Shares | 21 March 2018 | 1.83 | 34,674,444 | 16 May 2018 | 34,674,444 | - | http://www.cninfo.com.cn | 15 May 2018 |
| Corporate bonds, including convertibles and warrant bonds | ||||||||
| Corporate bonds | 6 June 2018 | 5.48 | 10,000,000 | 2 July 2018 | 10,000,000 | http://www.cninfo.com.cn | 27 June 2018 |
III Shareholders and Their Holdings at Period-End
Unit: share
| Number of ordinary shareholders | 472,986 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | ||||||||
| 5% or greater ordinary shareholders or top 10 ordinary shareholders | ||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Ordinary shares | Increase/decrease in Reporting Period | Restricted ordinary shares | Unrestricted ordinary shares | Shares in pledge or frozen | |||
| Status | Shares | |||||||||
| Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) | Domestic non-state-owned legal person | 7.82 | 1,059,950,333 | 1,059,849,533 | 100,800 | In pledge | 687,420,000 | |||
| Huizhou Investment Holding Co., Ltd. | Domestic state-owned legal person | 6.48 | 878,419,747 | 878,419,747 | ||||||
| Li Dongsheng | Domestic natural person | 4.71 | 638,273,688 | 478,705,266 | 159,568,422 | In pledge | 528,234,787 | |||
| Beijing Ziguang Investment Co., Ltd. | Domestic state-owned legal person | 3.58 | 484,468,900 | 484,468,900 | ||||||
| Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) | Domestic non-state-owned legal person | 3.34 | 452,660,287 | 452,660,287 | In pledge | 452,660,287 | ||||
| Xinjiang Jiutian | Domestic | 3.02 | 408,899,5 | 408,899,52 | In pledge | 408,899,521 | ||||
| Liancheng Equity Investment Partnership (Limited Partnership) | non-state-owned legal person | 21 | 1 | |||||
| CDB Innovation Capital Co., Ltd. | Domestic state-owned legal person | 2.37 | 320,685,219 | 320,685,219 | ||||
| Guangdong Guangxin Holdings Group Ltd. | Domestic state-owned legal person | 2.34 | 316,834,683 | 316,834,683 | ||||
| China Securities Finance Corporation Limited | Domestic non-state-owned legal person | 2.31 | 313,481,602 | 313,481,602 | ||||
| BOSC Asset－SPD Bank－ BOSC Asset Wealth Asset Management Plan No. 10 | Domestic non-state-owned legal person | 2.22 | 301,447,437 | 301,447,437 | ||||
| Strategic investor or general legal person becoming top-10 ordinary shareholder due to rights issue (if any) (see note 3) | Huizhou Investment Holding Co., Ltd., Beijing Ziguang Investment Co., Ltd., Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership), Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership), CDB Innovation Capital Co., Ltd., BOSC Asset Management Co., Ltd. and CDB Jingcheng (Beijing) Investment Fund Co., Ltd. have appeared among the top 10 shareholders due to their subscriptions in a private placement offered by the Company, with their shareholdings locked up from 26 February 2015 to 26 February 2018. For further information, see the Issuance Report and Listing Announcement on the Private Share Placement of TCL Corporation. Meanwhile, Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) has also become a top-10 shareholder in a share offering of the Company, with its shareholdings locked up from 25 December 2017 to 25 December 2018. For further information, see the Implementation Report on TCL Corporation’s Asset Purchase via Share Offering and the Related-Party Transaction & the New Share Listing Announcement. | |||||||
| Related or acting-in-concert parties among shareholders above | Mr. Li Dongsheng, Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) and Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) have signed an agreement to become acting-in-concert parties. For further information, see the Reminder of Shareholders Signing an Agreement to Act in concert and the Change of the Biggest Shareholder. | |||||||
| Top 10 unrestricted ordinary shareholders | |||
| Name of shareholder | Unrestricted ordinary shares | Type of shares | |
| Type | Shares | ||
| Huizhou Investment Holding Co., Ltd. | 878,419,747 | RMB-denominated ordinary stock | 878,419,747 |
| Beijing Ziguang Investment Co., Ltd. | 484,468,900 | RMB-denominated ordinary stock | 484,468,900 |
| Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) | 452,660,287 | RMB-denominated ordinary stock | 452,660,287 |
| Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | 408,899,521 | RMB-denominated ordinary stock | 408,899,521 |
| CDB Innovation Capital Co., Ltd. | 320,685,219 | RMB-denominated ordinary stock | 320,685,219 |
| Guangdong Guangxin Holdings Group Ltd. | 316,834,683 | RMB-denominated ordinary stock | 316,834,683 |
| China Securities Finance Corporation Limited | 313,481,602 | RMB-denominated ordinary stock | 313,481,602 |
| BOSC Asset－SPD Bank－ BOSC Asset Wealth Asset Management Plan No. 10 | 301,447,437 | RMB-denominated ordinary stock | 301,447,437 |
| Central Huijin Asset Management Co., Ltd. | 206,456,500 | RMB-denominated ordinary stock | 206,456,500 |
| Li Dongsheng | 159,568,422 | RMB-denominated ordinary stock | 159,568,422 |
| 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 | 1. It is unknown whether there is, among the above domestic non-state-owned legal-person shareholders, any related parties or acting-in-concert parties as defined in the Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. 2. Huizhou Investment Holding Co., Ltd., Huizhou Investment and Development Co., Ltd. and Central Huijin Asset Management Co., Ltd. are state-owned legal-person shareholders. 3. Mr. Li Dongsheng, Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) and Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) have signed an agreement on 19 May 2017 to become acting-in-concert parties. For further information, see the Reminder of Shareholders Signing an Agreement to Act in concert and the Change of the Biggest Shareholder. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | None | ||
Whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conducted anypromissory repo during the Reporting Period:
No such cases in the Reporting Period.
IV Change of Controlling Shareholder or Actual Controller in Reporting Period
Change of the controlling shareholder in the Reporting Period:
The controlling shareholder remained unchanged in the Reporting Period.Change of the actual controller in the Reporting Period:
The actual controller remained unchanged in the Reporting Period.
Part VII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
Their shareholdings did not change in the Reporting Period.
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in Reporting Period (share) | Decrease in Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Li Dongsheng | Chairman of the Board and CEO | Incumbent | Male | 60 | 2017-9-1 | 2020-8-31 | 638,273,688 | - | - | - | 638,273,688 |
| Liu Bin | Vice Chairman of the Board | Incumbent | Male | 48 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| He Jinlei | Vice Chairman of the Board | Incumbent | Male | 44 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Bo Lianming | Directorand COO | Incumbent | Male | 54 | 2017-9-1 | 2020-8-31 | 4,058,801 | - | - | - | 4,058,801 |
| HuangXubin | Directorand CFO | Incumbent | Male | 52 | 2017-9-1 | 2020-8-31 | 3,383,380 | - | - | - | 3,383,380 |
| Huang Wei | Director | Incumbent | Male | 55 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Liao Qian | Directorand Board Secretary | Incumbent | Male | 37 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Wu Xiaohui | Director | Incumbent | Female | 46 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Yan Yan | Independent Director | Incumbent | Male | 61 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Lu Xin | Independent Director | Incumbent | Female | 55 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Zhou Guofu | Independent Director | Incumbent | Male | 54 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Liu Xunci | Independent Director | Incumbent | Male | 59 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| He Zhuohui | Chairman of the Supervisory Committee | Incumbent | Male | 52 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Mao Tianxiang | Employee Supervisor | Incumbent | Male | 37 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Qiu Haiyan | Supervisor | Incumbent | Female | 43 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
II Change of Directors, Supervisors and Senior Management
| Name | Office title | Type of change | Date of change | Reason for change |
| Bo Lianming | President and Executive Director | Departure from the Company | 2 March 2018 | Personal reasons |
| Du Juan | COO and Executive Director | Elected | 19 March 2018 | Nominated by the Board |
| Wang Cheng | Senior Vice President | Hired | 19 March 2018 | Nominated by the Board |
Part VIII Corporate Bonds
I General Information of Corporate Bonds
| Bond name | Abbr. | Bond code | Value date | Maturity | Balance (RMB’000) | Coupon rate | Way of principal repayment and interest payment |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2016 to Qualified Investors (Phase 1) (Type 1) | 16TCL01 | 112352.SZ | 16 March 2016 | 16 March 2019 | 2,500,000 | 3.08% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2016 to Qualified Investors (Phase 1) (Type 2) | 16TCL02 | 112353.SZ | 16 March 2016 | 16 March 2021 | 1,500,000 | 3.56% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2016 to Qualified Investors (Phase 2) | 16TCL03 | 112409.SZ | 7 July 2016 | 7 July 2021 | 2,000,000 | 3.50% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase | 17TCL01 | 112518.SZ | 19 April 2017 | 19 April 2022 | 1,000,000 | 4.80% | Interest payable annually and principal repayable in full upon maturity |
| 1) | |||||||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 2) | 17TCL02 | 112542.SZ | 7 July 2017 | 7 July 2022 | 3,000,000 | 4.93% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) | 18TCL01 | 112717.SZ | 6 June 2018 | 6 June 2023 | 1,000,000 | 5.48% | Interest payable annually and principal repayable in full upon maturity |
| Place for bond listing and trading | Shenzhen Stock Exchange | ||||||
| Investor eligibility | These bonds are for qualified investors only. | ||||||
| Interest payment and principal repayment during Reporting Period | 1. The interest for the period from 16 March 2017 to 15 March 2018 on “16TCL01” and “16TCL02” was paid on 16 March 2018. 2. The interest for the period from 19 April 2017 to 18 April 2018 on “17TCL01” was paid on 19 April 2018. 3. The interest for the period from 7 July 2017 to 6 July 2018 on “16TCL03” and “17TCL02” was paid on 9 July 2018. | ||||||
| Where the bond carries any issuer or investor option clause, interchangeable clause or other special clauses, give the execution details (if applicable) of these clauses during the Reporting Period | Not applicable | ||||||
II Bond Trustee and Credit Rating Agency
| Bond trustee: | |||||||
| Name | Guotain Junan Securities Co., Ltd. | Office address | 35/F, New World Center, 6009 Yitian Road, Shenzhen, | Contact person | Zhang Chongzhen | Tel. | 0755-23976367 |
| Guangdong Province | |||||
| Credit rating agency which conducted follow-up ratings for bonds during Reporting Period: | |||||
| Name | China Chengxin Securities Rating Co., Ltd. | Office address | Room 968, Tower 1, 599 Xinye Road, Qingpu District, Shanghai | ||
| Where the bond trustee or credit rating agency was changed during the Reporting Period, explain the reasons, the executed procedures, the impact on investors’ interests, etc. (if applicable) | Not applicable | ||||
III Utilization of Funds Raised through Corporate Bonds
| Utilization of funds raised through corporate bonds and procedures executed | The raised funds were used to supplement the working capital and repay debt, which is in strict compliance with the prospectus. And with the authorization of the Board and the general meeting, the related internal decision-making procedure was executed according to the relevant rules approved by the Board and the general meeting. |
| Ending balance (RMB’000) | 0 |
| Operation of special account for raised funds | The Company has signed the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2015 to Qualified Investors, the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 1), the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 2), and the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) with China Development Bank (Guangdong branch) and the Industrial and Commercial Bank of China (Huizhou branch) to ensure that the raised funds will be used as earmarked. |
| Whether the utilization of raised funds is in line with the promised usages, utilization plan or other promises in the prospectus | Yes |
IV Rating Results of Corporate Bonds
According to the Credit Rating Report on TCL Corporation’s Corporate Bonds Publicly Offered in
2018 to Qualified Investors (Phase 1) issued by China Chengxin Securities Rating Co., Ltd. on 28
May 2018, TCL Corporation was rated AAA with a “Stable” outlook, and the said bonds were also
rated AAA.
According to the Follow-up Rating Report (2018) on TCL Corporation’s Corporate Bonds Publicly
Offered in 2016 to Qualified Investors (Phase 1 and 2) and the Follow-up Rating Report (2018) on
TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 1 and 2)
issued by China Chengxin Securities Rating Co., Ltd. on 25 June 2018, the AAA credit status of
TCL Corporation and the said bonds was affirmed with a “Stable” outlook.
V Credit Enhancement, Repayment Plans and Other Repayment Guarantee Measures
No credit enhancement measures were taken for the Company’s bonds during the Reporting Period.The capital for principal repayment and interest payment for the Company’s bonds is primarily
sourced from the revenue, net profit and cash flows arising from its ordinary course of business.The repayment guarantee measures include a specialized task group, a strict capital management
plan, a bond trustee, the Rules for Bondholders’ Meetings, strict information disclosure, and an
undertaking to not distribute profits to shareholders, as well as suspend capital expenditures such asmajor investments in external parties and mergers and acquisitions where the Company fails to, orexpectedly fails to, repay the principal and pay the interest on any bonds on time.
The Company’s credit enhancement mechanism, repayment plans and other repayment guarantee
measures remained unchanged during the Reporting Period.VI Meetings of Bondholders Convened during Reporting PeriodNo such cases in the Reporting Period.VII Performance of Duties by Bond Trustee during Reporting Period
As the trustee of the “16TCL01”, “16TCL02”, “16TCL03”, “17TCL01”, “17TCL02” and“18TCL01” bonds, Guotain Junan Securities Co., Ltd., in strict accordance with the applicable laws
and regulations including the Measures for the Issue and Trading of Corporate Bonds and the
Professional Code of Conduct for Corporate Bond Trustees, keeps a close eye on the Company’s
operating, financial and credit conditions to fulfill its duties as a bond trustee and protect the legalrights and interests of the bondholders. And the bond trustee has no conflicts of interests in any kindwith the Company.
VIII Selected Financial Information of the Company as at 30 June 2018 and 31 December2017 (or for H1 2018 and H1 2017)
| Item | 30 June 2018 | 31 December 2017 | Change (%) |
| Current ratio (%) | 108% | 111% | -3% |
| Debt asset ratio (%) | 66.05% | 66.22% | -0.17% |
| Quick ratio (%) | 64% | 77% | -13% |
| H1 2018 | H1 2017 | Change (%) | |
| EBITDA-to-interest coverage (times) | 7.73 | 6.84 | 12.93% |
| Debt repayment ratio (%) | 100% | 100% | 0.00% |
| Interest payment ratio (%) | 100% | 100% | 0.00% |
Main reasons for any over 30% YoY movements in the data above:
□Applicable ■Not applicable
IX Debt DefaultsNo debt defaults.X Principal Repayment and Interest Payment of Other Bonds and Debt Financing
Instruments during Reporting Period
| No. | Bond abbreviation | Principal amount | Value date | Maturity | Coupon rate | Principal repayment and interest payment |
| 1 | 13TCL-MTN1 | RMB500 million | 2013-1-18 | 5 years | 6.05% | Repaid in full on time |
| 2 | 15TCL-MTN001 | RMB500 million | 2015-4-2 | 5 years | 5.50% | The interest for the period from 2 April 2017 to 1 April 2018 was paid on 2 April 2018 |
XI Credit Lines Granted by Banks, as well as Their Utilization and Repayment duringReporting Period
The Company operates in compliance, with a fine credit reputation, strong profitability and a greatability to repay debt. Additionally, it maintains a long-term partnership with the China DevelopmentBank, The Export-Import Bank of China, the Industrial and Commercial Bank of China, etc. As at
30 June 2018, the credit lines granted by the major bank partners to the Company totaledRMB190.8 billion, with RMB63.2 billion utilized and RMB127.6 billion left.During the Reporting Period, there were no defaults on bank loans.
XII Fulfillment of Commitments Made in Bond Prospectuses during Reporting PeriodUp to the date of the approval of this Report for issue, the Company has been executing all the
commitments given in its bond prospectuses, without any negative impact on the investors caused
by the Company’s weak execution of such commitments.
XIII Significant Events during Reporting PeriodExcept for the aforesaid, there were no other significant events as listed in Article 45 of the
Measures for the Issue and Trading of Corporate Bonds during the Reporting Period.XIV Guarantor for Corporate Bonds
□ Yes ■ No
Part IX Financial Statements
I Independent Auditor’s Report
The interim financial statements are unaudited by an independent auditor.
TCL Corporation
Unaudited Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
| Contents | Page | ||
| I | Unaudited Financial Statements | ||
| 1. Consolidated Balance Sheet | 1-2 | ||
| 2. Consolidated Income Statement | 3 | ||
| 3. C onsolidated 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 | 15-135 | ||
| II | Supplementary Information to Financial Statements | ||
| 1. Return on Equity and Earnings per Share | AI-1 | ||
| 2. Schedules of Allowances for Asset Impairments | AI-2 | ||
| 3. Analysis of Data Changes in Financial Statements | AI-3 to AI-5 |
TCL CorporationConsolidated Balance Sheet
(In thousands of RMB)Assets:
| Assets: | Note IV | 30 June 2018 | 31 December 2017 | |
| Current assets: | ||||
| Monetary capital | 1 | 17,612,564 | 27,459,453 | |
| Financial assets at fair value through profit or loss | 2 | 1,710,315 | 2,231,276 | |
| Notes receivable | 3 | 5,388,074 | 6,170,349 | |
| Accounts receivable | 4 | 15,192,641 | 14,747,223 | |
| Factored accounts receivable | 5 | 12,943 | 46,449 | |
| Prepayments | 6 | 1,093,650 | 910,215 | |
| Interest receivable | 7 | 65,159 | 53,622 | |
| Dividends receivable | 8 | 9,454 | 11,103 | |
| Other receivables | 9 | 4,293,320 | 3,853,591 | |
| Inventories | 10 | 11,902,029 | 12,946,303 | |
| Other current assets | 11 | 19,724,189 | 11,666,323 | |
| Total current assets | 77,004,338 | 80,095,907 | ||
| Non-current assets: | ||||
| Loans and advances to customers | 12 | 848,778 | 555,133 | |
| Available-for-sale financial assets | 13 | 3,219,690 | 3,202,055 | |
| Long-term equity investments | 14 | 16,177,691 | 15,352,014 | |
| Investment property | 15 | 1,553,570 | 859,890 | |
| Fixed assets | 16 | 29,923,846 | 32,597,979 | |
| Construction in progress | 17 | 22,926,082 | 14,775,237 | |
| Intangible assets | 18 | 6,858,592 | 6,372,511 | |
| R&D expense | 19 | 992,740 | 872,804 | |
| Goodwill | 20 | 420,534 | 420,534 | |
| Long-term prepaid expense | 21 | 942,049 | 929,124 | |
| Deferred income tax assets | 22 | 946,059 | 871,843 | |
| Other non-current assets | 23 | 8,102,876 | 3,388,953 | |
| Total non-current assets | 92,912,507 | 80,198,077 | ||
| Total assets | 169,916,845 | 160,293,984 |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationConsolidated Balance Sheet (Continued)
(In thousands of RMB)Liabilities and shareholders’ equity:
| Liabilities and shareholders’ equity: | Note IV | 30 June 2018 | 31 December 2017 | ||||
| Current liabilities: | |||||||
| Short-term borrowings | 24 | 12,982,141 | 15,990,105 | ||||
| Factorage financings | 5 | 12,943 | 46,449 | ||||
| Borrowings from central bank | 25 | 230,406 | 39,997 | ||||
| Customer deposits and interbank deposits | 26 | 466,417 | 310,875 | ||||
| Financial liabilities at fair value through profit or loss | 27 | 470,404 | 442,942 | ||||
| Notes payable | 28 | 2,018,054 | 2,061,471 | ||||
| Accounts payable | 29 | 19,183,740 | 19,324,249 | ||||
| Advances from customers | 30 | 1,311,110 | 1,307,900 | ||||
| Payroll payable | 31 | 2,029,408 | 2,292,668 | ||||
| Taxes payable | 32 | 881,750 | 1,273,792 | ||||
| Interest payable | 33 | 445,218 | 444,846 | ||||
| Dividends payable | 34 | 71,251 | 47,110 | ||||
| Other payables | 35 | 19,601,061 | 16,662,797 | ||||
| Short-term commercial papers payable | 36 | 2,000,000 | - | ||||
| Current portion of non-current liabilities | 37 | 5,759,804 | 5,927,528 | ||||
| Other current liabilities | 38 | 3,512,002 | 6,075,073 | ||||
| Total current liabilities | 70,975,709 | 72,247,802 | |||||
| Non-current liabilities: | |||||||
| Long-term borrowings | 39 | 28,766,500 | 20,283,381 | ||||
| Bonds payable | 40 | 8,998,248 | 10,497,248 | ||||
| Long-term payables | 41 | 98,067 | 76,309 | ||||
| Long-term payroll payable | 31 | 24,906 | 25,519 | ||||
| Deferred income | 42 | 3,106,229 | 2,664,877 | ||||
| Deferred income tax liabilities | 22 | 263,028 | 271,157 | ||||
| Other non-current liabilities | 5,561 | 84,755 | |||||
| Total non-current liabilities | 41,262,539 | 33,903,246 | |||||
| Total liabilities | 112,238,248 | 106,151,048 | |||||
| Share capital | 43 | 13,549,649 | 13,514,972 | ||||
| Capital reserves | 44 | 6,034,565 | 5,940,471 | ||||
| Less: Treasury stock | 63,458 | - | |||||
| Other comprehensive income | 60 | (226,052) | 219,272 | ||||
| Surplus reserves | 45 | 1,494,300 | 1,494,300 | ||||
| General reserve | 46 | 361 | 361 | ||||
| Retained earnings | 47 | 8,808,662 | 8,577,688 | ||||
| Total equity attributable to shareholders of the Company as the parent | 29,598,027 | 29,747,064 | |||||
| Non-controlling interests | 28,080,570 | 24,395,872 | |||||
| Total shareholders’ equity | 57,678,597 | 54,142,936 | |||||
| Total liabilities and shareholders’ equity | 169,916,845 | 160,293,984 | |||||
| Legal representative: | Head for financial affairs： | Head of the financial department： | |||||
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationConsolidated Income Statement
(In thousands of RMB)
| Note IV | H1 2018 | H1 2017 | |||||
| 1. Revenue | 52,581,847 | 52,294,573 | |||||
| Including: Operating revenue | 48 | 52,523,748 | 52,174,517 | ||||
| Interest income | 49 | 58,099 | 120,056 | ||||
| 2. Operating costs and expenses | 52,717,148 | 51,721,350 | |||||
| Including: Cost of sales | 48 | 42,918,658 | 41,555,705 | ||||
| Interest expense | 49 | 41,337 | 32,372 | ||||
| Taxes and surcharges | 50 | 318,542 | 250,384 | ||||
| Selling expense | 4,450,980 | 4,617,614 | |||||
| Administrative expense | 3,911,801 | 4,272,099 | |||||
| Finance costs | 51 | 441,312 | 811,233 | ||||
| Asset impairment loss | 52 | 634,518 | 181,943 | ||||
| Add: Gain on changes in fair value (loss shown in brackets) | 53 | (103,911) | 131,012 | ||||
| Investment income (loss shown in brackets) | 54 | 1,093,958 | 799,245 | ||||
| Including: Share of profit or loss of joint ventures and associates | 54 | 615,227 | 386,544 | ||||
| Foreign exchange gain (loss shown in brackets) | 49 | (24,065) | (9,630) | ||||
| Asset disposal income (loss shown in brackets) | 55 | 129 | 5,053 | ||||
| Other income | 56 | 1,052,395 | 621,840 | ||||
| 3. Operating profit | 1,883,205 | 2,120,743 | |||||
| Add: Non-operating income | 57 | 346,754 | 166,334 | ||||
| Less: Non-operating expense | 58 | 44,203 | 64,696 | ||||
| 4. Profit before tax | 2,185,756 | 2,222,381 | |||||
| Less: Income tax expense | 59 | 484,915 | 561,061 | ||||
| 5. Net profit | 1,700,841 | 1,661,320 | |||||
| 5.1 By operational continuity | |||||||
| Net profit from continuing operations | 1,700,840 | 1,661,320 | |||||
| Net profit from discontinued operations | - | - | |||||
| 5.2 By ownership | |||||||
| Net profit attributable to owners of the Company as the parent | 1,585,939 | 1,033,845 | |||||
| Net profit attributable to non-controlling interests | 114,902 | 627,474 | |||||
| 6. Other comprehensive income, net of tax | 60 | (472,949) | 795,472 | ||||
| 6.1 Other comprehensive income that will not be reclassified to profit or loss | - | - | |||||
| 6.2 Other comprehensive income that may subsequently be reclassified to profit or loss | (472,949) | 795,472 | |||||
| 7. Total comprehensive income | 1,227,892 | 2,456,791 | |||||
| Attributable to shareholders of the Company as the parent | 1,140,615 | 1,850,316 | |||||
| Attributable to non-controlling interests | 87,277 | 606,475 | |||||
| 8. Earnings per share | 61 | ||||||
| 8.1 Basic earnings per share (RMB yuan/share) | 0.1173 | 0.0846 | |||||
| 8.2 Diluted earnings per share (RMB yuan/share) | 0.1172 | 0.0846 | |||||
| Legal representative: | Head for financial affairs： | Head of the financial department： | |||||
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationConsolidated Cash Flow Statement
(In thousands of RMB)
| Note IV | H1 2018 | H1 2017 | ||
| 1. Cash flows from operating activities: | ||||
| Proceeds from sale of commodities and rendering of services | 56,530,176 | 55,464,944 | ||
| Net increase/(decrease) in customer deposits and interbank deposits | 155,541 | 169,757 | ||
| Net increase/(decrease) in borrowings from central bank | 190,409 | 324,160 | ||
| Interest, handling charges and commissions received | 58,497 | 120,120 | ||
| Tax rebates | 2,091,698 | 2,452,084 | ||
| Cash generated from other operating activities | 62 | 1,881,237 | 1,193,334 | |
| Subtotal of cash generated from operating activities | 60,907,558 | 59,724,399 | ||
| Payments for commodities and services | (44,915,951) | (43,098,935) | ||
| Net increase/(decrease) in loans and advances to customers | (17,635) | (380,261) | ||
| Net increase/(decrease) in deposits in central bank and in interbank loans granted | 3,048,341 | 2,617 | ||
| Cash paid to and for employees | (3,747,850) | (4,231,419) | ||
| Taxes paid | (2,535,665) | (1,247,602) | ||
| Cash used in other operating activities | 63 | (8,363,572) | (7,296,258) | |
| Subtotal of cash used in operating activities | (56,532,332) | (56,251,858) | ||
| Net cash generated from/used in operating activities | 65 | 4,375,226 | 3,472,541 | |
| 2. Cash flows from investing activities: | ||||
| Proceeds from disinvestment | 13,999,884 | 9,813,449 | ||
| Investment income | 277,006 | 438,836 | ||
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 339,385 | 147,596 | ||
| Net proceeds from disposal of subsidiaries or other business units | 62,955 | 60,431 | ||
| Subtotal of cash generated from investing activities | 14,679,230 | 10,460,312 | ||
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | (12,002,181) | (6,879,777) | ||
| Payments for investments | (21,037,698) | (14,375,950) | ||
| Net payments for acquisition of subsidiaries and other business units | (2,081) | (63,645) | ||
| Cash decreased by non-consolidated subsidiaries | - | (1,023) | ||
| Subtotal of cash used in investing activities | (33,041,960) | (21,320,395) | ||
| Net cash generated from/used in investing activities | (18,362,730) | (10,860,083) |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integralpart of the financial statements.
TCL CorporationConsolidated Cash Flow Statement (Continued)
(In thousands of RMB)
| Note IV | H1 2018 | H1 2017 | ||
| 3. Cash flows from financing activities: | ||||
| Capital contributions received | 4,281,683 | 2,750,071 | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | 4,218,225 | 2,750,071 | ||
| Increase in borrowings obtained | 26,806,259 | 23,630,278 | ||
| Net proceeds from issuance of bonds | 1,000,000 | 2,377,240 | ||
| Cash generated from other financing activities | - | 158,270 | ||
| Subtotal of cash generated from financing activities | 32,087,942 | 28,915,859 | ||
| Repayment of borrowings | (22,155,913) | (20,819,683) | ||
| Payments for interest and dividends | (2,852,219) | (2,130,719) | ||
| Including: Dividends paid by subsidiaries to non-controlling interests | (294,279) | (343,628) | ||
| Cash used in other financing activities | 64 | - | (38,360) | |
| Subtotal of cash used in financing activities | (25,008,132) | (22,988,762) | ||
| Net cash generated from/used in financing activities | 7,079,810 | 5,927,097 | ||
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 130,330 | (147,361) | ||
| 5. Net increase in cash and cash equivalents | (6,777,364) | (1,607,806) | ||
| Add: Cash and cash equivalents, beginning of the period | 23,281,169 | 23,815,656 | ||
| 6. Cash and cash equivalents, end of the period | 66 | 16,503,805 | 22,207,850 |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integralpart of the financial statements.
