TCL Technology Group Corporation Annual Report 2019
TCL 科技集团股份有限公司
TCL Technology Group Corporation
ANNUAL REPORT 2019
31 March 2020
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TCL Technology Group Corporation Annual Report 2019
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 ............................................................................................................51
Part VI Share Changes and Shareholder Information .........................................................84
Part VII Directors, Supervisors, Senior Management and Staff .......................................93
Part VIII Corporate Governance ..............................................................................................113
Part IX Corporate Bonds .......................................................................................................... 129
Part X Financial Report............................................................................................................. 138
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TCL Technology Group Corporation Annual Report 2019
Achieve Global Leadership by Innovation and Efficiency
Chairman’s Statement
Dear shareholders, customers and partners,
In 2019, as supply surged and growth of demand slowed down, the global semi-conductor
display industry entered a cold winter with great earning pressure. To survive and also
prepare for the growth of next cycle, became the top priority for every company. Under the
severe and complicated business environment, the Company persues its global leadership
steadily, completed the significant assets spin-off, and continuously improved the efficiency
by organization reformation, so as to promote steady growth in all the businesses.
Business Review for 2019
In 2019, on the reference basis (the consolidation scope after the Restructuring), the
Company recorded revenue of RMB57.27 billion, up by 18.7% year -on-year; and a net
profit of RMB3.56 billion, up by 0.53% yearly, of which the net profit attributable to the listed
company’s shareholders was RMB2.62 billion, down by 17.0% yearly.
The Company completes the significant assets spin-off, optimizes the capital structure and
improves the operating efficiency. The net profit per capita increases to RMB74,000 from
RMB38,600. And the debt/asset ratio decreases to 61.3% from 68.4%, while the net cash
flow generated from operating activities amounted to RMB11.49 billion, both improve the
sustainable potential greatly. The Company keeps on its strategy as global industry leader,
concentrates on the long-term strategic industries which are high-tech and capital intensive.
Enhance the ecological development of the industry, improves the ability of industrial
finance and facilitates the industrial development after the restructuring. The clear
development strategy of the Company will fully release the growth potential and the positive
effect of the restructuring.
The panel price continuously drops to the historic low ebb with industry losses arising and
the market further concentrated to the leading enterprises last year. TCL CSOT keeps the
best efficiency and profitability of the industry by the business process improvement,
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TCL Technology Group Corporation Annual Report 2019
ultimate cost reduction and the better product and customer mix. For the year under review,
TCL CSOT recorded revenue of RMB33.99 billion, up by 22.9% year-on-year, and a net
profit of RMB964 million, down by 58.5% year-on-year. The t6 (G11) plant in Shenzhen
reached designed production at the end of the 2019 and the t4 (flexible AMOLED) plant
achieved mass production at the same time. The two plants will support the profit growth of
this year firmly.
TCL CSOT continuously invests in R&D and actively develops the next generation of
display technologies, from materials to manufacturing (including ink-jet printing flexible
OLED). The PCT patent applications of the Company increases 2,752 in the current period
and the acumulated patent applications reaches to 11,261.
The industrial finance business develops steadily and optimizes the capital operating
system, improves the asset efficiency and risk control capability. The supply chain finance
enables the industry development and meet the capital needs. TCL venture capital focuses
on the opportunities of cutting-edge technology; Admiralty Harbour Capital starts its
offshore operates smoothly. For the Reporting Period, the industrial finance, investment
and venture capital recorded a net profit of RMB999 million totally; Earning from the
significant assets spin-off was RMB1.15 billion. The other businesses of the Company were
stable and recorded revenue of RMB22.9 billion and a net profit of RMB320 million.
Earnings from finance and other businesses stabilize the performance of the Company
during the winter of the panel cycle.
2020 business planning
Since the end of last year, the price of the big-size panel has risen as business environment
improved. I think that the global demand-supply relationship of the industry has not
changed fundamentally, but the long-term prospect of the industry is bright with very
large market potential. The human-computer interaction technology creates the new
application scenarios and expand the new market in demand of commercial display; Global
industry reshuffling are accelerated and the industry concentrate to the leading companies.
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TCL Technology Group Corporation Annual Report 2019
The environment of the global display industry will be better comparing last year and the
enterprise with edge will have more opportunities.
TCL CSOT focuses on "improving efficiency and profitability", compares with all the
benchmarks thoroughly, finds the root reason, responses quickly, builds up the core
competencies, continues to reduce the cost, improves operation quality as well as actively
expands new markets and customers to achieve business success. The Company will
maintain the max production of the t6 plant, further expand the capacity of t3 plant, reach
mass production of the Phase I of the t4 plant, complete Phase II and Phase III construction
of t4, and start the t7 (G11) operation at the end of the year. Continuously max the existing
capacity and complete full sales. Keep on capacity expansion and support the revenue
growth this year. The Company shall dedicated to the video interaction and commercial
display technology, improve LTPS and flexible AM-OLED technology, further optimize
product and customer structure, continuously strengthen the market position and enhance
earnings. We are confident that TCL CSOT's revenue growth and profitability will exceed
last year.
The industrial finance & investment business will support the semiconductor display from
many aspects, further improve the financial status and asset turnover rate, as well as lower
financial costs. TCL Capital will focus on investment from upstream to downstream of
industrial chain and strategic technology, and support ecological perfection of the
semi-conductor display. The industrial finance & investment business will continuously
contribute to steady growth in earnings and improve the capability to counter the cycle.
The Company will continue to spin off the other business and keep an eye on the M&A
opportunity in the semiconductor. Focus on the semi-conductor display business and
shareholder return.
The Company has an active expectation this year. Although the COVID-19 epidemic
causes greater uncertainty to the global economy, we have confidence to overcome
difficulties and challenges to further expand the market share and achieve a strong revenue
growth.
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TCL Technology Group Corporation Annual Report 2019
Medium-and-long term strategic outlook
China is the world's largest exporter. And the manufacture is the root of China's economic
competitiveness, but the high-end manufacturing ability is insufficient with low value added.
China need to upgrade its manufacturer, enhance their high-end manufacturing and
technology ability. The long-term strategy of the company is centralizing the resource
and building up global leadership in strategic industries of technology-intensive and
capital-intensive. On the other hand, the Company enhances the industrial financial
capacity, develops the industrial finance business creatively, facilitates industrial
development, establishes the efficient industrial financial business system and
increases the investment income also.
The semi-conductor display technology and material is one of the most important core and
basic industries with great market prospects of which China has a global advantage.
I think there is an opportunity for China's display industry to become the global leader in
big-size products, but in medium and small size will face the challenges from Korean
companies. China and Korea will become the final leading forces of global display industry.
As the competition of the display industry will be heated, the business volatility will be lower
finally. The leading player's advantages will be significant and the return will increase
gradually. The Company will increase the scale and efficiency of the industry by interior and
exterior development, increase R&D investment, establish the technical barrier, break
through the next generation of display technology, deploy the global industrial chain layout
actively and serve global customers, establish the ecological system of the industry,
improve efficiency and become a global leader in the display industry.
With the advantages from technology, management and capital, the Company is looking for
opportunity to create a new field in the capital-intensive and technology-intensive strategic
industries to support long-term sustainable growth of the enterprise. The potential target will
be the leading enterprise of the industry, which has consistent business logic and has
synergy to increase earnings.
The Company always values shareholder returns and stabilizes the cash dividends. The
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TCL Technology Group Corporation Annual Report 2019
Board of Directors proposes the dividend of RMB0.1 per share for the year under review.
The Company has distributed cash dividends for 9 consecutive years since 2012 and
cumulative dividends will exceed RMB8.1 billion. The Group will continuously execute the
existing dividend policy and actively pay back the shareholders. In 2019, the Company
cumulatively repurchased 565 million shares with total RMB1.934 billion of repurchase to
enhance shareholder return.
I have personally increased my shares in the Company by a total of 175 million shares
since Dec. 2018 and I have confidence in the long-term value of the Company.
Finally, on behalf of the Board of Directors, I’d like to take this opportunity to express my
gratitude for the trusts of all our shareholders, for the support from all our partners and
users, as well as for the hard work of management team and staff!
Li Dongsheng
31 March 2020
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TCL Technology Group Corporation Annual Report 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 Technology Group
Corporation (hereinafter referred to as the “Company”) hereby guarantee the
factuality, accuracy and completeness of the contents of this Report and its
summary, and shall be jointly and severally liable for any misrepresentations,
misleading statements or material omissions therein.
All the Company’s directors have attended the Board meeting for the review of this
Report and its summary. And all the Company’s supervisors have attended the
meeting of the Supervisory Committee for the review of this Report and its summary.
The Board has approved a final dividend plan for the ordinary shareholders as
follows: based on the share capital of 13,000,372,307 shares on 27 March 2020 that
are eligible for profit distribution (the total share capital of 13,528,438,719 shares
minus the 528,066,412 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
RMB1,300,037,230.70. The retained earnings of RMB6,819,795,641.3 will carry
forward for future distribution. Meanwhile, there will be no bonus issue from either
profit or capital reserves for the year under review.
Mr. Li Dongsheng, the Chairman of the Board, Ms. Du Juan, the person-in-charge of
financial affairs (Chief Financial Officer), and Mr. Xi Wenbo, the person-in-charge of
the financial department, hereby guarantee that the financial statements carried in
this Report are factual, accurate and complete.
This Report and its summary have been prepared in both Chinese and English.
Should there be any discrepancies or misunderstandings between the two versions,
the Chinese versions shall prevail.
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TCL Technology Group Corporation Annual Report 2019
Definitions
Term Definition
The “Company”, the “Group”, “TCL”, “TCL TCL Technology Group Corporation and its consolidated subsidiaries,
Tech.” or “we” except where the context otherwise requires
The “Reporting Period” The period from 1 January 2019 to 31 December 2019
The reference basis or the reference report The financial reports of the Reporting Period and last year that the
Company prepares based on the consolidation scope after the
restructuring, i.e. exclusive of the effects of the restructured businesses
TCL Industries TCL Industries Holdings Inc.
The “Major Asset Restructuring”, The major asset restructuring approved at the 13 th meeting of the 6 th
“Restructuring” or “significant assets spin-off” Board of Directors on 7 December and the First Extraordinary General
Meeting of 2019 on 7 January 2019 and settled in April 2019
TCL CSOT TCL China Star Optoelectronics Technology Co., Ltd.
Wuhan CSOT Wuhan China Star Optoelectronics Technology Co., Ltd.
Guangdong Juhua Guangdong Juhua Printed Display Technology Co., Ltd.
China Ray Guangzhou China Ray Optoelectronic Materials Co., Ltd.
Highly Highly Information Industry Co., L td., a majority-owned subsidiary of the
Company listed on the National Equities Exchange and Quotations
(stock code: 835281)
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)
Bank of Shanghai Bank of Shanghai Co., Ltd. (stock code: 601229.SH), with the Company
holding a 5.14% 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 20.06% interest as its second largest shareholder
Admiralty Harbour Capital Admiralty Harbour Capital Limited
Huizhou Environmental Resource Huizhou TCL Environmental Resource Co., Ltd.
TCL Industries (HK) TCL Industries Holdings (HK) Limited
TCL Household Electric Appliance Huizhou TCL Household Electric Appliance Group Co., Ltd.
Open Edutainment Beijing National Center for Open & Distance Education Co., Ltd.
Hefei Home Appliances TCL Home Appliances (HeFei) Co., Ltd.
Cool Friends Technology Huizhou Cool Friends Network Technology Co., Ltd.
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TCL Technology Group Corporation Annual Report 2019
Koyoo Online Service Koyoo Online Service Co., Ltd.
TCL Technology Park TCL Technology Park Co., Ltd.
JDH JDH Information Tech (Zhuhai) Co., Ltd.
HAWK Internet Shenzhen HAWK Internet Co., Ltd.
Getech Getech Ltd.
t1 project The generation 8.5 (or G8.5) TFT-LCD production line of TCL CSOT
t2 project The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor)
production line of TCL CSOT
t3 project The generation 6 (or G6) LTPS-LCD panel production line of TCL CSOT
t4 project The generation 6 (or G6) flexible LTPS-AMOLED panel production line
of TCL CSOT
t6 project The generation 11 (or G11) new TFT-LCD production line of TCL CSOT
t7 project The generation 11 (or G11) new ultra-high-definition (UHD) TFT-LCD
and AMOLED production line of TCL CSOT
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TCL Technology Group Corporation Annual Report 2019
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name TCL Corp. Stock code 000100
Changed stock name1 TCL Tech.
Stock exchange for listing Shenzhen Stock Exchange
Company name in Chinese TCL 科技集团股份有限公司
Abbr. TCL 科技
Company name in English TCL Technology Group Corporation
Abbr. TCL TECH.
Legal representative Li Dongsheng
TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District,
Registered address
Huizhou City, Guangdong Province, China
Zip code 516001
TCL Tech Building, 17 Huifeng Third Road, Zhongkai Hi-Tech Development District,
Office address
Huizhou City, Guangdong Province, China
Zip code 516001
Company website http://www.tcl.com
Email address ir@tcl.com
Fortune China 500
Top 60 Chinese Corporate Citizens 2019
Responsibility Value Innovation Enterprise Award
Outstanding Enterprise in Social Responsibility granted by China Corporate Social
Responsibility Annual Conference
Company honors Investors’ Favorite Award granted by Cailianpress.com
Best Board Award granted by the 15 th Gold Round Table
Sustainability Innovation Award granted by the Caijing magazine
Best A-stock Company in Investment Value Award granted by Gelonghui
Best China Listed Companies in Corporate Social Responsibility Award 2018 granted by
JRJ.com
1
In order to reflect its business scope and operations in an accurate and clear manner, as well as its strategic positioning
to become a globally leading technology company, the Company has changed, upon approval, its Chinese name from
“TCL 集团股份有限公司” to “TCL 科技集团股份有限公司”, English name from “TCL Corporation” to “TCL Technology
Group Corporation”, stock name in Chinese from “TCL 集团” to “TCL 科技”, stock name in English from “TCL” to “TCL
Tech.”, and the abbreviation of its English name from “TCL Corp.” to “TCL Tech.”. The stock code of “000100” remains
unchanged.
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TCL Technology Group Corporation Annual Report 2019
II Contact Information
Board Secretary
Name Liao Qian
19/F, Tower B, TCL Building, Gaoxin South First Road,
Address 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 Securities Times, China Securities Journal, Shanghai Securities
information disclosure News and Securities Daily
Website designated by CSRC for publication of
http://www.cninfo.com.cn
this Report
Place where this Report is lodged Board Office of TCL Technology Group Corporation
IV Change to Company Registered Information
Unified social credit code 91441300195971850Y
Change to principal activity of the
Not applicable
Company since going public (if any)
Every change of controlling
Not applicable
shareholder since incorporation (if any)
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 Qiu Junzhou and Jiang Xianmin
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable ■ Not applicable
The independent financial advisor hired by the Company to e xercise constant supervision over the Company in the
Reporting Period:
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TCL Technology Group Corporation Annual Report 2019
Name Office address Representative Period of supervision
CITIC Securities Tower, No.
From 1 March 2019 to 31
CITIC Securities Co., Ltd. 8 Zhongxin 3rd Road, Futian Huang Biao and Liu Jian
December 2020
District, Shenzhen, China
VI Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes ■ No
2019-over-2018
Item 2019 2018 2017
change (%)
Revenue (RMB)Note 74,933,085,688 113,360,075,545 -33.90 111,577,362,348
EBITDA 14,224,327,742 14,096,523,261 0.91 13,395,054,317
Net profit (RMB) 3,657,735,320 4,065,194,164 -10.02 3,544,702,884
Net profit attributable to the listed
2,617,766,571 3,468,207,407 -24.52 2,664,396,006
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 235,119,321 1,587,391,372 -85.19 1,190,649,328
non-recurring gains and losses (RMB)
Basic earnings per share (RMB/share) 0.1986 0.2566 -22.60 0.2178
Diluted earnings per share (RMB/share) 0.1935 0.2562 -24.47 0.2178
Weighted average return on equity (%) 9.09 11.98 -2.89 10.86
Net cash generated from/used in
11,490,096,405 10,486,580,443 9.57 9,209,615,123
operating activities (RMB)
Net cash per share generated
from/used in operating activities 0.8493 0.7739 9.74 0.6814
(RMB/share)
Change of 31
December
31 December 31 December 31 December
2019 over 31
2019 2018 2017
December
2018 (%)
Total assets (RMB) 164,844,884,926 192,763,941,739 -14.48 160,293,985,835
Total owners’ equity (R MB) 63,883,145,340 60,871,672,647 4.95 54,142,938,886
Owners’ equity attributable to the listed
30,111,946,237 30,494,364,951 -1.25 29,747,067,178
company’s shareholders (RMB)
Share capital (share) 13,528,438,719 13,549,648,507 -0.16 13,514,972,063
Equity per share attributable to the listed
2.2258 2.2506 -1.1 2.2010
company’s shareholders (RMB/share)
Note: In April 2019, the Company completed the handover of major assets in a restructuring. Therefore, the revenue data
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TCL Technology Group Corporation Annual Report 2019
of 2019 and 2018 are not comparable as the former only includes the January-March 2019 revenue generated by the
restrcucted assets, while the latter comprises the January-December 2018 such revenue. Adopting the same reference
basis, revenue would be up by 18.72% in 2019 compared to 2018.
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
13,528,438,719
before the disclosure of this Report (share)
Fully diluted earnings per share based on the latest total
0.1935
share capital above (RMB/share)
Note: After the restructuring, the Company has shifted to a globally leading intelligent technology company concentrating
on the semi-conductor display and materials business. It is the key operational philosophy and mission of the Company to
create value for and grow with the shareholders. In order to effecti vely protect shareholders’ interests and enhance
shareholder value, the Company carried out a share repurchase programme during the Reporting Period , which has been
completed on 10 January 2020. Cumulatively, 565,333,922 shares (or 4.18% of the total share capital) have been
repurchased, of which 3,875,613 shares have been used for the 2019 Restricted Stock Incentive Plan and the Second
Global Innovation Partner Plan, 33,391,897 shares have been used for the Second Global Partner Plan, and the rest will
be kept as treasury shares and used for employee stock ownership plans, equity incentive plans or convertible bonds.
The key financial information of 2019 and 2018 exclusive of the effects of the restructuring businesses (reference data
presented based on the consolidation scope after the restructuring) is as follows:
2019-over-2018
Item 2019 2018
change (%)
Revenue (RMB) 57,270,940,685 48,240,376,808 18.72
Net profit (RMB) 3,564,025,084 3,545,237,938 0.53
Net profit attributable to the listed
2,617,778,635 3,153,044,155 -16.98
company’s shareholders (RMB)
Basic earnings per share
0.1986 0.2333 -14.87
(RMB/share)
Diluted earnings per share
0.1935 0.2329 -16.92
(RMB/share)
Weighted average return on
9.09 9.74 -0.65
equity (%)
Note: The data of 2019 and 2018 in the table above exclude the results of the restructuring businesses.
Indicate whether there are any corporate bonds.
■ Yes □ No
Indicate whether the Company has seen a deficit for the past two years.
□ Yes ■ No □ Not applicable
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TCL Technology Group Corporation Annual Report 2019
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and
Foreign Accounting Standards
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
Revenue 29,600,956,875 14,180,656,860 15,036,052,357 16,115,419,596
Net profit 1,006,077,530 1,730,985,146 750,351,631 170,321,013
Net profit attributable to the
779,088,389 1,313,260,303 484,981,289 40,436,590
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders
560,950,806 -310,483,676 252,929,177 -268,276,986
before non-recurring gains and
losses
Net cash generated from/used
2,243,903,241 3,906,918,581 1,458,452,367 3,880,822,216
in operating activities
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.
□ Yes ■ No
IX Non-Recurring Gains and Losses
Unit: RMB
Item 2019 2018 2017 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance 1,419,020,969 -58,305,452 420,543,530 Not applicable
write-offs)
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TCL Technology Group Corporation Annual Report 2019
Government subsidies charged to current
profit or loss (exclusive of government
subsidies given in the Company’s ordinary
1,170,648,526 1,377,064,570 1,159,442,050 Not applicable
course of business at fixed quotas or
amounts as per the government’s uniform
standards)
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 - - 191,917,137 Not applicable
enjoyable fair value of identifiable net
assets of investees when making
investments
Gain or loss on fair-value changes in
trading financial assets and liabilities &
investment income from disposal of
trading financial assets and liabilities and
186,339,457 162,729,226 -207,276,526 Not applicable
available-for-sale financial assets
(exclusive of effective portion of hedges
that arise in the Company’s ordinary
course of business)
Non-operating income and expense other
77,285,628 871,846,769 504,575,138 Not applicable
than the above
Less: Corporate income tax 165,397,982 191,940,974 310,502,820 Not applicable
Non-controlling interests (net of tax) 305,249,348 280,578,104 284,951,831 Not applicable
Total 2,382,647,250 1,880,816,035 1,473,746,678 Not applicable
Explanation of why the Company reclassifies as recurrent a non -recurring gain/loss item defined or listed in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-Recurring Gain/Loss Items:
□ Applicable ■ Not applicable
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TCL Technology Group Corporation Annual Report 2019
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
During the Reporting Period, the Company primarily consists of the following three
business segments: the semi-conductor display and materials business, the industrial
finance & investment business and the other businesses.
