TCL Corporation Annual Report 2018
TCL CORPORATION
TCL集团股份有限公司
ANNUAL REPORT 2018
19 March 2019
Reform and Transform to Increase Competitiveness and Shareholder Value
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 8
Part II Corporate Information and Key Financial Information ...... 11
Part III Business Summary ...... 17
Part IV Directors’ Report ...... 22
Part V Significant Events ...... 56
Part VI Share Changes and Shareholder Information ...... 95
Part VII Directors, Supervisors, Senior Management and Staff ...... 105
Part VIII Corporate Governance ...... 124
Part IX Corporate Bonds ...... 138
Part X Independent Auditor’s Report and Financial Statements ...... 145
Reform and Transform to Increase Competitiveness and Shareholder Value
Chairman’s Statement
Dear shareholders, partners and employees,In 2018, the greater downward pressure on the global and China’s economy, as well as theslowing-down or even negative market growth posed a tough challenge to the Group’s businessoperations. In face of such a complicated and harsh operating environment, TCL followed the setstrategic reform and transformation direction, continued to refine its business structure, and madegreat efforts to promote development in all its businesses. As a result, its operating performancecontinued to improve. For 2018, the Group recorded operating revenue of RMB113.36 billion, flatwith last year; and a net profit of RMB4.07 billion, of which the net profit attributable to TCLshareholders amounted to RMB3.47 billion, up by 30.2% over the figure of 2017 (2017-over-2016growth: 66.3%). Therefore, all the operating objectives set for 2018 have been accomplished. Theoperating performance of the past two years has enhanced our determination to move on with thereform and transformation.The Group promoted a strategic concentration, increased operational efficiency andcontinued to strengthen competitiveness. In 2018, following the reform and transformationstrategy, we further concentrated on our core business, clarified development strategies for all themajor businesses, optimized the organizational structure and flow, increased operational efficiencyand enhanced technological innovation. In the year, the Group divested another 39 non-coresubsidiaries. Its business structure has been adjusted to comprise four business groups, i.e. thesemi-conductor display and material business, the intelligent terminal business, the industrialfinance & investment and venture capital business, as well as the emerging business group, with thefirst two being the core. Thanks to better efficiency and competitiveness as a result of reform andrestructuring, the Group’s overall operating performance continued to improve.Affected by the cyclical downturn of the global industry, the semi-conductor display business haswitnessed, starting from the second quarter of the year, a considerable drop in product prices, ayear-on-year decline in sales revenue and a significantly narrowed gross profit margin. CSOTmaintained full production and sales through various reform and transformation initiatives. TheLTPS plant in Wuhan (the t3 project) reached full capacity in the fourth quarter, and the G11 LCD
Reform and Transform to Increase Competitiveness and Shareholder Value
plant in Shenzhen (the t6 project) started production in late 2018. The sales volumes of all theproducts registered ongoing growth in the year. Amid a weak industry, CSOT was able to maintaingood profitability by means of promoting cost efficiency, strengthening coordination and improvingtechnological capability. CSOT not only represented the biggest profit contributor to the Group, butalso posted operating results much better than its peers in the year.The intelligent terminal business group improved in 2018, turning from a huge deficit in 2017(primarily caused by the mobile communication terminal business) to a profit of nearly RMB0.3billion in 2018. To be specific, the color TV business showed a strong growth with a full-year salesvolume (ODM inclusive) of 28.96 million units, ranking second around the world; the homeappliance and smart speaker business registered steady development; and the mobilecommunication terminal business recorded a much smaller deficit.But this is still a low-profit-margin business, with fast product and technology transitions. Exceptfor a competitive scale for the smart TV business, all the other businesses are of a small scale withinsufficient profitability and driving force. What’s more, the intelligent terminal business and thesemi-conductor display business vary greatly in organizational flow and management logic.Therefore, in order to concentrate resources for a bigger and stronger semi-conductor displaybusiness, the Group has decided to divest the intelligent terminal business. The newly incorporatedTCL Holdings will acquire this business, together with its assets, liabilities and employees. Webelieve that this restructuring will also enable the intelligent terminal business to concentrate on itscore operations, optimize its organizational structure and business flow, as well as increase itsefficiency, economic benefits and competitiveness.Having been approved at a general meeting, this major asset restructuring is expected to becompleted soon, including the delivery of assets. After the restructuring, the Group will rely on thesemi-conductor display and material business as its core, and sustain the industrial finance &investment and venture capital business in addition to other businesses.The Group’s major operating indicators improved significantly through the strategicrestructuring. According to the 2018 figures for reference, after the restructuring, the Group’s netprofit margin will rise from 3.59% to 7.35%; debt/asset ratio will drop from 68.4% to 64.1% with acash amount of RMB4.76 billion received; and number of employees will decrease from 90,000 to
Reform and Transform to Increase Competitiveness and Shareholder Value
30,000. Furthermore, the organizational and capital structure, as well as the financial position havebeen further improved. Despite a considerable drop in consolidated sales revenue caused by therestructuring, it is believed that the Group’s sales revenue, operating profit and cash flow willcontinue to increase in the coming years as CSOT implements a production ramp-up and the otherbusinesses expand. In addition, this restructuring has boosted the Group’s financings, which meansthat equity financing is no longer needed for the subsequent construction and expansion of CSOT’st4 and t6 projects, as well as the construction of its t7 project.This major asset restructuring is a big change to the Group’s operating philosophy andorganizational flow. The Group has shifted from diversified operations to dedicated operations,which are considered a more efficient and competitive model with a high return for shareholders inview of the history of business models around the world.Looking forward into 2019, there are still many challenges and uncertainties ahead for the globaland China’s economy, but the fittest will survive amid the fiercer competition in the industry. Whatcomes together with challenges is opportunities. The Chinese government continues to providegreat support for the real economy with multiple such initiatives launched this year, which will helpgreatly boost the profit of the domestic manufacturing sector. Meanwhile, the reshuffle of the globaleconomic landscape will also create new opportunities for Chinese enterprises with competitiveglobal operations. China has become the center of the global semi-conductor display industry, withthe largest scale, as well as fast growing technological capability and related industries. Despite arecently slight oversupply on the market, the core application expansion of new technologies willboost global demand and gradually change the supply-demand condition, which means a largerspace for business development. We have absolute faith in the semi-conductor industry, a key basichigh-tech industry with great potentials that calls for outstanding strength in technology, capital andmanagement. We are confident that we will be able to achieve ongoing growth amid thecompetition in the global industry.After this restructuring, the Group will become a high-tech conglomerate with a greaterability of sustainable development. CSOT will deepen its reform and transformation throughoptimizing the organizational flow, increasing operational efficiency, enhancing technologicalcapability and fully strengthening competitiveness. Additionally, it will make efforts to develop new
Reform and Transform to Increase Competitiveness and Shareholder Value
display technologies and materials, promote upstream and downstream business expansion, as wellas carry out M&As when opportunities arise for better competitiveness. We are at the forefront ofthe global new semi-conductor display industry. Guangdong Juhua, a TCL subsidiary, has beengiven the green light to establish the “National Printed and Flexible Display Innovation Center”. Inthe field of new display materials, China Ray has undertaken the national “Printed OLED KeyMaterial Commercialization Demonstration Programme”, with the materials developed being of aworld-leading performance. Meanwhile, the research achievements in relation to QLED materialshave been published on Nature Communications, a top international science magazine, with thenumber of QLED patents ranking No. 2 around the world. By the end of 2018, the Group hasaccumulatively applied for 9,990 patents through PCT, one of the highest numbers among Chinesecompanies. We are determined to establish leading competitive edges in the global semi-conductordisplay and material industry.CSOT is believed to register a considerable rise in sales revenue and a double-digit growth in profitfor 2019, driven by its great operating efficiency, global presence, synergy with other businessesand the production ramp-up of the t6 project.The industrial finance & investment and venture capital business will concentrate on providingasset management and financial services for the development of the core business, as well as ongenerating steady and increasing profit. It will also actively expand the supply chain financebusiness for higher capital gains. The venture capital business will explore opportunities forbusiness and technological synergy, as well as entering into new businesses. The investmentbusiness will generate stable earnings for the Group. The profit contributions from this businessgroup can help offset the impact of cyclical performance swings on the semi-conductor displaysector.As for the emerging business group, the Group will further refine the business structure bycontinuing to divest non-core businesses according to the principle of maximum value forshareholders. The Group will also enter into other key basic high-tech industries when the timing isripe by means of M&A, etc., so as to foster new driving force.In addition to corporate development, we also pay attention to the protection of shareholderinterests, enhancing shareholder value through various effective measures. The Group will maintain
Reform and Transform to Increase Competitiveness and Shareholder Value
a proactive and sound business model, and keep operating risks under control while developing, soas to maintain ongoing, steady growth. We stick to a policy of stable and increasing dividend todeliver return to our shareholders, attract value investors, and achieve common long-termdevelopment with our shareholders.On behalf of the Board of Directors of TCL, I’d like to take this opportunity to express my gratitudefor the trust of all our shareholders, for the support from all our partners and users, as well as for thehard work of TCL’s management team and staff!
Li Dongsheng19 March 2019
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”) hereby guarantee the factuality, accuracy and completeness of the contents ofthis 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 Reportand its summary.The Board has approved a final dividend plan for the ordinary shareholders as follows: basedon the share capital of 13,402,888,507 shares on 19 March 2019 that are eligible for profitdistribution (the total share capital of 13,549,648,507 shares minus the 146,760,000 shares inthe Company’s special securities account for repurchase that are not eligible for profitdistribution), a cash dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to theshareholders, totaling RMB1,340,288,851. The retained earnings of RMB7,628,922,531 willcarry forward for future distribution. Meanwhile, there will be no bonus issue from eitherprofit or capital reserves for the year under review.Mr. Li Dongsheng, the Chairman of the Board, Ms. Du Juan, the person-in-charge offinancial affairs (Chief Financial Officer), and Mr. Xi Wenbo, the person-in-charge of thefinancial department, hereby guarantee that the financial statements carried in this Reportare factual, accurate and complete.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
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 31 December 2018 |
| TCL Holdings, TCL Industries Holdings | TCL Industries Holdings (Guangdong) Inc. |
| The “Major Asset Restructuring” or “Restructuring” | The major asset restructuring approved at the 13th meeting of the 6th Board of Directors on 7 December and the First Extraordinary General Meeting of 2019 on 7 January 2019 |
| 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, a listed company on the Stock Exchange of Hong Kong (stock code: 01777.HK), with the Company holding a 20.08% interest as its second largest shareholder |
| Admiralty Harbour Capital | Admiralty Harbour Capital Limited |
| Environmental Resource | Huizhou TCL Environmental Resource Co., Ltd. |
| Thunderbird Technology | Shenzhen Thunderbird Network Technology Co. |
| TCL Culture Media | TCL Culture Media (Shenzhen) Co., Ltd. |
| Educational Web | TCL Educational Web Ltd. |
| Open Edutainment | Beijing National Center for Open & Distance Education Co., Ltd. |
| Tsinghua Unigroup | Tsinghua Unigroup Co., Ltd. |
| TCL Industries | TCL Industries Holdings (HK) Limited |
| TCL Household Electric Appliance | Huizhou TCL Household Electric Appliance Group Co., Ltd. |
| Hefei Home Appliances | TCL Home Appliances (HeFei) Co., Ltd. |
| Cool Friends Technology | Huizhou Cool Friends Network Technology Co., Ltd. |
| Koyoo Online Service | Koyoo Online Service Co., Ltd. |
| TCL Technology Park | TCL Technology Park Co., Ltd. |
| JDH | JDH Information Tech (Zhuhai) Co., Ltd. |
| Getech | Getech Ltd. |
| t1 project | The generation 8.5 (or G8.5) TFT-LCD production line of CSOT |
| 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 |
Part II Corporate Information and Key Financial Information
I Corporate Information
| 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. | TCL集团 | ||
| Company name in English (if any) | TCL Corporation | ||
| Abbr. (if any) | TCL Corp. | ||
| Legal representative | Li Dongsheng | ||
| Registered address | Block 19, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province | ||
| Zip code | 516001 | ||
| 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 | ||
| Company honors | ? R&F Top 100 in Brand Value ? Forbes Top 100 Digital Companies ? Top 50 Chinese Global Brand Builders 2018 ? 2017-2018 Consumer Electronics Top 10 Brands from China, 2017-2018 Global TV Brands Top 15, 2017-2018 Global Top 20 Smart Phones Brand, and 2017-2018 Global Consumer Electronics Brands Top 50 granted by International Data Group (“IDG”) ? No. 8 among the 2017 Guangdong Private Enterprises Top 100 for the excellent operating performance of 2017 ? CES Asia 2018 Innovation Awards for TCL C6 New Theater TV and TCL Crystal Four-Door Refrigerator ? Listed Company Most Respected by Investors 2017 ? No. 5 among the 2018 Chinese Electronic Information Enterprises Top 100 unveiled by China Information Technology Industry Federation ? Forbes: World’s Best Employers ? Best Board of Directors, Best Board Secretary and Best New Media Operation at the 9th Tianma Awards | ||
II Contact Information
TCL Investor Relations Platform TCL on Weibo TCL on WeChat
| 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 Media for Information Disclosure and Place where this Report Is Lodged
| 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 lodged | Board Office of TCL Corporation |
IV Change to Company Registered Information
| Unified social credit code | 91441300195971850Y |
| Change to principal activity of the Company since going public (if any) | N/A |
| Every change of controlling shareholder since incorporation (if any) | No change |
V Other Information
The independent audit firm hired by the Company:
| Name | Da Hua Certified Public Accountants (Special General Partnership) |
| Office address | Room 1101, Building 7, No. 16 Xi Si Huan Zhong Road, Haidian District, Beijing |
| Accountants writing signatures | Zhang Yuanyuan and Li Bingxin |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable ■ Not applicableThe independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
| Name | Office address | Representative | Period of supervision |
| CITIC Securities Co., Ltd. | CITIC Securities Tower, No. 8 Zhongxin 3rd Road, Futian District, Shenzhen, China | Huang Biao and Liu Jian | From 25 December 2017 to 31 December 2018 |
VI Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.□ Yes ■ No
| Series No. | Item | 2018 | 2017 | 2018-over-2017 change (%) | 2016 |
| 1 | Operating revenue (RMB) | 113,360,075,545 | 111,577,362,348 | 1.60 | 106,473,499,866 |
| 2 | Gross profit (RMB) | 20,393,602,825 | 22,512,673,777 | -9.41 | 17,658,421,891 |
| 3 | EBITDA | 14,096,523,261 | 13,395,054,317 | 5.24 | 8,615,427,516 |
| 4 | Profit before tax (RMB) | 4,944,376,186 | 4,789,740,570 | 3.23 | 2,796,969,138 |
| 5 | Net profit (RMB) | 4,065,194,164 | 3,544,702,884 | 14.68 | 2,137,539,667 |
| Net profit attributable to the listed company’s shareholders (RMB) | 3,468,207,407 | 2,664,396,006 | 30.17 | 1,602,125,331 | |
| Net profit attributable to the listed company’s shareholders before non-recurring gains and losses (RMB) | 1,587,391,372 | 1,190,649,328 | 33.32 | 13,337,995 | |
| 6 | Basic earnings per share (RMB/share) (note) | 0.2566 | 0.2178 | 17.81 | 0.1312 |
| Diluted earnings per share (RMB/share) | 0.2562 | 0.2178 | 17.63 | 0.1312 | |
| Basic earnings per share before non-recurring gains and losses (RMB/share) | 0.1175 | 0.0973 | 20.76 | 0.0011 | |
| 7 | Weighted average return on equity (%) | 11.98 | 10.86 | Up by 1.12 percentage points | 7.17 |
| Weighted average return on | 5.48 | 4.86 | Up by 0.62 percentage | 0.06 |
| equity before non-recurring gains and losses (%) | point | ||||
| 8 | Net cash generated from/used in operating activities (RMB) | 10,486,580,443 | 9,209,615,123 | 13.87 | 8,028,002,475 |
| Net cash per share generated from/used in operating activities (RMB/share) | 0.7739 | 0.6814 | 13.57 | 0.6573 | |
| 31 December 2018 | 31 December 2017 | Change of 31 December 2018 over 31 December 2017 (%) | 31 December 2016 | ||
| 9 | Total assets (RMB) | 192,763,941,739 | 160,293,985,835 | 20.26 | 147,136,785,349 |
| 10 | Total liabilities (RMB) | 131,892,269,092 | 106,151,046,949 | 24.25 | 101,390,003,766 |
| 11 | Debt/asset ratio (%) | 68.42 | 66.22 | Up by 2.2 percentage points | 68.91% |
| Debt/asset ratio before borrowings obtained using bank deposit as a pledge and deferred income (%) | 67.05 | 64.55 | Up by 2.5 percentage points | 66.42% | |
| 12 | Total owners’ equity (RMB) | 60,871,672,647 | 54,142,938,886 | 12.43 | 45,746,781,583 |
| Owners’ equity attributable to the listed company’s shareholders (RMB) | 30,494,364,951 | 29,747,067,178 | 2.51 | 22,764,892,022 | |
| 13 | Share capital (share) | 13,549,648,507 | 13,514,972,063 | 0.26 | 12,213,681,742 |
| 14 | Equity per share attributable to the listed company’s shareholders (RMB/share) | 2.2506 | 2.2010 | 2.25 | 1.8639 |
The total share capital at the end of the last trading session before the disclosure of this Report:
| Total share capital at the end of the last trading session before the disclosure of this Report (share) | 13,549,648,507 |
| Fully diluted earnings per share based on the latest total share capital above (RMB/share) | 0.2562 |
Indicate whether there are any corporate bonds.■ Yes □ NoIndicate whether the Company has seen a deficit for the past two years.□ Yes ■ No □ Not applicable
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
□ Yes ■ Not applicable
1. Net Profit and Equity 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
VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 25,629,844,055 | 26,893,904,238 | 29,713,396,587 | 31,122,930,665 |
| Net profit | 788,045,509 | 912,794,351 | 1,175,114,242 | 1,189,240,062 |
| Net profit attributable to the listed company’s shareholders | 730,837,280 | 855,101,003 | 903,723,232 | 978,545,892 |
| Net profit attributable to the listed company’s shareholders before non-recurring gains and losses | 521,159,061 | 472,277,800 | 601,362,425 | -7,407,914 |
| Net cash generated from/used in operating activities | 3,034,386,560 | 1,340,841,734 | 3,181,204,574 | 2,930,147,575 |
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what have beendisclosed in the Company’s quarterly or interim reports.□ Yes ■ No
IX Non-Recurring Gains and Losses
Unit: RMB
| Item | 2018 | 2017 | 2016 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance | -58,305,452 | 420,543,530 | 461,546,531 | Not applicable |
| write-offs) | ||||
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 1,377,064,570 | 1,159,442,050 | 1,112,069,855 | Not applicable |
| 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 | - | 191,917,137 | 34,527,018 | |
| 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) | 162,729,226 | -207,276,526 | 250,397,833 | The RMB163 million income from wealth managed products in the Reporting Period was recognized as a non-recurring gain as per the CSRC rules. |
| Non-operating income and expense other than the above | 871,846,769 | 504,575,138 | 17,914,360 | Not applicable |
| Gain on the remeasurement of the fair value of the remaining equity interests in entities over which the Company has ceased control | - | - | 392,545,425 | |
| Less: Corporate income tax | 191,940,974 | 310,502,820 | 251,325,615 | Not applicable |
| Non-controlling interests (net of tax) | 280,578,104 | 284,951,831 | 428,888,071 | Not applicable |
| Total | 1,880,816,035 | 1,473,746,678 | 1,588,787,336 | Not applicable |
Explanation of why the Company reclassifies as recurrent a non-recurring gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/LossItems:
□ Applicable ■ Not applicable
Part III Business Summary
I Principal Activity of the Company in the Reporting PeriodDuring the Reporting Period, the Group primarily consists of the following three major businessgroups:
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 GroupIt is responsible for the overall management of the Group’s platform services, strategic emergingbusiness and financial control system.
A major asset restructuring plan has been approved at the Group’s general meeting on 7 January2019. And the restructuring is currently progressing on track. Upon the completion of therestructuring, the Group’s core businesses will be modified to comprise the semi-conductor displayand material business, the industrial finance & investment and venture capital business and theemerging business group:
1. The Semi-Conductor Display and Material BusinessIt consists of CSOT, CDOT (0334.HK), Guangdong Juhua and China Ray.2. The Industrial Finance & Investment and Venture Capital BusinessIt includes TCL Finance and TCL Capital.3. The Emerging Business GroupIt comprises Highly, Educational Web and Environmental Resource.
For further information about the Company’s businesses, please refer to “Part IV Directors’ Report” herein.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Please refer to “Part IV Directors’ Report” herein.
2. Major Assets Overseas
□ Applicable ■ Not applicable
III Core Competitiveness AnalysisUpon 38 years of development, TCL has always stuck to industry with constant innovation,determination and the courage to change. Customer-orientation, all-win and maximizedshareholders’ interests have always been our operating philosophy. TCL will strive to be aworld-class enterprise with global competitiveness. Keeping abreast of the times, leadingtechnological advancements, forging ahead with responsibility and working hard, TCL hasgradually established its competitive advantages for the future.Concentration on the Core Business for a Stronger Ability of Sustainable DevelopmentUpon the Restructuring of selling the terminal and supporting business, the Group is able toconcentrate more on the semi-conductor display and material business, with a better capitalstructure and a stronger ability of sustainable development. The technology-driven semi-conductordisplay and material business with high added value will greatly improve the Group’s profitability.
TCL Corporation
Industrial Finance &Investment and VC Business
| Semi-Conductor Display & Material Business | Industrial Finance & Investment and VC Business | Emerging Business Group |
| CSOT | TCL Finance | Highly |
| CDOT | TCL Capital | Education Web |
| Guangdong Juhua | Environmental Resource |
The Group will concentrate the majority of its effort and resources on this business, solidifying itsadvantages in operating efficiency, costs and expenses, as well as scale benefits, and at the sametime strengthening investments in links such as R&D, production process improvement, leanmanagement and supply chain management. In this way, the Group will boost its market share andcompetitiveness in the semi-conductor display and material industry. CSOT has two G8.5 and oneG6 LTPS production lines running at full capacity for strong sales. The G11 line, the highestgeneration around the world, has started production. The G6 AMOLED line has begun operation.And the construction of the G11 line of 8K and large-sized AMOLED is underway. Theseproduction lines will significantly boost the production scale and economic benefits.The Competitive Edge of Technology-Driven, Leading Economic Benefits in the GlobalIndustryThe Group will promote the R&D and application of new display technologies, materials andproduction processes based on CSOT’s business platform. Meanwhile, it will make use ofGuangdong Juhua’s “Printed and Flexible Display Technology Platform” to develop thenext-generation new display technology, as well as to accelerate the development of materials forprinted AMOLED, evaporated AMOLED and electroluminescent QLED. In terms of evaporatedAMOLED, CSOT has completed technology development and reserve on the G4.5 trial line and itsG6 flexible AMOLED production line has started production soon after the start of operation. In thefield of printed display, the "National Printed and Flexible Display Innovation Center" ofGuangdong Juhua is the only national innovation center in China’s display sector, as well as themost advanced printed display public platform around the world. It has successfully developed the31-Inch 4K Printed OLED and the world’s first 31-Inch 4K Printed H-QLED. Meanwhile, ChinaRay has undertaken the national “Printed OLED Key Material Commercialization DemonstrationProgramme”, taking the lead in the development and application of printed OLED materials. Withregard to the development of electroluminescent QLED materials, the Group’s QLED R&D teamhas solved key issues such as the useful life of red-light and green-light QLEDs, and theself-developed blue-light QLED shows the best performance around the world. The relevantresearch achievements have been published on Nature Communications, a top international sciencemagazine, indicating industry-wide leading levels of R&D and development progress.
The Group develops new display technologies and applications through internal business expansionand independent development. In addition to that, the Group will proactively leverage incubation,investment, strategic cooperation, M&A and other means to explore opportunities for industrialchain extension. CSOT will strive to materialize advanced products and technology, as well as tomaintain the leading efficiency and economic benefits, so as to build up competitive edges in theglobal industry.Great Strength in R&D and Global OperationsThe Group has set up R&D centres in Hong Kong, the U.S., the Europe, Wuhan and other places tostrengthen the research on basic technologies such as AI, big data, intelligent manufacturing and theindustrial Internet. The Hong Kong R&D Centre specializes in intelligent product application, aswell as key image and big data technologies; the R&D centre in the U.S. works on supportingInternet operation technologies; the Wuhan R&D Centre concentrates on algorithms in relation toAI technologies such as image recognition, as well as voice recognition and understanding; and theEuropean R&D Centre will focus on AI algorithms. In AI algorithms, data and application scenarioconstruction, the relevant results have been applied to its products and the development of displaymaterials. The Group also develops intelligent manufacturing and industrial Internet products,technologies and solutions with independent core intellectual properties (IP). Deeply integratingindustrial and information technology resources, the Group will provide an industrywide advancedindustrial Internet platform to help upgrade the semiconductor display plants with intelligent, digitaland modular management systems, as well as with scenario-based intelligent manufacturingsolutions.During the Reporting Period, the Group applied for 1,607 international patents through PCT,representing a cumulative number of 9,990, covering Europe, the U.S., South Korea, etc. In addition,up to the end of the Reporting Period, the Group has cumulatively applied for 36,389 Chinesepatents and 8,363 U.S. patents. Among those, CSOT has applied for 14,372 Chinese patents and7,684 U.S. patents, indicating a domestically advanced level of patented technologies indomestically; in the quantum-dot electroluminescence field, applications have been filed for 757patents, ranking the world’s second highest in this regard.
The Advantage of Effective Collaboration among the Business GroupsThe Group will sustain the industrial finance & investment and venture capital operations after therestructuring, primarily comprising TCL Finance and TCL Capital. TCL Finance provides financialservices to the upstream and downstream partners of the core businesses and the industrial chain,which also uses the surplus capital for more gains. TCL Capital focuses on the core business chain,investing in the forefront of areas such as key electronic devices, basic software and high-enduniversal chips. The industrial finance & investment and venture capital business can helpconcentrate on the industrial chain of the core businesses. The stable profit contributions from it canalso help offset the impact of cyclical swings on the semi-conductor display sector. Meanwhile,CSOT will give full play to its existing capacity and technology advantages, so as to transformfaster towards a multi-application-scenario display interface provider. In order to do that, CSOTcontinues to refine its existing product and customer structures, as well as actively work on thedevelopment of display products for interactive whiteboards, tiled video walls, advertisementplayers, gaming, vehicles, etc. for a larger share in these segment markets with high added value. Itaims to promote market demand with its multi-scenario display application, and boost profit withdifferentiated products with high added value.Enriching the Content of the “Hawkish Spirit” and Strengthening the Corporate CulturalGeneThe “Hawkish Spirit” is a unique TCL spirit developed through more than ten years of ups anddowns. It is an epitome of TCL’s values and unique competitiveness, as well as TCL’s intellectualwealth and what unites TCL people. The content of the “Hawkish Spirit” will be re-defined in thenew development process. It will encourage all the TCL people to keep going, face the problems,change through self-criticism and maintain entrepreneurial passion as always.
Part IV Directors’ Report
I OverviewIn order to promote high-quality growth on such a large business scale, the Group started in 2017the reform and transformation through “modifying the operating philosophy, refining theorganizational flow, innovating business models and removing development obstacles”. Itstreamlined the operation and management process, optimized the business and organizationalstructures, kept promoting cost efficiency, as well as strengthened the position and competitiveedges of its core businesses in the industry. For 2018, the Group recorded operating revenue ofRMB113.36 billion, representing a year-on-year increase of 1.60%; core business revenue ofRMB112.28 billion, rising by 1.60% compared to a year ago; a net profit of RMB4.07 billion,representing a 14.7% year-on-year increase; and a net profit attributable to TCL shareholders ofRMB3.47 billion, representing an increase of 30.2% compared to a year ago. Meanwhile, net profitmargin was up from 2% in 2016 to 3.6%, ROE up from 7.2% to 12%, and per-capital net profit upfrom RMB35,500 to RMB38,600, representing notably better operational efficiency andperformance. In all, this round of reform has yielded preliminary results.Upon efforts of more than two years, the sale and shutdown of 63 non-core enterprises resulted in aconsiderable drop in enterprises running in the red and redirected human, capital and technologyresources to the core businesses with increasing competitiveness. During the Reporting Period,CSOT maintained full production and sales, as well as industry-wide leading operational efficiencyand profitability, posting a steady profit of RMB2.32 billion amid a weakening industry. Theintelligent terminal business saw better profitability with greater product strength and a largermarket share thanks to resource support from other businesses in R&D, manufacturing, supplychain management, distribution channel, branding, etc. And all the other businesses registered stableoperation and growth with profit contributions to the Group. As a result, the Group’s profitability isgradually improving.However, due to the different natures and development stages of the industries of the Group’sbusinesses, they differ greatly in business model and way of operation and management. Thisremains the major obstacle of the Group’s business growth and value creation. Therefore, the Group
accelerates the refining of its business and capital structures by stripping off its terminal and relatedbusiness, so as to further concentrate resources to satisfy the needs of the capital- andtechnology-intensive semi-conductor display and material business. It aims to build up thecompetitive edges of its core businesses through continuous concentration and sufficient resourcecommitment. The said restructuring plan has been approved at the First Extraordinary GeneralMeeting of 2019 on 7 January 2019. And the restructuring is currently progressing on track. In theReporting Period, the Group still managed and measured based on the old business structure, i.e. thesemi-conductor display business group, the intelligent terminal business group and the emergingbusiness group.
The capital structure and profitability have been improved to build up the Group’s ability ofsustainable development.The said major asset restructuring is a cash deal. The Group received RMB4.76 billion in cash forthe asset sale, which was considered a one-off restructuring income of the period of the settlement.This brought up both the assets and profit attributable to TCL shareholders.Excluding the target assets in the restructuring, for 2018, the Group recorded a net profit ofRMB3.55 billion, of which the net profit attributable to TCL shareholders stood at RMB3.15 billion.Meanwhile, major financial indicators improved to varying degrees. To be specific, the debt/assetratio dropped from 68.4% to 64.1%, the net profit margin on sales rose from 3.59% to 7.35%, thenumber of employees decreased from 89,750 to 31,645, and the per-capital net profit increasedfrom RMB38,600 to RMB99,600.This restructuring has helped refine the Group’s capital structure, as well as significantly boostprofitability and returns for shareholders. The Group will embrace a whole new development stagewith high-speed and high-quality growth.
The strategic transformation towards a technology conglomerate will help the Groupconcentrate resources on its core businesses.Upon the completion of the restructuring, the Group will become a technology conglomerate.The semi-conductor display and material business will be the Group’s core business. It will furthersolidify its leading advantages in product and technology innovation and operational efficiency,
obtain a larger market share and a better position in the industry through production ramp-up plustechnology and production process upgrade, as well as build a bigger and stronger business ofsemi-conductor display and materials by vertical extension to the upstream and downstreamindustrial chain, as well as by horizontal cross-industry integration. It is committed to becoming aleader in the global industry.The industrial finance & investment and venture capital business will be sustained to providesufficient resource assurance for the development of the core business. The industrial financebusiness is positioned to offer capital and asset management services for the core business. It helpsincrease capital utilization efficiency and cut down finance costs under controllable risk. Theinvestment and venture capital business will explore opportunities at the forefront ofcore-business-related new technologies, new materials and new applications, so as to increase theGroup’s control over the key links of its industrial chain. The stable profit contributions from theindustrial finance & investment and venture capital business can also help offset the impact ofcyclical swings on the semi-conductor display sector.As for the other businesses that have been sustained in the restructuring, they are generallyoperating in a steady manner with profit contributions to the Group. But they are not closelyconnected to the core business, so for further concentration, the Group will gradually divest thesebusinesses by means of restructuring, divestiture, sale or other ways at proper timings according tothe principle of maximum value for shareholders.Meanwhile, the Group will make use of its capital, technology and operational and managementefficiency advantages to look for M&A opportunities in technology- and capital-intensive high-techindustries. This is to create a new driving force of the Group’s business growth in addition to thesemi-conductor display and material business, driving growth with technology.
The Group focuses on the three core technologies and drives growth through product andtechnology innovation.New semi-conductor display technologies and materials, artificial intelligence (AI) and big data, aswell as intelligent manufacturing and the industrial Internet are the Group’s three major strategicdirections. In 2018, the Group spent RMB5.67 billion on R&D, up by 20% year-on-year.
In the field of printed display, the "National Printed and Flexible Display Innovation Center" ofGuangdong Juhua is the only national innovation center in China’s display sector, as well as themost advanced printed display public platform around the world. It has successfully developed the31-Inch 4K Printed OLED and the world’s first 31-Inch 4K Printed H-QLED. In terms of materialdevelopment for OLED, China Ray has developed, in an independent manner, red-light andgreen-light evaporated OLEDs which are domestically advanced. In addition, the Group’s QLEDR&D team has solved key issues such as the useful life of red-light and green-light QLEDs, and theself-developed blue-light QLED shows the best performance around the world.The Group has set up multiple R&D centres across the world, which are dedicated to the basiccommon technology research of AI and big data. The Hong Kong R&D Centre specializes inintelligent product application, as well as key image and big data technologies; the R&D centre inthe U.S. works on supporting Internet operation technologies; the Wuhan R&D Centre concentrateson algorithms in relation to AI technologies such as image recognition, as well as voice recognitionand understanding; and the European R&D Centre will focus on AI algorithms. Thanks to theintroduction of global leading talent, the Group has achieved better abilities in algorithm, data andapplication scenario construction in a fast pace, which have been applied to its products and thedevelopment of display materials.In the area of intelligent manufacturing and industrial Internet, the Group develops such products,technologies and solutions with independent core intellectual properties (IP). Deeply integratingindustrial and information technology resources, the Group will provide an industrywide advancedindustrial Internet platform to help upgrade the semiconductor display plants with intelligent, digitaland modular management systems, as well as with scenario-based intelligent manufacturingsolutions.During the Reporting Period, the Group applied for 1,607 international patents through PCT,representing a cumulative number of 9,990, covering Europe, the U.S., South Korea, etc. In addition,up to the end of the Reporting Period, the Group has cumulatively applied for 36,389 Chinesepatents and 8,363 U.S. patents. Among those, CSOT has applied for 14,372 Chinese patents and7,684 U.S. patents, indicating a domestically advanced level of patented technologies indomestically; in the quantum-dot electroluminescence field, applications have been filed for 757
patents, ranking the world’s second highest in this regard.
With significantly improved industrial capability, the Group keeps enriching its productrange and multi-scenario applications.The t6 project (the G11 production line), mainly for 65-inch, 75-inch and other super-large-sizednew display panels, went into production in November 2018, which was ahead of schedule. The t7project (another G11 production line), positioned to produce 8K and OLED large-sized displaypanels, is under construction. As for small- and medium-sized displays, the t3 project (the G6LTPS-LCD production line) started to run at full capacity for quick sale in the fourth quarter of2018, with its shipment jumping to No. 3 around the world, representing the world’s fastest growthspeed. The t4 project (the G6 flexible LTPS-AMOLED production line) has started production,with capacity and the yield rate gradually improving. CSOT is also proactively making plans toenter new markets of large-sized panels for touch modules, electronic whiteboards, tiled video walls,specialized high-end monitors, etc. as a way to increase the proportion of high-tech andhigh-added-value products in its product mix.The intelligent terminal business continued to optimize its product mix and significantly improvedits product strength. According to China Market Monitor, a data firm, TCL TV’s brand-price indexon China’s market has risen from 102 in 2017 to 110 in 2018, jumping to No. 2. In the ReportingPeriod, the sales volume of TCL Electronics’ 55-inch-and-above products accounted for a marketshare 25.2%, up by 4.6 percentage points year-on-year; the sales volume of 4K products went upfast, with a market share of 40%; and the sales volume of curved TV ranked first on the market.
With progress in branding and global operations, the Group has started to utilize itsindustrial chain capability overseas.During the Reporting Period, with opportunities arising from the “Belt and Road Initiative” and theintegration of the consumer electronics industry, the Group beefed up its global expansion. As aresult, it has broken into the European market and expanded its business in India and Russia. TheGroup integrates the business resources of TCL Electronics, TCL Communication and TCLHousehold Electric Appliance Group, as well as promotes intragroup cooperation in product
development, industrial chain management, marketing and global branding. Through enhancingbranding and product strength, TCL is shifting from a Chinese brand to a competitive global brand.The Group owns 28 R&D centres, 10 joint labs and 22 manufacturing bases across the world,covering over 160 countries and regions. In the Reporting Period, revenue generated by the Group’soverseas business accounted for 49.7% of its total revenue.The whole-module integrated intelligent manufacturing industrial park in India, which has startedconstruction in late December 2018, helps materialize the shift from a single product model to ascreen-to-TV-module industrial chain. This will help improve the global operation and managementability, so as to lay a solid foundation for the globalization of the Group’s semi-conductor displayand material business.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.
The Group builds up its digital operation capability to promote digitization in managementand business operation.To promote digitization and improve intelligent manufacturing, the Group coordinated internalresources in a bid to deeply integrate industrial technology and information technology resources, aswell as promote digitization and IT in management and operation. Meanwhile, the Group’sintelligent manufacturing resources are tapped to establish an intelligent manufacturing servicecenter to boost the intelligent manufacturing capability of all the businesses. So far, the Company’sdigital operation platform has reserved products with independent IP in the Industrial Internet,intelligent enabling technology, intelligent plants and intelligent equipment. It is launching productsand services in three major fields, IoT platforms, industrial software and IT service for factorymanagement. In order to seize overseas opportunities in the accelerating transformation andupgrade of China’s manufacturing sector, the Group will, based on years of accumulation in themanufacturing sector and advanced technologies in the industry, provide intelligent manufacturingproducts and solutions for overseas customers, as well as build an industry-level industrial Internet
platform.
II Core Business AnalysisThe major asset restructuring plan has been approved at the Group’s general meeting on 7 January2019. And the restructuring is currently progressing on track. Upon the completion of therestructuring, the Group’s core businesses will be modified to comprise the semi-conductor displayand material business, the industrial finance & investment and venture capital business and theemerging business group:
1. The Semi-Conductor Display and Material BusinessIt consists of CSOT, CDOT (0334.HK), Guangdong Juhua and China Ray.2. The Industrial Finance & Investment and Venture Capital BusinessIt includes TCL Finance and TCL Capital.3. The Emerging Business GroupIt comprises Highly, Educational Web and Environmental Resource.
(I) The Semi-Conductor Display and Material Business1. CSOTCSOT is mainly engaged in the R&D, production and sales of semiconductor display panels and thecollaborative management of semiconductor display related industries. In addition to further
Guangdong JuhuaChina Ray
China RayTCL Corporation
TCL Corporation
Industrial Finance &Investment and VC Business
Industrial Finance &Investment and VC Business
TCL Finance
TCL FinanceTCL Capital
TCL CapitalCSOT
CSOTCDOT
CDOTHighly
HighlyEducation Web
Education WebEnvironmental Resource
Environmental ResourceSemi-Conductor Display
& Material Business
| Semi-Conductor Display & Material Business | Emerging Business Group |
consolidating its leading position as a large-sized TV panel provider, CSOT is strengthening itsproduct advantage in the area of small- and medium-sized panels through ongoing technologyinnovation, so as to increase its overall competitiveness. In the meantime, it also accelerates itstransformation towards a multi-application-scenario display interface provider. By expanding itssegment market share of products with high added value, it strives for higher profit.Moreover, CSOT is promoting organizational structure optimization and business modeltransformation to further improve efficiency and reduce costs for leading efficiency andeffectiveness in the industry. In the Reporting Period, CSOT recorded operating revenue ofRMB27.67 billion and a net profit of RMB2.32 billion.1.1 Large-Sized Panel Business GroupDuring the Reporting Period, the two G8.5 lines of CSOT, t1 and t2 projects, maintained fullproduction and sales. A total of 3.593 million glass substrates were inputted, representing ayear-on-year increase of 7.95%. CSOT’s large-sized LCD panel shipment remains the fifth in theglobe, with the shipments of the 32-inch and 55-inch UD products both being the second largest inthe world, as well as consecutively ranking first in shipment to major domestic brand customers.The G11 TFT-LCD and AMOLED new display production line (t6 project), mainly producing65-inch, 75-inch and other ultra-large-sized new display panels, has started production in November2018 and is expected to reach full capacity in late 2019. The G11 UHD new display production line(t7 project), which has started construction in November 2018, is mainly responsible for theproduction and sales of 65-inch, 70-inch (21:9) and 75-inch 8K UHD displays and AMOLEDdisplay products.The first phase of CSOT’s integrated intelligent module manufacturing base (High GenerationModule Project) has been put into production, with an annual processing capacity of 40 millionLCD modules. Bulk shipment has been achieved. Supporting the G8.5 and G11 production lines,this project is positioned to provide high-end and large-sized display modules to solve problems forcustomers, and further enhance the manufacturing capability of CSOT in the sector ofsemiconductor displays.1.2 Small- and Medium-Sized Panel Business Group
Benefiting from a sharp rise in the shipment to international top brand customers, the G6LTPS-LCD production line (t3 project) realized full production and sales in the fourth quarter of theyear under review, with remarkable year-on-year improvements in market share and profitability.According to AVC, a data firm, in the fourth quarter of 2018, CSOT’s shipment of 24.8 millionpieces ranked No. 3 worldwide and No. 2 domestically, representing the world’s fastest growthspeed.The G6 LTPS-AMOLED flexible production line (t4 project) is expected to start mass production in2019, with the development and verification of key technologies well underway. CSOT’s G4.5flexible AMOLED trial line in Wuhan has helped prepare for the rapid mass production of t4products in terms of beforehand technology and talent reserve.CSOT will give full play to its existing capacity and technology advantages, so as to transformfaster towards a multi-application-scenario display interface provider. In order to do that, CSOTcontinues to refine its existing product and customer structures, as well as actively work on thedevelopment of display products for interactive whiteboards, tiled video walls, advertisementplayers, gaming, vehicles, etc. for a larger share in these segment markets with high added value. Itaims to promote market demand with its multi-scenario display application, and boost profit withdifferentiated products with high added value.
2. CDOTCDOT (0334.HK) is engaged in the R&D, production and sales of small- and medium-sizedTFT-LCD/OLED display modules.In the Reporting Period, CDOT fully leveraged synergy with CSOT, refined its product mix andbrought in a number of international top brand customers. As a result, it sold 60.48 million modules(a 13.0% year-on-year increase), generating sales revenue of RMB5.28 billion (a 52.4%year-on-year increase). Meanwhile, following the business strategy of being a provider ofmulti-application-scenario display interface, CDOT is actively expanding its share in the smarthome and commercial display markets by way of working with famous Internet companies tolaunch smart home products equipped with its display modules. It will also improve its business
composition and enhance its product competitiveness and profitability.
3. Guangdong JuhuaAs the contractor of the "National Printed and Flexible Display Innovation Center", GuangdongJuhua is the first national innovation center in China’s display sector. It is mainly engaged in theresearch of key common technologies of printed and flexible display. To build up China’s publicR&D platform for printed display and create a printed display eco-system, it cooperates withuniversities, research institutes, internationally renowned materials and equipment companies, so asto integrate resources within the industry and develop such core technology.In the Reporting Period, Guangdong Juhua’s development of printed display technology went well.In the large-sized area, it has successfully developed the 31-Inch UHD (4K) Printed OLED and the31-Inch UHD Top-Emitting Printed H-QLED, which is the world’s highest resolution printedQLED, as well as the world’s first such product to adopt both advantages of electroluminescentquantum-dot materials and OLED materials. While in the small-sized area, it completed thedevelopment of the 5-inch ultra-high resolution (400ppi) printed AMOLED, which is the highestresolution display device completed by the printed technology.
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’s R&D of new materials was progressing in a smoothmanner. It has developed over 700 types of emitting materials with independent IP, many of whichhave been accepted by China’s mainstream panel production lines and some of them have realizedbulk supply. China Ray now has three kinds of emitting materials with independent IP—red-lightand green-light materials based on evaporation process, as well as solution-processed green-lightmaterials, all of which are of a globally advanced performance.To support the national overall planning of new display materials and technologies, China Ray
independently develops printed OLED materials, including red-light and green-light emittingmaterials and devices, which reach domestically advanced performance. And breakthroughs havealso been made concerning the blue-light emitting materials.