TCL Corporation
Consolidated Statement of Changes in Shareholders’ Equity
(In thousands of RMB)
| H1 2018 | |||||||||||||||||
| Equity attributable to shareholders of the Company as the parent | Non-controlling interests | Total shareholders’ equity | |||||||||||||||
| Share capital | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | General reserve | Retained earnings | |||||||||||
| 1. Balances as at end of prior year | 13,514,972 | 5,940,471 | - | 219,272 | 1,494,300 | 361 | 8,577,688 | 24,395,872 | 54,142,936 | ||||||||
| Add: Adjustments for changed accounting policies | - | - | - | - | - | - | - | - | - | ||||||||
| 2. Balances as at beginning of the year | 13,514,972 | 5,940,471 | - | 219,272 | 1,494,300 | 361 | 8,577,688 | 24,395,872 | 54,142,936 | ||||||||
| 3. Increase/decrease in the period | 34,677 | 94,094 | (63,458) | (445,324) | - | - | 230,974 | 3,684,697 | 3,535,660 | ||||||||
| 3.1 Total comprehensive income | - | - | - | (445,324) | - | - | 1,585,939 | 87,278 | 1,227,893 | ||||||||
| 3.2 Capital increased and reduced by shareholders | 34,677 | 94,094 | (63,458) | - | - | - | - | 4,068,026 | 4,133,339 | ||||||||
| 3.2.1 Capital increased by shareholders | 34,677 | 28,781 | (63,458) | - | - | - | - | 4,068,026 | 4,068,026 | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | - | - | - | - | - | - | - | - | - | ||||||||
| 3.2.3 Other | - | 65,313 | - | - | - | - | - | - | 65,313 | ||||||||
| 3.3 Profit distribution | - | - | - | - | - | - | (1,354,965) | (470,606) | (1,825,571) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | - | - | - | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | - | (1,354,965) | (548,993) | (1,903,958) | ||||||||
| 3.3.3 Other | - | - | - | - | - | - | - | 78,387 | 78,387 | ||||||||
| 4. Balances as at end of the period | 13,549,649 | 6,034,565 | (63,458) | (226,052) | 1,494,300 | 361 | 8,808,662 | 28,080,570 | 57,678,597 | ||||||||
| Legal representative： | Head for Financial Affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
TCL Corporation
Consolidated Statement of Changes in Shareholders’ Equity (Continued)
(In thousands of RMB)
| Year 2017 | |||||||||||||||||
| Equity attributable to shareholders of the Company as the parent | Non-controlling interests | Total shareholders’ equity | |||||||||||||||
| Share capital | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | General reserve | Retained earnings | |||||||||||
| 1. Balances as of end of prior year | 12,213,682 | 3,531,323 | - | (1,365,163) | 1,078,761 | 361 | 7,305,927 | 22,981,890 | 45,746,781 | ||||||||
| Add: Adjustments for changed accounting policies | - | - | - | - | - | - | - | - | - | ||||||||
| 2. Balances as of beginning of the year | 12,213,682 | 3,531,323 | - | (1,365,163) | 1,078,761 | 361 | 7,305,927 | 22,981,890 | 45,746,781 | ||||||||
| 3. Increase/decrease in the period | 1,301,290 | 2,409,148 | - | 1,584,435 | 415,539 | - | 1,271,761 | 1,413,982 | 8,396,155 | ||||||||
| 3.1 Total comprehensive income | - | - | - | 1,584,435 | - | - | 2,664,395 | 1,018,218 | 5,267,048 | ||||||||
| 3.2 Capital increased and reduced by shareholders | 1,301,290 | 2,409,148 | - | - | - | - | - | 1,182,573 | 4,893,011 | ||||||||
| 3.2.1 Capital increased by shareholders | 1,301,290 | 2,732,710 | - | - | - | - | - | 1,059,447 | 5,093,447 | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | - | - | - | - | - | - | - | - | - | ||||||||
| 3.2.3 Other | - | (323,562) | - | - | - | - | - | 123,126 | (200,436) | ||||||||
| 3.3 Profit distribution | - | - | - | - | 415,539 | - | (1,392,634) | (786,809) | (1,763,904) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | 415,539 | - | (415,539) | - | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | - | (977,095) | (786,809) | (1,763,904) | ||||||||
| 4. Balances as at end of the period | 13,514,972 | 5,940,471 | - | 219,272 | 1,494,300 | 361 | 8,577,688 | 24,395,872 | 54,142,936 | ||||||||
| Legal representative： | Head for Financial Affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
TCL CorporationBalance Sheet of the Company as the Parent
(In thousands of RMB)Assets:
| Assets: | Note XII | 30 June 2018 | 31 December 2017 | |
| Current assets: | ||||
| Monetary capital | 3,918,265 | 1,116,725 | ||
| Financial assets at fair value through profit or loss | 1,225,049 | 1,543,844 | ||
| Notes receivable | 41,170 | 23,031 | ||
| Accounts receivable | 1 | 347,661 | 340,349 | |
| Prepayments | 49,132 | 30,648 | ||
| Interest receivable | 163,969 | 103,343 | ||
| Dividends receivable | 3,678,349 | 3,458,737 | ||
| Other receivables | 2 | 12,020,137 | 10,078,258 | |
| Inventories | 803 | 803 | ||
| Other current assets | 8,203,675 | 3,065,895 | ||
| Total current assets | 29,648,210 | 19,761,633 | ||
| Non-current assets: | ||||
| Available-for-sale financial assets | 3 | 1,198,656 | 1,224,518 | |
| Long-term equity investments | 4 | 37,931,248 | 34,983,565 | |
| Investment property | 13,710 | 15,339 | ||
| Fixed assets | 41,121 | 46,319 | ||
| Construction in progress | 575 | 1,668 | ||
| Intangible assets | 28,919 | 26,367 | ||
| Long-term prepaid expense | 462,044 | 466,049 | ||
| Total non-current assets | 39,676,273 | 36,763,825 | ||
| Total assets | 69,324,483 | 56,525,458 |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationBalance Sheet of the Company as the Parent (Continued)
(In thousands of RMB)Liabilities and shareholders’ equity
| Liabilities and shareholders’ equity | Note XII | 30 June 2018 | 31 December 2017 | |
| Current liabilities: | ||||
| Short-term borrowings | 4,360,260 | 5,675,260 | ||
| Notes payable | - | 176,488 | ||
| Accounts payable | 401,728 | 133,412 | ||
| Advances from customers | 101 | 81 | ||
| Payroll payable | 29,918 | 35,789 | ||
| Taxes payable | 50,899 | 51,544 | ||
| Interest payable | 420,822 | 340,461 | ||
| Dividends payable | 4,550 | 1,082 | ||
| Other payables | 16,492,721 | 5,896,199 | ||
| Short-term commercial papers payable | 2,000,000 | - | ||
| Current portion of non-current liabilities | 4,231,371 | 2,422,940 | ||
| Total current liabilities | 27,992,370 | 14,733,256 | ||
| Non-current liabilities: | ||||
| Long-term borrowings | 3,840,956 | 3,840,956 | ||
| Bonds payable | 8,998,248 | 10,497,248 | ||
| Long-term payables | 1,909 | 1,909 | ||
| Long-term payroll payable | 24,906 | 25,519 | ||
| Deferred income | 70,567 | 41,953 | ||
| Total non-current liabilities | 12,936,586 | 14,407,585 | ||
| Total liabilities | 40,928,956 | 29,140,841 | ||
| Share capital | 13,549,649 | 13,514,972 | ||
| Capital reserves | 8,545,932 | 8,476,523 | ||
| Less: Treasury stock | 63,458 | - | ||
| Surplus reserves | 1,292,236 | 1,292,236 | ||
| Retained earnings | 5,107,504 | 4,114,531 | ||
| Other comprehensive income | (36,336) | (13,645) | ||
| Total shareholders’ equity | 28,395,527 | 27,384,617 | ||
| Total liabilities and shareholders’ equity | 69,324,483 | 56,525,458 |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationIncome Statement of the Company as the Parent
(In thousands of RMB)
| Note XII | H1 2018 | H1 2017 | ||
| 1. Operating revenue | 5 | 1,028,097 | 621,347 | |
| Less: Cost of sales | 5 | 932,415 | 514,460 | |
| Taxes and surcharges | 6,292 | 1,074 | ||
| Selling expense | 13,364 | 9,058 | ||
| Administrative expense | 170,978 | 145,742 | ||
| Finance costs | 397,461 | 295,230 | ||
| Asset impairment loss | 920 | - | ||
| Add: Gain on changes in fair value (loss shown in brackets) | (72,394) | (30,025) | ||
| Investment income (loss shown in brackets) | 6 | 2,626,472 | 658,554 | |
| Including: Share of profit or loss of joint ventures and associates | 6 | 490,009 | 289,681 | |
| Asset disposal income (loss shown in brackets) | 12 | 1,346 | ||
| Other income | - | - | ||
| 2. Operating profit | 2,060,757 | 285,658 | ||
| Add: Non-operating income | 296,536 | 4,436 | ||
| Less: Non-operating expense | 9,355 | 23,773 | ||
| 3. Profit before tax | 2,347,938 | 266,321 | ||
| Less: Income tax expense | - | - | ||
| 4. Net profit | 2,347,938 | 266,321 | ||
| 5. Other comprehensive income | 22,691 | (8,047) | ||
| 6. Total comprehensive income | 2,325,247 | 258,274 | ||
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL CorporationCash Flow Statement of the Company as the Parent
(In thousands of RMB)
| Note XII | H1 2018 | H1 2017 | ||||||
| 1. Cash flows from operating activities: | ||||||||
| Proceeds from sale of commodities and rendering of services | 994,894 | 680,570 | ||||||
| Interest, handling charges and commissions received | 8,874 | - | ||||||
| Cash generated from other operating activities | 5,849,290 | 295,978 | ||||||
| Subtotal of cash generated from operating activities | 6,853,058 | 976,548 | ||||||
| Payments for commodities and services | (1,286,222) | (681,677) | ||||||
| Cash paid to and for employees | (78,554) | (64,671) | ||||||
| Taxes paid | (23,328) | (3,655) | ||||||
| Cash used in other operating activities | (495,200) | (1,640,689) | ||||||
| Subtotal of cash used in operating activities | (1,883,304) | (2,390,692) | ||||||
| Net cash generated from/used in operating activities | 7 | 4,969,754 | (1,414,144) | |||||
| 2. Cash flows from investing activities: | ||||||||
| Proceeds from disinvestment | 11,499,240 | 5,909,134 | ||||||
| Investment income | 1,843,083 | 1,260,144 | ||||||
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 212,232 | 4,658 | ||||||
| Subtotal of cash generated from investing activities | 13,554,555 | 7,173,936 | ||||||
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | (4,286) | (9,735) | ||||||
| Payments for investments | (16,877,016) | (7,415,105) | ||||||
| Subtotal of cash used in investing activities | (16,881,302) | (7,424,840) | ||||||
| Net cash generated from/used in investing activities | (3,326,747) | (250,904) | ||||||
| Legal representative: | Head for financial affairs： | Head of the financial department： | ||||||
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integralpart of the financial statements.
TCL CorporationCash Flow Statement of the Company as the Parent (Continued)
(In thousands of RMB)
| Note XII | H1 2018 | H1 2017 | ||
| 3. Cash flows from financing activities: | ||||
| Capital contributions received | 63,458 | - | ||
| Increase in borrowings obtained | 7,181,712 | 5,080,956 | ||
| Net proceeds from issuance of bonds | 1,000,000 | 1,000,000 | ||
| Cash generated from other financing activities | - | 8,000 | ||
| Subtotal of cash generated from financing activities | 8,245,170 | 6,088,956 | ||
| Repayment of borrowings | (5,641,532) | (5,151,347) | ||
| Payments for interest and dividends | (1,349,906) | (1,386,423) | ||
| Subtotal of cash used in financing activities | (6,991,438) | (6,537,770) | ||
| Net cash generated from/used in financing activities | 1,253,732 | (448,814) | ||
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | (34,911) | 1,236 | ||
| 5. Net increase in cash and cash equivalents | 2,861,828 | (2,112,626) | ||
| Add: Cash and cash equivalents, beginning of the period | 1,056,211 | 4,906,046 | ||
| 6. Cash and cash equivalents, end of the period | 8 | 3,918,039 | 2,793,420 |
| Legal representative: | Head for financial affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5form an integral part of the financial statements.
TCL Corporation
Statement of Changes in Shareholders’ Equity of the Company as the Parent
(In thousands of RMB)
| H1 2018 | |||||||||||||||
| Share capital | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | |||||||||
| 1. Balances as of end of prior year | 13,514,972 | 8,476,523 | - | (13,645) | 1,292,236 | 4,114,531 | 27,384,617 | ||||||||
| Add: Adjustments for changed accounting policies | - | - | - | - | - | - | - | ||||||||
| 2. Balances as of beginning of the year | 13,514,972 | 8,476,523 | - | (13,645) | 1,292,236 | 4,114,531 | 27,384,617 | ||||||||
| 3. Increase/decrease in the period | 34,677 | 69,409 | (63,458) | (22,691) | - | 992,973 | 1,010,910 | ||||||||
| 3.1 Total comprehensive income | - | - | - | (22,691) | - | 2,347,938 | 2,325,247 | ||||||||
| 3.2 Capital increased and reduced by shareholders | 34,677 | 69,409 | (63,458) | - | - | - | 40,628 | ||||||||
| 3.2.1 Capital increased by shareholders | 34,677 | 28,781 | (63,458) | - | - | - | - | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | - | - | - | - | - | - | - | ||||||||
| 3.2.3 Other | - | 40,628 | - | - | - | - | 40,628 | ||||||||
| 3.3 Profit distribution | - | - | - | - | - | (1,354,965) | (1,354,965) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | - | - | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | (1,354,965) | (1,354,965) | ||||||||
| 4. Balances as at end of the period | 13,549,649 | 8,545,932 | (63,458) | (36,336) | 1,292,236 | 5,107,504 | 28,395,527 | ||||||||
| Legal representative： | Head for Financial Affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
TCL Corporation
Statement of Changes in Shareholders’ Equity of the Company as the Parent (Continued)
(In thousands of RMB)
| Year 2017 | |||||||||||||||
| Share capital | Capital reserves | Treasury stock | Other comprehensive income | Surplus reserves | Retained earnings | Total shareholders’ equity | |||||||||
| 1. Balances as of end of prior year | 12,213,682 | 4,724,955 | - | 30,871 | 876,697 | 1,351,771 | 19,197,976 | ||||||||
| Add: Adjustments for changed accounting policies | - | - | - | - | - | - | - | ||||||||
| 2. Balances as of beginning of the year | 12,213,682 | 4,724,955 | - | 30,871 | 876,697 | 1,351,771 | 19,197,976 | ||||||||
| 3. Increase/decrease in the period | 1,301,290 | 3,751,568 | - | (44,516) | 415,539 | 2,762,760 | 8,186,641 | ||||||||
| 3.1 Total comprehensive income | - | - | - | (44,516) | - | 4,155,393 | 4,110,877 | ||||||||
| 3.2 Capital increased and reduced by shareholders | 1,301,290 | 3,751,568 | - | - | - | - | 5,052,858 | ||||||||
| 3.2.1 Capital increased by shareholders | 1,301,290 | 2,732,710 | - | - | - | - | 4,034,000 | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | - | - | - | - | - | - | - | ||||||||
| 3.2.3 Other | - | 1,018,858 | - | - | - | - | 1,018,858 | ||||||||
| 3.3 Profit distribution | - | - | - | - | 415,539 | (1,392,633) | (977,094) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | 415,539 | (415,539) | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | (977,094) | (977,094) | ||||||||
| 4. Balances as at end of the period | 13,514,972 | 8,476,523 | - | (13,645) | 1,292,236 | 4,114,531 | 27,384,617 | ||||||||
| Legal representative： | Head for Financial Affairs： | Head of the financial department： |
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| I | General information |
| (I) | Place of incorporation and organization |
| TCL 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 share |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| I | General information (continued) |
| (I) | Place of incorporation and 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 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 Shenzhen 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 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 share capital of the Company increased from 13,514,972,063 shares to 13,549,648,507 shares. | |
| As at 30 June 2018, the total issued share capital of the Company was 13,549,648,507 shares. Please refer to Note IV, 43 for details. | |
| The registered address of the Company is: Block 19, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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 electronic products and communication devices, new optoelectronic products, liquid crystal display devices, hardware and electrical equipment , VCD and DVD video players, home theater systems, computers and accessories, batteries, digital satellite TV receivers, building materials, general machinery; computer technology services; freight and warehousing; film and television equipment maintenance; waste materials recycling; real estate development and management on legally acquired land; import and export of goods and technologies; venture capital business and venture capital consultation, management of entrusted venture capital of other venture capital institutions, entrepreneurial management services for start-up enterprises, participation in the initiation of venture capital institutions and investment management advisory institutions. | |
| (III) | Authorization of financial statements for issue |
| These financial statements were authorized for issue by the Company’s Board of Directors on 28 August 2018. | |
| II | 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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | 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 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. . |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | 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 investment income 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 investment income; 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 investment income in the current period of acquisition date. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | 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 profit 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 exceeds the share enjoyed by the minority shareholder in the initial owner's equity of the subsidiary, the balance will still reduce the minority shareholders' equity. | |
| 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 under non-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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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 investment income 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 investment income 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | 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 cashes 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 available for sale, 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 "undistributed profit" 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments |
| Financial instruments include financial assets, financial liabilities and equity instruments. | |
| (1) | Classification of financial instrument |
| The Company classifies financial assets and liabilities at initial recognition based on the contractual terms of the financial instruments issued and the economic substance they reflect but not only the legal form, in combination with the purpose of the acquisition of financial assets and liabilities, to the following categories: financial assets (or financial liabilities) that are measured at fair value and whose changes are included in current profit and loss; held-to-maturity investments; receivables; available-for-sale financial assets. | |
| (2) | Recognition basis and measurement method of financial instruments |
| Financial assets and financial liabilities are measured at fair value on initial recognition. For financial assets or liabilities that are measured at fair value and whose changes are included in the current profits or losses, transaction expenses are directly recognized in the current profit and loss. For other financial assets or liabilities, transaction expenses are included in the initial recognition amount. | |
| The Company conducts subsequent measurement of financial assets at fair value, and does not deduct the transaction costs that may occur in the future disposal of the financial assets, except for the following cases: held-to-maturity investments and loans and receivables are measured at amortized cost by the effective interest method; and derivative financial assets that are linked to, and required to be settled by the delivery of, equity instruments not quoted in an active market with a fair value that cannot be measured in a reliable way, are measured at costs. | |
| The Company conducts subsequent measurement of financial liabilities at amortized costs by the effective interest method, except for the following cases: financial liabilities that are measured at fair value and whose changes are included in the current profit and loss are measured at fair value; and derivative financial liabilities that are linked to, and required to be settled by the delivery of, equity instruments not quoted in an active market with a fair value that cannot be measured in a reliable way, are measured at costs. | |
| (3) | Recognition basis and measurement method of financial asset transfer |
| The transfer of financial assets means that the Company transfers or delivers the financial assets to the other party (the transferred party) other than the issuer of the financial assets. | |
| If the Company has transferred almost all the risks and rewards of the financial asset ownership to the transferred party, the recognition of the financial assets will be terminated, while if the Company retains almost all the risks and rewards of the financial asset ownership, the recognition of the financial assets will not be terminated. | |
| Where the transfer of financial assets meets the conditions for termination of recognition, based on the consideration received for the transfer, the difference between the sum of accumulated changes in the fair value originally recorded in the owner's equity (in the case where the transferred financial assets are available for sale) and the book value of transferred financial assets is included in the current profit and loss. If the transfer of financial assets does not meet the conditions for termination of recognition, the Company will keep the recognition of the transferred financial assets and |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments (continued) |
| (4) | Conditions for the derecognition of financial liabilities |
| If all or part of the current obligations of a financial liability have been discharged, recognition of the financial liability or part of it is terminated; if the Company signs an agreement with the creditor to replace the existing financial liabilities with new ones, and the terms of the contract of new financial liabilities are substantially different with the existing ones, the recognition of existing financial liabilities is terminated and the new financial liabilities are recognized. | |
| If substantial changes are made to all or part of the contractual terms of existing financial liabilities, the recognition of existing financial liabilities or the part thereof will be terminated, and the financial liabilities with modified new terms will be recognized as a new financial liability. When the recognition of a financial liability is terminated in whole or in part, the difference between the book value of the financial liability with recognition terminated and the consideration paid (including the transferred non-cash assets or new financial liabilities assumed) will be included in the current profit and loss. | |
| If the Company repurchases part of the financial liabilities, the book value of the financial liabilities as a whole is allocated on the repurchase date based on the relative fair value of the portion continue to be recognized and the portion terminated to be recognized. The difference between the book value assigned to the portion terminated to be recognized and the consideration paid (including the transferred non-cash assets or new financial liabilities assumed) is included in the current profit and loss. | |
| (5) | Methods for determining the fair value of financial assets and financial liabilities |
| The Company determines the fair value of financial instruments with active markets by the quoted prices in active markets. For financial instruments without active market, the Company determines the fair value by valuation techniques. In the valuation, the Group adopts valuation techniques that are applicable under current circumstances and that are with sufficient available data and other information, and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transactions of related assets or liabilities, and tries the best to give priority to relevant observable input values. Non-observable input values are used in the cases that the relevant observable input values are not available or are not practicable. | |
| (6) | Impairment of financial assets |
| On the balance sheet date, the Company checks the book value of financial assets other than the ones measured at fair value and whose changes are included in the current profit and loss. In case that objective evidence of impairment of the financial assets is found, the impairment loss is recognized and allowance for impairment is made. | |
| (a) | Measurement of impairment losses on held-to-maturity investments, loans and receivables |
| If impairment of a financial assets measured at amortized cost, such as held-to-maturity investments and loans, occurs, the Company recognizes the difference between the present value of the future cash flows of the financial asset and the book value as the impairment loss, which is included in the current profit and loss. The expected present value of future cash flows is determined by discounting the original real interest rate of the financial asset, taking into account the value of the relevant collateral. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| The Company conducts separate impairment tests on financial assets with significant single amount. In case that objective evidence of impairment of a financial asset is found, the impairment loss is recognized and included in the current profit and loss. Financial assets with insignificant single amount may be tested individually for impairment or tested in a combination of financial assets with similar credit risk characteristics together with financial assets without impairment after being separately tested. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 11 | Financial instruments (continued) |
| (6) | Impairment of financial assets (continued) |
| For the impairment loss recognized on the financial assets measured at amortized cost, if there is objective evidence that the value of the financial assets has recovered and is objectively related to the events occurring after the recognition of the loss, the previously recognized impairment loss is reversed and included in the current profit and loss. | |
| The measurement of impairment losses on receivables is described in the allowance policies for doubtful accounts. | |
| (b) | Measurement of impairment losses on available-for-sale financial assets |
| The Company conducts a separate inspection of each available-for-sale equity instrument investment on the balance sheet date. If the fair value of the equity instrument invested on the balance sheet date is less than 50% of its initial investment cost (including 50%) or less than its initial investment cost over one year (including one year), it indicates that the investment is impaired; if the fair value of the equity instrument invested on the balance sheet date is less than its initial investment cost by more than 20% (including 20%) but has not yet reached 50%, the Company will consider other relevant factors, such as price volatility, to determine whether the equity instrument investment is impaired. | |
| In the event that the financial assets available for sale are impaired, even if the recognition of financial assets is not terminated, the Company transfers the accumulated loss resulting from the decline of fair value, which was directly included in other comprehensive income originally, from other comprehensive income to the current profit and loss. The accumulated loss transferred is equal to the balance of the initial acquisition cost of the financial assets available for sale after deducting the recovered principal and the amortized amount, the current fair value and the impairment losses already recorded in the profit and loss. | |
| For equity instrument investments that are not quoted in active markets and whose fair value cannot be reliably measured, or derivative financial assets that are linked to the equity instruments and required to be settled by delivery of the equity instruments, the Company recognizes their impairment as impairment losses based on the difference between the present value of future cash flow of the financial asset and its book value, and include the impairment losses in the current profit and loss. The impairment losses incurred on these assets are not reversed in subsequent accounting periods. | |
| For available-for-sale debt instruments that have been recognized for impairment loss, if the fair value increases in the subsequent accounting period and is objectively related to events that occur after the original impairment losses have been recognized, the previously recognized impairment losses are transferred back to the current profit and loss; the impairment losses on available-for-sale equity instruments are reversed through equity when the value of the equity instruments recovers; but for impairment losses on equity instruments that are not quoted in active markets and whose fair value cannot be measured in a reliably way, or derivative financial assets that are linked to, and required to be settled by delivery of the equity instruments, are not reversed. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 12 | Recognition criteria and accrual method for allowance for doubtful accounts receivable |
| Receivables refer to non-derivative financial assets that are not quoted in active markets with fixed or determinable recovery amounts. The Company adopts allowance method for the accounting of losses arising from doubtful accounts. | |
| (1) | Recognition criteria for allowance for doubtful accounts receivable |
| On the balance sheet date, the Company checks the book value of receivables. In case that objective evidence of impairment of the receivables is found, the impairment loss is recognized and allowance for impairment is made. When one of the following conditions occurs, it indicates that receivables are impaired: | |
| (a) The debtor is in serious financial difficulties; | |
| (b) The debtor violated the terms of a contract, broke a contract or failed to perform its debt service obligations; | |
| (c) The creditor made concessions to the debtor with financial difficulties due to economic or legal considerations; | |
| (d) The debtor is likely to go bankrupt or undergo other financial restructuring; | |
| (e) Other objective evidence of impairment of receivables. | |
| (2) | Recognition criteria for doubtful accounts |
| (a) The debtor has gone bankrupt or died, and the receivables still cannot be recovered after the liquidity of bankrupt’s estate or legacy; or | |
| (b) The debtor failed to perform its debt-servicing obligations and the obvious characteristics indicate that it is impossible or unlikely to recover the receivables. | |
| Receivables confirmed to be unrecoverable are written off as dead accounts after being approved by the Board of Directors. | |
| (3) | Accrual method for allowance for doubtful accounts |