Semi-conductor TCL CSOT China Ray
display & materials Wuhan CSOT Juhua
Industrial finance &
TCL Tech. TCL Financial TCL Capital
investment
Other Highly Open Edutainment
Adhere to the strategy of becoming a global leading intelligent technology company, the
Company will continue to strengthen manufacturing competitiveness, focus on developing
high-tech strategic businesses, and establish global cutting edges in related businesses.
The industrial finance business will facilitate the development of the Company’s
manufacturing business and increase returns on investments. Capitalizing on the industrial
superiority, the Company will invest in enterprises from the ecological industry chain for
better comprehensive advantage. In the future, under the principle of concentrating on the
core business and maximizing shareholder value, the Company will continue to promote
M&As in the other businesses, so as to achieve higher returns on assets.
For further information about the Company’s businesses, please refer to “Part IV Director’s
Report” herein.
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TCL Technology Group Corporation Annual Report 2019
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major assets Significant change
Primarily driven by the transfer of the construction in progress of the t2, t3, t4 and
Fixed assets
t6 production lines to fixed assets
Intangible assets Primarily driven by spinoffs in the Restructuring
2. Major Assets Overseas
□ Applicable ■ Not applicable
III Core Competitiveness Analysis
Through the development of 39 years, TCL always adheres to the manufacturing industry,
change and innovate continuously. In the latest reform, the Company spins off the
intelligent terminal and supporting businesses, reconfirmed the technology-centric business
direction at the beginning of 2019. Furthermore, for the purpose of accurately reflecting the
strategic position-“To become a globally leading technology company”, the Company
renamed to "TCL Tech." and achieved a new round of industrial upgrading and
technological transformation with expansion and improvement on the core business.
Scale and eff iciency are prominent advantages and the compet it iveness
was intensified during the industry trough
TCL CSOT has a rapid growth of production capacity and continuously increases the
market shares, sales through the max capacity of t1 and t2, as well as t6 G11 reaches
design capacity in advance. Wuhan CSOT t3 LTPS product sales ranks second in the world,
t4 flexible AMOLED begins mass production and supply, t7 G11 project construction is in
smooth progress and TCL module and whole-widget integrated project Phase I reaches
target output. Now, the position of TCL CSOT big-size panel is stable in the market
segment: The shipment of 55-inch TV panels ranks first, the shipment of 65-inch TV panels
ranks third, the shipment of 86-inch TV panels in the white board field ranks second and the
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TCL Technology Group Corporation Annual Report 2019
shipment of 32-inch TV panels in the e-sports field ranks third. The overall advantages of
TCL CSOT stand among the forefront of the global display panel industry.
Since operation, TCL CSOT improves the efficiency of capacity expansion by efficient
production line layout, gives full play to Gemini plant layout assembly effect and industrial
chain integration advantage and drives extreme efficiency cost measures with efficiency
and benefit indicators continuing to be the global industry leader. With the industry reshuffle
intensified and concentration increased, TCL Technology can successfully cross the bottom
of the cycle based on scale and efficiency advantages and will benefit from the next
industry boom cycle with sufficient resources.
Strengthening the ability of technology research and development and
product innovation and beforehand layout of the next generat ion display
technology and materials
In 2019, the Company's R&D investment reached RMB5.46 billion. TCL Tech. submitted
2,752 PCT international patent applications with accumulative applications of 11,261
covering countries and regions such as Europe, America and Korea. The number of the
Company’s patents in the quantum dot material ranks second in the world.
After 10 years development, TCL has entered the stage of advanced technology
development from technological catch-up in the semi-conductor display field. For the large
size panel, the Company continuously optimizes the HVA technology. The Mini-LED
backlight product released for the first time in the world in 2019 and the first glass substrate
integration LED scheme have better performance in comparison to existing PCB integrated
solution. 8K and Touch technologies will be continuously used for high-end products. In the
small and medium size panel, the Company expands LTPS-LCD application scenarios with
technology, including LCD special-shaped screen, blind hole technology, small and medium
size vehicle display screen/notebook computer technology, and focuses on developing
such high-end application technologies as AMOLED foldable screen and under-panel
camera shooting. Several flexible folding products of TCL CSOT will mass produce and
sale in 2020 and the key technology of multifold and curl type is steadily developed.
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TCL Technology Group Corporation Annual Report 2019
The Company takes the lead in layout of new technologies and materials and aims to lead
the next generation display technology. In the printing OLED field, "National Printed and
Flexible Display Innovation Center" of Guangdong Juhua subordinate to the Company is
the only national innovation center in the display field in China which has built the world's
most advanced printing display public platform; The mass supply of China Ray OLED
materials has started. The QLED R&D team of the Company has solved key problems
(such as life of red and green materials), the performance of the blue -light emitting material
independently researched and developed is world-leading and related research
achievements have been published on the international scientific journal-Nature
Communication.
Taking the advantages of industrial f inance business and providing the
performance contribution with sustained and stable g rowth
After the Restructuring, the Company keeps the industrial finance and investment venture
capital, mainly by TCL Financial and TCL Capital. TCL Financial improves asset turnover
and enhances the efficiency and advantage of the main business by continuously
optimizing the asset allocation efficiency. TCL Capital focuses on investment of upstream
and downstream chain and strategic technology industry and supports ecological perfection
of the semi-conductor display. Many invested projects have synergy with the main business
with cutting-edge technology and applications jointly developed. The industrial finance &
investment and venture capital business will support industrial chain layout by the
Company in the main business and the stable profit contribution brought also makes for
offsetting the down cycle of the semi-conductor display sector.
Stable strategic customer relationship and efficient order management and
production scheduling capability
The Company is the largest big-size panel supplier among top six TV manufacturers of
China. And with a good strategic partnership with first-tier brand customers (including
Samsung, TCL Electronics and MI); For the fast growth of commercial display, the
Company works with main manufacturers (such as CVTE and Hitevision) smoothly. The G6
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TCL Technology Group Corporation Annual Report 2019
LTPS t3 plant accounts for 80% shipment of first-tier mobile phone brand customers.
Folding and hole digging screens from G6 AMOLED t4 plant mass produced and shipped
to Lenovo and MI, as well as successively cooperate with BYD and Lenovo about vehicle
display screen, notebook computer, etc. in medium size.
The long-term partnership between TCL CSOT and customers is conductive to the
Company's product market share growth and cost control, remarkably strengthens the
predictability regarding relation between supply and demand in the market and production
scheduling for orders and makes for the Company optimizing capacity utilization and
product structure which is the base of the Company management hard power.
Strengthening team building, upgrading TCL's corporate culture and
revitaliz ing the vita lity of organiz ational compet ition
Team organization ability and enterprise cultural construction are important for achieving
strategic objectives. The Company will further enhance the vitality of the organization and
team, vigorously carry forward the TCL corporate culture and comprehensively enhance
the advantages of the enterprise.
The Company will continue to improve the governance structure and establish a
"customer-centric" process-driven organization to adapt to the rapid growth of industrial
scale in the future and ensure long-term stable and healthy development of the Company,
continuously promote the upgrading of corporate culture, build consensus by systematically
sorting out corporate vision, mission, core values as well as carry out the vision of " to
become a global leading intelligent technology company", the core value of "accountability,
innovation and excellence" and the realization of "global leadership" in every aspect of daily
work.
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TCL Technology Group Corporation Annual Report 2019
Part IV Directors’ Report
I Overview
In the Reporting Period, as supply surged and growth in demand slowed down, the global
semi-conductor display industry entered a cold winter with tremendous pressure on
earnings. In face of the tough internal and external challenges, the Company completed t he
Major Asset Restructuring, deepened reform and transformation, spun off the intelligent
terminal and supporting business and shifted from diverse operations to specialized
operations. Focusing on the core business of semi-conductor display and materials
and other strategic industries which are high-tech, capital intensive and of a long
cycle, the Company aims to become a global leading intelligent technology group.
In 2019, on the reference basis (the consolidation scope after the Restructuring), the
Company recorded revenue of RMB57.27 billion, up by 18.7% year-on-year; and a profit of
RMB3.56 billion, up by 0.53% year-on year, of which the net profit attributable to the listed
company’s shareholders was RMB2.62 billion, down by 17.0% year-on-year. Under the
complicated operating environment, the Company adhered to the strategy of being globally
leading, deepened reform, and improved quality and efficiency, so as to steady growth in all
the businesses. Prices of the major products have stabilized and begin to rebound at the
end of the Reporting Period. As the supply and demand situation improves in the industry,
the Company expects a strong earning.
The Company takes management ability and efficiency as the operation foundation,
deepens organization reform, restructures business process, and improves
operation quality, with the capital structure and operation efficiency improved
constantly. By optimizing process and management, the expense ratio has decreased to
12.5% from 16.8%. Per capita net profit of the Company is improved from RMB38,600 to
RMB74,000, the debt/assets ratio has dropped from 68.4% to 61.3%, and the net cash flow
generated from operating activities is RMB11.49 billion. At the bottom of industry cycle, the
risk resistance and sustainable development ability of the Company is further enhanced.
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TCL Technology Group Corporation Annual Report 2019
The Company takes technological innovation as the main driving force, constantly
optimizes products and technologies, and actively deploys next generation display
technology and new materials. In LCD field, the Company focuses on developing 4K/8K
and Touch products. The Company launched the first Mini-LED BLU on Glass in the world,
which will establish its competition advantage in high end market of household large screen
and commercial display field. In the field of AMOLED, the Company developed the
laminated technology which allows a switch between dual fold forms of outer and inner fold,
such new technologies as multi-fold, curling, etc., have made prospective progress, and
foldable screens of t4 production line have been put into mass production for delivery. In the
field of next generation of display and materials, subordinated Guangdong Juhua of the
Company, as the only national-level printing display R&D center of the industry, has
coordinated the global industry chain resources, accelerated to promote the application of
printing display technology; OLED material which is developed independe ntly by the
Company has started its mass production, with the efficiency and life of QLED material
taking a leading position in the industry.
During the Reporting Period, there were 6,155 R&D technical staffs in the Company, with
the R&D as RMB5.46 billion; the Company submitted 2,752 PCT international application,
with cumulative applications of 11,261 and with the public patent of quantum dot ranking 2 nd
in the world; the Company held the first open conference of technological cooperati on,
employed 29 authoritative personnel of the industry as technological consultants, and
published 13 frontier technology cooperation projects world-widely, and accelerated the
breakthrough of core and basic technology and the conversion of major technological
achievements through innovation of “self-research + cooperation”.
The Company keeps on improving its industrial ability, enhances scale advantages
based on technology upgrading, and constantly enriches product portfolio. During
the reporting period, t6 G11 production line reached the designed output in advance; t7 G11
production line was constructed smoothly; t3 G6 LTPS production line expanded its
designed output and increased to 50K/month, and became the largest LTPS single plant in
the world; t4 G6 flexible OLED had Phase I mass production and the foldable screen was
delivered; Phase I of Huizhou module integration project reached the designed output; by
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TCL Technology Group Corporation Annual Report 2019
2023, five-year CAGR of shipping area of TCL CSOT will reach 10% a nd the market share
will further increase. With two G8.5 production lines, two G11 production line and two G6
production lines, TCL CSOT has formed the plant layout for large, medium and small
productions, which meet the needs of major products in the market. In 2019, market share
of TV panel was improved to the 3 rd in the world, and market share of LTPS mobile phone
panel was improved to the 2 nd in the world.
As a pioneer of international layout, the Company cooperates with upstream and
downstream enterprises to construct global industry ecology integrating localized
production, sales and service, completes the layout of global manufacturing and
supply chain of TCL CSOT, and accelerates the globalization process of domestic
semi-conductor display industry. On September 26th, 2019, the construction of the panel
and module integrated intelligent manufacturing park in India under the cooperation of TCL
CSOT and TCL Electronics officially kicked off. According to the plan, the Phase I project
will produce 8 million pieces of 26-55 inch large-sized and 30 million pieces of 3.5-8 inch
small- and medium-sized modules annually, and mass production is expected to be
delivered in the first half of 2020, to meet the growing local market needs.
The industrial finance & investment bushiness of TCL maintain a good momentum of
development, and continue to contribute strategic synergy and earnings to the
Group. Finance business of the Company optimizes capital operating system, guarantees
the liquidity of the Company, and improves asset efficiency and risk control ability. The
supply chain finance gives empowerment for industry development, and the financial
investment business conducts investment to obtain stable profits by relying on its
professional advantages. TCL venture capital business focuses on investment
opportunities in frontier technological field; Admiralty Harbour Capital operates successfully,
and bond issuing and underwriting, financial consulting, and asset management business
develops quickly. During the Reporting Period, the industrial finance, investment and
venture capital businesses recorded a profit of RMB999 million.
The other businesses develop stably, with revenue of RMB22.9 billion and a profit of
RMB320 million for the year under review. The profit of TCL industrial finance and other
24
TCL Technology Group Corporation Annual Report 2019
businesses improve the performance of the Company when the main business is low
season.
Earnings from the Asset Restructuring are RMB1.15 billion in the year under review. The
principle of the Company is to focus on the owner and maximize shareholders’ value. It will
keep on promoting M&As and improving return on assets. The growth potential of the
Company will be thoroughly released through the Restructuring, which will lay a foundation
for the long term development of the Company; the positive effect of the Restructuring will
be further reflected in the future.
39-year development of the Company is an epitome of numerous Chinese enterprises. The
Company establishes its market position, brand, channel and influence of global supply
chain of intelligent terminal products in major countries and regions of the world with its
efficiency, speed and cost advantages, starts to fight upward and focuses on strategic point
in global technological map, and strives to the peak of the industry ecology.
After 10 years of catching up, the Company has established scale and efficiency
advantages in semi-conductor, new display technology and material has created
opportunities for Chinese enterprises to catch up and surpass. Although the COVID-19
epidemic at the beginning of 2020 affected the operating performance of Q1 of the
Company and brought uncertainty for global economic growth, the Company will adhere to
the strategic goal of global leadership, make its utmost efforts, overcome difficulties and
challenges, and further expand its market share to achieve the objective of a strong growth
in full-year revenue. TCL CSOT will expand from application innovation to key technology
breakthrough on the basis of leading efficiency, then to leading original technology and
ecological layout of core industry chain, break through active Mini-LED backlight and
direct-viewing product technology, and lead the development of printing OLED/QLED. The
Group will improve scale and efficiency through internal and external extension
development; enhance R&D, and establish technological barrier; accelerate to complete
layout of global industry chain, and adapt to international competition; become the leading
enterprise of global display industry; expand display industry advantage to other relevant
industry chain, and improve competitiveness and operation efficiency.
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TCL Technology Group Corporation Annual Report 2019
The Company will take The Strategy to wards Global Leadership as enterprise development
outline, be led by strategy, be guaranteed by organization and culture, reform and break
through, improve quality and efficiency, and stride toward a technological industry
group with global leadership. The Company changed its name from “TCL Corporation” to
“TCL Technology Group Corporation” on February 7th , 2020, and entered its brand new
development stage.
II. Core Business Analysis
The Company primarily consists of the following three business segments: the
semi-conductor display and materials business, the industrial finance & investment
business and the other businesses.
Semi-conductor TCL CSOT China Ray
display & materials Wuhan CSOT Juhua
Industrial finance &
TCL Tech. TCL Financial TCL Capital
investment
Other Open Edutainment
Highly
Adhere to the strategy of becoming a global leading intelligent technology company, TCL
Tech. will gradually quit from other businesses in accordance with the principle of
maximizing shareholders’ value. It will take endogenous development power as the
foundation, powerfully promote leading progress of semiconductor products and material
business in product, technology and ecology in the world. It helps industrial development
through industrial finance, and increases investment profits; invests in ecological
enterprises by relying on industry advantages, and strengthens comprehensive
competitiveness. It utilizes technology, management, and capital advantages to deploy
Chinese enterprise assets which can establish sustainable leading advantages in capital
and technology intensive strategic industries. The selected area will be similar to
26
TCL Technology Group Corporation Annual Report 2019
management and operation logic of the existing businesses and will be top enterprises in
the respective industries with synergy, enhance income and realize sustainable
development of high quality.
(I) Semi-conductor Display and Material Business
During the Reporting Period, TCL CSOT achieved shipping area of 22.184 million square
meters, up by 23.8% compared with the same period last year, achieved revenue of
RMB33.99 billion, up by 22.9% compared with the same period last year, achieved net
profit of RMB964 million, down by 58.5% compared with the same period of last year, and
EBITDA was RMB8.68 billion. The comprehensive performance kept on taking a leading
position in the industry.
The t1 and t2 plants in Shenzhen is operating at full capacity for strong sales, the t6 plant
reached designed output in Q4 in advance, and the yield rate ramp-up was better than
expected. During the reporting period, the total shipment of large-sized panels reached
20.82 million square meters, up by 19.1% compared with the same period last year, and the
total shipment was 41.195 million pieces, up by 5% compared with the same period last
year; market share of TV panel was improved to the 3 rd in the world, the shipment of
55-inch products ranked the 1st in the world while that of 32-inch products ranked the 2nd in
the world, and market occupancy of 86-inch commercial display panel ranked the 2 nd in the
world. However, because the price of main products is lower than the same period last year,
the large size panel business achieved revenue of RMB18.93 billion, down by 12.5%
year-on-year.
T3 plant in Wuhan was operating at full capacity for strong sales, and market share of
LTPS-LCD products ranked at the 2nd in the world stably. Flexible AMOLED of t4 plant
reached Phase I mass production in Q4, curved and foldable products had mass
production successively. During the Reporting Period, the shipping area of small and
medium size products was 1.365 million square meters, up by 2.12 times compared with
the same period of last year, and the shippment was 113.978 million pieces, up by 1.25
27
TCL Technology Group Corporation Annual Report 2019
times compared with the same period last year; the revenue reached RMB15.07 billion, up
by 1.5 times compared with the same period last year.
In 2019, semi-conductor display industry ran downward, and the industry loss heavily,
restructure accelerated, Chinese panel companies improved their global competitiveness
and market share with their capital and efficiency advantages. By the end of last year, price
of large size panel rebounded, and industry operating profits improved. The demand of
global display industry has not fundamentally changed; however, long term development
prospect of the industry gets optimistic, and the market potential is still great; the demand of
video interaction technology and commercial display products increases quickly, which
brings market increment; the global industry restructure and integration accelerates, and as
a result industry concerntration is further improved. In 2020, TCL CSOT will keep on
promoting ultimate cost reduction and profit increase, improve efficiency, further optimize
product and customer structure, develop video interaction and commercial product
business, keep on operating at fully capacity for strong sales, and increase sales revenue
and operation interest; we are confident that revenue growth and profitability in 2020 will
exceed 2019.
Through high efficient production line investment strategy, synergistic advantage of
industry chain and excellent management, TCL CSOT always maintains leading
operation efficiency and profits at low season of industry cycle. Since being put into
production, TCL CSOT take advantage of aggregation effect of Gemini P lant la yo ut , and
improved production output and expanded efficiency through high efficient production line
layout; exerted integration advantages of industry chain and taken ultimate efficiency cost
measures to realize the lowest sales expense ratio and financial expense ratio, overcome
the headwind of the industry, and keep momentum for the next round of industry growth.
As the capacity is stepping into high growth phrase, product mix will be refined
continuously. T1 and t2 G8.5 production line of TCL CSOT operates at full capacity for
strong sales; G6 LTPS production line of t3 is expanded from 45k/month to 50K/month; G11
production line of t6 reached designed output in Q4 and will have production at full capacity
this year; G6 flexible OLED production line of t4 realized Phase I mass production in
December, Phase II and Phase III construction will be completed in this year; G11
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TCL Technology Group Corporation Annual Report 2019
production line construction of t7 is progressed as planned and will be put into production at
the end of this year, which lays a foundation for performance growth. While each production
line is put into production successively, by 2023, five -year CAGR of shipping area of large
size panel of TCL CSOT will be 17%, and five -year CAGR of shipping area of small and
medium panel will be 26%. Meanwhile, the proportion of high margin products of TCL
CSOT for commercial display, vehicle display, gaming monitor, etc. will improve
continuously, and strategic cooperation is established with CVTE, HiteVision, BYD, Lenovo,
etc. successively.
Take technological innovation as core drive, improve product competitiveness
continuously. In large size field, TCL CSOT consolidates the application adva ntages of
HVA technology in LCD high end products, improves the share of such products as 4K/8K,
Touch, etc., launched MLED product based on Mini-LED backlight on Glass for the first time
in the world, to meet the demand growth of high end market of large size LCD. In the small
and medium size field, the yield rate and quality of CSOT LTPS production line has reached
international top, proportion of Incell/COF/blind via product rises continuously, and the
Company actively develops under screen/within screen fingerprint technology; flexible
AMOLED focus on under screen shooting, foldable technology and other high end
technologies, with the curved punched screen and flexible foldable screen delivered
already.