(II) The Industrial Finance & Investment and Venture Capital BusinessThe Group will sustain the industrial finance & investment and venture capital operations after therestructuring, primarily comprising TCL Finance and TCL Capital. TCL Finance provides financialservices to the upstream and downstream partners of the core businesses and the industrial chain,increasing capital utilization efficiency and cutting down finance costs under controllable risk. Italso uses the surplus capital for more gains. TCL Capital focuses on the core business chain,investing in the forefront of areas such as key electronic devices, basic software and high-enduniversal chips.The industrial finance & investment and venture capital business can help concentrate on the corebusinesses, as well as boost management and operational efficiency. The stable profit contributionsfrom it can also help offset the impact of cyclical swings on the semi-conductor display sector.1. TCL FinanceTCL Finance mainly comprises the Group’s finance and the supply chain finance.The Group’s finance primarily involves providing financial and management support to the majorbusinesses and subsidiaries within the Group, and undertaking the functions of efficiencyimprovement and risk management of Group assets. During the Reporting Period, TCL Finance Co.,Ltd. enhanced its financial support to the Group’s business development according to the Group’sstrategic goals, and further improved its active management ability for capital and risks. Theoperation of TCL Finance is progressing smoothly. Its asset scale, gross profit, ROE and capitalconcentration are all of a leading level in the industry.The supply chain finance is divided into industrial chain finance and consumer finance, providingfinancial services for industrial chain partners, Group employees and Group product consumersrespectively. During the Reporting Period, the supply chain finance business was improved
internally and externally to provide quality and convenient account receivable financing services forindustry chain partners, especially small and medium enterprises. By 2018, the number of B2Bfinance clients reached more than 13,000, while the registered retail finance clients were close to50,000.
2. TCL CapitalTCL Capital includes the venture capital and financial investment business, as well as AdmiraltyHarbour Capital Limited.The venture capital business focuses on investment opportunities in prospective and innovativetechnology according to the development needs of the Group’s core businesses, with majorinvestments in new materials, new energy, major consumption and high-end manufacturingindustries. Up to the end of the Reporting Period, the venture capital business manages funds ofRMB9.365 billion in total, and has accumulatively invested in 108 projects, with shareholdings inlisted companies such as Petro-King, Sky Solar, Jinyu, ZJBC, HyUnion Holding, CATL and S.C. Inaddition, in the non-core investments, the Group cautiously evaluates financial investmentopportunities. At present, it holds a 19.07% interest in 712 Corp. (603712.SH), a 20.08% interest inFantasia Holdings (01777.HK), and a 4.99% interest in Bank of Shanghai (601229.SH).Admiralty Harbour Capital Limited, a majority-owned subsidiary of the Group and a financialinstitution holding Licenses No. 1, No. 4 and No. 9 in Hong Kong, is approved in 2017 by theSecurities and Futures Commission of Hong Kong to engage in securities trading, providingsecurities-related advice and offering asset management service. The subsidiary signed andintroduced in March 2018 a management and operation team comprising international seniorexperts, with the purpose of building an innovative, efficient financial service platform. It has beenproviding financial service for third-party clients for revenue since August 2018. On the capitalmarket, it completed two bond issues in 2018, and provides debt management consulting service fora Hong Kong listed company as their financial advisor. In regard with asset management, thesubsidiary has accomplished the preparations for two global bond funds, and has been engaged ininvestment management since November 2018.
(III) The Emerging Business Group1. 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.Following the strategy of "sales + service", Highly Information is committed to becoming acomputing equipment provider in the intelligent era. Highly Information achieved sales revenue ofRMB16.54 billion and a net profit attributable to the Company as the parent of RMB0.199 billion inthe Reporting Period.
2. Educational WebOpen Edutainment is the largest web-based degree course provider in China. It is a leader inweb-based degree course services, and also actively develops Internet education and vocationaleducation. During the Reporting Period, the enrollment for the degree courses of Educational Webwas successfully completed, and teacher training was steadily processing. On the basis of theexisting business, Open Edutainment intensified the integration of educational resources and B2Cbusiness development. Up to the end of the Reporting Period, the registered users of the Internet ITvocational education platform (IMOOC) reached 14.70 million, ranking first in the industry.
(IV) Major Target Businesses of the Restructuring PlanHaving been approved at a general meeting on 7 January 2019, the Group’s major assetrestructuring plan is targeted at the restructuring of the intelligent terminal and related business.Upon the completion of relevant transaction, this business will be stripped off from the Group andexcluded from the Group’s consolidated financial statements.1. TCL Electronics
TCL 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. It is aimed atbecoming a world-leading intelligent technology firm and achieving market leadership in China andaround the world.During the Reporting Period, the sales revenue of TCL Electronics increased by 9.25%year-on-year to RMB38.57 billion (HK$45.58 billion). The net profit attributable to the Companyas the parent increased by 14.4% year-on-year to RMB0.801 billion (HK$0.944 billion). Theaggregate sales volume of LCD TVs reached 28.606 million sets (including commercial displays),showing an increase of 23.1% year-on-year. According to Sigmaintell, a consulting firm, TCLElectronics achieved a global market share of 11.6% in terms of TV shipment in 2018, the secondlargest.TCL Electronics achieved a sales volume of 18.214 million TV sets in overseas markets,representing an increase of 29.5% year-on-year. To be specific, the sales volume in the NorthAmerica market rose by 41.8% from a year ago, jumping to No. 2 in the third quarter andNovember; the sales volume in the emerging markets increased by 30.7% year-on-year, withimpressive growth in India, Southeast Asia, Brazil and Australia; and the sales volume in theEuropean market increased by 43.1% year-on-year, with growth particularly in France, Germany,Italy, Spain, etc.
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, as well asestablish a customer-oriented product definition and sales system.Following the operating strategy of “building strength in products, the supply chain and marketing,as well as improving the basic corporate management system”, TCL Communication shortened thetime needed for the development of a product, increased the supply chain efficiency, and set up acustomer-oriented marketing system. As a result, it has seen the average selling price and grossprofit margin increase, operating expenses go down, and loss decrease as compared to the previous
year. However, due to the fiercer market competition and the impact of reforms and adjustments,TCL Communication sold 33.87 million units of products during the Reporting Period, representinga drop of 23% year-on-year.
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.In face of the complicated operating environment at home and abroad, TCL Household ElectricAppliance Group drove product upgrades based on the category leading strategy, as well asproactively promoted cost efficiency throughout the industrial chain. Capitalizing on the marketingand brand advantages of TCL Electronics, it promoted lean management, improved its customerstructure, and optimized the domestic and foreign sales mix to achieve high-quality scale growth.During the Reporting Period, it sold 9.197 million units of air-conditioners (an 0.3% year-on-yearincrease), 2.368 million units of washing machines (a 23.5% year-on-year increase), and 1.77million units of refrigerators (a 14.6% year-on-year increase). During the Reporting Period, TCLHousehold Electric Appliance Group posted sales revenue of RMB17.46 billion, up by 9.87% whencompared to the prior year.
4. 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.In the Reporting Period, in addition to strengthening the development and innovation of smart voicespeakers, Tonly Electronics also worked actively on cross-industry smart voice application products.Leveraging its first mover advantage in smart voice technology and the cooperation relationshipwith various voice ecosystems, it marketed its smart products to brand customers outside the smartspeaker industry. During the Reporting Period, Tonly Electronics achieved sales revenue ofRMB6.18 billion (HK$7.30 billion), representing a year-on-year increase of 21.8%.
2. Revenue and Cost Analysis(1) Breakdown of Sales Revenue
Unit: RMB
| 2018 | 2017 | Change (%) | |||
| Sales revenue | As % of total sales revenue (%) | Sales revenue | As % of total sales revenue (%) | ||
| CSOT | 27,537,312,308 | 24.53% | 30,475,095,111 | 27.58% | -9.64% |
| Highly | 16,536,580,699 | 14.73% | 15,200,566,276 | 13.75% | 8.79% |
| TCL Electronics | 38,569,124,963 | 34.35% | 35,304,642,696 | 31.95% | 9.25% |
| TCL Household Electric Appliance | 17,458,889,700 | 15.55% | 15,890,528,400 | 14.38% | 9.87% |
| TCL Communication | 12,564,163,915 | 11.19% | 14,974,744,729 | 13.55% | -16.10% |
| Tonly Electronics | 6,176,286,717 | 5.50% | 5,072,397,750 | 4.59% | 21.76% |
| Others and eliminated intercompany accounts | -6,559,765,476 | Not applicable | -6,407,078,001 | Not applicable | Not applicable |
| Total sales revenue | 112,282,592,826 | 100.00% | 110,510,896,961 | 100.00% | 1.60% |
(2) Sales Revenue by Operating Segment
Unit: RMB
| 2018 | 2017 | Change (%) | |||
| Sales revenue | As % of total sales revenue (%) | Sales revenue | As % of total sales revenue (%) | ||
| Domestic core business | 56,473,133,329 | 50.30% | 56,321,585,935 | 50.96% | 0.27% |
| Overseas core business | 55,809,459,497 | 49.70% | 54,189,311,026 | 49.04% | 2.99% |
| Total sales revenue | 112,282,592,826 | 100.00% | 110,510,896,961 | 100.00% | 1.60% |
(3) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable ■Not applicable
(4) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
Compared with 2017, 35 subsidiaries (34 newly incorporated and another one due to acquisition ofcontrol) are newly included in and 31 subsidiaries (20 de-registered, four transferred and anotherseven due to cease of control caused by a decreased interest) are excluded from the consolidationscope of 2018.
(5) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable ■Not applicable
(6) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 17,833,273,051 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 15.88% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | - |
Top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 5,320,999,943 | 4.74% |
| 2 | Customer B | 3,633,016,047 | 3.24% |
| 3 | Customer C | 3,500,719,617 | 3.12% |
| 4 | Customer D | 2,954,321,077 | 2.63% |
| 5 | Customer E | 2,424,216,367 | 2.16% |
| Total | Total | 17,833,273,051 | 15.88% |
Other information about major customers:
□ Applicable ■ Not applicableMajor suppliers:
| Total purchases from top five suppliers (RMB) | 19,095,960,306 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 20.78% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | - |
Top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 6,307,241,108 | 6.86% |
| 2 | Supplier B | 4,351,718,884 | 4.74% |
| 3 | Supplier C | 3,898,168,759 | 4.24% |
| 4 | Supplier D | 2,388,167,687 | 2.60% |
| 5 | Supplier E | 2,150,663,868 | 2.34% |
| Total | 19,095,960,306 | 20.78% |
Other information about major suppliers:
□ Applicable ■ Not applicable
7. Expense
Unit: RMB
| 2018 | 2017 | Change (%) | Reason for any significant change | |
| Selling expense | 8,887,021,380.00 | 9,511,063,675.00 | -6.56% | A decline in advertising expense and sales promotional expense |
| Administrative expense | 4,299,610,008.00 | 4,676,573,595.00 | -8.06% | Intermediary fees |
| R&D expense | 4,677,578,988.00 | 4,779,466,163.00 | -2.13% | Cost control |
| Finance costs | 973,260,519.00 | 1,665,274,997.00 | -41.56% | Exchange rate fluctuations |
8. R&D Expense
Details about R&D expense:
| 2018 | 2017 | Change (%) | |
| Number of R&D personnel | 12,481 | 10,946 | 14.02% |
| R&D personnel as % of total employees | 16.63% | 14.58% | 7.36% |
| R&D expense (RMB) | 5,670,918,950 | 4,721,201,060 | 20.1% |
| R&D expense as % of operating revenue | 5.00% | 4.25% | Up by 0.75 percentage point |
| Capitalized R&D expense (RMB) | 1,832,275,281 | 1,627,463,339 | 12.58% |
| Capitalized R&D expense as % of total R&D expense | 32.31% | 34.33% | Down by 2 percentage points |
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable ■ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable ■ Not applicable
9. Cash Flows
Unit: RMB
| Item | 2018 | 2017 | Change (%) |
| Subtotal of cash generated from operating activities | 130,101,601,946 | 127,113,578,788 | 2.4% |
| Subtotal of cash used in operating activities | 119,615,021,503 | 117,903,963,665 | 1.5% |
| Net cash generated from/used in operating activities | 10,486,580,443 | 9,209,615,123 | 13.9% |
| Subtotal of cash generated from investing activities (note 1) | 60,058,874,214 | 28,596,545,129 | 110.0% |
| Subtotal of cash used in investing activities (note 2) | 88,289,416,141 | 45,521,704,534 | 94.0% |
| Net cash generated from/used in investing activities (note 3) | -28,230,541,927 | -16,925,159,405 | -66.8% |
| Subtotal of cash generated from financing activities | 63,323,909,094 | 51,420,471,219 | 23.1% |
| Subtotal of cash used in financing activities | 43,284,087,005 | 42,868,342,032 | 1.0% |
| Net cash generated from/used in financing activities (note 4) | 20,039,822,089 | 8,552,129,187 | 134.3% |
| Net increase in cash and cash equivalents (note 5) | 2,421,213,397 | -534,486,172 | 553.0% |
Explanation of why any of the data above varies significantly on a year-on-year basis:
Note 1: Cash generated from investing activities rose 110% as compared to 2017, primarily driven by the withdrawal of cash onwealth management.Note 2: Cash used in investing activities rose 94% as compared to 2017, primarily driven by fixed asset investments and wealthmanagement purchases.Note 3: Net cash generated from investing activities declined 67% as compared to 2017, primarily driven by fixed asset investmentsand wealth management purchases.Note 4: Net cash generated from financing activities rose 134% as compared to 2017, primarily driven by borrowings obtained.Note 5: Net increase in cash and cash equivalents rose 553% as compared to 2017, primarily driven by a larger amount of net cashgenerated from operating and financing activities.
III Analysis of Non-Core Businesses
□ Applicable ■ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2018 | 31 December 2017 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Accounts receivable | 13,651,444,917 | 7.08% | 14,793,671,898 | 9.23% | -2.15% | Remittances of the Group |
| Construction in progress | 38,924,586,355 | 20.19% | 14,775,237,325 | 9.22% | 10.97% | More ongoing constructions for the t4 and G11 LCD panel production lines |
| Short-term borrowings | 13,287,723,834 | 6.89% | 16,036,554,607 | 10.00% | -3.11% | Repayment of borrowings |
| Long-term borrowings | 36,864,922,669 | 19.12% | 20,283,380,765 | 12.65% | 6.47% | New borrowings obtained |
2. Assets and Liabilities at Fair Value
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Ending amount |
| Financial assets | |||||||
| 1.Financial assets at fair value through profit or loss (exclusive of derivatives) | 1,543,843,738 | -54,348,583 | - | - | - | 768,100,000 | 721,395,155 |
| 2.Derivative financial assets | 687,431,897 | -298,956,859 | - | - | 27,709,511 | - | 416,184,549 |
| 3. Available-for-sale financial assets | 1,159,165,770 | - | -438,844,906 | 96,717,659 | 2,179,984,949 | 886,421,741 | 1,917,166,413 |
| Subtotal of financial assets | 3,390,441,405 | -353,305,442 | -438,844,906 | 96,717,659 | 2,207,694,460 | 1,654,521,741 | 3,054,746,117 |
| Financial liabilities | 442,942,029 | -204,115,699 | - | - | - | 26,729,263 | 212,097,067 |
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes ■ No
3. Restricted Asset Rights as at the Period-End
| Restricted assets | Carrying amount (RMB’000) | Reason for restriction | As % of total assets | Remark |
| Monetary capital | 868,900 | Deposited by the finance subsidiary in the central bank as the required reserve | 0.45% | Restricted |
| Monetary capital | 224,940 | Other monetary capital | 0.12% | Restricted |
| Accounts receivable | 47,090 | Factored or put in pledge for loans | 0.02% | In pledge |
| Fixed assets | 43,113,350 | As collateral for loan | 22.37% | Collateralized |
| Intangible assets | 4,337,850 | As collateral for loan | 2.25% | Collateralized |
| Total | 48,592,130 | 25.21% |
V Investments Made
1. Total Investment Amount
| Total investment amount in 2018 (RMB) | Total investment amount in 2017 (RMB) | Change (%) |
| 12,577,112,494 | 10,178,152,467 | 23.57% |
2. Major Equity Investments Made in the Reporting Period
Unit: RMB
| Investee | Core business scope of investee | Way of investment | Amount of investment | The Company’s interest in investe | Funding source | Joint investor | Term of investment | Type of investment | Investment progress as at balance sheet | Projected earnings | Return on investment in Reporting | Any legal matter involved | Disclosure date (if any) | Index to disclosed information (if |
| e | date | Period | any) | |||||||||||
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | G11 UHD New Display Production Line | With monetary capital | 7,000,0 00,000 | 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 | |
| Guangdong CSOT Industrial Equity Investment Co., Ltd. | G11 UHD New Display Production Line | With monetary capital | 2,000,000,000 | 17.54% | Self-funded | Guangdong Utrust Industrial Investment Fund Partnership | 9 years | UHD new displays | - | - | None | 3 August 2018 | http:/ /www.c ninfo.c om.cn | |
| Total | -- | -- | 9,000,000,000 | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the 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) | 28 April 2018 |
| 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 gain of RMB52.938 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 | No major changes |
| and specific accounting principles adopted for derivative investments in Reporting Period compared to last reporting period | |
| Opinion of independent directors on derivative investments and risk control | In view of the fact that nearly half of the main business of the Company is overseas, a wide range of settlement currencies is involved. The Company reduces exchange losses and locks transaction costs by reasonable financial derivatives, which helps to reduce risk control costs and improve company competitiveness. Risks are effectively controlled as the Company has taken series of measures such as conducting a rigorous internal evaluation for the operation of financial derivatives business, establishing a corresponding regulatory mechanism, formulating reasonable accounting policies and specific accounting principles, setting limits for risk exposure management, and operating simple financial derivatives. The contracting agent for financial derivatives business of the Company is a sound financial agent with good credit standing. The independent directors believe that the financial derivatives transactions carried out by the Company in 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. |
Positions of derivative investments at the period-end:
| 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 | 25,316,330 | 860,700 | 52,938 | 415.9 | 14.1 |
| 2. Interest rate swaps | 4,168,820 | 83,380 | 4,653,250 | 139,600 | 76.4 | 2.3 | |
| 3. Currency swaps | 1,633,550 | 31,840 | 3,115,890 | 155,790 | 51.2 | 2.6 | |
| Total | 26,171,740 | 812,380 | 33,085,470 | 1,156,090 | 52,938 | 543.5 | 19 |
5. Use of Funds Raised(1) General Information about the Use of Raised Funds
Unit: RMB’000
| Year of raising | Way of raising | Total amount | Used in the | Cumulatively used | Amount with | Cumulative amount | Cumulative amount | Unused amount | Purpose and | Amount being idle |
| raised | Current Period | changed use in the Reporting Period | with changed use | with changed use as % of total amount raised | whereabouts of the unused amount | for more than two years | ||||
| 2018 | Public offering to qualified investors | 3,000,000 | 3,000,000 | 3,000,000 | - | - | - | - | - | - |
| Total | -- | 3,000,000 | 3,000,000 | 3,000,000 | - | - | - | - | -- | - |
| Remark | ||||||||||
| During the Reporting Period, TCL Corporation raised a total of RMB3 billion through the Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) and (Phase 2), which was used up for supplementing the working capital and repaying loans. | ||||||||||
(2) Promised Use of Raised Funds
□ Applicable ■ Not applicable
(3) Changed Use of Raised Funds
□ Applicable ■ Not applicable
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
| Transaction party | Asset sold | Date of sale | Transaction price (RMB’000) | Net profit contributed to the Company from the period-begin to the date of sale (RMB’000) | Effect on the Company (see note 3) | Ratio of the net profit contributed by the sale of the asset to the Company’s total profit (%) | Pricing principle | Related-party transaction or not | Relationship between the transaction party and the Company (applicable for related-party transactions) | Ownership of the asset involved has been all transferred or not | Creditor’s rights and liabilities involved have been all transferred or not | Executed as scheduled or not; if not, give reasons and measures taken | Disclosure date | Index to disclosed information |
| TCL Industries Holdings (Guangdong) Inc. | 100% interest of TCL Industries, 100% interest of TCL Household Electric Appliance, 100% interest of Hefei Home Appliances, 56.50% interest in Cool Friends Technology, 100% interest of Koyoo Online Service, 100% interest of TCL Technology Park, 75% interest in JDH, and 36.00% interest | 7 January 2019 | 4,760,000.00 | - | The Company sold the intelligent terminal (consumer electronics, home appliances, etc.) and supporting businesses in this deal for restructuring. Upon the deal, the Company’s diversified business structure will be simplified to focus on the semi-conductor | - | The deal is priced upon friendly negotiation of the transaction parties according to the assessed value of the target assets. | Yes | As Mr. Li Dongsheng is a director of both TCL Corporation and TCL Holdings, TCL Holdings is considered a related party of TCL Corporation. | Not | Not applicable | Yes |
| in Getech | display and material business. According to the restructuring arrangements, TCL senior management personnel formerly working in the target companies have resigned. As the target assets were still include in the consolidated financial statements of the Reporti |
Note: The Proposal on the Review of the Report of TCL Corporation on the Sale of Major Assets & Related-Party Transaction (Draft)and Its Summary, as well as the relevant proposals, were approved at the 13
th
meeting of the 6
th
Board of Directors on 7 December2018 and later at the First Extraordinary General Meeting of 2019 on 7 January 2019. For details of this restructuring, see the Reportof TCL Corporation on the Sale of Major Assets & Related-Party Transaction (Draft), its revised version and other relevantdocuments disclosed on www.cninfo.com.cn dated 8 and 22 December 2018, respectively. The restructuring is currently progressingon track. The Board will urge the transaction parties to execute the duties of this restructuring, so as to ensure a smoothimplementation of the project and protect shareholder interests.
2. Sale of Major Equity Interests
□ Applicable ■ Not applicable
VII Major Subsidiaries
Unit: RMB
ngPeriod,thisrestructuringhad noimpacton theCompany’sfinancialpositionandoperatingresultsof theReportingPeriod.
Name
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit attributable to the Company as the parent |
| TCL Electronics Holdings Limited | Subsidiary | Colour TVs | HK$2.333 billion | 23,845,922,677 | 7,754,133,579 | 39,098,170,408 | 970,054,426 | 801,439,035 |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. (as a consolidated group) | Subsidiary | LCD panels | RMB19.822 billion | 116,348,577,621 | 47,689,154,902 | 27,666,368,029 | 2,596,202,783 | 2,215,225,113 |
VIII Structured Bodies Controlled by the Company
□ Applicable ■ Not applicable
IX Prospects2019 is a year of opportunities and challenges. What we are facing currently is profound change inexternal environment. Setbacks in economic globalization, challenges to multilateralism, shocks inthe international financial market, and especially the China-US economic and trade frictions, havean adverse effect on market expectations. Economic performance is generally stable with changes,some of which cause concern. From the perspective of macro environment, China is still facing acomplicated and challenging environment for its development with many predictable andunpredictable risks and challenges in the future. At the same time, however, China remains in astage of important strategic opportunities for its development with adequate resilience, hugepotentials and vitality for innovation bursting out continuously. In light of the new challenges andhistorical opportunities, the country will continue to drive the transformation and upgrading oftraditional industries, center around the promotion of the high-quality development ofmanufacturing industry, reinforce industrial foundation and technical innovation capabilities,advance the integrated development of advanced manufacturing and modern service industries, andaccelerate the building of a strong manufacturing country. The development of new growth driverswill make progress rapidly.Through the reform and reorganization in the previous stages, the semi-conductor display andmaterial business has become the Company’s core business. As a representative of nationalcompetitiveness in China’s semi-conductor display area, it has vast development prospects andhuge potentials for growth. As one of the strategic emerging industries prioritized, semi-conductor
display has been listed into the country’s “12th Five-Year Plan”, “13th Five-Year Plan” and“Outline of the National Program for Long- and Medium-Term Scientific and TechnologicalDevelopment (2006-2020)”. Driven by increasing demands in the terminal market, as a big countryof manufacturing and consumption at the intelligent terminal, China fully benefits from the generaltrend of focus shift of global display area by virtue of its advantages in investment, industrial chainand cost. While high-end display products are in short supply with vast market prospects and space,as the fastest growing market with the biggest industrial volume of semi-conductor display, Chinawill usher in the opportunity of standing in the global leading position and driving the industrialdevelopment of next-generation semi-conductor display. Semi-conductor display products arewidely used in TVs, computers, mobile phones and other terminal devices. With the rapiddevelopment of information and intelligence, the display demands and new products andapplications targeting commercial, household and mobile application scenarios keep arising; thebooming development of industrial control display, commercial display, educational white board,E-sports monitor, tablet, vehicle-mounted and VR/AR products are improving and diversifying theefficiency and user experience of work, entertainment, learning, life and other activities and willbring sustained growth to the display industry.Through strategic business transformation, the Group has optimized its asset structure and businessflows, improved operating efficiency and benefits, as well as increased comprehensivecompetitiveness and corporate value. The Group is positioned as a technology conglomerate with aprominent core business, clear development strategies, a clear business structure and high operatingefficiency. It will further concentrate its resources to increase CSOT’s business scale and marketcompetitiveness, so as to strengthen and deepen the semi-conductor display and material industrialchain. It will also explore integration and expansion opportunities in the area of key, high-end andbasic information electronic devices.To concentrate on the core business and increase the market share and competitiveness of thesemi-conductor display and material businessThe Group will concentrate its capital, human and technology resources on the semi-conductordisplay and material business. On one hand, the Group will take technological capabilityimprovement as the most important strategy in a bid to promote leading products and technologies
in addition to leading efficiency. Through developing the next-generation new display technologyand materials, the Group will build up core competitiveness for its high-end products. On the otherhand, the Group will continue to give play to the scale advantage of concentrated production lines,as well as improve operating efficiency and various economic indicators. A larger scale and animproved product structure of CSOT will help further promote the Group’s position in the industry,in addition to better operating efficiency and profitability.To develop products and customers in various application scenarios and promote thehorizontal development strategyAfter the Restructuring, the Group becomes an operation platform with the semi-conductor displayand material business as the core. It will independently develop new products and applications for amore open market and a wider range of customer needs, so as to further expand its market share.Meanwhile, CSOT will continue to optimize the product and customer structures of the existingdisplay business, while proactively developing products for new application areas such ascommercial display, notebook computers and vehicle-mounted display. By focusing on segmentmarkets with high added value, it will beef up business transformation.To give play to the advantage of the industrial finance business so as to contribute steadilygrowing operating resultsThe finance and venture capital businesses of the Group provide sufficient resource assurance forthe Group’s member enterprises and the major partners of the Group’s industrial chain. Throughdomestic and overseas finance licenses covering finance companies, small loans, online loans,factoring, finance leases and asset management, the industrial chain finance business providesvarious financial services to related enterprises. It helps increase capital utilization efficiency andcut down finance costs under controllable risk. It also uses the surplus capital for more gains. Theinvestment and venture capital business concentrates on the cutting-edge technologies in relation tothe core business. In addition to helping build the semi-conductor display and material industrialeco-chain, this business also takes into account venture capital projects with stable earnings. It hassuccessfully invested in a batch of star technology firms. The industrial finance & investment andventure capital business can help concentrate on the core businesses, as well as offset the impact ofcyclical swings on the semi-conductor display and material sector.
To increase investment in basic technology research and development for new competitiveedgesThe Group will strengthen AI and big data R&D. By setting up R&D centres around the world andintroducing global leading talent, the Group will achieve better abilities in algorithm, data andapplication scenario construction in a fast pace, as well as improve manufacturing efficiency andproduct application experience. Meanwhile, in the area of intelligent manufacturing and industrialInternet, the Group will keep developing such products and solutions with independent coreintellectual properties (IP). It will provide an industrywide advanced industrial Internet platform,build up intelligent, digital and modular management systems, as well as offer intelligentmanufacturing solutions for various scenarios.X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
| Date | Way of communication | Type of communication party | Index to main information communicated |
| 17 January 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 31 January 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 5 March 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 13 March 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 22 March 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 3 May 2018 | 2017 Annual Results Briefing | Institutional investor | www.cninfo.com.cn |
| 7 May 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 10 May 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 17 May 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 24 May 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 29 May 2018 | By visit | Individual investor | www.cninfo.com.cn |
| 29 May 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 5 June 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 6 July 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 18 July 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 27 July 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 27 July 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 29 August 2018 | 2018 Interim Results Briefing | Institutional investor | www.cninfo.com.cn |
| 30 October 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 31 October 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 31 October 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| 7 November 2018 | By visit | Institutional investor | www.cninfo.com.cn |
| Times of communications | 22 |
| Number of institutions communicated with | 289 |
| Number of individuals communicated with | 8 |
| Number of other communication parties | 0 |
| Tip-offs or leakages of substantial supposedly-confidential information during communications | None |
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | No changes to the dividend policy and the relevant conditions and procedures are in compliance with applicable regulations and transparent |
The 2016 annual equity distribution plan: based on the share capital of 12,213,681,742 shares on 27April 2017, a cash dividend of RMB0.8 (tax inclusive) per 10 shares was to be distributed to theshareholders, totaling RMB977,094,539.36. The retained earnings will carry forward for futuredistribution. Meanwhile, there was no bonus issue from either profit or capital reserves for the year.The 2017 annual equity distribution plan: based on the share capital of 13,514,972,063 shares on 27April 2018 (plus the reserved restricted shares for distribution, a total of 13,550,916,063 shares), acash dividend of RMB1 (tax inclusive) per 10 shares was to be distributed to the shareholders,totaling RMB1,355,091,606.3. The retained earnings will carry forward for future distribution.Meanwhile, there was no bonus issue from either profit or capital reserves for the year.The 2018 annual equity distribution plan: based on the share capital of 13,402,888,507 shares on 19March 2019 that are eligible for profit distribution (the total share capital of 13,549,648,507 sharesminus the 146,760,000 shares in the Company’s special securities account for repurchase that arenot eligible for profit distribution), a cash dividend of RMB1 (tax inclusive) per 10 shares is to bedistributed to the shareholders, totaling RMB1,340,288,851. The retained earnings ofRMB7,628,922,531 will carry forward for future distribution. Meanwhile, there will be no bonusissue from either profit or capital reserves for the year under review.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) |
| 2018 | 1,340,288,851 | 3,468,207,405 | 38.65% | - | - |
| 2017 | 1,355,091,606.3 | 2,664,396,006 | 50.86% | - | - |
| 2016 | 977,094,539.36 | 1,602,125,331.00 | 61.00% | - | - |
Indicate whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parent distributable to the ordinaryshareholders are positive.□ Applicable ■ Not applicable
II Final Dividend Plan for the Reporting Period
| Bonus issue from profit (share/10 shares) | 0 |
| Cash dividend/10 shares (RMB) (tax inclusive) | 1.00 |
| Bonus issue from capital reserves (share/10 shares) | 0 |
| Share base (share) | 13,402,888,507 |
| Total cash dividends (RMB) (tax inclusive) | 1,340,288,851 |
| Distributable profits (RMB) | 8,969,211,382 |
| Cash dividends as % of total profits to be distributed (%) | 100% |
| Cash dividend plan | |
| Based on the share capital of 13,402,888,507 shares on 19 March 2019 that are eligible for profit distribution (the total share capital of 13,549,648,507 shares minus the 146,760,000 shares in the Company’s special securities account for repurchase that are not eligible for profit distribution), a cash dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to the shareholders, totaling RMB1,340,288,851. | |
| Cash and/or stock dividend plan in detail | |
| Based on the share capital of 13,402,888,507 shares on 19 March 2019 that are eligible for profit distribution (the total share capital of 13,549,648,507 shares minus the 146,760,000 shares in the Company’s special securities account for repurchase that are not | |
III Fulfillment of Commitments1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and other Entities Fulfilled in the Reporting Periodor Ongoing at the Period-end
eligible for profit distribution), a cash dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to the shareholders,totaling RMB1,340,288,851.
Commitment
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in major asset restructuring | Li Dongsheng, Jiutian Liancheng and Donging Huarui | About avoiding horizontal competition | 1. Before and after this transaction, I/we as an enterprise or our controlled enterprises shall have no horizontal competition with the principal activities of TCL Corporation or its subsidiaries. 2. After this transaction, I/we as an enterprise shall take active measures to avoid carrying out business activities that are or may be in competition with the principal activities of TCL Corporation or its subsidiaries, and shall urge our controlled enterprises to do so. 3. In the event that I/we as an enterprise or any enterprise controlled by me/us as an enterprise obtains an opportunity for a new business, which constitutes or may constitute horizontal competition with the main business of TCL Corporation or any of its affiliates, I/we as an enterprise will make maximum efforts to drive the business opportunity to be provided to TCL Corporation or its affiliate on reasonable and fair terms and conditions in favor of the interests of TCL Corporation under the permission of conditions. 4. If due to the investment needs of me/us as an enterprise or the business development of TCL | 7 December 2018 | During the period when being the biggest shareholder of TCL Corporation | No violations |
| Corporation, the business of me/us as an enterprise or any enterprise controlled by me/us as an enterprise overlaps with that of TCL Corporation, which may constitute horizontal competition, I/we as an enterprise and the enterprise controlled by me/us as an enterprise agree to solve the horizontal competition problem arising thereof within the time limit specified then. 5. During the period of being the first majority shareholder of TCL Corporation, the aforementioned commitments are unconditional and irrevocable. I/we as an enterprise will make comprehensive and timely joint compensations in full amount to TCL Corporation for any losses incurred from the violation of the aforementioned commitments. | |||||
| Li Dongsheng, Jiutian Liancheng and Donging Huarui | About reducing and controlling related-party transactions | 1. I/we as an enterprise will minimize related-party transactions between me/us as an enterprise as well as any enterprise controlled by me/us as an enterprise and TCL Corporation as well as any of its affiliates. 2. In respect of any unavoidable or reasonable related-party transaction, I/we as an enterprise as well as the enterprise controlled by me/us as an enterprise and TCL Corporation as well as its affiliate shall deal with it in accordance with fair market principles and normal commercial conditions, ensure the fairness of related-party transaction prices, perform the decision-making procedures for related-party transactions in accordance with laws, undertake not to make use of the transaction to transfer the funds or profits of TCL Corporation illegally, and undertake not to take advantage of the transaction to infringe upon the legitimate rights and interest of TCL Corporation and its shareholders. | 7 December 2018 | During the period when being the biggest shareholder of TCL Corporation | No violations |
| 3. I/we as an enterprise and the enterprises controlled by me/us as an enterprise will not request TCL Corporation or any of its affiliates to offer more favorable conditions than the conditions offered to an independent third party in any fair market transaction. 4. During the period of being the first majority shareholder of TCL Corporation, the aforementioned commitments are unconditional and irrevocable. I/we as an enterprise will make comprehensive and timely joint compensations in full amount to TCL Corporation for any losses incurred from the violation of the aforementioned commitments. | |||||
| Li Dongsheng, Jiutian Liancheng and Donging Huarui | About keeping the listed company independent | Upon the completion of this transaction, I/we as an enterprise will continue to exercise the shareholder’s rights in accordance with laws, regulations and the Articles of Incorporation of TCL Corporation and maintain the independence of TCL Corporation in assets, personnel, finance, business and institution. The specific contents are as follows: (I) Commitment to the personnel independence from TCL Corporation I/we as an enterprise undertake to maintain personnel independence from TCL Corporation. General managers, deputy general managers, financial principals, board secretaries and other senior managers of TCL Corporation will not serve in any position other than Director and Supervisor in any enterprise which is a wholly-owned or holding subsidiary of me/us as an enterprise or any other subsidiary over which I/we as an enterprise has control (hereinafter referred to as “the subsidiaries”). They will not be paid salaries in the subsidiaries of me/us as an enterprise. The financial personnel of TCL | 7 December 2018 | During the period when being the biggest shareholder of TCL Corporation | No violations |
| and run it independently and autonomously. 2. I/we as an enterprise undertake that the office institutions and production and operation places of TCL Corporation are separate from my subsidiaries/us as an enterprise. 3. I/we as an enterprise undertake that the Board of Directors, Board of Supervisors and functional departments of TCL Corporation are operated independently without any affiliation with the functional department of us as an enterprise. (V) Commitment to the business independence from TCL Corporation 1. I/we as an enterprise undertake to maintain business independence from the TCL Corporation after this transaction. 2. I/we as an enterprise undertake that TCL Corporation has the assets, personnel, qualifications and capabilities for independent performance of operating activities and the capabilities for autonomous operation targeting market. I/we as an enterprise or the subsidiaries of me/us as an enterprise will make bear the corresponding compensation liabilities in accordance with laws for any losses incurred to TCL Corporation due to the violation of the commitments under the commitment letter. | ||||||
| Commitments made in asset purchase via share offering | Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) | About share trading restrictions | We agree not to transfer the shares that we subscribe for within 12 months since the end of TCL’s asset purchase via share offering (25 December 2017). | 25 December 2017 | 25 December 2018 | No violations |
| Star Century Enterprises Limited; Linzhou Xinglan | About shar | We agree not to transfer the shares that we subscribe for within 36 months since the | 25 December 2017 | 25 December 2020 | No violations |
| Venture Investment Management Partnership (Limited Partnership); Linzhou Xingyong Venture Investment Management Partnership (Limited Partnership); Linzhou Xingyuan Venture Investment Management Partnership (Limited Partnership); and Linzhou Xinglian Venture Investment Management Partnership (Limited Partnership) | e trading restrictions | end of TCL’s asset purchase via share offering (25 December 2017). | |||
| Li Dongsheng | About horizontal competition, related-party transaction and capital occupation | 1) I shall avoid horizontal competition between the companies, enterprises or other business organizations that I own, control, control with others, have significant influence on and TCL Corporation with its subsidiaries; and 2) I shall reduce and control related-parties transactions between the companies, enterprises or other business organizations that I own, control, control with others, have significant influence on and TCL Corporation with its subsidiaries. | 30 August 2013 | During the period when being TCL Corporation’s director, supervisor or senior management | No violations |
| Li Dongsheng; Bo Lianming; Liao Qian; Huang Xubin; Yan Xiaolin and Shi | About horizontal | I will comply with obligations specified in the management regulations for short-swing trading, insider trading and changes in the | 4 February 2015 | Long-standing | No violations |
| Wanwen | competition, related-party transaction and capital occupation | shareholding of senior management; I agree to have me and the partnership enterprise recognized as persons acting in concert and have the number of shares I hold of TCL Corporation and that the partnership enterprise holds of TCL Corporation calculated in consolidation in accordance with the provisions of related regulations such as Article 83 of the Management Measures on the Acquisition of Listed Companies and the Articles of Incorporation when the related parties perform their legal obligations of information disclosure on major equity changes and tender offer. | |||
| 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.; CDB Jingcheng (Beijing) Investment Fund Co., Ltd.; CDB | About share trading restrictions | We agree not to transfer the shares that we subscribe for within 36 months since the end of TCL’s asset purchase via share offering (25 December 2017). | 26 February 2015 | 25 February 2018 | No violations |
| Equipment Manufacturing Industrial Investment Fund Co., Ltd.; CITIC Capital (Tianjin) Equity Investment Partnership (LLP); and Tianjin Chengbai Investment Fund Center | ||||||
| Other commitments | The Company | About horizontal competition, related-party transaction and capital occupation | The Company undertakes to TCL Multimedia that: The Company and its subsidiaries (other than TCL Multimedia and its subsidiaries) will not engage in the manufacturing, assembly and distribution of TV sets (“restricted businesses”) and will engage in the R&D, manufacturing and sales of audio and video products (excluding TV sets) (“related businesses”) which are not restricted businesses, provided that the party making the commitment or any party therein runs or engages in related businesses through equity investment in Tonly Electronics. The distribution and maintenance of TV sets and the manufacturing, assembly, distribution and maintenance of information technology products related to Internet from time to time will no longer be included in the scope of restricted businesses. The termination | 16 June 2014 | Long-standing | No violations |
| condition is that the total equity which TCL Multimedia and its subsidiaries hold of Cool Friends Technology is less than 15%. | ||||||
| Li Dongsheng；Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | About not reducing shareholdings in the Company | I/We as an enterprise shall not reduce our shareholdings in the Company within 12 months since 19 June 2018. | 19 June 2018 | 19 June 2019 | No violations | |
| Fulfilled on time | Yes | |||||
| Specific reasons for failing to fulfill commitments on time and plans for next step | Not applicable | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable ■ Not applicableCommitments made by the Company’s shareholders and transaction counterparties regarding the operating performance of theReporting Period:
□ Applicable ■ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable ■ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Committee and theIndependent Directors (if any) Regarding the Independent Auditor's “Modified Opinion” onthe Financial Statements of the Reporting Period
□ Applicable ■ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
□ Applicable ■ Not applicable
VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
□ Applicable ■ Not applicable
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
| Name of the domestic independent auditor | Da Hua Certified Public Accountants (Special General Partnership) |
| The Company’s payment to the domestic independent auditor (RMB’000) | 4,050 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 11 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Zhang Yuanyuan and Li Bingxin |
| How many consecutive years the certified public accountants have provided audit service for the Company | Four and five years |
Note: The service years start from the day when the first audit agreement is signed between the audit firm and the Company.Indicate whether the independent auditor was changed for the Reporting Period.□ Yes ■ NoIndicate whether the independent auditor was changed during the audit period.□ Yes ■ No
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable ■ Not applicable
XI Insolvency and Reorganization
□ Applicable ■ Not applicable
XII Major Legal Matters
□ Applicable ■ Not applicable
XIII Punishments and Rectifications
□ Applicable ■ Not applicable
XIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable ■ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees1. 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, theCompany’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 theCompany 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 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 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’sStatement Regarding the Review and Publication of the Awardee List for the 2018 Restricted Stock
Incentive 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 approvedto grant 35,944,000 restricted shares to 1,522 eligible awardees on 21 March 2018. The Company’sindependent 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 AssetManagement Co., Ltd., the administrator of the Company’s Stock Ownership Plan, purchased atotal 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.XVI 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-type transactions | Approved transaction line (RMB’000) | Over the approved line or not | Method of settlement | Obtainable market price for same-type transactions | Disclosure date | Index to disclosed information |
| 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 | - | 9,309.3 | 1.3% | 714,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn |
| same period, nor shall it be lower or higher than the interest rate of the Bank of Shanghai for any third-party same-kind deposit for the same period. | |||||||||||||
| 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 | 80,890 | 1.34% | 200,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn | |
| 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 market prices | -- | 1,275,462 | 92.92% | 1450,000 | Not | - | Not applicable | 28 April 2018 | http://www.cninfo.com.cn |
| Total | -- | -- | 1,365,661.3 | -- | 2,364,000 | -- | -- | -- | -- | -- | |||
| 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 any significant difference between the transaction price and the market reference price (if applicable) | Not applicable |
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable ■Not applicable
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable ■ Not applicable
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 2018 | Reason for capital occupation | Nature of capital occupation |
| Active Industries International Limited | Associate | Other receivable | 161,795.0 | 72,913.1 | 88,881.9 | Current account | For operating purposes | |
| Good Vision Limited | Associate | Account receivable | 5,453.8 | 5,453.8 | For selling products | For operating purposes | ||
| Good Vision Limited | Associate | Other receivable | 5,722.2 | - | 5,722.2 | Current account | For operating purposes | |
| Harvey Holdings Limited | Associate | Account receivable | 43.7 | 43.7 | Current account | For operating purposes | ||
| Harvey Holdings Limited | Associate | Interest receivable | 2,411.4 | 2,541.3 | - | 4,952.7 | Current account | For operating purposes |
| Harvey Holdings Limited | Associate | Other receivable | 42,353.2 | 8,981.5 | 33,371.7 | Current account | For operating purposes |
| KAIOSTECHNOLOGIESINC | Associate | Other receivable | 43,988.0 | 23,224.9 | 54,397.3 | 12,815.6 | Current account | For operating purposes |
| T2MobileInternationalLimited | Joint venture | Account receivable | 15,364.8 | 30,997.4 | - | 46,362.2 | For selling products | For operating purposes |
| T2MobileInternationalLimited | Joint venture | Other receivable | 5.9 | - | 5.9 | Current account | For operating purposes | |
| Palm Venture Group | Associate | Account receivable | 18,582.4 | - | 18,582.4 | Current account | For operating purposes | |
| Palm Venture Group | Associate | Other receivable | 12,266.3 | - | 12,266.3 | Current account | For operating purposes | |
| TCL Sun, Inc. | Joint venture | Account receivable | 73,999.0 | 26,312.6 | 20,639.8 | 79,671.8 | For selling products | For operating purposes |
| TCL Zhiyi Technology Huizhou Co., Ltd. | Joint venture | Account receivable | 6,764.1 | 11,156.0 | 16,440.7 | 1,479.4 | For selling products | For operating purposes |
| Beijing National Center for Open & Distance Education Co., Ltd. | Joint venture’s subsidiary | Account receivable | 97.5 | 4.0 | - | 101.5 | For selling products | For operating purposes |
| Beijing WeMed Medical Equipment Co., Ltd. | Associate | Other receivable | 3,776.6 | 3,776.6 | For selling products | For operating purposes | ||
| Wealthy Way Group Limited | Associate | Other receivable | 88.5 | 10.9 | 77.6 | Current account | For operating purposes | |
| Guangdong Regency Optics-Electron Corp. | Associate | Other receivable | 184.0 | 5,675.0 | 5,859.0 | Current account | For operating purposes |