| The Company conducts separate impairment tests on receivables with significant single amount. In case that objective evidence of impairment of a receivable is found, the impairment loss is recognized based on the difference between the present value of estimated future cash flows and the book value, and allowance for doubtful accounts is made. For receivables with insignificant single amount, impairment test may be conducted individually, or classify the receivables into portfolios based on similar credit risk characteristics together with receivables without impairment after being separately tested, and determinate the impairment losses according to a certain proportion of the receivable portfolio in the balance on the balance sheet date, and made allowance for doubtful accounts. The allowance for doubtful accounts determined according to a certain proportion of the balance of the receivables portfolio can fully reflect the actual impairment losses incurred by each item, and the accrual ratio are reasonably determined based on the actual loss rate of the portfolios, taking account of the current situation. Similar credit risk characteristics are determined by the Company and its subsidiaries based on actual conditions, including but not limited to industry |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| distribution, regional distribution, overdue status and aging. If a receivable is not possible to be reasonably classified into a portfolio with similar credit risk characteristics, a separate impairment test is required. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 13 | Inventories |
| (1) | Classification of inventories |
| The Company classifies inventories into raw materials, in-process products, development costs, 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. | |
| (3) | Basis for determining the net realizable value of inventories and accrual method for inventory valuation allowance |
| Ending 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 14 | Long-term equity investments |
| Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and the Group’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 Group 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 Group 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 under non-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 under non-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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 14 | Long-term equity investment (continued) |
| (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 continue 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 investment income. | |
| 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 Group and the investee attributed to the Group according to the shareholding ratio, is offset, and the investment profit and loss are recognized on this basis. In respect of the internal transaction losses incurred by the Group and the investee, for the part recognized asset impairment losses, the corresponding unrealized losses is not offset. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 14 | Long-term equity investment (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 enterprise 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; | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| (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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 14 | Long-term equity investment (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 Group 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. |
| 15 | 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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 is used. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 16 | Fixed assets |
| (1) | Recognition criteria for fixed assets |
| Fixed assets means 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. | |
| (2) | Recognition and initial measurement of fixed assets under financing lease |
| If one of the following conditions specified in the terms of the lease agreement of an asset singed between the Company and the leasing party, it is recognized as an asset under financing lease: | |
| (a) The ownership of the leased asset is attributable to the Company upon the expiry of lease; | |
| (b) The Company has the option to purchase the asset, and the purchase price is much lower than the fair value of the asset when the option is exercised; | |
| (c) The lease term represents the majority of the service life of the leased asset; | |
| (d) The present value of the minimum lease payments on the lease start date is not significantly different from the fair value of the asset. | |
| On the date of the 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, which ever is lower, and recognizes the minimum lease payment amount as the book value of the long-term payable, the difference is recognized as unconfirmed financing costs. Unrecognized financing expenses are apportioned over the lease term by the effective interest method. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) | |||
| 16 | Fixed assets (continued) | |||
| (3) | Depreciation method for fixed assets | |||
| 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 0-3% 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) | 5-11 years | 9-20% | ||
| Mold (with benefit period more than one year) | 1-3 years | 33-100% | ||
| Office and electronic equipment | 3-5 years | 20-33% | ||
| Transportation equipment | 4-5 years | 20-25% | ||
| Other devices | 4-5 years | 20-25% | ||
| Fixed assets renovation is amortized evenly over the benefit period. | ||||
| All fixed assets are subject to depreciation, except for fixed assets that have been fully depreciated and continue to be used, and the land that is priced and recorded separately. Fixed assets are depreciated on a monthly basis. Fixed assets added are not depreciated in the current month when being added but from the following month; fixed assets reduced are still depreciated in the current month when being reduced, and no depreciation is made from the following month. Fixed assets that are not profitable for the enterprise 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. | ||||
| 17 | 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 18 | 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) | |
| 19 | Intangible assets | |
| Intangible assets are recorded at the actual cost at the time of acquisition. The service life of intangible assets are 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 period | |
| Land use rights | The length of land use rights or the Company's operating period, whichever is shorter | |
| Patents and non-patent technologies | 10 years or service life, years of benefit or effective years specified by law, whichever is shorter | |
| Software usage fee | Benefit period | |
| Other | Benefit 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 is 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. | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 20 | Long-term prepaid expenses |
| Long-term prepaid expenses refer to various expenses that the Company has paid and whose period of amortization is more than one year, such as the improvement expenses incurred in renting fixed assets by operating leases. Long-term prepaid expenses are amortized on a straight-line basis within the beneficial period of the expense items. |
| 21 | 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. | |
| 22 | 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 price, interest of the difference is accrued on time during the repurchase period, and included in financial expenses. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 23 | 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 estimate 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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 24 | 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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 25 | 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 is made to the identified related costs or expenses or total owner's equity after the vesting date. | |
| 26 | Revenue recognition |
| Revenue is recognized only when economic benefits are likely to flow in and the amount of income and associated costs can be measured in a reliable way, and the following conditions are all satisfied: | |
| (1) | Sales of goods |
| The Company has transferred the main risks and rewards of ownership of the goods to the purchaser, and no longer retains any continuing management right or effective control of the goods, which are usually linked to the ownership, and recognizes the realization of sales revenue of the goods. | |
| (2) | Sales of property development products |
| The realization of sales revenue is recognized when the sales of property is completed and acceptance of the property is qualified, the terms of delivery stipulated in the sales contract are satisfied, and the buyer has obtained the certificate of payment for the delivery of the property stipulated in the sales contract (usually the first payment of the sales contract is received and the payment arrangement of the remaining payment is confirmed). | |
| (3) | Rendering of services |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| In the case that the transaction results of service rendering can be estimated in a reliable way, the Company confirms the relevant labor revenue according to the percentage of completion method on the balance sheet date; otherwise, the revenue is recognized based on the amount of labor costs that have occurred and are expected to be compensated. | |
| (4) | Interest income |
| Accounted for according to the time and actual interest rate of the Company's monetary funds used by others. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 26 | Revenue recognition (continued) |
| (5) | User fee income |
| Accounted for according to the time and method of charging as stipulated in the relevant contract or agreement. | |
| 27 | Government subsidies |
| (1) | Category |
| Government subsidies are transfers of monetary or non-monetary assets from the government to the Group at nil consideration. According to the subsidy targets stipulated in the relevant government documents, government subsidies are classified into government subsidies related to assets and government subsidies related to income. | |
| (2) | Recognition of government subsidies |
| If a government subsidy is a monetary asset, it is measured at the amount received or receivable. If a government subsidy 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 subsidies measured at nominal amounts are recognized directly in the current profit and loss. | |
| (3) | Accounting treatment |
| Government subsidies related to assets offset the book value of the underlying assets. | |
| If the government subsidies 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 subsidies 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 subsidies related to the daily activities of the enterprise, the R&D and VAT-related subsidies are included in other income; other government subsidies offset related costs according to the nature of economic activities. Government subsidies 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 The government finance department directly appropriates the interest subsidy funds to the Company, the subsidies offset the related borrowing costs. | |
| In case that a confirmed government subsidy 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 28 | 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 29 | Leases |
| (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. | |
| 30 | Related parties |
| If one party controls, commonly controls or exerts a significant influence on the other party, and two or more parties are under the control, common control or significant influence of the other party, they constitute related parties. | |
| 31 | Discontinued operations |
| The Company recognizes a component disposed of or classified as a component that can be separately distinguished from the category held for sale and satisfied any of the following as a |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| II | Significant accounting policies and accounting estimates (continued) |
| 32 | Changes in major accounting policies and estimates |
| On May 28, 2017, the Group began to adopt the “Accounting Standards for Business Enterprises No. 42 – Non-current Assets and Disposal Groups Held for Sale and Discontinued Operations” newly published by the Ministry of Finance in 2017, and on June 12, 2017, the Company began to adopt the “Accounting Standards for Business Enterprises No. 16 – Government Subsidies” revised by the Ministry of Finance in 2017. In addition, the financial statements are prepared in accordance with the Notice on Revising and Issuing of the Format of General Corporate Financial Statements (CK (2017) No. 30, hereinafter referred to as the “Financial Accounting Document No. 30”) issued by the Ministry of Finance on December 25, 2017. | |
| Non-current assets held for sale, disposal groups and discontinued operations: | |
| The “Accounting Standards for Business Enterprises No. 42 – Non-current Assets and Disposal Groups Held for Sale and Discontinued Operations” specifies the classification and measurement of non-current assets or disposal groups held for sale, requiring that the profit and loss of both continuous and discontinued operations be presented separately in the profit statement, and that the information of non-current assets or disposal groups held for sale and discontinued operations be disclosed in the notes in detail. The standards require the adoption of future applicable law and bring no impact on the comparable annual financial statements. | |
| Government subsidies: | |
| Prior to the implementation of the “Accounting Standards for Business Enterprises No. 16 – Government Subsidies” (revised), government subsidies included in the current profit and loss are presented as non-operating income. | |
| After the implementation of the “Accounting Standards for Business Enterprises No. 16 - Government Subsidies” (revised), government subsidies related to assets offset the book value of relevant assets. Government subsidies related to income are recognized as deferred income, which are included in the current profit and loss in the period in which relevant cost or loss is recognized, or offset the relative costs. Among the government subsidies related to daily activities of the Company, the R&D-related subsidies and VAT refunds are included in other income. Government subsidies not related to daily activities of the Company are included in non-operating income and expenditure. | |
| The Group adopts the future applicable method to account for the above changes in accounting policies, and the change in accounting policies brings no impact on the comparable annual financial statements. | |
| Presentation of asset disposal income: | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Prior to the release of the Financial Accounting Document No. 30, the Group’s disposal profit and loss recognized in the sales of non-current assets (other than financial instruments, long-term equity investments and investment properties) or disposal groups (other than subsidiaries and industries) classified as held for sale or disposal groups, and the disposal profit and loss arising from disposal of fixed assets, construction in progress and intangible assets that are not classified as held for sale, are presented in the “non-operating income” or “non-operating expenses” item. After the publish of Financial Accounting Document No. 30, the disposal profit and loss arising from the sale of the above assets are presented in the “Asset Disposal Income” item by the Group. For the above-mentioned changes in the presentation items, the Group adopts the retrospective adjustment method for accounting treatment and adjusts the comparative data of the previous year. |
| 33 | Correction of previous accounting errors |
| During the Reporting Period, there is no corrections in the previous accounting errors made by the Company. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| III | Taxes |
| 1 | Value-added tax |
| According to the national tax regulations, the Company’s product sales revenue, taxable sales service income and income from sales of intangible assets or property are identified as VAT income. The income from main products is calculated at the rate of 17%, and the value-added tax is paid based on the difference after deducting the allowable deduction of input tax in the current period. | |
| According to the Notice of the Ministry of Finance and the State Taxation Administration on the Pilot of Changing Business Tax to Value-Added Tax (CS [2016] No. 36) and related regulations published by the Ministry of Finance and the State Taxation Administration, from May 1, 2016, the business incomes such as leasing services, property management services, financial services, consulting services, logistics services of the Company and its subsidiaries are subject to VAT, and business tax is applied to these business before May 1, 2016. | |
| In respect of the import goods of the Company, the amount of VAT payable is calculated based on the composing taxable price and the tax rate stipulated in the “Provisional Regulations on Value Added Tax of the People's Republic of China”, and collected by the customs. The goods directly exported by the Company are all taxed according to the provisions of value-added tax first, and then, subject to the tax refund approved by the tax authorities in charge of export tax rebate in accordance with the prescribed tax rebate rate in the national export tax rebate plan. | |
| The overseas subsidiaries of the Company pay the corresponding value-added tax according to the local tax laws. | |
| 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. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| III | Taxes (continued) |
| 6 | Corporate income tax |
| The Company calculates corporate income tax based on the taxable income in accordance with the “Enterprise Income Tax Law of the People's Republic of China”. The situation of each member of the Company varies and so do tax rates. Domestic enterprises under the Company pay corporate income tax in accordance with the relevant provisions of the “Enterprise Income Tax Law of the People's Republic of China”. All overseas subsidiaries of the Company (including subsidies in the Hong Kong Special Administrative Region of the People's Republic of China) calculate and pay taxes in accordance with the taxes and tax rates applicable according to local tax laws. | |
| 7 | Personal income tax |
| Personal 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements | |||||||||
| 1 | Monetary Capital | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| In original currency | Exchange rate | In RMB | In original currency | Exchange rate | In RMB | |||||
| Cash | 5,354 | 4,759 | ||||||||
| Cash at bank－ | 16,498,451 | 23,276,412 | ||||||||
| RMB | 10,681,617 | 1.0000 | 10,681,617 | 15,800,948 | 1.0000 | 15,800,948 | ||||
| USD | 737,021 | 6.6166 | 4,876,571 | 1,072,179 | 6.5342 | 7,005,832 | ||||
| HKD | 812,804 | 0.8431 | 685,275 | 175,953 | 0.8358 | 147,062 | ||||
| EUR | 14,791 | 7.6534 | 113,201 | 20,855 | 7.8035 | 162,742 | ||||
| RUB | 137,902 | 0.1053 | 14,521 | 106,336 | 0.1135 | 12,069 | ||||
| Other currencies | 127,266 | 147,759 | ||||||||
| Cash due from central bank | 842,936 | 3,945,427 | ||||||||
| Other monetary capital－ | 265,823 | 232,855 | ||||||||
| RMB | 263,374 | 1.0000 | 263,374 | 229,302 | 1.0000 | 229,302 | ||||
| USD | 370 | 6.6166 | 2,449 | 544 | 6.5342 | 3,553 | ||||
| Total | 17,612,564 | 27,459,453 | ||||||||
| (1) | Other Monetary Capital by Nature | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Security deposits | 263,037 | 219,320 | ||||||||
| L/C security deposits | 2,569 | 3,280 | ||||||||
| Customs security deposits | 217 | 10,255 | ||||||||
| 265,823 | 232,855 | |||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||
| 1 | Monetary Capital (Continued) | |||||
| (2) | Monetary Capital with Restricted Right of Use： | |||||
| 30 June 2018 | 31 December 2017 | |||||
| TCL Finance’s required reserve with central bank | 842,936 | 3,945,429 | ||||
| Other monetary capital | 265,823 | 232,855 | ||||
| 1,108,759 | 4,178,284 | |||||
| As at 30 June 2018, among the Company’s cash at bank, RMB842,936,000 (31 December 2017: RMB3,945,429,000) was required reserve deposited by subsidiary TCL Finance Co., Ltd. in the central bank. | ||||||
| As at 30 June 2018, the Company’s monetary capital abroad equaled RMB4,124,824,000 (31 December 2017: RMB2,429,037,000), which were all owned by the Company’s overseas subsidiaries. | ||||||
| 2 | Financial Assets at Fair Value through Profit or Loss | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Derivative financial assets | 940,983 | 687,432 | ||||
| Wealth management instruments at fair value | 769,332 | 1,543,844 | ||||
| 1,710,315 | 2,231,276 | |||||
| The fair value of the Company’s derivative financial assets is their real-time quotes on the forex market, and the change in fair value is the difference between the contractual price and the real-time quote on the forex market based on the forward exchange rate on the balance sheet date. | ||||||
| There are no significant restrictions on the Company’s investment in and realization of financial assets at fair value through profit or loss. | ||||||
| 3 | Notes Receivable | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Bank acceptance notes | 3,492,884 | 4,081,181 | ||||
| Commercial acceptance notes | 1,895,190 | 2,089,168 | ||||
| Total | 5,388,074 | 6,170,349 | ||||
| As at 30 June 2018, there were no notes receivable in pledge, commercial acceptance notes or bank acceptance notes that had been discounted but were still outstanding, or notes receivable from any shareholder with a 5% or greater voting stock. The notes receivable from related parties amounted to RMB2,319,000 (31 December 2017: RMB607,000). | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 4 | Accounts Receivable | |||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||
| Accounts receivable | 15,644,643 | 15,131,490 | ||||||||||||
| Less: Allowance for doubtful accounts | 452,002 | 384,267 | ||||||||||||
| 15,192,641 | 14,747,223 | |||||||||||||
| (1) | Aging Analysis of Accounts Receivable： | |||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||
| Amount | As % of total accounts receivable | Allowance for doubtful accounts | Allowance ratio | Amount | As % of total accounts receivable | Allowance for doubtful accounts | Allowance ratio | |||||||
| Within 1 year | 15,002,890 | 95.90% | 50,615 | 0.34% | 14,537,233 | 96.07% | 46,177 | 0.32% | ||||||
| 1-2 years | 465,568 | 2.98% | 235,611 | 50.61% | 426,154 | 2.82% | 178,727 | 41.94% | ||||||
| 2-3 years | 71,551 | 0.46% | 64,975 | 90.81% | 65,432 | 0.43% | 59,214 | 90.50% | ||||||
| Over 3 years | 104,634 | 0.66% | 100,801 | 96.34% | 102,671 | 0.68% | 100,149 | 97.54% | ||||||
| 15,644,643 | 100.00% | 452,002 | 2.89% | 15,131,490 | 100.00% | 384,267 | 2.54% | |||||||
| (2) | Accounts Receivable by Category： | |||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||
| Amount | As % of total accounts receivable | Allowance for doubtful accounts | Allowance ratio | Amount | As % of total accounts receivable | Allowance for doubtful accounts | Allowance ratio | |||||||
| Accounts receivable with amounts that are individually significant | 12,340,863 | 78.88% | 295,835 | 2.40% | 12,388,084 | 81.87% | 294,573 | 2.38% | ||||||
| Accounts receivable with amounts that are not individually significant but carry a major risk on the credit risk grouping basis | - | - | - | - | - | - | - | - | ||||||
| Other insignificant accounts receivable | 3,303,780 | 21.12% | 156,167 | 4.73% | 2,743,406 | 18.13% | 89,694 | 3.27% | ||||||
| 15,644,643 | 100.00% | 452,002 | 2.89% | 15,131,490 | 100.00% | 384,267 | 2.54% | |||||||
| An account receivable that is individually significant refers to an account receivable with an individual amount | ||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 4 | Accounts Receivable (Continued) | |||
| (3) | Allowance for Doubtful Accounts Receivable: | |||
| H1 2018 | Year 2017 | |||
| Beginning amount | 384,267 | 314,436 | ||
| Newly consolidated subsidiaries | - | - | ||
| Established in the period | 124,916 | 180,199 | ||
| Reversed in the period | (29,439) | (81,988) | ||
| Written off in the period | (14,527) | (16,002) | ||
| Newly deconsolidated subsidiaries | (10,268) | (3,184) | ||
| Exchange adjustments | (2,947) | (9,194) | ||
| Ending amount | 452,002 | 384,267 | ||
| (4) | As at 30 June 2018, accounts receivable from related parties amounted to RMB841,077,000 (31 December 2017: RMB748,024,000), accounting for 5.38% of the total accounts receivable (31 December 2017: 4.94%). For further information, see Note VII. And there were no accounts receivable from any shareholder with a 5% or greater voting stock. | |||
| (5) | Top Five Accounts Receivable on 30 June 2018： | |||
| 30 June 2018 | 31 December 2017 | |||
| Top five accounts receivable combined | 3,024,695 | 2,102,125 | ||
| As % of total accounts receivable | 19.33% | 13.89% | ||
| 5 | Factored Accounts Receivable/Factorage Financings | |||
| As at 30 June 2018, RMB12,943,000 of accounts receivable (31 December 2017: RMB46,449,000) were factored in the current period according to the agreements signed between the Company’s subsidiaries and banks. According to the agreements, because the Company’s subsidiaries retained partial risk in connection with the factored accounts receivable (the risk of customers’ non-payment or untimely payment), the Company reflected the factored accounts receivable and the bank borrowings obtained therefrom in the balance sheet. | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 6 | Prepayments | |||
| (1) | Analysis of Prepayments： | |||
| 30 June 2018 | 31 December 2017 | |||
| Within 1 year | 1,093,650 | 910,215 | ||
| (2) | Top Five Prepayments on 30 June 2018： | |||
| 30 June 2018 | 31 December 2017 | |||
| Top five prepayments combined | 673,257 | 442,136 | ||
| As % of total prepayments | 61.56% | 48.57% | ||
| (3) | As at 30 June 2018, prepayments to related parties amounted to RMB74,151,000 (31 December 2017: RMB29,421,000), accounting for 6.78% of the total prepayments (31 December 2017: 3.23%). And there were no prepayments to any shareholder with a 5% or greater voting stock. | |||
| 7 | Interest Receivable | |||
| 30 June 2018 | 31 December 2017 | |||
| Interest on bank deposits | 65,159 | 53,622 | ||
| As at 30 June 2018, interest receivable related parties amounted to RMB3,719,000 (31 December 2017: RMB2,488,000), accounting for 5.71% of the total interest receivable (31 December 2017: 4.64%). And there was no interest receivable from any shareholder with a 5% or greater voting stock. | ||||
| 8 | Dividends Receivable | |||
| 30 June 2018 | 31 December 2017 | |||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 4,417 | - | ||
| DK Electronic Materials, Inc. | 1,996 | - | ||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 1,404 | 11,015 | ||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 1,163 | - | ||
| Shenzhen Refond Optoelectronics Co., Ltd. | 385 | - | ||
| SEMP TCL Industria E Comercio De Eletroeletronicos S.A. | 89 | 88 | ||
| 9,454 | 11,103 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 9 | Other Receivables | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Other receivables | 4,742,214 | 4,290,709 | |||
| Less: Allowance for doubtful other receivables | 448,894 | 437,118 | |||
| 4,293,320 | 3,853,591 | ||||
| (1) | Aging Analysis of Other Receivables： | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Amount | As % of total other receivables | Allowance for doubtful accounts | Allowance ratio | Amount | As % of total other receivables | Allowance for doubtful accounts | Allowance ratio | |||
| Within 1 year | 4,051,003 | 85.42% | 22,524 | 0.56% | 3,557,913 | 82.92% | 21,429 | 0.60% | ||
| 1-2 years | 294,417 | 6.21% | 106,339 | 36.12% | 238,773 | 5.56% | 96,045 | 40.22% | ||
| 2-3 years | 185,410 | 3.91% | 132,893 | 71.68% | 329,263 | 7.67% | 193,656 | 58.81% | ||
| Over 3 years | 211,384 | 4.46% | 187,138 | 88.53% | 164,760 | 3.85% | 125,988 | 76.47% | ||
| 4,742,214 | 100.00% | 448,894 | 9.47% | 4,290,709 | 100.00% | 437,118 | 10.19% | |||
| (2) | Other Receivables by Category： | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Amount | As % of total other receivables | Allowance for doubtful accounts | Allowance ratio | Amount | As % of total other receivables | Allowance for doubtful accounts | Allowance ratio | |||
| Other receivables with amounts that are individually significant | 3,348,755 | 70.62% | 401,302 | 11.98% | 3,378,755 | 78.75% | 404,322 | 11.97% | ||
| Other receivables with amounts that are not individually significant but carry a major risk on the credit risk | - | - | - | - | - | - | - | - | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| grouping basis | ||||||||||
| Other insignificant other receivables | 1,393,459 | 29.38% | 47,592 | 3.42% | 911,954 | 21.25% | 32,796 | 3.60% | ||
| 4,742,214 | 100.00% | 448,894 | 9.47% | 4,290,709 | 100.00% | 437,118 | 10.19% | |||
| The balance of the Company’s other receivables primarily consisted of export tax rebates receivable, government subsidies receivable, security deposits in external entities, etc. | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 9 | Other Receivables (Continued) | |||
| (3) | Allowance for Doubtful Other Receivables： | |||
| H1 2018 | Year 2017 | |||
| Beginning amount | 437,118 | 369,119 | ||
| Established in the period | 15,589 | 86,473 | ||
| Reversed in the period | (1,115) | (763) | ||
| Written off in the period | (1,715) | (1,818) | ||
| Newly deconsolidated subsidiaries | (572) | (14,439) | ||
| Exchange adjustments | (411) | (1,454) | ||
| Ending amount | 448,894 | 437,118 | ||
| (4) | As at 30 June 2018, other receivables from related parties amounted to RMB727,288,000 (31 December 2017: RMB350,617,000), accounting for 15.34% of the total other receivables (31 December 2017: 8.17%). For further information, see Note VII. And there were no other receivables from any shareholder with a 5% or greater voting stock. | |||
| (5) | Top Five Other Receivables on 30 June 2018： | |||
| 30 June 2018 | 31 December 2017 | |||
| Top five other receivables combined | 1,409,351 | 1,546,652 | ||
| As % of total other receivables | 29.72% | 36.05% | ||
| (6) | As at 30 June 2018, there were no transfers of other receivables not meeting the derecognition conditions, securitization on other receivables, or financial instruments that backed securities and did not meet the derecognition conditions. | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 10 | Inventories | |||||||||||||||||||
| (1) | Inventories by Category： | |||||||||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||||||||
| Gross amount | Valuation allowance | Carrying amount | Gross amount | Valuation allowance | Carrying amount | |||||||||||||||
| Raw materials | 2,788,679 | 372,595 | 2,416,084 | 2,995,068 | 403,182 | 2,591,886 | ||||||||||||||
| Unfinished goods | 920,394 | 177,815 | 742,579 | 939,613 | 48,590 | 891,023 | ||||||||||||||