Actively promote new display technology, material & core technology development
and ecology construction, and construct core advantages which lead the future.
Guangdong Juhua, as the only “national printing and flexible display innovation center” of
the industry, has launched the manufacturing of 31-inch 4K RGB QLED sample machine for
full quantum dot printing and the first 31-inch rollable flexible sample machine for ink-jet
printing based on printing technology and OLED flexible display technology in the world,
with its R&D innovation leading the industry development. China Ray mainly develops new
OLED key materials with independent IP, and has developed more than 700 new materials
currently, including more than 30 products which enter pilot scale experiment; synthesis
mass production site and sublimation plant have been put into production, and part
materials have entered into mass production stage. QLED R&D team has broken thro ugh
key problems such as the life of red and green materials, etc., and the public patent in
quantum dot electroluminescent field ranked 2nd in the world.
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TCL Technology Group Corporation Annual Report 2019
Though counter-globalization trend is severe in recent years, global supply chain
restructures, competition advantages of China manufacturing in semi-conductor are
hard to be shaken in short term. TCL CSOT will make its utmost efforts to achieve
technology leadership and ecology leadership by efficiency and product mix, break
through the next generation of new display technology and materials through
horizontal expansion and vertical extension, and lead the global display industry.
(II) Industrial Finance and Investment Business
1. TCL Financial
TCL Financial mainly includes the Group’s finance and the supply chain finance.
Finance business targets at providing capital support and management support for main
businesses and member companies, providing capital guarantee for the Group’s major
investment projects, undertaking the function of improving the Group’s asset operation
efficiency and risk control; supply chain finance business provides various financing and
support supply-chain finance for related companies, establishes ecological circle of small
and medium companies, and reduces cost of supply chain; meanwhile, financial investment
business improves capital efficiency by creating stable profits through financial services,
and reduces financial expenses of the Company.
2. TCL Capital
TCL Capital consists of TCL Venture Capital, Admiralty Harbour Capital Limited and China
Innovative Capital Management Limited (holding 49% of its equity), seek investment
opportunities in key fields of technological industries, including new display technology,
semi-conductor and their relevant industry chain, as well as high end materials and
technological equipment, etc., which promotes technology and create synergy. At the same
time, investment value was generated.
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TCL Technology Group Corporation Annual Report 2019
TCL venture capital business focuses on relevant new technologies, new materials and
new applications of main business by establishing various funds. By the end of this
reporting period, the scale of funds managed by TCL venture capital business reached
RMB8.99 billion, and it invested in 115 projects cumulatively and exited from 33 projects,
including 10 projects which it exited partialy. Currently, it holds stocks of CATL, Dynanonic,
Willsemi, and other listed companies, and the interest in Cambricon, Dkem, Transwarp, and
other companies. Several projects invested by TCL venture capital business have good
synergy with current business of TCL, and play a vital role in completing industry chain,
technology foresight and layout, and lead to technology advance of the Company.
Admiralty Harbour Capital is a licensed financial company which is established in Hong
Kong, with the license of investment bank and assets management, provides
corresponding capital and financial service support for overseas business expansion, as
well as merger and restructure. During the reporting period, Admiralty Harbour Capital
completed the 12 bonds issuing and underwriting projects and 2 bond restructure projects,
financial consultant and assets management business increase quickly, and it realized
profit in the first year.
China Innovative Capital Management Limited mainly engages in equity investment for
listed companies as well as merger and restructure, invested in more than 110 listed
companies cumulatively, with good business operation and stable growing profits. China
Innovative Capital Management Limited also provides professional support for domestic
merger and purchasing as well as business expansion of the Company in China. During the
reporting period, the Company established Guangdong Rongchuang Lingyue Intelligent
Manufacturing and IT Industry Equity Investment Fund together with China Innovative
Capital Management Limited, Utrust, etc., focusing on investment in smart manufacturing,
IT industry and relevant service upgrading field, etc.
At the end of the Reporting Period, the Company directly invests in a number of listed
companies, including a 19.07% interest in 712 Corp. (603712.SH), a 5.14% interest in Bank
of Shanghai (601229.SH) and a 20.06% interest in Fantasia Holdings (01777.HK). During
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TCL Technology Group Corporation Annual Report 2019
the Reporting Period, the Company increased its interest in Bank of Shanghai by 0.15%,
other direct interests in listed companies remained the same during the Reporting Period.
2. Revenue and Cost Analysis
(1) Breakdown of Revenue
Unit: RMB
2019 2018
Operating division As % of total As % of total Change (%)
Revenue Revenue
revenue (%) Revenue (%)
TCL CSOT 33,993,533,865 45.37% 27,666,368,029 24.41% 22.87%
Highly 20,835,617,478 27.81% 16,566,992,566 14.61% 25.77%
Other businesses
and eliminated Not
20,103,934,345 Not applicable 69,126,714,950 Not applicable
intercompany applicable
accounts
Total 74,933,085,688 100.00% 113,360,075,545 100.00% -33.90%
Note: On the reference basis, the revenue amounted to RMB57.27 billion in 2019, up by 18.72%
year-on-year.
(2) Revenue by Operating Segment
Unit: RMB
2019 2018
Operating
As % of total As % of total Change (%)
segment Revenue Revenue
Revenue (%) Revenue (%)
Domestic core
47,799,405,342 63.79% 56,473,133,329 49.82% -15.36%
businesses
Overseas core
26,256,983,394 35.04% 55,809,459,497 49.23% -52.95%
businesses
Other businesses 876,696,952 1.17% 1,077,482,719 0.95% -18.63%
Total 74,933,085,688 100.00% 113,360,075,545 100.00% -33.90%
Unit: RMB’0,000
2019 2018
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenue 2,960,095.69 1,418,065.69 1,503,605.24 1,611,541.96 2,562,984.41 2,689,390.42 2,971,339.66 3,112,293.07
Net profit
attributable to the
77,908.84 131,326.03 48,498.13 4,043.66 73,083.73 85,510.10 90,372.32 97,854.59
listed company’s
shareholders
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TCL Technology Group Corporation Annual Report 2019
(3) Operating Division, Product Category or Operating Segment Contributing over 10% of
Revenue or Operating Profit
Unit: RMB
YoY
Gross YoY change in
YoY change in change in
Revenue Cost of sales profit cost of sales
revenue (%) gross profit
margin (%)
margin (%)
By operating division
Semi-conductor
33,993,533,865 30,478,907,024 10.34% 22.87% 35.61% -8.42%
display business
Distribution
20,835,617,478 20,087,790,401 3.59% 25.77% 26.26% -0.37%
business
By product category
Semi-conductor
33,993,533,865 30,478,907,024 10.34% 22.87% 35.61% -8.42%
display devices
Distribution of
20,835,617,478 20,087,790,401 3.59% 25.77% 26.26% -0.37%
electronics
By operating segment
Mainland China 47,799,405,342 42,114,423,773 11.89% -15.36% -8.84% -6.30%
Overseas
(including Hong 26,256,983,394 23,888,804,820 9.02% -52.95% -47.72% -9.11%
Kong)
(4) Whether Revenue from Physical Sales Is Higher than Service Revenue
Operating
Item Unit 2019 2018 Change (%)
division
Sales volume 0,000 ㎡ 2,218 1,792 23.83%
Semi-conductor
Output 0,000 ㎡ 2,234 1,842 21.27%
display business
Inventory 0,000 ㎡ 84 68 23.53%
(5) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable ■Not applicable
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
Compared with 2018, 17 subsidiaries (all newly incorporated) are included in and 313
subsidiaries (which 288 transferred in the Restructuring, 9 de-registered, and 16 that have
shifted from subsidiaries to associates) are excluded from the consolidation scope of 2019.
33
TCL Technology Group Corporation Annual Report 2019
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable ■Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 21,701,692,572
Total sales to top five customers as % of total sales
29.30%
of the Reporting Period (%)
Total sales to related parties among top five
customers as % of total sales of the Reporting Period -
(%)
Top five customers:
Sales revenue contributed
No. Customer for the Reporting Period As % of total sales revenue (%)
(RMB)
1 Customer A 8,141,718,792 10.99%
2 Customer B 5,377,820,556 7.26%
3 Customer C 2,907,012,016 3.93%
4 Customer D 2,803,131,747 3.79%
5 Customer E 2,472,009,462 3.34%
Total 21,701,692,572 29.30%
Other information about major customers:
□ Applicable ■ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 14,959,258,051
Total purchases from top five suppliers as % of total
22.66%
purchases of the Reporting Period (%)
Total purchases from related parties among top five
suppliers as % of total purchases of the Reporting -
Period (%)
Top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
1 Supplier A 5,108,937,201 7.74%
2 Supplier B 4,336,151,947 6.57%
3 Supplier C 2,031,503,382 3.08%
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TCL Technology Group Corporation Annual Report 2019
4 Supplier D 1,815,015,871 2.75%
5 Supplier E 1,667,649,650 2.53%
Total 14,959,258,051 22.66%
Other information about major suppliers:
□ Applicable ■ Not applicable
3. Expense
Unit: RMB
2019 2018 Change (%) Reason for any significant change
Selling expense 2,857,488,890 8,887,021,380 -67.85% The Restructuring
Administrative expense 1,895,087,528 4,299,610,008 -55.92% The Restructuring
Finance costs 1,248,800,752 973,260,519 28.31% Increase in financings
R&D expense 3,396,804,603 4,677,578,988 -27.38% The Restructuring
4. R&D Expense
Details about R&D expense:
2019 2018 Change (%)
Number of R&D
6,155 12,481 -50.69%
personnel Note
R&D personnel as % of total
17.40% 16.63% 0.77%
employees
R&D expense (RMB) 5,464,281,132 5,670,918,950 -3.64%
R&D expense as % of
7.29% 5.00% 2.29%
revenue
Capitalized R&D expense
2,067,476,529 1,832,275,281 12.84%
(RMB)
Capitalized R&D expense
37.84% 32.31% 5.53%
as % of total R&D expense
Note: During the Reporting Period, the Company completed the settlement of the Major Asset Restructuring and spun off
the terminal and supporting businesses. As such, it has become a globally leading intelligent technology company with its
core business being the semi-conductor display and material business. The number of R&D personnel and R&D expense
has decreased accordingly, which is why the data of 2019 and 2018 in the table above are not comparable. Based n the
reference basis, the number of R&D personnel would be up by 2.7% in 2019 compared to 2018.
Reasons for any significant YoY change in the percentage of R&D expense in revenue:
□ Applicable ■ Not applicable
35
TCL Technology Group Corporation Annual Report 2019
5. Cash Flows
Unit: RMB
Item 2019 2018 Change (%)
Subtotal of cash generated from
86,264,894,716 130,101,601,946 -33.69%
operating activities
Subtotal of cash used in operating
74,774,798,311 119,615,021,503 -37.49%
activities
Net cash generated from/used in
11,490,096,405 10,486,580,443 9.57%
operating activities
Subtotal of cash generated from
28,039,344,036 60,058,874,214 -53.31%
investing activities
Subtotal of cash used in investing
59,771,052,922 88,289,416,141 -32.30%
activities
Net cash generated from/used in
-31,731,708,886 -28,230,541,927 12.40%
investing activities
Subtotal of cash generated from
47,909,796,502 63,323,909,094 -24.34%
financing activities
Subtotal of cash used in financing
35,958,990,471 43,284,087,005 -16.92%
activities
Net cash generated from/used in
11,950,806,031 20,039,822,089 -40.36%
financing activities
Net increase in cash and cash
-8,064,640,553 2,421,213,397 -433.08%
equivalents
Explanation of why any of the data above varies significantly on a year-on-year basis:
The significant changes to the cash flow statement items in the table above were primarily driven by spinoffs in the
Restructuring.
Explanation of why net cash generated from/used in operating activities varies significantly from net profit of the Reporting
Period
Net cash generated from operating activities was higher than net profit primarily driven by high depreciation and
amortization amounts in the semi-conductor display industry.
III Analysis of Non-Core Businesses
□ Applicable ■ Not applicable
36
TCL Technology Group Corporation Annual Report 2019
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2019 1 January 2019 Change
As % of As % of in
Reason for any significant change
Amount total Amount total percenta
assets assets ge (%)
Monetary
18,648,184,663 11.31% 26,801,342,532 13.89% -2.58% The Restructuring
assets
Accounts
8,340,353,992 5.06% 13,647,564,194 7.07% -2.01% The Restructuring
receivable
Inventories 5,677,963,123 3.44% 19,887,971,677 10.31% -6.87% The Restructuring
Investment
82,272,964 0.05% 1,676,210,635 0.87% -0.82% The Restructuring
property
Long-term
equity 17,194,284,162 10.43% 17,117,936,085 8.87% 1.56% -
investments
The transfer of the construction in
Fixed assets 45,459,070,330 27.58% 35,983,131,306 18.64% 8.94% progress of the t2, t3, t4 and t6
production lines to fixed assets
Construction in
33,578,289,802 20.37% 38,924,586,355 20.17% 0.20% -
progress
Short-term
12,069,657,099 7.32% 13,287,723,834 6.89% 0.43% The Restructuring
borrowings
Long-term
38,512,059,200 23.36% 36,864,922,669 19.10% 4.26% -
borrowings
2. Assets and Liabilities at Fair Value
Unit: RMB
Gain/loss
Cumulative
on fair-value
fair-value Purchased in
Beginning changes in Sold in the Other Ending
Item changes the Reporting
amount the Reporting Period changes amount
charged to Period
Reporting
equity
Period
Financial
assets
1. 4,602,601,228 555,470,011 - 12,036,720,572 8,577,351,625 8,617,440,
37
TCL Technology Group Corporation Annual Report 2019
Held-for-tra 186
ding
financial
assets
(excluding
derivative
financial
assets)
2.Derivative
159,035,5
financial 391,558,256 138,118,918 -344,080,595 - 26,560,987 -
92
assets
3.
Investments
279,883,5
in other 488,457,175 - 9,800,832 - 221,004,516 2,630,024
15
equity
instruments
Subtotal of
9,056,359,
financial 5,482,616,659 693,588,929 -334,279,763 12,036,720,572 8,824,917,128 2,630,024
293
assets
Financial 272,924,6
212,097,067 219,916,229 -225,185,927 183,390,434 117,293,115 -
liabilities 88
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 Carrying amount Reason for restriction As % of total Remark
assets (RMB’0,000) assets
Deposited by the finance subsidiary in Restricted
Monetary
57,100 the central bank as the required 0.35%
assets
reserve
Monetary Other monetary assets Restricted
43,944 0.27%
assets
Held-for-tradin In pledge
g financial 174,320 Put in pledge for loan 1.06%
assets
Fixed assets 3,657,178 As collateral for loan 22.19% Collateralized
Intangible As collateral for loan Collateralized
248,370 1.51%
assets
Total 4,180,912 - 25.36% -
38
TCL Technology Group Corporation Annual Report 2019
V Investments Made
1. Total Investment Amount
Total investment amount in 2019 Total investment amount in 2018
Change (%)
(RMB) (RMB)
21,060,912,197 12,577,112,494 67.45%
2. Major Equity Investments Made in the Reporting Period
With confidence in the Company’s core business and long-term investment value, during
the Reporting Period, Mr. Li Dongsheng, Chairman of the Company’s Board, increased his
shareholdings in the Company through centralized bidding and block trading by a total of
167,974,800 shares with RMB513,869,000 on 3 January, 15 January, 30 January, 31
January, 29 April and 6 June 2019. As of 31 December 2019, Mr. Li Dongsheng and his
acting-in-concert party Jiutian Liancheng together held a total of 1,221,748,000 shares (a
9.02% stake) in the Company, and is the biggest shareholder of the Company.
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable ■ Not applicable
4. Financial Investments
(1) Securities Investments
Gain/lo
Purchased
Beginnin Sold in Ending ss in
Sec Measu in Fun
g carrying Reporting carrying Reporti Acco
Security urity Security rement Reporting ding
amount Period amount ng untin
type cod name metho Period sour
(RMB’0,0 (RMB’0,0 (RMB’0,0 Period g title
e d (RMB’0,000 ce
00) 00) 00) (RMB’0,
)
000)
China Held-
Developme At fair for-tr
Entruste Not
nt Bank value ading Self-
d wealth appl
Win-Win throug - 50,000 - 50,753 753 finan fund
manage icab
RMB h profit cial ed
ment le
Wealth or loss asset
Manageme s
39
TCL Technology Group Corporation Annual Report 2019
nt Product
Tranche
2017666
CCB
Principal Held-
Shengjing At fair for-tr
Not
Tongying value ading Self-
Trust appl
Debenture throug - 40,000 - 40,907 907 finan fund
plan icab
Investment h profit cial ed
le
Collective or loss asset
Capital s
Trust Plan
Guotai Held-
Jun’an At fair for-tr
Asset Not
Asset value ading Self-
manage appl
Manageme throug - 30,000 - 30,681 681 finan fund
ment icab
nt Junxiang h profit cial ed
plan le
Yinghuo or loss asset
No. 2 s
ICBC
Held-
Wealth
At fair for-tr
Entruste Not Manageme
value ading Self-
d wealth appl ntCorporat
throug - 30,000 - 30,488 488 finan fund
manage icab e RMB
h profit cial ed
ment le Wealth
or loss asset
Manageme
s
nt
Agricultural
Bank of
Held-
China
At fair for-tr
Entruste Not “An xin
value ading Self-
d wealth appl Deli”
throug - 30,000 - 30,475 475 finan fund
manage icab Directional
h profit cial ed
ment le RMB
or loss asset
Wealth
s
Manageme
nt Product
Changjiang Held-
Securities At fair for-tr
Entruste Not
Lexiang value ading Self-
d wealth appl
1-Day throug - 20,000 - 20,426 426 finan fund
manage icab
Collective h profit cial ed
ment le
Asset or loss asset
Manageme s
40
TCL Technology Group Corporation Annual Report 2019
nt Plan
Agricultural
Bank of
Held-
China
At fair for-tr
Entruste Not “An xin
value ading Self-
d wealth appl Deli”
throug - 20,000 - 20,321 321 finan fund
manage icab Directional
h profit cial ed
ment le RMB
or loss asset
Wealth
s
Manageme
nt Product
Guotai Held-
Jun’an At fair for-tr
Entruste Not
Asset value ading Self-
d wealth appl
Manageme throug - 10,000 - 10,227 227 finan fund
manage icab
nt Junxiang h profit cial ed
ment le
Yinghuo or loss asset
No. 1 s
Guotai Held-
Jun’an At fair for-tr
Entruste Not
Asset value ading Self-
d wealth appl
Manageme throug - 10,000 - 10,227 227 finan fund
manage icab
nt Junxiang h profit cial ed
ment le
Yinghuo or loss asset
No. 3 s
Changjiang
Held-
Securities
At fair for-tr
Entruste Not Lexiang
value ading Self-
d wealth appl 1-Day
throug - 10,000 - 10,213 213 finan fund
manage icab Collective
h profit cial ed
ment le Asset
or loss asset
Manageme
s
nt Plan
Not Self-
Other securities investments
429,117 855,791 994,424 361,376 75,532 appli fund
held at period-end
cable ed
Total 429,117 1,105,791 994,424 616,094 80,250
(2) Investments in Derivative Financial Instruments
Funding source Mostly foreign-currency revenue
Legal matters involved (if
Not applicable
applicable)
41
TCL Technology Group Corporation Annual Report 2019
Disclosure date of board
announcement approving 28 April 2018
derivative investment (if any)
Disclosure date of general
meeting announcement
Not applicable
approving derivative
investment (if any)
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
Analysis of risks and control to the bank for the operations of evening up or selling the derivatives below the buying
measures associated with prices;
derivative investments held in 3. Performance risk: the Group conducts the derivative business based on rolling budgets
Reporting Period (including but for risk management, and there is a risk of performance failure due to deviation between
not limited to market risk, the actual operating results and budgets;
liquidity risk, credit risk, 4. Other risks: in the case of specific business operations, if the operator fails to finish the
operational risk, legal risk, etc.) 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
42
TCL Technology Group Corporation Annual Report 2019
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, operationa l 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 d evelopment;
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 With the rapid expansion of overseas sales, the Company keeps following the above rules
fair value of derivative in the operation of forward foreign exchange contracts, interest rate swap contracts and
investments in Reporting futures contracts to avoid and hedge foreign exchange risks arising from operation and
Period (fair value analysis financing. It saw a loss of RMB6.35 million for the Reporting Period. The fair value of
should include measurement derivatives is determined by real-time quoted price of the foreign exchange market, based
method and related on the difference between the contractual price and the forward exchange rate quoted
assumptions and parameters) immediately in the foreign exchange market on the balance sheet date.