| Huan Tech Co., Ltd. | Associate | Other receivable | 2.7 | 19.7 | - | 22.4 | Current account | For operating purposes |
| Huan Tech Co., Ltd. | Associate | Account receivable | 565.8 | 135.8 | 430.0 | For selling products | For operating purposes | |
| Honpe Technology (Shenzhen) Co., Ltd. | Associate’s subsidiary | Prepayment | 1,056.9 | 1,056.9 | Current account | For operating purposes | ||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | Associate | Other receivable | 995,841.4 | 848,804.0 | 147,037.4 | Current account | For operating purposes | |
| Huizhou TCL Real Estate Development Co., Ltd. | Associate’s subsidiary | Account receivable | 241.6 | 235.2 | 6.4 | For selling products | For operating purposes | |
| Huizhou Gaoshengda Technology Co., Ltd. | Associate’s subsidiary | Interest receivable | 34.4 | - | 34.4 | Current account | For operating purposes | |
| LG Innotek Huizhou Co., Ltd. | Associate | Other receivable | 9.7 | - | 9.7 | Current account | For operating purposes | |
| LG Innotek Huizhou Co., Ltd. | Associate | Account receivable | 10,704.8 | 10,704.8 | For selling products | For operating purposes | ||
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Account receivable | 23,975.0 | 20,533.4 | 3,441.6 | For selling products | For operating purposes | |
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Prepayment | 2,127.5 | 2,109.8 | 17.7 | For selling products | For operating purposes | |
| LE SHI ZHI | Key | Notes | 607.3 | 607.3 | For selling | For |
| XIN Electronic & Technology Co., Ltd. | subsidiary’s minority shareholder | receivable | products | operating purposes | ||||
| LE SHI ZHI XIN Electronic & Technology Co., Ltd. | Key subsidiary’s minority shareholder | Other receivable | 800.0 | - | 800.0 | Current account | For operating purposes | |
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | Associate | Other receivable | 296.4 | - | 296.4 | Current account | For operating purposes | |
| Qihang Import&Export Limited | Associate’s subsidiary | Account receivable | 162,962.9 | 560,945.9 | 673,685.4 | 50,223.4 | For selling products | For operating purposes |
| Qihang Import&Export Limited | Associate’s subsidiary | Interest receivable | 78.2 | - | 78.2 | Current account | For operating purposes | |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Other receivable | 236,839.4 | - | 236,839.4 | Current account | For operating purposes | |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Dividend receivable | 88.0 | 4.5 | - | 92.5 | Dividend distribution | For operating purposes |
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | Associate | Account receivable | 167,673.8 | 5,977.1 | - | 173,650.9 | For selling products | For operating purposes |
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | Other receivable | 3,676.0 | 3,676.0 | Current account | For operating purposes | ||
| T2 Mobile (Shanghai) | Associate’s subsidiary | Prepayment | 1,784.4 | 1,130.3 | 1,784.4 | 1,130.3 | For selling products | For operating |
| Limited | purposes | |||||||
| T2 Mobile (Shanghai) Limited | Associate’s subsidiary | Account receivable | 404.0 | 2,370.1 | - | 2,774.1 | For selling products | For operating purposes |
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | Associate | Other receivable | 2,180.0 | 2,180.0 | Current account | For operating purposes | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | Other receivable | 5,079.8 | 1,721.7 | 3,358.1 | Current account | For operating purposes | |
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | Associate | Prepayment | 492.1 | 462.6 | 29.5 | For selling products | For operating purposes | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Account receivable | 299,867.2 | 51,388.1 | 215.206.4 | 136,048.9 | For selling products | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Other receivable | 49,500.0 | 58.2 | 27,466.6 | 22,091.6 | Current account | For operating purposes |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Prepayment | 22,693.2 | 22,693.2 | For selling products | For operating purposes | ||
| Canyon Circuit Technology | Associate | Interest receivable | 17.9 | - | 17.9 | Current account | For operating purposes |
| (Huizhou) Co., Ltd. | ||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | Associate | Interest receivable | 77.0 | 5.6 | 71.4 | Current account | For operating purposes | |
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | Associate | Other receivable | 1.9 | - | 1.9 | Current account | For operating purposes | |
| Shenzhen Thunderbird Network Media Co., Ltd. | Associate’s subsidiary | Other receivable | 694.8 | 1,546.6 | 1,990.3 | 251.1 | For selling products | For operating purposes |
| Shenzhen Thunderbird Network Media Co., Ltd. | Associate’s subsidiary | Account receivable | 69.9 | 290.7 | 360.6 | For selling products | For operating purposes | |
| Shenzhen Thunderbird Network Technology Co. | Associate | Other receivable | 545.0 | 259.6 | 804.6 | For selling products | For operating purposes | |
| Shenzhen Thunderbird Information Technology Co., Ltd. | Associate’s subsidiary | Other receivable | 762.1 | 17.0 | 779.1 | For selling products | For operating purposes | |
| Shenzhen Thunderbird Smart Products Co., Ltd. | Associate’s subsidiary | Other receivable | 35.9 | 1,852.1 | 39.5 | 1,848.5 | For selling products | For operating purposes |
| Shenzhen Thunderbird Smart Products Co., | Associate’s subsidiary | Account receivable | 3,809.9 | 8,702.8 | - | 12,512.7 | For selling products | For operating purposes |
| Ltd. | ||||||||
| CJ Speedex Logistics Co., Ltd. | Joint venture | Prepayment | 1,760.1 | 1,419.1 | 1,421.0 | 1,758.2 | Current account | For operating purposes |
| TV University Online Distance Education Technology Co., Ltd. | Associate | Dividend receivable | 47,656.0 | - | 47,656.0 | Dividend distribution | For operating purposes | |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | Other receivable | 5.7 | 5.7 | Current account | For operating purposes | ||
| Wuhan Lesheng Times Trading Co., Ltd. | Associate’s subsidiary | Other receivable | 8,000.0 | - | 8,000.0 | Current account | For operating purposes | |
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | Dividend receivable | 11,015.0 | 11,015.0 | Dividend distribution | For operating purposes | ||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | Associate | Other receivable | 40,300.0 | 40,300.0 | Current account | For operating purposes | ||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited | Associate | Other receivable | 7,844.9 | - | 7,844.9 | Current account | For operating purposes |
| Partnership) | ||||||||
| Changzhou Chuangdong Fund Management Co., Ltd. | Associate | Other receivable | 2.3 | - | 2.3 | Current account | For operating purposes | |
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | Associate | Other receivable | 340.6 | - | 340.6 | Current account | For operating purposes | |
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | Associate | Other receivable | 20.5 | - | 20.5 | Current account | For operating purposes | |
| Xionghua Investment Co., Ltd. | Associate’s subsidiary | Other receivable | 16.6 | 0.8 | 17.4 | Current account | For operating purposes | |
| Total | 1,142,259.2 | 2,099,089.6 | 2,078,301.3 | 1,163,047.5 |
5. Other Major Related-Party Transactions
No such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
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 and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 2018/10/30 | 50,000 | 2018/7/11 | 39,352 | Joint-liability | 30—208 days | Not | Yes |
| Huizhou Shenghua Industrial Co., Ltd. | 90,000 | 2018/7/3 | 86,250 | Joint-liability | 61—338 days | Not | Not | |
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 40,000 | 2018/7/10 | 26,100 | Joint-liability | 112—184 days | Not | Not | |
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 1,100,000 | 2018/3/27 | 625,936.6 | Joint-liability | 62-365 days | Not | Not | |
| Qihang Import&Export Limited | 300,000 | 2018/7/31 | 245,364.0 | Joint-liability | 365-365 days | Not | Not | |
| Huizhou Gaoshengda Technology Co., Ltd. | 90,000 | 2018/7/26 | 67,190 | Joint-liability | 60—210 days | Not | Not | |
| Total approved line for such guarantees in Reporting Period (A1) | 1,670,000 | Total actual amount of such guarantees in Reporting Period (A2) | 1.453,260 | |||||
| Total approved line for such guarantees at end of Reporting Period (A3) | 1,670,000 | Total actual balance of such guarantees at end of Reporting Period (A4) | 1,090,190 | |||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date (date of agreement signing) | Actual guarantee amount | Type of guarantee | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | 2018-10-30 | 3,450,000 | 2018/4/28 | 1,603,140 | Joint-liability | 22—311 days | Not | Not |
| TCL Overseas Electronics (Huizhou) Ltd. | 1,200,000 | 2018/6/29 | 802,690 | Joint-liability | 52—360 days | Not | Not | |
| TCL King Electrical Appliances (Chengdu) Co., Ltd. | 600,000 | 2018/6/5 | 179,200 | Joint-liability | 170—587 days | Not | Not | |
| Huizhou TCL Mobile Communication Co., Ltd. | 4,500,000 | 2018/7/25 | 2,443,960 | Joint-liability | 1—365 days | Not | Not | |
| TCL Communication Technology Holdings Limited | 1,200,000 | 2017/11/20 | 1,120,350 | Joint-liability | 1-3 years | Not | Not | |
| TCL Mobile Communication (HK) Company Limited | 2,485,000 | 2018/9/5 | 661,610 | Joint-liability | 62—186 days | Not | Not | |
| TCT Mobile Overseas Limited | 66,250 | 2018/8/29 | 13,730 | Joint-liability | 365 days | Not | Not | |
| TCT Mobile (US) Inc. | 845,000 | - | - | Joint-liability | - | Not | Not | |
| TCT Mobile International Limited | 310,000 | 2018/8/29 | 20,590 | Joint-liability | 365 days | Not | Not | |
| TCT Mobile Italy S.R.L | 16,000 | 2018/0 | 11,750 | Joint-liability | 90—180 days | Not | Not | |
| 4/19 | ||||||||
| TCT MOBILE - TELEFONES LTDA. | 120,000 | 2018/5/31 | 108,010 | Joint-liability | 365 days | Not | Not | |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | 7,500,000 | 2016/4/13 | 4,226,530 | Joint-liability | 20—96 month | Not | Not | |
| Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd.-note (1) | 21,500,000 | 2017/3/31 | 12,875,130 | Joint-liability | 2—96 month | Not | Not | |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 6,000,000 | 2015/3/10 | 3,905,980 | Joint-liability | 38 days –96 months | Not | Not | |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 11,600,000 | 2017/9/29 | 5,124,570 | Joint-liability | 3—96 months | Not | Not | |
| Huizhou China Star Optoelectronics Technology Co., Ltd. | 5,000,000 | 2018/3/9 | 120,410 | Joint-liability | 3—13 months | Not | Not | |
| China Star Optoelectronics International (HK) Limited | 2,600,000 | 2018/1/8 | 310,210 | Joint-liability | 24 months | Not | Not | |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | 1,500,000 | 2018/6/15 | 469,830 | Joint-liability | 33 days –12 months | Not | Not | |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | 300,000 | 2018/10/22 | 10,740 | Joint-liability | 1—6 months | Not | Not | |
| Guangdong Juhua Printed Display Technology Co., Ltd. | 300,000 | 2017/12/22 | 10,410 | Joint-liability | 6—144 months | Not | Not | |
| TCL Home Appliances (Hefei) Co., Ltd. | 1,400,000 | 2017/9/28 | 884,990 | Joint-liability | 1—459 days | Not | Not | |
| TCL Home Appliances (Zhongshan) Co., Ltd. | 160,000 | 2018/6/19 | 125,610 | Joint-liability | 1—238 days | Not | Not | |
| TCL Air-Conditioner (Zhongshan) Co., Ltd. | 1,586,000 | 2016/9/9 | 1,101,100 | Joint-liability | 1—843 days | Not | Not | |
| TCL Air Conditioner (Wuhan) Co., Ltd. | 1,316,0 | 2018/6 | Joint-li | 1—234 | Not | Not |
| 00 | /25 | 1,039,240 | ability | days | ||||
| Zhongshan TCL Refrigeration Equipment Co., Ltd. | 753,000 | 2018/7/26 | 272,570 | Joint-liability | 1—213 days | Not | Not | |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | 70,000 | 2018/7/27 | 57,780 | Joint-liability | 91—208 days | Not | Not | |
| TCL Home Appliances (Huizhou) Co., Ltd. | 115,000 | 2018/10/6 | 19,590 | Joint-liability | 1—118 days | Not | Not | |
| TCL Intelligent Technology (Hefei) Co., Ltd. | 8,000 | 2018/11/3 | 4,210 | Joint-liability | 1—150 days | Not | Not | |
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | 250,000 | 2018/7/4 | 122,690 | Joint-liability | 1—208 days | Not | Not | |
| TCL Home Appliances (Hong Kong) Limited | 200,000 | - | - | Joint-liability | - | Not | Not | |
| Shenzhen TCL Hangxiang Supply Chain Service Co., Ltd. | 5,000 | - | - | Joint-liability | - | Not | Not | |
| Zhongshan Hhappy Tree Network Technology Co., Ltd. | 20,000 | 2018/12/6 | 760 | Joint-liability | 30—181 days | Not | Not | |
| TCL Tonly Electronics (Huizhou) Co., Ltd. | 400,000 | 2016/11/4 | 244,830 | Joint-liability | 4 days—48 months | Not | Not | |
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | 140,000 | 2018/9/20 | 56,320 | Joint-liability | 87—268 days | Not | Not | |
| Huizhou TCL Light Electrical Appliances Co., Ltd. | 55,000 | 2018/7/12 | 18,370 | Joint-liability | 90—182 days | Not | Not | |
| Huizhou VERY Light Source Technology Co., Ltd. | 40,000 | 2018/8/28 | 46,810 | Joint-liability | 5—240 days | Not | Not | |
| TCL Finance Co., Ltd. | 1,500,000 | - | - | Joint-liability | - | Not | Not | |
| TCL Capital (Hong Kong) Limited | 1,000,000 | - | - | Joint-liability | - | Not | Not | |
| TCL Commercial Factoring (Shenzhen) Co., Ltd. | 500,000 | - | - | Joint-liability | - | Not | Not | |
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | 500,000 | 2018/10/10 | 9,500 | Joint-liability | 12—12 months | Not | Not | |
| Guangzhou TCL Internet Microcredit Co., Ltd. | 500,000 | - | - | Joint-liability | - | Not | Not | |
| Highly Information Industry Co., Ltd. | 3,000,0 | 2016/6 | 1,520,0 | Joint-li | 1—36 | Not | Not |
| 00 | /23 | 00 | ability | months | ||||
| Beijing Hecheng Nuoxin Technology Co., Ltd. | 200,000 | 2018/1/1 | 190,000 | Joint-liability | 12—36 months | Not | Not | |
| Beijing Lingyun Data Technology Co., Ltd. | 350,000 | 2017/6/1 | 274,470 | Joint-liability | 1—15 months | Not | Not | |
| Beijing Sunpiestore Technology Co., Ltd. | 500,000 | 2012/6/1 | 340,000 | Joint-liability | 12—79 months | Not | Not | |
| Shaanxi Titi Electronic Technology Co., Ltd. | 30,000 | - | - | Joint-liability | - | Not | Not | |
| Huizhou Cool Friends Network Technology Co., Ltd. | 130,000 | 2018/10/30 | 93,000 | Joint-liability | 7 days –12 months | Not | Not | |
| SHIFENDAOJIA Online Service Co., Ltd. | 30,000 | 2018/8/16 | 29,950 | Joint-liability | 1—6 months | Not | Not | |
| TCL Technology Park (Huizhou) Co., Ltd. | 2,000,000 | - | - | Joint-liability | - | Not | Not | |
| TCL Technology Park Co., Ltd. | 270,000 | - | - | Joint-liability | - | Not | Not | |
| Guangzhou Yunsheng Tianji Technology Co., Ltd. | 1,100,000 | 2017/9/28 | 530,000 | Joint-liability | 10—12 years | Not | Not | |
| Guangzhou TCL Science and Technology Development Co., Ltd. | 2,000,000 | 2018/12/18 | 150,000 | Joint-liability | 13 years | Not | Not | |
| Shenzhen Bao’an TCL Haichuanggu Technology Park Development Co., Ltd. | 200,000 | 2018/9/25 | 161,440 | Joint-liability | 3 year | Not | Not | |
| TCL Industries Holdings (HK) Limited | 8,000,000 | 2016/10/4 | 7,245,760 | Joint-liability | 1—5 years | Not | Not | |
| Huizhou TCL Environment Technology Co., Ltd. | 60,000 | 2018/12/24 | 9,590 | Joint-liability | 7 days -365 days | Not | Not | |
| Total approved line for such guarantees in the Reporting Period (B1) | 99,480,250 | Total actual amount of such guarantees in the Reporting Period (B2) | 73,316,890 | |||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 99,480,250 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 48,567,440 | |||||
| Guarantees provided between subsidiaries | ||||||||
| Obligor | Disclosure date of the guarantee line announcement | 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 a related party or not |
| - | - | - | - | - | - | - | - | - |
| Total approved line for such guarantees in the Reporting Period (C1) | - | Total actual amount of such guarantees in the Reporting Period (C2) | - | |||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | - | Total actual balance of such guarantees at the end of the Reporting Period (C4) | - | |||||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 101,150,250 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 74,770,150 | |||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 101,150,250 | Total actual guarantee balance at the end of the | 49,657,640 | |||||
(2) Irregularities in Provision of Guarantees
□ Applicable ■ Not applicable
3. Cash Entrusted to Other Entities for Management(1) Cash Entrusted for Wealth Management
Unit: RMB’000
| Type | Source of capital | Amount | Undue amount | Unrecovered overdue amount |
| Bank’s wealth management product | Self-owned capital | 9,705,760 | 200,000 | - |
| Securities firm’s wealth management product | Self-owned capital | 751,000 | 21,900 | - |
| Trust wealth management product | Self-owned capital | 2,515,000 | 1,500,000 | - |
| Other | Self-owned capital | 1,360,640 | 907,510 | - |
| Reporting Period (A4+B4+C4) | |||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 162.84% | ||
| 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 an over 70% debt/asset ratio (E) | 21,773,900 | ||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 33,167,810 | ||
| Total of the three amounts above (D+E+F) | 54,941,710 | ||
| Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees (if any) | Not applicable | ||
| Guarantees provided in breach of prescribed procedures (if any) | Not applicable | ||
| Total | 14,332,400 | 2,629,410 | - |
High-risk wealth management transactions with a significant single amount, low liquidity and no principal protection:
□ Applicable ■ Not applicableSituation where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable ■ Not applicable
(2) Entrusted Loans
Unit: RMB’000
| Total amount | Source of capital | Undue amount | Unrecovered overdue amount |
| 70,252.4 | Self-owned capital | 52,456.0 | - |
Note: The entrusted loans were primarily provided for the employees of CSOT and its subsidiaries with their self-owned capital topay the down payment for their first family house under the CSOT Housing Program.High-risk entrusted loans with a significant single amount, low liquidity and no principal protection:
□ Applicable ■ Not applicableSituation where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable ■ Not applicable
4. Other Major Contracts
□ Applicable ■ Not applicable
XVIII Corporate Social Responsibility (CSR)1. Measures Taken to Fulfill CSR CommitmentPlease refer to The 2018 Annual Corporate Social Responsibility & Sustainable DevelopmentReport of TCL Corporation.2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
To 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 welfare
projects 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 the Related Work Done in the Reporting PeriodIn 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
| Indicators | Measurement Unit | Quantity/Development |
| I. Overall summary | —— | —— |
| Of which: 1. Cash | RMB’000 | 5,923.6 |
| II. Investment breakdown | —— | —— |
| 4. Poverty alleviation by education | —— | —— |
| Of which: 4.1 Investment amount in aiding students in poverty | RMB’000 | 200 |
| 4.2 Number of students in poverty who got aid | Person | 100 |
| 4.3 Investment amount in improvement of educational resources in poverty-stricken areas | RMB’000 | 5,475.8 |
| 8. Poverty alleviation by public programmes | —— | —— |
| 8.2 Investment amount in targeted | RMB’000 | 36.8 |
| poverty alleviation | ||
| 8.3 Investment amount in public fund for poverty alleviation | RMB’000 | 211 |
(4) Subsequent Plans
In 2019, Shenzhen TCL Public Welfare Foundation and CYDF have signed another five-yearstrategic cooperation agreement. Together they will expand the existing award scale and publicityimpact of the TCL Hope Engineering Candlelight Awards Program, and improve user interaction onthe Internet platform for social concern. Starting from 2019, we will also expand the publicity andcoverage of the Candlelight Micro-loan Project to solve the financial needs of some rural teachersfor their better services in rural education.In order to serve the national poverty alleviation work and respond to the call for targeted povertyalleviation, Shenzhen TCL Public Welfare Foundation initiated an "assistance program for retiredprivate substitute teachers" jointly with CYDF to solve the problem of low-paid and difficult livingfor retired private substitute teachers in poverty-stricken areas. This program helps and supportsretired private substitute teachers who contributed to education in poverty-stricken areas to improvetheir living conditions by funding services and social advocacy, and encourage them to develop forsocial respect and self-development.3. Issues Related to Environmental Protection
| Name of the Company or subsidiary | Major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration (mg/L) | Governing discharge standards (mg/L) | Total discharge (metric ton) | Approved total discharge (metric tons/year) | Excessive discharge | ||||||||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. (Phase I) | COD | Discharged after being duly treated in waste water treatment system | 1 | Northwest of plant | 78.5 | 260 | 519.12 | 1226.05 | None | ||||||||||
| Ammonia nitrogen | 3.35 | 30 | 22.17 | / | |||||||||||||||
| Shenzhen China Star | COD | Discharged after being | 1 | Artificial wetland to | 18.6 | 30 | 84.84 | 174.89 | None |
| Optoelectronics Technology Co., Ltd. (Phase II) | Ammonia nitrogen | duly treated in waste water treatment system and going through artificial wetland system | north of plant | 0.33 | 1.5 | 1.67 | 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 | 8.5-116.20 | 400mg/L | 185.74 | 353.55 | None | ||||||||||
| Ammonia nitrogen | 0-4.45 | 30 | 18.57 | 35.36 | None | ||||||||||||||
| TCL-AOBO Environmental Protection And Development Co., Ltd. | PM | Discharged at high altitude after being duly treated in bag dust-cleaning system | 1 | Exhaust funnel of physical crushing workshop | 4.7 | 120 | 0.264 | 5.76 | None | ||||||||||
| PM | 1 | Exhaust funnel of plastic treatment workshop | 2.2 | 120 | 0.267 | 5.76 | None | ||||||||||||
| 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 | 20 | 120 | 0.844 | 2.9 | None | ||||||||||
| Huizhou TCL Environment Technology Co., Ltd. | COD | Discharged after being duly treated in waste water treatment system | 1 | West of plant | 23.08 | 90 | 0.857 | 3.996 | None | ||||||||||
| Ammonia nitrogen | 1.21 | 10 | 0.045 | 0.444 | None |
Construction and operation of facilities for preventing pollution:
During 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 gastreatment 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. The monitoring results show that the factory boundary noise and emission of all subsidiaries
meet the standards in a stable manner.Environmental Impact Assessment on Construction Projects and Other EnvironmentalProtection Administrative LicensesEach subsidiary complies with the laws and regulations of environmental impact assessment onconstruction projects and other environmental protection administrative licenses, 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 platformmanaged by local environmental authorities or subsidiary websites.Other environment-related information that should be disclosed:
None.Other relevant information:
None.XIX Other Significant EventsOn 24 March 2018, the Company disclosed the Announcement on the Establishment of StrategicInvestment Funds (announcement No. 2018-029). It intended to, together with Shenzhen China StarOptoelectronics Technology Co., Ltd. and TCL Multimedia Technology Holdings Limited, establishan overseas M&A fund of a target scale of approximately US$75 million and a domestic M&A fundof a RMB201 million scale. So far, the domestic M&A fund has been registered with the industrialand commercial administration, received the business license and been filed with the Asset
Management Association of China as per the Securities Investment Fund Law, the Interim Measuresfor the Supervision and Administration of Privately Offered Investment Funds, as well as otherapplicable laws and regulations. For further information, please refer to the Announcement on theProgress of the Establishment of the Strategic Investment Funds (announcement No. 2018-101)disclosed by the Company on 29 October 2018.On 15 May 2018, the Company disclosed the Announcement on the Progress of the Establishmentof an Equity Investment Fund (announcement No. 2018-047). TCL Culture Media, a wholly-ownedsubsidiary of the Company, intended to, as a limited partner together with Deqing PuyingInvestment Management Partnership (Limited Partnership), Hangzhou Shunwang Technology Co.,Ltd. and Wang Wengan (natural person), to establish Qiyu Investment with a contribution ofRMB70 million. Qiyu Investment specializes in the acquisition of the RMB118,990,957 limitedpartnership share of the Puhua Fund held by Shanghai Liyou, which is corresponding to theinvestment of the Puhua Fund in Shengqu Games. The fund is currently running well.On 3 August 2018, the Company disclosed the Announcement on the Investment Progress of anIndustrial Equity Investment Fund with the Company as a Co-Founder (announcement No.2018-077). The changes to the partners of Xinjiang Dongpeng Heli Equity Investment Partnership(Limited Partnership), co-founded by the Company’s wholly-owned subsidiary Xinjiang TCLEquity Investment Ltd. have been registered with the industrial and commercial administration andsubmitted to the Asset Management Association of China. The fund is currently running well.On 29 August 2018, the Company disclosed the Announcement on the Establishment of a StartupInvestment Fund (announcement No. 2018-089). Ningbo TCL Equity Investment Ltd., awholly-owned subsidiary of the Company, together with Changzhou Chuangdong FundManagement Co., Ltd., Changzhou Peony Jiangnan Startup Investment Co., Ltd. and ChangzhouTianrong Equity Investment Center (Limited Partnership), intended to establish a startup investmentfund of a target scale of RMB501 million. The fund would focus on investment in high-qualitygrowing unlisted startups in the establishment or re-establishment process in TMT, new materials,intelligent manufacturing and other areas. The fund is currently running well.On 30 November 2018, the Company completed the issuance of a three-year MTN of RMB2 billionat the offering price of RMB100/RMB100 par value with a coupon rate of 4.58%. For further
information, please refer to the announcement No. 2018-107 disclosed by the Company on thedesignated media.XX 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 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 |
| Announcement on the Introduction of Strategic Investor by Subsidiary Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | 3 August 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 the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 4,513,615,359 | 33.40% | 34,676,444 | -2,722,638,512 | -2,687,962,068 | 1,825,653,291 | 13.47% | ||
| 1.1 Shares held by state-owned legal persons | 1,244,019,136 | 9.20% | -1,244,019,136 | -1,244,019,136 | |||||
| 1.2 Shares held by other domestic investors | 3,179,063,876 | 23.53% | 34,392,300 | -1,478,619,376 | -1,444,227,076 | 1,734,836,800 | 12.80% | ||
| 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 | 4,949,999 | 39,342,299 | 524,078,826 | 3.87% | ||
| 1.3 Shares held by | 90,532,347 | 0.67% | 284,144 | 284,144 | 90,816,491 | 0.67% | |||
| foreign investors | |||||||||
| 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% | 2,722,638,512 | 2,722,638,512 | 11,723,995,216 | 86.53% | |||
| 2.1 RMB-denominated ordinary shares | 9,001,356,704 | 66.60% | 2,722,638,512 | 2,722,638,512 | 11,723,995,216 | 86.53% | |||
| 3. Total shares | 13,514,972,063 | 100.00% | 34,676,444 | 0 | 34,676,444 | 13,549,648,507 | 100.00% |
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 passed the half-year limit startingfrom his resignation, decreasing the restricted shares by 1,014,700 shares and decreasing the unrestricted shares accordingly; Li Dongincreased his holdings by 6,600,000 shares, increasing the restricted shares by 4,950,000 shares; and 34,676,444 restricted shareswere granted 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 applicableTransfer of share ownership:
□Applicable ■Not applicableProgress on any share repurchase:
□ Applicable ■Not applicableProgress on reducing the repurchased shares by means of centralized bidding:
□ Applicable ■ Not applicableEffects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’sordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□Applicable ■Not applicable
Other information that the Company considers necessary or is required by the securities 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 | - | - | 1,059,849,533 | IPO restricted shares | 2019-1-4 |
| Star Century Enterprises Limited | 90,532,347 | - | - | 90,532,347 | IPO restricted shares | 2020-12-25 |
| Duilong Xinglan Venture Investment Management Partnership (Limited Partnership) | 42,521,163 | - | - | 42,521,163 | IPO restricted shares | 2020-12-25 |
| Duilong Xingyong Venture Investment Management Partnership (Limited Partnership) | 38,380,684 | - | - | 38,380,684 | IPO restricted shares | 2020-12-25 |
| Duilong Xingyuan Venture Investment Management Partnership (Limited Partnership) | 37,695,315 | - | - | 37,695,315 | IPO restricted shares | 2020-12-25 |
| Duilong Xinglian Venture Investment Management Partnership (Limited Partnership) | 32,311,279 | - | - | 32,311,279 | IPO restricted shares | 2020-12-25 |
| Other | 484,736,527 | - | 4,949,999 | 489,686,526 | Locked-up shares of senior management | 9999-99-99 |
| Awardees of restricted stock incentives | 0 | - | 34,676,444 | 34,676,444 | Restricted shares granted as incentives | 2019-5-16 |
| Total | 1,786,026,848 | - | 39,626,443 | 1,825,653,291 | -- | -- |
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
■ Applicable □ Not applicable
| 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 |
| Stock | ||||||
| Restricted stock | 2019-03-21 | 1.83 | 34,676,444 | 2019-05-16 | 34,676,444 | - |
| Corporate bonds, including convertibles and warrant bonds | ||||||
| Corporate bonds | 2018-06-05 | 5.48% | 10,000,000 | 2018-07-02 | 10,000,000 | |
| Corporate bonds | 2018-08-17 | 5.30% | 20,000,000 | 2018-09-26 | 20,000,000 | |
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
During the Reporting Period, the 2,727,588,511 shares in a private placement in 2015 wereunlocked on 26 February 2018, reducing the restricted shares and increasing the unrestricted sharesaccordingly; director Mr. Bo Lianming passed the half-year limit starting from his resignation,decreasing the restricted shares by 1,014,700 shares and decreasing the unrestricted sharesaccordingly; Li Dong increased his holdings by 6,600,000 shares, increasing the restricted shares by4,950,000 shares; and 34,676,444 restricted shares were granted and listed as incentives, increasingthe total shares from 13,514,972,063 shares to 13,549,648,507 shares.
3. Existing Staff-Held Shares
□ Applicable ■ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders at the period-end | 463,789 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 479,128 | Number of preferred shareholders with resumed voting rights at the period-end (if any) (see note 8) | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | |||||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | 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 | 747,420,000 | ||||||
| Huizhou Investment Holding Co., Ltd. | State-owned legal person | 6.48 | 878,419,747 | - | 878,419,747 | |||||||||
| Li Dongsheng | Domestic natural person | 4.76 | 644,873,688 | 6,600,000 | 483,655,266 | 161,218,422 | In pledge | 607,644,587 | ||||||
| Beijing Ziguang Investment Co., Ltd. | 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 Liancheng Equity Investment Partnership (Limited | Domestic non-state-owned legal person | 3.02 | 408,899,521 | - | - | 408,899,521 | In pledge | 408,899,521 | ||||||
| Partnership) | ||||||||
| China Securities Finance Corporation Limited | Domestic non-state-owned legal person | 2.75 | 373,231,553 | - | - | 373,231,553 | ||
| CDB Innovation Capital Co., Ltd. | State-owned legal person | 2.37 | 320,685,219 | - | - | 320,685,219 | ||
| Guangdong Guangxin Holdings Group Ltd. | State-owned legal person | 2.34 | 316,834,683 | - | - | 316,834,683 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned legal person | 1.52 | 206,456,500 | - | - | 206,456,500 | ||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder in a 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) and CDB Innovation Capital 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 the shareholders above | During the Reporting Period, 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 shareholders | ||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||||||
| 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 |
| China Securities Finance Corporation Limited | 373,231,553 | RMB-denominated ordinary stock | 373,231,553 |
| 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 |
| Central Huijin Asset Management Co., Ltd. | 206,456,500 | RMB-denominated ordinary stock | 206,456,500 |
| Li Dongsheng | 161,218,422 | RMB-denominated ordinary stock | 161,218,422 |
| CDB Jingcheng (Beijing) Investment Fund Co., Ltd. | 158,343,559 | RMB-denominated ordinary stock | 158,343,559 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | During the Reporting Period, 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 ordinary shareholders involved in securities margin trading (if any) (see note 4) | None | ||
Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conductedany promissory repo during the Reporting Period.□ Yes ■ No
2. Controlling Shareholder
The Company has no controlling shareholder.On 19 May 2017, TCL Corporation (hereinafter referred to as “TCL” or the “Company”) wasnotified by shareholders Mr. Li Dongsheng, Xinjiang Dongxing Huarui Equity InvestmentPartnership (Limited Partnership) (hereinafter referred to as “Dongxing Huarui”) and XinjiangJiutian 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 (hereinafterreferred to as the “Agreement”) on 19 May 2017. Up to the agreement signing day, these threeacting-in-concert parties combined is the biggest shareholder of TCL, with a total of 1,499,833,496shares in TCL (an 11.1% stake).With confidence in the Company’s core business and long-term investment value, Mr. LiDongsheng increased his shareholdings in the Company by a total of 6,600,000 shares on 18 and 19December 2018, respectively. As at the end of the Reporting Period, Mr. Li Dongsheng and hisacting-in-concert parties together held a total of 1,506,433,496 shares (an 11.12% stake) in theCompany, and he is the biggest shareholder of the Company.As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who ownsover 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 inthe resolution of a meeting of shareholders or a general meeting of shareholders according to thevoting 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 nocontrolling shareholder or actual controller.
3. Actual Controller and Its Acting-in-Concert Parties
The Company has no actual controller.The “actual controller” refers to an entity which is not a shareholder of a company but actuallycontrols the company behaviors through investment relationship, agreement or other arrangements.According to the definition above, the Company has no actual controller.Any shareholder with a greater than 10% interest at the ultimate control level:
On 19 May 2017, TCL Corporation (hereinafter referred to as “TCL” or the “Company”) wasnotified by shareholders Mr. Li Dongsheng, Xinjiang Dongxing Huarui Equity InvestmentPartnership (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 stablemanagement and development strategies. They have officially become acting-in-concert parties onTCL after signing the Acting-in-Concert Agreement in Relation to TCL Corporation (hereinafterreferred to as the “Agreement”) on 19 May 2017. Up to the agreement signing day, these threeacting-in-concert parties combined is the biggest shareholder of TCL, with a total of 1,499,833,496shares in TCL (an 11.1% stake).With confidence in the Company’s core business and long-term investment value, Mr. LiDongsheng increased his shareholdings in the Company by a total of 6,600,000 shares on 18 and 19December 2018, respectively. As at the end of the Reporting Period, Mr. Li Dongsheng and hisacting-in-concert parties together held a total of 1,506,433,496 shares (an 11.12% stake) in theCompany, and he is the biggest shareholder of the Company.
Shareholders with a greater than 5% interest at the ultimate control level:
| Shareholder at the ultimate control level | Legal representative/person-in-charge | Date of establishment | Organization code | Principal activity |
| Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) | Shenzhen Genzon Fund Management Co., Ltd. (assigned representative: Yang Shufen) | 23 August 2016 | 91420100MA4KNCA12R | Non-securities equity investment and the related consulting services (excluding activities restricted or prohibited by China’s laws or regulations or the State Council; not allowed to publicly raise or issue funds in any way) (not allowed to take in deposits or in a disguised form from the general public, or to offer loans) (where approval is required according to law, it shall be obtained before operation) |
| Huizhou Investment Holding Co., Ltd. | Liu Bin | 31 December 2001 | 91441300MA4W7AMD5H | State-owned assets operation and management and financing of the government’s construction projects within the authorization of the municipal government |
| Interests of the shareholder in other domestic or foreign listed companies | None | |||
4. Other 10% or Greater Corporate Shareholders
□ Applicable ■ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable ■ Not applicable
Part VII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Li Dongsheng | Chairman of the Board and CEO | Incumbent | Male | 61 | 2002-4-16 | 2020-8-31 | 638,273,688 | 6,600,000 | - | - | 644,873,688 |
| He Jinlei | Vice Chairman of the Board | Incumbent | Male | 45 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Liu Bin | Vice Chairman of the Board | Incumbent | Male | 49 | 2015-8-31 | 2020-8-31 | 0 | - | - | - | 0 |
| Du Juan | Director and COO | Incumbent | Female | 48 | 2018-3-2 | 2020-8-31 | 0 | - | - | - | 0 |
| Bo Lianming | Director and President | Former | Male | 55 | 2007-10-29 | 2018-3-2 | 4,058,801 | - | - | - | 4,058,801 |
| Huang Xubin | Director and CFO | Incumbent | Male | 53 | 2011-6-20 | 2019-1-10 | 3,383,380 | - | - | - | 3,383,380 |
| Huang Wei | Director and Senior Vice President | Incumbent | Male | 56 | 2015-8-13 | 2020-8-31 | 0 | - | - | - | 0 |
| Liao Qian | Director and Board Secretary | Incumbent | Male | 38 | 2014-4-23 | 2020-8-31 | 0 | - | - | - | 0 |
| Wu Xiaohui | Director | Incumben | Female | 47 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| t | |||||||||||
| Yan Yan | Independent Director | Incumbent | Male | 62 | 2015-3-24 | 2020-8-31 | 0 | - | - | - | 0 |
| Lu Xin | Independent Director | Incumbent | Female | 56 | 2014-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Zhou Guofu | Independent Director | Incumbent | Male | 55 | 2014-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Liu Xunci | Independent Director | Incumbent | Male | 60 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| He Zhuohui | Chairman of the Supervisory Committee | Incumbent | Male | 53 | 2015-9-2 | 2020-8-31 | 0 | - | - | - | 0 |
| Mao Tianxiang | Employee Supervisor | Incumbent | Male | 38 | 2017-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Qiu Haiyan | Supervisor | Incumbent | Female | 44 | 2014-9-1 | 2020-8-31 | 0 | - | - | - | 0 |
| Jin Xuzhi | Senior Vice President | Incumbent | Male | 64 | 2015-8-13 | 2020-8-31 | 0 | - | - | - | 0 |
| Yan Xiaolin | CTO | Incumbent | Male | 52 | 2014-9-1 | 2020-8-31 | 599,500 | - | - | - | 599,500 |
| Wang Cheng | Senior Vice President | Incumbent | Male | 44 | 2018-3-19 | 2019-1-10 | 0 | - | - | - | 0 |
| Total | -- | -- | -- | -- | -- | -- | 646,315,369 | 6,600,000 | - | - | 652,915,369 |
II Change of Directors, Supervisors and Senior Management
| Name | Office title | Type of change | Date of change | Reason for change |
| Bo Lianming | President and | Resignation | 2 March 2018 | Personal reason |
| Executive Director | ||||
| Du Juan | COO and Executive Director | Elected | 19 March 2018 | Elected at a general meeting upon nomination by the Board |
| Wang Cheng | Senior Vice President | Hired | 19 March 2018 | Hired by the Board |
III Biographical InformationBorn in July 1957, Mr. Li Dongsheng is the founder of TCL (TCL Corporation) and currentlyserves as the Company’s Chairman and CEO and the Secretary of the Party Committee of the Group;he was elected as a delegate to China’s 16
th
National Congress of the CPC and a deputy to the 10
th
,
th
, 12
th
and 13
th
National People’s Congress. Mr. Li holds a number of prestigious positions: ViceChairman of All China Federation of Industry and Commerce (ACFIC), Honorary President ofChina Video Industry Association, Vice Chairman of China Commerce of International Chamber,President of Guangdong Provincial Enterprise Confederation, President of Guangdong ProvincialAssociation of Entrepreneurs, First President of China Manufacturing Innovation Alliance,Honorary President of South China University of Technology Education Development Foundation,Vice President of Alumni Association South China University of Technology, Member of theCouncil of South China University of Technology, Visiting Professor in Wuhan University andHonorary Professor in Beijing Institute of Technology.From 1982 to 1985, he served as Technician, Workshop Manager and Production Director in TTKHousehold Appliances Co., Ltd.; from 1985 to 1986, he served as First General Manager of TCLCommunication Devices Company; from 1986 to 1989, he served as Director of the IntroductionDepartment in Guangdong Huizhou Industrial Development Corporation; from 1990 to 1993, heserved as Deputy General Manager, Deputy Secretary of the Party Committee and Secretary of theYouth League Committee of Huizhou Electronic Communication Corporation; from 1993 to 1996,he served as General Manager of TCL Electronics Group; from 1996 to 2002, he served asChairman and President of TCL Corporation and in 2002, Mr. Li Dongsheng was selected as“CCTV’s Economic Person of the Year 2002”; from April 2002 to January 2004, he served asChairman and President of TCL Corporation; from January 2004 till now, he serves as Chairmanand CEO of TCL Corporation. On October 24, 2018, he was selected on the “List of 100
Outstanding Private Entrepreneurs of 40 Years of Reform and Opening Up” of the United FrontWork Department and All China Federation of Industry and Commerce. On December 18, 2018, hewas selected on the list of “100 Outstanding Contributors of Reform and Opening Up” of theCentral Committee of the Party and the State Council; he won the title of Pioneer of Reform andawarded with the medal with the comment “A pioneer opening the international market inelectronics industry”.As one of the founders of TCL Corporation, Mr. Li Dongsheng has led TCL in acquiring the globalcolor TV business of Thomson-CSF and the global mobile terminal business of Alcatel andestablished a global business structure. He was honored as the “Asian Economic Person of the Year2004” by the Fortune magazine and won the National Medal of Honor of France. In June 2006, Mr.Li Dongsheng wrote the famous article titled “Rebirth of the Eagle” as a call for TCL teammembers to carry out reform and innovation with the spirit of rebirth and firmly promote theinternational business. In February 2014, Mr. Li Dongsheng launched TCL’s strategictransformation of “Double+” and in the same year, TCL achieved a sales revenue of over RMB100billion. In 2015, the sales revenue of TCL again exceeded RMB100 billion.Mr. Li Dongsheng always holds the firm belief that a strong country is built on the basis of strongeconomy, which in turn requires a group of world-class enterprises. It is his steadfast belief andpersistent goal to firmly stick to industry and develop TCL into a world-class enterprise as thebackbone of China’s economy.Born in February 1970, Mr. Liu Bin has obtained the Bachelor’s Degree and is an AssistantEconomist and Member of the Communist Party of China. He graduated from the Department ofManagement Engineering of South China University of Technology. Currently, he serves asChairman and General Manager of Huizhou Investment Holdings Co., Ltd.. From July 1992 toDecember 1993, he served as Deputy Director of the General Office in Huizhou Foreign InvestmentService Corporation; from December 1993 to December 1998, he served as Secretary to the GeneralManager, Administrative Assistant to the General Manager and Assistant to the General Manager(the Deputy Section Head level) of Huizhou Economy and Trade Group Co., Ltd.; from December1998 to June 2003, he served as Manager of Huizhou Tea Import and Export Company (the SectionHead level); from June 2003 to June 2010, he served as Deputy General Manager and General
Manager of Huizhou Economy and Trade Group Co., Ltd.; from June 2010 to May 2015, he servedas Deputy General Manager of Huizhou Investment Holdings Co., Ltd. (from May 2011 to June2015, he concurrently served as Director and Deputy General Manager of Huizhou FairwayInvestment and Construction Co., Ltd.; from September 2013 to August 2015, he concurrentlyserved as Supervisor and Chairman of the Board of Supervisors of TCL Corporation); fromFebruary 2014 till now, he serves as Director of Huizhou Investment Holdings Co., Ltd.; from May2015 till now, he serves as Chairman and General Manager (the Deputy Division Head level) (fromJune 2015 to May 2018, he concurrently served as Chairman of Huizhou Investment Holding AssetOperation Co., Ltd., Chairman of Huizhou Financing Guarantee Co., Ltd. and Vice Chairman ofTCL Corporation; from June 2015 to January 2017, he concurrently served as Chairman of HuizhouFairway Investment and Construction Co., Ltd.; from May 2016 to March 2017, he concurrentlyserved as Director of Uirust.Born in December 1974, Mr. He Jinlei has obtained MBA. He served in China Construction Bank,Southwest Securities and Institute of Software Chinese Academy of Sciences. From June 2005 toDecember 2009, he served as Chief Operating Officer of Beida Jade Bird Group; from December2009 to December 2011, he served as Director of Peking University Resource College; fromDecember 2011 till now, he serves as Vice President of China Development Bank Capital Co., Ltd..Ms. Du Juan currently serves as Chief Operating Officer, Chief Financial Officer and Member ofthe Execution Commission of the Company. Born in May 1970, she graduated from the Departmentof Investment of Zhongnan University of Economics and Law and obtained EMBA from CKGSB.From July 1991 to May 1999, she worked in CCB Huizhou Branch. In May 1999, she joined inTCL Corporation and served as General Manager of the Settlement Center and General Manager ofthe Finance Company in TCL Corporation. From October 2014 till now, she serves as President andChairman of TCL Financial Holdings Group (Guangzhou) Co., Ltd.. From July 2016 to February2018, she served as Vice President of TCL Corporation. From February 2018 till now, she serves asChief Operating Officer (COO) of TCL Corporation. From January 2019 till now, she concurrentlyserves as Chief Financial Officer (CFO) of TCL Corporation.Mr. Bo Lianming graduated from Xi’an Jiaotong University with PhD. Since he joined in TCLCorporation in 2000, he has served in many important positions, including Vice President and
Director of Finance in Information and Industry Group, Vice President in Component BusinessDivision, Executive Vice President in TTE Corporation, and Director of Human Resource, VicePresident and Senior Vice President of TCL Corporation. Mr. Bo has more than 15 years ofexperience in household electronic product industry. From June 2011 to March 2018, he served asPresident of TCL Corporation. From December 2012 to August 2016, he served as CEO andExecutive Chairman of CSOT. Before joining in TCL Corporation in 2000, he served as ChiefAccountant in Shenzhen Airlines Company. He is one of the founders of Shenzhen AirlinesCompany.Mr. Huang Xubin is the Executive Director and CFO of the Company. Born in November 1965, hegraduated from Hunan University (the former Hunan Institute of Finance and Economics). Later, heobtained the Master’s Degree in Economics from the Department of Postgraduate of the Ministry ofFinance of China and EMBA from CEIBS and became a Senior Economist. He served as Officer inthe Investment Institute, Deputy General Manager of the Credit Card Division, Deputy DivisionHead and Division Head of the Credit Loan Division in China Construction Bank GuangdongBranch. During the period, he concurrently served as Manager in Guotai Junan Securities Co., Ltd.Guangzhou Branch and Senior Manager in China Cinda Guangzhou Office. He joined in TCL inMarch 2001. In 2002, he served as Vice Group Leader of the Application and Preparations LeadingGroup in the Finance Company of TCL Corporation; from May 2002 to December 2008, he servedas Director and General Manager of the Financial Settlement Center in TCL Corporation; from June2004 to June 2008, he served as Chief Economist of TCL Corporation; from October 2006 toDecember 2008, he served as General Manager of the Finance Company of TCL Corporation; fromApril 2008 to January 2011, he served as Vice President of the Company; from June 2008 toJanuary 2011, he served as Director of Finance of the Company; from January 1, 2011 to March 30,2011, he concurrently served as Board Secretary of the Company (in an acting capacity); fromJanuary 28, 2011 to January 10, 2019, he served as CFO of the Company.Mr. Huang Wei currently serves as Senior Vice President, Deputy Secretary of the PartyCommittee and Member of the Execution Commission in the Company. Born in October 1963, hehas obtained MBA. He served as Deputy Director of Wuhan Television Set Factory; Director andDeputy General Manager of Wuhan JVC Electronic Industry Co., Ltd.; Director of Wuhan
Television Set Factory and Chairman of Wuhan JVC Electronic Industry Co., Ltd.. Mr. Huang Weijoined in TCL in May 1998. He served as Assistant to the General Manager in TCL King ElectricalAppliances (Huizhou) Co., Ltd.; Director and Deputy General Manager in TCL-Melody; DeputyDirector of the President’s Office, Head of the Human Resource Department, Director of thePresident’s Office, Secretary of the Discipline Commission and Vice President in the Company. Mr.Huang Wei concurrently serves as Chairman of Shenzhen TCL Real Estate Co. Ltd.; GeneralManager of Huizhou TCL Environmental Protection Resources Co., Ltd.; and Chairman of TCLAggregate Procurement Supply Chain Technology Co., Ltd..Mr. Liao Qian currently serves as Vice President and Board Secretary of the Company. Born inJuly 1980, he has obtained the Master’s Degree and holds the Occupational Qualification Certificateof the People’s Republic of China for Law. In 2002, he graduated from Fuzhou University with theBachelor’s Degree in Economics; in 2006, he graduated from Yunnan University with the Master’sDegree in Law. From August 2006 to February 2014, he served as Senior Manager and GeneralManager of the Financial Consultation Department and Director of Institutional AccountDepartment in Guotai Junan International Holdings Co., Ltd. and was engaged in the investmentbanking business in the capital markets of Hong Kong and Mainland China. He joined in TCLCorporation in March 2014. From April 2014, he serves as Board Secretary of the Company; fromDecember 2014, he serves as Member of the Execution Commission in the Company. FromSeptember 2015, he serves as Director of Huizhou Financial Holdings (Shenzhen) Co., Ltd.. FromMarch 2016, he serves as Director of Huizhou Cool Friends Network Technology Co., Ltd.. In July2016, he served as Director of Speedex, a holding subsidiary of TCL. From August 2016, he servesas Director of Hawk Internet and of TCL Culture Media, holding subsidiaries of TCL. FromNovember 2016, he serves as Independent Director of JiaWei Renewable Energy (stock code:
300317). From January 1, 2017, he serves as Director of TCL Tonly Electronics and of CDOT.From March 31, 2017, he serves as Non-Executive Director of Fantasia. From October 2018, heserves as Chairman of Highly.Born in July 1972, Ms. Wu Xiaohui has obtained the PhD in Law from Sun Yat-sen University andis a Senior Economist. From June 1993 to April 1995, she served as a leader in the Law Office ofthe Operation Department in Guangzhou Engineering Contractor Group Co., Ltd.; from April 1995
to October 2000, she served as a leader in the Law Office of the Operation Department andCorporate Youth League Committee Secretary in Guangzhou Engineering Contractor Group Co.,Ltd.; from October 2000 to March 2016, she served as Deputy General Manager and Head of theLegal Affairs Department, Vice Chairman of the Labor Union, Chief Legal Consultant, DeputyGeneral Manager and Member of the Party Committee in Guangdong Guangye Group Co., Ltd. andconcurrently as Director of South China Sea Oil Joint Service Corp. and Director of GuangdongPetro-Trade Development Corporation. From March 2016 till now, she serves as General Manager,Deputy Secretary of the Party Committee and Director of Guangdong Guangxin Holdings GroupLtd..Mr. Yan Yan currently serves as Founding Managing Partner of SAIF Partners. Born in September1957, he holds the nationality of Hong Kong, China. Before founding SAIF, Mr. Yan had served asManaging Director of AIG Asia Infrastructure Investment Fund and Director of the Hong KongOffice. Between 1989 and 1994, he served as Economist in the head office of World Bank,Researcher in Hudson Institute, a famous think tank in the U.S., and Director of the StrategicPlanning and Business Development for Asia Pacific Region in Sprint International Corporation. Mr.Yan obtained the Bachelor’s Degree of Engineering from Nanjing University of Aeronautics andAstronautics. He studied in the Master’s Program in Social Sciences in Peking University from1984 to 1986. From 1986 to 1989, he studied in the PhD Program in Princeton University andobtained the Master’s Degree in International Economics in 1989. In 1995, he studied in theProgram of Advanced Finance and Accounting in The Wharton School.Mr. Yan is a member of Peking University Education Foundation and of the InvestmentCommission. He was selected as “Venture Capitalist of the Year” by China Venture CapitalAssociation in 2004 and 2007. In 2007, he was honored as one of the “Fifty Finest Private EquityInvestors in the World” by Private Equity International. He was voted as the No. 1 Best VentureCapitalist in China for 2008 and 2009 by Forbes China. In 2009, he won the title of “VentureCapital Professional of the Year” granted by Asia Venture Capital Journal. Under Mr. Yan’sleadership, SAIF was voted as “VC Firm of the Year” by China Venture Capital Association in 2004and 2007. and it was also named as “The Best Performing Fund in Asia” by Private EquityInternational in 2005, 2006 and 2008, and “The Best Growth Investment Fund of 2009 in Asia”.