| Finished goods | 8,567,532 | 242,282 | 8,325,250 | 9,254,989 | 254,119 | 9,000,870 | ||||||||||||||
| Revolving materials | 261,493 | 818 | 260,675 | 320,350 | 818 | 319,532 | ||||||||||||||
| Moulds | 128,884 | 116 | 128,768 | 120,395 | 116 | 120,279 | ||||||||||||||
| Real estate development costs | 28,673 | - | 28,673 | 22,713 | - | 22,713 | ||||||||||||||
| 12,695,655 | 793,626 | 11,902,029 | 13,653,128 | 706,825 | 12,946,303 | |||||||||||||||
| As at 30 June 2018, there were no inventories used as security for debt. | ||||||||||||||||||||
| (2) | Inventory Valuation Allowances： | |||||||||||||||||||
| 1 January 2018 | Established in the period | Reversed in the period | Written off in the period | Newly deconsolidated subsidiaries | Exchange adjustments | 30 June 2018 | ||||||||||||||
| Raw materials | 403,182 | 162,535 | (42,116) | (139,953) | (10,913) | (140) | 372,595 | |||||||||||||
| Unfinished goods | 48,590 | 143,040 | (2,719) | (10,816) | (280) | - | 177,815 | |||||||||||||
| Finished goods | 254,119 | 261,398 | (52,708) | (195,502) | (25,481) | 456 | 242,282 | |||||||||||||
| Revolving materials | 818 | - | - | - | - | - | 818 | |||||||||||||
| Moulds | 116 | - | - | - | - | - | 116 | |||||||||||||
| 706,825 | 566,973 | (97,543) | (346,271) | (36,674) | 316 | 793,626 | ||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||
| 11 | Other Current Assets | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Wealth management instruments (note 1) | 13,659,938 | 4,710,164 | ||||
| VAT to be deducted or approved, etc. | 3,083,570 | 2,075,997 | ||||
| Assets and creditor’s rights purchased from non-financial institutions (note 2) | 1,582,570 | 3,216,620 | ||||
| Currency swaps | 1,323,320 | 1,633,550 | ||||
| Other | 74,791 | 29,992 | ||||
| 19,724,189 | 11,666,323 | |||||
| Note 1: In order for better utilization, the Company purchased low-risk wealth management products with its own idle funds. For further information, see the Announcement of TCL Corporation on the Line Adjustment for Wealth Management Product Investment with Self-Owned Idle Funds disclosed by the Company on the designated information disclosure media dated 28 March 2017. | ||||||
| Note 2: Mostly notes discounting, held-to-maturity investments due within 1 year such as personal short-term loans. | ||||||
| 12 | Loans and Advances to Customers | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Loans and advances to customers (note 1) | 848,778 | 555,133 | ||||
| Note 1: Loans and advances to customers were loans granted to their customers by subsidiaries Guangzhou TCL Internet Microcredit Co., Ltd. and Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | ||||||
| 13 | Available-for-Sale Financial Assets | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Available-for-sale equity instruments——at fair value (1) | 1,004,975 | 1,159,166 | ||||
| Available-for-sale equity instruments——at cost (2) | 2,214,715 | 2,042,889 | ||||
| 3,219,690 | 3,202,055 | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 13 | Available-for-Sale Financial Assets (Continued) | |||||||
| (1) | Available-for-Sale Equity Instruments——at Fair Value | |||||||
| Cost | Change in fair value | Impairment allowance | Ending amount | |||||
| Tencent Holdings Limited 0700 | 85,481 | (2,478) | - | 83,003 | ||||
| New China Life Insurance Company Ltd. 1336 | 29,448 | (10,358) | - | 19,090 | ||||
| GAC Group 2238 | 11,144 | (7,033) | - | 4,111 | ||||
| China Construction Bank 0939 | 17,835 | (2,187) | - | 15,648 | ||||
| CSPC 1093 | 4,105 | 1,889 | - | 5,994 | ||||
| China Molybdenum Co., Ltd. 3993 | 15,307 | (2,485) | - | 12,822 | ||||
| AAC Technologies 2018 | 30,992 | (7,794) | - | 23,198 | ||||
| China Education Group 0839 | 8,247 | (2,249) | - | 5,998 | ||||
| Sino Biopharmaceutical Limited 1177 | 57,550 | 3,356 | - | 60,906 | ||||
| HKEX 0388 | 99,261 | (11,713) | - | 87,548 | ||||
| NASDAQ-Gilead Sciences Inc. (GILD.NASD) | 31,479 | (5,232) | - | 26,247 | ||||
| Ping An Insurance (Group) Company of China, Ltd. 2318 | 69,258 | (10,212) | - | 59,046 | ||||
| Health and Happiness (H&H) International Holdings Limited 1112 | 20,167 | (1,170) | - | 18,997 | ||||
| Geely Automobile Holdings Limited 0175 | 27,806 | (2,070) | - | 25,736 | ||||
| Yuhua Education 6169 | 14,361 | (718) | - | 13,643 | ||||
| Alibaba Group Holding (NYSE-BABA) | 68,857 | (7,479) | - | 61,378 | ||||
| Thunder Software Technology CO LTD | 3,438 | 58,437 | - | 61,875 | ||||
| Beijing D.Phone Trade&Commerce Stock Co., Ltd. | 18,692 | (597) | 9,291 | 8,804 | ||||
| Shenzhen Wintone Culture Co., Ltd. | 4,800 | - | - | 4,800 | ||||
| Shenzhen Refond Optoelectronics Co., Ltd. | 40,000 | 13,962 | - | 53,962 | ||||
| SKYS | 18,021 | (4,325) | 11,422 | 2,274 | ||||
| Restricted stock of Petro-king Oilfield Technology Ltd. (HK.2178) | 115,259 | 2,319 | 74,803 | 42,775 | ||||
| Focaltech Inc.(3545.TW) | 5,898 | 17,324 | - | 23,222 | ||||
| O Luxe Holdings Limited | 199,456 | 84,442 | - | 283,898 | ||||
| 996,862 | 103,629 | 95,516 | 1,004,975 | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||
| 13 | Available-for-Sale Financial Assets (Continued) | ||||||
| (2) | Available-for-Sale Equity Instruments——at Cost | ||||||
| The Company’s interest | Actual investment | ||||||
| Investee | Direct | Indirect | 30 June 2018 | 31 December 2017 | |||
| Samsung Suzhou LCD Co., Ltd. | 10.00% | - | 625,949 | 625,949 | |||
| Boluo County Rural Commercial Bank | 6.05% | - | 203,669 | 203,669 | |||
| Guokai Siyuan (Beijing) Investment Fund Co., Ltd. | 3.95% | - | 200,000 | 200,000 | |||
| Mango International Group Limited | - | 2.31% | 189,199 | 32,493 | |||
| China Broadband Capital Partners III LP. | - | 8.90% | 170,425 | 145,391 | |||
| Changjiang Chendao (Hubei) New Energy Industry Investment Partnership (Limited Partnership) | - | 4.76% | 150,000 | 150,000 | |||
| Sierra Ventures X ,LP | - | 15.13% | 118,000 | 109,763 | |||
| Kateeva,lnc | - | 1.77% | 52,273 | 51,820 | |||
| Beijing Shangyun Chuangzhan Investment Center (Limited Partnership) | 10.00% | - | 50,000 | 50,000 | |||
| Kunshan Wantong Kaiyuan Equity Investment Center (Limited Partnership) | 5.00% | - | 50,000 | 50,000 | |||
| Sierra Ventures XI ,LP | - | 8.78% | 41,891 | 36,607 | |||
| Sensetime Group lnc | - | 0.34% | 33,197 | 33,197 | |||
| Cannan Partners | - | 11.63% | 33,120 | 30,539 | |||
| Huzhou Zhongze Jiameng Equity Investment Partnership (Limited Partnership) | - | 8.33% | 28,833 | 28,833 | |||
| DK Electronic Materials, Inc. | - | 13.31% | 24,303 | 24,303 | |||
| Rechi Precision Mechanism (Huizhou) Co., Ltd. | - | 7.14% | 21,753 | 21,753 | |||
| Amiti Fund II LP | - | 12.68% | 20,783 | 20,046 | |||
| Palm Venture Group | - | 30.00% | 19,849 | 19,919 | |||
| Najing Technology Co., Ltd. | - | 2.65% | 18,825 | 18,825 | |||
| Shanghai Guanmu Investment Management Partnership (Limited Partnership) | - | 17.20% | 17,500 | 17,500 | |||
| Innoviz Technologies Ltd | - | 0.70% | 13,359 | 13,359 | |||
| Wonder Workshop.Inc | - | 1.90% | 13,279 | 13,279 | |||
| Hailo Technologies Ltd | - | 6.50% | 12,659 | - | |||
| Guangdong Poly OptoElectronics Co., Ltd. | - | 8.00% | 12,000 | 12,000 | |||
| Guiyang Dongshi Cloud Technology Co., Ltd. | - | 7.46% | 11,000 | 11,000 | |||
| Beijing Youpinyuedong Trade Co., Ltd. | - | 2.00% | 10,000 | 10,000 | |||
| Chipone Technology (Beijing) Co., Ltd. | - | 10.00% | 10,000 | - | |||
| Shanlian Information Technology Engineering Center Co., Ltd. | 19.23% | - | 10,000 | 10,000 | |||
| Zhongdao Optoelectronic Equipment Co., Ltd. | - | 2.58% | 9,738 | 9,738 | |||
| Moblabs,INC | - | 2.43% | 6,616 | - | |||
| Beijing Taimei Huigu Culture Media Co., Ltd. | - | 10.00% | 6,000 | 6,000 | |||
| Shenzhen Zhongcailian Technology Co., Ltd. | - | 11.50% | 6,000 | 1,153 | |||
| National Source Coding Center (Beijing) | 7.52% | - | 5,000 | 5,000 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 13 | Available-for-Sale Financial Assets (Continued) | |||||||
| (2) | Available-for-Sale Equity Instruments——at Cost | |||||||
| The Company’s interest | Actual investment | |||||||
| Investee | Direct | Indirect | 30 June 2018 | 31 December 2017 | ||||
| Suzhou Enhanry Advanced Material Co., Ltd. | - | 0.34% | 4,800 | - | ||||
| Foshan Chuangshanghui E-Commerce Co., Ltd. | - | 6.76% | 3,654 | 3,654 | ||||
| Shanghai Digital TV National Engineering Research Center Co., Ltd. | - | 4.26% | 2,400 | 2,400 | ||||
| Huizhou Kaifengda Intelligent Manufacturing Technology Development Co., Ltd. | - | 10.00% | 2,000 | 2,000 | ||||
| West Eagle Vent | - | 33.33% | 1,979 | 1,962 | ||||
| Guizhou UbiLink Information Technology Co., Ltd. | - | 3.46% | 1,500 | 1,500 | ||||
| Shenzhen Digital TV National Engineering Research Center Co., Ltd. | - | 6.00% | 1,153 | 6,000 | ||||
| Beijing Shixunsuda Information Technology Co., Ltd. | - | 7.50% | 1,000 | - | ||||
| Henan Melody Huana Electronics Co., Ltd. | - | 5.00% | 500 | 573 | ||||
| Screlec S.A. | - | 4.26% | 234 | 234 | ||||
| Jiangxi Guangke E-Commerce Co., Ltd. | - | 10.00% | 150 | 150 | ||||
| Huizhou TCL Magnet Products Co., Ltd. | 5.00% | - | 76 | 76 | ||||
| Shenzhen Adot Network Co., Ltd. | - | 1.66% | 33 | 33 | ||||
| Hangzhou UATA Technology Co., Ltd. | - | 1.60% | 16 | 316 | ||||
| Beijing Ruichuang Investment Management Center (Limited Partnership) | - | 10.00% | - | 10,000 | ||||
| Aurora Mobile Ltd | - | 2.54% | - | 51,855 | ||||
| 2,214,715 | 2,042,889 | |||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 14 | Long-Term Equity Investments | |||||||
| 30 June 2018 | 31 December 2017 | |||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||
| Unconsolidated subsidiaries (1) | 20,373 | 786 | 19,587 | 20,373 | 20,373 | - | ||
| Long-term equity investments measured at equity method | 16,296,900 | 138,796 | 16,158,104 | 15,471,223 | 119,209 | 15,352,014 | ||
| Including: Associates (2) | 15,623,804 | 138,796 | 15,521,357 | 14,806,411 | 102,447 | 14,703,964 | ||
| Joint ventures (3) | 673,096 | - | 656,334 | 664,812 | 16,762 | 648,050 | ||
| 16,317,273 | 139,582 | 16,177,691 | 15,491,596 | 139,582 | 15,352,014 | |||
| As at 30 June 2018, the Company established impairment allowances for its long-term investments in insolvent investees. Other than that, there were no significant restrictions on sale of the long-term equity investments or collection of the investment income. | ||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 14 | Long-Term Equity Investments (Continued) | |||||||||||||
| (1) | Unconsolidated Subsidiaries | |||||||||||||
| Profit/loss adjustment | ||||||||||||||
| Investee | The Company’s percentage in investee’s registered capital | Initial investment amount | Change in profit/loss in current period | Accumulated change in profit/loss | Impairment allowance | 30 June 2018 | ||||||||
| Increase in current period | Accumulated increase | |||||||||||||
| a | b | c | d=a+b+c | |||||||||||
| Jinke Holding Group Co., Ltd. | 75.50% | 20,373 | - | - | - | - | 20,373 | |||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 14 | Long-Term Equity Investments (Continued) | ||||||||||||||||||||
| (2) | Associates | ||||||||||||||||||||
| Change in current period | |||||||||||||||||||||
| Investee | Beginning amount | Increase/decrease in investment in current period | Share of profit/loss using equity method | Adjustments of other comprehensive income | Other change in equity | Cash dividends or profits declared | Impairment allowance | Other increases/decreases | 30 June 2018 | ||||||||||||
| Bank of Shanghai Co., Ltd. | 7,630,711 | - | 467,562 | 3,171 | - | - | - | - | 8,101,444 | ||||||||||||
| Hubei Consumer Finance Company | 120,343 | - | 5,836 | - | - | - | - | - | 126,179 | ||||||||||||
| Huan Tech Co., Ltd. | 158,042 | - | 561 | - | - | - | - | - | 158,603 | ||||||||||||
| LG Innotek Huizhou Co., Ltd. | 81,554 | - | 3,402 | - | - | (10,135) | - | 2,037 | 76,858 | ||||||||||||
| Huizhou Shangdian Law Firm Waterway Construction Investment Co., Ltd. | 48,081 | - | (223) | - | - | - | - | (47,858) | - | ||||||||||||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | - | 16,103 | 2,068 | - | - | - | - | - | 18,171 | ||||||||||||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 637,000 | - | 6,936 | - | - | - | - | 25,751 | 669,687 | ||||||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 53,012 | - | 4,393 | - | - | - | - | - | 57,405 | ||||||||||||
| Ningbo Meishan Bonded Port Renxing Culture Investment Center (Limited Partnership) | 8,001 | (3,091) | - | - | - | - | - | - | 4,910 | ||||||||||||
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | 165,465 | - | 8,524 | - | - | (3,333) | - | - | 170,656 | ||||||||||||
| Wuhan Shangde Plastics Technology Co., Ltd. | 5,683 | - | 464 | - | - | - | - | - | 6,147 | ||||||||||||
| Gaoshengda Holdings (Huizhou) Co., Ltd. | 49,733 | - | 7,713 | - | - | - | - | - | 57,446 | ||||||||||||
| Beijing WeMed Medical Equipment Co., Ltd. | 39,435 | - | (2,647) | - | - | - | - | - | 36,788 | ||||||||||||
| Million China International Holdings Limited | 19,410 | - | (12) | - | - | - | - | 5 | 19,403 | ||||||||||||
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | 1,200 | - | 1,595 | - | - | - | - | - | 2,795 | ||||||||||||
| Amlogic (Shanghai) Limited | 146,739 | - | 10,794 | - | - | - | - | 2,853 | 160,386 | ||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 14 | Long-Term Equity Investments (Continued) | |||||||||||||||||||
| (2) | Associates (Continued) | |||||||||||||||||||
| Change in current period | ||||||||||||||||||||
| Investee | Beginning amount | Increase/decrease in investment in current period | Share of profit/loss using equity method | Adjustments of other comprehensive income | Other change in equity | Cash dividends or profits declared | Impairment allowance | Other increases/decreases | 30 June 2018 | |||||||||||
| SEMP TCL Industria E Comercio De Eletroeletronicos S.A. | 229,558 | - | (5,971) | - | - | - | - | - | 223,587 | |||||||||||
| Kai Os Technologies Inc | 2,023 | - | - | - | - | - | - | - | 2,023 | |||||||||||
| Naturedao Information Science and Technology, Ltd. | 2,628 | - | 4 | - | - | - | - | (336) | 2,296 | |||||||||||
| T2Mobile Limited | 20,258 | - | 1,149 | - | - | - | - | (1,107) | 20,300 | |||||||||||
| Harvey Holdings Limited | 19,689 | - | (1,662) | - | - | - | - | 1,282 | 19,309 | |||||||||||
| Petro AP (Hong Kong) Company Limited | - | - | (4,597) | - | - | - | - | 4,597 | - | |||||||||||
| Petro AP S.A. | - | - | (174) | - | - | - | - | 174 | - | |||||||||||
| Guangdong Regency Optics-Electron Corp. | 21,082 | - | 850 | - | - | - | - | - | 21,932 | |||||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,000 | - | (541) | - | - | - | - | - | 5,459 | |||||||||||
| Shenzhen Thunderbird Network Technology Co. | 247,685 | 30,000 | 11,771 | - | - | - | - | - | 289,456 | |||||||||||
| Jiangxi Broadcasting TV Network E-Commerce Co., Ltd. | 1,470 | - | (25) | - | - | - | - | (4) | 1,441 | |||||||||||
| Yizheng Zeyu Electric Light Co., Ltd. | 2,537 | - | 5 | - | - | - | - | - | 2,542 | |||||||||||
| Urumqi TCL Equity Investment Management Co., Ltd. | 1,278 | - | (105) | - | - | - | - | - | 1,173 | |||||||||||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) | 53,651 | - | 516 | (316) | - | - | - | (224) | 53,627 | |||||||||||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) | 62,471 | (12,746) | 15,889 | (21,073) | - | (15,013) | - | 11 | 29,539 | |||||||||||
| Beijing A Dynamic Investment Consulting Co., Ltd. | 517 | - | 125 | - | - | - | - | - | 642 | |||||||||||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 288 | - | (191) | - | - | - | - | - | 97 | |||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 30,398 | - | (367) | - | - | - | - | - | 30,031 | ||||||||||
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | 35,573 | - | 1,160 | (2,620) | - | - | - | - | 34,113 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||||
| 14 | Long-Term Equity Investments (Continued) | |||||||||||||||||||||
| (2) | Associates (Continued) | |||||||||||||||||||||
| Change in current period | ||||||||||||||||||||||
| Investee | Beginning amount | Increase/decrease in investment in current period | Share of profit/loss using equity method | Adjustments of other comprehensive income | Other change in equity | Cash dividends or profits declared | Impairment allowance | Other increases/decreases | 30 June 2018 | |||||||||||||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | 335 | - | (1) | - | - | - | - | - | 334 | |||||||||||||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | 781 | - | (15) | - | - | - | - | - | 766 | |||||||||||||
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | 43,022 | - | (7) | 9 | - | - | - | - | 43,024 | |||||||||||||
| Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) | 27,648 | - | 1 | - | - | - | - | - | 27,649 | |||||||||||||
| Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) | 16,810 | - | 6 | - | - | - | - | - | 16,816 | |||||||||||||
| Xizang Rongxin Venture Investment Management Co., Ltd. | 4,871 | - | (2) | - | - | - | - | - | 4,869 | |||||||||||||
| Xizang Rongxing Venture Investment Partnership (Limited Partnership) | 961 | - | - | - | - | - | - | - | 961 | |||||||||||||
| Wuxi TCL Aisikai Semiconductor Industry Investment Fund Partnership (Limited Partnership) | 64,926 | 10,292 | (558) | - | - | - | - | - | 74,660 | |||||||||||||
| Urumqi Qixinda Equity Investment Management Co., Ltd. | 734 | - | (2) | - | - | - | - | - | 732 | |||||||||||||
| Xizang Dongwei Investment Management Center (Limited Partnership) | 238 | - | (5) | - | - | - | - | - | 233 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 4,257 | - | (100) | - | - | - | - | - | 4,157 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 1,051,495 | - | 7,249 | - | - | - | - | - | 1,058,744 | |||||||||||||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 77,478 | 45,000 | (2,954) | - | - | - | - | - | 119,524 | |||||||||||||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 783,751 | - | (10,327) | 15,737 | - | - | - | - | 789,161 | |||||||||||||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 5,077 | - | (203) | - | - | - | - | - | 4,874 | |||||||||||||
| Fantasia Holdings Group Co., Limited | 2,125,346 | 20,651 | - | - | (65,972) | - | - | 2,080,025 | ||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 14 | Long-Term Equity Investments (Continued) | ||||||||||||||||||
| (2) | Associates (Continued) | ||||||||||||||||||
| Change in current period | |||||||||||||||||||
| Investee | Beginning amount | Increase/decrease in investment in current period | Share of profit/loss using equity method | Adjustments of other comprehensive income | Other change in equity | Cash dividends or profits declared | Impairment allowance | Other increases/decreases | 30 June 2018 | ||||||||||
| Active Industries International Limited | 13,943 | - | 726 | - | - | - | - | - | 14,669 | ||||||||||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | 271,985 | - | 67,460 | - | - | - | - | - | 339,445 | ||||||||||
| Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) | 2,878 | - | (11) | - | - | - | - | - | 2,867 | ||||||||||
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | 640 | - | (162) | - | - | - | - | - | 478 | ||||||||||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 16,839 | 170,874 | (3,573) | - | - | - | - | - | 184,140 | ||||||||||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 12,921 | - | 1,229 | - | - | (1,163) | - | - | 12,987 | ||||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 209,981 | - | - | - | - | - | - | - | 209,981 | ||||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | - | 70,000 | - | - | - | - | - | - | 70,000 | ||||||||||
| Huizhou TCL Resource Investment Co., Ltd. | 65,532 | - | (9,716) | - | - | - | - | - | 55,816 | ||||||||||
| Total | 14,703,964 | 326,432 | 604,488 | (5,092) | - | (95,616) | - | (12,819) | 15,521,357 | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 14 | Long-Term Equity Investments (Continued) | ||||||||||||||||||
| (3) | Joint Ventures | ||||||||||||||||||
| Change in current period | |||||||||||||||||||
| Investee | Beginning amount | Increase/decrease in investment in current period | Share of profit/loss using equity method | Adjustments of other comprehensive income | Other change in equity | Cash dividends or profits declared | Impairment allowance | Other increases/decreases | 30 June 2018 | ||||||||||
| TCL Sun, Inc. | 11,945 | - | 519 | - | - | - | - | (1,035) | 11,429 | ||||||||||
| TV University Online Distance Education Technology Co., Ltd. | 135,341 | - | 12,873 | - | - | - | - | (1,420) | 146,794 | ||||||||||
| CJ Speedex Logistics Co., Ltd. | 468,286 | - | (2,258) | - | - | - | - | - | 466,028 | ||||||||||
| Shanxi TCL Huirong Venture Investment Co., Ltd. | 5,774 | - | 350 | - | - | - | - | - | 6,124 | ||||||||||
| Shanxi TCL Huirong Venture Investment Management Co., Ltd. | 503 | - | 1 | - | - | - | - | - | 504 | ||||||||||
| TCL Huizhou City, Kai Enterprise Management Limited | 1,147 | - | 29 | - | - | - | - | - | 1,176 | ||||||||||
| TCL-IMAX Entertainment Co., Limited | (3) | - | 3 | - | - | - | - | - | - | ||||||||||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 2,467 | - | (72) | - | - | - | - | - | 2,395 | ||||||||||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | 22,590 | - | (706) | - | - | - | - | - | 21,884 | ||||||||||
| 648,050 | - | 10,739 | - | - | - | - | (2,455) | 656,334 | |||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 14 | Long-Term Equity Investments (Continued) | |||||||||
| (4) | Impairment Allowances for Long-Term Equity Investments | |||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | Reason for allowance | ||||||
| Pride Telecom Limited | 1,624 | - | - | 1,624 | Note 1 | |||||
| Naturedao Information Science and Technology, Ltd. | 2,221 | - | - | 2,221 | Note 2 | |||||
| Jinke Holding Group Co., Ltd. | 20,373 | - | - | 20,373 | Note 3 | |||||
| China United Magnesium Co.,Ltd. | 97,387 | - | - | 97,387 | Note 1 | |||||
| Wealthy Way Group Limited | 1,215 | - | - | 1,215 | Note 2 | |||||
| TCL-IMAX Entertainment Co., Limited | 16,762 | - | - | 16,762 | Note 2 | |||||
| 139,582 | - | - | 139,582 | |||||||
| Note1 | Impairment allowances were established for the long-term investments in these investees at the recoverable amounts because continuous operating loss occurred to these investees with poor management. | |||||||||
| Note2 | Impairment allowances were established for the long-term investments in Naturedao Information Science and Technology, Ltd., Wealthy Way Group Limited and TCL-IMAX Entertainment Co., Limited at the recoverable amounts because continuous operating loss occurred to these investees with poor management. | |||||||||
| Note3 | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||
| 15 | Investment Property | ||||||
| Buildings | Land use rights | Total | |||||
| Gross amount: | |||||||
| 1 January 2018 | 2,056,279 | 25,805 | 2,082,084 | ||||
| Increases: | |||||||
| Increase in current period | 155,056 | - | 155,056 | ||||
| Reclassified from fixed assets and intangible assets | 274,519 | 716,592 | 991,111 | ||||
| Reclassified from construction in progress | 490,728 | - | 490,728 | ||||
| Decreases: | |||||||
| Decrease in current period | (220,413) | (9,947) | (230,360) | ||||
| Newly deconsolidated subsidiaries | - | - | - | ||||
| Reclassified to fixed assets and intangible assets | (152,425) | (563,403) | (715,828) | ||||
| Exchange adjustments | 5,679 | 46 | 5,725 | ||||
| 30 June 2018 | 2,609,423 | 169,093 | 2,778,516 | ||||
| Accumulated depreciation and amortization: | |||||||
| 1 January 2018 | 1,215,651 | 6,543 | 1,222,194 | ||||
| Increases: | |||||||
| Increase in current period | 3,752 | 5,414 | 9,166 | ||||
| Reclassified from fixed assets and intangible assets | 13,721 | 2,654 | 16,375 | ||||
| Decreases: | |||||||
| Decrease in current period | - | - | - | ||||
| Newly deconsolidated subsidiaries | (13,546) | - | (13,546) | ||||
| Reclassified to fixed assets and intangible assets | (6,856) | (3,131) | (9,987) | ||||
| Exchange adjustments | 726 | 18 | 744 | ||||
| 30 June 2018 | 1,213,448 | 11,498 | 1,224,946 | ||||
| Investment property, net: | |||||||
| 30 June 2018 | 1,395,975 | 157,595 | 1,553,570 | ||||
| 1 January 2018 | 840,628 | 19,262 | 859,890 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 16 | Fixed Assets | |||||||||||
| Buildings | Decoration of fixed assets | Machinery and equipment | Office and electronic equipment | Motor vehicles | Total | |||||||
| Gross amount: | ||||||||||||
| 1 January 2018 | 12,333,627 | 372,125 | 41,201,902 | 1,561,753 | 104,551 | 55,573,958 | ||||||
| Increases: | ||||||||||||
| Newly consolidated subsidiaries | - | - | - | 2 | 463 | 465 | ||||||
| Purchased | 260,643 | 13,848 | 266,816 | 70,458 | 6,362 | 618,127 | ||||||
| Reclassified from investment property | 152,425 | - | - | - | - | 152,425 | ||||||
| Reclassified from construction in progress | 226,138 | 7,929 | 478,482 | 30,243 | - | 742,792 | ||||||
| Decreases: | ||||||||||||
| Written down with government subsidies | - | - | (11,342) | (6) | - | (11,348) | ||||||
| Newly deconsolidated subsidiaries | (801) | (4,114) | (684,428) | (32,125) | (1,138) | (722,606) | ||||||
| Sold or retired | (480,016) | (35,030) | (140,544) | (51,801) | (6,997) | (714,388) | ||||||
| Reclassified to investment property | (537,032) | (38,249) | - | - | - | (575,281) | ||||||
| Exchange adjustments | 10,646 | 14,592 | (221,380) | 166,227 | 7,093 | (22,822) | ||||||
| 30 June 2018 | 11,965,630 | 331,101 | 40,889,506 | 1,744,751 | 110,334 | 55,041,322 | ||||||
| Accumulated depreciation: | ||||||||||||
| 1 January 2018 | 2,110,019 | 282,293 | 18,948,357 | 957,236 | 65,313 | 22,363,218 | ||||||
| Increases: | ||||||||||||
| Newly consolidated subsidiaries | - | - | - | - | - | - | ||||||
| Depreciation established | 283,215 | 25,932 | 3,006,967 | 124,753 | 7,766 | 3,448,633 | ||||||
| Reclassified from investment property | 6,856 | - | - | - | - | 6,856 | ||||||
| Decreases: | ||||||||||||
| Written down with government subsidies | (17,762) | - | (408,912) | (65) | - | (426,739) | ||||||
| Newly deconsolidated subsidiaries | (3) | (2,499) | (163,517) | (23,344) | (1,022) | (190,385) | ||||||
| Sold or retired | (102,753) | (30,028) | (173,403) | (35,041) | (6,604) | (347,829) | ||||||
| Reclassified to investment property | (13,721) | - | - | - | - | (13,721) | ||||||
| Exchange adjustments | 3,594 | 5,856 | (112,423) | 94,708 | (759) | (9,024) | ||||||
| 30 June 2018 | 2,269,445 | 281,554 | 21,097,069 | 1,118,247 | 64,694 | 24,831,009 | ||||||
| Fixed assets, net: | ||||||||||||
| 30 June 2018 | 9,696,185 | 49,547 | 19,792,437 | 626,504 | 45,640 | 30,210,313 | ||||||
| 1 January 2018 | 10,223,608 | 89,832 | 22,253,545 | 604,517 | 39,238 | 33,210,740 | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 16 | Fixed Assets (Continued) | |||||||||||
| Impairment allowances: | ||||||||||||
| 1 January 2018 | 1,141 | 994 | 608,117 | 2,426 | 83 | 612,761 | ||||||
| Established in current period | - | - | 47,065 | - | - | 47,065 | ||||||
| Newly deconsolidated subsidiaries | - | - | (335,944) | (208) | - | (336,152) | ||||||
| Written off in current period | - | - | (16) | - | - | (16) | ||||||
| Exchange adjustments | 7 | - | (36,623) | (575) | - | (37,191) | ||||||
| 30 June 2018 | 1,148 | 994 | 282,599 | 1,643 | 83 | 286,467 | ||||||
| Fixed assets, net: | ||||||||||||
| 30 June 2018 | 9,695,037 | 48,553 | 19,509,838 | 624,861 | 45,557 | 29,923,846 | ||||||
| 1 January 2018 | 10,222,467 | 88,838 | 21,645,428 | 602,091 | 39,155 | 32,597,979 | |||||||||||
| For the collateralized fixed assets, see Note V, item 39. As at 30 June 2018, the carrying amount of the temporarily idle fixed assets was RMB8,763,000, and the gross amount of the fixed assets that were sufficiently depreciated and still in use was RMB84,054,000. | |||||||||||||||||
| Fixed assets with pending ownership certificates at the end of the current period： | |||||||||||||||||
| Gross amount | Accumulated depreciation | Impairment allowance | Carrying amount | Expected time of obtaining ownership certificate | |||||||||||||
| Buildings (note) | 2,784,541 | 238,696 | - | 2,545,845 | Within 2018 | ||||||||||||
| Note: As at 30 June 2018, the fixed assets with pending ownership certificates were mostly the buildings of CSOT’s T2 and T3 manufacturing bases and the Hefei manufacturing base that had been completed and put into use. | |||||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 17 | Construction in Progress | ||||||||||||||||||||
| Project | Budget | 1 January 2018 | Increase in current period | Reclassified to fixed assets in current period | Reclassified to investment property in current period | Other decreases | 30 June 2018 | Investment as % of budget | Funding source | ||||||||||||
| G11 LCD panel | 46,500,000 | 3,293,073 | 3,067,227 | - | - | - | 6,360,300 | 14% | Self-owned capital and borrowings | ||||||||||||
| t3 production line of LCD panel | 14,500,000 | 9,066,479 | 3,342,461 | (218,190) | - | (9,263) | 12,181,487 | 84% | Self-owned capital and borrowings | ||||||||||||
| Yunsheng Technology Park in Guangzhou Science City | 1,200,000 | 223,909 | 300,287 | - | - | - | 524,196 | 44% | Self-owned capital and borrowings | ||||||||||||
| Xili project | 583,460 | 316,650 | 176,000 | - | (490,728) | - | 1,922 | 100% | Self-owned capital and borrowings | ||||||||||||
| T2 production line of LCD panel | 22,400,000 | 368,399 | 726,391 | (3,686) | - | - | 1,091,104 | 99% | Self-owned capital and borrowings | ||||||||||||
| Huizhou modular integration project | 17,550,000 | 591,969 | 1,317,687 | - | - | (146,350) | 1,763,306 | 10% | Self-owned capital and borrowings | ||||||||||||
| Huizhou whole-widget integration project | 24,650,000 | - | 185,026 | - | - | - | 185,026 | 1% | Self-owned capital and borrowings | ||||||||||||
| Other | Not applicable | 914,758 | 434,209 | (520,916) | - | (9,310) | 818,741 | Not applicable | |||||||||||||
| 14,775,237 | 9,549,288 | (742,792) | (490,728) | (164,923) | 22,926,082 | ||||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 18 | Intangible Assets | |||||||||||
| Land use rights | Non-patented technologies /patents | Trademark use rights | Other | Total | ||||||||
| Gross amount： | ||||||||||||
| 1 January 2018 | 4,705,551 | 1,982,225 | 330,599 | 1,181,100 | 8,199,475 | |||||||
| Increases: | ||||||||||||
| Newly consolidated subsidiaries | - | - | - | - | - | |||||||
| Purchased | 227,843 | 16,209 | - | 69,834 | 313,886 | |||||||
| Reclassified from investment property | 563,403 | - | - | - | 563,403 | |||||||
| Reclassified from construction in progress | 75,319 | - | - | 10,641 | 85,960 | |||||||
| Reclassified from R&D expense | - | 220,961 | - | 1,310 | 222,271 | |||||||
| Decreases: | ||||||||||||
| Sold or disposed | - | (5) | - | (8,857) | (8,862) | |||||||
| Reclassified to investment property | (433,800) | - | - | 17,970 | (415,830) | |||||||
| Newly deconsolidated subsidiaries | - | (1,486) | - | (23,753) | (25,239) | |||||||
| Exchange adjustments | 483 | 14,612 | 3,908 | (50,664) | (31,661) | |||||||