Major changes in accounting
policies and specific
accounting principles adopted
No major changes
for derivative in vestments in
Reporting Period compared to
last reporting period
According to the Guiding Opinion of CSRC on Establishing the Independent Director
System in Listed Companies, the Stock Listing Rules of Shenzhen Stock Exchange (2018
Revision), the Company’s Articles of Association, the Rules of Procedure for Independent
Directors, etc., we, as the independent directors of the Company, express our
independent opinion on the trading of financial derivatives in 2019 as follows:
Opinion of independent
In view of the fact that certain raw materials of the core business of the Company are
directors on derivative
purchased overseas , a wide range of settlement currencies is involved. The Company
investments and risk control
reduces exchange losses and locks transaction costs by reasonabl e 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
43
TCL Technology Group Corporation Annual Report 2019
specific accounting principles, setting limits for risk exposure management, and operating
simple financial derivatives. The contracting agent for financial derivatives business of the
Company is a sound financial agent with good credit standing.
We believe that the financial derivatives transactions carried out by the Company in 201 9
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’0,000
Ending contractual
amount as % of the
Beginning amount Ending amount Gain/loss in
Company’s ending net
Type of contract Reporting
assets
Period
Contractual Actual Contractual Actual Contractual Actual
amount amount amount amount amount amount
1. Forward forex 2,531,633 86,070 1,279,232 36,087 20.02 0.56
contracts
2. Interest rate 465,325 13,960 528,098 15,843 -635 8.27 0.25
swaps
3. Currency swaps 311,589 15,579 215,565 14,399 3.37 0.23
Total 3,308,547 115,609 2,022,895 66,329 -635 31.66 1.04
5. Use of Funds Raised
(1) General Information about the Use of Raised Funds
Unit: RMB’0,000
Cumulativ
Amount e amount Purpose
Cumulativ Amount
Used in with with and
Total e amount being idle
Year of Way of the Cumulativ changed changed Unused whereabo
amount with for more
raising raising Current ely used use in the use as % amount uts of the
raised changed than two
Period Reporting of total unused
use years
Period amount amount
raised
Public
offering to
2019 400,000 400,000 400,000 - - - -- -
qualified
investors
Total -- 400,000 400,000 400,000 - - - - -- -
44
TCL Technology Group Corporation Annual Report 2019
Remark
During the Reporting Period, TCL Technology Group Corporation raised a total of RMB4 billion through the Corporate
Bonds Publicly Offered in 2019 to Qualified Investors (Phase 1), (Phase 2) and (Phase 3), which was used up for
supplementing the working capital and repaying loans.
Promised Use of Raised Funds
□ Applicable ■ Not applicable
Changed Use of Raised Funds
□ Applicable ■ Not applicable
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
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 13th meeting of the 6th Board of Directors on 7 December
2018 and later at the First Extraordinary General Meeting of 2019 on 7 January 2019. At
the price of RMB4.76 billion, the Company sold the following directly-held equity interests to
TCL Industries: 100% interest of TCL Industries (HK), 100% interest of Huizhou 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 in Getech. For details of this
restructuring, see the Report of TCL Corporation on the Sale of Major Assets &
Related-Party Transaction (Draft), its revised version and other relevant documents
disclosed on www.cninfo.com.cn dated 8 and 22 December 2018, respectively. Up to April
2019, the Company had received all the amount for this sale of major assets, marking the
completion of the restructuring. And the gain/loss on the restructuring has been recognized.
Considering the weak connection to the Company’s core business and the small
contributions to the Company’s revenue of Huizhou TCL Environmental Resource Co., Ltd.
(“Huizhou Environmental Resource ”) and Shenzhen HAWK Internet Co., Ltd. (“HAWK
Internet”), in order to further concentrate on its core business, the Company sold a 71%
45
TCL Technology Group Corporation Annual Report 2019
interest in Huizhou Environmental Resource to TCL Industries for the consideration of
RMB274,891,300; and sold the 100% interest in HAWK Internet to TCL Electronics
(Huizhou) Ltd., a subsidiary of TCL Industries, for the consideration of RMB200,109,800.
This transaction has been approved at the 21 st Meeting of the 6th Board of Directors of the
Company on 30 October 2019. For further details, see the Announcement on Sale of
Interests in Subsidiaries & the Related-Party Transactions disclosed by the Company on
www.cninfo.com.cn dated 31 October 2019.
2. Sale of Major Equity Interests
□ Applicable ■ Not applicable
VII Major Subsidiaries
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s
net profit:
Rel
atio
nshi Prin
p cip Regist
Total assets Net assets Revenue Operating Net profit
Name with al ered
(RMB) (RMB) (RMB) profit (RMB) (RMB)
the acti capital
Co vity
mp
any
TCL Se
China mi-
Star con
Sub RMB1
Optoelec duc 964,444,37
sidi 9.823 130,582,409,307 55,231,216,844 33,993,533,865 958,502,226
tronics tor 3
ary billion
Technol dis
ogy Co., pla
Ltd. y
Dist
Highly
ribu
Informati Sub RMB1
tion 215,604,32
on sidi 33 4,520,509,132 1,002,879,862 20,835,617,478 308,374,952
of 1
Industry ary million
not
Co., Ltd.
ebo
46
TCL Technology Group Corporation Annual Report 2019
oks
Subsidiaries obtained or disposed in the Reporting Period:
See “(6) Changes to the Consolidation Scope of the Reporting Period” in Item II of Part IV.
VIII Structured Bodies Controlled by the Company
□ Applicable ■ Not applicable
IX Prospects
The external environment is complex and severe , and opportunities and challenges both
exist in 2020. Trade war between China and the United States has intensified, the
economic globalization has encountered twists and turns and China's economic
restructuring and industrial restructuring are under increasing pressure. On the other hand,
the development of 5G, AI, IoT, big data and cloud technology brings new development
opportunities for new infrastructure and application and the global display business
environment will be improved compared to last year, but the global epidemic development
increases uncertainty.
China has manufacture and consume a lot of intelligent terminals. And the market is the
biggest size and the fastest growth of semi-conductor display industry. Chinese companies
will quickly become a global leader in the display industry based on efficiency, scale, cost
and customer response advantages and the industry chain is accelerating to transfer to
China. Moreover, the continuous product technology innovation can meet the new market
requirement, especially various high performance display products in t he commercial sector.
Smart TV big screen upgrade and increase in needs for overseas market bring industrial
development opportunities. The China Industry is expected to exert an advantage in the
industry low, accelerate merging and reorganization, increase industrial concentration and
speed up development of the global industrial chain.
TCL Tech. has completed the Major Asset Restructuring and is positioned as a technology
conglomerate which proposes the "global leadership" strategic target as well as achieves
long-term effective growth and gradually achieves global leadership by continuously
improving product quality and management efficiency, breaking through the core and key
technologies and rational ecological layout. The Company will further concentrate its
47
TCL Technology Group Corporation Annual Report 2019
resources to increase scale and market competitiveness of semi-conductor display and
material business based on TCL CSOT as the core, so as to strengthen and deepen the
semi-conductor display and material industrial chain. It will also explore integration and
expansion opportunities for relevant business in the area of key, high-end and basic
information technology.
2020 is the opening year of implementing the new strategy of the Company and various key
works has been comprehensively implemented. The volume production of G6 AMOLED
production line t4 is conducted, the G11 oversize display t7 project is constructed and the
next generation of display technology proceeds orderly. The Company will actively lay out
the upstream and downstream industrial chai n, participate in development of new materials
and layout of new process and equipment as well as further improve the global
competitiveness of the semi-conductor display industry by cooperation, investment and
participation, acquisition and reorganization, etc. TCL CSOT will achieve steady growth by
efficient industrial structure layout, innovative technical capacity and stable financial capital
structure. The Company also will take advantages of technology, management and capital
and actively enter the new area of the capital-intensive and technology-intensive strategic
industries to become a global leading intelligent technology company.
X Communications with the Investment Community such as Researches, Inquiries
and Interviews
1. During the Reporting Period
Type of communication Index to main information
Date Way of communication
party communicated
18 January 2019 By visit Institutional investor www.cninfo.com.cn
12 February 2019 By visit Institutional investor www.cninfo.com.cn
18 February 2019 By visit Institutional investor www.cninfo.com.cn
19 February 2019 By visit Institutional investor www.cninfo.com.cn
20 February 2019 By visit Institutional investor www.cninfo.com.cn
20 February 2019 By visit Institutional investor www.cninfo.com.cn
25 February 2019 By visit Institutional investor www.cninfo.com.cn
27 February 2019 By visit Institutional investor www.cninfo.com.cn
48
TCL Technology Group Corporation Annual Report 2019
1 March 2019 By visit Institutional investor www.cninfo.com.cn
4 March 2019 By visit Institutional investor www.cninfo.com.cn
7 March 2019 By visit Institutional investor www.cninfo.com.cn
20 March 2019 By visit Institutional investor www.cninfo.com.cn
28 March 2019 By visit Institutional investor www.cninfo.com.cn
29 March 2019 By visit Institutional investor www.cninfo.com.cn
9 April 2019 By visit Individual investor www.cninfo.com.cn
24 April 2019 By visit Institutional investor www.cninfo.com.cn
25 April 2019 By visit Institutional investor www.cninfo.com.cn
24 May 2019 By visit Institutional investor www.cninfo.com.cn
29 May 2019 By visit Institutional investor www.cninfo.com.cn
12 June 2019 By visit Institutional investor www.cninfo.com.cn
13 June 2019 By visit Institutional investor www.cninfo.com.cn
28 June 2019 By visit Institutional investor www.cninfo.com.cn
25 July 2019 By visit Institutional investor www.cninfo.com.cn
13 August 2019 By visit Institutional investor www.cninfo.com.cn
12 September 2019 By visit Institutional investor www.cninfo.com.cn
20 September 2019 By visit Institutional investor www.cninfo.com.cn
31 October 2019 By phone Institutional investor www.cninfo.com.cn
1 November 2019 By visit Institutional investor www.cninfo.com.cn
5 November 2019 By visit Institutional investor www.cninfo.com.cn
5 November 2019 By visit Institutional investor www.cninfo.com.cn
6 November 2019 By visit Institutional investor www.cninfo.com.cn
19 November 2019 By visit Institutional investor www.cninfo.com.cn
20 November 2019 By visit Institutional investor www.cninfo.com.cn
27 November 2019 By visit Institutional investor www.cninfo.com.cn
2 December 2019 By visit Institutional investor www.cninfo.com.cn
12 December 2019 By visit Institutional investor www.cninfo.com.cn
Times of communications 36
Number of institutions communicated with 456
Number of individuals communicated with 118
Number of other communication parties 0
49
TCL Technology Group Corporation Annual Report 2019
Tip-offs or leakages of substantial
supposedly-confidential information during None
communications
50
TCL Technology Group Corporation Annual Report 2019
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
Yes
and resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Non-controlling interests are able to fully express their
opinion and desire and their legal rights and interests are Yes
fully protected
In case of adjusting or changing the cash dividend policy, No changes to the dividend policy and the relevant
the conditions and procedures involved are in compliance conditions and procedures are in compliance with
with applicable regulations and transparent applicable regulations and transparent
The 2017 annual equity distribution plan: based on the share capital of 13,514,972,063
shares on 27 April 2018 plus the granted restricted shares for profit distribution of
34,676,444 shares, i.e. a total of 13,549,648,507 shares, a cash dividend of RMB1 (tax
inclusive) per 10 shares was to be distributed to the shareholders, totaling
RMB1,354,964,850.7. The retained earnings would 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 19 March 2019 that were 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 were not eligible for profit distribution), a cash dividend of
RMB1 (tax inclusive) per 10 shares was to be distributed to the shareholders, totaling
RMB1,340,288,851. The retained earnings would carry forward for future distribution.
Meanwhile, there was no bonus issue from either profit or capital reserves for the year.
The 2019 annual equity distribution plan: based on the share capital of 13,000,372,307
shares on 27 March 2020 that are eligible for profit distribution (the total share capital of
51
TCL Technology Group Corporation Annual Report 2019
13,528,438,719 shares minus the 528,066,412 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
RMB1,300,037,230.70. The retained earnings will carry forward for future distribution.
Meanwhile, there will be no bonus issue from either profit or capital reserves for the year.
The Company carried out a share repurchase program of up to RMB1.934 billion in 2019,
which has been completed in early January 2020. As attaching great importance to the
reasonable return of investors, the Company reviews the return plan of shareholders for the
coming three years in 2020, which not only ensures an ongoing and consistent profit
distribution policy, but also pay full attention to what the shareholders, especially the
minority shareholders, want so as to sufficiently protect their rightful interests.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Net profit
attributable to
ordinary Total cash
Cash dividends in
shareholders of dividends
Cash dividends A as % other forms (like C as % A+C as %
Year the listed (including those
(tax inclusive) (A) of B (%) share repurchase) of B (%) of B (%)
company in in other forms)
(C)
consolidated (A+C)
statements for
the year (B)
2019 1,300,037,230.7 2,617,766,571 49.66% 1,933,596,514.47 73.86% 3,233,633,745.17 123.53%
2018 1,340,288,851 3,468,207,405 38.65% - - 1,340,288,851 38.65%
2017 1,355,091,606.3 2,664,396,006 50.86% - - 1,355,091,606.3 50.86%
Indicate whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the facts
that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to
the ordinary shareholders 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) (ta x inclusive) 1.00
52
TCL Technology Group Corporation Annual Report 2019
Bonus issue from capital reserves (share/10
0
shares)
Share base (share) 13,000,372,307
Cash dividends (RMB) (tax inclusive) 1,300,037,230.7
Cash dividends in other forms (like share
1,933,596,514.47
repurchase) (RMB)
Total cash dividends (including those in other
3,233,633,745.17
forms) (RMB)
Distributable profits (RMB) 8,119,832,872
Total cash dividends (including those in other
100%
forms) as % of total profits to be distributed (%)
Cash dividend plan
Based on the share capital of 13,000,372,307 shares on 27 March 2020 that are eligible for profit distribution (the total
share capital of 13,528,438,719 shares minus the 528,066,412 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 RMB1,300,037,230.70. The retained earnings of RMB6,819,795,641.3 will carry
forward for future distribution. Meanwhile, there will be no bonus issue from either profit or capital reserves for the year.
Cash and/or stock dividend plan in detail
Based on the share capital of 13,000,372,307 shares on 27 March 2020 that are eligible for profit distribution (the total
share capital of 13,528,438,719 shares minus the 528,066,412 shares in the Company’s special securities account for
repurchase that are not eligible for profit distribution), a cash dividend of RMB1 (ta x inclusive) per 10 shares is to be
distributed to the shareholders, totaling RMB1,300,037,230.70. The retained earnings of RMB6,819,795,641.3 will carry
forward for future distribution. Meanwhile, there will be no bonus issue from either profit or capital reserves for the year.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and other Entities Fulfilled in the Reporting Period or
Ongoing at the Period-end
Typ
e of Date of
Term of
com commitm Fulfillme
Commitment Promisor Details of commitment commitmen
mit ent nt
t
men making
t
Abo 1. Before and after this During the
Li Dongsheng, transaction, I/we as an
ut enterprise or our 7 period No
Commitments made in major asset Jiutian Liancheng
avoi controlled enterprises Decembe when being violation
restructuring and Donging shall have no horizontal
ding competition with the r 2018 the biggest s
Huarui
hori principal activities of TCL shareholde
53
TCL Technology Group Corporation Annual Report 2019
zont Corporation or its r of TCL
subsidiaries.
al 2. After this transaction, Corporatio
com I/we as an enterprise n
shall take active
petit measures to avoid
ion 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
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
54
TCL Technology Group Corporation Annual Report 2019
comprehensive and
timely joint
compensations in full
amount to TCL
Corporation for any
losses incurred from the
violation of the
aforementioned
commitments.
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
Abo with fair market principles
ut and normal commercial
conditions, ensure the
redu fairness of related-party
During the
cing transaction prices,
perform the period
and decision-making
when being
Li Dongsheng, cont procedures for
related-party transactions 7 the biggest No
Jiutian Liancheng rolli in accordance with laws,
Decembe shareholde violation
and Donging ng undertake not to make
use of the transaction to r 2018 r of TCL s
Huarui relat transfer the funds or
Corporatio
ed-p profits of TCL Corporation
illegally, and undertake n
arty not to take advantage of
the transaction to infringe
tran
upon the legitimate rights
sact and interest of TCL
ions Corporation and its
shareholders.
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
55
TCL Technology Group Corporation Annual Report 2019
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.
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
Abo from TCL Corporation
I/we as an enterprise
ut
undertake to maintain
kee personnel independence During the
from TCL Corporation. period
ping
General managers,
the deputy general when being
Li Dongsheng, managers, financial
liste 7 the biggest No
Jiutian Liancheng principals, board
d secretaries and other Decembe shareholde violation
and Donging senior managers of TCL
com r 2018 r of TCL s
Huarui Corporation will not serve
pan in any position other than Corporatio
Director and Supervisor in
y n
any enterprise which is a
inde wholly-owned or holding
subsidiary of me/us as an
pen enterprise or any other
dent 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
Corporation will not work
in the subsidiaries of
me/us as an enterprise on
a part-time basis.
(II) Commitment to the
asset independence and
completeness of TCL
Corporation
1. I/we as an enterprise
undertake that TCL
56
TCL Technology Group Corporation Annual Report 2019
Corporation has
independent and
complete assets.
2. I/we as an enterprise
undertake that TCL
Corporation has no funds
or assets misappropriated
by me/us as an enterprise
or the subsidiaries of
me/us as an enterprise.
(III) Commitment to the
financial independence of
TCL Corporation
1. I/we as an enterprise
undertake that TCL
Corporation establishes
an independent finance
department and an
independent financial
accounting system.
2. I/we as an enterprise
undertake that TCL
Corporation has standard
and independent financial
accounting policies.
3. I/we as an enterprise
undertake that TCL
Corporation opens
accounts independently
in the bank without
sharing any bank account
with me/us as an
enterprise.
4. I/we as an enterprise
undertake that the
financial personnel of TCL
Corporation not work in
the subsidiaries of me/us
as an enterprise on a
part-time basis.
5. I/we as an enterprise
undertake that TCL
Corporation is able to
make financial decisions
independently and that
I/we as an enterprise not
intervene in the fund use
of TCL Corporation.
(IV) Commitment to the
institutional
independence of TCL
Corporation
1. I/we as an enterprise
undertake that TCL
Corporation has an
independent and
complete organizational
institution and run it
independently and
autonomously.
2. I/we as an enterprise
undertake that the office
institutions and
production and operation
places of TCL
57
TCL Technology Group Corporation Annual Report 2019
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.
Star Century
Enterprises
Limited; Linzhou
Xinglan Venture Abo
Investment ut We agree not to transfer
Management shar the shares that we
Partnership e subscribe for within 36 25 25
No
Commitments made in refinancing (Limited tradi months since the end of Decembe December
violation
Partnership); ng TCL’s asset purchase via r 2017 2020
s
Linzhou Xingyong restr share offering (25
Venture ictio December 2017).
Investment ns
Management
Partnership
(Limited
58
TCL Technology Group Corporation Annual Report 2019
Partnership);
Linzhou Xingyuan
Venture
Investment
Management
Partnership
(Limited
Partnership); and
Linzhou Xinglian
Venture
Investment
Management
Partnership
(Limited
Partnership)
I will comply with
obligations specified in
the management
regulations for
short-swing trading,
Abo
insider trading and
ut
changes in the
hori
shareholding of senior
zont
management; I agree to
al
have me and the
com
partnership enterprise
petit
recognized as persons
ion,
Li Dongsheng; Bo acting in concert and
relat
Lianming; Liao have the number of 4 No
ed-p Long-stand
Qian; Huang shares I hold of TCL February violation
arty ing
Xubin; Yan Xiaolin Corporation and that the 2015 s
tran
and Shi Wanwen partnership enterprise
sact
holds of TCL Corporation
ion
calculated in
and
consolidation in
capi
accordance with the
tal
provisions of related
occ
regulations such as
upat
Article 83 of the
ion
Management Measures
on the Acquisition of
Listed Companies and
the Articles of
Incorporation when the
59
TCL Technology Group Corporation Annual Report 2019
related parties perform
their legal obligations of
information disclosure on
major equity changes and
tender offer.
1) I shall avoid horizontal
Abo
competition between the
ut
companies, enterprises or
hori
other business
zont
organizations that I own,
al
control, control with During the
com
others, have significant period
petit
influence on and TCL when being
ion,
Corporation with its TCL
relat
subsidiaries; and 30 Corporatio No
ed-p
Li Dongsheng 2) I shall reduce and August n’s director, violation
arty
control related-parties 2013 supervisor s
tran
transactions between the or senior
sact
companies, enterprises or manageme
ion
other business nt
and
organizations that I own,
capi
control, control with
tal
others, or have significant
occ
influence on and TCL
upat
Corporation with its
ion
subsidiaries.