Ms. Lu Xin is a professor in the major of Accounting in the School of Management, JinanUniversity and Deputy Director in the Management Accounting Research Center, Jinan University.Born in October 1963, she has obtained the PhD in Management from Renmin Business School andwas elected a deputy to the 12
th
and 13
th
National People’s Congress. From July 1989 to December2003, she worked in Dalian University in Liaoning; from January 2004 till now, she serves in JinanUniversity. She concurrently serves as Vice Chairperson of Taimeng Guangdong Provincial PartyCommittee.Ms. Lu Xin has presided over and engaged in a number of fund projects of the national andprovincial levels. She has won the Sixth National Foreign Trade Research Outstanding CreationAward from the Ministry of Commerce for her work titled Building Competitive Strength -Multinational Management Strategies of Chinese Enterprises. She has published over 50 academicpapers in Accounting Research, China Industrial Economics, Journal of Industrial Engineering andEngineering Management and other journals. She has extensive practical experience in managementaccounting and has presided over and engaged in a number of management consultation projects forlarge and medium-sized enterprises.Mr. Zhou Guofu currently serves as Director of South China Academy of AdvancedOptoelectronics. Born in October 1964, he holds the Dutch Nationality. He has obtained the PhD inMaterial Sciences from IMR and the PhD in Physics from the University of Amsterdam. From 1994to 1995, he was engaged in postdoctoral research in the University of Cambridge; from 1995 to2011, he worked in Philips Research; from January 2011 till now, he serves as Senior Consultant inPhilips Research; from 2012 to 2016, he served as Distinguished Professor in the Department ofElectrical Engineering and the Department of Industrial Design in Eindhoven University ofTechnology; from 2016 till now, he serves as Science Adviser in Eindhoven University ofTechnology; from April 2011 till now, he serves as Professor and Doctoral Supervisor in SouthChina Normal University and Director of South China Academy of Advanced Optoelectronics.Mr. Zhou Guofu won the ISMANAM1994 Gold Award for French Young Scientists, Royal PhilipsMajor Invention Bronze Award and Silver Award and Individual Innovation Award for ChinaProduction, Education and Research Collaboration. He was named as “Star of Entrepreneurship andInnovation” in Guangdong Province, Honorary Citizen of Guangzhou City and “Hero of Innovation”
of Guangzhou City. He was selected into the Recruitment Program for Global Expert, as adistinguished expert of the country, a leading professional of Guangdong Province and an“Outstanding Professional” under the Special Support Program of Guangdong Province. He haspublished 290 scientific papers and applied for 622 patents, including 231 international ones, ofwhich 50 have been authorized in the U.S. and one authorized in Japan. Mr. Zhou Guofu holds anumber of prominent positions, including Chief Scientist of National Key R&D Program of China;Director of the “Center for International Research on Green Optoelectronics” of the NationalInternational Science and Technology Cooperation Base; Head of 111 Project - Optical InformationInnovation and Expert Introduction Center; Director of “International Joint Laboratory for OpticalInformation Technologies” under the Ministry of Education; Chairman of the OrganizationCommittee for the International Conference on Display Technology (2018) hosted by the Societyfor Information Display (SID); Member of the Society for Information Display (SID) Asia Branch;Member of the Committee for the International Conference on Display Technology; Reviewer ofPhysical Review Letters, Reviews of Modern Physics, Applied Physics Letters and Applied Physics;Member of CSOE; Member of MNSC; Strategic Expert for the fundamental research of GuangdongProvince; Executive Director of the Council of GDMRS; Deputy Secretary-General of GuangdongAlliance of Printed Display Technology Innovation; and President of Shenzhen Alliance ofIndustrial Technology Innovation.Born in September 1959, Mr. Liu Xunci is a professor in Huizhou University with the Master’sDegree. He is one of the top professionals in Huizhou City and a member of the Decision-Makingand Consultation Commission of the Municipal Government. After graduating from high school inSeptember 1976, he went to the countryside and joined in the workforce; from September 1980 toJuly 1993, he studied in the Postgraduate Program; from July 2006 to May 2007, he stayed in theUniversity of Greenwich as a visiting scholar. He served as Associate Professor in HengyangNormal University and Professor in Hunan Agricultural University. Currently, he serves asProfessor in Huizhou University.Mr. Liu Xunci has presided over and engaged in a number of fund projects of the national andprovincial levels. His works include Analysis of Industrial and Commercial Management Strategies,Theory and Practice on the Strategic Planning of Regional Economy, Corporate Strategy
Management, etc.. He has published more than 50 papers on academic journals. His major researchinterests include planning of regional economy, corporate strategy management and financemanagement. In recent few years, he has led and completed “12
th
Five-Year” and “13
th
Five-Year”economic and social development plans and corporate management consultations commissioned bygovernments and enterprises and special research reports, and proposed and verified “Pearl RiverDelta”, “Ring Daya Bay Economic Zone” and “Guangdong-Hong Kong-Macao Greater Bay Area”,with quite a few projects going into the government’s decision-making list.Born in July 1966, Mr. He Zhuohui currently serves as Full-time Deputy Secretary and Director inHuizhou Investment Holdings Co., Ltd.. From August 1991 to June 1995, he served as DeputyDirector of the General Office and Director of the Office in China Construction Bank HuiyangBranch; from June 1995 to August 2008, he served as Manager in Renchengchang (Huizhou)Investment Co., Ltd.; from August 2008 to September 2009, he served as General Manager ofHuizhou Investment Holdings Asset Management Co., Ltd.; from September 2009 to December2012, he served as Manager of the Management and Development Department in HuizhouInvestment Holdings Co., Ltd. and Deputy General Manager and Director of Huizhou FairwayInvestment and Construction Co., Ltd.; from December 2012 till now, he serves as Full-time DeputySecretary in Huizhou Investment Holdings Co., Ltd.; from February 2014 till now, he serves asDirector in Huizhou Investment Holdings Co., Ltd. (from April 2010 to January 2017, heconcurrently served as Director of the First and Second Session of the Board of Huizhou FairwayInvestment and Construction Co., Ltd.; from August 2015, he concurrently serves as Chairman ofthe Fifth Session of the Board of Supervisors of TCL Corporation).Born in December 1975, Ms. Qiu Haiyan obtained the Bachelor’s Degree from Central Radio &TV University in 2011. She is an accountant and member of the Communist Party of China. FromJuly 1995 to March 1998, she served as a finance officer in Huizhou Zongli Real Estate Company;from March 1998 to June 2002, she served as a finance officer in Huizhou Trust InvestmentCompany; from June 2002 till now, she serves as Accountant, Deputy Manager and Manager of theFinance Department in Huizhou Investment Holdings Co., Ltd.; from February 2014 till now, sheserves as Workers’ Director in Huizhou Investment Holdings Co., Ltd. (from June 2009 to February2013, she concurrently served as Supervisor in Huizhou Fairway Investment and Construction Co.,
Ltd.; from June 2013 to May 2018, she concurrently served as Director in Huizhou InvestmentHoldings Asset Operation Co., Ltd.; from March 2014, she concurrently serves as Workers’Representative Director in Huizhou Investment and Development Co., Ltd.; from April 2014, sheconcurrently serves as Supervisor of the Fifth Session of the Board of Supervisors of TCLCorporation).Mr. Mao Tianxiang currently serves as Member of the Party Committee, Head of the Audit andSupervision Department and Deputy Secretary of the Discipline Committee in the Company. Hewas born in January 1980 and graduated from the Department of Journalism of Guangxi University.From July 2003 to June 2005, he served as Secretary in China Telecom Guangxi Guilin Company;from July 2005 to November 2007, he served as Supervisor of PR and Communications in theStrategic OEM Business Division and Officer in the President’s Office in the Company; fromNovember 2007 to June 2009, he served as Deputy Head of the Legal Section and Head of theGeneral Section in Huizhou Auditing Bureau; from June 2009 to August 2014, he served as DeputyDirector and Deputy Director of the Divisional Level in the Law Enforcement Inspection Office andthe Efficacy Inspection Office of Huizhou Discipline Committee. He has been working in theCompany since September 2014. He served as Deputy Director of the Party-Masses WorkDepartment in the Company and Secretary of the Youth League Committee of TCL Corporation;from August 2015 to January 2016, he concurrently served as Acting General Manager of theElectronic Device Business Division in Techne Corporation; in November 2016, he was elected asMember of the Party Committee and Deputy Secretary of the Discipline Committee in TCLCorporation; from March 2017 to December 2018, he concurrently served as General Manager ofTCL Resource Investment Company. From March 2017 till now, he serves as Head of the Audit andSupervision Department.Dr. Yan Xiaolin is a professor-level senior engineer, party-time professor in Peking University,Chairman of IEC/TC110, Vice Chairman of SID and President of the Asian Region. He graduatedfrom ASIPP with the Doctor’s Degree in July 1999. From July 1999 to May 2001, he was engagedin postdoctoral research in the Chinese Academy of Sciences. He joined in TCL in May 2001. FromMay 2001 to December 2004, he served as Project Manager in TCL Multimedia Electronic R&DCenter and Director and Deputy General Manager of the Research Institute; from December 2004 to
October 2005, he served as CTO in the Component Business Division of TCL Corporation andDeputy Director and Acting Director of TCL Industrial Technology Research Institute; fromOctober 2005 till now, he serves as Director of TCL Industrial Technology Research Institute; fromMay 2008 to November 2012, he served as Vice President of TCL Corporation; from December2012 till now, he serves as CTO and Senior Vice President of TCL Corporation. He is holding anumber of positions currently, including CTO and Senior Vice President of TCL Corporation,Director of TCL Industrial Technology Research Institute, Executive Director of TCL Multimedia,Director of CSOT, Chief Scientist of CSOT, Chairman of Guangdong Juhua, Chairman of ChinaRay, Vice Chairman of Amlogic (Shanghai) Inc. and Director of Kateeva.He is an Expert of NACMIDS, Key Project Expert of National “Key New Material R&D andApplication” and Head of the New Display Group, Expert of “Strategic Advanced ElectronicMaterial Key Specials” under the National Key R&D Program during the 13
th
Five-Year PlanPeriod, Head of the General Expert Panel for the 12
th
Five-Year New Display Key Specials underthe Ministry of Science and Technology, Science Innovation Leading Professional under the SpecialSupport Program for High-Calibre Professionals of the Organization Department of the CentralCommittee of the CPC, and one of the National Young and Middle-Aged Experts with OutstandingContributions under the National “Talents Project”.Mr. Jin Xuzhi currently serves as Senior Vice President of the Company and CEO and Director ofCSOT. Born in September 1955, he has obtained the Master’s Degree in Material Engineering fromYonsei University in South Korea and MBA from McGill University. He worked in LGSemiconductor Co., Ltd. and served as Deputy General Manager in LG Display (formerly known asLG Philips LCD) and Head of the IT Business Division. From April 2009 to March 2010, he servedas Senior Consultant in Fuhrmeister Electronics. He joined in the Company in March 2010 andserved as Senior Vice President, President and CEO of Shenzhen CSOT and General Manager ofWuhan CSOT.Born in November 1974, Mr. Wang Cheng obtained the Bachelor’s Degree in Economics fromHarbin University of Commerce in July 1997 and EMBA from UT Arlington in December 2005.From July 1997 to January 2004, he served as Deputy Director of HR Department in TCLMultimedia Sales Company; from January 2006 to September 2006, he served as Director of the
European Channel Account Department in the OEM Business Center, TTE Strategy, TCLMultimedia; from September 2006 to May 2015, he served as General Manager of TCL MultimediaVietnam Branch, General Manager of the Overseas Business Center and Vice President of TCLMultimedia; from June 2015 to July 2016, he served as HR Director in TCL Corporation; fromAugust 2016 to November 2017, he served as General Manager of the Supply Chain ManagementCenter in TCL Multimedia; from January 2017 to October 2017, he served as COO of TCLMultimedia; from February 2017 to July 2018, he served as General Manager of the ChineseBusiness Division in TCL Multimedia; from March 2017 to February 2018, he served as VicePresident of TCL Corporation. From October 2017 till now, he serves as CEO of TCL Multimedia(later changed to TCL Electronics); from March 2018 to January 2019, he served as Senior VicePresident of TCL Corporation; from July 2018 till now, he serves as CEO of TCL Communication.
Offices held concurrently in shareholding entities:
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
| Li Dongsheng | Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) | Assigned representative of the managing partner | August 2014 | Ongoing | None |
| He Jinlei | China Development Bank Capital Co., Ltd. | Vice President | December 2011 | Ongoing | Yes |
| Liu Bin | Huizhou Investment Holding Co., Ltd. | Chairman of the Board and General Manager | May 2015 | Ongoing | Yes |
| Wu Xiaohui | Guangdong Guangxin Holdings Group Ltd. | General Manager/Deputy Party Secretary/Director | March 2016 | Ongoing | Yes |
| He Zhuohui | Huizhou Investment Holding Co., Ltd. | Full-Time Deputy Secretary and Director | December 2012 | Ongoing | Yes |
| Qiu Haiyan | Huizhou Investment Holding Co., Ltd. | Employee Director | February 2014 | Ongoing | Yes |
| Note | Not applicable |
Offices held concurrently in other entities:
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Li Dongsheng | Tencent Holdings Limited | Independent Non-Executive Director | April 2004 | Ongoing | Yes |
| Legrand in France | Independent Director | May 2013 | Ongoing | Yes | |
| Fantasia Holdings Group Co., Limited | Non-Executive Director | January 2014 | Ongoing | Yes | |
| Liu Bin | Huizhou Financing Guaranty Co., Ltd. | Chairman of the Board | August 2015 | Ongoing | No |
| Zhou Guofu | Philips Research in the Netherlands | Senior advisor | January 2011 | Ongoing | No |
| Eindhoven University of Technology in the Netherlands | Special Term Professor and Science Consultant | April 2012 | Ongoing | No | |
| South China Academy of Advanced Optoelectronics of South China Normal University | Professor and Dean | April 2011 | Ongoing | Yes | |
| Lu Xin | Jinan University | Professor | January 2004 | Ongoing | Yes |
| Kingfa Sci. & Tech. Co., Ltd. | Independent Director | May 2014 | Ongoing | Yes | |
| Gree Electric Appliances Inc. | Independent Director | June 2015 | Ongoing | Yes | |
| Yan Yan | SAIF Partners | Founding Managing Partner | October 2001 | Ongoing | No |
| China Resources Land Limited | Independent Non-Executive Director | July 2006 | Ongoing | Yes | |
| Guodian Technology and Environment Group Corporation Limited | Non-Executive Director | June 2012 | Ongoing | No | |
| Bluefocus Intelligent Communications Group Co., Ltd. | Independent Director | March 2014 | Ongoing | Yes | |
| ATA Inc. | Director | March 2005 | Ongoing | Yes |
| Liu Xunci | Huizhou University | Professor | January 2006 | Ongoing | Yes |
| Huang Xubin | Bank of Shanghai | Non-Executive Director | September 2015 | 15 January 2019 | No |
| Liao Qian | Fantasia Holdings Group Co., Limited | Non-Executive Director | March 2017 | Ongoing | Yes |
| Shenzhen Jiawei Photovoltaic Lighting Co., Ltd. | Independent Director | November 2016 | Ongoing | Yes | |
| Note | Not applicable | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable ■ Not applicable
IV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure and determination basis of remuneration for directors, supervisors andsenior management:
The allowances for directors and supervisors have been approved at the Fourth ExtraordinaryGeneral Meeting of 2011 on 14 July 2011. And the remuneration of senior management isdetermined as per the Company’s remuneration management rules.The remuneration and allowances of directors:
The remuneration and allowances of executive directors: As the Company pays remuneration toexecutive directors, it shall not pay additional allowances to them. The remuneration of five of theexecutive directors is determined as per the Company headquarters’ remuneration managementrules.The allowances and other payments to independent non-executive directors: The allowance for eachindependent non-executive director is RMB160,000/year (tax inclusive), and the allowance for theconvener of the Audit Committee is RMB200,000/year (tax inclusive). And the Company shall bearthe travel expense arising from the independent directors’ attending the Company’s board andgeneral meetings, as well as other expenses arising from independent directors’ exercising theirfunctions and powers as per the Company’s Articles of Association.The remuneration and allowances of supervisors:
The allowance for the Chairman of the Supervisory Committee is RMB160,000/year (tax inclusive);the allowance for the shareholder supervisor is RMB100,000/year (tax inclusive); and as the
Company pays remuneration to the employee supervisor, it shall not pay additional allowances tohim/her.
Unit: RMB'000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Li Dongsheng | Chairman of the Board and CEO | Male | 61 | Incumbent | 2,991.1 | |
| He Jinlei | Vice Chairman of the Board | Male | 45 | Incumbent | 0 | No |
| Liu Bin | Vice Chairman of the Board | Male | 49 | Incumbent | 160.0 | Yes |
| Du Juan | Director and COO | Female | 48 | Incumbent | 1,213.6 | |
| Bo Lianming | Director and President | Male | 55 | Former | 2,485.9 | |
| Huang Xubin | Director and CFO | Male | 53 | Incumbent | 1,845.7 | |
| Huang Wei | Director and Senior Vice President | Male | 56 | Incumbent | 1,527.3 | |
| Liao Qian | Director and Board Secretary | Male | 38 | Incumbent | 1,087.5 | |
| Wu Xiaohui | Director | Female | 47 | Incumbent | 0 | |
| Yan Yan | Independent Director | Male | 62 | Incumbent | 160.0 | |
| Lu Xin | Independent Director | Female | 56 | Incumbent | 200.0 | |
| Zhou Guofu | Independent Director | Male | 55 | Incumbent | 160.0 | |
| Liu Xunci | Independent Director | Male | 60 | Incumbent | 160.0 | |
| He Zhuohui | Chairman of the Supervisory Committee | Male | 53 | Incumbent | 160.0 | Yes |
| Qiu Haiyan | Supervisor | Female | 38 | Incumbent | 100.0 | Yes |
| Mao Tianxiang | Supervisor | Male | 44 | Incumbent | 432.5 | |
| Jin Xuzhi | Senior Vice President | Male | 64 | Incumbent | 9,868.4 | |
| Yan Xiaolin | CTO | Male | 52 | Incumbent | 1,772.5 | |
| Wang Cheng | Senior Vice President | Male | 44 | Incumbent | 1,539.4 | |
| Total | -- | -- | -- | -- | -- |
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable ■ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent | 220 |
| Number of in-service employees of major subsidiaries | 89,530 |
| Total number of in-service employees | 89,750 |
| Total number of paid employees in the Reporting Period | 89,750 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 184 |
| Functions | |
| Function | Employees |
| Production | 49,216 |
| Sales | 13,738 |
| R&D and technical | 12,481 |
| Financial | 1,295 |
| Administrative | 1,182 |
| Managerial | 3,029 |
| Other | 8,809 |
| Total | 89,750 |
| Educational backgrounds | |
| Educational background | Employees |
| Doctorate degree | 246 |
| Master’s degree | 2,759 |
| Bachelor’s degree | 16,875 |
| Junior college | 7,259 |
| Senior high school/technical secondary school | 9,016 |
| Junior high school and below | 1,716 |
| Total | 37,871 |
| Note: The table above excludes operating workers. | |
2. Employee Remuneration Policy
The Company implements the remuneration management principle of “determining position byresponsibilities, determining salary by position and determining remuneration by performance”.
Fixed income is determined based on position assessment, variable income is determined based onperformance appraisal and a remuneration distribution mechanism oriented by position andperformance is established inside the Company.
3. Employee Training Plans
Established in 2015, TCL University aims to help enterprises to implement the Double Plusstrategic transformation. Based on strategies and performances, the University facilitates the growthof enterprises. It combines corporate management wisdom and best business practice and convertsthe core concept of TCL into learners’ behaviors and abilities to help them with their development;it establishes a communication platform for ambitious and competent employees of the wholeCompany and assists in the implementation of innovation projects. It has developed more than 80%of middle management professionals for enterprises. In 2018, on the basis of providing servicesinternally, TCL University started to undertake business from external parties with an aim to allowcorporate learning to become a driving force of business.
4. Labor Outsourcing
□ Applicable ■ Not applicable
Part VIII Corporate Governance
I General Information of Corporate GovernanceSince it was listed, the Company has been attaching great importance to corporate governance anddedicated to the establishment and refinement of internal control policies. So far, it has establishedan organization structure that accommodates the Company’s business scale and businessmanagement needs. At the same time, it observes the principle of separating incompatible duties,sets up departments and positions in a reasonable manner, plans responsibilities and authorizationscientifically and forms an internal control system with well-defined duties and responsibilities,mutual cooperation and mutual restraints. The Company has comprehensive audit and internalcontrol policies, especially in terms of internal audit, in respect of which the hierarchies areclear-cut and the duties and responsibilities are well-defined, which can effectively prevent Grouprisks; the Company has purchased liabilities insurance for its directors, supervisors and seniormanagement for seven consecutive years; although the shareholding proportion of its majorityshareholders is less than 30%, the Company still adopts the cumulative voting system in theelection of directors and supervisors, which is higher than the standards of corporate governanceand effectively protects the voting rights of minority shareholders; in addition, the Company’sBoard of Supervisors works with diligence and the supervisors go deep into corporate research andproactively propose management suggestions, which effectively refine the Company’s internalgovernance mechanism; by establishing new management policies, the Company continues toimprove its information disclosure management and investor relationship management; theCompany is passionate about commonweal and establishes donation funds for public benefits andall those measures have enabled the Company to stand in the industry leading position for itsgovernance level.During the Reporting Period, in accordance with the Company Law, the Securities Law, the Code ofCorporate Governance for Listed Companies and other relevant laws and regulations, the Companycontinued to refine its governance structure and further standardized its operations to comply withthe requirements of related laws and regulations. During the Reporting Period, the Company’sdirectors, supervisors and senior management furthered their learning of regulations and documents
in respect of the corporate governance for listed companies, strengthened their self-discipline anddiligence, and faithfully safeguarded the interests of all shareholders, in particular the minorityshareholders.Currently, there is no difference between the actual status of the Company’s corporate governancestructure and the standard documents on the corporate governance for listed companies publishedby China Securities Regulatory Commission. The names of the policies are shown in the followingtable and all the policies have been published on www.cninfo.com.cn.
| Category of rules | Title of rules |
| Articles of Association | The Articles of Association of TCL Corporation |
| Dividend rules | The Dividend Rules of TCL Corporation |
| The Shareholder Return Plan for 2017-2020 of TCL Corporation | |
| Information disclosure rules | The Rules Governing the Shareholdings of Directors, Supervisors and Senior Management in TCL Corporation and Changes therein |
| The Rules Governing the Registration of Information Insiders of TCL Corporation | |
| The Accountability Rules for Material Errors in Annual Report Disclosure of TCL Corporation | |
| The Rules Governing External Users of Information of TCL Corporation | |
| The Rules Governing Investor Relations of TCL Corporation | |
| The Work Rules for Independent Directors Concerning Annual Reports of TCL Corporation | |
| The Reception and Promotional Work Rules of TCL Corporation | |
| The Rules Governing Internal Reporting of Significant Information of TCL Corporation |
| The Work Rules for the Board Secretary of TCL Corporation | |
| The Rules Governing Information Disclosure of TCL Corporation | |
| Governance and operation rules | The Rules of Procedure for the General Meeting of TCL Corporation |
| The Rules of Procedure for the Supervisory Committee of TCL Corporation | |
| The Rules of Procedure for the Board of Directors of TCL Corporation | |
| The Work Rules for the Independent Directors of TCL Corporation | |
| The Rules Governing the Use of Raised Funds of TCL Corporation | |
| The Rules of Procedure for the Audit Committee under the Board of Directors of TCL Corporation | |
| The Rules of Procedure for the Remuneration and Appraisal Committee under the Board of Directors of TCL Corporation | |
| The Specific Work Rules for the CEO of TCL Corporation | |
| The Rules of Procedure for the Nomination Committee under the Board of Directors of TCL Corporation | |
| The Rules of Procedure for the Strategy Committee under the Board of Directors of TCL Corporation | |
| Internal control rules | The Rules Governing Major Investments of TCL Corporation |
| The Internal Control Rules for Venture Capital of TCL Corporation | |
| The Rules Governing Securities Investment of TCL Corporation | |
| The Internal Control Rules for Investment in Derivative Financial Instruments of TCL Corporation | |
| The Internal Control Rules for the Online New Share Subscription of TCL Corporation | |
| The Internal Control Rules for the Entrusted Wealth Management of TCL Corporation | |
| The Work Procedures for the Annual Audit by the Audit Committee under the Board of Directors of TCL Corporation | |
| The Internal Control Rules for the Online New Share Subscription of TCL |
| Corporation |
| The Majority-Owned Subsidiary Management Measures of TCL Corporation |
| The Rules Governing the Related-Party Transactions of TCL Corporation |
| The Rules Governing the Guarantees Provided for External Parties of TCL Corporation |
| The Internal Control Rules of TCL Corporation |
| The Internal Audit Charter of TCL Corporation |
| The Internal Control Evaluation Rules of TCL Corporation |
There is no material incompliance with the regulatory documents issued by the CSRC governing thegovernance of listed companies.
Special corporate governance campaigns, as well as the formulation and implementation ofthe rules governing the registration of information insiders:
Upon various special checks of corporate governance by the CSRC and work conferences on thegovernance of listed companies, the Company has revised its Articles of Association, RulesGoverning the Guarantees Provided for External Parties, and the Internal Control Rules forInvestments in Derivative Financial Instruments. The rules strictly standardize the Company’sbehaviors and protect the interests of investors.The following rules have been revised in 2018 so as to further improve corporate governance:
| Title of rules | |
| Revised | The Articles of Association of TCL Corporation |
| Revised | The Rules Governing the Guarantees Provided for External Parties of TCL Corporation |
| Revised | The Internal Control Rules for Investment in Derivative Financial Instruments of TCL Corporation |
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
□ Applicable ■ Not applicable
III Horizontal Competition
□ Applicable ■ Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The First Extraordinary General Meeting of 2018 | Combination of on-site and online voting | 37.36% | 19 March 2018 | 20 March 2018 | http://www.cninfo.com.cn |
| The 2017 Annual General Meeting | Combination of on-site and online voting | 40.57% | 18 May 2018 | 19 May 2018 | |
| The Second Extraordinary General Meeting of 2018 | Combination of on-site and online voting | 37.04% | 6 June 2018 | 7 June 2018 | |
| The Third Extraordinary General Meeting of 2018 | Combination of on-site and online voting | 33.45% | 18 August 2018 | 19 August 2018 | |
| The Fourth Extraordinary General Meeting of 2018 | Combination of on-site and online voting | 36.05% | 12 September 2018 | 13 September 2018 | |
| The Fifth Extraordinary General Meeting of 2018 | Combination of on-site and online voting | 36.03% | 13 November 2018 | 14 November 2018 |
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights
□ Applicable ■Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Lu Xin | 8 | 3 | 5 | 0 | 0 | No | 1 |
| Zhou Guofu | 8 | 1 | 7 | 0 | 0 | No | 0 |
| Yan Yan | 8 | 0 | 8 | 0 | 0 | No | 0 |
| Liu Xunci | 8 | 3 | 5 | 0 | 0 | No | 5 |
2. Objections Raised by Independent Directors on Matters of the Company
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
In the Reporting Period, in strict accordance with the applicable laws and regulations, as well as theCompany’s Articles of Association, the independent directors of the Company paid attention to theCompany’s operations and faithfully fulfilled their duties as independent directors. They putforward a lot of valuable, professional advice regarding the improvement of the Company’s rulesand daily operating decision-making. They issued their independent and fair opinion on the mattersof the Company that required their opinion. Therefore, they have played their part in improving theCompany’s supervision mechanism, as well as in protecting the legal interests of the Company andits shareholders.
| Issue date of opinion | Matter | Type of opinion |
| 2 March 2018 | The Top 400 and Key Personnel Stock Ownership Plan and the Global Partner Plan of TCL Corporation (Draft) and its Summary, The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation (Draft) and its Summary, and the nomination of director candidates and the engagement of senior management | Consent |
| 22 March 2018 | The adjustments to The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation, and the grant of restricted shares to the awardees | Consent |
| 28 April 2018 | The 2017 Annual Profit Distribution Plan, the Proposal on the Engagement Renewal of the CPA Firm, the 2017 Annual Internal Control Evaluation Report, the Proposal on the Estimated Continuing Related-Party Transactions in 2018, The Proposal on the Guarantee Line for Subsidiaries in 2018, the Proposal on the Adjustment to the | Consent |
| Issue date of opinion | Matter | Type of opinion |
| Investment Line of Derivative Financial Instruments, the Special Statement on the Capital Occupation by the Controlling Shareholder or Other Related Parties and the Guarantees Provided for External Parties, the derivative financial instrument transactions carried out by the Company in 2017, and the changes to the Company’s accounting policies | ||
| 23 August 2018 | The adjustments to the CSOT Housing Program | Consent |
| 29 August 2018 | The Proposal on the Adjusted Guarantee Line for Subsidiaries, and the derivative financial instrument transactions carried out by the Company in H1 2018 | Consent |
| The Special Statement on the Capital Occupation by the Controlling Shareholder or Other Related Parties and the Guarantees Provided for External Parties | Consent | |
| 30 October 2018 | The Proposal on the Adjusted Guarantee Line for Subsidiaries, the Proposal on the Changes to the Accounting Policies, and the derivative financial instrument transactions carried out by the Company in Q1~Q3 2018 | Consent |
| 8 December 2018 | The major asset sale and related-party transaction, the evaluation in the transaction, the related-party transactions between the Company and the transaction counterparty upon the completion of the major asset sale, the continued provision of guarantees by the Company for the target companies of the major asset sale, and the lendings and borrowings between the Company and the target companies of the major asset sale | Consent |
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period1. Performance of Duty by the Audit CommitteeIn the principle of being diligent, pragmatic and realistic, all the members of the Audit Committeeunder the Board proactively pushed forward the 2018 annual audit. During the annual audit, theAudit Committee convened four meetings to review the audit plan and the financial statements. Italso fully communicated with the accountants responsible for the annual audit. Two letters wereissued to urge the auditor to carry out the audit in strict compliance with the audit plan.The Audit Committee summarized the 2018 annual audit carried out by Da Hua Certified PublicAccountants (Special General Partnership) as follows:
On 30 January 2019, we reviewed and confirmed the Audit Plan of the Internal Control of TCLCorporation in 2018 and the Audit Plan of the 2018 Annual Financial Statements of TCLCorporation submitted by Da Hua Certified Public Accountants (Special General Partnership), theindependent auditor for the year 2018.In October 2018, the auditor started the pre-audit of the annual report. On 2 January 2019, the
auditor came to the Company and started the official audit. Afterwards, according to the audit plan,we emailed and called a few times to learn about and urge the audit progress, as well as went to theaudit site to offer advice and urge the audit progress. We issued Urge Letters on 5 and 13 March2019 respectively to ask the auditor to carry out the audit in accordance with the audit plan, as wellas to raise the following major questions: 1. whether the Company’s accounting statements wereprepared in strict compliance with the Chinese Accounting Standards for Business Enterprises, theCompany’s financial rules, as well as the applicable laws and regulations; 2. whether theCompany’s accounting treatments needed to be improved; and 3. whether the Company providedsufficient materials as required by the auditor. The auditor replied to these questions in a timelymanner.On 19 March 2019, we reviewed the unaudited 2018 annual financial statements of the Companyand agreed that the 2018 annual audit should be carried out based on the said financial statements.On 19 March 2019, the auditor issued a preliminary “unmodified unqualified” audit opinion on theCompany’s financial statements, to which we agreed.We believed that Da Hua Certified Public Accountants (Special General Partnership), theindependent auditor for the year 2018, provided audit service for the Company in a diligent andresponsible way. It completed the audit in strict accordance with the audit plan. The auditedfinancial statements were a factual and complete reflection of the Company’s financial position as at31 December 2018, as well as the operating results and cash flows of the year then ended. The auditopinion they issued factually reflected the Company’s realities. On 19 March 2019, the AuditCommittee convened a meeting, where the following proposals were approved and submitted to theBoard for further review: The 2018 Annual Financial Report, the Summary Report of the AuditCommittee under the Board Regarding the 2018 Annual Audit Carried out by Da Hua CertifiedPublic Accountants (Special General Partnership), and the Proposal on the Renewal of theEngagement of Da Hua Certified Public Accountants (Special General Partnership) as theIndependent Auditor for 2019.2. Performance of Duty by the Nomination CommitteeDuring the Reporting Period, the Nomination Committee convened one meeting, where theProposal on the Nomination of a Director Candidate for the Sixth Board was reviewed and Ms. Du
Juan was nominated as a director.3. Performance of Duty by the Remuneration and Appraisal CommitteeDuring the Reporting Period, the Remuneration and Appraisal Committee convened one meeting,where The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCLCorporation (Draft) and other proposals were reviewed.
VII Performance of Duty by the Supervisory Committee
Indicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.□ Yes ■ No
| Meeting | Date of the meeting | Supervisor present | Proposal reviewed at the meeting | Resolution | Index to the disclosed resolution | Disclosure date |
| The Third Meeting of the Sixth Supervisory Committee | 3 March 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. The Top 400 and Key Personnel Stock Ownership Plan and the Global Partner Plan of TCL Corporation (Draft) and its summary; 2. The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation (Draft) and its summary; 3. The Implementation and Appraisal Measures for the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of | Resolutions of the Third Meeting of the Sixth Supervisory Committee | http://www.cninfo.com.cn | 4 March 2018 |
| TCL Corporation; and 4. Examination of the awardee list for the 2018 Restricted Stock Incentive Plan. | ||||||
| The Fourth Meeting of the Sixth Supervisory Committee | 21 March 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. Adjustments to the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan; and 2. Granting of restricted stock to the awardees. | Resolutions of the Fourth Meeting of the Sixth Supervisory Committee | 22 March 2018 | |
| The Fifth Meeting of the Sixth Supervisory Committee | 27 April 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. The 2017 Annual Work Report of the Supervisory Committee; 2. The 2017 Annual Financial Report; 3. The 2017 Annual Report and its summary; 4. The First Quarter Report 2018 and its summary; 5. The 2017 Annual Internal Control Evaluation Report; 6. The Social Responsibility & Sustainable Development 2017; 7. The proposal on the write-off of the doubtful accounts in 2017; 8. The | Resolutions of the Fifth Meeting of the Sixth Supervisory Committee | 28 April 2018 |
| proposal on changes to the accounting policies; and 9. The proposal on profit distribution. | ||||||
| The Sixth Meeting of the Sixth Supervisory Committee | 27 August 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. Interim Report 2018 and its summary | Resolutions of the Sixth Meeting of the Sixth Supervisory Committee | 28 August 2018 | |
| The Seventh Meeting of the Sixth Supervisory Committee | 29 October 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. Third Quarter Report 2018 and its summary; and 2. The proposal on accounting policy changes. | Resolutions of the Seventh Meeting of the Sixth Supervisory Committee | 30 October 2018 | |
| The Eighth Meeting of the Sixth Supervisory Committee | 7 December 2018 | He Zhuohui Qiu Haiyan Mao Tianxiang | 1. Being eligible for a major asset sale; 2. The major asset sale and related-party transaction plan; 3. The transaction being a related-party transaction; 4. The Major Asset Sale and Related-Party Transaction Report (Draft) and its summary; 5. Signing the Major Asset Sale Agreement with the transaction counterparty, which was conditionally effective; 6. The continuing | Resolutions of the Eighth Meeting of the Sixth Supervisory Committee | 8 December 2018 |
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior ManagementDuring the Reporting Period, the Company carried out performance appraisal and competenceexamination on managers. The KPI (key performance indicators) system was used for performanceappraisal. In respect of the team led by each manager, the key factors of performance appraisalincluded phased goals of strategic transformation and operating indicators of the current period(such as profits, cash flow, products and service quality); the comprehensive results of theaccomplishment of each goal were considered as the main basis for motivating managers. In thatway, corporate strategies were converted into internal management activities through the process ofgoal settings, implementation and accomplishment to steer the work orientation of all systems of theCompany and serve the purpose of enhancing the overall efficiency of the Company. Leaderexamination consisted of four dimensions of assessment, being leader’s performance, competence,experience and quality (potential, personality and aspiration/values). An annual examination reportfor leaders was generated through annual performance assessment, virtual assessment center,
360-degree behavior interview or online assessment, supported by key experience, personality ormanagement style assessment, which served as the main basis for appraising, appointing anddismissing leaders.IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes ■ NoNo such cases in the Reporting Period.