| 30 June 2018 | 5,138,799 | 2,232,516 | 334,507 | 1,197,581 | 8,903,403 | |||||||
| Accumulated amortization： | ||||||||||||
| 1 January 2018 | 367,288 | 657,024 | 131,693 | 625,295 | 1,781,300 | |||||||
| Increases: | ||||||||||||
| Amortization established | 86,176 | 105,943 | 9,783 | 66,155 | 268,057 | |||||||
| Reclassified from investment property | 3,131 | - | - | - | 3,131 | |||||||
| Decreases: | ||||||||||||
| Sold or disposed | (1,156) | - | - | (1,160) | (2,316) | |||||||
| Reclassified to investment property | (2,654) | - | - | - | (2,654) | |||||||
| Newly deconsolidated subsidiaries | - | (1,450) | - | (9,837) | (11,287) | |||||||
| Written down with government subsidies | (3,418) | - | - | - | (3,418) | |||||||
| Exchange adjustments | 261 | 14,192 | 2,414 | (41,621) | (24,754) | |||||||
| 30 June 2018 | 449,628 | 775,709 | 143,890 | 638,832 | 2,008,059 | |||||||
| Intangible assets, net： | ||||||||||||
| 30 June 2018 | 4,689,171 | 1,456,807 | 190,617 | 558,749 | 6,895,344 | |||||||
| 1 January 2018 | 4,338,263 | 1,325,201 | 198,906 | 555,805 | 6,418,175 | |||||||
| Impairment allowances： | ||||||||||||
| 1 January 2018 | - | 11,388 | - | 34,276 | 45,664 | |||||||
| Exchange adjustments | - | - | - | (8,912) | (8,912) | |||||||
| 30 June 2018 | - | 11,388 | - | 25,364 | 36,752 | |||||||
| Intangible assets, net： | ||||||||||||
| 30 June 2018 | 4,689,171 | 1,445,419 | 190,617 | 533,385 | 6,858,592 | |||||||
| 1 January 2018 | 4,338,263 | 1,313,813 | 198,906 | 521,529 | 6,372,511 | |||||||
| For the collateralized intangible assets, see Note IV, item 39. | ||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 19 | R&D Expense | |||||||
| The Group’s R&D expense is listed as follows： | ||||||||
| 30 June 2018 | 31 December 2017 | |||||||
| Mobile phones | 297,394 | 297,394 | ||||||
| LCD panels | 635,102 | 526,840 | ||||||
| Other | 60,244 | 48,570 | ||||||
| 992,740 | 872,804 | |||||||
| 20 | Goodwill | |||||||
| Investee | Reason | Initial amount | 30 June 2018 | 31 December 2017 | ||||
| TCL (Vietnam) Corporation Ltd. | Note 1 | 1,947 | 778 | 778 | ||||
| TCL Mobile Communication (HK) Company Limited | 310 | 124 | 124 | |||||
| TCL Electronics Holdings Limited | Note 2 | 11,419 | 4,567 | 4,567 | ||||
| TCL Electronics Holdings Limited | Note 3 | (5,409) | (2,705) | (2,705) | ||||
| TCL Electronics Holdings Limited | Note 4 | 39,130 | 19,565 | 19,565 | ||||
| TCL Electronics Holdings Limited | Note 5 | 28,017 | 15,409 | 15,409 | ||||
| TCL Electronics Holdings Limited | Note 6 | 8,952 | 5,372 | 5,372 | ||||
| TCL Electronics Holdings Limited | Note 7 | 36,259 | 25,381 | 25,381 | ||||
| TCL Communication Technology Holdings Limited | Note 8 | 316,893 | 194,551 | 194,551 | ||||
| JRD Communication Inc. | Note 9 | 134,968 | 134,968 | 134,968 | ||||
| TCL MEDICAL RADIOLOGICAL TECHNOLOGY (BEIJING) CO., LTD. | Note 10 | 28,967 | 28,967 | 28,967 | ||||
| Huizhou TCL Environment Technology Co., Ltd. | Note 11 | 92,952 | 92,952 | 92,952 | ||||
| TCL Communication (Ningbo) Co., Ltd. | Note 12 | 89,196 | 89,196 | 89,196 | ||||
| Toshiba Visual Products (China) Co., Ltd. | Note 13 | 12,065 | 12,065 | 12,065 | ||||
| Pusheng Group Co., Ltd. | Note 14 | 3,506 | 3,506 | 3,506 | ||||
| East Fair Investments Limited | Note 15 | 50,729 | 50,729 | 50,729 | ||||
| Qingdao Blue Business Consulting Co., Ltd. | Note 16 | 2,452 | 2,452 | 2,452 | ||||
| Gross amount | 677,877 | 677,877 | ||||||
| Less: impairment allowances | Note 17 | 257,343 | 257,343 | |||||
| Carrying amount, net | 420,534 | 420,534 | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Note1. | TCL Overseas Holdings Limited, a wholly-owned subsidiary of TCL Electronics Holdings Limited (hereinafter referred to as “TCL Electronics”) (a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited), increased in November 2000 its interest in TCL (Vietnam) Corporation Ltd. (hereinafter referred to as “TCL Vietnam”) to 100% with a capital of HK$10,690,000. As such, the difference between the accumulated investment of TCL Overseas Holdings Limited in TCL Vietnam (corresponding to a 100% interest) and the owner’s equity of TCL Vietnam attributable to TCL Overseas Holdings Limited on the settlement date (equal to RMB1,947,000) was recorded in the Company’s goodwill. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) |
| 20 | Goodwill (Continued) |
| Note2. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2000 another 19,220,000 shares in TCL Electronics with a capital of HK$29,872,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 51.82% interest) and the owner’s equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB11,419,000) was recorded in the Company’s goodwill. |
| Note 3. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2001 another 32,556,000 shares in TCL Electronics with a capital of HK$30,608,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 55.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB-5,409,000) was recorded in the Company’s goodwill. |
| Note 4. | According to a conditional agreement on the acquisition of Huizhou TCL Computer Technology Co., Ltd. signed in late 2000 between TCL Industries Holdings (HK) Limited and TCL Holdings (BVI) Limited, a wholly-owned subsidiary of TCL Electronics (a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited), TCL Electronics offered, at the price of HK$1.78/share, 105,619,289 shares as the consideration for the acquisition, to TCL Industries Holdings (HK) Limited. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 53.86% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB39,130,000) was recorded in the Company’s goodwill. |
| Note 5. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2002 another 39,610,000 shares in TCL Electronics with a capital of HK$76,719,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 54.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB28,017,000) was recorded in the Company’s goodwill. |
| Note 6. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2003 another 37,080,000 shares in TCL Electronics with a capital of HK$62,304,820. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 54.51% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB8,952,000) was recorded in the Company’s goodwill. |
| Note 7. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2004 another 50,436,000 shares in TCL Electronics with a capital of HK$126,814,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a 54.83% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB36,259,000) was recorded in the Company’s goodwill. |
| Note 8. | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, acquired in 2004 a 57.4% interest in TCL Communication with a consideration of RMB1,510,016,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Communication (corresponding to a 57.4% interest) and the shareholders’ equity of TCL Communication attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB316,893,000) was recorded in the Company’s goodwill. An impairment allowance of RMB194,551,000 had been established on this goodwill item for 2017. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Note 9. | TCL Communication, a subsidiary of the Company’s subsidiary TCL Industries Holdings (HK) Limited, acquired in July 2007 a combined 61.46% interest in JRD Communication Inc. (hereinafter referred to as “JRDC”) from the other shareholders, with a total consideration of US$39,313,000 (equivalent to approximately RMB296,584,000). As such, the difference between the accumulated investment of TCL Communication in JRDC (corresponding to a 100% interest) and the fair value of the identifiable net assets of JRDC attributable to TCL Communication on the settlement date (equal to approximately RMB134,968,000) was recorded in the Company’s goodwill. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) |
| 20 | Goodwill (Continued) |
| Note 10 | 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 RMB52,319,000. 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 RMB28,967,000) was recorded in the Company’s goodwill. |
| Note 11 | Huizhou TCL Environmental Resource Co., Ltd. (hereinafter referred to as “TCL Environmental Resource”), a subsidiary of the Company, acquired in 2010 the 100% interest in Huizhou TCL Environment Technology Co., Ltd. (hereinafter referred to as “TCL Environment Technology”) with a capital of RMB98,024,000. As such, the difference between the accumulated investment of TCL Environmental Resource in TCL Environment Technology (corresponding to a 100% interest) and the fair value of the identifiable net assets of TCL Environment Technology attributable to TCL Environmental Resource on the settlement date (equal to RMB92,952,000) was recorded in the Company’s goodwill. |
| Note 12 | TCL Communication, a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in May 2011 the 100% interest in TCL Communication (Ningbo) Co., Ltd. (hereinafter referred to as “TCL Communication Ningbo”) with a capital of 11 million euros (equivalent to RMB102,690,000). As such, the difference between the accumulated investment of TCL Communication in TCL Communication Ningbo (corresponding to a 100% interest) and the fair value of the identifiable net assets of TCL Communication Ningbo attributable to TCL Communication on the settlement date (equivalent to RMB89,196,000) was recorded in the Company’s goodwill. |
| Note 13 | Huizhou TCL Household Appliance Marketing Co., Ltd. (hereinafter referred to as “Huizhou TCL Household Appliance Marketing”), a subsidiary of TCL Electronics (a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited), acquired in May 2014 a 21% interest in Toshiba Visual Products (China) Co., Ltd. (hereinafter referred to as “Toshiba Visual Products”) with a capital of RMB0. As such, the difference between the accumulated investment of Huizhou TCL Household Appliance Marketing in Toshiba Visual Products (corresponding to a 70% interest) and the fair value of the identifiable net assets of Toshiba Visual Products attributable to Huizhou TCL Household Appliance Marketing on the settlement date (equivalent to RMB12,065,000) was recorded in the Company’s goodwill. An impairment allowance of RMB12,065,000 had been established on this goodwill item for 2017. |
| Note 14 | Tonly Electronics, a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in September 2015 the 100% interest in Pusheng Group Co., Ltd. (hereinafter referred to as “Pusheng Group”) with a capital of RMB95,546,000. As such, the difference between the accumulated investment of Tonly Electronics in Pusheng Group (corresponding to a 100% interest) and the fair value of the identifiable net assets of Pusheng Group attributable to Tonly Electronics on the settlement date (equivalent to RMB3,506,000) was recorded in the Company’s goodwill. |
| Note 15 | Prosper Wide Limited and TCL Communication Technology Holdings Limited, subsidiaries of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in September 2015 a 40% interest and a 19.99% interest in East Fair Investments Limited (hereinafter referred to as “East Fair Investments”), respectively, with a capital of RMB9,600,000 and a capital of RMB4,798,000. As such, the difference between the accumulated investment of Prosper Wide Limited and TCL Communication Technology Holdings Limited in East Fair Investments (corresponding to a combined interest of 59.99%) and the fair value of the identifiable net assets of East Fair Investments attributable to Prosper Wide Limited and TCL Communication Technology Holdings Limited on the settlement date (equivalent to RMB50,729,000) was recorded in the Company’s goodwill. An impairment allowance of RMB50,729,000 had been established on this goodwill item for 2017. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Note 16 | 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 RMB10,000,000. 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 RMB2,452,000) was recorded in the Company’s goodwill. |
| Note 17 | On 30 June 2018, the Company tested asset groups inclusive of goodwill for impairment. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||
| 21 | Long-Term Prepaid Expense | |||||||||||||||
| 1 January 2018 | Increase in current period | Newly consolidated subsidiaries | Newly deconsolidated subsidiaries | Amortization in current period | Other | 30 June 2018 | ||||||||||
| Improvement expense on leased fixed assets | 853,233 | 4,539 | - | - | (15,811) | - | 841,961 | |||||||||
| Other | 75,891 | 212,795 | - | (9,601) | (179,013) | 16 | 100,088 | |||||||||
| 929,124 | 217,334 | - | (9,601) | (194,824) | 16 | 942,049 | ||||||||||
| 22 | Deferred Income Tax Assets and Deferred Income Tax Liabilities | |||||||
| (1) | Deferred Income Tax Assets | |||||||
| 1 January 2018 | Change in current period (charged to profit/loss) | Change in current period (charged to equity) | Newly consolidated subsidiaries | Exchange adjustments | 30 June 2018 | |||
| Unrealized profits within the Group | 250,385 | (9,472) | - | - | (407) | 240,506 | ||
| Provisions | 287,495 | 52,470 | - | - | 35 | 340,000 | ||
| Deductible tax losses | 66,610 | (2,361) | - | 11 | (1,310) | 62,950 | ||
| Inventory valuation allowances | 79,663 | (9,042) | - | - | 8 | 70,629 | ||
| Financial instruments at fair value | 72,038 | 9,451 | 3,903 | - | 173 | 85,565 | ||
| Amortization of long-lived assets | 29,219 | - | - | - | - | 29,219 | ||
| Other | 86,433 | 19,761 | 10,659 | - | 337 | 117,190 | ||
| 871,843 | 60,807 | 14,562 | 11 | (1,164) | 946,059 | |||
| (2) | Deferred Income Tax Liabilities | |||||||
| 1 January 2018 | Change in current period (charged to profit/loss) | Change in current period (charged to equity) | Newly consolidated subsidiaries | Exchange adjustments | 30 June 2018 | |||
| Fair value adjustments of subsidiary acquisitions | 55,844 | (478) | - | - | 51 | 55,417 | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Financial instruments at fair value | 17,035 | 8,466 | (8,822) | - | - | 16,679 | |
| Available-for-sale financial assets | 753 | - | - | - | - | 753 | |
| Government subsidy adjustments | 4,941 | (3,129) | - | - | (43) | 1,769 | |
| Other | 192,584 | (4,033) | - | - | (141) | 188,410 | |
| 271,157 | 826 | (8,822) | - | (133) | 263,028 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 23 | Other Non-Current Assets | |||||||
| 1 January 2018 | Increase in current period | decrease in current period | 30 June 2018 | |||||
| Prepayments for equipment and land use rights (note 1) | 2,493,017 | 5,545,530 | (768,040) | 7,270,507 | ||||
| Front-end investments for development projects | 120,000 | - | - | 120,000 | ||||
| Wealth management instruments | 201,080 | - | (77,000) | 124,080 | ||||
| Other | 574,856 | 172,009 | (158,576) | 588,289 | ||||
| - | ||||||||
| 3,388,953 | 5,717,539 | (1,003,616) | 8,102,876 | |||||
| Note1 | Prepayments for equipment and land use rights and some other long-lived assets were reclassified from prepayments to other non-current assets. | |||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 24 | Short-Term Borrowings | ||||
| Short-Term Borrowings by Category | |||||
| 30 June 2018 | 31 December 2017 | ||||
| Pledge borrowings | 1,178,271 | 1,394,814 | |||
| Unsecured borrowings | 11,803,870 | 14,595,291 | |||
| 12,982,141 | 15,990,105 | ||||
| As at 30 June 2018, pledge borrowings from banks were equivalent to RMB1,178,271,000 (31 December 2017: RMB1,394,814,000), with letters of credit equivalent to RMB1,190,988,000 (31 December 2017: RMB1,404,853,000) as the pledge. | |||||
| As at 30 June 2018, there were no overdue short-term borrowings. | |||||
| 25 | Borrowings from Central Bank | ||||
| As at 30 June 2018, the balance of the borrowings of TCL Finance Co., Ltd., a subsidiary of the Company, from the central bank was RMB230,406,000 (31 December 2017: RMB39,997,000). | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 26 | Customer Deposits and Interbank Deposits | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Customer deposits and interbank deposits | 466,417 | 310,875 | |||
| Customer deposits and interbank deposits are deposits absorbed by subsidiary TCL Finance Co., Ltd. from its associates and joint ventures. | |||||
| 27 | Financial Liabilities at Fair Value through Profit or Loss | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Derivative financial liabilities-forward forex contracts | 194,241 | 349,506 | |||
| Derivative financial liabilities –interest rate swap contracts | 276,163 | 93,436 | |||
| 470,404 | 442,942 | ||||
| The fair value of the Company’s trading financial liabilities is their real-time quotes on the forex and interest rate open markets, and the change in fair value is the difference between the contractual price and the real-time quote on the forex or interest rate open market based on the forward exchange rate or interest rate on the balance sheet date. | |||||
| 28 | Notes Payable | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Bank acceptance notes | 1,246,706 | 1,206,258 | |||
| Commercial acceptance notes | 771,348 | 855,213 | |||
| 2,018,054 | 2,061,471 | ||||
| As at 30 June 2018, notes payable to related parties were RMB8,793,000 (31 December 2017: RMB14,377,000), accounting for 0.44% of the total notes payable (31 December 2017: 0.70%). There were no notes payable to any shareholder with a 5% or greater voting stock. | |||||
| 29 | Accounts Payable | ||||
| Accounts payable are largely for purchases of raw materials and components. As at 30 June 2018, the carrying amount of accounts payable was RMB19,183,740,000 (31 December 2017: RMB19,324,249,000), of which accounts payable with aging over 1 year were RMB433,446,000 (31 December 2017: RMB154,765,000), accounting for approximately 2.26% of the total accounts payable (31 December 2017: 0.80%). | |||||
| As at 30 June 2018, accounts payable to related parties were RMB273,130,000 (31 December 2017: RMB493,212,000), accounting for 1.42% of the total accounts payable (31 December 2017: 2.55%). For further information, see Note VII. There were no accounts payable to any shareholder with a 5% or greater voting stock. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 30 | Advances from Customers | |||
| Advances from customers as at the end of the current period were mostly advances on sales. As at 30 June 2018, there were no large-amount advances from customers with aging over 1 year. | ||||
| As at 30 June 2018, advances from related parties were RMB3,672,000 (31 December 2017: RMB208,000), accounting for 0.28% of the total advances from customers (31 December 2017: 0.02%). There were no advances from any shareholder with a 5% or greater voting stock. | ||||
| 31 | Payroll Payable and Long-Term Payroll Payable | |||
| (1) | Payroll Payable | |||
| 30 June 2018 | 31 December 2017 | |||
| Short-term payroll payable (note) | 1,990,133 | 2,207,545 | ||
| Defined contribution plans payable | 12,928 | 15,624 | ||
| Dismissal benefits payable | 26,347 | 69,499 | ||
| 2,029,408 | 2,292,668 | |||
| (Note) | Short-Term Payroll Payable | ||||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | ||||||||
| Wages and salaries, bonuses, allowances and subsidies | 2,057,182 | 4,133,006 | (4,677,134) | 1,513,054 | |||||||
| Social security contributions | 18,465 | 121,798 | (118,287) | 21,976 | |||||||
| Housing funds | 5,615 | 119,359 | (120,531) | 4,443 | |||||||
| Labour union funds | 32,957 | 14,947 | (15,206) | 32,698 | |||||||
| Employee education funds | 71,038 | 35,566 | (36,676) | 69,928 | |||||||
| Other | 22,288 | 416,813 | (91,067) | 348,034 | |||||||
| 2,207,545 | 4,841,489 | (5,058,901) | 1,990,133 | ||||||||
| (2) | Long-Term Payroll Payable | ||||||||||
| 30 June 2018 | 31 December 2017 | ||||||||||
| Supplementary old age security pensions (note) | 24,906 | 25,519 | |||||||||
| Note： | Supplementary old age security pensions payable to retired employees. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 32 | Taxes Payable | ||||
| 30 June 2018 | 31 December 2017 | ||||
| VAT | 159,948 | 119,646 | |||
| Corporate income tax | 378,413 | 759,743 | |||
| Individual income tax | 88,917 | 117,032 | |||
| City construction tax | 24,454 | 46,861 | |||
| Embankment fees | 51,149 | 51,139 | |||
| Educational surcharges | 18,654 | 35,151 | |||
| Waste electric appliance and electronic product treatment fund | 68,697 | 58,448 | |||
| Other | 91,518 | 85,772 | |||
| 881,750 | 1,273,792 | ||||
| For the standards for provisions for taxes and the applicable tax rates, see Note III. | |||||
| 33 | Interest Payable | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Interest payable on MTN | 33,449 | 60,781 | |||
| Interest payable on corporate bonds | 247,502 | 244,027 | |||
| Interest payable on short-term commercial papers | 18,400 | - | |||
| Interest payable on bank borrowings | 145,867 | 140,038 | |||
| 445,218 | 444,846 | ||||
| 34 | Dividends Payable | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Non-controlling interests | 71,251 | 47,110 | |||
| 71,251 | 47,110 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||
| 35 | Other Payables | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Patent and franchise royalties | 1,732,796 | 2,196,631 | ||||
| Engineering and equipment expense | 8,523,534 | 5,676,045 | ||||
| Ordinary current accounts | 3,802,017 | 3,128,571 | ||||
| Security deposits | 366,298 | 636,414 | ||||
| Technological development fund and potential exploitation fund | 9,685 | 7,618 | ||||
| Deposits from joint ventures and associates | 15,477 | 15,477 | ||||
| Payables for equity transfers | 795 | 9,018 | ||||
| Maintenance cost | 571,257 | 660,012 | ||||
| Installation cost | 348,806 | 183,676 | ||||
| R&D expense | 192,318 | 213,395 | ||||
| Advertising expense | 586,650 | 519,776 | ||||
| Transport and warehousing expense | 396,536 | 346,414 | ||||
| Utilities | 123,601 | 109,522 | ||||
| Rental expense | 33,173 | 20,508 | ||||
| Sales promotional expense | 293,474 | 427,472 | ||||
| Intermediary fees | 377,252 | 374,420 | ||||
| Compensation for price adjustments | 262,926 | 193,179 | ||||
| Sales commissions and rebates | 856,019 | 874,094 | ||||
| Software and Internet service expense | 85,892 | 130,789 | ||||
| Travel and office expense | 52,555 | 68,243 | ||||
| Insurance expense | 19,211 | 13,721 | ||||
| Other | 950,789 | 857,802 | ||||
| Total | 19,601,061 | 16,662,797 | ||||
| As at 30 June 2018, other payables to related parties were RMB656,666,000 (31 December 2017: RMB258,159,000), accounting for 3.35% of the total other payables (31 December 2017: 1.55%). For further information, see Note VII. There were no other payables to any shareholder with a 5% or greater voting stock. | ||||||
| 36 | Short-Term Commercial Papers Payable | |||||
| 30 June 2018 | 31 December 2017 | |||||
| Short-term commercial papers (note) | 2,000,000 | - | ||||
| Note | The Phase 1 of 2018 Short-Term Commercial Papers of RMB2 billion issued by the Company in April 2018. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 37 | Current Portion of Non-Current Liabilities | ||||
| Note IV | 30 June 2018 | 31 December 2017 | |||
| Long-term borrowings (note 1) | 39 | 2,759,804 | 4,930,778 | ||
| MTN (note 2) | 500,000 | 996,750 | |||
| Corporate bonds | 2,500,000 | - | |||
| 5,759,804 | 5,927,528 | ||||
| Note 1 | The current portion of long-term borrowings included RMB419,849,000 of unsecured borrowings, RMB831,370,000 of pledge borrowings and RMB1,508,585,000 of mortgage borrowings. | ||||
| Note 2 | The current portion of MTN of RMB500,000,000 as at the end of the current period was reclassified to the item of “current portion of non-current liabilities”. | ||||
| Note 3 | The current portion of bonds payable of RMB2,500,000,000 as at the end of the current period was reclassified to the item of “current portion of non-current liabilities”. | ||||
| (1) | Top Five of Current Portions of Long-Term Borrowings： | |||||||||
| Lender | Start date | End date | Currency | Interest rate | 30 June 2018 | |||||
| China Development Bank-6000 special account for loans | February 2011 | January 2019 | USD | 3.00% | 846,925 | |||||
| The Export-Import Bank of China (Guangdong branch) | June 2015 | July 2018 | RMB | 3.15% | 600,000 | |||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | November 2018 | USD | 4.00% | 330,830 | |||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | May 2019 | USD | 4.00% | 330,830 | |||||
| The Export-Import Bank of China (Guangdong branch) | December 2016 | September 2018 | RMB | 2.65% | 300,000 | |||||
| 2,408,585 | ||||||||||
| 38 | Other Current Liabilities | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Financial assets sold under repurchase agreements | 1,130,697 | 3,206,902 | ||||||||
| Currency swaps (note 1) | 1,290,000 | 1,697,240 | ||||||||
| After-sales service expense (note 2) | 1,088,132 | 1,109,100 | ||||||||
| Other | 3,173 | 61,831 | ||||||||
| 3,512,002 | 6,075,073 | |||||||||
| Note 1 | Currency swaps due within 1 year. | |||||||||
| Note 2 | After-sales service expense expected to occur within 1 year is reflected in current liabilities. After-sales service expense is increased by the provisions for such expense established in the current period, and decreased by such expense that occurred in the current period. | |||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||
| 39 | Long-Term Borrowings | ||||||||||
| 30 June 2018 | 31 December 2017 | ||||||||||
| Mortgage borrowings | 24,247,472 | 18,420,345 | |||||||||
| Pledge borrowings | 831,370 | 1,026,190 | |||||||||
| Unsecured borrowings | 6,447,462 | 5,767,624 | |||||||||
| 31,526,304 | 25,214,159 | ||||||||||
| Of which：Current portion of long-term borrowings | (2,759,804) | (4,930,778) | |||||||||
| 28,766,500 | 20,283,381 | ||||||||||
| The maturities of the Company’s long-term borrowings vary from 2018 to 2026. | |||||||||||
| As at 30 June 2018, the carrying amount of long-term mortgage borrowings was RMB24,247,472,000, with land use rights, buildings, machinery and equipment and construction in progress equivalent to RMB37,540,971,000 as the collateral. | |||||||||||
| As at 30 June 2018, the carrying amount of long-term pledge borrowings was RMB831,370,000 (31 December 2017: RMB1,026,190,000), with the Company’s interest in TCL Industries Holdings (HK) Limited as the collateral. | |||||||||||
| Top Five Long-Term Borrowings： | |||||||||||
| Lender | Start date | End date | Currency | Interest rate | 30 June 2018 | ||||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | March 2023 | USD | 4.00% | 4,300,790 | ||||||
| China Development Bank (Hubei branch) | April 2016 | April 2024 | USD | 5.20% | 3,791,312 | ||||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | March 2023 | RMB | 4.90% | 3,513,600 | ||||||
| China Development Bank (Hubei branch) | April 2016 | February 2021 | RMB | 4.75% | 2,310,000 | ||||||
| China Development Bank (Hubei branch) | March 2018 | January 2026 | RMB | 4.45% | 1,870,000 | ||||||
| 15,785,702 | |||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||
| 40 | Bonds Payable | ||||||
| 30 June 2018 | 31 December 2017 | ||||||
| MTN (note 1) | 498,250 | 497,250 | |||||
| Corporate bonds (note 2) | 8,499,998 | 9,999,998 | |||||
| 8,998,248 | 10,497,248 | ||||||
| Note 1 | The Company issued RMB500 million of five-year MTNs on 21 August 2013, and another RMB500 million of five-year MTNs on 2 April 2015. The RMB500 million of five-year MTNs that would be due within 1 year as at the end of the current period was reclassified to “current portion of non-current liabilities”. | ||||||
| Note 2 | The Company issued RMB2.5 billion of 2016 three-year corporate bonds (phase 1) and RMB1.5 billion of five-year corporate bonds on 16 March 2016, RMB 2 billion of 2016 five-year corporate bonds (phase 2) on 7 July 2016, RMB1 billion of 2017 five-year corporate bonds (phase 1) on 19 April 2017, RMB3 billion of 2017 five-year corporate bonds (phase 2) on 7 July 2017, and RMB1 billion of 2018 five-year corporate bonds (phase 1) on 6 June 2018. The RMB2.5 billion of corporate bonds that would be due within 1 year as at the end of the current period was reclassified to “current portion of non-current liabilities”. | ||||||
| 41 | Long-Term Payables | ||||||
| 30 June 2018 | 31 December 2017 | ||||||
| Technological development fund | 73,000 | 73,000 | |||||
| Other | 25,067 | 3,309 | |||||
| 98,067 | 76,309 | ||||||
| 42 | Deferred Income | ||||||
| 30 June 2018 | 31 December 2017 | ||||||
| Income-related government subsidies | 3,106,229 | 2,664,877 | |||||
| 3,106,229 | 2,664,877 | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 43 | Share Capital | |||||||||||
| 1 January 2018 | Change in current period | 30 June 2018 | ||||||||||
| (In thousand shares) | Shares | Percentage | New issues | Other | Subtotal | Shares | Percentage | |||||
| 1. Restricted shares | 4,513,615 | 33.40% | 34,677 | (2,726,574) | (2,691,897) | 1,821,718 | 13.44% | |||||
| 1.1 Shares held by government | - | - | - | - | - | - | 0.00% | |||||
| 1.2 Shares held by state-owned legal persons | 1,244,019 | 9.20% | - | (1,244,019) | (1,244,019) | - | 0.00% | |||||
| 1.3 Shares held by other domestic investors | 3,179,064 | 23.53% | 34,392 | (1,482,554) | (1,448,162) | 1,730,902 | 12.77% | |||||
| Among which: Shares held by domestic non-state-owned legal persons | 2,694,327 | 19.94% | - | (1,483,569) | (1,483,569) | 1,210,758 | 8.94% | |||||
| Shares held by domestic natural persons | 484,737 | 3.59% | 34,392 | 1,015 | 35,407 | 520,144 | 3.84% | |||||
| 1.4 Shares held by foreign investors | 90,532 | 0.67% | 284 | - | 284 | 90,816 | 0.67% | |||||
| Among which: Shares held by foreign legal persons | 90,532 | 0.67% | - | - | - | 90,532 | 0.67% | |||||
| Shares held by foreign natural persons | - | - | 284 | - | 284 | 284 | 0.00% | |||||
| 2. Unrestricted shares | 9,001,357 | 66.60% | - | 2,726,574 | 2,726,574 | 11,727,931 | 86.56% | |||||
| 2.1 RMB-denominated ordinary shares | 9,001,357 | 66.60% | - | 2,726,574 | 2,726,574 | 11,727,931 | 86.56% | |||||
| 2.2 Domestically listed foreign shares | - | - | - | - | - | - | 0.00% | |||||
| 2.3 Overseas listed foreign shares | - | - | - | - | - | - | 0.00% | |||||
| 2.4 Other | - | - | - | - | - | - | 0.00% | |||||
| 3. Total shares | 13,514,972 | 100.00% | 34,676 | - | 34,677 | 13,549,649 | 100.00% | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 43 | Share Capital (Continued) | |||||||
| Note | As at 30 June 2018, the Company’s total share capital was 13,549,649,000 shares. | |||||||
| Except for Chairman of the Board Mr. Li Dongsheng who holds restricted shares subscribed for in a private placement, none of the other incumbent directors, supervisors or senior management hold any restricted shares from a split-share structure reform or a private placement. The shares held by these personnel will stay partially frozen as per the Rules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of Listed Companies and the Changes thereof. The trading and information disclosure in relation to these shares shall be in strict compliance with the applicable laws, regulations and rules. | ||||||||
| 44 | Capital Reserves | |||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | |||||