Abo
ut
not
Li Dongsheng； redu
I/We as an enterprise
Xinjiang Jiutian cing
shall not reduce our
Liancheng Equity shar No
shareholdings in the 19 June 19 June
Investment ehol violation
Company within 12 2018 2019
Partnership ding s
months since 19 June
Other commitments (Limited s in
2018.
Partnership) the
Co
mpa
ny
Abo The Company undertakes
No
ut to TCL Multimedia that: 16 June Long-stand
The Company violation
hori The Company and its 2014 ing
s
zont subsidiaries (other than
60
TCL Technology Group Corporation Annual Report 2019
al TCL Multimedia and its
com subsidiaries) will not
petit engage in the
ion, manufacturing, assembly
relat and distribution of TV sets
ed-p (“restricted businesses”)
arty and will engage in the
tran R&D, manufacturing and
sact sales of audio and video
ion products (excluding TV
and sets) (“related
capi businesses”) which are
tal not restricted businesses,
occ provided that the party
upat making the commitment
ion 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 res tricted
businesses. The
termination condition is
that the total equity which
TCL Multimedia and its
subsidiaries hold of Cool
Friends Technology is
less than 15%.
Fulfilled on time Yes
Specific reasons for failing to fulfill
commitments on time and plans for Not applicable
next step
61
TCL Technology Group Corporation Annual Report 2019
2. Where there had been an earnings forecast for an asset or project and the Reporting Period
was still within the forecast period, explain why the forecast has been reached for the Reporting
Period.
□ Applicable ■ Not applicable
Commitments made by the Company’s shareholders and transaction counterparties regarding the operating performance
of the Reporting Period:
□ Applicable ■ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its
Related Parties for Non-Operating Purposes
□ Applicable ■ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Committee and the
Independent Directors (if any) Regarding the Independent Auditor's “Modified
Opinion” on the Financial Statements of the Reporting Period
□ Applicable ■ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
For details, see “36. Changes to main accounting policies and estimates ” in “III Significant accounting policies and
estimates” in “Part X Financial Report”.
VII Retrospective Restatements due to Correction of Material Accounting Errors in
the Reporting Period
□ Applicable ■ Not applicable
VIII YoY Changes to the Scope of the Consolidated Financial Statements
Compared with 2018, 2019 saw the official exclusion of the intelligent terminal and
supporting businesses from the consolidated financial statements as the Restructuring was
completed in April 2019. The consolidated financial statements of 2019 included the Q1
data of the restructured businesses, while those of 2018 included the full-year data.
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
62
TCL Technology Group Corporation Annual Report 2019
Da Hua Certified Public Accountants (Special General
Name of the domestic independent auditor
Partnership)
The Company’s payment to the domestic independent
316
auditor (RMB’0,000)
How many consecutive years the domestic independent
12
auditor has provided audit service for the Company
Names of the certified public accountants from the domestic
independent auditor writing signatures on the auditor’s Qiu Junzhou and Jiang Xianmin
report
How many consecutive years the certified public
1 year for both
accountants have provided audit service for the Company
Indicate whether the independent auditor was changed for the Reporting Period.
□ Yes ■ No
Indicate whether the independent auditor was changed during the audit period.
□ Yes ■ No
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 Actual
Controller
□ Applicable ■ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive
Measures for Employees
(I) The First Top 400 and Key Personnel Stock Ownership Plan and the Global
63
TCL Technology Group Corporation Annual Report 2019
Partner Plan
1. On 28 March 2019, the Company disclosed the Announcement on the Quota Allocation
and Equity Vesting of the First Top 400 and Key Personnel Stock Ownership Plan and the
Global Partner Plan (the “First Stock Ownership Plan”). This plan set out a company
performance-related condition of a not-lower-than-15% growth in the net profit attributable
to shareholders of the Company as the parent in 2018 compared to 2017. According to the
2018 Annual Independent Auditor’s Report for TCL Corporation issued by Da Hua Certified
Public Accountants (Special General Partnership), the net profit attributable to
shareholders of the Company as the parent in 2018 grew by 30.17% compared to 2017,
which meant the said condition had been satisfied.
2. A total of 99,148,115 shares were purchased for the First Stock Ownership Plan. As per
the rules governing the First Stock Ownership Plan, the Management Committee of the
First Stock Ownership Plan decided to vest a total of approximately 47.49 million shares in
the holders of the First Stock Ownership Plan. To be specific, a total of about 4.26 million
shares were vested in directors, supervisors and senior management (Mr. Li Dongsheng,
Ms. Du Juan, Mr. Huang Wei, Mr. Jin Xuzhi, Mr. Liao Qian, Mr. Yan Xiaolin and Mr. Mao
Tianxiang), and the rest of 43.23 million shares were given to the other holders. The
unvested about 51.66 million shares under the First Stock Ownership Plan and the
corresponding dividends (if any) were taken back by the Management Committee of the
First Stock Ownership Plan with no compensation. These shares would be sold at a proper
timing before the expiry of the First Stock Ownership Plan, and the proceeds generated
therein would be returned to the Company.
(II) The Second Global Partner Plan
1. The Proposal on the Second Global Partner Plan (Draft) and Its Summary, and the
Measures for the Management of the Second Global Partner Plan were approved
respectively at the 16th Meeting of the 6th Board of Directors on 23 April 2019 and the Third
Extraordinary General Meeting of 2019 on 8 May 2019. Shares for the Second Global
Partner Plan would be obtained through a non-deal transfer from the special securities
account for repurchases.
64
TCL Technology Group Corporation Annual Report 2019
2. The Proposal on Adjustments to the Second Global Partner Plan (Draft) and Its
Summary was approved at the 22 nd Meeting of the 6th Board of Directors on 12 August
2019. The Company’s independent directors expressed their independent opinion on
whether the interests of the Company and its shareholders would be jeopardized by these
adjustments.
3. The shares used for the Second Global Partner Plan were part of the shares
repurchased in 2019. On 23 August 2019, the Company initiated a non-deal transfer
procedure with the Shenzhen branch of China Securities Depository and Clearing Co., Ltd.
Up to that day, the cumulative shares in the special securities account for repurchases were
repurchased at an average price of RMB3.394/share through centralized bidding. The
capital used for the Second Global Partner Plan came from the Special Fund for the 2019
Stock Ownership Plans, with a ceiling of RMB113.3321 million. Based on the aforesaid
average repurchase price, the shares to be transferred from the special securities account
for repurchases to the Second Global Partner Plan would be 33.3919 million shares in total.
4. The Announcement on the Completion of the Non-Deal Transfer to the Second Global
Partner Plan was disclosed on the designated media dated 12 October 2019. The
Company had received the Securities Transfer Confirmation issued by the Shenzhen
branch of China Securities Depository and Clearing Co., Ltd. 33.3919 million shares (or
0.25% of the Company’s total share capital) had been transferred in a non-deal manner
from the special securities account for repurchases to the securities account for employee
stock ownership plans. As required by the Second Global Partner Plan (Draft), the shares
under the Second Global Partner Plan would be locked up for a period of no less than 12
months starting from the disclosure of the announcement on the completion of the transfer
of target shares from the special securities account for repurchases, i.e. from 12 October
2019 to 11 October 2020.
(III) The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan
1. As authorized by the First Extraordinary General Meeting of 2018, the Company
convened the 16th Meeting of the 6th Board of Directors and the 10th Meeting of the 6th
Supervisory Committee on 23 April 2019. At the meetings, the Proposal on an Adjustment
65
TCL Technology Group Corporation Annual Report 2019
to the Repurchase Price of the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan was approved. As such, it was decided to adjust the repurchase
price of the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan
(the “2018 Restricted Stock Incentive Plan” for short) from RMB1.83/share to
RMB1.63/share.
2. The Proposal on the Repurchase and Retirement of Restricted Shares That Have Been
Granted to Certain Awardees under the 2018 Restricted Stock Incentive Plan and the
Global Innovation Partner Plan But Are Still in Lockup was approved respectively at the 18 th
Meeting of the 6th Board of Directors and the 12 th Meeting of the 6th Supervisory Committee
both dated 20 May 2019. As such, it was agreed to repurchase and retire the 21,209,788
restricted shares that had been granted to 755 awardees but were still in lockup due to
reasons such as job transfer to TCL Industries in the Restructuring, resignation, or failure of
fulfillment of the performance indicator.
The Proposal on the Satisfaction of the Unlocking Condition for the First Unlocking Period
of the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan was
also approved. A total of 712 awardees could apply to unlock their restricted shares of
6,685,704 shares in total (or 0.05% of the Company’s existing total share capital) for
trading.
3. On 29 October 2019, 21,209,788 restricted shares were repurchased and retired through
the Shenzhen branch of China Securities Depository and Clearing Co., Ltd.
(IV) The 2019 Restricted Stock Incentive Plan and the Second Global Innovation
Partner Plan
1. On 23 April 2019, the Proposal on the 2019 Restricted Stock Incentive Plan and the
Second Global Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the
Proposal on the Measures for the Implementation of the 2019 Restricted Stock Incentive
Plan and the Second Global Innovation Partner Plan of TCL Corporation, the Proposal on
Asking the General Meeting to Authorize the Board to Handle Matters Related to the 2019
Restricted Stock Incentive Plan and other proposals were approved at the 16th Meeting of
the Sixth Board of Directors. Meanwhile, the Company’s independent directors expressed
66
TCL Technology Group Corporation Annual Report 2019
their independent opinion on whether these incentive plans would be good for the
Company’s sustained development and whether the interests of the Company and its
shareholders would be jeopardized.
2. On 23 April 2019, the Proposal on the 2019 Restricted Stock Incentive Plan and the
Second Global Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the
Proposal on the Measures for the Implementation of the 2019 Restricted Stock Incentive
Plan and the Second Global Innovation Partner Plan of TCL Corporation, and the Proposal
on the Awardee List for the 2019 Restricted Stock Incentive Plan were approved at the 10th
Meeting of the Sixth Supervisory Committee.
3. Following the publication of the awardee list within the Company, the Supervisory
Committee’s Statement Regarding the Review and Publication of the Awardee List for the
Restricted Stock Incentive Plan and the Second Global Innovation Partner Plan was
disclosed to the public on 6 May 2019.
4. On 8 May 2019, the Proposal on the 2019 Restricted Stock Incentive Plan and the
Second Global Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the
Proposal on the Measures for the Implementation of the 2019 Restricted Stock Incentive
Plan and the Second Global Innovation Partner Plan of TCL Corporation, and the Proposal
on Asking the General Meeting to Authorize the Board to Handle Matters Related to the
2019 Restricted Stock Incentive Plan were approved at the Third Extraordinary General
Meeting of 2019.
5. On 10 May 2019, the Proposal on the Adjustments to the 2019 Restricted Stock
Incentive Plan and the Second Global Innovation Partner Plan were approved at the 17th
Meeting of the Sixth Board of Directors and at the 11th Meeting of the Sixth Supervisory
Committee. As such, it was approved to grant 3,875,600 restricted shares to 122 eligible
awardees on 10 May 2019. The Company’s independent directors expressed their
independent opinion that the awardee determination method and the grant date were in
compliance with the applicable requirements.
67
TCL Technology Group Corporation Annual Report 2019
6. On 27 June 2019, the Company disclosed the Announcement on the Completion of the
Grant of Restricted Stock for 2019. This grant had been completed by the Board. And the
granted shares were listed on 26 June 2019.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ 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
□ Applicable ■ Not applicable
Indicate whether there were any credits and liabilities with related parties for non-operating purposes :
□ Yes ■ No
5. Other Major Related-Party Transactions
Title of announcement Date of disclosure Website for disclosure
Announcement on Intended Continuing
Related-Party Transactions with TCL 8 December 2018
Industries Holdings (Guangdong) Inc.
Announcement on TCL Finance Co., Ltd.
and TCL Industries Holdings Inc. Signing a
13 June 2019
Financial Service Agreement and the
Related-Party Transaction http://www.cninfo.com.cn
Announcement on the Acquisition of
Interest in Subsidiary and the 13 August 2019
Related-Party Transaction
Announcement on Investment in Equity
Investment Fund and the Related-Party 13 August 2019
Transaction
68
TCL Technology Group Corporation Annual Report 2019
Announcement on Increase in the
Estimated Amount of Continuing 31 October 2019
Related-Party Transactions with TCL
Industries Holdings Inc.
Announcement on the Sale of Interest in
Subsidiary and the Related-Party 31 October 2019
Transaction
Announcement on Investment in Equity
Investment Fund and the Related-Party 19 November 2019
Transaction
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable ■ Not applicable
(2) Contracting
□ Applicable ■ Not applicable
(3) Leases
□ Applicable ■ Not applicable
2. Major guarantees
Guarantees
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external par ties (exclusive of those for
subsidiaries)
Disclosure
Guarant
date of the
Actual Actual Having ee for a
guarantee Line of Type of Term of
Obligor occurrence guarantee expired related
line guarantee guarantee guarantee
date amount or not party or
announce
not
ment
69
TCL Technology Group Corporation Annual Report 2019
TCL King Electrical
Joint-liabilit 39 days--60
Appliances 2019/3/19 345,000 2019/07/23 232,163 Not Yes
y months
(Huizhou) Co., Ltd.
TCL Overseas
Joint-liabilit 19 –365
Electronics 2019/3/19 120,000 2019/07/17 83,200 Not Yes
y days
(Huizhou) Ltd.
TCL King Electrical
Joint-liabilit
Appliances 2019/3/19 60,000 2019/11/18 4,000 302 days Not Yes
y
(Chengdu) Co., Ltd.
Huizhou TCL Mobile
Joint-liabilit 1 day—15
Communication Co., 2019/3/19 450,000 2019/07/29 223,585 Not Yes
y months
Ltd.
TCL Communication
Joint-liabilit 18—60
Technology 2019/3/19 120,000 2017/11/20 106,903 Not Yes
y months
Holdings Limited
TCL Mobile
Communication Joint-liabilit 3—4
2019/3/19 248,500 2019/10/8 42,099 Not Yes
(HK) Company y months
Limited
TCT Mobile Joint-liabilit
2019/3/19 6,625 - - Not Yes
Overseas Limited -y
TCT Mobile (US) Joint-liabilit
2019/3/19 84,500 - - Not Yes
Inc. -y
TCT Mobile Joint-liabilit
2019/3/19 31,000 - - Not Yes
International Limited -y
TCT Mobile Italy Joint-liabilit
2019/3/19 1,600 - - Not Yes
S.R.L -y
TCT MOBILE - Joint-liabilit
2019/3/19 12,000 - - Not Yes
TELEFONES LTD A. -y
TCL Home
Joint-liabilit 2—365
Appliances (Hefei) 2019/3/19 140,000 2020/01/02 59,189 Not Yes
y days
Co., Ltd.
TCL Home
Appliances Joint-liabilit 4—185
2019/3/19 16,000 2019/07/13 12,187 Not Yes
(Zhongshan) Co., y days
Ltd.
TCL Air-Conditioner
Joint-liabilit 27—1,804
(Zhongshan) Co., 2019/3/19 158,600 2016/09/09 91,686 Not Yes
y days
Ltd.
70
TCL Technology Group Corporation Annual Report 2019
TCL Air Conditioner Joint-liabilit 33—360
2019/3/19 131,600 2019/05/07 67,124 Not Yes
(Wuhan) Co., Ltd. y days
Zhongshan TCL
Joint-liabilit 90—196
Refrigeration 2019/3/19 75,300 2019/06/21 26,211 Not Yes
y days
Equipment Co., Ltd.
Guangdong TCL
Smart Heating & Joint-liabilit 90—189
2019/3/19 7,000 2019/07/30 5,964 Not Yes
Ventilation y days
Equipment Co., Ltd.
TCL Home
Joint-liabilit
Appliances 2019/3/19 11,500 - - Not Yes
-y
(Huizhou) Co., Ltd.
TCL Intelligent
Joint-liabilit
Technology (Hefei) 2019/3/19 800 2019/01/15 2 76 days Not Yes
y
Co., Ltd.
TCL Air-Conditioner Joint-liabilit 180—365
2019/3/19 25,000 2019/07/09 12,019 Not Yes
(Jiujiang) Co., Ltd. y days
TCL Home
Joint-liabilit
Appliances (Hong 2019/3/19 20,000 - - Not Yes
-y
Kong) Limited
Shenzhen TCL
Hangxiang Supply Joint-liabilit
2019/3/19 500 - - Not Yes
Chain Service Co., -y
Ltd.
Zhongshan Hhappy
Joint-liabilit 31—31
Tree Network 2019/3/19 2,000 2019/12/16 3 Not Yes
y days
Technology Co., Ltd.
TCL Tonly
Joint-liabilit
Electronics 2019/3/19 40,000 2019/02/15 7,206 1—2 years Not Yes
y
(Huizhou) Co., Ltd.
TCL Commercial
Information Joint-liabilit 3—259
2019/3/19 14,000 2018/11/16 Not Yes
Technology -y days
(Huizhou) Co., Ltd.
TCL Very Lighting
Joint-liabilit 2—196
Technology 2019/3/19 9,500 2019/07/11 4,795 Not Yes
y days
(Huizhou) Co., Ltd.
TCL Capital (Hong Joint-liabilit
2019/3/19 100,000 - - Not Yes
Kong) Limited -y
71
TCL Technology Group Corporation Annual Report 2019
Huizhou Cool
Joint-liabilit 6—204
Friends Network 2019/3/19 13,000 2019/11/11 12,989 Not Yes
y days
Technology Co., Ltd.
SHIFENDAOJIA
Joint-liabilit 2—189
Online Service Co., 2019/3/19 3,000 2019/06/28 1,216 Not Yes
y days
Ltd.
TCL Technology Joint-liabilit
2019/3/19 27,000 - - Not Yes
Park Co., Ltd. -y
Guangzhou
Joint-liabilit 120—144
Yunsheng Tianji 2019/3/19 110,000 2017/09/28 94,900 Not Yes
y months
Technology Co., Ltd.
Guangzhou TCL
Science and
Joint-liabilit 156—156
Technology 2019/3/19 200,000 2018/12/18 38,250 Not Yes
y months
Development Co.,
Ltd.
Shenzhen Bao’an
TCL Haichuanggu
Joint-liabilit 36—36
Technology Park 2019/3/19 20,000 2018/09/25 16,144 Not Yes
y months
Development Co.,
Ltd.
TCL Industries
Joint-liabilit
Holdings (HK) 2019/3/19 800,000 2016/10/4 631,197 1—5 years Not Yes
y
Limited
Huizhou TCL
Joint-liabilit 7 days-3
Environment 2019/3/19 6,000 2019/01/24 684 Not Yes
y months
Technology Co., Ltd.
Canyon Circuit
Joint-liabilit 24—188
Technology 2019/3/19 5,000 2019/07/03 3,205 Not Yes
y days
(Huizhou) Co., Ltd.
Huizhou Shenghua Joint-liabilit 59—239
2019/3/19 9,000 2019/06/28 7,421 Not Yes
Industrial Co., Ltd. y days
Taiyang
Joint-liabilit 109—184
Electro-optic 2019/3/19 4,000 2019/07/05 3,235 Not Yes
y days
(Huizhou) Co., Ltd.
Shenzhen Qianhai
Qihang Supply Joint-liabilit
2019/3/19 110,000 2018/3/27 28,052 2-12 months Not Yes
Chain Management y
Co., Ltd.
72
TCL Technology Group Corporation Annual Report 2019
Qihang
Joint-liabilit
Import&Export 2019/3/19 30,000 - - Not Yes
-y
Limited
Huizhou
Joint-liabilit 89—245
Gaoshengda 2019/3/19 9,000 2019/06/25 390 Not Yes
y days
Technology Co., Ltd.
AGC New Electronic
Joint-liabilit
Display Glass 2019/6/12 40,000 - - Not Yes
-y
(Shenzhen) Co., Ltd.
Total approved line for such Total actual amount of
guarantees in Reporting Period 3,617,025 such guarantees in 3,893,397
(A1) Reporting Period (A2)
Total approved line for such Total actual balance of
guarantees at end of Reporting 3,617,025 such guarantees at end 1,816,017
Period (A3) of Reporting Period (A4)
Guarantees provided by the Company as the parent for its subsidiaries
Disclosure
Guarant
date of the
Actual Actual Having ee for a
guarantee Line of Type of Term of
Obligor occurrence guarantee expired related
line guarantee guarantee guarantee
date amount or not party or
announce
not
ment
Wuhan China Star 14
Joint-liabilit
Optoelectronics 2019/3/19 800,000 2016/07/05 554,546 days—96 Not Not
y
Technology Co., Ltd. months
Shenzhen China
Star Optoelectronics
Joint-liabilit 6—96
Semiconductor 2019/3/19 4,763,100 2017/03/31 1,079,113 Not Not
y months
Display Technology
Co., Ltd.
TCL China Star 18
Joint-liabilit
Optoelectronics 2019/6/12 889,535 2015/04/27 404,127 days—96 Not Not
y
Technology Co., Ltd. months
Wuhan China Star
Optoelectronics
Joint-liabilit 3—96
Semiconductor 2019/3/19 1,160,000 2017/12/22 642,500 Not Not
y months
Display Technology
Co., Ltd.