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 20 March 2019 | |
| Index to the disclosed internal control self-evaluation report | http://www.cninfo.com.cn | |
| Evaluated entities’ combined assets as % of consolidated total assets | 94% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 91% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | Material weaknesses: (1) an invalid control environment; (2) fraud of directors, supervisors and senior management; (3) any material misstatement of the financial reporting of the current period which is identified by the registered accountants but the Company fails to do so; and (4) invalid internal control supervision by the Audit Committee and the internal audit organ. Serious weaknesses: A single weakness or a group of weaknesses which are less serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious | Material weaknesses: (1) material violations of the country’s laws or regulations in the Company’s operating activities; (2) any material decision-making error that is caused by an irrational decision-making procedure and causes material property loss to the Company; (3) a massive loss of the key managerial or technical personnel; and (4) frequent negative news coverage that causes great concern of the regulatory administration and a material long-lasting impact on the Company’s brand and reputation. Serious weaknesses: A single weakness or a group of weaknesses which are less |
| serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious | ||
| Quantitative standard | Material weaknesses: misstatements≥ 5% of profit before tax; Serious weaknesses: 3% of profit before tax≤misstatements <5% of profit before tax; Common weaknesses: misstatements <3% of profit before tax | Not applicable |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
X Independent Auditor’s Report on Internal Control
| Opinion paragraph in the independent auditor’s report on internal control | |
| In our opinion, TCL Corporation maintained, in all material respects, effective internal control over financial reporting as of 31 December 2018, based on the Basic Rules on Enterprise Internal Control and other applicable rules. | |
| Independent auditor’s report on internal control disclosed or not | The Internal Control Audit Report of TCL Corporation disclosed on http://www.cninfo.com.cn dated 20 March 2019 |
| Disclosure date | 20 March 2019 |
| Index to such report disclosed | http://www.cninfo.com.cn |
| Type of the auditor’s opinion | Unmodified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.□ Yes ■ NoIndicate whether the independent auditor’s report on the Company’s internal control is consistent with the internal controlself-evaluation report issued by the Company’s Board.■ Yes □ No
TCL Corporation Annual Report 2018
Part IX 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 | 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 | 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 | 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 1) | 17TCL01 | 112518 | 19 April 2017 | 19 April 2022 | 1,000,000 | 4.80% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 2) | 17TCL02 | 112542 | 7 July 2017 | 7 July 2022 | 3,000,000 | 4.93% | Interest payable annually and principal repayable in full upon maturity |
| TCL Corporation’s | 18TCL01 | 112717 | 6 June 2018 | 6 June 2023 | 1,000,000 | 5.48% | Interest payable |
| Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) | annually and principal repayable in full upon maturity | ||||||
| TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 2) | 18TCL02 | 112747 | 20 August 2018 | 20 August 2023 | 2,000,000 | 5.3% | 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” was paid on 9 July 2018. 4. The interest for the period from 7 July 2017 to 6 July 2018 on “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 | 1. TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 1) is of a five-year term, with the issuer’s call option, the issuer’s coupon rate adjustment option and the investors’ sell-back option at the end of the third year. The interest payment day is April 19 from 2018 to 2022 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). If an investor chooses to exercise the sell-back option, the interest payment day for the sold-back bonds is April 19 from 2018 to 2020 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). 2. TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 2) is of a five-year term, with the issuer’s call option, the issuer’s coupon rate adjustment option and the investors’ sell-back option at the end of the third year. The interest payment day is July 7 from 2018 to 2022 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). If an investor chooses to exercise the sell-back option, the interest payment day for the sold-back bonds is July 7 from 2018 to 2020 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). 3. TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) is of a five-year term, with the issuer’s call option, the issuer’s coupon rate adjustment option and the investors’ sell-back option at the end of the third year. The interest payment day is June 6 from 2019 to 2023 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). If an investor chooses to exercise the sell-back option, the interest payment day for the sold-back bonds is June 6 from 2019 to 2021 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). 4. TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 2) is of a five-year term, with the issuer’s call option, the issuer’s coupon rate adjustment option and the investors’ sell-back option at the end of the third year. The interest payment day is August 20 from 2019 to 2023 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). If an investor chooses to exercise the sell-back option, the interest payment day for the sold-back bonds is August 20 from 2019 to 2021 (the subsequent first trading day if it is a statutory holiday or rest day, with no additional interest for the postponement). | ||||||
II Bond Trustee and Credit Rating Agency
| Name | Guotai Junan Securities Co., Ltd. | Office address | 35/F, New World Center, 6009 Yitian Road, Shenzhen, Guangdong Province | Contact person | Zhang Chongzhen | Tel. | 0755-23976367 | |
| 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), the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 1) and the Escrow Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Phase 2) 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 BondsAccording to the Credit Rating Report on TCL Corporation’s Corporate BondsPublicly Offered in 2018 to Qualified Investors (Phase 1) issued by China ChengxinSecurities 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 theFollow-up Rating Report (2018) on TCL Corporation’s Corporate Bonds PubliclyOffered in 2016 to Qualified Investors (Phase 1 and 2) issued by China ChengxinSecurities Rating Co., Ltd. on 25 June 2018, the AAA credit status of TCLCorporation and the said bonds was affirmed with a “Stable” outlook.According to the Follow-up Rating Report (2018) on TCL Corporation’s CorporateBonds 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 ofTCL Corporation and the said bonds was affirmed with a “Stable” outlook.According to the Credit Rating Report on TCL Corporation’s Corporate BondsPublicly Offered in 2018 to Qualified Investors (Phase 2) issued by China ChengxinSecurities Rating Co., Ltd. on 9 August 2018, TCL Corporation was rated AAA with a“Stable” outlook, and the said bonds were also rated AAA.V Credit Enhancement, Repayment Plans and Other Repayment GuaranteeMeasuresNo credit enhancement measures were taken for the Company’s bonds during theReporting Period.The capital for principal repayment and interest payment for the Company’s bonds isprimarily sourced from the revenue, net profit and cash flows arising from its ordinarycourse of business. The repayment guarantee measures include a specialized taskgroup, a strict capital management plan, a bond trustee, the Rules for Bondholders’Meetings, strict information disclosure, and an undertaking to not distribute profits toshareholders, as well as suspend capital expenditures such as major investments inexternal 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 otherrepayment 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 PeriodAs the trustee of the “16TCL01”, “16TCL02”, “16TCL03”, “17TCL01”, “17TCL02”,“18TCL01” and “18TCL02” bonds, Guotai Junan Securities Co., Ltd., in strictaccordance with the applicable laws and regulations including the Measures for theIssue and Trading of Corporate Bonds and the Professional Code of Conduct forCorporate Bond Trustees, keeps a close eye on the Company’s operating, financialand credit conditions to fulfill its duties as a bond trustee and protect the legal rightsand interests of the bondholders. And the bond trustee has no conflicts of interests in
any kind with the Company.VIII Selected Financial Information of the Company in the Past Two Years
| Item | 2018 | 2017 | Change (%) |
| EBITDA (RMB’000) | 14,095,910 | 13,395,050 | 5.24% |
| Current ratio | 1.02 | 1.11 | -9.0% |
| Debt/asset ratio (%) | 68.42 | 66.22 | Up by 2.2 percentage points |
| Quick ratio | 0.67 | 0.77 | Down by 10 percentage points |
| Debt/EBITDA ratio | 0.11 | 0.13 | -2% |
| Interest cover (times) | 2.4 | 2.76 | -13.0% |
| Cash-to-interest cover (times) | 5.46 | 5.66 | -3.7% |
| EBITDA-to-interest cover (times) | 5.53 | 5.98 | -7.5% |
| Debt repayment ratio (%) | 100.00 | 100.00 | 0.00% |
| Interest payment ratio (%) | 100.00 | 100.00 | 0.00% |
IX Principal Repayment and Interest Payment of Other Bonds and DebtFinancing Instruments during the Reporting Period
| No. | Bond abbreviation | Principal amount | Issue date | Maturity | Coupon rate | Principal repayment and interest payment |
| 1 | 13TCL-MTN1 | RMB500 million | 2013-1-17 | 5 years | 6.05% | Repaid in full on time |
| 2 | 15TCL-MTN001 | RMB500 million | 2015-4-1 | 5 years | 5.50% | The interest for the period from 2 April 2017 to 1 April 2018 was paid on 2 April 2018 |
| 3 | 13TCL-MTN002 | RMB500 million | 2013-8-20 | 5 years | 6.20% | Repaid in full on time |
Note: The principal repayments and interest payment during the Reporting Period shall be disclosed for any otherbonds or debt financing instruments.
X Credit Lines Granted by Banks, as well as Their Utilization and Repaymentduring the Reporting PeriodThe Company operates in compliance, with a fine credit reputation, strongprofitability and a great ability to repay debt. Additionally, it maintains a long-termpartnership with the China Development Bank, The Export-Import Bank of China, theIndustrial and Commercial Bank of China, etc. As at 31 December 2018, the creditlines granted by the major bank partners to the Company totaled RMB185.568 billion,with RMB62.123 billion utilized and RMB123.445 billion left.During the Reporting Period, there were no defaults on bank loans.
XI Fulfillment of Commitments Made in Bond Prospectuses during ReportingPeriodUp to the date of the approval of this Report for issue, the Company has beenexecuting all the commitments given in its bond prospectuses, without any negativeimpact on the investors caused by the Company’s weak execution of suchcommitments.XII Significant Events during the Reporting PeriodThe major asset sale & related-party transaction report was approved at the 13
th
Meeting of the 6
th
Board on 7 December 2018, and later at the First ExtraordinaryGeneral Meeting of 2019 on 7 January 2019. The major asset sale is currentlyprogressing as scheduled. The transaction price is RMB4.76 billion, not exceeding 10%of the consolidated equity as at 31 December 2018. Therefore, this asset sale is notexpected to have a material negative impact on the Company’s ability to meet its debtobligations.XIII Guarantor for Corporate Bonds
□ Yes ? No
Da Hua Certified Public Accountants (Special General Partnership)
| TCL Corporation |
| Independent Auditor’s Report |
| Da Hua Shen Zi [2019] No. 000188 |
TCL Corporation
Independent Auditor’s Report and Financial Statements
(For the year from 1 January 2018 to 31 December 2018)
| Contents | Page | ||
| I | Independent Auditor’s Report | 1-8 | |
| II | Audited Financial Statements | ||
| 1．Consolidated Balance Sheet | 1-2 | ||
| 2．Consolidated Income Statement | 3 | ||
| 3．Consolidated Cash Flow Statement | 4-5 | ||
| 4．Consolidated Statement of Changes in Shareholders’ Equity | 6-8 | ||
| 5．Balance Sheet of the Company as the Parent | 9-10 | ||
| 6．Income Statement of the Company as the Parent | 11 | ||
| 7．Cash Flow Statement of the Company as the Parent | 12-13 | ||
| 8．Statement of Changes in Shareholders’ Equity of the Company as the Parent | 14-15 | ||
| 9．Notes to Financial Statements | 16-177 |
Da Hua Shen Zi [2019] No. 000188
Independent Auditor’s Report
Da Hua Shen Zi [2019] No. 000188
To the Shareholders of TCL CorporationI OpinionWe have audited the financial statements of TCL Corporation (the “Company”),which comprise the consolidated and parent company (the Company as the parentexclusive of subsidiaries) balance sheets as at 31 December 2018, the consolidatedand parent company statements of income, cash flows and changes in shareholders’equity for the year then ended, as well as the notes to the financial statements.In our opinion, the financial statements referred to above present fairly, in all materialrespects, the consolidated and parent company financial position of the Company at31 December 2018, and the consolidated and parent company operating results andcash flows for the year then ended, in conformity with the Chinese AccountingStandards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for ChineseRegistered Accountants. Our responsibilities under those standards are furtherdescribed in the Auditor’s Responsibilities for Audit of Financial Statements sectionof our report. We are independent of the Company in accordance with the China Codeof Ethics for Certified Public Accountants, and we have fulfilled our other ethicalresponsibilities in accordance with the said Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinionon these matters.And key audit matter identified in our audit is summarized as follows:
Da Hua Shen Zi [2019] No. 000188
1. Impairment of accounts receivable2. Inventory impairment3. Revenue recognition(I) Impairment of accounts receivable1. Matter descriptionPlease refer to the accounting policies as stated in 12. “Recognition criteria andwithdrawal method of bad debt provision of accounts receivable” under Note II to thefinancial statements and in 3. Accounts receivable under Note IV to the financialstatements. As at December 31, 2018, the book value of accounts receivable wasRMB13.6 billion, which accounted for around 7% of the total assets and wasclassified as key assets.The management conducted credit risk assessment separately on key accounts on aperiodic basis. In such assessment, focus was placed on the customer’s historicalsettlement records and current payment capacity and consideration was given tospecific information of the customer itself and of its industrial economic environment.In respect of the accounts receivable which did not need separate assessment orshowed no impairment in separate assessment, the management had carried outcombined impairment assessment on the basis of considering the account age analysisof such customer groups and historical records of impairment losses.As the recognition of the recoverability of accounts receivable requires themanagement to identify the matters with impairment and objective evidence, evaluatethe expected future obtainable cash flow and recognize its present value, whichinvolves the management’s adoption of significant accounting estimation andjudgement, and the recoverability of accounts receivable is important to the financialstatements, we identify the recoverability of accounts receivable as a key audit matter.2. Audit responseThe important audit procedures we carried out in respect of the impairment items ofaccounts receivable include:
(1) We understood, evaluated and tested the design and operation of internal control inrespect of the routine management and recoverability assessment of accountsreceivable. The internal control included assessment of customers’ credit risk, processof recovering accounts receivable, identification of events triggering impairment of
Da Hua Shen Zi [2019] No. 000188
accounts receivable and assessment of the amount of bad debt provision;(2) We reviewed the management’s judgement and estimation in assessing therecoverability of accounts receivable and paid attention to whether the managementhad fully identified items with impairment. During the process, we gave considerationto previous payment modes, the actual compliance of credit terms and ourunderstanding of the operating environment and industrial benchmark (especiallyaccount age and overdue accounts receivable);(3) We compared the accounting estimation of bad debt provision in the previousperiod with the actual bad debt losses and the reversal and withdrawal of bad debtprovision in this period to evaluate the reliability and historical accuracy of themanagement’s judgement on the recoverability of accounts receivable and inquiredabout any significant differences with the management.(4) In respect of accounts receivable with the withdrawal of bad debt provision inaccordance with the portfolio of credit risk characteristics, we recalculated the amountof the withdrawal of bad debt provision based on the bad debt policies to review theaccuracy of the amount.(5) We obtained the detailed analysis of the assessment of key accounts’ credit risk,conducted random impairment tests on the accounts receivable with significantindividual amounts and separate withdrawal of bad debt provision, and reviewed thebasis on which the management had evaluated the expected future obtainable cashflow to verify the withdrawal time point of bad debt provision and reasonableness ofamount;(6) We executed independent confirmation procedures in respect of importantaccounts receivable and carried out substitute audit procedures on the accounts withno replies, including conducting post-period collection tests;Based on the audit work executed, we believe that the management’s judgement andestimation in respect of the recoverability of accounts receivable are reasonable.(II) Inventory impairment1. Matter descriptionPlease refer to the accounting policies as stated in 13. “Inventory” under Note II to thefinancial statements and 7. Inventory under Note IV to the financial statements. Thebook value of inventory was around RMB19.9 billion, which was an increase of about54% from the previous period.
Da Hua Shen Zi [2019] No. 000188
The Company must maintain certain inventories of raw materials and products toensure stable supply. With the accelerated update of LCD module industry andhousehold appliance products, there is a risk of electronic products going outdated.Meanwhile, as manufactured products may not satisfy consumers’ preference, there isa risk of dead inventory. The recognition of provision for falling prices in inventorydepends on the estimation of the net realizable value of inventory, the recognition ofwhich requires the management to make significant judgement and analysis on suchfactors as the future sale price of inventory and the costs to be incurred untilcompletion. Therefore, we identify the provision for falling prices in inventory as akey audit matter.2. Audit responseThe important audit procedures we carried out in respect of inventory impairmentinclude:
(1) We understood and assessed whether the management’s design and operation ofkey internal control in respect of inventory management were effective or not;(2) We assessed important assumptions and evaluations involved in the management’scalculation of the net realizable value, such as the inspection of proof documents forsales price and costs incurred until completion, sales expenses and relevant taxes;(3) We executed examination, recalculation and other audit procedures, especiallyrecalculation of the data related to the net realizable value of inventory;(4) We obtained the list of inventory age in respect of the Company’s inventory. Basedon the product status, we conducted analytical review on inventories of an old age andanalyzed whether the withdrawal of provision for falling prices in inventory wasreasonable;(5) We implemented supervision and random checking on closing inventory toexamine whether there were mass outdated and old-aged inventories;(6) We compared key inventory indicators such as inventory turnover ratio and fallingprice ratio of inventory with the average industrial level to analyze the overallreasonableness;Based on the audit work executed, we believe that the management’s judgement andestimation in respect of inventory impairment are reasonable.(III) Revenue recognition
Da Hua Shen Zi [2019] No. 000188
1. Matter descriptionPlease refer to the accounting policies as stated in 26. “Revenue recognition” underNote II to the financial statements and 42. Operating revenue under Note IV to thefinancial statements. The Company’s operating revenue for the current period wasapproximately RMB113.4 billion, which was an increase of around 2% from theprevious period.As operating revenue is one of the Company’s key operating indicators with thehereditary risk of the management manipulating the revenue recognition time pointfor the purpose of achieving a specific objective or expectation, and the revenuerecognition for the current period has a big influence on the financial statements, weidentify revenue recognition as a key audit matter.2. Audit responseThe important audit procedures we carried out in respect of revenue recognitioninclude:
(1) We understood and assessed whether the management’s design and operation ofkey internal control in respect of revenue recognition were effective or not;(2) We understood and assessed whether the management’s selection andimplementation of the policies related to revenue recognition complied with theaccounting standards for business enterprises;(3) We selected samples of recorded transactions with revenue for the year andexamined relevant documents involved during the transaction process, includingoutbound delivery orders, customers’ receipt records, sale invoices and fund receiptproofs to verify the authenticity of the transactions. In respect of export sales revenue,we obtained the customs’ export data for 2018 to verify against the book records ofexport sales revenue and conducted tests on the payment of key accounts;(4) We selected samples of the recorded transactions with revenue around the balancesheet data and examined outbound delivery orders and other supporting documents toassess whether the revenue had been recorded into the appropriate accounting period;(5) We obtained the Company’s sale list for the year and carried out analysisprocedures on the operating revenue to determine the reasonableness of changes in therevenue and gross profit margin for the current period;(6) We executed confirmation procedures with key accounts and inquired about the
Da Hua Shen Zi [2019] No. 000188
sales amount and the current account balance incurred for the current period to verifythe authenticity and completeness of the sales revenue; we carried out substitute auditprocedures on the accounts with no replies, including conducting post-periodcollection tests;Based on the audit work executed, we believe that the Company’s recognition ofrevenue complies with relevant requirements of the accounting standards for businessenterprises.IV Other InformationThe Company’s management is responsible for the other information. The otherinformation comprises all of the information included in the Company’s 2018 AnnualReport other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of this other information, we are required to report that fact. We havenothing to report in this regard.V Responsibilities of Management and Those Charged with Governance forFinancial StatementsThe Company’s management is responsible for the preparation of the financialstatements that give a fair view in accordance with CAS, and for designing,implementing and maintaining such internal control as the management determines isnecessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless themanagement either intends to liquidate the Company or to cease operations, or haveno realistic alternative but to do so.
Da Hua Shen Zi [2019] No. 000188
Those charged with governance are responsible for overseeing the Company’sfinancial reporting process.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditor’s report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted inaccordance with CAS will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.4. Conclude on the appropriateness of the management’s use of the going concernbasis of accounting and, based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required by CAS to draw users’ attention in our auditor’sreport to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor’s report. However, future events or conditionsmay cause the Company to cease to continue as a going concern.5. Evaluate the overall presentation, structure and content of the financial statements,
Da Hua Shen Zi [2019] No. 000188
including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.6. Obtain sufficient appropriate audit evidence regarding the financial information ofthe entities or business activities within the Company to express an opinion on thefinancial statements. We are responsible for the direction, supervision andperformance of the Company audit. We remain solely responsible for our auditopinion.We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including anynoteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence, andcommunicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
| Da Hua Certified Public Accountants (Special General Partnership) | Chinese CPA: Zhang Yuanyuan |
| Beijing·China | （Engagement Partner） |
| Chinese CPA: Li Bingxin | |
| 19 March 2019 |
TCL CorporationConsolidated Balance Sheet
(RMB’000)
Assets:
| Assets: | Note IV | 31 December 2018 | 31 December 2017 | |
| Current assets: | ||||
| Monetary capital | 1 | 26,801,343 | 27,459,453 | |
| Financial assets at fair value through profit or loss | 2 | 1,137,580 | 2,231,276 | |
| Notes and accounts receivable | 3 | 17,876,580 | 20,917,572 | |
| Factored accounts receivable | 4 | 47,087 | 46,449 | |
| Prepayments | 5 | 1,194,972 | 910,215 | |
| Other receivables | 6 | 5,719,379 | 3,918,316 | |
| Inventories | 7 | 19,887,972 | 12,946,303 | |
| Assets classified as held for sale | 18,791 | - | ||
| Other current assets | 8 | 7,624,097 | 11,666,323 | |
| Total current assets | 80,307,801 | 80,095,907 | ||
| Non-current assets: | ||||
| Loans and advances to customers | 9 | 1,123,800 | 555,133 | |
| Available-for-sale financial assets | 10 | 4,270,845 | 3,202,055 | |
| Long-term equity investments | 11 | 16,957,109 | 15,352,014 | |
| Investment property | 12 | 1,676,211 | 859,890 | |
| Fixed assets | 13 | 35,983,131 | 32,597,979 | |
| Construction in progress | 14 | 38,924,586 | 14,775,237 | |
| Intangible assets | 15 | 5,954,873 | 6,372,511 | |
| R&D expense | 16 | 1,011,504 | 872,804 | |
| Goodwill | 17 | 357,112 | 420,534 | |
| Long-term prepaid expense | 18 | 1,861,333 | 929,124 | |
| Deferred income tax assets | 19 | 797,882 | 871,843 | |
| Other non-current assets | 20 | 3,537,756 | 3,388,953 | |
| Total non-current assets | 112,456,142 | 80,198,077 | ||
| Total assets | 192,763,943 | 160,293,984 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationConsolidated Balance Sheet (Continued)
(RMB’000)Liabilities and shareholders’ equity:
| Liabilities and shareholders’ equity: | Note IV | 31 December 2018 | 31 December 2017 | |
| Current liabilities: | ||||
| Short-term borrowings | 21 | 13,240,637 | 15,990,105 | |
| Factorage financings | 4 | 47,087 | 46,449 | |
| Borrowings from central bank | 22 | 231,404 | 39,997 | |
| Customer deposits and interbank deposits | 23 | 545,053 | 310,875 | |
| Financial liabilities at fair value through profit or loss | 24 | 212,097 | 442,942 | |
| Notes and accounts payable | 25 | 27,015,286 | 21,385,720 | |
| Advances from customers | 26 | 1,460,773 | 1,307,900 | |
| Payroll payable | 27 | 2,891,393 | 2,292,668 | |
| Taxes payable | 28 | 716,534 | 1,273,792 | |
| Other payables | 29 | 23,120,774 | 17,154,753 | |
| Short-term commercial papers payable | 30 | 2,000,000 | - | |
| Current portion of non-current liabilities | 31 | 6,009,915 | 5,927,528 | |
| Other current liabilities | 32 | 1,344,451 | 6,075,073 | |
| Total current liabilities | 78,835,404 | 72,247,802 | ||
| Non-current liabilities: | ||||
| Long-term borrowings | 33 | 36,864,923 | 20,283,381 | |
| Bonds payable | 34 | 12,985,628 | 10,497,248 | |
| Long-term payables | 35 | 73,902 | 76,309 | |
| Long-term payroll payable | 27 | 24,246 | 25,519 | |
| Deferred income | 36 | 2,637,229 | 2,664,877 | |
| Deferred income tax liabilities | 19 | 440,352 | 271,157 | |
| Other non-current liabilities | 30,586 | 84,755 | ||
| Total non-current liabilities | 53,056,866 | 33,903,246 | ||
| Total liabilities | 131,892,270 | 106,151,048 | ||
| Share capital | 37 | 13,549,649 | 13,514,972 | |
| Capital reserves | 38 | 5,996,741 | 5,940,471 | |
| Less: Treasury stock | 63,458 | - | ||
| Other comprehensive income | 56 | (1,174,162) | 219,272 | |
| Surplus reserves | 39 | 2,184,261 | 1,494,300 | |
| General reserve | 40 | 361 | 361 | |
| Retained earnings | 41 | 10,000,973 | 8,577,688 | |
| Total equity attributable to shareholders of the Company as the parent | 30,494,365 | 29,747,064 | ||
| Non-controlling interests | 30,377,308 | 24,395,872 | ||
| Total shareholders’ equity | 60,871,673 | 54,142,936 | ||
| Total liabilities and shareholders’ equity | 192,763,943 | 160,293,984 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationConsolidated Income Statement
(RMB’000)
| Note IV | 2018 | 2017 | |||||||||
| 1. Revenue | 113,447,438 | 111,727,442 | |||||||||
| Including: Operating revenue | 42 | 113,360,076 | 111,577,362 | ||||||||
| Interest income | 43 | 87,362 | 150,080 | ||||||||
| 2. Costs and expenses | 113,699,686 | 111,704,484 | |||||||||
| Including: Cost of sales | 42 | 92,605,589 | 88,663,843 | ||||||||
| Interest expense | 43 | 72,248 | 79,421 | ||||||||
| Taxes and surcharges | 44 | 661,262 | 665,342 | ||||||||
| Selling expense | 8,887,021 | 9,511,064 | |||||||||
| Administrative expense | 4,299,607 | 4,696,716 | |||||||||
| R&D expense | 4,677,579 | 4,759,324 | |||||||||
| Finance costs | 45 | 973,261 | 1,665,275 | ||||||||
| Including: Interest expense | 1,782,408 | 1,800,106 | |||||||||
| Interest income | 621,949 | 485,953 | |||||||||
| Asset impairment loss | 46 | 1,523,119 | 1,663,499 | ||||||||
| Add: Other income | 47 | 2,218,718 | 1,379,941 | ||||||||
| Return on investment | 48 | 2,167,254 | 2,438,692 | ||||||||
| Including: Share of profit or loss of joint ventures and associates | 1,360,268 | 1,098,218 | |||||||||
| Gain on changes in fair value | 49 | (3,879) | 309,429 | ||||||||
| Asset disposal income | 50 | 10,071 | (15,793) | ||||||||
| Foreign exchange gain | 43 | (47,714) | (22,303) | ||||||||
| 3. Operating profit | 4,092,202 | 4,112,924 | |||||||||
| Add: Non-operating income | 51 | 956,809 | 840,251 | ||||||||
| Less: Non-operating expense | 52 | 104,631 | 163,435 | ||||||||
| 4. Profit before tax | 4,944,380 | 4,789,740 | |||||||||
| Less: Income tax expense | 53 | 879,182 | 1,245,038 | ||||||||
| 5. Net profit | 4,065,198 | 3,544,702 | |||||||||
| 5.1 By operational continuity | |||||||||||
| Net profit from continuing operations | 4,065,198 | 3,544,702 | |||||||||
| Net profit from discontinued operations | - | - | |||||||||
| 5.2 By ownership | |||||||||||
| Net profit attributable to owners of the Company as the parent | 3,468,211 | 2,664,395 | |||||||||
| Net profit attributable to non-controlling interests | 596,987 | 880,307 | |||||||||
| 6. Other comprehensive income, net of tax | 54 | (1,663,194) | 1,722,346 | ||||||||
| 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 | (1,663,194) | 1,722,346 | |||||||||
| 7. Total comprehensive income | 2,402,004 | 5,267,048 | |||||||||
| Attributable to shareholders of the Company as the parent | 2,074,777 | 4,248,830 | |||||||||
| Attributable to non-controlling interests | 327,227 | 1,018,218 | |||||||||
| 8. Earnings per share | 55 | ||||||||||
| 8.1 Basic earnings per share (RMB yuan/share) | 0.2566 | 0.2178 | |||||||||
| 8.2 Diluted earnings per share (RMB yuan/share) | 0.2562 | 0.2178 | |||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | ||||||
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationConsolidated Cash Flow Statement
(RMB’000)
| Note IV | 2018 | 2017 | |||||||
| 1. Cash flows from operating activities: | |||||||||
| Proceeds from sale of commodities and rendering of services | 123,443,026 | 117,699,317 | |||||||
| Net increase/(decrease) in customer deposits and interbank deposits | 234,178 | 90,222 | |||||||
| Net increase/(decrease) in borrowings from central bank | 191,407 | 26,685 | |||||||
| Interest, handling charges and commissions received | 88,208 | 150,524 | |||||||
| Tax rebates | 4,003,111 | 5,792,204 | |||||||
| Cash generated from other operating activities | 56 | 2,141,672 | 3,354,627 | ||||||
| Subtotal of cash generated from operating activities | 130,101,602 | 127,113,579 | |||||||
| Payments for commodities and services | (90,509,473) | (83,491,509) | |||||||
| Net increase/(decrease) in loans and advances to customers | (1,068,789) | (508,082) | |||||||
| Net increase/(decrease) in deposits in central bank and in interbank loans granted | 3,076,532 | (2,493,199) | |||||||
| Cash paid to and for employees | (10,174,024) | (9,335,172) | |||||||
| Taxes paid | (5,000,449) | (3,461,888) | |||||||
| Cash used in other operating activities | 57 | (15,938,820) | (18,614,114) | ||||||
| Subtotal of cash used in operating activities | (119,615,023) | (117,903,964) | |||||||
| Net cash generated from/used in operating activities | 58 | 10,486,579 | 9,209,615 | ||||||
| 2. Cash flows from investing activities: | |||||||||
| Proceeds from disinvestment | 58,385,497 | 27,264,643 | |||||||
| Return on investment | 1,309,354 | 1,001,388 | |||||||
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 81,287 | 164,909 | |||||||
| Cash generated from other investing activities | 1,562 | - | |||||||
| Net proceeds from disposal of subsidiaries or other business units | 281,174 | 165,604 | |||||||
| Subtotal of cash generated from investing activities | 60,058,874 | 28,596,544 | |||||||
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | (32,798,364) | (15,656,963) | |||||||
| Payments for investments | (55,491,053) | (29,796,469) | |||||||
| Net payments for acquisition of subsidiaries and other business units | - | (63,645) | |||||||
| Cash decreased by non-consolidated subsidiaries | - | (4,628) | |||||||
| Subtotal of cash used in investing activities | (88,289,417) | (45,521,705) | |||||||
| Net cash generated from/used in investing activities | (28,230,543) | (16,925,161) | |||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | ||||
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationConsolidated Cash Flow Statement
(RMB’000)
Legalrepresentative:
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
| Note IV | 2018 | 2017 | ||
| 3. Cash flows from financing activities: | ||||
| Capital contributions received | 7,759,258 | 3,988,742 | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | 7,695,800 | 3,988,742 | ||
| Borrowings obtained | 50,564,652 | 42,829,609 | ||
| Net proceeds from issuance of bonds | 5,000,000 | 4,000,000 | ||
| Cash generated from other financing activities | - | 602,120 | ||
| Subtotal of cash generated from financing activities | 63,323,910 | 51,420,471 | ||
| Repayment of borrowings | (38,554,966) | (39,733,145) | ||
| Payments for interest and dividends | (4,144,148) | (3,002,297) | ||
| Including: Dividends paid by subsidiaries to non-controlling interests | (411,272) | (296,069) | ||
| Cash used in other financing activities | 59 | (584,974) | (132,900) | |
| Subtotal of cash used in financing activities | (43,284,088) | (42,868,342) | ||
| Net cash generated from/used in financing activities | 20,039,822 | 8,552,129 | ||
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 125,357 | (1,371,070) | ||
| 5. Net increase in cash and cash equivalents | 2,421,215 | (534,487) | ||
| Add: Cash and cash equivalents, beginning of the period | 23,281,169 | 23,815,656 | ||
| 6. Cash and cash equivalents, end of the period | 60 | 25,702,384 | 23,281,169 |
TCL CorporationConsolidated Statement of Changes in Shareholders’ Equity
(RMB’000)
| 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 | 56,270 | (63,458) | (1,393,434) | 689,961 | - | 1,423,285 | 5,981,436 | 6,728,737 | ||||||||
| 3.1 Total comprehensive income | - | - | - | - | (1,393,434) | - | - | 3,468,211 | 327,227 | 2,402,004 | |||||||
| 3.2 Capital increased and reduced by shareholders | 34,677 | 56,270 | (63,458) | - | - | - | - | - | 7,127,793 | 7,155,282 | |||||||
| 3.2.1 Capital increased by shareholders | - | - | - | - | - | - | - | 7,127,793 | 7,127,793 | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | 34,677 | 28,781 | (63,458) | - | - | - | - | - | - | ||||||||
| 3.2.3 Other | - | 27,489 | - | - | - | - | - | - | 27,489 | ||||||||
| 3.3 Profit distribution | - | - | - | - | 689,961 | - | (2,044,926) | (1,473,584) | (2,828,549) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | 689,961 | - | (689,961) | - | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | - | (1,354,965) | (1,109,311) | (2,464,276) | ||||||||
| 3.3.3 Other | - | - | - | - | - | - | - | (364,273) | (364,273) | ||||||||
| 3.4 Transfers within owners’ equity | - | - | - | - | - | - | - | - | - | ||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | - | - | - | - | - | - | - | - | - | ||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | - | - | - | - | - | - | - | - | - | ||||||||
TCL CorporationConsolidated Statement of Changes in Shareholders’ Equity
(RMB’000)
3.4.3 Other
| 3.4.3 Other | - | - | - | - | - | - | - | - | - | ||||||||
| 4. Balances as at end of the period | 13,549,649 | 5,996,741 | (63,458) | (1,174,162) | 2,184,261 | 361 | 10,000,973 | 30,377,308 | 60,871,673 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationConsolidated Statement of Changes in Shareholders’ Equity (Continued)
(RMB’000)
| 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: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationBalance Sheet of the Company as the Parent
(RMB’000)
Assets:
| Assets: | Note XII | 31 December 2018 | 31 December 2017 | |
| Current assets: | ||||
| Monetary capital | 1,328,707 | 1,116,725 | ||
| Financial assets at fair value through profit or loss | 711,741 | 1,543,844 | ||
| Notes and accounts receivable | 1 | 215,456 | 363,380 | |
| Prepayments | 187,895 | 30,648 | ||
| Other receivables | 2 | 18,773,353 | 13,640,338 | |
| Inventories | 826 | 803 | ||
| Other current assets | 1,873,962 | 3,065,895 | ||
| Total current assets | 23,091,940 | 19,761,633 | ||
| Non-current assets: | ||||
| Available-for-sale financial assets | 3 | 1,185,430 | 1,224,518 | |
| Long-term equity investments | 4 | 41,803,450 | 34,983,565 | |
| Investment property | 5,158 | 15,339 | ||
| Fixed assets | 40,058 | 46,319 | ||
| Construction in progress | 552 | 1,668 | ||
| Intangible assets | 18,776 | 26,367 | ||
| Long-term prepaid expense | 461,056 | 466,049 | ||
| Total non-current assets | 43,514,480 | 36,763,825 | ||
| Total assets | 66,606,420 | 56,525,458 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationBalance Sheet of the Company as the Parent (Continued)
(RMB’000)Liabilities and shareholders’ equity
| Liabilities and shareholders’ equity | Note XII | 31 December 2018 | 31 December 2017 | |
| Current liabilities: | ||||
| Short-term borrowings | 3,300,260 | 5,675,260 | ||
| Notes and accounts payable | 376,509 | 309,900 | ||
| Advances from customers | 38,615 | 81 | ||
| Payroll payable | 98,753 | 35,789 | ||
| Taxes payable | 3,437 | 51,544 | ||
| Other payables | 6,407,742 | 6,237,742 | ||
| Short-term commercial papers payable | 2,000,000 | - | ||
| Current portion of non-current liabilities | 3,000,003 | 2,422,940 | ||
| Total current liabilities | 15,225,319 | 14,733,256 | ||
| Non-current liabilities: | ||||
| Long-term borrowings | 5,340,956 | 3,840,956 | ||
| Bonds payable | 12,985,628 | 10,497,248 | ||
| Long-term payables | 700 | 1,909 | ||
| Long-term payroll payable | 24,246 | 25,519 | ||
| Deferred income | 51,506 | 41,953 | ||
| Total non-current liabilities | 18,403,036 | 14,407,585 | ||
| Total liabilities | 33,628,355 | 29,140,841 | ||
| Share capital | 13,549,649 | 13,514,972 | ||
| Capital reserves | 8,565,338 | 8,476,523 | ||
| Less: Treasury stock | 63,458 | - | ||
| Surplus reserves | 1,982,197 | 1,292,236 | ||
| Retained earnings | 8,969,209 | 4,114,531 | ||
| Other comprehensive income | (24,870) | (13,645) | ||
| Total shareholders’ equity | 32,978,065 | 27,384,617 | ||
| Total liabilities and shareholders’ equity | 66,606,420 | 56,525,458 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationIncome Statement of the Company as the Parent
(RMB’000)
| Note XII | 2018 | 2017 | ||
| 1. Operating revenue | 5 | 2,055,950 | 1,611,509 | |
| Less: Cost of sales | 5 | 1,854,623 | 1,523,290 | |
| Taxes and surcharges | 6,951 | 4,067 | ||
| Selling expense | 29,160 | 21,458 | ||
| Administrative expense | 368,820 | 256,962 | ||
| R&D expense | 123,609 | 98,134 | ||
| Finance costs | 634,124 | 814,496 | ||
| Including: Interest expense | 1,330,315 | 1,117,611 | ||
| Interest income | 652,821 | 307,476 | ||
| Asset impairment loss | 41,872 | 66,186 | ||
| Add: Other income | 8,000 | 4,060 | ||
| Return on investment | 6 | 7,126,393 | 4,696,511 | |
| Including: Share of profit or loss of joint ventures and associates | 6 | 931,721 | 599,872 | |
| Gain on changes in fair value | (54,003) | (8,168) | ||
| Asset disposal income | 22,238 | 1,366 | ||
| 2. Operating profit | 6,099,419 | 3,520,685 | ||
| Add: Non-operating income | 809,277 | 665,005 | ||
| Less: Non-operating expense | 9,092 | 30,297 | ||
| 3. Profit before tax | 6,899,604 | 4,155,393 | ||
| Less: Income tax expense | - | - | ||
| 4. Net profit | 6,899,604 | 4,155,393 | ||
| 5. Other comprehensive income | (11,225) | (44,515) | ||
| 6. Total comprehensive income | 6,888,379 | 4,110,878 | ||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationCash Flow Statement of the Company as the Parent
(RMB’000)
| Note XII | 2018 | 2017 | ||||||||
| 1. Cash flows from operating activities: | ||||||||||
| Proceeds from sale of commodities and rendering of services | 2,346,705 | 1,993,629 | ||||||||
| Interest, handling charges and commissions received | 498 | 267 | ||||||||
| Cash generated from other operating activities | 2,000,914 | 2,910,360 | ||||||||
| Subtotal of cash generated from operating activities | 4,348,117 | 4,904,256 | ||||||||
| Payments for commodities and services | (2,442,452) | (1,892,558) | ||||||||
| Cash paid to and for employees | (179,932) | (119,600) | ||||||||
| Taxes paid | (35,117) | (12,205) | ||||||||
| Cash used in other operating activities | (6,590,572) | (3,037,862) | ||||||||
| Subtotal of cash used in operating activities | (9,248,073) | (5,062,225) | ||||||||
| Net cash generated from/used in operating activities | 7 | (4,899,956) | (157,969) | |||||||
| 2. Cash flows from investing activities: | ||||||||||
| Proceeds from disinvestment | 48,308,442 | 14,645,798 | ||||||||
| Return on investment | 5,314,308 | 1,607,303 | ||||||||
| Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets | 242,768 | 4,814 | ||||||||
| Subtotal of cash generated from investing activities | 53,865,518 | 16,257,915 | ||||||||
| Payments for acquisition of fixed assets, intangible assets and other long-lived assets | (11,466) | (18,398) | ||||||||
| Payments for investments | (50,693,136) | (16,211,344) | ||||||||
| Subtotal of cash used in investing activities | (50,704,602) | (16,229,742) | ||||||||
| Net cash generated from/used in investing activities | 3,160,916 | 28,173 | ||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo | |||||
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationCash Flow Statement of the Company as the Parent (Continued)
(RMB’000)
| Note XII | 2018 | 2017 | ||
| 3. Cash flows from financing activities: | ||||
| Capital contributions received | 63,458 | - | ||
| Borrowings obtained | 9,771,712 | 15,206,136 | ||
| Net proceeds from issuance of bonds | 5,000,000 | 4,000,000 | ||
| Cash generated from other financing activities | - | 8,000 | ||
| Subtotal of cash generated from financing activities | 14,835,170 | 19,214,136 | ||
| Repayment of borrowings | (10,569,652) | (19,915,167) | ||
| Payments for interest and dividends | (2,364,333) | (2,979,396) | ||
| Cash used in other financing activities | (2,937) | (3,611) | ||
| Subtotal of cash used in financing activities | (12,936,922) | (22,898,174) | ||
| Net cash generated from/used in financing activities | 1,898,248 | (3,684,038) | ||
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 62,974 | 14,285 | ||
| 5. Net increase in cash and cash equivalents | 222,182 | (3,799,549) | ||
| Add: Cash and cash equivalents, beginning of the period | 1,106,497 | 4,906,046 | ||
| 6. Cash and cash equivalents, end of the period | 8 | 1,328,679 | 1,106,497 |
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationStatement of Changes in Shareholders’ Equity of the Company as the Parent
(RMB’000)
| 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 | 88,815 | (63,458) | (11,225) | 689,961 | 4,854,678 | 5,593,448 | ||||||||
| 3.1 Total comprehensive income | - | - | - | (11,225) | - | 6,899,604 | 6,888,379 | ||||||||
| 3.2 Capital increased and reduced by shareholders | 34,677 | 88,815 | (63,458) | - | - | - | 60,034 | ||||||||
| 3.2.1 Capital increased by shareholders | - | - | - | - | - | - | - | ||||||||
| 3.2.2 Share-based payments included in shareholders’ equity | 34,677 | 28,781 | (63,458) | - | - | - | - | ||||||||
| 3.2.3 Other | - | 60,034 | - | - | - | - | 60,034 | ||||||||
| 3.3 Profit distribution | - | - | - | - | 689,961 | (2,044,926) | (1,354,965) | ||||||||
| 3.3.1 Appropriation to surplus reserves | - | - | - | - | 689,961 | (689,961) | - | ||||||||
| 3.3.2 Appropriation to shareholders | - | - | - | - | - | (1,354,965) | (1,354,965) | ||||||||
| 4. Balances as at end of the period | 13,549,649 | 8,565,338 | (63,458) | (24,870) | 1,982,197 | 8,969,209 | 32,978,065 | ||||||||
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
TCL CorporationStatement of Changes in Shareholders’ Equity of the Company as the Parent (Continued)
(RMB’000)
| 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: | Li Dongsheng | Person-in-charge of financial affairs: | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |
The attached notes to the financial statements form an integral part of the financial statements.