| Share premium (note) | 4,901,361 | 28,781 | - | 4,930,142 | ||||
| Other capital reserves | 1,039,110 | 65,313 | - | 1,104,423 | ||||
| 5,940,471 | 94,094 | - | 6,034,565 | |||||
| Note | See the relevant analyses of the changes in financial statement data. | |||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 45 | Surplus Reserves | |||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | |||||||
| Statutory surplus reserves | 1,311,430 | - | - | 1,311,430 | ||||||
| Discretionary surplus reserves | 182,870 | - | - | 182,870 | ||||||
| 1,494,300 | - | - | 1,494,300 | |||||||
| 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, 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 net profits to the discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used to make up the previous loss or increase the share capital. | ||||||||||
| 46 | General Reserve | |||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | |||||||
| General reserve | 361 | - | - | 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 Finance Co., Ltd., this subsidiary appropriated 1% of its net profit as general reserve in the previous years. | ||||||||||
| 47 | Retained Earnings | |||||||||
| H1 2018 | H1 2017 | |||||||||
| Beginning retained earnings | 8,577,688 | 7,305,927 | ||||||||
| Net profit for current period | 1,585,939 | 1,033,845 | ||||||||
| Decrease in current period | (1,354,965) | (977,095) | ||||||||
| Including: Appropriated as surplus reserves | - | - | ||||||||
| Distributed to ordinary shareholders as dividends | (1,354,965) | (977,095) | ||||||||
| Ending retained earnings | 8,808,662 | 7,362,677 | ||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 48 | Operating Revenue and Cost of Sales | ||||||||||||||||||
| H1 2018 | H1 2017 | ||||||||||||||||||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | ||||||||||||||||
| Core business | 52,073,415 | 42,673,646 | 51,328,314 | 40,811,716 | |||||||||||||||
| Non-core business | 450,333 | 245,012 | 846,203 | 743,989 | |||||||||||||||
| 52,523,748 | 42,918,658 | 52,174,517 | 41,555,705 | ||||||||||||||||
| (1) | Core Business by Operating Division | ||||||||||||||||||
| Revenue | Cost of sales | Gross profit | |||||||||||||||||
| H1 2018 | H1 2017 | H1 2018 | H1 2017 | H1 2018 | H1 2017 | ||||||||||||||
| TCL Electronics | 17,145,948 | 15,015,818 | 14,419,287 | 12,692,435 | 2,726,661 | 2,323,383 | |||||||||||||
| TCL Communication | 4,661,221 | 6,865,486 | 3,603,990 | 5,355,697 | 1,057,231 | 1,509,789 | |||||||||||||
| CSOT | 12,144,065 | 13,969,731 | 9,759,672 | 10,358,954 | 2,384,393 | 3,610,777 | |||||||||||||
| TCL Household Electric Appliance Group | 10,633,312 | 9,226,969 | 9,095,910 | 7,871,483 | 1,537,402 | 1,355,486 | |||||||||||||
| Tonly Electronics | 2,270,308 | 1,795,341 | 1,984,277 | 1,523,300 | 286,031 | 272,041 | |||||||||||||
| Marketing and logistics service business group | 11,250,905 | 10,057,308 | 10,635,971 | 9,567,516 | 614,934 | 489,792 | |||||||||||||
| Others and eliminated intercompany accounts | (6,032,344) | (5,602,339) | (6,825,461) | (6,557,669) | 793,117 | 955,330 | |||||||||||||
| 52,073,415 | 51,328,314 | 42,673,646 | 40,811,716 | 9,399,769 | 10,516,598 | ||||||||||||||
| (2) | Core Business by Operating Segment | |||||||||||
| Revenue | Cost of sales | Gross profit | ||||||||||
| H1 2018 | H1 2017 | H1 2018 | H1 2017 | H1 2018 | H1 2017 | |||||||
| Domestic | 27,626,264 | 28,323,154 | 22,144,576 | 22,903,520 | 5,481,688 | 5,419,634 | ||||||
| Overseas | 24,447,151 | 23,005,160 | 20,529,070 | 17,908,196 | 3,918,081 | 5,096,964 | ||||||
| 52,073,415 | 51,328,314 | 42,673,646 | 40,811,716 | 9,399,769 | 10,516,598 | |||||||
| The sales revenue from the top five customers combined was RMB8,558,458,000 and RMB8,950,429,000 respectively for H1 2018 and H1 2017, accounting for 16.44% and 17.44% of the core business revenue. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 49 | Interest Income/(Expense) and Exchange Income/(Loss) | |||
| H1 2018 | H1 2017 | |||
| Interest income | 58,099 | 120,056 | ||
| Interest expense | 41,336 | 32,372 | ||
| Exchange income/(loss) | (24,065) | (9,630) | ||
| The interest income, interest expense and exchange income/(loss) above occurred with the Company’s subsidiary TCL Finance Co., Ltd., which are presented separately herein as required for a financial enterprise. | ||||
| 50 | Taxes and Surcharges | |||
| H1 2018 | H1 2017 | |||
| City construction and maintenance tax | 63,382 | 55,214 | ||
| Commodity circulation tax (Brazil) | 6,107 | 48,780 | ||
| Educational surcharge | 46,835 | 29,654 | ||
| Stamp tax | 43,434 | 39,198 | ||
| Property tax | 50,049 | 31,881 | ||
| Land use tax | 8,211 | 9,085 | ||
| Other | 100,524 | 36,572 | ||
| 318,542 | 250,384 | |||
| The applicable tax and surcharge standards are detailed in Note III. | ||||
| 51 | Finance Costs | |||
| H1 2018 | H1 2017 | |||
| Interest expense | 904,654 | 734,386 | ||
| Less: Interest income | (385,014) | (196,643) | ||
| Exchange loss/(income) | (173,933) | 201,725 | ||
| Other | 95,605 | 71,765 | ||
| 441,312 | 811,233 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 52 | Asset Impairment Loss | |||
| H1 2018 | H1 2017 | |||
| Loss on uncollectible accounts | 109,951 | 26,122 | ||
| Inventory valuation loss | 469,430 | 152,608 | ||
| Loss on impairments of available-for-sale financial assets | 4,299 | 1,447 | ||
| Loss on impairments of discounted notes | 3,773 | 1,573 | ||
| Loss on impairments of fixed assets | 47,065 | 193 | ||
| 634,518 | 181,943 | |||
| 53 | Gains/(Losses) on Changes in Fair Value | |||
| H1 2018 | H1 2017 | |||
| Financial assets/liabilities at fair value through profit or loss –forward forex contracts | (79,169) | 125,610 | ||
| Financial liabilities at fair value through profit or loss-wealth management instruments | (24,425) | 14,794 | ||
| Financial assets at fair value through profit or loss-interest rate swap contracts | (317) | (9,392) | ||
| (103,911) | 131,012 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 54 | Investment Income | |||
| H1 2018 | H1 2017 | |||
| Investment income from disposal of wealth management instruments | 386,543 | 211,701 | ||
| Income from disposal of derivative financial assets/liabilities | (33,745) | 43,867 | ||
| Income from investments in money market funds | - | 4,155 | ||
| Share of current period profit/(loss) of associates | 604,488 | 395,494 | ||
| Share of current period profit/(loss) of joint ventures | 10,739 | (8,950) | ||
| Net income from disposal of long-term equity investments | 17,651 | 20,708 | ||
| Investment income from disposal of available-for-sale financial assets | 91,563 | 68,978 | ||
| Investment income during period of holding available-for-sale financial assets | 16,719 | 63,292 | ||
| 1,093,958 | 799,245 | |||
| 55 | Asset Disposal Income | |||
| H1 2018 | H1 2017 | |||
| Income from disposal of fixed assets (loss shown in brackets) | 85 | 5,045 | ||
| Income from disposal of intangible assets (loss shown in brackets) | (10) | 8 | ||
| Income from disposal of other non-current assets (loss shown in brackets) | 54 | - | ||
| 129 | 5,053 | |||
| 56 | Other Income | |||
| H1 2018 | H1 2017 | |||
| R&D subsidies | 890,017 | 360,113 | ||
| VAT rebates on software | 162,378 | 261,727 | ||
| 1,052,395 | 621,840 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 57 | Non-Operating Income | |||
| H1 2018 | H1 2017 | |||
| Gains on retired or damaged non-current assets | 367 | 4,440 | ||
| Including：Gains on retired or damaged fixed assets | 367 | 2,184 | ||
| Gains on retired or damaged intangible assets | - | 2,256 | ||
| Negative goodwill | - | 82,582 | ||
| Other | 346,387 | 79,312 | ||
| 346,754 | 166,334 | |||
| 58 | Non-Operating Expense | |||
| H1 2018 | H1 2017 | |||
| Losses on retired or damaged non-current assets | 729 | 10,345 | ||
| Including：Losses on retired or damaged fixed assets | 722 | 10,345 | ||
| Losses on retired or damaged intangible assets | 7 | - | ||
| Other | 43,474 | 54,351 | ||
| 44,203 | 64,696 | |||
| 59 | Income Tax Expense | |||
| H1 2018 | H1 2017 | |||
| Current income tax expense | 544,896 | 562,232 | ||
| Deferred income tax expense (note) | (59,981) | (1,171) | ||
| 484,915 | 561,061 | |||
| Note | For further information on the deferred income tax expense as recognized in the income statement for the current period, see Note IV, item 22. | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 60 | Other Comprehensive Income | |||||||||
| (1) | Other Comprehensive Income Items, Income Tax Effects and Reclassifications to Profit or Loss | |||||||||
| H1 2018 | H1 2017 | |||||||||
| Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | (5,092) | 88,475 | ||||||||
| Gain/(Loss) on available-for-sale financial assets | - | 215,060 | ||||||||
| Previous other comprehensive income reclassified to profit for current period | (218,318) | (53,025) | ||||||||
| Subtotal | (218,318) | 162,035 | ||||||||
| Current gain/(loss) on cash flow hedges | (110,096) | 171,807 | ||||||||
| Previous other comprehensive income reclassified to profit for current period | (37,265) | 15,289 | ||||||||
| Income tax effects recorded in other comprehensive income for current period | 23,384 | - | ||||||||
| Subtotal | (123,977) | 187,096 | ||||||||
| Differences arising from translation of foreign currency-denominated financial statements | (125,562) | 357,866 | ||||||||
| Total | (472,949) | 795,472 | ||||||||
| (2) | Changes in Other Comprehensive Income Items | |||||||||
| Equity attributable to shareholders of the Company as the parent | ||||||||||
| 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 available-for-sale financial assets | Gain/(Loss) on changes in cash flow hedges | Differences arising from translation of foreign currency-denominated financial statements | Subtotal | Non-controlling interests | Total other comprehensive income | ||||
| 1 January 2017 | 44,356 | 303,079 | (220,378) | (1,492,220) | (1,365,163) | (89,842) | (1,455,005) | |||
| Change in 2017 | 11,718 | 97,301 | 341,707 | 1,133,709 | 1,584,435 | 137,911 | 1,722,346 | |||
| 31 December 2017 | 56,074 | 400,380 | 121,329 | (358,511) | 219,272 | 48,069 | 267,341 | |||
| Change in H1 2018 | (5,025) | (218,318) | (108,896) | (113,085) | (445,324) | (27,625) | (472,949) | |||
| 30 June 2018 | 51,049 | 182,062 | 12,433 | (471,596) | (226,052) | 20,444 | (205,608) | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 61 | Earnings per Share (EPS) | |||
| (1) | Basic EPS | |||
| H1 2018 | H1 2017 | |||
| Net profit attributable to owners of the Company as the parent | 1,585,939 | 1,033,845 | ||
| Weighted average outstanding ordinary shares (in thousand shares) | 13,526,146 | 12,213,682 | ||
| Basic EPS (RMB yuan/share) | 0.1173 | 0.0846 | ||
| (2) | Diluted EPS | |||
| H1 2018 | H1 2017 | |||
| Net profit attributable to owners of the Company as the parent | 1,585,939 | 1,033,845 | ||
| Diluted weighted average outstanding ordinary shares (in thousand shares) | 13,542,435 | 12,213,682 | ||
| Diluted EPS (RMB yuan/share) | 0.1172 | 0.0846 | ||
| 62 | Cash Generated from Other Operating Activities | |||
| Cash generated from other operating activities in the consolidated cash flow statement was RMB1,881,237,000, which primarily consisted of other current payments received and government subsidies. | ||||
| 63 | Cash Used in Other Operating Activities | |||
| Cash used in other operating activities in the consolidated cash flow statement was RMB8,363,572,000, which primarily consisted of selling expense and administrative expense. | ||||
| 64 | Cash Used in Other Financing Activities | |||
| None. | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 65 | Net Cash Generated from/Used in Operating Activities | ||||
| Reconciliation of Net Profit to Net Cash Generated from/Used in Operating Activities | |||||
| H1 2018 | H1 2017 | ||||
| Net profit | 1,700,841 | 1,661,319 | |||
| Add：Asset impairment allowance | 634,518 | 181,943 | |||
| Depreciation of fixed assets | 3,457,799 | 2,700,024 | |||
| Amortization of intangible assets | 268,057 | 200,523 | |||
| Amortization of long-term prepaid expense | 194,824 | 129,448 | |||
| Loss/(Income) from disposal of fixed assets, intangible assets and other long-lived assets | (129) | 852 | |||
| Loss/(Income) on retired or damaged fixed assets | 379 | - | |||
| Loss/(Gain) on changes in fair value | 103,911 | (131,012) | |||
| Finance costs | 796,123 | 978,113 | |||
| Investment income | (1,093,958) | (799,245) | |||
| Increase/(Decrease) in deferred income tax assets | (74,216) | (10,574) | |||
| Increase/(Decrease) in deferred income tax liabilities | (8,129) | 2,240 | |||
| Decrease/(Increase) in inventories | 574,843 | (72,414) | |||
| Increase in operating receivables | (176,106) | (298,476) | |||
| Decrease in operating payables | (2,073,055) | (969,526) | |||
| Other | 69,524 | (100,674) | |||
| Net cash generated from/used in operating activities | 4,375,226 | 3,472,541 | |||
| 66 | Changes in Cash and Cash Equivalents, Net | ||||
| Ending cash and cash equivalents | 16,503,805 | 22,207,850 | |||
| Less: Beginning cash | (23,281,169) | (23,815,656) | |||
| Net increase in cash and cash equivalents | (6,777,364) | (1,607,806) | |||
| Analysis of ending cash and cash equivalents： | |||||
| Ending monetary capital | 17,612,564 | 24,028,220 | |||
| Less: Ending non-cash equivalents (note) | (1,108,759) | (1,820,370) | |||
| Ending cash and cash equivalents | 16,503,805 | 22,207,850 | |||
| Note: The ending non-cash equivalents primarily included bank deposits, the required reserve deposited by TCL Finance Co., Ltd. in the central bank and other monetary capital. For further information, see Note IV, item 1. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| V | Changes in Consolidation Scope | ||||
| 1 | Newly Consolidated Entities for Current Period | ||||
| Investee | Consolidated period | Reason for change | Registered capital | The Company’s interest | |
| Guangdong Tonly Precision Structural Parts Co., Ltd. | Feb.-Jun. 2018 | Newly incorporated | RMB 20,000,000 | 100% | |
| TCL Netherlands B.V. | Feb.-Jun. 2018 | Newly incorporated | - | 100% | |
| China Star Optoelectronics Technology (Japan) Co., Ltd. | Mar.-Jun. 2018 | Newly incorporated | JPY 10,000,000 | 100% | |
| Ningbo TCL Equity Investment Co., Ltd. | H1 2018 | Newly incorporated | RMB 30,000,000 | 99% | |
| Karley Investment Limited | H1 2018 | Newly incorporated | USD 1 | 100% | |
| Zhonggang Finance Group Limited | H1 2018 | Newly incorporated | HKD 1 | 100% | |
| Guangxi Tonly Electronics Technology Co., Ltd. | Mar.-Jun. 2018 | Newly incorporated | RMB 50,000,000 | 100% | |
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | Feb.-Jun. 2018 | Newly incorporated | RMB 20,000,000 | 100% | |
| Beijing Xunying Renren Medical Technologies Co., Ltd. | Feb.-Jun. 2018 | Newly incorporated | RMB 50,000,000 | 100% | |
| Shenzhen Xiaoxiang Technology Development Co., Ltd. | Apr.-Jun. 2018 | Newly incorporated | RMB 15,000,000 | 100% | |
| TCL Ventures Inc | Jun. 2018 | Newly incorporated | RMB 10,000,000 | 100% | |
| TCL Ventures Fund Limited Partnership | Jun. 2018 | Acquired | RMB 1,000,000 | 100% | |
| Peaklink Investments Limited | Jun. 2018 | Newly incorporated | RMB 50,000 | 100% | |
| TCL Intelligent Appliances (Vietnam) Co., Ltd. | Jun. 2018 | Newly incorporated | VND 11,000,000 | 100% | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| V | Changes in Consolidation Scope (Continued) | ||||
| 2 | Deconsolidated Entities for Current Period | ||||
| Investee | Date of deconsolidation | Reason for change | Net assets at transfer day/dissolution day | Net profit in consolidated period | |
| TCL Network Equipment (Shenzhen) Co., Ltd. | 2018/1/1 | Dissolved | - | - | |
| Foshan TCL Household Appliances (Nanhai) Co., Ltd. | 2018/2/1 | Dissolved | - | (170) | |
| Huizhou TCL Hyperpower Batteries Inc. | 2018/2/28 | Transferred | 69,795 | (6,333) | |
| Qujing Sunpiestore Technology Co., Ltd. | 2018/3/1 | Dissolved | - | - | |
| Cheers Overseas Limited | 2018/5/31 | Dissolved | - | (16,748) | |
| JRD (Beijing) Technology Co., Ltd. | 2018/5/31 | Dissolved | - | (737) | |
| Beijing Luote Pacific Communication Technology Co., Ltd. | 2018/1/1 | Dissolved | - | - | |
| Shanke Technology Holdings Limited | 2018/2/28 | Transferred | - | - | |
| TCT Mobile (Singapore) Pte.Ltd | 2018/6/30 | Dissolved | - | - | |
| Huizhou Taichuang Investment Development Co., Ltd. | 2018/1/31 | Transferred | 15,439 | - | |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 2018/3/31 | Transferred | 81,121 | 1,727 | |
| Tairui (Hong Kong) Limited | 2018/3/31 | Transferred | (140) | 43 | |
| TCT Mobile - Telefones LTDA | 2018/3/31 | Transferred | 376,688 | (33,411) | |
| Petro AP (Hong Kong) Company Limited | 2018/3/31 | Transferred | 678,748 | (11,131) | |
| PETRO AP S.A. | 2018/3/31 | Transferred | (274,804) | (1,941) | |
| Xi’an TCL Industrial Technology Research Institute Co., Ltd. | 2018/3/31 | Dissolved | - | (118) | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| V | Changes in Consolidation Scope (Continued) | |||||||
| 3 | Subsidiaries Disposed in Current Period | |||||||
| Subsidiary | Huizhou Taichuang Investment Development Co., Ltd. | Huizhou TCL Hyperpower Batteries Inc. | Canyon Circuit Technology (Huizhou) Co., Ltd. | Tairui (Hong Kong) Limited | TCT Mobile - Telefones LTDA | Petro AP (Hong Kong) Company Limited | ||
| Price for equity interest disposal | 50,821 | 62,498 | 80,515 | 81 | 380,954 | - | ||
| % equity interest disposed | 100% | 100.00% | 35.00% | 28.35% | 100.00% | - | ||
| Way of disposal | Transfer | Transfer | Transfer | Transfer | Transfer | Transfer | ||
| Time of loss of control | Jan. 2018 | Feb. 2018 | Mar. 2018 | Mar. 2018 | Mar. 2018 | Mar. 2018 | ||
| Determination basis for time of loss of control | When the rights and obligations in relation to the target equity interest have all been transferred | When the rights and obligations in relation to the target equity interest have all been transferred | When the rights and obligations in relation to the target equity interest have all been transferred | When the rights and obligations in relation to the target equity interest have all been transferred | When the rights and obligations in relation to the target equity interest have all been transferred | When the rights and obligations in relation to the target equity interest have all been transferred | ||
| Difference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest | 35,382 | 4,931 | 414 | 225 | (43,475) | 10,016 | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities | ||||||
| 1 | Interests in Subsidiaries | ||||||
| (1) | Major Subsidiaries | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL Industries Holdings (HK) Limited | Hong Kong | Investment holdings | HKD 1,578,942,506 | 100% | - | Incorporated | |
| TCL Electronics Holdings Limited | Cayman Islands | Investment holdings | HKD 2,333,388,113 | - | 52.46% | Incorporated | |
| Guangzhou Digital Lehua Technology Co., Ltd. | Guangzhou | Manufacturing and marketing | RMB 120,000,000 | - | 70% | Incorporated | |
| Shenzhen TCL New Technology Co., Ltd. | Shenzhen | R&D | HKD 10,000,000 | - | 100% | Incorporated | |
| Shenzhen TCL Digital Technology Co., Ltd. | Shenzhen | R&D | RMB 100,000,000 | - | 100% | Incorporated | |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | HKD 507,562,684 | - | 98.51% | Incorporated | |
| TCL Overseas Electronics (Huizhou) Ltd. | Huizhou | Manufacturing and marketing | RMB 239,330,000 | - | 100% | Incorporated | |
| TCL Operation Polska Sp.zo.o | Poland | Manufacturing and marketing | PLN 126,716,500 | - | 100% | Incorporated | |
| TCL Moka Manufacturing, S.A. de C.V. | Mexico | Manufacturing and marketing | MXN 50,000 | - | 100% | Obtained in a business combination not under common control | |
| TCL (Vietnam) Corporation Ltd. | Vietnam | Manufacturing and marketing | VND 37,135,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Household Appliance Marketing Co., Ltd. | Huizhou | Marketing | RMB 30,000,000 | - | 100% | Incorporated | |
| TCL Electronics (HK) Limited | Hong Kong | Marketing | HKD 30,000,000 | - | 100% | Incorporated | |
| TCL verseas Marketing (Macao Commercial Offshore) Limited | Macau | Marketing | MOP 100,000 | - | 100% | Incorporated | |
| TCL Communication Technology Holdings Limited | Cayman Islands | Investment holdings | HKD 1,275,545,082 | - | 51% | Incorporated | |
| TCL Communication Technology (Chengdu) Co., Ltd. | Chengdu | R&D | USD 12,000,000 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| JRD Communication (Shanghai) Co., Ltd. | Shanghai | R&D | USD 10,000,000 | - | 100% | Incorporated | |
| TCL Mobile Communication Technology (Ningbo) Co., Ltd. | Ningbo | R&D | USD 5,000,000 | - | 100% | Incorporated | |
| JRD Communication (Shenzhen) Ltd. | Shenzhen | R&D | USD 10,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Mobile Communication Co., Ltd. | Huizhou | Manufacturing and marketing | USD 199,600,000 | - | 100% | Incorporated | |
| TCL Mobile Communication (HK) Company Limited | Hong Kong | Marketing | HKD 5,000,000 | - | 100% | Incorporated | |
| TCT Mobile Europe SAS | France | Marketing | EUR 23,031,072 | - | 100% | Incorporated | |
| TCT Mobile (US) Inc. | The U.S. | Marketing | USD 1 | - | 100% | Incorporated | |
| TCT Mobile International Ltd | Hong Kong | Marketing | HKD 5,000,000 | - | 100% | Incorporated | |
| TCT Mobile SA de CV | Mexico | Marketing | MXN 1,299,103,498 | - | 100% | Incorporated | |
| “TMC Rus” Limited Liability Company | Russia | Marketing | RUB 10,000 | - | 99% | Incorporated | |
| TCT Mobile Italy S.R.L | Italy | Marketing | EUR 10,000 | - | 100% | Incorporated | |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | Shenzhen | Manufacturing and marketing | RMB 18,341,942,877 | 86.81% | - | Incorporated | |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Shenzhen | Manufacturing and marketing | RMB 21,500,000,000 | - | 57.29% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| Guangzhou China Ray Optoelectronic Materials Co., Ltd. | Guangzhou | R&D | RMB 30,000,000 | - | 100% | Incorporated | |
| Wuhan China Star Optoelectronics Technology Co., Ltd. (note 1) | Wuhan | Manufacturing and marketing | RMB 8,760,000,000 | - | 43.04% | Incorporated | |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Wuhan | Manufacturing and marketing | RMB 1,800,000,000 | - | 34.43% | Incorporated | |
| Shenzhen CPT Display Technology Co., Ltd. | Shenzhen | Manufacturing and marketing | USD 30,000,000 | - | 100% | Obtained in a business combination not under common control | |
| China Star Optoelectronics International (HK) Limited | Hong Kong | Marketing | USD 9,000,000 | - | 100% | Incorporated | |
| China Display Optoelectronics Technology Holdings Limited | Bermuda | Investment holdings | HKD 208,385,062 | - | 52.59% | Obtained in a business combination not under common control | |
| CHINA Display Optoelectronics Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 231,900,000 | - | 100% | Incorporated | |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and marketing | RMB 500,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Household Electric Appliance Group Co., Ltd. | Huizhou | Investment holdings | RMB 448,000,000 | 100% | - | Incorporated | |
| Zhongshan Haibeirui Intelligent Software Technology Co., Ltd. | Zhongshan | R&D | RMB5,000,000 | - | 100% | Incorporated | |
| TCL Intelligent Technology (Hefei) Co., Ltd. | Hefei | R&D | RMB1,000,000 | - | 100% | Incorporated | |
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | Zhongshan | Manufacturing and marketing | USD 62,311,649 | - | 80% | Incorporated | |
| TCL Delong Home Appliances (Zhongshan) Co., Ltd. | Zhongshan | Manufacturing and marketing | USD 5,000,000 | - | 100% | Incorporated | |
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | Zhongshan | Manufacturing and marketing | RMB 20,000,000 | - | 100% | Incorporated | |
| TCL Home Appliances (Zhongshan) Co., Ltd. | Zhongshan | Manufacturing and marketing | RMB 80,000,000 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL Air Conditioner (Wuhan) Co., Ltd. | Wuhan | Manufacturing and marketing | RMB 110,878,990 | - | 100% | Incorporated | |
| TCL Home Appliances (Hefei) Co., Ltd. | Hefei | Manufacturing and marketing | RMB 300,000,000 | 100% | - | Incorporated | |
| TCL Home Appliances (Hong Kong) Limited | Hong Kong | Marketing | HKD 100,000 | - | 100% | Incorporated | |
| TCL Home Appliances (North America) Co. | The U.S. | Marketing | USD 100,000 | - | 100% | Incorporated | |
| Tonly Electronics Holdings Limited | The Virgin Islands | Investment holdings | HKD 268,357,390 | - | 48.73% | Incorporated | |
| Shenzhen Tonly Technology Development Co., Ltd. | Shenzhen | R&D | RMB 10,000,000 | - | 100% | Incorporated | |
| Xi’an TCL Software Development Co., Ltd. | Xi’an | R&D | USD 2,000,000 | - | 100% | Incorporated | |
| TCL Tonly Electronics (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 161,500,000 | - | 100% | Incorporated | |
| Dongguan Pusheng Electronic Technology Co., Ltd. | Dongguan | Manufacturing and marketing | RMB 31,700,000 | - | 100% | Obtained in a business combination not under common control | |
| TCL OEM Marketing Co., Ltd. | Hong Kong | Marketing | HKD 2 | - | 100% | Incorporated | |
| TCL Tonly Technology (Hong Kong) Limited | Hong Kong | Marketing | HKD 50,000,000 | - | 100% | Incorporated | |
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 100,000,000 | 65% | - | Incorporated | |
| TCL New Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 80,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Light Electrical Appliances Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 70,000,000 | 100% | - | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Huizhou VERY Light Source Technology Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 100,077,277 | - | 100% | Obtained in a business combination not under common control | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| Guangzhou Sky-tech Cloud Info Co., Ltd. | Guangzhou | Information technology | USD 200,000,000 | - | 100% | Incorporated | |
| Guangzhou Sky-tech Shichang Information Technology Co., Ltd. | Guangzhou | Information technology | RMB 10,000,000 | - | 100% | Incorporated | |
| TCL Healthcare Holding Co., Ltd. | Hong Kong | Investment holdings | USD 74,060,000 | - | 66.67% | Incorporated | |
| Guangzhou TCL Medical Equipment Co., Ltd. | Guangzhou | Manufacturing and marketing | RMB 200,000,000 | - | 100% | Incorporated | |
| TCL Medical MRI Technology (Wuxi) Co., Ltd. | Wuxi | Manufacturing and marketing | USD 30,000,000 | - | 100% | Incorporated | |
| TCL Medical Ultrasonic Technology (Wuxi) Co., Ltd. | Wuxi | Manufacturing and marketing | USD 30,000,000 | - | 100% | Incorporated | |
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | Beijing | Manufacturing and marketing | RMB 125,346,000 | 100% | - | Obtained in a business combination not under common control | |
| Huizhou TCL Environmental Resource Co., Ltd. | Huizhou | Investment holdings | RMB 300,000,000 | 91% | - | Incorporated | |
| TCL Aobo Environmental Protection and Development Co., Ltd. | Tianjin | Manufacturing and marketing | RMB 150,000,000 | - | 60% | Incorporated | |
| Huizhou TCL Environment Technology Co., Ltd. | Huizhou | Manufacturing and marketing | RMB 110,000,000 | - | 51% | Obtained in a business combination not under common control | |
| Shantou TCL Deqing Environmental Protection Development Co., Ltd. | Shantou | Manufacturing and marketing | RMB 50,000,000 | - | 51% | Incorporated | |
| TCL Educational Web Ltd. | The Virgin Islands | Investment holdings | HKD 42,819,044 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Shenzhen TCL Educational Technology Co., Ltd. | Shenzhen | Educational service | HKD 31,000,000 | - | 100% | Incorporated | |
| Confucius Institute (Beijing) E-Learning Technology Center Co., Ltd. | Beijing | Educational service | RMB 39,000,000 | - | 80% | Incorporated | |
| GoLive TV Tech Co., Ltd. | Beijing | Information technology | RMB 30,834,300 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| Quanying Technology (Beijing) Co., Ltd. | Beijing | Information technology | USD 750,000 | - | 100% | Obtained in a business combination not under common control | |
| Shenzhen TCL Smart Home Technologies Co., Ltd. | Shenzhen | Information technology | RMB 90,000,000 | - | 100% | Incorporated | |
| Shenzhen HAWK Internet Co., Ltd. | Shenzhen | Internet services | RMB 500,000,000 | 100%- | - | Incorporated | |
| Shenzhen HAWK Cloud Information Technology Co., Ltd. | Beijing | Internet services | RMB 20,000,000 | 100% | - | Incorporated | |
| TCL Culture Media (Shenzhen) Co., Ltd. | Shenzhen | Ad planning | RMB 550,000,000 | 100% | - | Incorporated | |
| Huizhou Cool Friends Network Technology Co., Ltd. | Huizhou | E-commerce | RMB 500,000,000 | 55% | 45% | Incorporated | |
| Koyoo Online Service CO., Ltd. | Huizhou | After-sales service | RMB 35,000,000 | 100% | - | Incorporated | |
| SHIFENDAOJIA Online Service Co., Ltd. | Shenzhen | Services | RMB 38,991,526 | - | 48.20% | Incorporated | |
| Highly Information Industry Co., Ltd. | Beijing | Product distribution | RMB 132,600,000 | 73.69% | - | Incorporated | |
| Beijing Sunpiestore Technology Co., Ltd. | Beijing | Marketing | RMB 20,000,000 | - | 60% | Incorporated | |
| Beijing Lingyun Data Technology Co., Ltd. | Beijing | Marketing | RMB 15,000,000 | - | 75% | Incorporated | |
| TCL Finance Holdings Group (Guangzhou) Co., Ltd. | Shenzhen | Finance | RMB 1,000,000,000 | 100% | - | Incorporated | |
| TCL Finance Co., Ltd. | Huizhou | Finance | RMB 1,500,000,000 | 82% | 18% | Incorporated | |
| TCL Finance Technology (Shenzhen) Co., Ltd. | Shenzhen | Finance | RMB 5,000,000 | - | 100% | Incorporated | |
| Shenzhen Baisi Asset Management Co., Ltd. | Shenzhen | Asset management | RMB 30,000,000 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL Financial Service (Shenzhen) Co., Ltd. | Shenzhen | Financial service | RMB 5,000,000 | - | 100% | Incorporated | |
| TCL Commercial Factoring (Shenzhen) Co., Ltd. | Shenzhen | Commercial factoring | RMB100,000,000 | - | 100% | Incorporated | |
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | Huizhou | Finance | RMB200,000,000 | 80% | - | Acquired | |
| Xinjiang TCL Equity Investment Co., Ltd. | Huizhou | Investment | RMB200,000,000 | 100% | - | Incorporated | |
| Petro AP Limited (note 2) | The Virgin Islands | Investment holdings | USD 12,000,000 | - | 45% | Incorporated | |
| TCL Technology Park Co., Ltd. | Zhuhai | Property management | RMB3,000,000,000 | 100% | - | Incorporated | |
| TCL Technology Park (Huizhou) Co., Ltd. | Huizhou | Property management | RMB500,000,000 | 100% | - | Incorporated | |
| Shenzhen TCL Real Estate Co., Ltd. | Shenzhen | Property management | RMB100,000,000 | - | 70% | Incorporated | |
| Shenzhen TCL Lighting Technology Co., Ltd. | Shenzhen | Property management | RMB200,000,000 | - | 60% | Incorporated | |
| Winshero Investment Limited | The Virgin Islands | Investment | USD 1 | - | 100% | Incorporated | |