Huizhou China Star 24
Joint-liabilit
Optoelectronics 2019/3/19 500,000 2019/09/25 100,611 days—12 Not Not
y
Technology Co., Ltd. months
73
TCL Technology Group Corporation Annual Report 2019
China Star
Optoelectronics Joint-liabilit
2019/3/19 260,000 2019/08/30 48,000 24 months Not Not
International (HK) y
Limited
China Display
Optoelectronics Joint-liabilit 7 days—60
2019/3/19 150,000 2019/09/26 37,713 Not Not
Technology y months
(Huizhou) Co., Ltd.
Wuhan China
Display Joint-liabilit 22—196
2019/3/19 50,000 2019/04/10 7,790 Not Not
Optoelectronics y days
Technology Co., Ltd.
Guangdong Juhua
Joint-liabilit
Printed Display 2019/3/19 30,000 - - Not Not
-y
Technology Co., Ltd.
TCL Finance Co., Joint-liabilit
2019/3/19 150,000 - - Not Not
Ltd. -y
TCL Commercial
Joint-liabilit
Factoring 2019/3/19 50,000 - - Not Not
-y
(Shenzhen) Co., Ltd.
Huizhou Zhongkai
TCL Zhirong Joint-liabilit 12—12
2019/3/19 50,000 2019/03/10 22,989 Not Not
Technology y months
Microcredit Co., Ltd.
Guangzhou TCL
Joint-liabilit
Internet Microcredit 2019/3/19 50,000 - - Not Not
-y
Co., Ltd.
Highly Information Joint-liabilit 1—26
2019/3/19 283,000 2018/04/12 212,192 Not Not
Industry Co., Ltd. y months
Beijing Hecheng
Joint-liabilit 22—22
Nuoxin Technology 2019/3/19 20,000 2018/09/05 2,000 Not Not
y months
Co., Ltd.
Beijing Lingyun Data Joint-liabilit 1—24
2019/3/19 35,000 2018/01/01 33,340 Not Not
Technology Co., Ltd. y months
Beijing Sunpiestore Joint-liabilit 12—22
2019/3/19 67,000 2018/09/05 47,000 Not Not
Technology Co., Ltd. y months
Shaanxi Titi
Joint-liabilit 22—22
Electronic 2019/3/19 3,000 2018/09/05 1,000 Not Not
y months
Technology Co., Ltd.
74
TCL Technology Group Corporation Annual Report 2019
TCL Technology
Joint-liabilit
Park (Huizhou) Co., 2019/3/19 200,000 - - Not Not
-y
Ltd.
TCL Technology Joint-liabilit
2019/6/12 400,000 - - Not Not
Investments Limited -y
Total approved line for such Total actual amount of
guarantees in the Reporting 9,910,635 such guarantees in the 3,024,432
Period (B1) Reporting Period (B2)
Total actual balance of
Total approved line for such
such guarantees at the
guarantees at the end of the 9,910,635 3,192,920
end of the Reporting
Reporting Period (B3)
Period (B4)
Guarantees provided between subsidiaries
Disclosure
Guarant
date of the
Actual Actual Having ee for a
guarantee Line of Type of Term of
Obligor occurrence guarantee expired related
line guarantee guarantee guarantee
date amount or not party or
announce
not
ment
Total approved line for such Total actual amount of
guarantees in the Reporting - such guarantees in the -
Period (C1) Reporting Period (C2)
Total actual balance of
Total approved line for such
such guarantees at the
guarantees at the end of the - -
end of the Reporting
Reporting Period (C3)
Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in Total actual guarantee
the Reporting Period 13,527,660 amount in the Reporting 6,917,829
(A1+B1+C1) Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at
balance at the end of the
the end of the Reporting Period 13,527,660 5,008,937
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the 166%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual
1,816,016.79
controller and their related parties (D)
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TCL Technology Group Corporation Annual Report 2019
Balance of debt guarantees provided directly or indirectly for
2,284,430.79
obligors with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50%
3,503,339.28
of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 7,603,786.86
Joint liability possibly borne or already borne in the
-
Reporting Period for outstanding guarantees (if any)
Guarantees provided in breach of prescribed procedures (if
-
any)
Irregularities in Provision of Guarantees
□ Applicable ■ Not applicable
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
Overview of wealth management entrustments in the Reporting Period:
Unit: RMB’0,000
Unrecovered overdue
Type Source of capital Amount Undue amount
amount
Bank’s wealth
Self-owned capital 770,029 145,424 0-
management product
Securities firm’s
wealth management Self-owned capital 95,000 95,000 0-
product
Trust plan Self-owned capital 150,000 40,000 0-
Other Self-owned capital 91,751 26,944 0-
Total 1,101,751 307,368 0-
High-risk wealth management transactions with a significant single amount, low liquidity and no principal protection:
□ Applicable ■ Not applicable
Situation where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable ■ Not applicable
(2) Entrusted Loans
Overview of entrusted loans provided in the Reporting Period:
Unit: RMB’0,000
76
TCL Technology Group Corporation Annual Report 2019
Unrecovered overdue
Total amount Source of capital Undue amount
amount
0 Self-owned capital 711.09 0
High-risk entrusted loans with a significant single amount, low liquidity and no principal protection:
□ Applicable ■ Not applicable
Situation 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 Commitment
Please refer to The 2019 Corporate Social Responsibility Report of TCL Technology Group
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
Capital Markets in Serving the Country in Poverty Alleviation", the Compa ny has been
fulfilling its social responsibilities in poverty alleviation and public service, especially in the
field of education poverty alleviation. The "TCL Hope Engineering Candlelight Awards
Program" jointly established by CYDF and Shenzhen TCL Public Welfare Foundation in
2013 is one of the earliest public welfare projects for rural teachers in the country. The
investment to this project is over RMB34 million in six years. The purpose of the award is to
demonstrate the morality and professional dreams of outstanding rural teachers who have
worked hard in the grassroots education front in poverty-stricken areas for their posts, and
encourage more outstanding young teachers to take root in rural basic education and
promote rural education development.
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TCL Technology Group Corporation Annual Report 2019
(2) Summary of the Related Work Done in the Reporting Period
In the 2019 "Candlelight Awards Program", a total of 402 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 will receive funding and training support. The individual award,
which is worth RMB8,000, includes a cash reward of RMB5,000 and a "candle classroom"
training of RMB3,000 in online and offline "Flipped Classroom" per person. In 2019, the
coverage of "Candlelight Micro-Loan" was expanded. Except for the outstanding teachers
who were rewarded by the "TCL Hope Engineering Candlelight Awards", all the teachers
under training who belong to the Hope Primary School Teacher Training Office of CYDF
can apply for the loan.
In order to serve the national poverty alleviation work and respond to the call for targeted
poverty alleviation, Shenzhen TCL Public Welfare Foundation initiated an "assistance
program for retired private substitute teachers" jointly with CYDF to solve the problem of
low-paid and difficult living for retired private substitute teachers in poverty-stricken areas.
This program helps and supports retired private substitute teachers who contributed to
education in poverty-stricken areas to improve their living conditions by funding services
and social advocacy, and encourage them to develop for social respect and
self-development.
(3) Results
Measurement
Indicators Quantity/Development
Unit
I. Overall summary —— ——
Of which: 1. Cash RMB’0,000 779.298
4. Poverty alleviation by education —— ——
4.3 Investment amount in
improvement of educational resources in RMB’0,000 360
poverty-stricken areas
8. Poverty alleviation by public
—— ——
programmes
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TCL Technology Group Corporation Annual Report 2019
8.2 Investment amount in targeted
RMB’0,000 10
poverty alleviation
8.3 Investment amount in public
RMB’0,000 409.298
fund for poverty alleviation
(4) Subsequent Plans
In 2020, the Company will expand the existing award scale and publicity impact of the TCL
Hope Project—Candlelight Awards Program, and strengthen interaction with netizens on
the Internet platform to maintain social attention.
Starting from 2020, the Company will also expand the coverage of the Candlelight
Micro-loan Project to solve the financial needs of more rural teachers and improve their
lives. This is to ensure the positive development of rural education.
3. Issues Related to Environmental Protection
The Company as the parent is not a major polluter. The subsidiaries in the table below were
major polluters declared by the environmental protection authorities in 2019, and
“subsidiaries” mentioned in this section refer to the following subsidiaries in particular.
Name of Approved
Distributio Discharge Governing Total
the Number of total
Major Way of n of concentrati discharge discharge Excessive
Company discharge discharge
pollutants discharge discharge on standards (metric discharge
or outlets (metric
outlets (mg/L) (mg/L) ton)
subsidiary tons/year)
Intermittent
COD 106.9mg/L 260 mg/L 777.23t 1226.05t None
ly
Northwest
discharged
ern corner
to 1
TCL China Ammonia of the plant
Guangmin 5.6 mg/L 30 mg/L 40.81t / None
Star nitrogen area
g Sewage
Optoelectr
Plant
onics
Continuou
Technolog COD Artificial 16.6 mg/L 30 mg/L 70.15t 174.89t None
sly
y Co., Ltd. wetland to
discharged
1 the north
Ammonia to
of the plant 0.65 mg/L 1.5 mg/L 2.7t 7.7t None
nitrogen Dongkeng
area
shui
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TCL Technology Group Corporation Annual Report 2019
Shenzhen COD 50mg/L 110mg/L 237.25t 494.52t None
China Star Intermittent
Optoelectr ly
Northeaste
onics discharged
rn corner
Semicondu to 1
Ammonia of the plant
ctor Guangmin 3mg/L 30mg/L 14t 79.12t None
nitrogen area
Display g Sewage
Technolog Plant
y Co., Ltd.
Wuhan Intermittent
COD 16-34mg/L 400mg/L 250.45t 353.55t None
China Star ly Northwest
Optoelectr discharged ern corner
1
onics Ammonia to Zuoling of the plant 0.306-5.59
30mg/L 25.05t 35.36t None
Technolog nitrogen Sewage area mg/L
y Co., Ltd. Plant
Construction and operation of facilities for preventing pollution:
During the Reporting Period, no major environmental pollution incidents occurred in either
the Company or any of its subsidiaries. An advanced sewage management system has
been established for each subsidiary, and regular monitoring and supervision and
inspection mechanisms have been adopted to ensure the emission and disposal of waste
water, waste gas, and solid waste and factory noises generated during the operation are in
compliance with the national and local laws and regulations.
The waste water of each subsidiary company includes domestic waste water and industrial
waste water, of which domestic waste water is discharged into the local municipal sewage
treatment pipe network after being pre-treated by oil separation and septic treatment, and
industrial waste water enters different treatment systems according to its characteristics,
and is discharged subjected to the standards after physical and chemical and biochemical
treatment. The atmospheric pollutants produced by each subsidiary are mainly process
waste gases in the production process. For different types 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 gas treatment system,
waste gas treatment system for waste water treatment station, cloth bag dedusting system,
etc. for the collection of waste gases through pipelines to the corresponding waste gas
treatment system, where waste gases are discharged at a high altitude after meeting
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TCL Technology Group Corporation Annual Report 2019
relative standards. The concentration and total amount of waste water and exhaust gas
discharged meet the relevant national and local standards. The solid wastes generated b y
each subsidiary include general waste, hazardous waste and domestic garbage, of which,
hazardous wastes are treated by an entrusted qualified hazardous waste disposal agency
according to the regulations; general wastes are disposed of by a resource recycling firm
after being classified in the plant area; while domestic garbage is disposed of by the
property management company. All the disposals meet the regulatory requirements. The
factory noise generated by each subsidiary comes from the mechanical noises of
production and power equipment, including refrigerators, cooling towers, air compressors,
fans, various types of pumps, etc.. The Company reduces the impact of noise on the
surrounding environment by the use of low-noise equipment, vibration reduction, noise
reduction, etc., and noise reduction measures such as sound insulation and sound
absorption in the factories and equipment rooms. The monitoring results show that the
factory boundary noise and emission of all subsidiaries meet the standards in a s table
manner.
Environmental Impact Assessment on Construction Projects and Other
Environmental Protection Administrative Licenses
Each subsidiary complies with the laws and regulations of environmental impact
assessment on construction projects and other e nvironmental protection administrative
licenses, and no violations occurred during the Reporting Period.
Emergency Response Plan for Environmental Incidents
Each subsidiary has set up an environmental incident emergency organization led by the
senior management of the enterprise and prepared an environmental emergency response
plan, which has been filed with the local environmental protection department in
accordance with relevant national laws and regulations. In addition, regularly emergency
drills are conducted for environmental incidents according to the plan to ensure the validity
of emergency response plan.
Environmental Self-Monitoring Program
Each subsidiary has formulated an environmental self-monitoring program in accordance
81
TCL Technology Group Corporation Annual Report 2019
with national regulations, and monitors the discharge of pollutants by manual monitoring or
manual monitoring performed by a third-party qualified agency. The monitoring plans and
annual monitoring reports can be checked on the key environmental monitoring information
platform managed by local environmental authorities or subsidiary websites.
Other environment-related information that should be disclosed:
None.
Other relevant information:
None.
XIX Other Significant Events
On 25 March 2019, the Company disclosed the Announcement on the Investment in an
Overseas Equity Investment Fund (Announcement No. 2019-039). As the electronic
information industry (where the Company competes) features a typical global vertical
specialization in terms of capital allocation as well as technological expertise. In view of that,
the Company has established R&D centers in Guangzhou, Wuhan, Hong Kong, the U.S.,
Europe, etc. based on local resources and global planning. By cooperating with
professional investing institutions across the globe through the platform of TCL Capital, the
Company strengthens insight in cutting-edge technologies and look for investment targets
with high growth potential, business synergy and financial returns. Therefore, through its
majority-owned subsidiary Li Rong Development Limited as a limited partner, the Company
intended to make an investment of US$25 million in Sierra Ventures XII, L.P., a venture
capital fund registered in Delaware, the U.S. The fund is currently in normal operation.
On 13 August 2019, the Company disclosed the Announcement on the Investment in an
Equity Investment Fund and the Related-Party Transaction (Announcement No. 2019-113).
In order to find investment projects with high growth potential, and promote the
improvement of industrial chain and technological progress through investment, the
Company intended to establish Chongqing Zhongxin Rongxin Investment Center (Limited
Partnership) jointly with Chongqing Zhongxin Rongchuang Investment Co., Ltd. and Tibet
Zhongxin Ruiyin Investment Management Co., Ltd. As a limited partnership, the fund aims
for a goal of RMB2.31 billion, of which Chongqing Zhongxin Rongchuang Investment Co.,
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TCL Technology Group Corporation Annual Report 2019
Ltd. subscribed for RMB0.06 billion, the Company subscribed for RMB1.5 billion and Tibet
Zhongxin Ruiyin Investment Management Co., Ltd. subscribed for RMB0.75 billion. The
fund is currently in normal operation.
On 19 November 2019, the Company disclosed the Announcement No. 2019-151 on
Investment in an Equity Investment Fund and the Related-Party Transaction. In order to
coordinate and leverage various resources to optimize the allocation of various elements
for faster realization of the Company’s strategies, the Company intended to make an
investment in Guangdong Rongchuang Lingyue Intelligent Manufacturing and Information
Technology Industry Equity Investment Fund Partnership (Limited Partnership) to be
established. As a limited partnership, the fund aimed to raise RMB3 billion in two tranches.
The goal of the first tranche was RMB2.03 billion, of which the Company subscribed for
RMB0.75 billion, Guangdong Utrust Industry Investment Fund Partnership (Limited
Partnership) subscribed for RMB0.4 billion, Chongqing Sokon Industry Group Stock Co.,
Ltd. subscribed for RMB0.15 billion, Win-All Hi-Tech Seed Co., Ltd. subscribed for RMB0.1
billion, Shenzhen Qianhai Zhongxin Financial Capital Management Company Limited
subscribed for RMB0.03 billion, Ningbo Meishan Bonded Port Area Chuangyi Asset
Management Partnership (Limited Partnership) subscribed for RMB0.1 billion, Chongqing
Haorong Ruigong Investment Center (Limited Partnership) subscribed for RMB0.3 billion,
and Tangying (Ningxia) Investment Management Co., Ltd. subscribed for RMB0.2 billion.
The goal of the second tranche was RMB0.97 billion. The fund is now in normal operation.
XX Significant Events of Subsidiaries
Title of current announcement Disclosure date Disclosure website
Announcement on Shenzhen Industry
Development Fund Increasing Its Capital
24 April 2019
Increase to the G11 New Display Device
Production Line Project Company http://www.cninfo.com.cn
Announcement on Name Change of
Subsidiary TCL China Star 4 November 2019
Optoelectronics Technology Co., Ltd.
83
TCL Technology Group Corporation Annual Report 2019
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Increase/decrease in the
Before After
Reporting Period (+/-)
Percenta Percenta
Shares Other Subtotal Shares
ge (%) ge (%)
1. Restricted shares 1,825,653,291 13.47% -957,888,311 -957,888,311 867,764,980 6.41%
1.1 Shares held by
state-owned legal 0 0.00% 0 0 0 0.00%
persons
1.2 Shares held by
other domestic 1,734,836,800 12.80% -957,734,601 -957,734,601 777,102,199 5.74%
investors
Among which:
Shares held by
1,210,757,974 8.94% -1,059,849,533 -1,059,849,533 150,908,441 1.12%
domestic legal
persons
Shares held
by domestic natural 524,078,826 3.86% 102,114,932 102,114,932 626,193,758 4.63%
persons
1.3 Shares held by
90,816,491 0.67% -153,710 -153,710 90,662,781 0.67%
foreign investors
Among which:
Shares held by
90,532,347 0.67% 0 0 90,532,347 0.67%
foreign legal
persons
Shares held
by foreign natural 284,144 0.00% -153,710 -153,710 130,434 0.00%
persons
2. Unrestricted
11,723,995,216 86.53% 936,678,523 936,678,523 12,660,673,739 93.59%
shares
2.1
11,723,995,216 86.53% 936,678,523 936,678,523 12,660,673,739 93.59%
RMB-denominated
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TCL Technology Group Corporation Annual Report 2019
ordinary shares
3. Total shares 13,549,648,507 100.00% -21,209,788 -21,209,788 13,528,438,719 100.00%
Reasons for share changes:
Some of the shares in a share offering made in 2017 for asset purchase, i.e. 1,059,849,533 shares, were unlocked on 4
January 2019, reducing the restricted shares and increasing the unrestricted shares accordingly; and 6,685,704 restricted
shares under the 2018 Restricted Stock Incentive Plan were unlocked, reducing the restricted shares and increasing the
unrestricted shares accordingly. 3,875,613 restricted shares were granted under the 2019 Restricted Stock Incentive Plan,
increasing the restricted shares accordingly. Mr. Li Dongsheng increased his shareholding by 167,974,800 shares,
increasing the restricted shares accordingly. 21,209,788 restricted shares under the 2018 Restricted Stock Incentive Plan
were repurchased and retired, reducing the total share capital from 13,549,648,507 shares to 13,528,438,719 shares.
Approval of share changes:
□Applicable ■Not applicable
Transfer of share ownership:
□Applicable ■Not applicable
Progress on any share repurchase:
It is the key operational philosophy and mission of the Company to create value for and grow with the shareholders. In
order to effectivel y protect shareholders’ interests and enhance shareholder value, the Company convened the 14 th
Meeting of the 6 th Board of Directors on 10 January 2019, at which the Proposal on the Repurchase of Certa in Public
Shares was approved. The Report on the Repurchase of Certain Public Shares was disclosed on 14 February 2019. In
th th
view of the trends on the secondary market of stocks, the Company convened the 15 Meeting of the 6 Board of
Directors on 19 March 2019, at which the Proposal on the Adjustment to the Upper Limit of the Share Repurchase Price.
As such, the upper limit of the share repurchase price was adjusted from RMB3.80/share to RMB5.00/share. The
Company implemented the share repurchase from 14 February 2019. Up to 10 January 2020, the Company has
cumulatively repurchased 565,333,922 shares (or 4.18% of the Company’s total share capital) in its special securities
account for repurchases by way of centralized bidding, with the highest trading price being RMB4.17/share, the lowest
trading price being RMB3.13/share, and the average trading price being RMB3.42/share. The total transaction amount
was RMB1,933.5965 million (exclusive of trading fees). The share repurchase has been implemented in a process in
compliance with the applicable regulations including the Specific Rules of the Shenzhen Stock Exchange for Share
Repurchase by Listed Companies. The actual number of shares repurchased, repurchase price and amount used were in
compliance with the repurchase plan approved at the 14 th Meeting of the 6 th Board of Directors, with no difference with the
disclosed Report on Share Repurchase. As such, the Company has completed the share repurchase as per the
repurchase plan that it disclosed.