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 31 December 2018, the total issued share capital of the Company was 13,549,648,507 shares. Please refer to Note IV, 37 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 31 December 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 19 March 2019. | |
| 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 31 December 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 31 December 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 31 December 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 cash that is easily converted into known amount with short holding period (generally due within three months from the date of purchase) and strong liquidity, and investments with low risk of changes in value (including investments in bonds within three months, while excluding equity investments), as cash equivalents. | |
| 10 | Foreign currency business and translation of foreign currency statement |
| (1) | Foreign currency transactions |
| Foreign currency transactions between the Company and its subsidiaries are translated into base currency at the spot exchange rate on the transaction date. | |
| Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date, and the exchange differences resulted therefrom, except that the exchange differences arising from special foreign currency loans related to the acquisition and construction of assets eligible for capitalization should be treated in accordance with the principle of capitalization of borrowing costs, are all included in the current profit and loss. Foreign currency non-monetary items measured at historical cost are still translated at the spot exchange rate on the transaction date, and the amount of base currency for bookkeeping is not changed. | |
| Foreign currency non-monetary items measured at fair value are translated at the spot exchange rates on the date when the fair value is determined, and the exchange differences resulted therefrom are included in profit or loss in the current period as a change in fair value. In the case of foreign currency non-monetary items that are 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| of recognition, the Company will keep the recognition of the transferred financial assets and recognize the consideration received as a financial liability. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 has 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 from 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 31 December 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 31 December 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Company and its subsidiaries based on actual conditions, including but not limited to industry 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 31 December 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 31 December 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 31 December 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. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| For long-term equity investment acquired by issuing equity securities, the fair value of equity securities issued is recognized as initial investment cost. | |
| 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 31 December 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 continued to be recognized, and the book value of long-term receivable items is offset, subject to other book value of the long-term equity that substantially constitutes the net investment of the investee. Finally, after the above-mentioned treatment, if the Company still bears additional obligations in accordance with the investment contract or agreement, the provisions are recognized according to the estimated obligations and included in the current investment losses. | |
| If the investee realizes profit in the future period, the Company shall, after deducting the unconfirmed loss share, conduct the process in the reverse order of the above to write down the book balance of the confirmed liabilities and recover other long-term equity that substantially constitute net investment of the investee and the book value of the long-term equity, and recognize the profit as investment income. | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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 31 December 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 31 December 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| The Company's investment property means the property held for the purpose of earning rent or capital appreciation, or both, including the land use rights that have been leased, the land use rights that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant buildings held by the Company for the purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that the buildings will be used for leases and the intention of holding will not change in a short-term, the building will also be reported as investment property. | |
| The Company adopts the cost model for subsequent measurement of investment property. For the purpose of depreciation or amortization method, the same amortization policy adopted for buildings as fixed assets and land use rights as intangible assets are used. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 mean tangible assets held for the purpose of producing goods, rendering of services, leases or operation management, whose service life is more than one fiscal year. Fixed assets satisfying the following conditions are recognized: | |
| (a) The economic benefits associated with the fixed assets are likely to flow into the enterprise; | |
| (b) The cost of the fixed asset can be measured in a reliable way. | |
| The Company's fixed assets are classified into buildings, machinery and equipment, office and electronic equipment, transportation vehicles and fixed assets renovation in line with capitalization conditions. Where each component of a fixed asset with a different service life provides economic benefits to the Company in different ways and applies different depreciation rates, it is recognized as a single fixed asset. | |
| Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase price, related taxes, and other expenses attributable to the fixed asset before it is ready for the intended use, such as the expenses on transportation, handling, installation and professional services, etc. When determining the cost of fixed assets, discard expenses should be considered. Subsequent expenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included in the cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which they arise. | |
| (2) | Recognition and initial measurement of fixed assets under a 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 31 December 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 31 December 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 31 December 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 is analyzed and judged at the time of acquisition. Intangible assets with a finite service life are amortized on the shortest of the estimated service lives, the beneficial period of the contract and the effective period specified by law from the time when the intangible assets are available for use. The amortization period is as follows: | ||
| Category | ||
| Land use rights | ||
| Patents and non-patent technologies | ||
| Software usage fee | ||
| Other | ||
| The Company reviews the service life and amortization method of intangible assets with limited service life at least at the end of each year, and made adjustment if necessary. | ||
| If an intangible asset is unforeseen to bring economic benefits to the Company, it is regarded as an intangible asset with an indefinite service life, which will be reviewed in each accounting period. If there is evidence indicates that the service life of the intangible asset is limited, then it is converted to an intangible asset with limited service life. Intangible assets with indefinite service lives are not amortized. | ||
| The expenditures of the Company's internal research and development projects are classified into expenditures in the research phase and expenditures in the development phase. Research means an original, planned survey of acquiring and understanding new scientific or technical knowledge. Development means the application of research results or other knowledge to a plan or design to produce new or substantially improved materials, devices, products, etc. prior to commercial production or use. | ||
| The expenditures in the research phase of the Company's internal research and development projects are included in the current profit and loss when incurred; expenditures in the development phase are recognized as intangible assets only when the following conditions are all satisfied: | ||
| (1) It is technically feasible to complete the intangible asset to enable it to be used or sold; | ||
| (2) There is intent to complete the intangible asset and use or sell it; | ||
| (3) The intangible assets can bring economic benefits; | ||
| (4) There are sufficient technical, financial and other resources to support the development of the intangible assets as well as ability to use or sell the intangible assets; | ||
| (5) Expenditures attributable to the development stage of the intangible asset can be measured in a reliable way. | ||
| If the above conditions cannot be all satisfied, the expenditures are included in the current profit and loss when incurred. | ||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 estimates are handled as follows: | |
| In case that there is a continuous range (or interval) of required expenditures, within which the possibility of occurrence of various results is the same, the best estimate is determined by the average of the middle value of the range, that is, the average of the upper and lower limits.. | |
| In case that there is no continuous range (or interval) of required expenditures, or there is a continuous range but the possibility of various results in the range is different, if the contingency involves a single item, the best estimate is determined based on the most probable amount; if a contingency involves multiple items, the best estimate is determined based on various possible outcomes and associated probabilities. | |
| If all or part of the expenses required by the Company to settle the provisions are expected to be compensated by a third party, the compensation amount is separately recognized as an asset when it is basically confirmed to be received, and the recognized compensation amount should not exceed the book value of provisions. |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 are 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 31 December 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 31 December 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 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 31 December 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 31 December 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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 31 December 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 |
| None. |
| 33 | Correction of previous accounting errors | |||
| During the Reporting Period, there is no corrections in the previous accounting errors made by the Company. | ||||
| 34 | Changes to financial statement line items | |||
| The Ministry of Finance issued on 15 June 2018 the Notice on Revising and Issuing the Format of the 2018 Annual Financial Statements of General Enterprises (CK〔2018〕No. 15), combining some balance sheet items and splitting some income statement items; and issued on 7 September 2018 the Interpretations Regarding the Format of the 2018 Annual Financial Statements of General Enterprises, requiring that the refund of the handling charges with regard to individual income tax withholding shall be presented in “other income”, and that the government subsidies received, whether asset-related or income-realted, shall be presented under cash flows from operating activities in the cash flow statement. The Company has prepared the financial statements according to the new requirements for the format of financial statements, and adjusted the comparative data as per the Accounting Standards No. 30 for Business Enterprises—Presentation of Financial Statements. The effects of the said changes on the financial statement items and amounts of the comparative period are as follows: | ||||
| Item | 31 Decmeber 2017 | Effect | 1 January 2018 | |
| Notes receivable | 6,170,349 | (6,170,349) | - | |
| Accounts receivable | 14,747,223 | (14,747,223) | - | |
| Notes and accounts receivable | - | 20,917,572 | 20,917,572 | |
| Interest receivable | 53,622 | (53,622) | - | |
| Dividends receivable | 11,103 | (11,103) | - | |
| Other receivables | 3,853,591 | 64,725 | 3,918,316 | |
| Notes payable | 2,061,471 | (2,061,471) | - | |
| Accounts payable | 19,324,249 | (19,324,249) | - | |
| Notes and accounts payable | - | 21,385,720 | 21,385,720 | |
| Interest payable | 444,846 | (444,846) | - | |
| Dividends payable | 47,110 | (47,110) | - | |
| Other payables | 16,662,797 | 491,956 | 17,154,753 | |
| Administrative expense | 9,456,040 | (4,759,324) | 4,696,716 | |
| R&D expense | - | 4,759,324 | 4,759,324 | |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| III | Taxes |
| 1 | Value-added tax |
| Before 1 May 2018, output tax was calculated at 6%, 11% or 17% of the taxable income of general taxpayers and the value added-tax was paid based on the difference after deducting the allowance deduction of input tax in the current period. From 1 May 2018 onwards, output tax is calculated at 6%, 10% or 16% of the taxable income of general taxpayers and the value added-tax is paid based on the difference after deducting the allowance deduction of input tax in the current period. The value added-tax payment for the Group’s directly exported goods is executed in accordance with the regulations of “Exemption, Offset and Refund”. Before 1 May 2018, the tax refund rate was 0%-17% and from 1 May 2018 onwards, the tax refund rate is 0%-16%. | |
| 2 | Urban maintenance and construction tax |
| Subject to the relevant tax laws and regulations of the state and local regulations, urban maintenance and construction tax is paid based on the proportion stipulated by the state according to the individual circumstances of each member of the Company. | |
| 3 | Education surcharges |
| Education surcharges are paid according to the individual circumstances of each member of the Company based on the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. | |
| 4 | Dike protection fee |
| Dike protection fee is paid according to relevant national tax regulations and local regulations. | |
| 5 | Property tax |
| Property tax is paid on the houses with property rights according to the proportion stipulated by the state in accordance with the relevant national tax regulations and local regulations. | |
| 6 | Corporate income tax |
| The 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 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| 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 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements | |||||||||
| 1 | Monetary Capital | |||||||||
| 31 December 2018 | 31 December 2017 | |||||||||
| In original currency | Exchange rate | In RMB | In original currency | Exchange rate | In RMB | |||||
| Cash | - | - | 5,065 | - | - | 4,759 | ||||
| Cash at bank－ | - | - | 25,702,447 | - | - | 23,276,412 | ||||
| RMB | 19,687,152 | 1.0000 | 19,687,152 | 15,800,948 | 1.0000 | 15,800,948 | ||||
| USD | 733,139 | 6.8632 | 5,031,682 | 1,072,179 | 6.5342 | 7,005,832 | ||||
| HKD | 572,877 | 0.8763 | 502,012 | 175,953 | 0.8358 | 147,062 | ||||
| EUR | 24,717 | 7.8549 | 194,150 | 20,855 | 7.8035 | 162,742 | ||||
| RUB | 300,870 | 0.0987 | 29,696 | 106,336 | 0.1135 | 12,069 | ||||
| Other currencies | - | - | 257,755 | - | - | 147,759 | ||||
| Cash due from central bank | - | - | 868,895 | - | - | 3,945,427 | ||||
| Other monetary capital－ | - | - | 224,936 | - | - | 232,855 | ||||
| RMB | 224,936 | 1.0000 | 224,936 | 229,302 | 1.0000 | 229,302 | ||||
| USD | - | 6.8632 | - | 544 | 6.5342 | 3,553 | ||||
| Total | 26,801,343 | 27,459,453 | ||||||||
| (1) | Other Monetary Capital by Nature | |||||||||
| 31 December 2018 | 31 December 2017 | |||||||||
| Security deposits | 204,417 | 219,320 | ||||||||
| Other | 20,519 | 13,535 | ||||||||
| 224,936 | 232,855 | |||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 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： | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Accounts receivable factoring | 5,128 | - | ||||
| TCL Finance’s required reserve with central bank | 868,895 | 3,945,429 | ||||
| Other monetary capital | 224,936 | 232,855 | ||||
| 1,098,959 | 4,178,284 | |||||
| As at 31 December 2018, among the Company’s cash at bank, RMB868,895,000 (31 December 2017: RMB3,945,427,000) was required reserve deposited by subsidiary TCL Finance Co., Ltd. in the central bank. | ||||||
| As at 31 December 2018, the Company’s monetary capital abroad equaled RMB4,884,301,000 (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 | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Derivative financial assets | 418,635 | 687,432 | ||||
| Money management schemes | 708,938 | 1,543,844 | ||||
| Money funds | 10,007 | - | ||||
| 1,137,580 | 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 and Accounts Receivable | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Notes receivable | 4,272,222 | 6,170,349 | ||||
| Accounts receivable | 13,604,358 | 14,747,223 | ||||
| 17,876,580 | 20,917,572 | |||||
| (1) | Notes Receivable | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Bank acceptance notes | 2,372,024 | 4,081,181 | ||||
| Commercial acceptance notes | 1,900,198 | 2,089,168 | ||||
| 4,272,222 | 6,170,349 | |||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 3 | Notes and Accounts Receivable (Continued) | |||||||||||||
| As at 31 December 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 RMB0 (31 December 2017: RMB607,000). | ||||||||||||||
| (2) | Accounts Receivable | |||||||||||||
| 31 December 2018 | 31 December 2017 | |||||||||||||
| Accounts receivable | 14,039,251 | 15,131,490 | ||||||||||||
| Less: Allowance for doubtful accounts | 434,893 | 384,267 | ||||||||||||
| 13,604,358 | 14,747,223 | |||||||||||||
| (a) | Aging Analysis of Accounts Receivable： | |||||||||||||
| 31 December 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 | 13,486,519 | 96.06% | 67,461 | 0.50% | 14,537,233 | 96.07% | 46,177 | 0.32% | ||||||
| 1-2 years | 387,369 | 2.76% | 209,259 | 54.02% | 426,154 | 2.82% | 178,727 | 41.94% | ||||||
| 2-3 years | 58,823 | 0.42% | 53,830 | 91.51% | 65,432 | 0.43% | 59,214 | 90.50% | ||||||
| Over 3 years | 106,540 | 0.76% | 104,343 | 97.94% | 102,671 | 0.68% | 100,149 | 97.54% | ||||||
| 14,039,251 | 100.00% | 434,893 | 3.10% | 15,131,490 | 100.00% | 384,267 | 2.54% | |||||||
| (b) | Accounts Receivable by Category： | |||||||||||||
| 31 December 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 | 11,334,393 | 80.73% | 293,209 | 2.59% | 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 | - | - | - | - | - | - | - | - | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Other insignificant accounts receivable | 2,704,858 | 19.27% | 141,684 | 5.24% | 2,743,406 | 18.13% | 89,694 | 3.27% | |||
| 14,039,251 | 100.00% | 434,893 | 3.10% | 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 equal to over US$500,000 (inclusive). | |||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 3 | Accounts Receivable (Continued) | |||
| (c) | Allowance for Doubtful Accounts Receivable: | |||
| 2018 | 2017 | |||
| Beginning amount | 384,267 | 314,436 | ||
| Newly consolidated subsidiaries | 3,863 | - | ||
| Established in the period | 302,172 | 180,199 | ||
| Reversed in the period | (102,542) | (81,988) | ||
| Written off in the period | (143,763) | (16,002) | ||
| Newly deconsolidated subsidiaries | (11,418) | (3,184) | ||
| Exchange adjustments | 2,314 | (9,194) | ||
| Ending amount | 434,893 | 384,267 | ||
| (d) | As at 31 December 2018, accounts receivable from related parties amounted to RMB525,285,000 (31 December 2017: RMB748,024,000), accounting for 3.74% 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. | |||
| (e) | Top Five Accounts Receivable on 31 December 2018： | |||
| 31 December 2018 | 31 December 2017 | |||
| Top five accounts receivable combined | 2,694,561 | 2,102,125 | ||
| As % of total accounts receivable | 19.19% | 13.89% | ||
| 4 | Factored Accounts Receivable/Factorage Financings | |||
| As at 31 December 2018, RMB47,087,000 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 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 5 | Prepayments | |||
| (1) | Analysis of Prepayments： | |||
| 31 December 2018 | 31 December 2017 | |||
| Within 1 year | 1,194,972 | 910,215 | ||
| (2) | Top Five Prepayments on 31 December 2018： | |||
| 31 December 2018 | 31 December 2017 | |||
| Top five prepayments combined | 578,751 | 442,136 | ||
| As % of total prepayments | 48.43% | 48.57% | ||
| (3) | As at 31 December 2018, prepayments to related parties amounted to RMB2,935,000 (31 December 2017: RMB29,421,000), accounting for 0.25% of the total prepayments (31 December 2017: 3.23%). And there were no prepayments to any shareholder with a 5% or greater voting stock. | |||
| 6 | Other Receivables | |||
| 31 December 2018 | 31 December 2017 | |||
| Interest receivable | 70,778 | 53,622 | ||
| Dividends receivable | 47,748 | 11,103 | ||
| Other receivables | 5,600,853 | 3,853,591 | ||
| 5,719,379 | 3,918,316 | |||
| (1) | Interest Receivable | |||
| 31 December 2018 | 31 December 2017 | |||
| Interest on bank deposits | 70,778 | 53,622 | ||
| As at 31 December 2018, interest receivable related parties amounted to RMB5,154,000 (31 December 2017: RMB2,488,000), accounting for 7.28% 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. | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 6 | Other Receivables (Continued) | |||
| (2) | Dividends Receivable | |||
| 31 December 2018 | 31 December 2017 | |||
| TV University Online Distance Education Technology Co., Ltd. | 47,656 | - | ||
| SEMP TCL INDUSTRIA E COMERCIO DE ELETROELETRONICOS S.A. | 92 | 88 | ||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | - | 11,015 | ||
| 47,748 | 11,103 | |||
| (3) | Other Receivables | ||||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||||
| Other receivables | 6,026,004 | 4,290,709 | |||||||||||
| Less: Allowance for doubtful other receivables | 425,151 | 437,118 | |||||||||||
| 5,600,853 | 3,853,591 | ||||||||||||
| (a) | Aging Analysis of Other Receivables： | ||||||||||||
| 31 December 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 | 5,134,601 | 85.21% | 19,585 | 0.38% | 3,557,913 | 82.92% | 21,429 | 0.60% | |||||
| 1-2 years | 343,730 | 5.70% | 84,323 | 24.53% | 238,773 | 5.56% | 96,045 | 40.22% | |||||
| 2-3 years | 300,090 | 4.98% | 125,999 | 41.99% | 329,263 | 7.67% | 193,656 | 58.81% | |||||
| Over 3 years | 247,583 | 4.11% | 195,244 | 78.86% | 164,760 | 3.85% | 125,988 | 76.47% | |||||
| 6,026,004 | 100.00% | 425,151 | 7.06% | 4,290,709 | 100.00% | 437,118 | 10.19% | ||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||
| 6 | Other Receivables (Continued) | ||||||||||||
| (b) | Other Receivables by Category： | ||||||||||||
| 31 December 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 | 4,378,244 | 72.66% | 357,079 | 8.16% | 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 grouping basis | - | - | - | - | - | - | - | - | |||||
| Other insignificant other receivables | 1,647,760 | 27.34% | 68,072 | 4.13% | 911,954 | 21.25% | 32,796 | 3.60% | |||||
| 6,026,004 | 100.00% | 425,151 | 7.06% | 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. | |||||||||||||
| (c) | Allowance for Doubtful Other Receivables： | ||||||||||||
| 2018 | 2017 | ||||||||||||
| Beginning amount | 437,118 | 369,119 | |||||||||||
| Newly consolidated subsidiaries | 249 | - | |||||||||||
| Established in the period | 55,818 | 86,473 | |||||||||||
| Reversed in the period | (37,647) | (763) | |||||||||||
| Written off in the period | (55,195) | (1,818) | |||||||||||
| Newly deconsolidated subsidiaries | (1,378) | (14,439) | |||||||||||
| Exchange adjustments | 26,186 | (1,454) | |||||||||||
| Ending amount | 425,151 | 437,118 | |||||||||||
| (d) | As at 31 December 2018, other receivables from related parties amounted to RMB581,924,000 (31 December 2017: RMB350,617,000), accounting for 9.66% 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. | ||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 6 | Other Receivables (Continued) | |||||||||||||||||||
| (e) | Top Five Other Receivables on 31 December 2018： | |||||||||||||||||||
| 31 December 2018 | 31 December 2017 | |||||||||||||||||||
| Top five other receivables combined | 2.015,077 | 1,546,652 | ||||||||||||||||||
| As % of total other receivables | 33.44% | 36.05% | ||||||||||||||||||
| (f) | As at 31 December 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. | |||||||||||||||||||
| 7 | Inventories | |||||||||||||||||||
| (1) | Inventories by Category： | |||||||||||||||||||
| 31 December 2018 | 31 December 2017 | |||||||||||||||||||
| Gross amount | Valuation allowance | Carrying amount | Gross amount | Valuation allowance | Carrying amount | |||||||||||||||
| Raw materials | 3,362,179 | 361,962 | 3,000,217 | 2,995,068 | 403,182 | 2,591,886 | ||||||||||||||
| Unfinished goods | 1,157,557 | 165,335 | 992,222 | 939,613 | 48,590 | 891,023 | ||||||||||||||
| Finished goods | 11,925,676 | 251,218 | 11,674,458 | 9,254,989 | 254,119 | 9,000,870 | ||||||||||||||
| Revolving materials | 400,754 | 849 | 399,905 | 320,350 | 818 | 319,532 | ||||||||||||||
| Moulds | 175,131 | - | 175,131 | 120,395 | 116 | 120,279 | ||||||||||||||
| Real estate development costs | 3,646,039 | - | 3,646,039 | 22,713 | - | 22,713 | ||||||||||||||
| 20,667,336 | 779,364 | 19,887,972 | 13,653,128 | 706,825 | 12,946,303 | |||||||||||||||
| As at 31 December 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 | 31 December 2018 | ||||||||||||||
| Raw materials | 403,182 | 523,553 | (102,386) | (443,527) | (18,729) | (131) | 361,962 | |||||||||||||
| Unfinished goods | 48,590 | 190,581 | (8,820) | (64,832) | (184) | - | 165,335 | |||||||||||||
| Finished goods | 254,119 | 517,143 | (120,412) | (376,006) | (26,391) | 2,765 | 251,218 | |||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Revolving materials | 818 | 31 | - | - | - | - | 849 | |||||||
| Moulds | 116 | - | - | (116) | - | - | - | |||||||
| 706,825 | 1,231,308 | (231,618) | (884,481) | (45,304) | 2,634 | 779,364 | ||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 8 | Other Current Assets | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Wealth management instruments (note 1) | 2,654,966 | 4,710,164 | |||
| VAT to be deducted or approved, etc. | 4,056,515 | 2,075,997 | |||
| Assets and creditor’s rights purchased from non-financial institutions (note 2) | 740,381 | 3,216,620 | |||
| Currency swaps | 99,983 | 1,633,550 | |||
| Other | 72,252 | 29,992 | |||
| 7,624,097 | 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, financial investments due within 1 year such as personal short-term loans. | |||||
| 9 | Loans and Advances to Customers | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Loans and advances to customers (note 1) | 1,123,800 | 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. | |||||
| 10 | Available-for-Sale Financial Assets | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Available-for-sale equity instruments——at fair value (1) | 1,917,168 | 1,159,166 | |||
| Available-for-sale equity instruments——at cost (2) | 2,353,677 | 2,042,889 | |||
| 4,270,845 | 3,202,055 | ||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 10 | Available-for-Sale Financial Assets (Continued) | |||
| (1) | Available-for-Sale Equity Instruments——at Fair Value | |||
| 31 December 2018 | 31 December 2017 | |||
| Cost | 2,452,730 | 978,946 | ||
| Changes in fair value | (438,844) | 328,995 | ||
| Less: impairment allowance | 96,718 | 148,775 | ||
| 1,917,168 | 1,159,166 | |||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 11 | Long-Term Equity Investments | |||||||
| 31 December 2018 | 31 December 2017 | |||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||
| Unconsolidated subsidiaries (1) | 20,373 | 20,373 | - | 20,373 | 20,373 | - | ||
| Long-term equity investments measured at equity method | 17,107,596 | 150,487 | 16,957,109 | 15,471,223 | 119,209 | 15,352,014 | ||
| Including: Associates (2) | 16,469,945 | 133,725 | 16,336,220 | 14,806,411 | 102,447 | 14,703,964 | ||
| Joint ventures (3) | 637,651 | 16,762 | 620,889 | 664,812 | 16,762 | 648,050 | ||
| 17,127,969 | 170,860 | 16,957,109 | 15,491,596 | 139,582 | 15,352,014 | |||
| As at 31 December 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 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 11 | 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 | 31 December 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 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 11 | 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 | Ending amount | ||||||||||||
| Bank of Shanghai Co., Ltd. | 7,630,711 | - | 899,703 | 27,863 | - | (194,713) | - | - | 8,363,564 | ||||||||||||
| Hubei Consumer Finance Company | 120,343 | - | 19,943 | - | - | - | - | - | 140,286 | ||||||||||||
| Huan Tech Co., Ltd. | 158,042 | (1,190) | 22,322 | - | - | - | - | 1,190 | 180,364 | ||||||||||||
| LG Innotek Huizhou Co., Ltd. | 81,554 | - | 10,445 | - | - | (10,135) | - | 2,038 | 83,902 | ||||||||||||
| Huizhou Shangdian Law Firm Waterway Construction Investment Co., Ltd. | 48,081 | - | (223) | - | - | - | - | (47,858) | - | ||||||||||||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | - | 19,389 | 5,982 | - | - | - | - | (3,286) | 22,085 | ||||||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 53,012 | - | (7,978) | - | - | - | - | - | 45,034 | ||||||||||||
| Ningbo Meishan Bonded Port Renxing Culture Investment Center (Limited Partnership) | 8,001 | (4,146) | (88) | - | - | - | - | - | 3,767 | ||||||||||||
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | 165,465 | - | 14,980 | - | - | (3,333) | - | - | 177,112 | ||||||||||||
| Wuhan Shangde Plastics Technology Co., Ltd. | 5,683 | - | 285 | - | - | - | - | - | 5,968 | ||||||||||||
| Gaoshengda Holdings (Huizhou) Co., Ltd. | 49,733 | (3,475) | 14,702 | - | - | - | - | - | 60,960 | ||||||||||||
| Beijing WeMed Medical Equipment Co., Ltd. | 39,435 | - | (3,053) | - | - | - | (31,278) | - | 5,104 | ||||||||||||
| Million China International Holdings Limited | 19,410 | (19,225) | (674) | - | - | - | - | 489 | - | ||||||||||||
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | 1,200 | - | 1,644 | - | - | - | - | - | 2,844 | ||||||||||||
| Amlogic (Shanghai) Limited | 146,739 | - | 18,147 | - | - | - | - | (20,297) | 144,589 | ||||||||||||
| Wealthy Way Group Limited | - | - | - | - | - | - | - | - | - | ||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||
| 11 | 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 | Ending amount | |||||||||||
| SEMP TCL INDUSTRIA E COMERCIO DE ELETROELETRONICOS S.A. | 229,558 | 81,617 | 6,315 | - | - | - | - | 10,141 | 327,631 | |||||||||||
| KAI OS TECHNOLOGIES INC | 2,023 | (3,983) | - | - | - | - | - | 1,960 | - | |||||||||||
| Naturedao Information Science and Technology, Ltd. | 2,628 | 766 | (128) | - | - | - | - | (203) | 3,063 | |||||||||||
| T2Mobile Limited | 20,258 | - | 2,443 | - | - | - | - | (1,089) | 21,612 | |||||||||||
| Harvey Holdings Limited | 19,689 | - | 1,298 | - | - | - | - | 1,274 | 22,261 | |||||||||||
| Petro AP (Hong Kong) Company Limited | - | - | - | - | - | - | - | - | - | |||||||||||
| PETRO AP S.A. | - | - | - | - | - | - | - | - | - | |||||||||||
| Guangdong Regency Optics-Electron Corp. | 21,082 | (10,000) | (1,544) | - | - | - | - | (9,538) | - | |||||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,000 | - | (842) | - | - | - | - | - | 5,158 | |||||||||||
| Shenzhen Thunderbird Network Technology Co. | 247,685 | 30,000 | 33,085 | - | - | - | - | (21,018) | 289,752 | |||||||||||
| Jiangxi Broadcasting TV Network E-Commerce Co., Ltd. | 1,470 | - | 10 | - | - | - | - | - | 1,480 | |||||||||||
| Yizheng Zeyu Electric Light Co., Ltd. | 2,537 | - | (30) | - | - | - | - | - | 2,507 | |||||||||||
| Urumqi TCL Equity Investment Management Co., Ltd. | 1,278 | - | (230) | - | - | - | - | - | 1,048 | |||||||||||
| Wuxi TCL Venture Capital Partnership (Limited Partnership) | 53,651 | - | (12,408) | 51,362 | - | - | - | (223) | 92,382 | |||||||||||
| Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) | 62,471 | (21,851) | 11,569 | (17,139) | - | (12,886) | - | 9 | 22,173 | |||||||||||
| Beijing A Dynamic Investment Consulting Co., Ltd. | 517 | - | 118 | - | - | - | - | - | 635 | |||||||||||
| Shanghai Gen Auspicious Investment Management Co., Ltd. | 288 | - | 228 | - | - | - | - | - | 516 | |||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Beijing A Dynamic Venture Capital Center (Limited Partnership) | 30,398 | (293) | (9,739) | - | - | - | - | - | 20,366 | ||||||||||
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | 35,573 | (5,080) | (454) | (4,211) | - | - | - | - | 25,828 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||||||||||
| 11 | 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 | Ending amount | |||||||||||||
| Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. | 335 | 50 | 1 | - | - | - | - | - | 386 | |||||||||||||
| Urumqi TCL Create Dynamic Equity Investment Management Co., Ltd. | 781 | - | (18) | - | - | - | - | - | 763 | |||||||||||||
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | 43,022 | - | (17,042) | 19 | - | - | - | 2 | 25,997 | |||||||||||||
| Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) | 27,648 | - | (3,809) | - | - | - | - | - | 23,839 | |||||||||||||
| Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) | 16,810 | - | (4,402) | - | - | - | - | - | 12,408 | |||||||||||||
| Xizang Rongxin Venture Investment Management Co., Ltd. | 4,871 | (4,900) | 163 | - | - | (147) | - | 13 | - | |||||||||||||
| Xizang Rongxing Venture Investment Partnership (Limited Partnership) | 961 | (1,000) | 139 | - | - | (100) | - | - | - | |||||||||||||
| Wuxi TCL Aisikai Semiconductor Industry Investment Fund Partnership (Limited Partnership) | 64,926 | 21,211 | 2,132 | - | - | (2,438) | - | 290 | 86,121 | |||||||||||||
| Urumqi Qixinda Equity Investment Management Co., Ltd. | 734 | - | 211 | - | - | - | - | - | 945 | |||||||||||||
| Xizang Dongwei Investment Management Center (Limited Partnership) | 238 | - | (6) | - | - | - | - | - | 232 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 4,257 | - | 134 | - | - | - | - | - | 4,391 | |||||||||||||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 1,051,495 | (7,845) | 4,232 | - | - | - | - | - | 1,047,882 | |||||||||||||
| Xinjiang Dongpeng Heli Equity Investment Partnership (Limited Partnership) | 77,478 | 45,000 | (5,928) | - | - | - | - | - | 116,550 | |||||||||||||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | 783,751 | 89,490 | 124,664 | 75,030 | - | (153,625) | - | 37,444 | 956,754 | |||||||||||||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 5,077 | - | (371) | - | - | - | - | - | 4,706 | |||||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Qingteng Intellectual Property Holding (Shenzhen) Co., Ltd. | - | 4,900 | (979) | - | - | - | - | - | 3,921 | ||||||||||
| Beijing Shangdao Yuetu Technology Co., Ltd. | - | 7,686 | (408) | - | - | - | - | - | 7,278 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 11 | 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 | Ending amount | ||||||||||
| Active Industries International Limited | 13,943 | - | 1,474 | - | - | - | - | - | 15,417 | ||||||||||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | 271,985 | - | 105,137 | - | - | - | - | - | 377,122 | ||||||||||
| Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) | 2,878 | - | (9) | - | - | - | - | - | 2,869 | ||||||||||
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | 640 | - | 805 | - | - | - | - | - | 1,445 | ||||||||||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 16,839 | 220,580 | (16,951) | - | - | - | - | - | 220,468 | ||||||||||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 12,921 | - | 1,949 | - | - | - | - | (1,163) | 13,707 | ||||||||||
| Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) | 209,981 | - | (2,934) | - | - | - | - | - | 207,047 | ||||||||||
| Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) | - | 70,000 | (822) | - | - | - | - | - | 69,178 | ||||||||||
| Pride Telecom Limited | - | (30) | - | - | - | - | - | 30 | - | ||||||||||
| Huizhou TCL Resource Investment Co., Ltd. | 65,532 | (269,500) | (65,533) | - | - | - | - | 269,501 | - | ||||||||||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | - | 2,000 | 13 | - | - | - | - | - | 2,013 | ||||||||||
| Palm Venture Group | - | 92,816 | (4,947) | - | - | - | - | - | 87,869 | ||||||||||
| Changzhou Chuangdong Fund Management Co., Ltd. | - | 600 | (94) | - | - | - | - | - | 506 | ||||||||||
| Changzhou A Dynamic Venture Capital Partnership (Limited Partnership) | - | 60,000 | (1,422) | - | - | - | - | - | 58,578 | ||||||||||
| Huarui (Huizhou) Co., Ltd. | - | 19,582 | 171 | - | - | - | - | - | 19,753 | ||||||||||
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | - | 17,000 | (264) | - | - | - | - | - | 16,736 | ||||||||||
| Sontec TCL Argentina S.A. | - | 777 | (265) | - | - | - | - | - | 512 | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| Radio Victoria TCL Argentina S.A. | - | 3,280 | 5,387 | - | - | - | - | - | 8,667 | ||||||||||
| Huizhou Gaoshengda Metals Co., Ltd. | - | 30,000 | (461) | - | - | - | - | - | 29,539 |
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 11 | 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 | Ending amount | ||||||||||
| China United Magnesium Co.,Ltd. | - | - | - | - | - | - | - | - | - | ||||||||||
| TCL-IMAX Entertainment Co., Limited | - | - | - | - | - | - | - | - | - | ||||||||||
| Other | 2,762,346 | - | 188,487 | - | - | (65,972) | - | (44,230) | 2,840,631 | ||||||||||
| Total | 14,703,964 | 464,226 | 1,334,263 | 132,924 | - | (443,349) | (31,278) | 175,474 | 16,336,220 | ||||||||||
| TCL Corporation |
| Notes to Financial Statements |
| (For the period from 1 January 2018 to 31 December 2018) |
| (The amounts in tables are expressed in thousands of RMB) |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 11 | 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 | Ending amount | ||||||||||
| TCL Sun, Inc. | 11,945 | - | 2,169 | - | - | - | - | (215) | 13,899 | ||||||||||
| TV University Online Distance Education Technology Co., Ltd. | 135,341 | - | 27,526 | - | - | (52,954) | - | 1,149 | 111,062 | ||||||||||
| CJ Speedex Logistics Co., Ltd. | 468,286 | - | (398) | - | - | - | - | - | 467,888 | ||||||||||
| Shanxi TCL Huirong Venture Investment Co., Ltd. | 5,774 | - | 324 | - | - | - | - | - | 6,098 | ||||||||||
| Shanxi TCL Huirong Venture Investment Management Co., Ltd. | 503 | (500) | 1 | - | - | - | - | (4) | - | ||||||||||
| TCL Huizhou City, Kai Enterprise Management Limited | 1,147 | (30) | 11 | - | - | (614) | - | - | 514 | ||||||||||
| TCL-IMAX Entertainment Co.,Limited | (3) | - | - | - | - | - | - | 3 | - | ||||||||||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 2,467 | - | (181) | - | - | - | - | (1) | 2,285 | ||||||||||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | 22,590 | - | (3,447) | - | - | - | - | - | 19,143 | ||||||||||
| 648,050 | (530) | 26,005 | - | - | (53,568) | - | 932 | 620,889 | |||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 11 | Long-Term Equity Investments (Continued) | |||||||||
| (4) | Impairment Allowances for Long-Term Equity Investments | |||||||||
| Beginning amount | Increase in current period | Decrease in current period | Ending amount | Reason for allowance | ||||||
| Pride Telecom Limited | 1,624 | - | - | 1,624 | Note 1 | |||||
| Naturedao Information Science and Technology, Ltd. | 2,221 | - | - | 2,221 | Note 1 | |||||
| Jinke Holding Group Co., Ltd. | 20,373 | - | - | 20,373 | Note 2 | |||||
| China United Magnesium Co.,Ltd. | 97,387 | - | - | 97,387 | Note 1 | |||||
| Wealthy Way Group Limited | 1,215 | - | - | 1,215 | Note 1 | |||||
| Beijing WeMed Medical Equipment Co., Ltd. | - | 31,278 | - | 31,278 | Note 1 | |||||
| TCL-IMAX Entertainment Co., Limited | 16,762 | - | - | 16,762 | Note 1 | |||||
| 139,582 | 31,278 | - | 170,860 | |||||||
| 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. | |||||||||
| Note 2 | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||
| 12 | 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 | 660 | - | 660 | ||||
| Reclassified from fixed assets and intangible assets | 292,869 | 228,949 | 521,818 | ||||
| Reclassified from construction in progress | 577,344 | - | 577,344 | ||||
| Decreases: | |||||||
| Decrease in current period | (14,842) | (7,547) | (22,389) | ||||
| Newly deconsolidated subsidiaries | (207,858) | - | (207,858) | ||||
| Reclassified to fixed assets and intangible assets | (7,921) | - | (7,921) | ||||
| Exchange adjustments | 5,552 | 256 | 5,808 | ||||
| 31 December 2018 | 2,702,083 | 247,463 | 2,949,546 | ||||
| Accumulated depreciation and amortization: | |||||||
| 1 January 2018 | 1,215,651 | 6,543 | 1,222,194 | ||||
| Increases: | - | - | - | ||||
| Increase in current period | 52,606 | 3,752 | 56,358 | ||||
| Reclassified from fixed assets and intangible assets | 4,762 | 2,835 | 7,597 | ||||
| Decreases: | |||||||
| Decrease in current period | (784) | - | (784) | ||||
| Newly deconsolidated subsidiaries | (13,546) | - | (13,546) | ||||
| Reclassified to fixed assets and intangible assets | (749) | - | (749) | ||||
| Exchange adjustments | 2,171 | 94 | 2,265 | ||||
| 31 December 2018 | 1,260,111 | 13,224 | 1,273,335 | ||||
| Investment property, net: | |||||||
| 31 December 2018 | 1,441,972 | 234,239 | 1,676,211 | ||||
| 1 January 2018 | 840,628 | 19,262 | 859,890 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 13 | 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 | - | 48 | 24,689 | 2,228 | 514 | 27,479 | ||||||
| Purchased | 26,012 | 16,610 | 1,234,974 | 306,055 | 14,241 | 1,597,892 | ||||||
| Reclassified from investment property | 7,921 | - | - | - | - | 7,921 | ||||||
| Reclassified from construction in progress | 1,643,905 | 10,527 | 8,223,322 | 149,848 | - | 10,027,602 | ||||||
| Decreases: | ||||||||||||
| Written down with government subsidies | - | (518) | (489,739) | (1,008) | - | (491,265) | ||||||
| Newly deconsolidated subsidiaries | (801) | (4,583) | (974,633) | (39,938) | (1,450) | (1,021,405) | ||||||
| Reclassified to investment property | (292,008) | (861) | - | - | - | (292,869) | ||||||
| Other decreases | (690,147) | (75,558) | (1,214,691) | (316,853) | (13,442) | (2,310,691) | ||||||
| Exchange adjustments | 33,652 | 64,301 | (253,407) | 169,643 | 8,082 | 22,271 | ||||||
| 31 December 2018 | 13,062,161 | 382,091 | 47,752,417 | 1,831,728 | 112,496 | 63,140,893 | ||||||
| Accumulated depreciation: | ||||||||||||
| 1 January 2018 | 2,110,019 | 282,293 | 18,948,357 | 957,236 | 65,313 | 22,363,218 | ||||||
| Increases: | ||||||||||||
| Newly consolidated subsidiaries | - | 38 | 10,710 | 1,745 | 164 | 12,657 | ||||||
| Depreciation established | 424,090 | 39,251 | 6,121,674 | 284,093 | 15,709 | 6,884,817 | ||||||
| Reclassified from investment property | 749 | - | - | - | - | 749 | ||||||
| Decreases: | ||||||||||||
| Written down with government subsidies | (34,215) | (518) | (823,777) | (573) | - | (859,083) | ||||||
| Newly deconsolidated subsidiaries | (3) | (2,715) | (182,353) | (29,144) | (1,299) | (215,514) | ||||||
| Reclassified to investment property | (4,762) | - | - | - | - | (4,762) | ||||||
| Other decreases | (102,324) | (75,500) | (699,224) | (232,965) | (12,279) | (1,122,292) | ||||||
| Exchange adjustments | 17,305 | 40,405 | (140,150) | 97,493 | 100 | 15,153 | ||||||
| 31 December 2018 | 2,410,859 | 283,254 | 23,235,237 | 1,077,885 | 67,708 | 27,074,943 | ||||||
| Fixed assets, net: | ||||||||||||
| 31 December 2018 | 10,651,302 | 98,837 | 24,517,180 | 753,843 | 44,788 | 36,065,950 | ||||||
| 1 January 2018 | 10,223,608 | 89,832 | 22,253,545 | 604,517 | 39,238 | 33,210,740 | ||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 13 | Fixed Assets (Continued) | |||||||||||
| Buildings | Decoration of fixed assets | Machinery and equipment | Office and electronic equipment | Motor vehicles | Total | |||||||
| Impairment allowances: | ||||||||||||
| 1 January 2018 | 1,141 | 994 | 608,117 | 2,426 | 83 | 612,761 | ||||||
| Established in current period | - | - | 51,716 | 9,856 | - | 61,572 | ||||||
| Newly deconsolidated subsidiaries | - | - | (557,448) | (208) | - | (557,656) | ||||||
| Written off in current period | - | (4) | (901) | (175) | - | (1,080) | ||||||
| Exchange adjustments | - | - | (32,155) | (623) | - | (32,778) | ||||||
| 31 December 2018 | 1,141 | 990 | 69,329 | 11,276 | 83 | 82,819 | ||||||
| Fixed assets, net: | ||||||||||||
| 31 December 2018 | 10,650,161 | 97,847 | 24,447,851 | 742,567 | 44,705 | 35,983,131 | ||||||
| 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 31 December 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 RMB74,264,000. | |||||||||||||||||
| 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) | 4,260,388 | 347,678 | - | 3,912,710 | Within 2019 | ||||||||||||
| Note: As at 31 December 2018, the fixed assets with pending ownership certificates were mostly the buildings of CSOT’s T3 manufacturing base and the Hefei manufacturing base that had been completed and put into use. | |||||||||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||||
| 14 | Construction in Progress | ||||||||||||||||||||
| Project | Budget | Beginning amount | Increase in current period | Reclassified to fixed assets in current period | Reclassified to investment property in current period | Other decreases | Ending amount | Investment as % of budget | Funding source | ||||||||||||
| t6 production line of LCD panel | 46,500,000 | 3,293,073 | 16,486,658 | (403,025) | - | - | 19,376,706 | 42% | Self-owned capital and borrowings | ||||||||||||
| t4 production line of LCD panel | 35,000,000 | 1,291,432 | 11,711,606 | - | - | - | 13,003,038 | 37% | Self-owned capital and borrowings | ||||||||||||
| t3 production line of LCD panel | 16,000,000 | 7,775,047 | 1,453,623 | (6,879,623) | - | (9,266) | 2,339,781 | 15% | Self-owned capital and borrowings | ||||||||||||