| Shenzhen TCL Industrial Technology Research Institute, Ltd. | Shenzhen | R&D | RMB50,000,000 | - | 100% | Incorporated | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||
| 1 | Interests in Subsidiaries (Continued) | ||||||
| (1) | Major Subsidiaries (Continued) | ||||||
| Investee | Place of registration | Nature of business | Registered capital (in RMB yuan) | The Company’s interest | How subsidiary was obtained | ||
| Direct | Indirect | ||||||
| TCL Research America Inc. | The U.S. | R&D | USD 10 | - | 100% | Incorporated | |
| TCL Industrial Technology Research Institute (Hong Kong) Limited | Hong Kong | R&D | HKD 30,000,000 | - | 100% | Incorporated | |
| Thunderbird Technology Holding Limited | Hong Kong | Investment holding | HKD 1 | - | 100% | Incorporated | |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | Zhongshan | Manufacturing and marketing | RMB | - | 80% | Incorporated | |
| 100,000,000 | |||||||
| Note 1 | Shenzhen China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as “CSOT”), a subsidiary of the Company, has a 43.04% interest in Wuhan China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Wuhan CSOT”). CSOT appoints key management personnel of Wuhan CSOT and decides its business and financial policies, so CSOT is considered to have substantial control over Wuhan CSOT. Therefore, Wuhan CSOT is included in the Company’s consolidated financial statements. | ||||||
| Note 2 | TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, is the biggest shareholder of Petro AP Limited, taking over half of the board seats. Therefore, TCL Industries Holdings (HK) Limited is considered to have substantial control over the business and financial policies of Petro AP Limited, which is thus included in the Company’s consolidated financial statements. | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||
| 1 | Interests in Subsidiaries (Continued) | ||||
| (2) | Subsidiaries with Significant Non-Controlling Interests | ||||
| Subsidiary | Non-controlling interests | Profit or loss attributable to non-controlling interests for current period | Dividends distributed to non-controlling interests for current period | Ending equity attributable to non-controlling interests | |
| TCL Electronics Holdings Limited | 47.48% | 217,270 | 136,414 | 3,998,552 | |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 13.19% | 58,478 | 285,625 | 22,623,400 | |
| Highly Information Industry Co., Ltd. | 26.31% | 24,791 | 15,699 | 5,398 | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | |||||||||||||
| 1 | Interests in Subsidiaries (Continued) | |||||||||||||
| (2) | Subsidiaries with Significant Non-Controlling Interests | |||||||||||||
| The following table presents the key financial information of the aforesaid subsidiaries: | ||||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||
| 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 Electronics Holdings Limited | 17,059,281 | 2,651,321 | 19,710,602 | 10,787,681 | 556,002 | 11,343,683 | 18,942,326 | 2,826,681 | 21,769,007 | 14,865,668 | 485,010 | 15,350,678 | ||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 42,381,104 | 59,704,387 | 102,085,491 | 28,386,716 | 29,019,217 | 57,405,933 | 40,956,744 | 48,743,798 | 89,700,542 | 27,187,180 | 20,420,363 | 47,607,544 | ||
| Highly Information Industry Co., Ltd. | 3,080,687 | 16,917 | 3,097,604 | 2,303,415 | - | 2,303,415 | 2,833,869 | 16,439 | 2,850,308 | 2,096,563 | - | 2,096,563 | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | |||||||||
| 1 | Interests in Subsidiaries (Continued) | |||||||||
| (2) | Subsidiaries with Significant Non-Controlling Interests | |||||||||
| The following table presents the key financial information of the aforesaid subsidiaries: | ||||||||||
| H1 2018 | H1 2017 | |||||||||
| Operating revenue | Net profit | Total comprehensive income | Net cash generated from/used in operating activities | Operating revenue | Net profit | Total comprehensive income | Net cash generated from/used in operating activities | |||
| TCL Electronics Holdings Limited | 17,300,343 | 467,958 | 380,444 | 159,427 | 15,184,689 | 138,663 | 224,219 | (418,234) | ||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 12,192,597 | 1,218,006 | 1,226,434 | 3,612,642 | 13,987,060 | 2,420,574 | 2,726,769 | 5,614,327 | ||
| Highly Information Industry Co., Ltd. | 7,098,305 | 103,572 | 101,114 | (479,311) | 7,023,699 | 85,753 | 86,303 | (140,658) | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | |||||||||
| 2 | Interests in Joint Ventures and Associates | |||||||||
| (1) | Basic Information about Major Joint Ventures and Associates | |||||||||
| 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 | |||||||||
| Joint ventures– | ||||||||||
| TV University Online Distance Education Technology Co., Ltd. | Beijing | Educational service | Yes | - | 50.00% | |||||
| CJ Speedex Logistics Co., Ltd. | Shenzhen | Logistics service | Yes | - | 50.00% | |||||
| Associates– | ||||||||||
| Fantasia Holdings Group Co., Limited | The Cayman Islands | Real estate | Yes | 20.08% | - | |||||
| Bank of Shanghai Co., Ltd. | Shanghai | Finance | Yes | - | 4.99% | |||||
| Note： | For the Reporting Period, the Company had a 4.99% interest in Bank of Shanghai Co., Ltd. and appointed one of its directors to be a member of the Risk Management Committee under the Board of the Bank of Shanghai. Therefore, the Company is deemed to have significant influence on the Bank of Shanghai, and this long-term equity investment is thus measured using the equity method. | |||||||||
| (2) | Key Financial Information of Major Joint Ventures | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| TV University Online Distance Education Technology Co., Ltd. | CJ Speedex Logistics Co., Ltd. | TV University Online Distance Education Technology Co., Ltd. | CJ Speedex Logistics Co., Ltd. | |||||||
| Current assets | 1,564,690 | 422,473 | 1,353,831 | 406,296 | ||||||
| Non-current assets | 68,846 | 24,470 | 72,837 | 17,707 | ||||||
| Total assets | 1,633,536 | 446,943 | 1,426,668 | 424,003 | ||||||
| Current liabilities | 1,293,285 | 300,080 | 1,109,984 | 272,522 | ||||||
| Non-current liabilities | 28,059 | - | 28,059 | - | ||||||
| Total liabilities | 1,321,344 | 300,080 | 1,138,043 | 272,522 | ||||||
| Equity attributable to non-controlling interests | 6,494 | - | 5,547 | - | ||||||
| Equity attributable to shareholders of the Company as the parent | 305,698 | 146,863 | 283,078 | 151,482 | ||||||
| Share of equity in proportion to the Company’s interest | 152,849 | 73,432 | 141,539 | 75,741 | ||||||
| Carrying amount of investment in joint venture | 146,794 | 466,028 | 135,342 | 468,286 | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | |||||||||
| 2 | Interests in Joint Ventures and Associates (Continued) | |||||||||
| (2) | Key Financial Information of Major Joint Ventures (Continued) | |||||||||
| H1 2018 | H1 2017 | |||||||||
| TV University Online Distance Education Technology Co., Ltd. | CJ Speedex Logistics Co., Ltd. | TV University Online Distance Education Technology Co., Ltd. | CJ Speedex Logistics Co., Ltd. | |||||||
| Operating revenue | 801,916 | 663,566 | 613,395 | 475,273 | ||||||
| Finance costs | (754) | (45) | (928) | (1,048) | ||||||
| Income tax expense | 4,159 | - | 5,292 | - | ||||||
| Net profit | 23,568 | (4,619) | 29,990 | (650) | ||||||
| Other comprehensive income | - | - | - | - | ||||||
| Total comprehensive income | 23,568 | (4,619) | 29,990 | (650) | ||||||
| Dividends received by the Group from joint venture for current period | - | - | - | - | ||||||
| (3) | Key Financial Information of Major Associates | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Fantasia Holdings Group Co., Limited | Bank of Shanghai Co., Ltd. | Fantasia Holdings Group Co., Limited | Bank of Shanghai Co., Ltd. | |||||||
| Current assets | 57,710,693 | 345,836,931 | 46,448,956 | 317,912,792 | ||||||
| Non-current assets | 23,019,748 | 1,572,888,107 | 22,507,784 | 1,489,854,146 | ||||||
| Total assets | 80,730,441 | 1,918,725,038 | 68,956,740 | 1,807,766,938 | ||||||
| Current liabilities | 33,506,392 | 1,548,905,856 | 26,895,112 | 1,489,271,838 | ||||||
| Non-current liabilities | 29,503,339 | 216,641,465 | 24,363,597 | 171,053,697 | ||||||
| Total liabilities | 63,009,731 | 1,765,547,321 | 51,258,709 | 1,660,325,535 | ||||||
| Equity attributable to non-controlling interests | 5,354,436 | 484,974 | 5,061,114 | 456,267 | ||||||
| Equity attributable to shareholders of the Company as the parent | 12,366,274 | 152,692,743 | 12,636,917 | 146,985,136 | ||||||
| Share of equity in proportion to the Company’s interest | 2,483,148 | 7,617,733 | 2,537,493 | 7,332,984 | ||||||
| Carrying amount of investment in associate | 2,080,025 | 8,101,444 | 2,125,346 | 7,630,711 | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VI | Interests in Other Entities (Continued) | ||||||||
| 2 | Interests in Joint Ventures and Associates (Continued) | ||||||||
| (3) | Key Financial Information of Major Associates (Continued) | ||||||||
| H1 2018 | H1 2017 | ||||||||
| Fantasia Holdings Group Co., Limited | Bank of Shanghai Co., Ltd. | Fantasia Holdings Group Co., Limited | Bank of Shanghai Co., Ltd. | ||||||
| Operating revenue | 5,270,806 | 19,749,818 | 3,822,660 | 15,396,008 | |||||
| Finance costs | (814,317) | Not applicable | (609,780) | Not applicable | |||||
| Income tax expense | (452,803) | 618,499 | (521,390) | 320,842 | |||||
| Net profit | 179,911 | 9,388,824 | 145,346 | 7,806,208 | |||||
| Other comprehensive income | 8,628 | 228,594 | 5,529 | 222,751 | |||||
| Total comprehensive income | 188,539 | 9,617,418 | 150,875 | 8,028,959 | |||||
| Dividends received by the Group from associate for current period | 65,972 | - | - | - | |||||
| (4) | Financial Information of Insignificant Joint Ventures and Associates Combined Respectively | ||||||||
| H1 2018 | H1 2017 | ||||||||
| Joint ventures： | |||||||||
| Aggregated carrying amount of investments | 43,512 | 44,422 | |||||||
| Aggregate of following items calculated in proportion to the Company’s interest | - | - | |||||||
| Net profit (note) | 124 | (13,107) | |||||||
| Other comprehensive income (note) | - | - | |||||||
| Total comprehensive income | 124 | (13,107) | |||||||
| Associates： | |||||||||
| Aggregated carrying amount of investments | 14,681,014 | 13,901,499 | |||||||
| Aggregate of following items calculated in proportion to the Company’s interest | - | - | |||||||
| Net profit (note) | 582,677 | 1,030,673 | |||||||
| Other comprehensive income (note) | (5,092) | 12,915 | |||||||
| Total comprehensive income | 577,585 | 1,043,588 | |||||||
| 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. | ||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions |
| 1 | Biggest Shareholder of the Company |
| The Company has no controlling shareholder. | |
| Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as “Changjiang Hanyi”), the biggest shareholder of the Company, holds 1,059,950,300 shares (or 7.82%) in the Company. Mr. Li Dongsheng directly holds 638,273,700 shares (or 4.71%) in the Company, and indirectly holds 408,899,500 (or 3.02%) in the Company through Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Jiutian Liancheng”) and 452,660,300 shares (or 3.35%) in the Company through Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Dongxing Huarui”). Therefore, Mr. Li Dongsheng is the real biggest shareholder of the Company for he controls a total of 1,499,833,500 shares (or 11.10%) in the Company. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | |
| 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 | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | |
| LG Innotek Huizhou Co., Ltd. | Associate | |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | |
| Taiyang Electro-optic (Huizhou) Co., Ltd. | Associate | |
| T2Mobile Limited | Associate | |
| Guangdong Regency Optics-Electron Corp. | Associate | |
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | Associate | |
| Shenzhen Thunderbird Network Technology Co. | Associate | |
| Yizheng Zeyu Electric Light Co., Ltd. | Associate | |
| Wuhan Shangde Plastics Technology Co., Ltd. | Associate | |
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | Associate | |
| Huizhou TCL Resource Investment Co., Ltd. | Associate | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | |
| Huan Tech Co., Ltd. | Associate | |
| Active Industries International Limited | Associate | |
| Gaoshengda Holdings (Huizhou) Co., Ltd. | Associate | |
| Good Vision Limited | Associate | |
| Harvey Holdings Limited | Associate | |
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | Associate | |
| Beijing WeMed Medical Equipment Co., Ltd. | Associate | |
| Wealthy Way Group Limited | Associate | |
| Kai Os Technologies Inc | Associate | |
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | Associate | |
| Opta Corporation | Associate | |
| TCL Mingchuang (Xi’an) Co., Ltd. | Associate | |
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | Associate | |
| Shanghai Gen Auspicious Investment Management Co., Ltd. | Associate | |
| Xizang Dongwei Investment Management Center (Limited Partnership) | Associate | |
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | |
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | Associate | |
| Urumqi Dongpeng Chuangdong Equity Investment Management Partnership (Limited Partnership) | Associate | |
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | Associate | |
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | Associate | |
| Shanghai Gen Auspicious Investment Management Co., Ltd. | Associate | |
| Beijing A Dynamic Investment Consulting Co., Ltd. | Associate | |
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | Associate | |
| Urumqi Qixinda Equity Investment Management Co., Ltd. | Associate | |
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | Associate | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | |
| 2 | Related Parties that Do Not Control or Are Not Controlled by the Company (Continued) | |
| Information about such related parties： | ||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | Associate | |
| Amlogic (Shanghai) Inc. | Associate | |
| TCL Sun , Inc. | Joint venture | |
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | Joint venture | |
| CJ Speedex Logistics Co., Ltd. | Joint venture | |
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | Joint venture | |
| TV University Online Distance Education Technology Co., Ltd. | Joint venture | |
| T2Mobile Limited | Joint venture | |
| TCL Huizhou City, Kai Enterprise Management Limited | Joint venture | |
| Huizhou Gaoshengda Technology Co., Ltd. | Associate’s subsidiary | |
| Shenzhen Thunderbird Smart Products Co., Ltd. | Associate’s subsidiary | |
| Shenzhen Thunderbird Network Media Co., Ltd. | Associate’s subsidiary | |
| Shenzhen Thunderbird Information Technology Co., Ltd. | Associate’s subsidiary | |
| Qihang Import&Export Limited | Associate’s subsidiary | |
| Huizhou Shenghua Industrial Co., Ltd. | Associate’s subsidiary | |
| Huizhou TCL Real Estate Development Co., Ltd. | Associate’s subsidiary | |
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | |
| T2Mobile International Limited | Associate’s subsidiary | |
| Amlogic Co., Limited | Associate’s subsidiary | |
| Elite Excellent Investments Limited | Associate’s subsidiary | |
| Union Dynamic Investment Limited | Associate’s subsidiary | |
| Huixing Holdings Limited | Associate’s subsidiary | |
| Marvel Paradise Limited | Associate’s subsidiary | |
| Shenzhen Yisheng Kangyun Technology Development Co., Ltd. | Associate’s subsidiary | |
| Xinjiang TCL Coal Co., Ltd. | Associate’s subsidiary | |
| Huizhou TCL Hongrong Properties Co., Ltd. | Associate’s subsidiary | |
| Gaoweida Digital Technology (Huizhou) Co., Ltd. | Associate’s subsidiary | |
| Huizhou TCL Cultural Development Co., Ltd. | Associate’s subsidiary | |
| Xionghua Investment Co., Ltd. | Associate’s subsidiary | |
| Wuhan Lesheng Times Trading Co., Ltd. | Associate’s subsidiary | |
| Jinpe Technology (HK) Co., Limited | Associate’s subsidiary | |
| Honpe Technology (Shenzhen) Co., Ltd. | Associate’s subsidiary | |
| Chengdu Legao Times Industrial Co., Ltd. | Associate’s subsidiary | |
| Xinjiang TCL Energy Co., Ltd. | Associate’s subsidiary | |
| TCT Mobile - Telefones LTDA | Associate’s subsidiary | |
| Tairui (Hong Kong) Limited | Associate’s subsidiary | |
| Beijing National Center for Open & Distance Education Co., Ltd. | Joint venture’s subsidiary | |
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | Major subsidiary’s non-controlling shareholder | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||||
| 3 | Major Related-Party Transactions | ||||||
| H1 2018 | As % of total transactions of same kind | H1 2017 | As % of total transactions of same kind | ||||
| (1) | Sale of Raw Materials and Finished Goods to Related Parties | Note1 | |||||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 578,024 | 1.11% | - | 0.00% | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 332,546 | 0.64% | 305,759 | 0.60% | |||
| Qihang Import&Export Limited | 249,243 | 0.48% | 280,461 | 0.55% | |||
| TCL Sun,Inc. | 138,387 | 0.27% | 125,736 | 0.24% | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 20,746 | 0.04% | - | 0.00% | |||
| T2Mobile International Limited | 16,503 | 0.03% | - | 0.00% | |||
| TCT Mobile - Telefones LTDA | 13,575 | 0.03% | - | 0.00% | |||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 8,651 | 0.02% | 3,449 | 0.01% | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 5,771 | 0.01% | 435,473 | 0.85% | |||
| Huizhou Shenghua Industrial Co., Ltd. | 2,679 | 0.01% | - | 0.00% | |||
| CJ Speedex Logistics Co., Ltd. | 321 | 0.00% | 38 | 0.00% | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 80 | 0.00% | - | 0.00% | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 78 | 0.00% | - | 0.00% | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 17 | 0.00% | 31,600 | 0.06% | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 17 | 0.00% | - | 0.00% | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 7 | 0.00% | - | 0.00% | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 1 | 0.00% | - | 0.00% | |||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | - | 0.00% | 14 | 0.00% | |||
| T2Mobile Limited | - | 0.00% | 62,130 | 0.12% | |||
| LG Innotek Huizhou Co., Ltd. | - | 0.00% | 25,886 | 0.05% | |||
| 1,366,646 | 2.64% | 1,270,546 | 2.48% | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||||
| 3 | Major Related-Party Transactions | ||||||
| H1 2018 | As % of total transactions of same kind | H1 2017 | As % of total transactions of same kind | ||||
| (2) | Procurement of Raw Materials and Finished Goods from Related Parties | Note 2 | |||||
| Huizhou Gaoshengda Technology Co., Ltd. | 641,079 | 1.50% | 478,359 | 1.18% | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 110,424 | 0.26% | - | 0.00% | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 97,136 | 0.23% | 73,968 | 0.18% | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 81,206 | 0.19% | 61,913 | 0.15% | |||
| Guangdong Regency Optics-Electron Corp. | 33,978 | 0.08% | 11,395 | 0.03% | |||
| Amlogic Co., Limited | 28,033 | 0.07% | 37,434 | 0.09% | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 15,076 | 0.04% | - | 0.00% | |||
| Qihang Import&Export Limited | 7,510 | 0.02% | 880 | 0.00% | |||
| Yizheng Zeyu Electric Light Co., Ltd. | 5,375 | 0.01% | 3,612 | 0.01% | |||
| Tairui (Hong Kong) Limited | 4,905 | 0.01% | - | 0.00% | |||
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | 3,156 | 0.01% | 3,556 | 0.01% | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | Note a | 1,751 | 0.00% | 132,843 | 0.33% | ||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 1,163 | 0.00% | - | 0.00% | |||
| Huizhou Shenghua Industrial Co., Ltd. | 272 | 0.00% | - | 0.00% | |||
| Honpe Technology (Shenzhen) Co., Ltd. | 140 | 0.00% | 9,782 | 0.02% | |||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | - | 0.00% | 13,866 | 0.03% | |||
| 1,031,204 | 2.42% | 827,608 | 2.03% | ||||
| Note | Because Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. has significant influence on the Company’s subsidiary TCL Electronics Holdings Limited, the transactions and accounts between them are disclosed as related-party transactions. | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major Related-Party Transactions | ||||
| H1 2018 | H1 2017 | ||||
| (3) | Getting Funding from Related Parties | Note 3 | |||
| Shenzhen Thunderbird Network Technology Co. | 439,862 | - | |||
| CJ Speedex Logistics Co., Ltd. | 59,349 | 104,570 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 48,894 | 86,154 | |||
| Qihang Import&Export Limited | 25,228 | 8,710 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 17,471 | - | |||
| Huizhou TCL Resource Investment Co., Ltd. | 11,272 | 937 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 9,306 | 2,517 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,867 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 6,729 | 7,964 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 3,615 | 4,502 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 2,580 | - | |||
| TV University Online Distance Education Technology Co., Ltd. | 918 | 4,880 | |||
| Union Dynamic Investment Limited | 771 | - | |||
| Marvel Paradise Limited | 635 | - | |||
| Huan Tech Co., Ltd. | 464 | 459 | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 299 | - | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 79 | 78 | |||
| Opta Corporation | - | 210 | |||
| Huizhou TCL Hongrong Properties Co., Ltd. | - | 6 | |||
| Gaoweida Digital Technology (Huizhou) Co., Ltd. | - | 2 | |||
| 634,339 | 220,989 | ||||
| (4) | Providing Funding for Related Parties | Note 3 | |||
| Qihang Import&Export Limited | 231,102 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 60,000 | 79,200 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 32,856 | 9,577 | |||
| Huizhou TCL Resource Investment Co., Ltd. | 31,800 | 31,800 | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 10,000 | - | |||
| (5) | Providing Labour Service for or Accepting Labour Service from Related Parties | ||||
| Providing labour service for related parties | 181,962 | 110,802 | |||
| Accepting labour service from related parties | 476,708 | 405,674 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major Related-Party Transactions (Continued) | ||||
| H1 2018 | H1 2017 | ||||
| (6) | Service Charges for Related Parties | ||||
| Shenzhen Thunderbird Network Media Co., Ltd. | 9,877 | - | |||
| Huan Tech Co., Ltd. | Note 4 | 1,667 | 18,600 | ||
| (7) | Receiving Interest from or Paying Interest to Related Parties | ||||
| Interest received | 12,016 | 7,729 | |||
| Interest paid | 400 | 547 | |||
| (8) | Leases | ||||
| Rental income | 8,905 | 10,448 | |||
| Note1. | Sale of Raw Materials and Finished Goods to Related Parties | ||||
| The Company sells raw materials, spare parts, auxiliary materials and finished goods to its joint ventures and associates at market prices, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit, but play an important role as to the Company’s continued operations. | |||||
| Note2. | Procurement of Raw Materials and Finished Goods from Related Parties | ||||
| The Company purchases raw materials and finished goods from its joint ventures and associates at prices similar to those paid to third-party suppliers, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit, but play an important role as to the Company’s continued operations. | |||||
| Note3. | Providing Funding for or Getting Funding from Related Parties and Corresponding Interest Received or Paid | ||||
| The Company set up a settlement centre in 1997 and TCL Finance Co., Ltd. in 2006 (together, the “Financial Settlement Centre”). The Financial Settlement Centre is responsible for the financial affairs of the Company, including capital operation and allocation. The Centre settles accounts with the Company’s subsidiaries, joint ventures and associates and pays the interest. It also allocates the money deposited by the subsidiaries, joint ventures and associates in it to these enterprises and charges interest. The interest income and expense between the Company and the Centre are calculated according to the interest rates declared by the People’s Bank of China. Except for the accounts mentioned in Note 4 below, the funding amount provided refers to the outstanding borrowings due from the Centre to related parties, while the funding amount received means the balances of related parties’ deposits in the Centre. | |||||
| Note4. | Service Charges for Related Parties | ||||
| Huan Tech Co., Ltd. is a service provider in China for the Internet TVs produced and sold by the Company’s majority-owned subsidiary Huizhou TCL Household Appliance Marketing Co., Ltd. Therefore, Huizhou TCL Household Appliance Marketing Co., Ltd. pays proportional service charges to Huan Tech Co., Ltd. on those Internet TVs. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties | ||||
| (1) | Accounts Receivable from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 393,293 | 299,867 | |||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 242,773 | 167,674 | |||
| TCL Sun,Inc. | 87,045 | 73,999 | |||
| Qihang Import&Export Limited | 83,034 | 162,963 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 17,457 | 3,810 | |||
| T2Mobile International Limited | 8,873 | 15,365 | |||
| T2 Mobile (Shanghai) Limited | 3,830 | 404 | |||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 3,512 | 6,764 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 502 | 98 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 347 | 70 | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 322 | 241 | |||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 70 | - | |||
| Urumqi Dongpeng Chuangdong Equity Investment Management Partnership (Limited Partnership) | 17 | - | |||
| Xizang Dongwei Investment Management Center (Limited Partnership) | 2 | - | |||
| Good Vision Limited | - | 5,454 | |||
| LG Innotek Huizhou Co., Ltd. | - | 10,705 | |||
| Huan Tech Co., Ltd. | - | 566 | |||
| Harvey Holdings Limited | - | 44 | |||
| 841,077 | 748,024 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties | ||||
| (2) | Accounts Payable to Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Huizhou Gaoshengda Technology Co., Ltd. | 153,638 | 322,688 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 49,545 | 74,446 | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 22,330 | 19,487 | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 18,182 | 18,790 | |||
| Guangdong Regency Optics-Electron Corp. | 14,678 | 19,441 | |||
| Amlogic Co., Limited | 6,058 | 7,163 | |||
| CJ Speedex Logistics Co., Ltd. | 4,916 | 28,085 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 3,474 | 162 | |||
| Huan Tech Co., Ltd. | 154 | - | |||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 136 | 136 | |||
| Harvey Holdings Limited | 11 | - | |||
| Honpe Technology (Shenzhen) Co., Ltd. | 8 | - | |||
| Wealthy Way Group Limited | - | - | |||
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | - | - | |||
| Yizheng Zeyu Electric Light Co., Ltd. | - | 1,037 | |||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | - | 1,012 | |||
| Shenzhen Thunderbird Network Technology Co. | - | 734 | |||
| Beijing WeMed Medical Equipment Co., Ltd. | - | 31 | |||
| 273,130 | 493,212 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (3) | Other Receivables from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 331,442 | - | |||
| Qihang Import&Export Limited | 205,873 | - | |||
| Active Industries International Limited | 85,674 | 161,795 | |||
| Kai Os Technologies Inc | 43,696 | 43,988 | |||
| Harvey Holdings Limited | 34,924 | 42,353 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 22,117 | 49,500 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 1,280 | - | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 800 | 800 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 630 | 695 | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 306 | 762 | |||
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | 296 | - | |||
| Guangdong Regency Optics-Electron Corp. | 137 | 184 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 76 | 36 | |||
| Good Vision Limited | 13 | - | |||
| Honpe Technology (Shenzhen) Co., Ltd. | 8 | - | |||
| T2Mobile International Limited | 6 | - | |||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 6 | 6 | |||
| Huan Tech Co., Ltd. | 3 | 3 | |||
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | 1 | - | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | - | 40,300 | |||
| Beijing WeMed Medical Equipment Co., Ltd. | - | 3,777 | |||
| T2 Mobile (Shanghai) Limited | - | 3,676 | |||
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | - | 2,180 | |||
| Xionghua Investment Co., Ltd. | - | 17 | |||
| Shenzhen Thunderbird Network Technology Co. | - | 545 | |||
| 727,288 | 350,617 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (4) | Other Payables to Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Shenzhen Thunderbird Network Technology Co. | 439,031 | - | |||
| CJ Speedex Logistics Co., Ltd. | 84,450 | 68,590 | |||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | 40,915 | 109,754 | |||
| Beijing WeMed Medical Equipment Co., Ltd. | 38,417 | - | |||
| Opta Corporation | 32,895 | 32,610 | |||
| Huizhou TCL Resource Investment Co., Ltd. | 6,268 | 6,267 | |||
| Shenzhen Yisheng Kangyun Technology Development Co., Ltd. | 2,646 | 786 | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 2,454 | 2,385 | |||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 2,035 | 255 | |||
| Jinpe Technology (HK) Co., Limited | 1,908 | 1,396 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 1,155 | 300 | |||
| Wealthy Way Group Limited | 994 | 986 | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 784 | 784 | |||
| Union Dynamic Investment Limited | 771 | 761 | |||
| Marvel Paradise Limited | 635 | 627 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 484 | 17,359 | |||
| T2Mobile Limited | 169 | 166 | |||
| TCL Mingchuang (Xi’an) Co., Ltd. | 161 | 161 | |||
| TV University Online Distance Education Technology Co., Ltd. | 139 | 141 | |||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 112 | 74 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 92 | 93 | |||
| T2 Mobile (Shanghai) Limited | 68 | - | |||
| Xionghua Investment Co., Ltd. | 43 | - | |||
| Urumqi Dongpeng Chuangdong Equity Investment Management Partnership (Limited Partnership) | 35 | 35 | |||
| Xizang Dongwei Investment Management Center (Limited Partnership) | 3 | 3 | |||
| Gaoweida Digital Technology (Huizhou) Co., Ltd. | 2 | 2 | |||
| Qihang Import&Export Limited | - | 6,170 | |||
| Good Vision Limited | - | 5,440 | |||
| Elite Excellent Investments Limited | - | 2,076 | |||
| Huixing Holdings Limited | - | 676 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (4) | Other Payables to Related Parties (Continued) | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Honpe Technology (Shenzhen) Co., Ltd. | - | 238 | |||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | - | 5 | |||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | - | 5 | |||