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TCL Technology Group Corporation Annual Report 2019
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable ■ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the
Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,
respectively:
□Applicable ■Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□Applicable ■Not applicable
2. Changes in Restricted Shares
Unit: share
Beginning Unlocked in Increase in Ending
Reason for Date of
Shareholder restricted Reporting Reporting restricted
restriction unlocking
shares Period Period shares
Hubei Changjiang
Hezhi Hanyi
Equity In vestment IPO restricted
1,059,849,533 1,059,849,533 - - 2019-1-4
Fund Partnership shares
(Limited
Partnership)
Star Century
IPO restricted
Enterprises 90,532,347 - - 90,532,347 2020-12-25
shares
Limited
Duilong Xinglan
Venture
Investment
IPO restricted
Management 42,521,163 - - 42,521,163 2020-12-25
shares
Partnership
(Limited
Partnership)
Duilong Xingyong
Venture
Investment
IPO restricted
Management 38,380,684 - - 38,380,684 2020-12-25
shares
Partnership
(Limited
Partnership)
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TCL Technology Group Corporation Annual Report 2019
Duilong Xingyuan
Venture
Investment
IPO restricted
Management 37,695,315 - - 37,695,315 2020-12-25
shares
Partnership
(Limited
Partnership)
Duilong Xinglian
Venture
Investment
IPO restricted
Management 32,311,279 - - 32,311,279 2020-12-25
shares
Partnership
(Limited
Partnership)
Locked-up
shares of
Other 489,686,526 - 125,981,101 615,667,627 9999-99-99
senior
management
2018 Restricted Restricted
Stock Incentive 34,676,444 27,859,492 6,780,952 shares granted 2020-5-16
Plan as incentives
2019 Restricted Restricted
Stock Incentive - - 3,875,613 3,875,613 shares granted 2020-5-10
Plan as incentives
Total 1,825,653,291 1,087,709,025 129,856,714 867,764,980 -- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
Number
Name of stock
Issue price (or approved for Termination date of
and its derivative Issue date Issued number Listing date
interest rate) public transaction
securities
trading
Type: convertible corporate bonds, convertible corporate bonds with warrants, corporate bonds
Corporate bonds 2019-5-20 4.33% 10,000,000 2019-06-06 10,000,000
Corporate bonds 2019-7-23 4.30% 10,000,000 2019-08-06 10,000,000
Corporate bonds 2019-10-21 4.20% 20,000,000 2019-10-29 20,000,000
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
Some of the shares in a share offering made in 2017 for asset purchase, i.e. 1,059,849,533
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TCL Technology Group Corporation Annual Report 2019
shares, were unlocked on 4 January 2019, reducing the restricted shares and increasing
the unrestricted shares accordingly; and 6,685,704 restricted shares under the 2018
Restricted Stock Incentive Plan were unlocked, reducing the restricted shares and
increasing the unrestricted shares accordingly. 3,875,613 restricted shares were granted
under the 2019 Restricted Stock Incentive Plan, increasing the restricted shares
accordingly. Mr. Li Dongsheng increased his shareholding by 167,974,800 shares,
increasing the restricted shares accordingly. 21,209,788 restricted shares under the 2018
Restricted Stock Incentive Plan were repurchased and retired, reducing the total share
capital from 13,549,648,507 shares to 13,528,438,719 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
preferred
Number of Number of shareholders
Number of ordinary preferred with resumed
ordinary shareholders at shareholders with voting rights at
shareholders 433,940 the month-end 546,906 resumed voting - the month-end -
at the prior to the rights at the prior to the
period-end disclosure of period-end (if disclosure of
this Report any) (see note 8) this Report (if
any) (see note
8)
5% or greater shareholders or top 10 shareholders
Sharehol Increase/dec Shares in pledge or
Nature of Total shares
Name of ding rease in the Restricted Unrestricted frozen
sharehold held at the
shareholder percenta Reporting shares held shares held
er period-end Status Shares
ge Period
Li Dongsheng Domestic Put in
and his natural 9.03 1,221,748,009 174,574,800 609,636,366 612,111,643 pledge 541,620,000
acting-in-conc person/g by Li
88
TCL Technology Group Corporation Annual Report 2019
ert party eneral Dongsh
legal eng
person
Put in
pledge
by
408,899,521
Jiutian
Lianche
ng
Huizhou
State-ow
Investment
ned legal 6.48 878,419,747 878,419,747
Holding Co.,
person
Ltd.
Tibet Tianfeng Domestic
Enterprise general
3.89 526,095,642 526,095,642 526,095,642
Management legal
Co., Ltd. person
China
Domestic
Securities
general
Finance 2.76 373,231,553 373,231,553
legal
Corporation
person
Limited
Hong Kong
Foreign
Securities
legal 2.61 353,489,854 353,489,854
Clearing
person
Company Ltd.
Central Huijin
State-ow
Asset
ned legal 1.53 206,456,500 206,456,500
Management
person
Co., Ltd.
Domestic
Xiaomi
general
Communicatio 1.00 134,949,437 134,949,437
legal
ns Co., Ltd.
person
Xinjiang
Dongxing
Domestic
Huarui Equity
general
Investment 0.86 115,726,278 115,726,278
legal
Partnership
person
(Limited
Partnership)
TCL Domestic
0.73 99,148,115 99,148,115
Corporation－ general
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TCL Technology Group Corporation Annual Report 2019
The First legal
Employee person
Stock
Ownership
Plan
Star Century Foreign
Enterprises legal 0.67 90,532,347 90,532,347
Limited person
Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) has
Strategic investor or also become a top-10 shareholder in a share offering of the Company, with its shareholdings
general legal person locked up from 25 December 2017 to 25 December 2018. For further information, see the
becoming a top-10 Implementation Report on TCL Corporation’s Asset Purchase via Share Offering and the
ordinary shareholder in a Related-Party Transaction & the New Share Listing Announcement. Changjiang Hanyi was
rights issue (if any) (see de-registered as a legal person in November 2019 and the indirect equity-holding of the
note 3) original partner has become direct equity-holding. Therefore, Tibet Tianfeng Enterprise
Management Co., Ltd. has become a top-10 shareholder of the Company.
Related or Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert, Mr. Li
acting-in-concert parties Dongsheng and Xinjiang Jiutian Liancheng Equity In vestment Partnership (Limited
among the shareholders Partnership) are the biggest shareholder of the Company with a total of 1,221,748,000
above shares.
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
Huizhou Investment Holding Co., RMB-denominated
878,419,747 878,419,747
Ltd. ordinary stock
Li Dongsheng and his RMB-denominated
612,111,643 612,111,643
acting-in-concert party ordinary stock
Tibet Tianfeng Enterprise RMB-denominated
526,095,642 526,095,642
Management Co., Ltd. ordinary stock
China Securities Finance RMB-denominated
373,231,553 373,231,553
Corporation Limited ordinary stock
Hong Kong Securities Clearing RMB-denominated
353,489,854 353,489,854
Company Ltd. ordinary stock
Central Huijin Asset Management RMB-denominated
206,456,500 206,456,500
Co., Ltd. ordinary stock
RMB-denominated
Xiaomi Communications Co., Ltd. 134,949,437 134,949,437
ordinary stock
Xinjiang Dongxing Huarui Equity
RMB-denominated
Investment Partnership (Limited 115,726,278 115,726,278
ordinary stock
Partnership)
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TCL Technology Group Corporation Annual Report 2019
TCL Corporation－The First RMB-denominated
99,148,115 99,148,115
Employee Stock Ownership Plan ordinary stock
Jiaxing Junying Youchang
RMB-denominated
Investment Partnership (Limited 87,208,957 87,208,957
ordinary stock
Partnership)
Related or acting-in-concert parties
among top 10 unrestricted public Being acting-in-concert parties upon the signing of the Agreement on Acting in
shareholders, as well as between Concert, Mr. Li Dongsheng and Xinjiang Jiutian Liancheng Equity In vestment
top 10 unrestricted public Partnership (Limited Partnership) are the biggest shareholder of the Company with
shareholders and top 10 a total of 1,221,748,000 shares.
shareholders
Top 10 ordinary shareholders
involved in securities margin None
trading (if any) (see note 4)
Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company
conducted any promissory repo during the Reporting Period.
□ Yes ■ No
2. Controlling Shareholder
The Company has no controlling shareholder.
Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert, Mr.
Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited
Partnership) are the biggest shareholder of the Company with a total of 1,221,748,000
shares.
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
91
TCL Technology Group Corporation Annual Report 2019
controller.
3. Actual Controller and Its Acting-in-Concert Parties
The “actual controller” refers to an entity which is not a shareholder of a company but
actually controls the company behaviors through investment relationship, agreement or
other arrangements. According to the definition above, the Company has no actual
controller.
Whether there is any shareholder with a greater than 10% interest at the ultimate control level:
□ Yes ■ No
Shareholders with a greater than 5% interest at the ultimate control level:
□ Applicable ■ Not applicable
Change of the actual controller in the Reporting Period:
□ Applicable ■ Not applicable
Indicate whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable ■ Not applicable
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
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TCL Technology Group Corporation Annual Report 2019
Part VII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Decrease Other
Increase in
Incumb Beginning in the increas Ending
Start of the Reporting
Name Office title ent/For Gender Age End of tenure shareholding Reporting e/decre shareholding
tenure
Period
mer (share) Period ase (share)
(share)
(share) (share)
Chairman of
Li Incumb
the Board and Male 62 2002-4-16 2020-8-31 644,873,688 167,974,800 - - 812,848,488
Dongsheng ent
CEO
Vice
Incumb
Liu Bin Chairman of Male 50 2015-8-31 2020-8-31 0 - - - 0
ent
the Board
Director,
Incumb
Du Juan COO and Female 49 2018-3-2 2020-8-31 0 - - - 0
ent
CFO
Director and
Incumb
Liao Qian Board Male 39 2014-4-23 2020-8-31 0 - - - 0
ent
Secretary
Director and
Incumb
Jin Xuzhi Senior Vice Male 65 2015-8-13 2020-8-31 0 - - - 0
ent
President
Independent Incumb
Yan Yan Male 63 2015-3-24 2020-8-31 0 - - - 0
Director ent
Independent Incumb
Lu Xin Female 57 2014-9-1 2020-8-31 0 - - - 0
Director ent
Independent Incumb
Zhou Guofu Male 56 2014-9-1 2020-8-31 0 - - - 0
Director ent
Independent Incumb
Liu Xunci Male 61 2017-9-1 2020-8-31 0 - - - 0
Director ent
Chairman of
the Incumb
He Zhuohui Male 54 2015-9-2 2020-8-31 0 - - - 0
Supervisory ent
Committee
Mao Employee Incumb
Male 39 2017-9-1 2020-8-31 0 - - - 0
Tianxiang Supervisor ent
93
TCL Technology Group Corporation Annual Report 2019
Incumb
Qiu Haiyan Supervisor Female 45 2014-9-1 2020-8-31 0 - - - 0
ent
Senior Vice
Incumb
Yan Xiaolin President and Male 53 2014-9-1 2020-8-31 599,500 - - - 599,500
ent
CTO
Wang Senior Vice
Former Male 45 2018-3-19 2019-1-10 0 - - - 0
Cheng President
Huang Director and
Former Male 54 2011-6-20 2019-1-10 3,383,380 - 845,000 - 2,538,380
Xubin CFO
Vice
He Jinlei Chairman of Former Male 46 2017-9-1 2019-5-21 0 - - - 0
the Board
Wu Xiaohui Director Former Female 48 2017-9-1 2019-8-7 0 - - - 0
Director and
Huang Wei Senior Vice Former Male 57 2015-8-13 2019-12-13 0 - - - 0
President
Total -- -- -- -- -- -- 648,856,568 167,974,800 845,000 - 815,986,368
II Change of Directors, Supervisors and Senior Management
Type of
Name Office title Date of change Reason for change
change
Transferred to TCL Industries upon the
Senior Vice
Wang Cheng Resignation 10 January 2019 Restructuring according to the principle of “people
President
follow assets”
Director and
Huang Xubin Resignation 10 January 2019 Personal and family reason
CFO
Director and
He Jinlei Vice Chairman Resignation 21 May 2019 Job change
of the Board
No longer worked in the shareholder entity due to
Wu Xiaohui Director Resignation 7 August 2019
job transfer
94
TCL Technology Group Corporation Annual Report 2019
On 30 October 2019, the plan on sale of the 71%
interest in Huizhou TCL Environmental Resource
Co., Ltd. was approved at the 21 st Meeting of the
Director and 6th Board of Directors. The relevant liabilities and
Huang Wei Senior Vice Resignation 13 December 2019 personnel would be transferred along with the
President asset. As the Chairman of the Board of Huizhou
TCL Environmental Resource Co., Ltd., Mr. Huang
Wei has been transferred to the transaction
counter-party.
III Biographical Information
Born in July 1957, Mr. Li Dongsheng is the founder of TCL Technology Group Corporation
and currently serves as the Company’s Chairman and CEO; he was elected as a delegate
to China’s 16th National Congress of the CPC and a deputy to the 10th, 11th, 12th and 13th
National People’s Congress. Mr. Li holds a number of prestigious positions: Vice Chairman
of All China Federation of Industry and Commerce (ACFIC), Honorary President of China
Video Industry Association, Vice Chairman of China Commerce of International Chamber,
President of Guangdong Provincial Enterprise Confederation, President of Guangdong
Provincial Association 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 the Council of South China University of Technology, Visiting
Professor in Wuhan University and Honorary Professor in Beijing Institute of Technology.
From 1982 to 1985, he served as Technician, Workshop Manager and Production Director
in TTK Household Appliances Co., Ltd.; from 1985 to 1986, he served as First General
Manager of TCL Communication Devices Company; from 1986 to 1989, he served as
Director of the Introduction Department in Guangdong Huizhou Industrial Development
Corporation; from 1990 to 1993, he served as Deputy General Manager, Deputy Secretary
of the Party Committee and Secretary of the Youth 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 as Chairman and President of the
Company and in 2002, Mr. Li Dongsheng was selected as “CCTV’s Economic Person of the
95
TCL Technology Group Corporation Annual Report 2019
Year 2002”; from April 2002 to January 2004, he served as Chairman and President of the
Company; from January 2004 till now, he serves as Chairman and CEO of the Company.
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 Front Work
Department and All China Federation of Industry and Commerce. On December 18, 2018,
he was selected on the list of “100 Outstanding Contributors of Reform and Opening Up” of
the Central Committee of the Party and the State Council; he won the title of Pioneer of
Reform and awarded with the medal with the comment “A pioneer opening the international
market in electronics industry”.
As one of the founders of TCL, Mr. Li Dongsheng has led TCL in acquiring the global color
TV business of Thomson-CSF and the global mobile terminal business of Alcatel and
established a global business structure. He was honored as the “Asian Economic Person of
the Year 2004” 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 team members to carry out reform and inno vation with the spirit of rebirth and firmly
promote the international business. In February 2014, Mr. Li Dongsheng launched TCL’s
strategic transformation of “Double+” and in the same year, TCL achieved a sales revenue
of over RMB100 billion. 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
strong economy, which in turn requires a group of world-class enterprises. It is his steadfast
belief and persistent goal to firmly stick to industry and develop the Company into a
world-class enterprise as the backbone of China’s economy.
Born in February 1970, Mr. Liu Bin has obtained the Bachelor’s Degree and is an Assistant
Economist and Member of the Communist Party of China. He graduated from the
Department of Management Engineering of South China University of Technology.
Currently, he serves as Chairman and General Manager of Huizhou Investment Holdings
Co., Ltd.. From July 1992 to December 1993, he served as Deputy Director of the General
Office in Huizhou Foreign Investment Service Corporation; from December 1993 to
December 1998, he served as Secretary to the General Manager, Administrative Assistant
96
TCL Technology Group Corporation Annual Report 2019
to the General Manager and Assistant to the General Manager (the Deputy Section Head
level) of Huizhou Economy and Trade Group Co., Ltd.; from December 1998 to June 2003,
he served as Manager of Huizhou Tea Import and Export Company (the Section Head
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
served as Deputy General Manager of Huizhou Investment Holdings Co., Ltd. (from May
2011 to June 2015, he concurrently served as Director and Deputy General Manager of
Huizhou Fairway Investment and Construction Co., Ltd.; from September 2013 to August
2015, he concurrently served as Supervisor and Chairman of the Board of Supervisors of
the Company); from February 2014 till now, he serves as Director of Huizhou Investment
Holdings Co., Ltd.; from May 2015 till now, he serves as Chairman and General Manager
(the Deputy Division Head level) (from June 2015 to May 2018, he concurrently served as
Chairman of Huizhou Investment Holding Asset Operation Co., Ltd., Chairman of Huizhou
Financing Guarantee Co., Ltd. and Vice Chairman of the Company; from June 2015 to
January 2017, he concurrently served as Chairman of Huizhou Fairway Investment and
Construction Co., Ltd.; from May 2016 to March 2017, he concurrently served as Director of
Uirust.
Ms. Du Juan currently serves as Chief Operating Officer, Chief Financial Officer and
Member of the Execution Commission of the Company. Born in May 1970, she graduated
from the Department of 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 in the Company and served as General Manager of the
Settlement Center and General Manager of the Finance Company in the Company. From
October 2014 till now, she serves as President and Chairman of TCL Financial Holdings
Group (Guangzhou) Co., Ltd.. From July 2016 to February 2018, she served as Vice
President of the Company. From February 2018 till now, she serves as Chief Operating
Officer (COO) of the Company. From January 2019 till now, she concurrently serves as
Chief Financial Officer (CFO) of the Company.
Mr. Liao Qian currently serves as Executive Director, Vice President, Chief of Staff and
97
TCL Technology Group Corporation Annual Report 2019
Board Secretary of the Company. He has obtained the Master’s Degree and holds the
Occupational Qualification Certificate of the People’s Republic of China for Law. From
August 2006 to February 2014, he worked in Guotai Junan International Holdings Co., Ltd.
and was engaged in the investment banking business in Hong Kong and Mainland China.
Joining the Company in March 2014, he is in charge of Board affairs, strategic planning and
matters in relation to the domestic and overseas capital markets. He is also Independent
Director of JiaWei Renewable Energy (300317.SZ), Chairman of the Board of Tonly
Electronics (1249.HK) and CDOT (0334.HK), Non-Executive Director of Fantasia (1777.HK)
and Vice Chairman of the Board of Tianjin 712 Communication & Broadcasting Co., Ltd.
(603712.SH).
Mr. Jin Xuzhi currently serves as Senior Vice President of the Company and CEO and
Director of TCL CSOT. Born in September 1955, he has obtained the Master’s Degree in
Material Engineering from Yonsei University in South Korea and MBA from McGill
University. He worked in LG Semiconductor Co., Ltd. and served as Deputy General
Manager in LG Display (formerly known as LG Philips LCD) and Head of the IT Business
Division. From April 2009 to March 2010, he served as Senior Consultant in Fuhrmeister
Electronics. He joined in the Company in March 2010 and served as Senior Vice President,
President and CEO of CSOT and General Manager of Wuhan CSOT.
Mr. Yan Yan currently serves as Founding Managing Partner of SAIF Partners. Born in
September 1957, he holds the nationality of Hong Kong, China. Before founding SAIF, Mr.
Yan had served as Managing Director of AIG Asia Infrastructure Investment Fund and
Director of the Hong Kong Office. 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 Strategic Planning 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 and Astronautics. He studied in the Master’s
Program in Social Sciences in Peking University from 1984 to 1986. From 1986 to 1989, he
studied in the PhD Program in Princeton University and obtained the Master’s Degree in
International Economics in 1989. In 1995, he studied in the Program of Advanced Finance
98
TCL Technology Group Corporation Annual Report 2019
and Accounting in The Wharton School.
Mr. Yan is a member of China Private Equity Investment Association and a Co-Chairman of
the Professional Committee of the association. He is also a member of Peking University
Education Foundation and of the Investment Commission. He was selected as “Venture
Capitalist of the Year” by China Venture Capital Association in 2004 and 2007. In 2007, he
was honored as one of the “Fifty Finest Private Equity Investors in the World” by Private
Equity International. He was voted as the No. 1 Best Venture Capitalist in China for 2008
and 2009 by Forbes China. In 2009, he won the title of “Venture Capital Professional of the
Year” granted by Asia Venture Capital Journal. Under Mr. Yan’s leadership, SAIF was voted
as “VC Firm of the Year” by China Venture Capital Association in 2004 and 2007. and it was
also named as “The Best Performing Fund in Asia” by Private Equity International 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, Jinan
University 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 and was elected a deputy to the 12 th and 13th National People’s Congress.
From July 1989 to December 2003, she worked in Dalian University in Liaoning; from
January 2004 till now, she serves in Jinan University. She concurrently serves as Vice
Chairperson of Taimeng Guangdong Provincial Party Committee.
Ms. Lu Xin has presided over and engaged in a number of fund projects of the national and
provincial levels. She has won the Sixth National Foreign Trade Research Outstanding
Creation Award from the Ministry of Commerce for her work titled Building Competitive
Strength - Multinational Management Strategies of Chinese Enterprises. She has published
over 50 academic papers in Accounting Research, China Industrial Economics, Journal of
Industrial Engineeri ng and Engineering Management and other journals. She has extensive
practical experience in management accounting and has presided over and engaged in a
number of management consultation projects for large and medium-sized enterprises.