| Huizhou modular integration project | 1,755,000 | 591,969 | 2,139,312 | (1,277,942) | - | (147,966) | 1,305,373 | 74% | Self-owned capital and borrowings | ||||||||||||
| Upgrade of the t3 production line of LCD panel | 1,471,000 | 368,399 | 1,118,706 | (416,899) | - | - | 1,070,206 | 73% | Self-owned capital and borrowings | ||||||||||||
| Yunsheng Technology Park in Guangzhou Science City | 1,200,000 | 223,909 | 483,737 | - | (96,462) | - | 611,184 | 51% | Self-owned capital and borrowings | ||||||||||||
| Huizhou whole-widget integration project | 2,465,000 | - | 566,876 | - | - | - | 566,876 | 23% | Self-owned capital and borrowings | ||||||||||||
| Other | Not applicable | 1,231,408 | 1,031,260 | (1,050,113) | (480,882) | (80,251) | 651,422 | Not applicable | Not applicable | ||||||||||||
| 14,775,237 | 34,991,778 | (10,027,602) | (577,344) | (237,483) | 38,924,586 | ||||||||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 15 | 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: | ||||||||||||
| Purchased | 1,110,764 | 300,618 | 292 | 180,651 | 1,592,325 | |||||||
| Reclassified from investment property | - | - | - | - | - | |||||||
| Reclassified from construction in progress | 76,920 | - | - | 19,442 | 96,362 | |||||||
| Reclassified from R&D expense | - | 339,300 | - | 54,944 | 394,244 | |||||||
| Decreases: | ||||||||||||
| Sold or disposed | (1,691,437) | (11,282) | - | (114,302) | (1,817,021) | |||||||
| Reclassified to investment property | (24,916) | - | - | (204,033) | (228,949) | |||||||
| Newly deconsolidated subsidiaries | - | (15,002) | (999) | (17,835) | (33,836) | |||||||
| Exchange adjustments | 11,245 | 24,331 | 16,268 | (57,337) | (5,493) | |||||||
| 31 December 2018 | 4,188,127 | 2,620,190 | 346,160 | 1,042,630 | 8,197,107 | |||||||
| Accumulated amortization： | ||||||||||||
| 1 January 2018 | 367,288 | 657,024 | 131,693 | 625,295 | 1,781,300 | |||||||
| Increases: | ||||||||||||
| Amortization established | 112,389 | 229,175 | 20,536 | 186,321 | 548,421 | |||||||
| Reclassified from investment property | - | - | - | - | - | |||||||
| Decreases: | ||||||||||||
| Sold or disposed | (16,137) | (9,030) | - | (71,183) | (96,350) | |||||||
| Reclassified to investment property | (2,835) | - | - | (2,835) | ||||||||
| Newly deconsolidated subsidiaries | - | (5,867) | (999) | (5,619) | (12,485) | |||||||
| Written down with government subsidies | (6,835) | - | - | (19,155) | (25,990) | |||||||
| Exchange adjustments | 9,464 | 12,213 | 7,855 | (49,354) | (19,822) | |||||||
| 31 December 2018 | 463,334 | 883,515 | 159,085 | 666,305 | 2,172,239 | |||||||
| Intangible assets, net： | ||||||||||||
| 31 December 2018 | 3,727,628 | 1,736,675 | 187,075 | 373,490 | 6,024,868 | |||||||
| 1 January 2018 | 4,338,263 | 1,325,201 | 198,906 | 555,805 | 6,418,175 | |||||||
| Impairment allowances： | ||||||||||||
| 1 January 2018 | - | 2,288 | - | 43,376 | 45,664 | |||||||
| Impairment allowances established | - | 33,169 | - | 10,379 | 43,548 | |||||||
| Written off in the current period | - | (2,288) | - | (8,606) | (10,894) | |||||||
| Exchange adjustments | - | 1,147 | - | (9,470) | (8,323) | |||||||
| 31 December 2018 | - | 34,316 | - | 35,679 | 69,995 | |||||||
| Intangible assets, net： | ||||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 31 December 2018 | 3,727,628 | 1,702,359 | 187,075 | 337,811 | 5,954,873 | |||||
| 1 January 2018 | 4,338,263 | 1,322,913 | 198,906 | 512,429 | 6,372,511 | |||||
| For the collateralized intangible assets, see Note IV, item 39. | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 16 | R&D Expense | |||||||
| The Group’s R&D expense is listed as follows： | ||||||||
| 31 December 2018 | 31 December 2017 | |||||||
| Mobile phones | 150,186 | 297,394 | ||||||
| LCD panels | 846,925 | 526,840 | ||||||
| Other | 14,393 | 48,570 | ||||||
| 1,011,504 | 872,804 | |||||||
| 17 | Goodwill | |||||||
| Investee | Reason | Initial amount | 31 December 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 | - | 320,765 | 257,343 | ||||
| Carrying amount, net | 357,112 | 420,534 | ||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) |
| 17 | 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) |
| 17 | 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 31 December 2018, the Company tested asset groups inclusive of goodwill for impairment. Upon the test, impairment allowances were established in full amount on the goodwill arising from the acquisition of equity interests in JRDC and TCL Medical Radiological Technology. |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||||
| 18 | Long-Term Prepaid Expense | |||||||||||||
| 1 January 2018 | Increase in current period | Newly consolidated subsidiaries | Newly deconsolidated subsidiaries | Amortization in current period | Other | 31 December 2018 | ||||||||
| Improvement expense on leased fixed assets | 853,233 | 659,696 | - | - | (52,636) | - | 1,460,293 | |||||||
| Other | 75,891 | 776,408 | 6,084 | (29,430) | (428,417) | 504 | 401,040 | |||||||
| 929,124 | 1,436,104 | 6,084 | (29,430) | (481,053) | 504 | 1,861,333 | ||||||||
| 19 | 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 | 31 December 2018 | |||
| Unrealized profits within the Group | 250,385 | 8,038 | - | - | 2,703 | 261,126 | ||
| Provisions | 287,495 | (61,819) | - | - | 407 | 226,083 | ||
| Deductible tax losses | 66,610 | 23,220 | 1,307 | 12 | 1,458 | 92,607 | ||
| Inventory valuation allowances | 79,663 | 3,220 | - | 7 | 42 | 82,932 | ||
| Financial instruments at fair value | 72,038 | (41,663) | (12,123) | - | - | 18,252 | ||
| Other | 115,652 | (1,406) | (22) | 1,058 | 1,600 | 116,882 | ||
| 871,843 | (70,410) | (10,838) | 1,077 | 6,210 | 797,882 | |||
| (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 | 31 December 2018 | |||
| Financial instruments at fair value | 17,035 | 13,982 | 6,186 | - | 148 | 37,351 | ||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Government subsidy adjustments | 4,941 | 9,820 | - | - | 337 | 15,098 | |
| Accelerated depreciation of fixed assets | 219,145 | 133,890 | (6,165) | - | 457 | 347,327 | |
| Other | 30,036 | 10,074 | (634) | - | 1,100 | 40,576 | |
| 271,157 | 167,766 | (613) | - | 2,042 | 440,352 |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 20 | Other Non-Current Assets | |||||||
| 1 January 2018 | Increase in current period | decrease in current period | 31 December 2018 | |||||
| Prepayments for equipment and land use rights (note 1) | 2,493,017 | 10,964,319 | (10,808,256) | 2,649,080 | ||||
| Wealth management instruments | 201,080 | - | (199,080) | 2,000 | ||||
| Other | 694,856 | 213,203 | (21,383) | 886,676 | ||||
| - | ||||||||
| 3,388,953 | 11,177,522 | (11,028,719) | 3,537,756 | |||||
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 21 | Short-Term Borrowings | ||||
| Short-Term Borrowings by Category | |||||
| 31 December 2018 | 31 December 2017 | ||||
| Pledge borrowings | - | 1,394,814 | |||
| Unsecured borrowings | 13,240,637 | 14,595,291 | |||
| 13,240,637 | 15,990,105 | ||||
| As at 31 December 2018, pledge short-term borrowings from banks was 0 (31 December 2017: RMB1,394,814,000). | |||||
| As at 31 December 2018, there were no overdue short-term borrowings. | |||||
| 22 | Borrowings from Central Bank | ||||
| As at 31 December 2018, the balance of the borrowings of TCL Finance Co., Ltd., a subsidiary of the Company, from the central bank was RMB231,404,000 (31 December 2017: RMB39,997,000). | |||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 23 | Customer Deposits and Interbank Deposits | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Customer deposits and interbank deposits | 545,053 | 310,875 | |||
| Customer deposits and interbank deposits are deposits absorbed by subsidiary TCL Finance Co., Ltd. from its associates and joint ventures. | |||||
| 24 | Financial Liabilities at Fair Value through Profit or Loss | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Derivative financial liabilities-forward forex contracts | 106,901 | 349,506 | |||
| Derivative financial liabilities –interest rate swap contracts | 105,196 | 93,436 | |||
| 212,097 | 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. | |||||
| 25 | Notes and Accounts Payable | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Notes payable | 3,092,574 | 2,061,471 | |||
| Accounts payable | 23,922,712 | 19,324,249 | |||
| 27,015,286 | 21,385,720 | ||||
| (1) | Notes Payable | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Bank acceptance notes | 2,234,882 | 1,206,258 | |||
| Commercial acceptance notes | 857,692 | 855,213 | |||
| 3,092,574 | 2,061,471 | ||||
| As at 31 December 2018, notes payable to related parties were RMB0 (31 December 2017: RMB14,377,000), accounting for 0.00% 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. | |||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) |
| 25 | Notes and Accounts Payable (Continued) |
| (2) | Accounts Payable |
| Accounts payable are largely for purchases of raw materials and components. As at 31 December 2018, the carrying amount of accounts payable was RMB23,922,712,000 (31 December 2017: RMB19,324,249,000), of which accounts payable with aging over 1 year were RMB262,062,000 (31 December 2017: RMB154,765,000), accounting for approximately 1.10% of the total accounts payable (31 December 2017: 0.80%). | |
| As at 31 December 2018, accounts payable to related parties were RMB689,444,000 (31 December 2017: RMB493,212,000), accounting for 2.88% 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. | |
| 26 | Advances from Customers |
| Advances from customers as at the end of the current period were mostly advances on sales. As at 31 December 2018, there were no large-amount advances from customers with aging over 1 year. | |
| As at 31 December 2018, advances from related parties were RMB7,561,000 (31 December 2017: RMB208,000), accounting for 0.52% 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. |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||
| 27 | Payroll Payable and Long-Term Payroll Payable | ||||||||||
| (1) | Payroll Payable | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Short-term payroll payable (note) | 2,802,947 | 2,207,545 | |||||||||
| Defined contribution plans payable | 16,124 | 15,624 | |||||||||
| Dismissal benefits payable | 72,322 | 69,499 | |||||||||
| 2,891,393 | 2,292,668 | ||||||||||
| (Note) | Short-Term Payroll Payable | ||||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 31 December 2018 | ||||||||
| Wages and salaries, bonuses, allowances and subsidies | 2,057,182 | 9,376,911 | (9,255,236) | 2,178,857 | |||||||
| Social security contributions | 18,465 | 438,897 | (431,600) | 25,762 | |||||||
| Housing funds | 5,615 | 261,193 | (257,962) | 8,846 | |||||||
| Labour union funds | 32,957 | 41,299 | (49,924) | 24,332 | |||||||
| Employee education funds | 71,038 | 43,483 | (48,498) | 66,023 | |||||||
| Other | 22,288 | 592,670 | (115,831) | 499,127 | |||||||
| 2,207,545 | 10,754,453 | (10,159,051) | 2,802,947 | ||||||||
| (2) | Long-Term Payroll Payable | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Supplementary old age security pensions (note) | 24,246 | 25,519 | |||||||||
| Note： | Supplementary old age security pensions payable to retired employees. | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||
| 28 | Taxes Payable | ||||
| 31 December 2018 | 31 December 2017 | ||||
| VAT | 238,049 | 119,646 | |||
| Corporate income tax | 214,140 | 759,743 | |||
| Individual income tax | 34,204 | 117,032 | |||
| City construction tax | 18,504 | 46,861 | |||
| Embankment fees | 51,785 | 51,139 | |||
| Educational surcharges | 13,328 | 35,151 | |||
| Waste electric appliance and electronic product treatment fund | 60,870 | 58,448 | |||
| Other | 85,654 | 85,772 | |||
| 716,534 | 1,273,792 | ||||
| For the standards for provisions for taxes and the applicable tax rates, see Note III. | |||||
| 29 | Other Payables | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Interest payable | 586,819 | 444,846 | |||
| Dividends payable | 22,553 | 47,110 | |||
| Other payables | 22,511,402 | 16,662,797 | |||
| 23,120,774 | 17,154,753 | ||||
| (1) | Interest Payable | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Interest payable on MTN | 74,103 | 60,781 | |||
| Interest payable on corporate bonds | 314,321 | 244,027 | |||
| Interest payable on short-term commercial papers | 67,467 | - | |||
| Interest payable on bank borrowings | 130,928 | 140,038 | |||
| 586,819 | 444,846 | ||||
| (2) | Dividends Payable | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Non-controlling interests | 22,553 | 47,110 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||
| (3) | Other Payables | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Engineering and equipment expense | 10,236,446 | 5,676,045 | ||||
| Ordinary current payables to external entities | 6,705,566 | 5,195,143 | ||||
| Unpaid expense | 4,709,423 | 5,155,195 | ||||
| Payables for land acquisition | 452,000 | - | ||||
| Security deposits | 407,967 | 636,414 | ||||
| Total | 22,511,402 | 16,662,797 | ||||
| As at 31 December 2018, other payables to related parties were RMB615,818,000 (31 December 2017: RMB258,159,000), accounting for 2.74% 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. | ||||||
| 30 | Short-Term Commercial Papers Payable | |||||
| 31 December 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 31 | Current Portion of Non-Current Liabilities | |||||||||||
| Note IV | 31 December 2018 | 31 December 2017 | ||||||||||
| Long-term borrowings (note 1) | 33 | 3,509,915 | 4,930,778 | |||||||||
| Corporate bonds (note 2) | 2,500,000 | - | ||||||||||
| MTN | - | 996,750 | ||||||||||
| 6,009,915 | 5,927,528 | |||||||||||
| Note 1 | The current portion of long-term borrowings was RMB3,509,915,000 of unsecured borrowings. | |||||||||||
| Note 2 | 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 | 31 December 2018 | ||||||||
| China Development Bank | February 2011 | January 2019 | USD | 878,490 | ||||||||
| The Export-Import Bank of China (Shenzhen branch) | November 2017 | November 2019 | RMB | 390,898 | ||||||||
| China Development Bank | March 2015 | May 2019 | USD | 343,160 | ||||||||
| The Export-Import Bank of China (Shenzhen branch) | October 2017 | October 2019 | RMB | 328,274 | ||||||||
| The Export-Import Bank of China (Guangdong branch) | June 2017 | June 2019 | RMB | 300,000 | ||||||||
| 2,240,822 | ||||||||||||
| The interest rates of the current portion of long-term borrowings in the current period ranged from 0% to 4.9% (2017: 0%-4.9%). | ||||||||||||
| 32 | Other Current Liabilities | |||||||||||
| 31 December 2018 | 31 December 2017 | |||||||||||
| After-sales service expense (note) | 1,108,360 | 1,109,100 | ||||||||||
| Financial assets sold under repurchase agreements | 185,364 | 3,206,902 | ||||||||||
| Currency swaps | - | 1,697,240 | ||||||||||
| Other | 50,727 | 61,831 | ||||||||||
| 1,344,451 | 6,075,073 | |||||||||||
| Note | 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||
| 33 | Long-Term Borrowings | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Mortgage borrowings | 29,516,297 | 18,420,345 | |||||||||
| Pledge borrowings | - | 1,026,190 | |||||||||
| Unsecured borrowings | 10,858,541 | 5,767,624 | |||||||||
| 40,374,838 | 25,214,159 | ||||||||||
| Of which：Current portion of long-term borrowings | (3,509,915) | (4,930,778) | |||||||||
| 36,864,923 | 20,283,381 | ||||||||||
| The maturities of the Company’s long-term borrowings vary from 2020 to 2026. | |||||||||||
| As at 31 December 2018, the carrying amount of long-term mortgage borrowings was RMB29,516,297,000, with land use rights, buildings, machinery and equipment and construction in progress equivalent to RMB47,451,204,000 as the collateral. | |||||||||||
| As at 31 December 2018, the carrying amount of long-term pledge borrowings was RMB0 (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 | 31 December 2018 | |||||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | March 2023 | USD | 4,461,080 | |||||||
| China Development Bank (Hubei branch) | April 2016 | April 2024 | USD | 3,932,614 | |||||||
| China Development Bank-a syndicated loan for the t2 project | March 2015 | March 2023 | RMB | 3,513,600 | |||||||
| China Development Bank (Hubei branch) | April 2016 | February 2021 | RMB | 2,310,000 | |||||||
| China Development Bank (Hubei branch) | March 2018 | December 2025 | RMB | 1,870,000 | |||||||
| 16,087,294 | |||||||||||
| The interest rates of the long-term borrowings in the current period ranged from 0% to 5.57% (2017: 0%-5.57%). | |||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||
| 34 | Bonds Payable | |||||
| 31 December 2018 | 31 December 2017 | |||||
| MTN (note 1) | 2,492,714 | 497,250 | ||||
| Corporate bonds (note 2) | 10,492,914 | 9,999,998 | ||||
| 12,985,628 | 10,497,248 | |||||
| Note1 | The Company issued RMB500 million of five-year MTNs on 2 April 2015. | |||||
| Note2 | 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, as well as RMB 2 billion of 2016 five-year corporate bonds (phase 2) on 7 July 2016. The Company issued RMB1 billion of 2017 five-year corporate bonds (phase 1) on 19 April 2017, and RMB3 billion of 2017 five-year corporate bonds (phase 2) on 7 July 2017. The Company issued RMB1 billion of 2018 five-year corporate bonds (phase 1) on 6 June 2018, and RMB2 billion of 2018 five-year corporate bonds (phase 2) on 20 August 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”. | |||||
| 35 | Long-Term Payables | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Technological development fund | 73,000 | 73,000 | ||||
| Other | 902 | 3,309 | ||||
| 73,902 | 76,309 | |||||
| 36 | Deferred Income | |||||
| 31 December 2018 | 31 December 2017 | |||||
| Income-related government subsidies | 2,637,229 | 2,664,877 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||||
| 37 | Share Capital | |||||||||||
| 1 January 2018 | Change in current period | 31 December 2018 | ||||||||||
| (In thousand shares) | Shares | Percentage | New issues | Other | Subtotal | Shares | Percentage | |||||
| 1. Restricted shares | 4,513,615 | 33.40% | 34,677 | (2,722,639) | (2,687,962) | 1,825,653 | 13.47% | |||||
| 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% | 34,393 | (1,478,619) | (1,444,226) | 1,734,838 | 12.80% | |||||
| 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% | 34,393 | 4,950 | 39,343 | 524,080 | 3.87% | |||||
| 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% | - | 2,722,638 | 2,722,638 | 11,723,995 | 86.53% | |||||
| 2.1 RMB-denominated ordinary shares | 9,001,357 | 66.60% | - | 2,722,638 | 2,722,638 | 11,723,995 | 86.53% | |||||
| 2.2 Domestically listed foreign shares | - | - | - | - | - | - | 0.00% | |||||
| 2.3 Overseas listed foreign shares | - | - | - | - | - | - | 0.00% | |||||
| 3. Total shares | 13,514,972 | 100.00% | 34,677 | - | 34,677 | 13,549,649 | 100.00% | |||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||
| 37 | Share Capital (Continued) | |||||||
| Note | As at 31 December 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. | ||||||||
| 38 | Capital Reserves | |||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 31 December 2018 | |||||
| Share premium | 4,901,361 | 28,781 | - | 4,930,142 | ||||
| Other capital reserves | 1,039,110 | 27,489 | - | 1,066,599 | ||||
| 5,940,471 | 56,270 | - | 5,996,741 | |||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 39 | Surplus Reserves | |||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 31 December 2018 | |||||||
| Statutory surplus reserves | 1,311,430 | 689,961 | - | 2,001,391 | ||||||
| Discretionary surplus reserves | 182,870 | - | - | 182,870 | ||||||
| 1,494,300 | 689,961 | - | 2,184,261 | |||||||
| 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. | ||||||||||
| 40 | General Reserve | |||||||||
| 1 January 2018 | Increase in current period | Decrease in current period | 31 December 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. | ||||||||||
| 41 | Retained Earnings | |||||||||
| 2018 | 2017 | |||||||||
| Beginning retained earnings | 8,577,688 | 7,305,927 | ||||||||
| Net profit for current period | 3,468,211 | 2,664,395 | ||||||||
| Decrease in current period | (2,044,926) | (1,392,634) | ||||||||
| Including: Appropriated as surplus reserves | (689,961) | (415,539) | ||||||||
| Distributed to ordinary shareholders as dividends | (1,354,965) | (977,095) | ||||||||
| Ending retained earnings | 10,000,973 | 8,577,688 | ||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | ||||||||||||||||||
| 42 | Operating Revenue and Cost of Sales | ||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | ||||||||||||||||
| Core business | 112,282,593 | 91,888,990 | 110,510,897 | 87,998,223 | |||||||||||||||
| Non-core business | 1,077,483 | 716,599 | 1,066,465 | 665,620 | |||||||||||||||
| 113,360,076 | 92,605,589 | 111,577,362 | 88,663,843 | ||||||||||||||||
| (1) | Core Business by Operating Division | ||||||||||||||||||
| Revenue | Cost of sales | Gross profit | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| CSOT | 27,537,312 | 30,475,095 | 22,461,374 | 21,978,605 | 5,075,938 | 8,496,490 | |||||||||||||
| Highly | 16,536,581 | 15,200,566 | 15,908,300 | 14,631,463 | 628,281 | 569,103 | |||||||||||||
| TCL Electronics | 38,569,125 | 35,304,643 | 32,525,996 | 29,738,937 | 6,043,129 | 5,565,706 | |||||||||||||
| TCL Communication | 12,564,164 | 14,974,745 | 9,251,447 | 11,685,720 | 3,312,717 | 3,289,025 | |||||||||||||
| TCL Household Electric Appliance Group | 17,458,890 | 15,890,528 | 14,744,496 | 13,425,506 | 2,714,394 | 2,465,022 | |||||||||||||
| Tonly Electronics | 6,176,287 | 5,072,398 | 5,428,542 | 4,337,994 | 747,745 | 734,404 | |||||||||||||
| Others and eliminated intercompany accounts | (6,559,766) | (6,407,078) | (8,431,165) | (7,800,002) | 1,871,399 | 1,392,924 | |||||||||||||
| 112,282,593 | 110,510,897 | 91,888,990 | 87,998,223 | 20,393,603 | 22,512,674 | ||||||||||||||
| (2) | Core Business by Operating Segment | |||||||||||
| Revenue | Cost of sales | Gross profit | ||||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||
| Domestic | 56,473,133 | 56,321,586 | 46,197,816 | 45,045,439 | 10,275,317 | 11,276,147 | ||||||
| Overseas | 55,809,460 | 54,189,311 | 45,691,174 | 42,952,784 | 10,118,286 | 11,236,527 | ||||||
| 112,282,593 | 110,510,897 | 91,888,990 | 87,998,223 | 20,393,603 | 22,512,674 | |||||||
| The sales revenue from the top five customers combined was RMB17,833,273,000 and RMB19,789,691,000 respectively for 2018 and 2017, accounting for 15.88% and 17.91% of the core business revenue. | ||||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 43 | Interest Income/(Expense) and Exchange Gain/(Loss) | |||
| 2018 | 2017 | |||
| Interest income | 87,362 | 150,080 | ||
| Interest expense | 72,248 | 79,421 | ||
| Exchange gain/(loss) | (47,714) | (22,303) | ||
| The interest income, interest expense and exchange gain/(loss) above occurred with the Company’s subsidiary TCL Finance Co., Ltd., which are presented separately herein as required for a financial enterprise. | ||||
| 44 | Taxes and Surcharges | |||
| 2018 | 2017 | |||
| City construction and maintenance tax | 132,326 | 123,926 | ||
| Property tax | 109,329 | 71,783 | ||
| Stamp tax | 103,995 | 82,024 | ||
| Educational surcharge | 96,329 | 91,841 | ||
| Land use tax | 15,064 | 19,062 | ||
| Commodity circulation tax (Brazil) | 306 | 93,257 | ||
| Other | 203,913 | 183,449 | ||
| 661,262 | 665,342 | |||
| The applicable tax and surcharge standards are detailed in Note III. | ||||
| 45 | Finance Costs | |||
| 2018 | 2017 | |||
| Interest expense | 1,782,408 | 1,800,106 | ||
| Interest income | (621,949) | (485,953) | ||
| Exchange loss/(income) | (321,412) | 175,896 | ||
| Other | 134,214 | 175,226 | ||
| 973,261 | 1,665,275 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 46 | Asset Impairment Loss | |||
| 2018 | 2017 | |||
| Loss on uncollectible accounts | 217,800 | 183,921 | ||
| Inventory valuation loss | 999,690 | 646,133 | ||
| Loss on impairments of available-for-sale financial assets | 22,548 | 42,189 | ||
| Loss on impairments of fixed assets | 61,572 | 557,087 | ||
| Loss on impairment of long-term equity investments | 31,277 | 17,963 | ||
| Loss on impairments of discounted notes | 7,522 | 9,591 | ||
| Loss on impairment of intangible assets | 43,548 | - | ||
| Loss on impairment of goodwill | 62,823 | 206,615 | ||
| Loss on impairment of other assets | 76,339 | - | ||
| 1,523,119 | 1,663,499 | |||
| 47 | Other Income | |||
| 2018 | 2017 | |||
| R&D subsidies | 1,851,643 | 941,734 | ||
| VAT rebates on software | 367,075 | 438,207 | ||
| 2,218,718 | 1,379,941 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 48 | Return on Investment | |||
| 2018 | 2017 | |||
| Income from disposal of wealth management instruments | 691,917 | 627,338 | ||
| Income from disposal of derivative financial assets/liabilities | (64,779) | (17,067) | ||
| Income from investments in money market funds | - | 18,835 | ||
| Share of current period profit/(loss) of associates | 1,334,263 | 1,089,216 | ||
| Share of current period profit/(loss) of joint ventures | 26,005 | 9,002 | ||
| Net income from disposal of long-term equity investments | (48,708) | 456,012 | ||
| Income from disposal of available-for-sale financial assets | 109,175 | 212,250 | ||
| Income during period of holding available-for-sale financial assets | 119,381 | 43,106 | ||
| 2,167,254 | 2,438,692 | |||
| 49 | Gains/(Losses) on Changes in Fair Value | |||
| 2018 | 2017 | |||
| Financial assets/liabilities at fair value through profit or loss –forward forex contracts | 5,834 | 318,009 | ||
| Financial liabilities at fair value through profit or loss-wealth management instruments | (9,380) | (8,168) | ||
| Financial assets at fair value through profit or loss-interest rate swap contracts | (333) | (412) | ||
| (3,879) | 309,429 | |||
| 50 | Asset Disposal Income | |||
| 2018 | 2017 | |||
| Income from disposal of fixed assets (loss shown in brackets) | 129,282 | (19,849) | ||
| Income from disposal of intangible assets (loss shown in brackets) | (116,206) | 3,895 | ||
| Income from disposal of other non-current assets (loss shown in brackets) | (3,005) | 161 | ||
| 10,071 | (15,793) | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 51 | Non-Operating Income | |||
| 2018 | 2017 | |||
| Gains on retired or damaged non-current assets | 742 | 5,052 | ||
| Including：Gains on retired or damaged fixed assets | 714 | 4,036 | ||
| Gains on retired or damaged intangible assets | - | 490 | ||
| Negative goodwill | - | 191,917 | ||
| Other | 956,067 | 643,282 | ||
| 956,809 | 840,251 | |||
| 52 | Non-Operating Expense | |||
| 2018 | 2017 | |||
| Losses on retired or damaged non-current assets | 8,398 | 24,728 | ||
| Including：Losses on retired or damaged fixed assets | 7,926 | 23,994 | ||
| Losses on retired or damaged intangible assets | 232 | 535 | ||
| Other | 96,233 | 138,707 | ||
| 104,631 | 163,435 | |||
| 53 | Income Tax Expense | |||
| 2018 | 2017 | |||
| Current income tax expense | 641,006 | 1,304,418 | ||
| Deferred income tax expense (note) | 238,176 | (59,380) | ||
| 879,182 | 1,245,038 | |||
| Note | For further information on the deferred income tax expense as recognized in the income statement for the current period, see Note IV, item 19. | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||||||||
| 54 | Other Comprehensive Income | |||||||||
| (1) | Other Comprehensive Income Items, Income Tax Effects and Reclassifications to Profit or Loss | |||||||||
| 2018 | 2017 | |||||||||
| Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | 132,924 | 12,915 | ||||||||
| Gain/(Loss) on available-for-sale financial assets | (576,616) | 200,164 | ||||||||
| Previous other comprehensive income reclassified to profit for current period | (226,840) | (109,299) | ||||||||
| Subtotal | (803,456) | 90,865 | ||||||||
| Current gain/(loss) on cash flow hedges | (45,368) | 416,052 | ||||||||
| Previous other comprehensive income reclassified to profit for current period | (40,471) | 42,409 | ||||||||
| Income tax effects recorded in other comprehensive income for current period | (10,225) | (1,946) | ||||||||
| Subtotal | (96,064) | 456,515 | ||||||||
| Differences arising from translation of foreign currency-denominated financial statements | (896,598) | 1,162,051 | ||||||||
| Total | (1,663,194) | 1,722,346 | ||||||||
| (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 2018 | 132,924 | (750,787) | (89,078) | (686,493) | (1,393,434) | (269,760) | (1,663,194) | |||
| 31 December 2018 | 188,998 | (350,407) | 32,251 | (1,045,004) | (1,174,162) | (221,691) | (1,395,853) | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 55 | Earnings per Share (EPS) | |||
| (1) | Basic EPS | |||
| 2018 | 2017 | |||
| Net profit attributable to owners of the Company as the parent | 3,468,211 | 2,664,395 | ||
| Weighted average outstanding ordinary shares (in thousand shares) | 13,549,649 | 13,514,972 | ||
| Basic EPS (RMB yuan/share) | 0.2566 | 0.2178 | ||
| (2) | Diluted EPS | |||
| 2018 | 2017 | |||
| Net profit attributable to owners of the Company as the parent | 3,468,211 | 2,664,395 | ||
| Diluted weighted average outstanding ordinary shares (in thousand shares) | 13,538,282 | 13,514,972 | ||
| Diluted EPS (RMB yuan/share) | 0.2562 | 0.2178 | ||
| 56 | Cash Generated from Other Operating Activities | |||
| Cash generated from other operating activities in the consolidated cash flow statement was RMB2,141,672,000, which primarily consisted of other current payments received and government subsidies. | ||||
| 57 | Cash Used in Other Operating Activities | |||
| Cash used in other operating activities in the consolidated cash flow statement was RMB15,938,820,000, which primarily consisted of various expenses. | ||||
| 58 | Cash Used in Other Financing Activities | |||
| Cash used in other operating activities in the consolidated cash flow statement was RMB584,974,000. | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IV | Notes to Consolidated Financial Statements (Continued) | |||
| 59 | Net Cash Generated from/Used in Operating Activities | |||
| Reconciliation of Net Profit to Net Cash Generated from/Used in Operating Activities | ||||
| 2018 | 2017 | |||
| Net profit | 4,065,198 | 3,544,702 | ||
| Add：Asset impairment allowance | 1,523,119 | 1,663,499 | ||
| Depreciation of fixed assets | 6,941,175 | 6,474,815 | ||
| Amortization of intangible assets | 548,421 | 453,086 | ||
| Amortization of long-term prepaid expense | 481,053 | 274,967 | ||
| Loss/(Income) from disposal of fixed assets, intangible assets and other long-lived assets | (10,071) | 15,793 | ||
| Loss on retired or damaged fixed assets | 7,656 | 19,676 | ||
| Loss/(Gain) on changes in fair value | 3,879 | (309,429) | ||
| Finance costs | 1,580,958 | 2,077,726 | ||
| Return/(Loss) on investment | (2,167,254) | (2,438,692) | ||
| Increase/(Decrease) in deferred income tax assets | 73,961 | (138,459) | ||
| Increase in deferred income tax liabilities | 169,195 | 41,376 | ||
| Decrease in inventories | (7,941,359) | (767,401) | ||
| Increase/(Decrease) in operating receivables | 1,228,167 | (1,763,676) | ||
| Decrease in operating payables | 898,032 | 2,696,447 | ||
| Other | 3,084,449 | (2,634,815) | ||
| Net cash generated from/used in operating activities | 10,486,579 | 9,209,615 | ||
| 60 | Changes in Cash and Cash Equivalents, Net | |||
| Ending cash and cash equivalents | 25,702,384 | 23,281,169 | ||
| Less: Beginning cash | 23,281,169 | 23,815,656 | ||
| Net increase in cash and cash equivalents | 2,421,215 | (534,487) | ||
| Analysis of ending cash and cash equivalents： | ||||
| Ending monetary capital | 26,801,343 | 27,459,453 | ||
| Less: Ending non-cash equivalents (note) | 1,098,959 | 4,178,284 | ||
| Ending cash and cash equivalents | 25,702,384 | 23,281,169 | ||
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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.-Dec. 2018 | Newly incorporated | RMB 20,000,000 | 100% | |
| TCL Netherlands B.V. | Feb.-Dec. 2018 | Newly incorporated | - | 100% | |
| China Star Optoelectronics Technology (Japan) Co., Ltd. | Mar.- Dec. 2018 | Newly incorporated | JPY 10,000,000 | 100% | |
| Ningbo TCL Equity Investment Co., Ltd. | Jan.-Dec. 2018 | Newly incorporated | RMB 30,000,000 | 99% | |
| Karley Investment Limited | Jan.-Dec. 2018 | Newly incorporated | USD 1 | 100% | |
| Admiralty Harbour Finance Group Limited | Jan.-Dec. 2018 | Newly incorporated | HKD 1 | 100% | |
| Guangxi Tonly Electronics Technology Co., Ltd. | Mar.-Dec. 2018 | Newly incorporated | RMB 50,000,000 | 100% | |
| TCL Air-Conditioner (Jiujiang) Co., Ltd. | Feb.-Dec. 2018 | Newly incorporated | RMB 20,000,000 | 100% | |
| Beijing Xunying Renren Medical Technologies Co., Ltd. | Feb.-Dec. 2018 | Newly incorporated | RMB 50,000,000 | 100% | |
| Shenzhen Xiaoxiang Technology Development Co., Ltd. | Apr.-Dec. 2018 | Newly incorporated | RMB 15,000,000 | 100% | |
| TCL Ventures Inc | Jun.-Dec. 2018 | Newly incorporated | RMB 10,000,000 | 100% | |
| TCL Ventures Fund L.P. | Jun.-Dec. 2018 | Acquired | RMB 1,000,000 | 100% | |
| Peaklink Investments Limited | Jun.-Dec. 2018 | Newly incorporated | RMB 50,000 | 100% | |
| TCL Intelligent Appliances (Vietnam) Co., Ltd. | Jun.-Dec. 2018 | Newly incorporated | VND 11,000,000 | 100% | |
| Guangzhou Cool Friends Network Technology Co., Ltd. | Jul.-Dec. 2018 | Newly incorporated | RMB 100,000,000 | 100% | |
| Shanghai Huiying Medical Technology Co., Ltd. | Jul.-Dec. 2018 | Newly incorporated | RMB1,000,000 | 100% | |
| Getech (Shenzhen) Ltd. | Jul.-Dec. 2018 | Newly incorporated | RMB 10,000,000 | 100% | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| V | Changes in Consolidation Scope | ||||
| 1 | Newly Consolidated Entities for Current Period (Continued) | ||||
| Investee | Consolidated period | Reason for change | Registered capital | The Company’s interest | |
| ARES' WARRIORS LIMITED | Jul.-Dec. 2018 | Newly incorporated | USD1 | 100% | |
| TCL Electronics UK ltd | Jul.-Dec. 2018 | Newly incorporated | GBP 200,000 | 100% | |
| TTE TECHNOLOGY INDIA PRIVATE LIMITED | Aug.-Dec. 2018 | Newly incorporated | INR242,500,001.03 | 100% | |
| Huizhou Shiwei New Technology Co., Ltd. | Aug.-Dec. 2018 | Newly incorporated | RMB 500,000 | 100% | |
| Shenzhen TCL Strategic Equity Investment Fund Partnership (Limited Partnership) | Aug.-Dec. 2018 | Newly incorporated | RMB 50,250,000 | 99.5% | |
| Wuhan TCL Industrial Technology Research Institute, Ltd. | Aug.-Dec. 2018 | Newly incorporated | RMB 20,000 | 100% | |
| Perfect Crown Investment Limited | Sept.-Dec. 2018 | Newly incorporated | USD 50,000 | 100% | |
| Link Win Development Limited | Sept.-Dec. 2018 | Newly incorporated | USD 50,000 | 100% | |
| Getech Ltd. | Sept.-Dec. 2018 | Newly incorporated | RMB 100,000,000 | 76% | |
| Getech (Wuhan) Ltd. | Oct.-Dec. 2018 | Newly incorporated | RMB 10,000,000 | 100% | |
| Guangdong CSOT Industrial Equity Investment Co., Ltd. | Nov.-Dec. 2018 | Newly incorporated | RMB 11,400,000,000 | 82% | |
| TTE ELECTRONICS INDIA PRIVATE LIMITED | Nov.-Dec. 2018 | Newly incorporated | INR5,000,000 | 100% | |
| SKYGO UNIWIN LIMITED | Nov.-Dec. 2018 | Newly incorporated | HKD 50,000 | 100% | |
| PANEL OPTODISPLAY TECHNOLOGY PRIVATE LIMITED | Dec. 2018 | Newly incorporated | INR108,000,000 | 100% | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| V | Changes in Consolidation Scope | ||||
| 1 | Newly Consolidated Entities for Current Period (Continued) | ||||
| Investee | Consolidated period | Reason for change | Registered capital | The Company’s interest | |
| Huizhou Nirike Optoelectronics Co., Ltd. | Dec. 2018 | Newly incorporated | RMB 30,000,000 | 51% | |
| TCL Electronics (Huizhou) Co., Ltd. | Dec. 2018 | Newly incorporated | RMB 1,100,000,000 | 100% | |
| Zhuhai TCL Haixing Real Estate Co., Ltd. | Dec. 2018 | Newly incorporated | RMB 5,000,000 | 100% | |
| Guangdong Regency Optics-Electron Corp. | Dec. 2018 | Acquired | RMB 38,000,000 | 56.39% | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| V | Changes in Consolidation Scope (Continued) | ||||
| 2 | Deconsolidated Entities for Current Period | ||||
| Investee | Date of deconsolidation | Reason for change | Net assets at transfer day/de-registration day | Net profit in consolidated period | |
| TCL Network Equipment (Shenzhen) Co., Ltd. | January 2018 | Dissolved | - | - | |
| Foshan TCL Household Appliances (Nanhai) Co., Ltd. | January 2018 | De-registered | - | (170) | |
| Huizhou TCL Hyperpower Batteries Inc. | February 2018 | Transferred | 69,795 | (6,333) | |
| Qujing Sunpiestore Technology Co., Ltd. | March 2018 | De-registered | - | - | |
| Cheers Overseas Limited | May 2018 | De-registered | - | (16,748) | |
| JRD (Beijing) Technology Co., Ltd. | May 2018 | De-registered | - | (737) | |
| Beijing Luote Pacific Communication Technology Co., Ltd. | January 2018 | De-registered | - | - | |
| Shanke Technology Holdings Limited | February 2018 | Transferred | - | - | |
| TCT Mobile (Singapore) Pte.Ltd | June 2018 | De-registered | - | - | |
| Huizhou Taichuang Investment Development Co., Ltd. | January 2018 | Transferred | 15,439 | - | |
| Xi’an TCL Industrial Technology Research Institute, Ltd. | June 2018 | De-registered | - | (118) | |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | January 2018 | Transferred | 81,121 | 1,727 | |
| Tairui (Hong Kong) Limited | March 2018 | Transferred | (140) | 43 | |
| TCT Mobile - Telefones LTDA | March 2018 | Transferred | 388,871 | (32,719) | |
| Petro AP (Hong Kong) Company Limited | March 2018 | Transferred | 705,477 | (11,565) | |
| PETRO AP S.A. | March 2018 | Transferred | (285,625) | (2,017) | |
| Shenzhen Asic Micro-Electronics Ltd. | July 2018 | De-registered | - | (82) | |
| Shenzhen Hongye Construction & Decoration Co., Ltd. | August 2018 | De-registered | - | 11,143 | |
| Meili Wireless Technology (Shenzhen) Co.,Ltd. | August 2018 | De-registered | - | (10) | |
| TTE (HK) Limited | September 2018 | De-registered | - | - | |
| Tonly Technology Pte. Ltd. | September 2018 | De-registered | - | - | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| TOPAID INVESTMENTS LIMITED | October 2018 | De-registered | - | 3,519 | |
| Dongming Industrial (Huizhou) Co., Ltd. | October 2018 | De-registered | - | - |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| V | Changes in Consolidation Scope (Continued) | ||||
| 2 | Deconsolidated Entities for Current Period (Continued) | ||||
| Investee | Date of deconsolidation | Reason for change | Net assets at transfer day/de-registration day | Net profit in consolidated period | |
| Huizhou TCL Hongchuang Technology Co., Ltd. | October 2018 | De-registered | - | 11 | |
| TCL Healthcare International (Singapore)Co., Ltd. | October 2018 | De-registered | - | - | |
| TCL Zhixian Holding Co., Ltd. | November 2018 | De-registered | - | (2,225) | |
| Prosper Wide Limited | December 2018 | De-registered | - | 10,060 | |
| TCL King Electrical Appliances (Wuxi) Co., Ltd. | December 2018 | De-registered | - | 275 | |
| PT EKSINDO TELAGA SAID DARAT | December 2018 | Transferred | - | - | |
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | September 2018 | Transferred | - | 1,950 | |
| Huarui (Huizhou) Co., Ltd. | September 2018 | Transferred | - | 463 | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | Huarui (Huizhou) Co., Ltd. | PT EKSINDO TELAGA SAID DARAT | |||
| Price for equity interest disposal | 50,821 | 62,498 | 80,515 | 81 | 380,954 | - | 48,189 | - | |||
| % equity interest disposed | 100.00% | 100.00% | 35.00% | 28.35% | 100.00% | 28.35% | 47.00% | 100.00% | |||
| Way of disposal | Transfer | Transfer | Transfer | Transfer | Transfer | Transfer | Transfer | Transfer | |||
| Time of loss of control | Jan. 2018 | Feb. 2018 | Mar. 2018 | Mar. 2018 | Mar. 2018 | Mar. 2018 | Sept. 2018 | Dec. 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 | 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 | (7,419) | 414 | 225 | (94,988) | 10,016 | 775 | (7,997) | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | ||||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | Shenzhen | Manufacturing and marketing | RMB19,822,894,772 | 87.80% | - | Incorporated | |
| TCL Industries Holdings (HK) Limited | Hong Kong | Investment holdings | HKD1,578,942,506 | 100% | - | Incorporated | |
| TCL Electronics Holdings Limited | Cayman Islands | Investment holdings | HKD 2,333,388,113 | - | 52.89% | Incorporated | |
| Guangzhou Digital Lehua Technology Co., Ltd. | Guangzhou | Manufacturing and marketing | RMB120,000,000 | - | 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 | RMB100,000,000 | - | 100% | Incorporated | |
| TCL King Electrical Appliances (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | HKD507,562,684 | - | 98.51% | Incorporated | |
| TCL Overseas Electronics (Huizhou) Ltd. | Huizhou | Manufacturing and marketing | RMB239,330,000 | - | 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 | RMB30,000,000 | - | 100% | Incorporated | |
| TCL Electronics (HK) Limited | Hong Kong | Marketing | HKD 30,000,000 | - | 100% | Incorporated | |
| TCL overseas Marketing (Macao Commercial Offshore) Limited | Macau | Marketing | MOP 100,000 | - | 100% | Incorporated | |
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB100,000,000 | - | 100% | Incorporated | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| TCL New Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB80,000,000 | - | 100% | Incorporated |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 Communication Technology Holdings Limited | Cayman Islands | Investment holdings | HKD1,278,984,117 | - | 51% | Incorporated | |
| TCL Communication Technology (Chengdu) Co., Ltd. | Chengdu | R&D | USD 12,000,000 | - | 100% | Incorporated | |
| 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 | USD199,600,000 | - | 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 Semiconductor Display Technology Co., Ltd. | Shenzhen | Manufacturing and marketing | RMB21,500,000,000 | - | 57.29% | Incorporated | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | RMB30,000,000 | - | 100% | Incorporated | |
| Wuhan China Star Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and marketing | RMB8,760,000,000 | - | 42.12% | Incorporated | |
| Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. | Wuhan | Manufacturing and marketing | RMB18,000,000,000 | - | 25.3% | 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 | HKD208,385,062 | - | 65.05% | Obtained in a business combination not under common control | |
| China Display Optoelectronics Technology (Huizhou) Co., Ltd. | Huizhou | Manufacturing and marketing | RMB231,900,000 | - | 100% | Incorporated | |
| Wuhan China Display Optoelectronics Technology Co., Ltd. | Wuhan | Manufacturing and marketing | RMB500,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Household Electric Appliance Group Co., Ltd. | Huizhou | Investment holdings | RMB448,000,000 | 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 | RMB20,000,000 | - | 100% | Incorporated | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| TCL Home Appliances (Zhongshan) Co., Ltd. | Zhongshan | Manufacturing and marketing | RMB80,000,000 | - | 100% | Incorporated | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | RMB110,878,990 | - | 100% | Incorporated | |
| TCL Home Appliances (Hefei) Co., Ltd. | Hefei | Manufacturing and marketing | RMB300,000,000 | 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 | HKD268,357,390 | - | 48.73% | Incorporated | |
| Shenzhen Tonly Technology Development Co., Ltd. | Shenzhen | R&D | RMB10,000,000 | - | 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 | RMB161,500,000 | - | 100% | Incorporated | |
| Dongguan Pusheng Electronic Technology Co., Ltd. | Dongguan | Manufacturing and marketing | RMB31,700,000 | - | 100% | Obtained in a business combination not under common control | |
| Tonly Electronics Marketing Co., Ltd. | Hong Kong | Marketing | HKD2 | - | 100% | Incorporated | |
| TCL Tonly Technology (Hong Kong) Limited | Hong Kong | Marketing | HKD 50,000,000 | - | 100% | Incorporated | |
| Huizhou TCL Light Electrical Appliances Co., Ltd. | Huizhou | Manufacturing and marketing | RMB70,000,000 | 100% | - | Incorporated | |
| Guangzhou Sky-tech Cloud Info Co., Ltd. | Guangzhou | Information technology | USD200,000,000 | - | 100% | Incorporated | |
| Guangzhou Sky-tech Shichang Information Technology Co., Ltd. | Guangzhou | Information technology | RMB10,000,000 | - | 100% | Incorporated | |
| TCL Healthcare Holding Co., Ltd. | Hong Kong | Investment holdings | USD 74,060,000 | - | 66.67% | Incorporated | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Guangzhou TCL Medical Equipment Co., Ltd. | Guangzhou | Manufacturing and marketing | RMB200,000,000 | - | 100% | Incorporated |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 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 | RMB125,346,000 | 100% | - | Obtained in a business combination not under common control | |
| Huizhou TCL Environmental Resource Co., Ltd. | Huizhou | Investment holdings | RMB300,000,000 | 91% | - | Incorporated | |
| TCL Aobo Environmental Protection and Development Co., Ltd. | Tianjin | Manufacturing and marketing | RMB150,000,000 | - | 60% | Incorporated | |
| Huizhou TCL Environment Technology Co., Ltd. | Huizhou | Manufacturing and marketing | RMB110,000,000 | - | 51% | Obtained in a business combination not under common control | |
| Shantou TCL Deqing Environmental Protection Development Co., Ltd. | Shantou | Manufacturing and marketing | RMB50,000,000 | - | 51% | Incorporated | |
| TCL Educational Web Ltd. | The Virgin Islands | Investment holdings | HKD 42,819,044 | - | 100% | Incorporated | |
| 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 | RMB39,000,000 | - | 80% | Incorporated | |
| GoLive TV Tech Co., Ltd. | Beijing | Information technology | RMB30,834,300 | - | 100% | Incorporated | |
| Quanying Technology (Beijing) Co., Ltd. | Beijing | Information technology | USD 750,000 | - | 100% | Obtained in a business combination not under common control | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Shenzhen TCL Smart Home Technologies Co., Ltd. | Shenzhen | Information technology | RMB135,670,000 | - | 100% | Incorporated | |
| Shenzhen HAWK Internet Co., Ltd. | Shenzhen | Internet services | RMB500,000,000 | 100% | - | Incorporated | |
| Beijing HAWK Cloud Information Technology Co., Ltd. | Beijing | Internet services | RMB20,000,000 | 100% | - | Incorporated | |
| TCL Culture Media (Shenzhen) Co., Ltd. | Shenzhen | Ad planning | RMB550,000,000 | 100% | - | Incorporated |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | ||||||
| Koyoo Online Service CO., Ltd. | Huizhou | After-sales service | RMB35,000,000 | 100% | - | Incorporated | |