| Beijing A Dynamic Investment Consulting Co., Ltd. | - | 4 | |||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | - | 4 | |||
| TCL Huizhou City, Kai Enterprise Management Limited | - | 4 | |||
| LG Innotek Huizhou Co., Ltd. | - | 2 | |||
| 656,666 | 258,159 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (5) | Notes Receivable from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 2,319 | 607 | |||
| 2,319 | 607 | ||||
| (6) | Notes Payable to Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 3,822 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 2,467 | 14,377 | |||
| CJ Speedex Logistics Co., Ltd. | 2,504 | - | |||
| 8,793 | 14,377 | ||||
| (7) | Prepayments to Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| CJ Speedex Logistics Co., Ltd. | 40,853 | 1,760 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 24,482 | 22,693 | |||
| Wuhan Lesheng Times Trading Co., Ltd. | 8,052 | - | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 492 | - | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 272 | 2,128 | |||
| T2 Mobile (Shanghai) Limited | - | 1,784 | |||
| Honpe Technology (Shenzhen) Co., Ltd. | - | 1,056 | |||
| 74,151 | 29,421 | ||||
| (8) | Advances from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 3,000 | - | |||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 617 | - | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 55 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 131 | |||
| TCL Sun,Inc. | - | 69 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | - | 7 | |||
| CJ Speedex Logistics Co., Ltd. | - | 1 | |||
| 3,672 | 208 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (9) | Dividends Receivable from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 4,417 | - | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 1,404 | 11,015 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 1,163 | - | |||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 89 | 88 | |||
| 7,073 | 11,103 | ||||
| (10) | Interest Receivable from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Harvey Holdings Limited | 3,459 | 2,411 | |||
| Qihang Import&Export Limited | 157 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 79 | 77 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 24 | - | |||
| 3,719 | 2,488 | ||||
| (11) | Deposits from Related Parties | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Huizhou Gaoshengda Technology Co., Ltd. | 48,409 | 9,402 | |||
| CJ Speedex Logistics Co., Ltd. | 46,886 | 23,724 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 17,471 | 21,920 | |||
| Huizhou TCL Resource Investment Co., Ltd. | 10,548 | 17,178 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 9,163 | 8,809 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,867 | 5,106 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 6,729 | 23,616 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 3,521 | 2,837 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 2,580 | 207 | |||
| TV University Online Distance Education Technology Co., Ltd. | 779 | 3,167 | |||
| Huan Tech Co., Ltd. | 464 | 462 | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 299 | 450 | |||
| Shenzhen Thunderbird Network Technology Co. | 148 | 776 | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 79 | - | |||
| 153,943 | 117,654 | ||||
| These deposits are made by related parties in the Company’s subsidiary TCL Finance Co., Ltd. | |||||
| Except that the deposits of the Company’s subordinates in the Financial Settlement Centre and the Centre’s borrowings to the subordinates are interest-bearing, all the other amounts due from and to related parties bear no interest, collateral or fixed payment dates. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| VIII | Commitments | ||||
| 1 | Lease Commitments | ||||
| The following table presents the minimum lease payables after the balance sheet date according to the irrevocable operating lease contracts signed by the Company： | |||||
| 30 June 2018 | 31 December 2017 | ||||
| Year 1 | 77,254 | 61,451 | |||
| Year 2 | 62,652 | 52,297 | |||
| Year 3 | 46,659 | 43,809 | |||
| Thereafter | 89,203 | 52,515 | |||
| 275,768 | 210,072 | ||||
| 2 | Capital Commitments | ||||
| 30 June 2018 | 31 December 2017 | ||||
| Under contractual obligations but not provided for | Note 1 | 6,961,897 | 8,322,088 | ||
| Approved by Board but not under contractual obligations | Note 2 | 11,207 | - | ||
| 6,973,104 | 8,322,088 | ||||
| Note 1. The capital commitments under contractual obligations but not provided for in the current period primarily consisted of such commitments for construction of investment projects and external investments. | |||||
| Note 2. The capital commitments approved by the Board but not under contractual obligations in the current period primarily consisted of such commitments for CSOT’s LCD panel project. | |||||
| As at 30 June 2018, except for the disclosures above, there were no other major commitments that are required to be disclosed. | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IX | Contingencies |
| 1 | Guarantees Provided for External Parties |
| (1) | The guarantee amount for associates’ bank loans, commercial drafts, letters of credit, etc. is RMB587,060,000. |
| As at 30 June 2018, the Company estimated that it was not likely for the aforesaid guarantees to cause a material loss, so it did not record a provision in the financial statements for it. Except for the said contingencies, there were no other major contingencies that are required to be disclosed as at 30 June 2018. | |
| X | Events after Balance Sheet Date |
| 1 | As per the China Securities Regulatory Commission’s Reply ZJXK [2017] No. 276 on the Approval of TCL Corporation’s Public Offering of Corporate Bonds to Qualified Investors and TCL Corporation’s Announcement on the Public Offering of 2018 Corporate Bonds to Qualified Investors (Phase 2), the Company publicly issued on 16 August 2018 RMB2 billion of corporate bonds to qualified investors, with a maturity of five years and a coupon rate of 5.30%. |
| Except for the aforesaid event, there were no other significant post-balance-sheet-date events that are required to be disclosed as at the date of the authorization of the financial statements for issue. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XI | Other Significant Events |
| 1 | In order to further improve its incentive and governance system and attach equal importance to incentive and constraint, the Company released on 3 March 2018 the Top 400 and Key Personnel Stock Ownership Plan and the Global Partner Plan of TCL Corporation (Draft) (hereinafter referred to as the “Partner Plan”), as well as the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation (Draft), for key medium- and high-level employees, as well as for medium- and low-level employees, respectively. For the first Partner Plan, the specialized incentive fund for 2018 is expected to not exceed RMB280 million. With the subscription of a total of 34,676,444 restricted incentive shares in the Reporting Period, the Company’s total share capital has increased from 13,514,972,063 shares to 13,549,648,507 shares. |
| 2 | According to the 2017 Final Dividend Plan approved at the general meeting on 18 May 2018, based on the Company’s total share capital of 13,514,972,063 shares as at 27 April 2018 and the 34,676,444 granted restricted incentive shares (together, 13,549,648,507 shares), a cash dividend of RMB1.00 (tax inclusive) per 10 shares was paid in the Reporting Period to all the shareholders, totaling RMB1,354,964,850.7. |
| 3 | As per the China Securities Regulatory Commission’s Reply ZJXK [2017] No. 276 on the Approval of TCL Corporation’s Public Offering of Corporate Bonds to Qualified Investors and TCL Corporation’s Announcement on the Public Offering of 2018 Corporate Bonds to Qualified Investors (Phase 1), the Company publicly issued on 5 June 2018 RMB1 billion of corporate bonds to qualified investors, with a maturity of five years and a coupon rate of 5.48%. |
| Except for the aforesaid events, there were no other other significant events that are required to be disclosed as at 30 June 2018. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent | |||||||||
| 1 | Accounts Receivable | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | |||
| Within 1 year | 347,661 | 100.00% | - | 0.00% | 340,349 | 100.00% | - | 0.00% | ||
| As at 30 June 2018, there were no such accounts receivable from any shareholder with a 5% or greater voting stock. | ||||||||||
| 2 | Other Receivables | |||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | |||
| Within 1 year | 10,516,349 | 86.86% | - | 0.00% | 8,840,984 | 86.97% | - | 0.00% | ||
| 1-2 years | 1,190,781 | 9.83% | - | 0.00% | 1,006,354 | 9.90% | - | 0.00% | ||
| 2-3 years | 141,392 | 1.17% | - | 0.00% | 110,185 | 1.08% | - | 0.00% | ||
| Over 3 years | 259,489 | 2.14% | 87,874 | 33.86% | 209,295 | 2.05% | 88,560 | 42.31% | ||
| 12,108,011 | 100.00% | 87,874 | 0.73% | 10,166,818 | 100.00% | 88,560 | 0.87% | |||
| The outstanding other receivables were mostly current accounts with related parties. As at 30 June 2018, there were no such other receivables from any shareholder with a 5% or greater voting stock. | ||||||||||
| The top five other receivables amounted to approximately RMB7,358,243,000 (31 December 2017: RMB7,362,890), accounting for 60.77% of the total other receivables (31 December 2017: 72.42%). | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||||||||
| 3 | Available-for-Sale Financial Assets | |||||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||||
| Available-for-sale equity instruments——at fair value (1) | 53,962 | 79,824 | ||||||||||||||
| Available-for-sale equity instruments——at cost (2) | 1,144,694 | 1,144,694 | ||||||||||||||
| 1,198,656 | 1,224,518 | |||||||||||||||
| (1) Available-for-Sale Equity Instruments——at Fair Value | ||||||||||||||||
| Cost | Change in fair value | Ending balance | ||||||||||||||
| Refond Optoelectronics (SZ.300241) | 40,000 | 13,962 | 53,962 | |||||||||||||
| (2) Available-for-Sale Equity Instruments——at Cost | ||||||||||||||||
| Investee | The Company’s interest | 30 June 2018 | 31 December 2017 | |||||||||||||
| Huizhou TCL Magnet Products Co., Ltd. | 5.00% | 76 | 76 | |||||||||||||
| National Source Coding Center (Beijing) | 7.52% | 5,000 | 5,000 | |||||||||||||
| Shanlian Information Technology Engineering Center Co., Ltd. | 19.23% | 10,000 | 10,000 | |||||||||||||
| Samsung Suzhou LCD Co., Ltd. | 10.00% | 625,949 | 625,949 | |||||||||||||
| Boluo County Rural Commercial Bank | 6.05% | 203,669 | 203,669 | |||||||||||||
| Beijing Shangyun Chuangzhan Investment Center (Limited Partnership) | 10.00% | 50,000 | 50,000 | |||||||||||||
| Kunshan Wantong Kaiyuan Equity Investment Center (Limited Partnership) | 5.00% | 50,000 | 50,000 | |||||||||||||
| Guokai Siyuan (Beijing) Investment Fund Co., Ltd. | 3.95% | 200,000 | 200,000 | |||||||||||||
| 1,144,694 | 1,144,694 | |||||||||||||||
| 4 | Long-Term Equity Investments | |||||||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||||||
| Long-term equity investments at equity method | 9,366,925 | - | 9,366,925 | 8,889,011 | - | 8,889,011 | ||||||||||
| Of which：Associates (1) | 9,345,041 | - | 9,345,041 | 8,866,421 | - | 8,866,421 | ||||||||||
| Joint ventures (1) | 21,884 | - | 21,884 | 22,590 | - | 22,590 | ||||||||||
| Subsidiaries (2) | 28,564,323 | - | 28,564,323 | 26,094,554 | - | 26,094,554 | ||||||||||
| 37,931,248 | - | 37,931,248 | 34,983,565 | - | 34,983,565 | |||||||||||
| As at 30 June 2018, there were no significant restrictions on sale of the long-term equity investments or collection of the investment income. | ||||||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||||||||||
| 4 | Long-Term Equity Investments (Continued) | |||||||||||||||||
| (1) | Joint Ventures and Associates | |||||||||||||||||
| Changes in current period | ||||||||||||||||||
| Beginning amount | Change in investment in current period | Investment income/(loss) at equity method | Adjustment in other comprehensive income | Other changes in equity | Cash dividends or profits declared | Impairment allowance | Other changes | 30 June 2018 | ||||||||||
| LG Innotek Huizhou Co., Ltd. | 81,554 | - | 3,402 | - | - | (10,135) | - | 2,037 | 76,858 | |||||||||
| Huan Tech Co., Ltd. | 158,042 | - | 561 | - | - | - | - | - | 158,603 | |||||||||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 2,291 | - | (100) | - | - | - | - | - | 2,191 | |||||||||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | 637,000 | - | 6,936 | - | - | - | - | 25,751 | 669,687 | |||||||||
| Gaoshengda Holdings (Huizhou) Co., Ltd. | 49,733 | - | 7,713 | - | - | - | - | - | 57,446 | |||||||||
| Huizhou Shangdian Law Firm Waterway Construction Investment Co., Ltd. | 48,081 | - | (223) | - | - | - | - | (47,858) | - | |||||||||
| Huizhou TCL Resource Investment Co., Ltd. | 65,532 | - | (9,716) | - | - | - | - | - | 55,816 | |||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 53,012 | - | 4,393 | - | - | - | - | - | 57,405 | |||||||||
| Bank of Shanghai Co., Ltd. | 7,630,711 | - | 467,562 | 3,171 | - | - | - | - | 8,101,444 | |||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||||||||||
| 4 | Long-Term Equity Investments (Continued) | |||||||||||||||||
| (1) | Joint Ventures and Associates | |||||||||||||||||
| Changes in current period | ||||||||||||||||||
| Beginning amount | Change in investment in current period | Investment income/(loss) at equity method | Adjustment in other comprehensive income | Other changes in equity | Cash dividends or profits declared | Impairment allowance | Other changes | 30 June 2018 | ||||||||||
| Hubei Consumer Finance Company | 120,343 | - | 5,836 | - | - | - | - | - | 126,179 | |||||||||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 12,921 | - | 1,229 | - | - | (1,163) | - | - | 12,987 | |||||||||
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | 1,200 | - | 1,595 | - | - | - | - | - | 2,795 | |||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,000 | - | (541) | - | - | - | - | - | 5,459 | |||||||||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | 22,590 | - | (706) | - | - | - | - | - | 21,884 | |||||||||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | - | 16,103 | 2,068 | - | - | - | - | 18,171 | ||||||||||
| \ | ||||||||||||||||||
| 8,889,010 | 16,103 | 490,009 | 3,171 | - | (11,298) | - | 20,070 | 9,366,925 | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent (Continued) | ||||||||
| 4 | Long-Term Equity Investments (Continued) | ||||||||
| (2) | Subsidiaries | ||||||||
| Voting right percentage | 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | |||||
| TCL Industries Holdings (HK) Limited | 100.00% | 1,344,042 | - | - | 1,344,042 | ||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 86.81% | 18,727,299 | 270,005 | - | 18,997,304 | ||||
| Huizhou TCL Household Electric Appliance Group Co., Ltd. | 100.00% | 448,000 | 54 | - | 448,054 | ||||
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | 80.00% | 65,000 | - | - | 65,000 | ||||
| Huizhou Cool Friends Network Technology Co., Ltd. | 55.00% | 273,144 | - | - | 273,144 | ||||
| Koyoo Online Service Co., Ltd. | 100.00% | 25,469 | - | - | 25,469 | ||||
| Techne Corporation | 55.00% | 37,954 | - | - | 37,954 | ||||
| Xinjiang TCL Equity Investment Co., Ltd. | 100.00% | 200,000 | - | - | 200,000 | ||||
| Huizhou TCL Environmental Resource Co., Ltd. | 100.00% | 300,000 | - | (26,987) | 273,013 | ||||
| Highly Information Industry Co., Ltd. | 73.69% | 107,296 | - | - | 107,296 | ||||
| Shenzhen TCL Industrial Technology Research Institute, Ltd. | 0.00% | 17,500 | - | (17,500) | - | ||||
| TCL Communication Equipment (Huizhou) Co., Ltd. | 75.00% | 79,500 | - | - | 79,500 | ||||
| TCL Finance Co., Ltd. | 82.00% | 1,256,003 | 47 | - | 1,256,050 | ||||
| Shenzhen TCL High-Tech Development Co., Ltd. | 100.00% | 20,000 | 16 | - | 20,016 | ||||
| Huizhou TCL Hongchuang Technology Co., Ltd. | 100.00% | 5,000 | - | - | 5,000 | ||||
| Huizhou TCL International Hotels Limited | 100.00% | 49,993 | - | - | 49,993 | ||||
| Guangzhou TCL Science and Technology Development Co., Ltd. | 100.00% | 230,000 | - | - | 230,000 | ||||
| Xi’an TCL Industrial Technology Research Institute Co., Ltd. | 100.00% | 150,000 | 15 | - | 150,015 | ||||
| TCL Home Appliances (Hefei) Co., Ltd. | 100.00% | 300,000 | 379 | - | 300,379 | ||||
| Huizhou TCL Light Electrical Appliances Co., Ltd. | 100.00% | 40,037 | 30,000 | - | 70,037 | ||||
| Huarui (Huizhou) Co., Ltd. | 67.10% | 51,000 | 16,105 | - | 67,105 | ||||
| Shenzhen TCL Real Estate Co., Ltd. | 0.00% | 212,958 | - | (212,958) | - | ||||
| Huizhou Taichuang Investment Development Co., Ltd. | 0.00% | 50,000 | - | (50,000) | - | ||||
| Guangzhou Xitian Technology Information Co., Ltd. | 50.00% | 15,000 | - | - | 15,000 | ||||
| Guangzhou Yunsheng Tianji Technology Co., Ltd. | 50.00% | 150,000 | - | - | 150,000 | ||||
| TCL Culture Media (Shenzhen) Co., Ltd. | 100.00% | 263,414 | 90,000 | - | 353,414 | ||||
| TCL Finance Holdings Group (Guangzhou) Co., Ltd. | 100.00% | 285,000 | 400,023 | - | 685,023 | ||||
| Guangzhou TCL Internet Microcredit Co., | 100.00% | 200,000 | 300,008 | - | 500,008 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Ltd. | |||||||||
| Shenzhen HAWK Internet Co., Ltd. | 100.00% | 350,000 | - | - | 350,000 | ||||
| HAWK Digital Entertainment Technology (Shenzhen) Co., Ltd. | 100.00% | 50,000 | - | - | 50,000 | ||||
| TCL Intelligent Industry (Huizhou) Co., Ltd. | 100.00% | 59,000 | - | - | 59,000 | ||||
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | 80.00% | 135,624 | 270,020 | - | 405,644 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 4 | Long-Term Equity Investments (Continued) | ||||||||
| (2) | Subsidiaries | ||||||||
| Voting right percentage | 1 January 2018 | Increase in current period | Decrease in current period | 30 June 2018 | |||||
| Shenzhen HAWK Cloud Information Technology Co., Ltd. | 100.00% | 20,000 | - | - | 20,000 | ||||
| TCL Technology Park (Huizhou) Co., Ltd. | 100.00% | 285,324 | 180,000 | - | 465,324 | ||||
| TCL Technology Park Co., Ltd. | 100.00% | 150,000 | 1,212,958 | - | 1,362,958 | ||||
| Huizhou Sailuote Communication Co., Ltd. | 67.00% | 82,500 | - | - | 82,500 | ||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 100.00% | 58,497 | - | - | 58,497 | ||||
| Equity incentives of subsidiaries | - | 7,584 | - | 7,584 | |||||
| 26,094,554 | 2,777,214 | (307,445) | 28,564,323 |
| For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note V. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| XII | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||
| 5 | Operating Revenue and Cost of Sales | |||||||||
| H1 2018 | H1 2017 | |||||||||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |||||||
| Core business | 608,360 | 602,601 | 431,801 | 425,298 | ||||||
| Non-core business | 419,737 | 329,814 | 189,546 | 89,162 | ||||||
| 1,028,097 | 932,415 | 621,347 | 514,460 | |||||||
| 6 | Investment Income | |||||||||
| H1 2018 | H1 2017 | |||||||||
| Investment income from disposal of wealth management instruments | 233,615 | 147,846 | ||||||||
| Dividends from subsidiaries | 1,944,633 | 208,787 | ||||||||
| Share of profit of associates for current period | 490,715 | 290,877 | ||||||||
| Share of profit of joint ventures for current period | (706) | (1,196) | ||||||||
| Investment income from holding available-for-sale financial assets | 8,761 | 9,240 | ||||||||
| Net income from disposal of long-term investments | (50,546) | 3,000 | ||||||||
| 2,626,472 | 658,554 | |||||||||
| As at 30 June 2018, there were no significant restrictions on the collection of the investment income. | ||||||||||
| 7 | Contingent Liabilities | |||||||||
| The following table presents the contingent liabilities with no provisions in the financial statements as at 30 June 2018： | ||||||||||
| 30 June 2018 | 31 December 2017 | |||||||||
| Guarantees for commercial drafts and letters of guarantee of subsidiaries | 28,147,300 | 13,870,451 | ||||||||
| Guarantees for bank loans of subsidiaries | 17,279,120 | 11,580,724 | ||||||||
| Guarantees for bank loans and commercial drafts of joint ventures and associates | 587,060 | 667,610 | ||||||||
| As at 30 June 2018, the Company estimated that the guarantees above were not likely to cause a material loss. | ||||||||||
| XIII | Comparative Data | |||||||||
| Certain comparative data have been reclassified to comply with the presentation of the current period. | ||||||||||
| TCL Corporation |
| Attached: Supplementary Information to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
AI-1
| I | Weighted Average Return on Equity (ROE) and Earnings per Share (EPS) | |||||||||
| Item | Net profit for Reporting Period | Weighted average ROE | EPS (RMB yuan) | |||||||
| Basic EPS | Diluted EPS | |||||||||
| Net profit attributable to ordinary shareholders of the Company | 1,585,939 | 5.22% | 0.1173 | 0.1172 | ||||||
| Net profit attributable to ordinary shareholders of the Company before non-recurring gains and losses | 993,438 | 3.27% | 0.0734 | 0.0734 | ||||||
| ROE and EPS are calculated according to the Compilation Rules No. 9 for Information Disclosure of Companies Offering Securities to the Public——Calculation and Disclosure of Return on Equity and Earnings per Share (revised in 2010) issued by the China Securities Regulatory Commission. | ||||||||||
| EPS is calculated based on the weighted average outstanding ordinary shares of the Company. | ||||||||||
| Of which：non-recurring gains and losses | ||||||||||
| H1 2018 | H1 2017 | |||||||||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 17,143 | 19,855 | ||||||||
| 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 government’s uniform standards) | ||||||||||
| 525,525 | 526,340 | |||||||||
| 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 | - | 82,582 | ||||||||
| Gain or loss on fair-value changes in trading financial assets and liabilities & investment income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | ||||||||||
| (6,131) | (50,041) | |||||||||
| Non-operating income and expense other than above | 303,187 | (18,512) | ||||||||
| Income tax effects | (158,562) | (59,945) | ||||||||
| Non-controlling interests effects | (88,661) | (85,650) | ||||||||
| Non-recurring gains and losses attributable to ordinary shareholders of the Company as parent | 592,501 | 414,629 | ||||||||
| Non-recurring gains and losses are recognized according to the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gains and Losses (2008) (CSRC Document [2008] No. 43). | ||||||||||
| TCL Corporation |
| Attached: Supplementary Information to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
AI-2
| II | Schedules of Asset Impairment Allowances | ||||||||||
| 1 | Consolidated Schedules of Asset Impairment Allowances | ||||||||||
| 1 January 2018 | Increases in current period | Decreases in current period | 30 June 2018 | ||||||||
| Item | Established in current period | Newly consolidated subsidiaries | Reversed in current period | Written off in current period | Newly deconsolidated subsidiaries | Exchange adjustments | Total | ||||
| 1. Allowances for doubtful accounts | 821,385 | 140,505 | - | (30,554) | (16,242) | (10,840) | (3,358) | (60,994) | 900,896 | ||
| Including：Accounts receivable | 384,267 | 124,916 | - | (29,439) | (14,527) | (10,268) | (2,947) | (57,181) | 452,002 | ||
| Other receivables | 437,118 | 15,589 | - | (1,115) | (1,715) | (572) | (411) | (3,813) | 448,894 | ||
| 2. Inventory valuation allowances | 706,825 | 566,973 | - | (97,543) | (346,271) | (36,674) | 316 | (480,172) | 793,626 | ||
| 3. Impairment allowances for available-for-sale financial assets | 148,117 | 4,299 | - | - | (27,742) | (28,288) | (870) | (56,900) | 95,516 | ||
| 4. Impairment allowances for Long-term equity investments | 139,582 | - | - | - | - | - | - | - | 139,582 | ||
| 5. Impairment allowances for fixed assets | 612,761 | 47,065 | - | - | (16) | (336,152) | (37,191) | (373,359) | 286,467 | ||
| 6. Impairment allowances for intangible assets | 45,664 | - | - | - | - | - | (8,912) | (8,912) | 36,752 | ||
| 7. Impairment allowances for goodwill | 257,344 | - | - | - | - | - | - | - | 257,344 | ||
| 8. Allowances for doubtful accounts in rediscounting business of TCL Finance Co., Ltd. | 10,342 | 3,773 | - | - | - | - | - | - | 14,115 | ||
| 2,742,020 | 762,615 | - | (128,097) | (390,271) | (411,954) | (50,015) | (980,337) | 2,524,298 | |||
| TCL Corporation |
| Attached: Supplementary Information to Financial Statements |
| (For the period from 1 January 2018 to 30 June 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
AI-3
| 2 | Schedules of Asset Impairment Allowances of the Company as Parent | |||||||||
| 1 January 2018 | Increases in current period | Decreases in current period | ||||||||
| Item | Reversed in current period | Written off in current period | Total | 30 June 2018 | ||||||
| Allowances for doubtful accounts | 88,560 | 920 | - | (1,606) | (1,606) | 87,874 | ||||
| Including：Other receivables | 88,560 | 920 | - | (1,606) | (1,606) | 87,874 | ||||
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
AI-4
| III | Analysis of Changes in Financial Statement Data |
| 1 | Analysis of Changes in Data of Consolidated Financial Statements |
| Compared with the carrying amount as at 31 December 2017, the Group’s monetary capital as at 30 June 2018 declined by RMB9,846,889,000 (or approximately -36%), primarily driven by higher cash payments for investments. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s other current assets as at 30 June 2018 rose by RMB8,057,866,000 (or approximately 69%), primarily driven by new wealth management instruments. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s loans and advances to customers as at 30 June 2018 rose by RMB293,645,000 (or approximately 53%), primarily driven by a rise in the loans and advances to customers. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s investment property as at 30 June 2018 rose by RMB693,680,000 (or approximately 81%), primarily driven by new investment property. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s construction in progress as at 30 June 2018 rose by RMB8,150,845,000 (or approximately 55%), primarily driven by a rise in the investments in the t3 LCD panel and G11 production lines. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s other non-current assets as at 30 June 2018 rose by RMB4,713,923,000 (or approximately 139%), primarily driven by a rise in the prepayments for equipment. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s taxes payable as at 30 June 2018 declined by RMB392,042,000 (or approximately -31%), primarily driven by a decline in the corporate income taxes. | |
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
AI-5
| III | Analysis of Changes in Financial Statement Data |
| 1 | Analysis of Changes in Data of Consolidated Financial Statements |
| Compared with the carrying amount as at 31 December 2017, the Group’s short-term commercial papers payable as at 30 June 2018 rose by RMB2,000,000,000 (or 100%), primarily driven by new short-term commercial papers. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s other current liabilities as at 30 June 2018 declined by RMB2,563,071,000 (or approximately -42%), primarily driven by a decline in the financial assets sold under repurchase agreements. | |
| Compared with the carrying amount as at 31 December 2017, the Group’s long-term borrowings as at 30 June 2018 rose by RMB8,483,119,000 (or approximately 42%), primarily driven by new borrowings. | |
| Compared with the carrying amount for H1 2017, the Group’s other comprehensive income for H1 2018 declined by RMB445,324,000 (or approximately -203%), primarily driven by a decline in the differences arising from the translation of foreign currency-denominated financial statements. | |
| Compared with the carrying amount for H1 2017, the Group’s finance costs for H1 2018 declined by RMB369,921,000 (or approximately -46%), primarily driven by a decline in the exchange loss. | |
| Compared with the carrying amount for H1 2017, the Group’s asset impairment loss for H1 2018 rose by RMB452,575,000 (or approximately 249%), primarily driven by the impairment loss on inventories and fixed assets. | |
| Compared with the carrying amount for H1 2017, the Group’s gain on changes in fair value for H1 2018 declined by RMB234,923,000 (or approximately -179%), primarily driven by a decline in the gains on derivative financial instruments. | |
| Compared with the carrying amount for H1 2017, the Group’s investment income for H1 2018 rose by RMB294,713,000 (or approximately 37%), primarily driven by a rise in the investment income from joint ventures and associates. | |
| Compared with the carrying amount for H1 2017, the Group’s other income for H1 2018 rose by RMB430,555,000 (or approximately 69%), primarily driven by a rise in the R&D subsidies. | |
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
AI-6
| III | Analysis of Changes in Financial Statement Data (Continued) |
| 2 | Analysis of Changes in Data of Financial Statements of the Company as Parent |
| Compared with the carrying amount as at 31 December 2017, the monetary capital of the Company as the parent as at 30 June 2018 rose by RMB2,801,540,000 (or approximately 251%), primarily driven by a rise in the deposits from subsidiaries. | |
| Compared with the carrying amount as at 31 December 2017, the other current assets of the Company as the parent as at 30 June 2018 rose by RMB5,317,780,000 (or approximately 168%), primarily driven by a rise in the wealth management instruments. | |
| Compared with the carrying amount as at 31 December 2017, the accounts payable of the Company as the parent as at 30 June 2018 rose by RMB268,316,000 (or approximately 201%), primarily driven by a rise in the accounts payable to subsidiaries. | |
| Compared with the carrying amount as at 31 December 2017, the other payables of the Company as the parent as at 30 June 2018 rose by RMB10,596,522,000 (or approximately 180%), primarily driven by a rise in the other payables to subsidiaries. | |
| Compared with the carrying amount as at 31 December 2017, the short-term commercial papers payable of the Company as the parent as at 30 June 2018 rose by RMB2,000,000,000 (or 100%), primarily driven by new short-term commercial papers. | |
| Compared with the carrying amount as at 31 December 2017, the current portion of non-current liabilities of the Company as the parent as at 30 June 2018 rose by RMB1,808,431,000 (or approximately 75%), primarily driven by a rise in the current portion of corporate bonds. | |
TCL Corporation28 August 2018
The financial statements and the notes thereto from page 1 to page 157, as well as the supplementaryinformation from page AI-1 to page AI-6, are signed by the following personnel:
| Legal representative: | Head for financial affairs： | Head of the financial department： |