| Huizhou Cool Friends Network Technology Co., Ltd. | Huizhou | E-commerce | RMB500,000,000 | 55% | 45% | Incorporated | |
| Highly Information Industry Co., Ltd. | Beijing | Product distribution | RMB132,600,000 | 73.69% | - | Incorporated | |
| Beijing Sunpiestore Technology Co., Ltd. | Beijing | Marketing | RMB20,000,000 | - | 60% | Incorporated | |
| Beijing Lingyun Data Technology Co., Ltd. | Beijing | Marketing | RMB25,000,000 | - | 75% | Incorporated | |
| TCL Finance Holdings Group (Guangzhou) Co., Ltd. | Shenzhen | Finance | RMB1,000,000,000 | 100% | - | Incorporated | |
| TCL Finance Co., Ltd. | Huizhou | Finance | RMB1,500,000,000 | 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 | RMB30,000,000 | - | 100% | Incorporated | |
| TCL Financial Service (Shenzhen) Co., Ltd. | Shenzhen | Financial service | RMB 5,000,000 | - | 100% | Incorporated | |
| TCL Commercial Factoring (Shenzhen) Co., Ltd. | Shenzhen | Commercial factoring | RMB500,000,000 | - | 100% | Incorporated | |
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | Huizhou | Finance | RMB500,000,000 | 80% | - | Acquired | |
| Xinjiang TCL Equity Investment Co., Ltd. | Huizhou | Investment | RMB200,000,000 | 100% | - | Incorporated | |
| Petro AP Limited | The Virgin Islands | Investment holdings | USD 12,000,000 | - | 45.00% | 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 | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | ||||||
| Shenzhen TCL Real Estate Co., Ltd. | Shenzhen | Property management | RMB100,000,000 | - | 70.00% | Incorporated | |
| Shenzhen TCL Lighting Technology Co., Ltd. | Shenzhen | Property management | RMB200,000,000 | - | 60.00% | Incorporated | |
| Winshero Investment Limited | The Virgin Islands | Investment | USD1 | - | 100.00% | Incorporated | |
| Shenzhen TCL Industrial Technology Research Institute, Ltd. | Shenzhen | R&D | RMB50,000,000 | - | 100.00% | Incorporated | |
| TCL Research America Inc. | The U.S. | R&D | USD 10 | - | 100.00% | Incorporated | |
| TCL Industrial Technology Research Institute (Hong Kong) Limited | Hong Kong | R&D | HKD 30,000,000 | - | 100.00% | Incorporated | |
| Thunderbird Technology Holding Limited | Hong Kong | Investment holding | HKD 1 | - | 100.00% | Incorporated | |
| Guangdong TCL Smart Heating & Ventilation Equipment Co., Ltd. | Zhongshan | Manufacturing and marketing | RMB100,000,000 | - | 80.00% | Incorporated | |
| Note 1 | Shenzhen China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as “CSOT”), a subsidiary of the Company, has a 42.12% 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | 47.11% | 372,453 | 226,428 | 3,651,851 | |
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 12.20% | 331,825 | 808,044 | 25,136,970 | |
| Highly Information Industry Co., Ltd. | 26.31% | 49,579 | 15,699 | 231,067 | |
| TCL Communication Technology Holdings Limited | 49.00% | (158,203) | - | (298,676) | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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: | ||||||||||||||
| 31 December 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 | 21,006,560 | 2,850,389 | 23,856,949 | 15,427,269 | 666,735 | 16,094,004 | 18,942,326 | 2,826,681 | 21,769,007 | 14,865,668 | 485,010 | 15,350,678 | ||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 37,654,261 | 78,694,317 | 116,348,578 | 35,014,430 | 33,644,993 | 68,659,423 | 40,956,744 | 48,743,798 | 89,700,542 | 27,187,180 | 20,420,363 | 47,607,543 | ||
| Highly Information Industry Co., Ltd. | 3,937,368 | 20,555 | 3,957,923 | 3,050,859 | 20,000 | 3,070,859 | 2,833,869 | 16,439 | 2,850,308 | 2,096,563 | - | 2,096,563 | ||
| TCL Communication Technology Holdings Limited | 5,159,415 | 2,127,130 | 7,286,545 | 7,446,858 | 501,715 | 7,948,573 | 6,272,916 | 2,772,766 | 9,045,682 | 8,405,363 | 577,965 | 8,983,328 | ||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VI | Interests in Other Entities (Continued) | |||||||||
| 1 | Interests in Subsidiaries (Continued) | |||||||||
| (2) | Subsidiaries with Significant Non-Controlling Interests (Continued) | |||||||||
| The following table presents the key financial information of the aforesaid subsidiaries: | ||||||||||
| 2018 | 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 | 39,098,170 | 809,788 | 640,370 | 1,754,327 | 35,789,070 | 700,682 | 505,815 | 488,491 | ||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 27,666,368 | 2,215,225 | 2,431,383 | 9,025,339 | 30,574,436 | 4,861,842 | 9,886,330 | 12,047,910 | ||
| Highly Information Industry Co., Ltd. | 16,566,993 | 198,616 | 195,939 | (80,265) | 15,234,608 | 194,347 | 202,766 | 253,540 | ||
| TCL Communication Technology Holdings Limited | 13,019,445 | (328,766) | (669,621) | - | 15,343,835 | (2,035,696) | (1,949,883) | (101,822) | ||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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– | ||||||||||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | Shenzhen | Real estate | Yes | - | 30.00% | |||||
| 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 | |||||||||
| 31 December 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 | 1,237,435 | 486,030 | 1,353,831 | 406,296 | ||||||
| Non-current assets | 76,396 | 31,647 | 72,837 | 17,707 | ||||||
| Total assets | 1,313,831 | 517,677 | 1,426,668 | 424,003 | ||||||
| Current liabilities | 1,049,238 | 366,133 | 1,109,984 | 272,522 | ||||||
| Non-current liabilities | 27,385 | - | 28,059 | - | ||||||
| Total liabilities | 1,076,623 | 366,133 | 1,138,043 | 272,522 | ||||||
| Equity attributable to non-controlling interests | 7,236 | - | 5,547 | - | ||||||
| Equity attributable to shareholders of the Company as the parent | 229,972 | 151,544 | 283,078 | 151,482 | ||||||
| Share of equity in proportion to the Company’s interest | 114,986 | 75,772 | 141,539 | 75,741 | ||||||
| Carrying amount of investment in joint venture | 111,062 | 467,888 | 135,342 | 468,286 | ||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VI | Interests in Other Entities (Continued) | |||||||||
| 2 | Interests in Joint Ventures and Associates (Continued) | |||||||||
| (2) | Key Financial Information of Major Joint Ventures (Continued) | |||||||||
| 2018 | 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 | 1,685,044 | 1,621,605 | 1,548,621 | 1,098,516 | ||||||
| Net profit | 55,116 | 63 | 57,076 | 2,932 | ||||||
| Other comprehensive income | - | - | - | - | ||||||
| Total comprehensive income | 55,116 | 63 | 57,076 | 2,932 | ||||||
| Dividends received by the Group from joint venture for current period | - | - | 26,359 | - | ||||||
| (3) | Key Financial Information of Major Associates | |||||||||
| 31 December 2018 | 31 December 2017 | |||||||||
| Bank of Shanghai Co., Ltd. | China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | Bank of Shanghai Co., Ltd. | China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | |||||||
| Current assets | 2,027,772,399 | 2,260,078 | 317,912,792 | 1,531,402 | ||||||
| Non-current assets | - | 474,881 | 1,489,854,146 | 58,292 | ||||||
| Total assets | 2,027,772,399 | 2,734,959 | 1,807,766,938 | 1,589,694 | ||||||
| Current liabilities | 1,866,003,791 | 1,563,520 | 1,489,271,838 | 768,711 | ||||||
| Non-current liabilities | - | - | 171,053,697 | - | ||||||
| Total liabilities | 1,866,003,791 | 1,563,520 | 1,660,325,535 | 768,711 | ||||||
| Equity attributable to non-controlling interests | 492,059 | - | 456,267 | - | ||||||
| Equity attributable to shareholders of the Company as the parent | 161,276,549 | 1,171,439 | 146,985,136 | 820,983 | ||||||
| Share of equity in proportion to the Company’s interest | 8,045,973 | 351,432 | 7,332,984 | 246,295 | ||||||
| Carrying amount of investment in associate | 8,363,564 | 377,122 | 7,630,711 | 271,985 | ||||||
| Note: The financial data of the Bank of Shanghai Co., Ltd. are expressed in thousands of RMB. | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VI | Interests in Other Entities (Continued) | ||||||||
| 2 | Interests in Joint Ventures and Associates (Continued) | ||||||||
| (3) | Key Financial Information of Major Associates (Continued) | ||||||||
| 2018 | 2017 | ||||||||
| Bank of Shanghai Co., Ltd. | China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | Bank of Shanghai Co., Ltd. | China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | ||||||
| Operating revenue | 43,887,822 | 4,784 | 33,124,995 | 3,827 | |||||
| Net profit | 18,067,835 | 350,455 | 15,336,793 | 45,110 | |||||
| Other comprehensive income | 1,180,474 | - | (1,056,287) | - | |||||
| Total comprehensive income | 19,248,309 | 350,455 | 14,280,506 | 45,110 | |||||
| Dividends received by the Group from associate for current period | 194,713 | - | 100,740 | - | |||||
| (4) | Financial Information of Insignificant Joint Ventures and Associates Combined Respectively | ||||||||
| 2018 | 2017 | ||||||||
| Joint ventures： | |||||||||
| Aggregated carrying amount of investments | 41,939 | 44,422 | |||||||
| Aggregate of following items calculated in proportion to the Company’s interest | - | - | |||||||
| Net profit (note) | (1,123) | (13,107) | |||||||
| Other comprehensive income (note) | - | - | |||||||
| Total comprehensive income | (1,123) | (13,107) | |||||||
| Associates： | |||||||||
| Aggregated carrying amount of investments | 15,454,884 | 13,901,499 | |||||||
| Aggregate of following items calculated in proportion to the Company’s interest | |||||||||
| Net profit (note) | 1,187,702 | 1,030,673 | |||||||
| Other comprehensive income (note) | 132,922 | 12,915 | |||||||
| Total comprehensive income | 1,320,624 | 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions |
| 1 | Biggest Shareholder of the Company |
| The Company has no controlling shareholder. | |
| On 19 May 2017, three shareholders of the Company, namely, Mr. Li Dongsheng, Xinjiang Dongxing Huarui Equity Investment Partnership (Limited Partnership) and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) officially became acting-in-concert parties on TCL after signing the Acting-in-Concert Agreement in Relation to TCL Corporation. Up to the agreement signing day, these three acting-in-concert parties combined is the biggest shareholder of TCL, with a total of 1,499,833,496 shares in TCL (an 11.1% stake). With confidence in the Company’s core business and long-term investment value, Mr. Li Dongsheng increased his shareholdings in the Company by a total of 6,600,000 shares on 18 and 19 December 2018, respectively. As at the end of the Reporting Period, Mr. Li Dongsheng and his acting-in-concert parties together held a total of 1,506,433,496 shares (an 11.12% stake) in the Company, and he is the biggest shareholder of the Company. As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total share capital; or, despite the ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to his interest in the limited liability company’s total capital or the joint stock company’s total number of shares. According to the definition above, the Company has no controlling shareholder or actual controller. | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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 | |
| 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 | |
| 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 Very Lighting Technology (Huizhou) Co., Ltd. | Associate | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | Associate |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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： | ||
| Related party | Relationship with the Company | |
| Zijinshan Investment Co., Ltd. | Associate | |
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | Associate | |
| Rechi Precision Mechanism (Huizhou) Co., Ltd. | Associate | |
| Tianjin 712 Communication & Broadcasting Co., Ltd. | Associate | |
| Canyon Circuit Technology (Huizhou) Co., Ltd. | Associate | |
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | Associate | |
| Palm Venture Group | Associate | |
| Amlogic (Shanghai) Inc. | Associate | |
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | Associate | |
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | Associate | |
| Changzhou Chuangdong Fund Management Co., Ltd. | 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 | |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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： | ||
| Related party | Relationship with the Company | |
| 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 | |
| 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 | |
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||||
| 3 | Major Related-Party Transactions | ||||||
| 2018 | As % of total transactions of same kind | 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. | 901,905 | 0.80% | 728,172 | 0.66% | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 550,794 | 0.49% | 261,399 | 0.24% | |||
| Qihang Import&Export Limited | 474,640 | 0.42% | 18,084 | 0.02% | |||
| TCL Sun,Inc. | 273,062 | 0.24% | 264,048 | 0.24% | |||
| CJ Speedex Logistics Co., Ltd. | 179,939 | 0.16% | 18,894 | 0.02% | |||
| TCT Mobile - Telefones LTDA | 103,045 | 0.09% | - | - | |||
| T2Mobile International Limited | 84,163 | 0.07% | 88,896 | 0.08% | |||
| Palm Venture Group | 63,947 | 0.06% | - | - | |||
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | 41,217 | 0.04% | - | - | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 21,130 | 0.02% | 33,177 | 0.03% | |||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 8,653 | 0.01% | 32,452 | 0.03% | |||
| Huizhou Shenghua Industrial Co., Ltd. | 3,031 | 0.00% | 3,324 | 0.00% | |||
| T2Mobile (Shanghai) Limited | 2,665 | 0.00% | 2 | 0.00% | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 1,229 | 0.00% | 6,690 | 0.01% | |||
| Honpe Technology (Shenzhen) Co., Ltd. | 185 | 0.00% | - | - | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 144 | 0.00% | 138 | 0.00% | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 136 | 0.00% | - | - | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 92 | 0.00% | - | - | |||
| Ziteng Intellectual Property Operation (Shenzhen) Co., Ltd. | 61 | 0.00% | - | - | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 41 | 0.00% | 72,514 | 0.07% | |||
| Shenzhen Thunderbird Network Technology Co. | 37 | 0.00% | - | - | |||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | 18 | 0.00% | - | - | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 7 | 0.00% | - | - | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 6 | 0.00% | 6 | 0.00% | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | - | - | 488,606 | 0.44% | |||
| Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. | - | - | 29 | 0.00% | |||
| LG Innotek Huizhou Co., Ltd. | - | - | 54,515 | 0.05% | |||
| 2,710,147 | 2.40% | 2,070,946 | 1.89% | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||||
| 3 | Major Related-Party Transactions | ||||||
| 2018 | As % of total transactions of same kind | 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. | 1,257,707 | 1.37% | 267,910 | 0.30% | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 405,848 | 0.44% | 116,504 | 0.13% | |||
| CJ Speedex Logistics Co., Ltd. | 340,253 | 0.37% | - | - | |||
| Huizhou Shenghua Industrial Co., Ltd. | 329,165 | 0.36% | 95,296 | 0.11% | |||
| TCL Very Lighting Technology (Huizhou) Co., Ltd. | 257,248 | 0.28% | - | - | |||
| Qihang Import&Export Limited | 242,316 | 0.26% | 3,612 | 0.00% | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 236,562 | 0.26% | 165,533 | 0.19% | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 132,862 | 0.14% | 125,585 | 0.14% | |||
| Amlogic Co., Limited | 99,940 | 0.11% | 73,399 | 0.08% | |||
| Guangdong Regency Optics-Electron Corp. | Note b | 56,909 | 0.06% | 70,255 | 0.08% | ||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 44,272 | 0.05% | - | - | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 21,841 | 0.02% | 22,856 | 0.03% | |||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 13,651 | 0.01% | - | - | |||
| Yizheng Zeyu Electric Light Co., Ltd. | 7,371 | 0.01% | - | - | |||
| Tairui (Hong Kong) Limited | 7,337 | 0.01% | - | - | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 3,166 | 0.00% | - | - | |||
| TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. | 3,156 | 0.00% | 7,344 | 0.01% | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 2,457 | 0.00% | - | - | |||
| Rechi Precision Mechanism (Huizhou) Co., Ltd. | 513 | 0.00% | - | - | |||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | - | - | 11,574 | 0.01% | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | Note a | - | - | 133,749 | 0.15% | ||
| Honpe Technology (Shenzhen) Co., Ltd. | - | - | 17,054 | 0.02% | |||
| Shenzhen Thunderbird Network Technology Co. | - | - | 37 | 0.00% | |||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | - | - | 16,114 | 0.02% | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 3,462,574 | 3.75% | 1,126,822 | 1.27% | ||||
| 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. | ||||||
| Noteb | The amount with Guangdong Regency Optics-Electron Corp. in the table above occurred during Jan.-Nov. 2018 as it became a subsidiary of the Company in December 2018. | ||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major Related-Party Transactions (Continued) | ||||
| 2018 | 2017 | ||||
| (3) | Getting Funding from Related Parties | Note 3 | |||
| Shenzhen Thunderbird Network Technology Co. | 436,565 | 776 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 84,760 | 21,920 | |||
| Qihang Import&Export Limited | 64,677 | 8,427 | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 60,085 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 29,876 | 23,616 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 28,907 | 9,894 | |||
| CJ Speedex Logistics Co., Ltd. | 25,138 | 24,890 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 17,346 | 5,106 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 13,177 | 8,950 | |||
| Huizhou Shenghua Industrial Co., Ltd. (the headquarters) | 5,863 | - | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 4,663 | 450 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 4,658 | 2,930 | |||
| Elite Excellent Investments Limited | 2,162 | 2,076 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 1,620 | 207 | |||
| TV University Online Distance Education Technology Co., Ltd. | 1,534 | 3,308 | |||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | 845 | - | |||
| UNION DYNAMIC INVESTMENT LIMITED | 775 | 761 | |||
| Huixing Holdings Limited | 668 | 676 | |||
| MARVEL PARADISE LIMITED | 641 | 627 | |||
| Huan Tech Co., Ltd. | 467 | 462 | |||
| Zijinshan Investment Co., Ltd. | 6 | - | |||
| Huizhou TCL Resource Investment Co., Ltd. | - | 17,899 | |||
| 784,433 | 132,975 | ||||
| (4) | Providing Funding for Related Parties | Note 3 | |||
| Qihang Import&Export Limited | 5,230 | 2,257 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 43,000 | 50,000 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 45,819 | - | |||
| 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 | 74,722 | 104,139 | |||
| Accepting labour service from related parties | 1,297,921 | 45,311 | |||
| (6) | Selling Assets to Related Parties | ||||
| T2Mobile (Shanghai) Limited | - | 1,942 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Shenzhen Thunderbird Information Technology Co., Ltd. | - | 70 |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major Related-Party Transactions (Continued) | ||||
| 2018 | 2017 | ||||
| (7) | Selling Equity Interests to Related Parties | ||||
| Active Industries International Limited | - | 215,744 | |||
| Gaoshengda Holdings (Huizhou) Co., Ltd. | - | 112,940 | |||
| (8) | Service Charges for Related Parties | ||||
| Shenzhen Thunderbird Network Media Co., Ltd. | 29,842 | - | |||
| Huan Tech Co., Ltd. | Note 4 | 1,777 | 125,444 | ||
| (9) | Receiving Interest from or Paying Interest to Related Parties | ||||
| Interest received | 16,421 | 5,354 | |||
| Interest paid | 15,854 | 2,604 | |||
| (10) | Leases | ||||
| Rental income | 45,382 | 27,351 | |||
| Rental expense | 42,889 | 461 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 3 | Major Related-Party Transactions (Continued) | ||||
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties | ||||
| (1) | Accounts Receivable from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 173,651 | 167,674 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 136,049 | 299,867 | |||
| TCL Sun,Inc. | 79,672 | 73,999 | |||
| Qihang Import&Export Limited | 50,223 | 162,963 | |||
| T2Mobile International Limited | 46,362 | 15,365 | |||
| Palm Venture Group | 18,582 | - | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 12,513 | 3,810 | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 3,442 | - | |||
| T2Mobile (Shanghai) Limited | 2,774 | 404 | |||
| TCL Zhiyi Technology (Huizhou) Co., Ltd. | 1,479 | 6,764 | |||
| Huan Tech Co., Ltd. | 430 | 566 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 102 | 98 | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 6 | 241 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | - | 70 | |||
| Good Vision Limited | - | 5,454 | |||
| LG Innotek Huizhou Co., Ltd. | - | 10,705 | |||
| Harvey Holdings Limited | - | 44 | |||
| 525,285 | 748,024 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties | ||||
| (2) | Accounts Payable to Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Huizhou Gaoshengda Technology Co., Ltd. | 359,391 | 322,688 | |||
| Huizhou Shenghua Industrial Co., Ltd. (the headquarters) | 91,947 | - | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 91,306 | 74,446 | |||
| CJ Speedex Logistics Co., Ltd. | 81,585 | 28,085 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 24,711 | 162 | |||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 14,839 | - | |||
| Amlogic Co., Limited | 14,057 | 7,163 | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 8,576 | 19,487 | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 2,879 | - | |||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 136 | 136 | |||
| Harvey Holdings Limited | 12 | - | |||
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | 5 | - | |||
| Guangdong Regency Optics-Electron Corp. | - | 19,441 | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | - | 18,790 | |||
| 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 | |||
| 689,444 | 493,212 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (3) | Other Receivables from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 236,839 | - | |||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | 147,037 | - | |||
| Active Industries International Limited | 88,882 | 161,795 | |||
| Harvey Holdings Limited | 33,372 | 42,353 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 22,092 | 49,500 | |||
| KAI OS TECHNOLOGIES INC | 12,816 | 43,988 | |||
| Palm Venture Group | 12,266 | - | |||
| Wuhan Lesheng Times Trading Co., Ltd. | 8,000 | - | |||
| Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) | 7,845 | - | |||
| Good Vision Limited | 5,722 | - | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 3,358 | - | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 1,849 | 36 | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 800 | 800 | |||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | 341 | - | |||
| Nanjing Zijin Chuangdong Investment Partnership (Limited Partnership) | 296 | - | |||
| Shenzhen Thunderbird Network Media Co., Ltd. | 251 | 695 | |||
| Wealthy Way Group Limited | 78 | - | |||
| Huan Tech Co., Ltd. | 22 | 3 | |||
| Shenzhen Changcheng Commercial Technology Property Service Co., Ltd. | 21 | - | |||
| Xionghua Investment Co., Ltd. | 17 | 17 | |||
| LG Innotek Huizhou Co., Ltd. | 10 | - | |||
| T2Mobile International Limited | 6 | - | |||
| Changzhou Chuangdong Fund Management Co., Ltd. | 2 | - | |||
| Shenzhen Jiutian Matrix Investment Management Co., Ltd. | 2 | - | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | - | 40,300 | |||
| Beijing WeMed Medical Equipment Co., Ltd. | - | 3,777 | |||
| T2Mobile (Shanghai) Limited | - | 3,676 | |||
| Shanghai Chuangxiang Venture Capital Partnership (Limited Partnership) | - | 2,180 | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | - | 762 | |||
| Shenzhen Thunderbird Network Technology Co. | - | 545 | |||
| Guangdong Regency Optics-Electron Corp. | - | 184 | |||
| Tianjin 712 Communication & Broadcasting Co., Ltd. | - | 6 | |||
| 581,924 | 350,617 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (4) | Other Payables to Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Shenzhen Thunderbird Network Technology Co. | 409,752 | - | |||
| CJ Speedex Logistics Co., Ltd. | 87,330 | 68,590 | |||
| Qihang Import&Export Limited | 59,446 | 6,170 | |||
| Opta Corporation | 34,190 | 32,610 | |||
| Good Vision Limited | 5,708 | 5,440 | |||
| AGC New Electronic Display Glass (Shenzhen) Co., Ltd. | 4,659 | - | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 3,282 | 300 | |||
| Elite Excellent Investments Limited | 2,162 | 2,076 | |||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 2,035 | 255 | |||
| Jinpe Technology (HK) Co., Limited | 1,976 | 1,396 | |||
| Wuhan Shangde Plastics Technology Co., Ltd. | 784 | 784 | |||
| Shenzhen Yisheng Kangyun Technology Development Co., Ltd. | 777 | 786 | |||
| UNION DYNAMIC INVESTMENT LIMITED | 775 | 761 | |||
| Huizhou Shenghua Industrial Co., Ltd. (the headquarters) | 718 | - | |||
| Huixing Holdings Limited | 668 | 676 | |||
| MARVEL PARADISE LIMITED | 641 | 627 | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 241 | - | |||
| T2Mobile Limited | 176 | 166 | |||
| Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. | 172 | 74 | |||
| TV University Online Distance Education Technology Co., Ltd. | 139 | 141 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 93 | 93 | |||
| Urumqi Dongpeng Chuangdong Equity Investment Management Partnership (Limited Partnership) | 42 | 35 | |||
| Honpe Technology (Shenzhen) Co., Ltd. | 27 | 238 | |||
| T2Mobile (Shanghai) Limited | 14 | - | |||
| Zijinshan Investment Co., Ltd. | 6 | - | |||
| Gaoweida Digital Technology (Huizhou) Co., Ltd. | 2 | 2 | |||
| Huizhou TCL Real Estate Development Co., Ltd. | 2 | 2,385 | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 1 | - | |||
| China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. | - | 109,754 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | - | 17,359 | |||
| Huizhou TCL Resource Investment Co., Ltd. | - | 6,267 | |||
| Wealthy Way Group Limited | - | 986 | |||
| TCL Mingchuang (Xi’an) Co., Ltd. | - | 161 | |||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (4) | Other Payables to Related Parties (Continued) | ||||
| 31 December 2018 | 31 December 2017 | ||||
| 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 | |||
| Xizang Dongwei Investment Management Center (Limited Partnership) | - | 3 | |||
| LG Innotek Huizhou Co., Ltd. | - | 2 | |||
| 615,818 | 258,159 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (5) | Notes Receivable from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | - | 607 | |||
| (6) | Notes Payable to Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 14,377 | |||
| (7) | Prepayments to Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| CJ Speedex Logistics Co., Ltd. | 1,758 | 1,760 | |||
| T2Mobile (Shanghai) Limited | 1,130 | 1,784 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 29 | - | |||
| Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. | 18 | 2,128 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 22,693 | |||
| Honpe Technology (Shenzhen) Co., Ltd. | - | 1,056 | |||
| 2,935 | 29,421 | ||||
| (8) | Advances from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Qihang Import&Export Limited | 7,526 | - | |||
| Palm Venture Group | 25 | - | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 10 | 7 | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | - | 131 | |||
| TCL Sun,Inc. | - | 69 | |||
| CJ Speedex Logistics Co., Ltd. | - | 1 | |||
| 7,561 | 208 | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| VII | Related Parties and Related-Party Transactions (Continued) | ||||
| 4 | Amounts Due from and to Related Parties (Continued) | ||||
| (9) | Dividends Receivable from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| TV University Online Distance Education Technology Co., Ltd. | 47,656 | - | |||
| Saipwell TCL Electronics Industrial Technology Co., Ltd. | 92 | 88 | |||
| Xinjiang Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) | - | 11,015 | |||
| 47,748 | 11,103 | ||||
| (10) | Interest Receivable from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Harvey Holdings Limited | 4,953 | 2,411 | |||
| Qihang Import&Export Limited | 78 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 71 | 77 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 34 | - | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 18 | - | |||
| 5,154 | 2,488 | ||||
| (11) | Deposits from Related Parties | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Shenzhen Thunderbird Network Media Co., Ltd. | 84,760 | 21,920 | |||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | 60,085 | - | |||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 29,876 | 23,616 | |||
| Huizhou Gaoshengda Technology Co., Ltd. | 28,907 | 9,402 | |||
| Shenzhen Thunderbird Network Technology Co. | 26,565 | 776 | |||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 17,346 | 5,106 | |||
| CJ Speedex Logistics Co., Ltd. | 14,465 | 23,724 | |||
| Beijing National Center for Open & Distance Education Co., Ltd. | 13,032 | 8,809 | |||
| Huizhou Shenghua Industrial Co., Ltd. (the headquarters) | 5,144 | - | |||
| Shenzhen Thunderbird Information Technology Co., Ltd. | 4,663 | 450 | |||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 4,565 | 2,837 | |||
| Shenzhen Thunderbird Smart Products Co., Ltd. | 1,620 | 207 | |||
| TV University Online Distance Education Technology Co., Ltd. | 1,394 | 3,167 | |||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | 845 | 17,178 | |||
| Huan Tech Co., Ltd. | 467 | 462 | |||
| 293,734 | 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| 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： | |||||
| 31 December 2018 | 31 December 2017 | ||||
| Year 1 | 101,775 | 61,451 | |||
| Year 2 | 87,092 | 52,297 | |||
| Year 3 | 42,858 | 43,809 | |||
| Thereafter | 67,742 | 52,515 | |||
| 299,467 | 210,072 | ||||
| 2 | Capital Commitments | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Under contractual obligations but not provided for | Note 1 | 8,609,241 | 8,322,088 | ||
| Approved by Board but not under contractual obligations | Note 2 | 8,627 | - | ||
| 8,617,868 | 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 31 December 2018, except for the disclosures above, there were no other major commitments that are required to be disclosed. | |||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| IX | Contingencies |
| Guarantees Provided for External Parties | |
| The guarantee amount for associates’ bank loans, commercial drafts, letters of credit, etc. is RMB1,112,147,000. | |
| As at 31 December 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 31 December 2018. | |
| X | Events after Balance Sheet Date |
| 1 | On 7 December 2018, the Proposal on the Major Asset Sale & Related-Party Transaction Report (Draft) and Its Summary, as well as the related proposals were approved at the 13th Meeting of the 6th Board. According to the proposals, the Company would sell for a total amount of RMB4.76 billion certain direct equity holdings (the 100.00% interest of TCL Industries Holdings (HK) Limited, the 100.00% interest of TCL Technology Park Co., Ltd., the 100.00% interest of Huizhou TCL Household Electric Appliance Group Co., Ltd., the 100.00% interest of TCL Home Appliances (HeFei) Co., Ltd., the 100.00% interest of Koyoo Online Service Co., Ltd., a 55.00% interest in Huizhou Cool Friends Network Technology Co., Ltd. (“Cool Friends Technology”) and a 36.00% interest in Getech Ltd.), as well as certain indirect equity holdings (a 75.00% interest in JDH Information Tech (Zhuhai) Co., Ltd. held via the wholly-owned subsidiary TCL Finance Holdings Group (Guangzhou) Co., Ltd. and a 1.50% interest in Cool Friends Technology held via Huizhou TCL Light Electrical Appliances Co., Ltd.). Up to the balance sheet date of the 2018 annual financial statements, the said restructuring plan was yet to be approved by a general meeting. On 7 January 2019, the Proposal on the Major Asset Sale & Related-Party Transaction Report (Draft) and Its Summary, as well as the related proposals were approved at the First Extraordinary General Meeting of 2019. And the restructuring was implemented as resolved. Up to 12 March 2019, the transaction parties had completed the approval/filing procedures on the target assets with the development and reform commission and the commercial administration; and the Company had received from the transaction counterparty the first payment of RMB1.428 billion as per the Agreement on the Sale of Major Assets. |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| X | Events after Balance Sheet Date (Continued) |
| 2 | As per the 2018 Annual Profit Distribution Plan approved at the 15th Meeting of the 6th Board on 19 March 2019, based on the share capital of 13,402,888,507 shares on 19 March 2019 that are eligible for profit distribution (the total share capital of 13,549,648,507 shares minus the 146,760,000 shares in the Company’s special securities account for repurchase that are not eligible for profit distribution), a cash dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to the shareholders, totaling RMB1,340,288,851. Meanwhile, there will be no bonus issue from either profit or capital reserves for the year under review. |
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | Notes to Financial Statements of the Company as Parent | ||||||||||||
| 1 | Accounts Receivable | ||||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||||
| Notes receivable | 20,497 | 23,031 | |||||||||||
| Accounts receivable | 194,959 | 340,349 | |||||||||||
| 215,456 | 363,380 | ||||||||||||
| (1) | Accounts Receivable by Aging: | ||||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||||
| Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | ||||||
| Within 1 year | 194,959 | 100.00% | - | 0.00% | 340,349 | 100.00% | - | 0.00% | |||||
| As at 31 December 2018, there were no such accounts receivable from any shareholder with a 5% or greater voting stock. | |||||||||||||
| 2 | Other Receivables | ||||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||||
| Interest receivable | 212,200 | 103,343 | |||||||||||
| Dividends receivable | 4,211,824 | 3,458,737 | |||||||||||
| Other receivables | 18,773,353 | 13,640,338 | |||||||||||
| 215,456 | 363,380 | ||||||||||||
| (1) | Other Receivables by Aging: | ||||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||||
| Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | Amount | Percentage | Allowance for doubtful accounts | Allowance ratio | ||||||
| Within 1 year | 11,333,489 | 78.62% | - | 0.00% | 8,840,984 | 86.97% | - | 0.00% | |||||
| 1-2 years | 2,506,592 | 17.39% | - | 0.00% | 1,006,354 | 9.90% | - | 0.00% | |||||
| 2-3 years | 316,189 | 2.19% | - | 0.00% | 110,185 | 1.08% | - | 0.00% | |||||
| Over 3 years | 258,932 | 1.80% | 65,873 | 25.44% | 209,295 | 2.05% | 88,560 | 42.31% | |||||
| 14,415,202 | 100.00% | 65,873 | 0.46% | 10,166,818 | 100.00% | 88,560 | 0.87% | ||||||
| The outstanding other receivables were mostly current accounts with related parties. As at 31 December 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 RMB6,598,913,000 (31 December 2017: | |||||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | Notes to Financial Statements of the Company as Parent (Continued) | ||||||||||
| 3 | Available-for-Sale Financial Assets | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Available-for-sale equity instruments——at fair value (note) | 40,736 | 79,824 | |||||||||
| Available-for-sale equity instruments——at cost | 1,144,694 | 1,144,694 | |||||||||
| 1,185,430 | 1,224,518 | ||||||||||
| Note | Available-for-Sale Equity Instruments——at Fair Value | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Cost | 40,000 | 40,000 | |||||||||
| Changes in fair value | 736 | 39,824 | |||||||||
| 40,736 | 79,824 | ||||||||||
| 4 | Long-Term Equity Investments | ||||||||||
| 31 December 2018 | 31 December 2017 | ||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | ||||||
| Long-term equity investments at equity method | 9,545,711 | 9,545,711 | 8,889,011 | - | 8,889,011 | ||||||
| Of which：Associates (1) | 9,526,568 | 9,526,568 | 8,866,421 | - | 8,866,421 | ||||||
| Joint ventures (1) | 19,143 | 19,143 | 22,590 | - | 22,590 | ||||||
| Subsidiaries (2) | 32,257,739 | 32,257,739 | 26,094,554 | - | 26,094,554 | ||||||
| 41,803,450 | 41,803,450 | 34,983,565 | - | 34,983,565 | |||||||
| As at 31 December 2018, there were no significant restrictions on sale of the long-term equity investments or collection of the investment income. | |||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | 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 | 31 December 2018 | ||||||||||
| LG Innotek Huizhou Co., Ltd. | 81,554 | - | 10,445 | - | - | (10,135) | - | 2,038 | 83,902 | |||||||||
| Huan Tech Co., Ltd. | 158,042 | (1,190) | 22,322 | - | - | - | - | 1,190 | 180,364 | |||||||||
| TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. | 2,291 | - | (268) | - | - | - | - | - | 2,023 | |||||||||
| Gaoshengda Holdings (Huizhou) Co., Ltd. | 49,733 | (61,051) | 11,318 | - | - | - | - | - | - | |||||||||
| Waterway Construction Investment Co., Ltd. | 48,081 | - | (223) | - | - | - | - | (47,858) | - | |||||||||
| Canyon Circuit Technology (Huizhou) Co., Ltd. | - | - | 3,286 | - | - | - | - | (3,286) | - | |||||||||
| Huizhou TCL Resource Investment Co., Ltd. | 65,532 | (269,500) | (65,533) | - | - | - | - | 269,501 | - | |||||||||
| Zhongxin Financial Capital Management Company Limited | - | - | - | - | - | - | - | - | ||||||||||
| Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. | 53,012 | - | (7,978) | - | - | - | - | - | 45,034 | |||||||||
| Bank of Shanghai Co., Ltd. | 7,630,711 | - | 899,703 | 27,863 | - | (194,713) | - | - | 8,363,564 | |||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | 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 | 31 December 2018 | ||||||||||
| Hubei Consumer Finance Company | 120,343 | - | 19,943 | - | - | - | - | - | 140,286 | |||||||||
| Shenzhen Tixiang Enterprise Management Technology Co., Ltd. | - | 2,000 | 13 | - | - | - | - | - | 2,013 | |||||||||
| Taiyang Electro-optic (Huizhou) Co., Ltd. | 12,921 | (11,627) | 1,508 | - | - | - | - | (2,802) | - | |||||||||
| Shenzhen Jucai Supply Chain Technology Co., Ltd. | 6,000 | - | (842) | - | - | - | - | - | 5,158 | |||||||||
| Huizhou TCL Taidong Shihua Investment Co., Ltd. | 22,590 | - | (3,447) | - | - | - | - | - | 19,143 | |||||||||
| Other | 638,201 | (1,200) | 41,474 | - | - | - | - | 25,749 | 704,224 | |||||||||
| 8,889,011 | (342,568) | 931,721 | 27,863 | - | (204,848) | - | 244,532 | 9,545,711 | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | 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 | 31 December 2018 | |||||
| TCL Industries Holdings (HK) Limited | 100.00% | 1,344,042 | - | (16,160) | 1,327,882 | ||||
| Shenzhen China Star Optoelectronics Technology Co., Ltd. | 87.80% | 18,727,299 | 3,168,399 | - | 21,895,698 | ||||
| Huizhou TCL Household Electric Appliance Group Co., Ltd. | 100.00% | 448,000 | - | - | 448,000 | ||||
| TCL Commercial Information Technology (Huizhou) Co., Ltd. | - | 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 | ||||
| Wuhan TCL Industrial Technology Research Institute, Ltd. | 100.00% | - | 20,000 | - | 20,000 | ||||
| Huizhou TCL Environmental Resource Co., Ltd. | 100.00% | 300,000 | - | (27,000) | 273,000 | ||||
| Highly Information Industry Co., Ltd. | 73.69% | 107,296 | - | - | 107,296 | ||||
| Shenzhen TCL Industrial Technology Research Institute, Ltd. | - | 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 | - | - | 1,256,003 | ||||
| Shenzhen TCL High-Tech Development Co., Ltd. | 100.00% | 20,000 | - | - | 20,000 | ||||
| Huizhou TCL Hongchuang Technology Co., Ltd. | - | 5,000 | - | (5,000) | - | ||||
| Huizhou TCL International Hotels Limited | - | 49,993 | - | (49,993) | - | ||||
| Guangzhou TCL Science and Technology Development Co., Ltd. | - | 230,000 | - | (230,000) | - | ||||
| Xi’an TCL Industrial Technology Research Institute Co., Ltd. | - | 150,000 | - | (150,000) | - | ||||
| TCL Home Appliances (Hefei) Co., Ltd. | 100.00% | 300,000 | - | - | 300,000 | ||||
| Huizhou TCL Light Electrical Appliances Co., Ltd. | 100.00% | 40,037 | 30,000 | - | 70,037 | ||||
| Huarui (Huizhou) Co., Ltd. | - | 51,000 | - | (51,000) | - | ||||
| Shenzhen TCL Real Estate Co., Ltd. | - | 212,958 | - | (212,958) | - | ||||
| Huizhou Taichuang Investment Development Co., Ltd. | - | 50,000 | - | (50,000) | - | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| Guangzhou Xitian Technology Information Co., Ltd. | - | 15,000 | - | (15,000) | - | ||||
| Guangzhou Yunsheng Tianji Technology Co., Ltd. | - | 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 | 487,000 | - | 772,000 | ||||
| Guangzhou TCL Internet Microcredit Co., Ltd. | 100.00% | 200,000 | 300,000 | - | 500,000 | ||||
| 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. | 79.84% | 135,624 | 270,000 | - | 405,624 |
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | Notes to Financial Statements of the Company as Parent (Continued) | |||||||||
| 4 | Long-Term Equity Investments (Continued) | |||||||||
| (2) | Subsidiaries (Continued) | |||||||||
| Voting right percentage | 1 January 2018 | Increase in current period | Decrease in current period | 31 December 2018 | ||||||
| Shenzhen HAWK Cloud Information Technology Co., Ltd. | 100.00% | 20,000 | - | - | 20,000 | |||||
| TCL Technology Park (Huizhou) Co., Ltd. | 100.00% | 285,324 | 340,000 | - | 625,324 | |||||
| TCL Technology Park Co., Ltd. | 100.00% | 150,000 | 2,413,631 | - | 2,563,631 | |||||
| Huizhou Sailuote Communication Co., Ltd. | 100.00% | 82,500 | - | - | 82,500 | |||||
| TCL Medical Radiological Technology (Beijing) Co., Ltd. | 100.00% | 58,497 | - | - | 58,497 | |||||
| Beijing Zhiqujia Technology Co., Ltd. | 100.00% | - | - | - | - | |||||
| Shenzhen TCL Strategic Equity Investment Fund Partnership (Limited Partnership) | 100.00% | - | 20,000 | - | 20,000 | |||||
| Getech Ltd. | 100.00% | - | 36,000 | - | 36,000 | |||||
| Equity incentives of subsidiaries | - | - | 27,766 | - | 27,766 | |||||
| 26,094,554 | 7,186,636 | (1,023,451) | 32,257,739 | |||||||
| For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note V. | ||||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | Notes to Financial Statements of the Company as Parent (Continued) | |||||||
| 5 | Operating Revenue and Cost of Sales | |||||||
| 2018 | 2017 | |||||||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |||||
| Core business | 1,255,708 | 1,247,345 | 1,190,871 | 1,176,703 | ||||
| Non-core business | 800,242 | 607,278 | 420,638 | 346,587 | ||||
| 2,055,950 | 1,854,623 | 1,611,509 | 1,523,290 | |||||
| 6 | Return on Investment | |||||||
| 2018 | 2017 | |||||||
| Income from disposal of wealth management instruments | 412,800 | 390,041 | ||||||
| Dividends from subsidiaries | 5,384,073 | 3,675,589 | ||||||
| Share of profit of associates for current period | 935,168 | 604,150 | ||||||
| Share of profit of joint ventures for current period | (3,447) | (4,278) | ||||||
| Income from holding available-for-sale financial assets | 31,282 | 21,147 | ||||||
| Net income from disposal of long-term investments | 366,517 | 9,862 | ||||||
| 7,126,393 | 4,696,511 | |||||||
| As at 31 December 2018, there were no significant restrictions on the collection of the investment income. | ||||||||
| 7 | Net Cash Generated from/Used in Operating Activities | |||||||
| Net cash used in operating activities in the cash flow statement of the Company as the parent was RMB 4,899,956,000. | ||||||||
| 8 | Cash and Cash Equivalents, End of the Period | |||||||
| Cash and cash equivalents, end of the period of the Company as the parent was RMB 1,328,679,000. | ||||||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XI | Notes to Financial Statements of the Company as Parent (Continued) | |||
| 9 | Contingent Liabilities | |||
| The following table presents the contingent liabilities with no provisions in the financial statements as at 31 December 2018： | ||||
| 31 December 2018 | 31 December 2017 | |||
| Guarantees for commercial drafts and letters of guarantee of subsidiaries | 25,162,875 | 13,870,451 | ||
| Guarantees for bank loans of subsidiaries | 23,408,535 | 11,580,724 | ||
| Guarantees for bank loans and commercial drafts of joint ventures and associates | 1,112,147 | 667,610 | ||
| As at 31 December 2018, the Company estimated that the guarantees above were not likely to cause a material loss. | ||||
| XII | Comparative Data | |||
| Certain comparative data have been reclassified to comply with the presentation of the current period. | ||||
| TCL Corporation | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XIII | Non-Recurring Gains and Losses | |||
| 2018 | 2017 | |||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | (58,305) | 420,543 | ||
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | ||||
| 1,377,065 | 1,159,442 | |||
| 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 | - | 191,917 | ||
| 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) | ||||
| 162,729 | (207,276) | |||
| Non-operating income and expense other than the above | 871,847 | 504,575 | ||
| Income tax effects | (191,942) | (310,502) | ||
| Non-controlling interests effects | (280,578) | (284,952) | ||
| Non-recurring gains and losses attributable to ordinary shareholders of the Company as parent | 1,880,816 | 1,473,747 | ||
| 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 | TCL集团股份有限公司 |
| Notes to Financial Statements | 财务报表附注 |
| (For the period from 1 January 2018 to 31 December 2018) | 2018年1月1日至12月31日 |
| (The amounts in tables are expressed in thousands of RMB) | 人民币千元 |
| XIV | 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 | 3,468,207 | 11.98% | 0.2566 | 0.2562 | ||||
| Net profit attributable to ordinary shareholders of the Company before non-recurring gains and losses | 1,587,391 | 5.48% | 0.1175 | 0.1173 | ||||
| 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. | ||||||||
TCL Corporation19 March 2019
The financial statements and the notes thereto from page 1 to page 177 are signed by:
| Legal representative: | Li Dongsheng | Person-in-charge of financial affairs： | Du Juan | Person-in-charge of the financial department: | Xi Wenbo |