Mr. Zhou Guofu currently serves as Director of South China Academy of Advanced
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TCL Technology Group Corporation Annual Report 2019
Optoelectronics. Born in October 1964, he holds the Dutch Nationality. He has obtained the
PhD in Material Sciences from IMR and the PhD in Physics from the University of
Amsterdam. From 1994 to 1995, he was engaged in postdoctoral research in the University
of Cambridge; from 1995 to 2011, he worked in Philips Research; from January 2011 till
now, he serves as Senior Consultant in Philips Research; from 2012 to 2016, he served as
Distinguished Professor in the Department of Electrical Engineering and the Department of
Industrial Design in Eindhoven University of Technology; from 2016 till now, he serves as
Science Adviser in Eindhoven University of Technology; from April 2011 till now, he serves
as Professor and Doctoral Supervisor in South China Normal University and Director of
South China Academy of Advanced Optoelectronics.
Mr. Zhou Guofu won the ISMANAM1994 Gold Award for French Young Scientists, Royal
Philips Major Invention Bronze Award and Silver Award, Guangdong Province Science and
Technology Cooperation Award at the first such awarding event, and Individual Innovation
Award for China Production, Education and Research Collaboration. He was named as
“Star of Entrepreneurship and Innovation” 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 a distinguished expert of the country, a leading
professional of Guangdong Province and an “Outstanding Professional” under the Special
Support Program of Guangdong Province. He has published 474 scientific papers and
applied for 749 patents, including 255 international ones. 52 U.S. patents, one Japanese
patent, one European patent and 133 China Invention Patents have been authorized. Mr.
Zhou Guofu holds a number 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 National International Science and Technology Cooperation Base;
Head of 111 Project - Optical Information Innovation and Expert Introduction Center;
Director of “International Joint Laboratory for Optical Information Technologies” under the
Ministry of Education; Chairman of the Organization Committee for the International
Conference on Display Technology (2018) hosted by the Society for Information Display
(SID); Member of the Society for Information Display (SID) Asia Branch; Member of the
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TCL Technology Group Corporation Annual Report 2019
Committee for the International Conference on Display Technology; Reviewer of Physical
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
Guangdong Province; Executive Director of the Council of GDMRS; Deputy
Secretary-General of Guangdong Alliance of Printed Display Technology Innovation; and
President of Shenzhen Alliance of Industrial Technology Innovation.
Born in Shaoyang City, Hunan Province, Mr. Liu Xunci is a professor with the Master’s
Degree in economics. He graduated from Central China Normal University and served as a
lecturer, associate professor, department head, member of the Organization Department
and the Publicity Department at the university. Also, he once worked in the Audit Office and
the Finance Office of Huizhou University. He is now a professor in Huizhou University, an
expert of the Decision-Making and Consultation Commission of the Huizhou Government,
and a “Top Professional” of Huizhou City. From July 2006, he stayed in the University of
Greenwich as a visiting scholar for a year.
Mr. Liu Xunci has presided over and engaged in a number of fund projects of the national
and provincial 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 quite many papers on academic journals.
His major research interests include planning of regional economy, corporate strategy
management and finance management. In recent few years, he has led and completed
“12th Five-Year” and “13th Five-Year” economic and social development plans and corporate
management consultations commissioned by governments and enterprises and special
research reports, and researched and evaluated projects such as “Pan-Pearl River Delta”,
“Ring Daya Bay Economic Zone” and “Guangdong -Hong Kong-Macao Greater Bay Area”,
with quite a few research 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 in Huizhou Investment Holdings Co., Ltd.. From August 1991 to June 1995, he
served as Deputy Director of the General Office and Director of the Office in China
Construction Bank Huiyang Branch; from June 1995 to August 2008, he served as
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TCL Technology Group Corporation Annual Report 2019
Manager in Renchengchang (Huizhou) Investment Co., Ltd.; from August 2008 to
September 2009, he served as General Manager of Huizhou Investment Holdings Asset
Management Co., Ltd.; from September 2009 to December 2012, he served as Manager of
the Management and Development Department in Huizhou Investment Holdings Co., Ltd.
and Deputy General Manager and Director of Huizhou Fairway Investment and
Construction Co., Ltd.; from December 2012 till now, he serves as Full-time Deputy
Secretary in Huizhou Investment Holdings Co., Ltd.; from February 2014 till now, he serves
as Director in Huizhou Investment Holdings Co., Ltd. (from April 2010 to January 2017, he
concurrently served as Director of the First and Second Session of the Board of Huizhou
Fairway Investment and Construction Co., Ltd.; from August 2015, he concurrently serves
as Chairman of the Fifth Session of the Board of Supervisors of the Company).
Mr. Mao Tianxiang currently serves as Member of the Party Committee, Head of the Audit
and Supervision Department and Deputy Secretary of the Discipline Committee in the
Company. He was born in January 1980 and graduated from Guangxi University with a
Bachelor degree. 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 the Strategic OEM Business Division and Officer in the
President’s Office in the Company; from November 2007 to June 2009, he served as
Deputy Head of the Legal Section and Head of the General Section in Huizhou Auditing
Bureau; from June 2009 to August 2014, he served as Deputy Director and Deputy Director
of the Divisional Level in the Law Enforcement Inspection Office and the Efficacy Inspection
Office of Huizhou Discipline Committee. He has been working in the Company since
September 2014. He served as Deputy Director of the Party-Masses Work Department in
the Company and Secretary of the Youth League Committee of the Company; from August
2015 to January 2016, he concurrently served as Acting General Manager of the Electronic
Device Business Division in Techne Corporation; in November 2016, he was elected as
Member of the Party Committee and Deputy Secretary of the Discipline Committee in the
Company; from March 2017 to December 2018, he concurrently served as General
Manager of TCL Resource Investment Company. From February 2017 till now, he serves
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TCL Technology Group Corporation Annual Report 2019
as Head of the Audit and Supervision Department. Since 2019, he has successively been a
Supervisor of Tianjin 712 Communication & Broadcasting Co., Ltd. (603712.SH) , the
Chairman of the Supervisory Committee of Highly Information Industry Co., Ltd., the Chief
Supervisor of TCL Finance Co., Ltd., etc. From July 2019, he has served concurrently as
the Chief Auditor of TCL CSOT.
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. From July 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 Investment Company; from June 2002 till now, she serves as Accountant,
Deputy Manager and Manager of the Finance Department in Huizhou Investment Holdings
Co., Ltd.; from February 2014 till now, she serves as Workers’ Director in Huizhou
Investment Holdings Co., Ltd. (from June 2009 to February 2013, she concurrent ly served
as Supervisor in Huizhou Fairway Investment and Construction Co., Ltd.; from June 2013
to May 2018, she concurrently served as Director in Huizhou Investment Holdings Asset
Operation Co., Ltd.; from March 2014, she concurrently serves as Workers’ Representative
Director in Huizhou Investment and Development Co., Ltd.; from April 2014, she
concurrently serves as Supervisor of the Fifth Supervisory Committee of the Company).
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 graduated from ASIPP with the Doctor’s Degree in July 1999. From July 1999
to May 2001, he was engaged in postdoctoral research in the Chinese Academy o f
Sciences. He joined in TCL in May 2001. From May 2001 to December 2004, he served as
Project Manager in TCL Multimedia Electronic R&D Center 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 the Company and Deputy Director
and Acting Director of TCL Industrial Technology Research Institute; from October 2005 till
now, he serves as Director of TCL Industrial Technology Research Institute; from May 2008
to November 2012, he served as Vice President of the Company; from December 2012 till
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TCL Technology Group Corporation Annual Report 2019
now, he serves as CTO and Senior Vice President of the Company. He is holding a number
of positions currently, including CTO and Senior Vice President of the Company, 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
China Ray, Vice Chairman of Amlogic (Shanghai) Inc. and Director of Kateeva.
Mr. Wang Cheng, an EMBA degree holder, graduated from Harbin University of Commerce.
He joined TCL in 1997 and worked as a frontline salesman of color TVs. In 2005, after
further learning upon the Company’s appointment, he successively worked in many
important positions including Deputy Director of HR Department in TCL Multimedia Sales
Company, Director of the European Channel Account Department in the OEM Business
Center, TTE Strategy, TCL Multimedia, General Manager of TCL Multimedia Vietnam
Branch, General Manager of the Overseas Business Center and Vice President of TCL
Multimedia. Therefore, he has rich experience of working overseas. From June 2015 to July
2016, he served as HR Director in TCL Corporation (now known as “TCL Technology Group
Corporation”). After that, he returned to TCL Multimedia (now known as “TCL Electronics”)
and successively served as General Manager of the Supply Chain Center, General
Manager of the Chinese Business Division, COO, etc. Since October 2017, he has served
as CEO of TCL Electronics.
In Janaury 2019, as TCL Technology Group Corporation carried on with its strategic
business restructuring plan and TCL Industries Holdings Inc. was incorporated, Mr. Wang
Cheng resigned as a Senior Vice President of TCL Technology Group Corporation. No
longer holding any offices in TCL Technology Group Corporation, he is now the CEO of TCL
Industries Holdings Inc.
Mr. Huang Xubin used to be the Executive Director and CFO of the Company. Born in
November 1965, he graduated from Hunan University (the former Hunan Institute of
Finance and Economics). Later, he obtained the Master’s Degree in Economics from the
Department of Postgraduate of the Ministry of Finance of China and EMBA from CEIBS and
became a Senior Economist. He served as Officer in the Investment Institute, Deputy
General Manager of the Credit Card Division, Deputy Division Head and Division Head of
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TCL Technology Group Corporation Annual Report 2019
the Credit Loan Division in China Construction Bank Guangdong Branch. 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 in March
2001. In 2002, he served as Vice Group Leader of the Application and Preparations
Leading Group in the Finance Company of the Company; from May 2002 to December
2008, he served as Director and General Manager of the Financial Settlement Center in the
Company; from June 2004 to June 2008, he served as Chief Economist of the Company;
from October 2006 to December 2008, he served as General Manager of the Finance
Company of the Company; from April 2008 to January 2011, he served as Vice President of
the Company; from June 2008 to January 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); from January 28, 2011 to January 10,
2019, he served as CFO of the Company. He has resigned as Director and CFO of the
Company in January 2019.
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 to December 2009, he served as Chief Operating Officer of Beida Jade Bird
Group; from December 2009 to December 2011, he served as Director of Peking University
Resource College; from December 2011 to April 2019, he served as Vice President of
China Development Bank Capital Co., Ltd. He has resigned as Director and Vice Chairman
of the Board of the Company in May 2019.
Born in July 1972, Ms. Wu Xiaohui has obtained the PhD in Law from Sun Yat-sen
University and is a Senior Economist. From June 1993 to April 1995, she served as a
leader in the Law Office of the 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 and Corporate 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 the Legal Affairs Department, Vice
Chairman of the Labor Union, Chief Legal Consultant, Deputy General Manager and
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TCL Technology Group Corporation Annual Report 2019
Member of the Party Committee in Guangdong Guangye Group Co., Ltd. and concurrently
as Director of South China Sea Oil Joint Service Corp. and Director of Guangdong
Petro-Trade Development Corporation. From March 2016 to July 2019, she served as
General Manager, Deputy Secretary of the Party Committee and Director of Guangdo ng
Guangxin Holdings Group Ltd. She has resigned as Director of the Company in August
2019. After that, she has become a standing committee member of the Party Committee of
Meizhou Municipality, the Deputy Secretary of the Leading Party Members’ Group of the
Huizhou Municipal Government, and the Executive Vice Mayor of Huizhou City.
Born in October 1963, Mr. Huang Wei is an MBA degree holder. He served as Deputy
Director of Wuhan Television Set Factory; Director and Deputy 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 Wei joined in TCL in May 1998. He
served as Assistant to the General Manager in TCL King Electrical Appliances (Huizhou)
Co., Ltd.; Director and Deputy General Manager in TCL-Melody; Deputy Director of the
President’s Office, Head of the Human Resource Department, Director of the President’s
Office, Secretary of the Discipline Commission, Senior Vice President, Deputy Secretary of
the Party Committee, Executive Director, and a member of the Executive Committee in the
Company. He has resigned as Director and Senior Vice President of the Company in
December 2019.
Offices held concurrently in shareholding entities:
Office held Remuneration or
in the allowance from
Name Shareholding entity shareholdin Start of tenure End of tenure the shareholding
g entity entity
Assigned
Xinjiang Jiutian Liancheng Equity representati
Li Dongsheng Investment Partnership (Limited ve of the August 2014 Ongoing None
Partnership) managing
partner
Chairman of
the Board
Liu Bin Huizhou Investment Holding Co., Ltd. Ma y 2015 Ongoing Yes
and General
Manager
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TCL Technology Group Corporation Annual Report 2019
Full-Time
Deputy December
He Zhuohui Huizhou Investment Holding Co., Ltd. Ongoing Yes
Secretary 2012
and Director
Employee February
Qiu Haiyan Huizhou Investment Holding Co., Ltd. Ongoing Yes
Director 2014
Note Not applicable
Offices held concurrently in other entities:
Remuneration
Office held
Name Other entity Start of tenure End of tenure or allowance
in the entity
from the entity
Chairman of September
TCL Industries Holdings Inc. Ongoing Yes
the Board 2018
Independent
Li Dongsheng Tencent Holdings Limited Non-Executi April 2004 Ongoing Yes
ve Director
Non-Executi
Fantasia Holdings Group Co., Limited January 2014 Ongoing Yes
ve Director
Chairman of
Liu Bin Huizhou Financing Guaranty Co., Ltd. August 2015 Ongoing No
the Board
September
TCL Industries Holdings Inc. Director Ongoing No
2018
Bank of Shanghai Co., Ltd. Director October 2019 Ongoing No
Du Juan
Chairman of September
Getech Ltd. Ongoing No
the Board 2018
TCL Technology Park Co., Ltd. Director October 2017 Ongoing No
Non-Executi
Fantasia Holdings Group Co., Limited March 2017 Ongoing Yes
ve Director
Shenzhen Jiawei Photovoltaic Lighting Independent November
Ongoing Yes
Liao Qian Co., Ltd. Director 2016
Vice
Tianjin 712 Communication &
Chairman of June 2019 Ongoing No
Broadcasting Co., Ltd.
the Board
Founding
SAIF Partners Managing October 2001 Ongoing No
Partner
Yan Yan
Independent
China Resources Land Limited Non-Executi July 2006 Ongoing Yes
ve Director
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TCL Technology Group Corporation Annual Report 2019
Guodian Technology and Environment Non-Executi
June 2012 Ongoing No
Group Corporation Limited ve Director
Bluefocus Intelligent Communications Independent
March 2014 Ongoing Yes
Group Co., Ltd. Director
ATA Creativity Global Director March 2005 Ongoing Yes
Haier Smart Home Co., Ltd. Director June 2019 Ongoing Yes
Shanghai Welltech Automation Co., Ltd. Director June 2019 Ongoing No
Independent
360 Finance, Inc July 2019 Ongoing Yes
Director
Appotronics Corporation Limited Director June 2019 Ongoing No
Jinan University Professor January 2004 Ongoing Yes
Independent Ongoing
Kingfa Sci. & Tech. Co., Ltd. Ma y 2014 Yes
Director
Independent September Ongoing
PCI-Suntek Technology Co.,Ltd. Yes
Lu Xin Director 2019
Guangdong Hengxing Feed Industry Independent Ongoing
January 2018 Yes
Co., Ltd. Director
Medprin Regenerative Medical Independent November Ongoing
Yes
Technologies Co., Ltd. Director 2018
Senior Ongoing
Philips Research in the Netherlands January 2011 No
advisor
Eindhoven University of Technology in Science Ongoing
April 2012 No
Zhou Guofu the Netherlands Consultant
South China Academy of Ad vanced Ongoing
Professor
Optoelectronics of South China Normal April 2011 Yes
and Dean
University
Liu Xunci Huizhou University Professor October 2006 Ongoing Yes
Tianjin 712 Communication &
Mao Tianxiang Supervisor June 2019 Ongoing No
Broadcasting Co., Ltd.
Note Not applicable
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and
senior management as well as those who left in the Reporting Period:
□ Applicable ■ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure and determination basis of remuneration for directors,
supervisors and senior management:
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TCL Technology Group Corporation Annual Report 2019
The allowances for directors and supervisors have been approved at the Fourth
Extraordinary General Meeting of 2011 on 14 July 2011. And the remuneration of senior
management is determined 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 to executive directors, it shall not pay additional allowances to them. The
remuneration of five of the executive directors is determined as per the Company
headquarters’ remuneration management rules.
The allowances and other payments to independent non-executive directors: The
allowance for each independent non-executive director is RMB160,000/year (tax inclusive),
and the allowance for the convener of the Audit Committee is RMB200,000/year (tax
inclusive). And the Company shall bear the travel expense arising from the independent
directors’ attending the Company’s board and general meetings, as well as other expenses
arising from independent directors’ exercising their functions 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 to him/her.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
An y
Incumbent/ Total before-tax remuneration remuneration
Name Office title Gender Age
Former from the Company from related
party
Chairman of the
Li Dongsheng Male 62 Incumbent 678.51 Yes
Board and CEO
Vice Chairman of
Liu Bin Male 50 Incumbent 16.00 Yes
the Board
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TCL Technology Group Corporation Annual Report 2019
Director, COO and
Du Juan Female 49 Incumbent 343.59 No
CFO
Director and Board
Liao Qian Male 39 Incumbent 203.36 No
Secretary
Director and Senior
Jin Xuzhi Male 65 Incumbent 875.35 No
Vice President
Independent
Yan Yan Male 63 Incumbent 16.00 No
Director
Independent
Lu Xin Female 57 Incumbent 20.00 No
Director
Independent
Zhou Guofu Male 56 Incumbent 16.00 No
Director
Independent
Liu Xunci Male 61 Incumbent 16.00 No
Director
Chairman of the
He Zhuohui Supervisory Male 54 Incumbent 16.00 Yes
Committee
Employee
Mao Tianxiang Male 39 Incumbent 72.12 Yes
Supervisor
Qiu Haiyan Supervisor Female 45 Incumbent 10.00 Yes
Senior Vice
Yan Xiaolin Male 53 Incumbent 306.96 No
President and CTO
Senior Vice
Wang Cheng Male 45 Former 4.43 Yes
President
Huang Xubin Director and CFO Male 54 Former 5.84 No
Vice Chairman of
He Jinlei Male 46 Former 0 No
the Board
Wu Xiaohui Director Female 48 Former 0 No
Director and Senior
Huang Wei Male 57 Former 363.75 Yes
Vice President
Total -- -- -- -- 2963.91 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable ■ Not applicable
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TCL Technology Group Corporation Annual Report 2019
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the
226
parent
Number of in-service employees of major subsidiaries 35,153
Total number of in-service employees 35,379
Total number of paid employees in the Reporting Period 35,379
Number of retirees to whom the Company as the parent or
22
its major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 23,865
Sales 1,430
R&D and technical 6,155
Financial 340
Administrative 323
Managerial 1,141
Other 2,125
Total 35,379
Educational backgrounds
Educational background Employees
Doctorate degree 260
Master’s degree 2,234
Bachelor’s degree 7,138
Junior college 1,506
Senior high school/technical secondary school 260
Junior high school and below 6
Total 11,404
Note 1: Since the Company completed the Restructuring in April 2019, the data of employees are on an after-restructuring
basis.
Note 2: The “educational backgrounds ” section excludes operating workers and overseas employees.
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TCL Technology Group Corporation Annual Report 2019
2. Employee Remuneration Policy
The Company implements the remuneration management principle of “determining position
by responsibilities, determining salary by position and determining remuneration by
performance”. Fixed income is determined based on position assessment, variable income
is determined based on performance appraisal and a remuneration distribution mechanism
oriented by position and performance is established inside the Company.
3. Employee Training Plans
On 10 September 2000, the Training Department of TCL Headquarters shifted to TCL
Training Institute. On 16 August 2005, TCL Training Institute changed its name to TCL
Leadership Development Institute, which focused on cultivation of management talent and
development of leadership. In 2015, the institute has been upgraded to TCL University. As
such, TCL University has expanded its value positioning, with changes to service recipients,
services provided and the ways of providing services. It focuses on strategic talent for
long-term development, and promotes performance improvement by solving the existing
business bottlenecks. It provides services for the Group and the broader ecosystem, as
well as offers trainings and development opportunities. It captures and creates demand.
And it trains and motivates.
“Eagle Elites”, the top talent cultivation program, has been running for 20 years. Every
course it has offered is closely related to strategy. For instance, Eagle Elites Course 13 was
offered in 2019 to cater to the new finance requirements of the Group. Eagle Elites Course
14—Reform and Transformation Pioneer Camp cultivates talent tailored to the needs of
reform and transformation.
4. Labor Outsourcing
□ Applicable ■ Not applicable
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TCL Technology Group Corporation Annual Report 2019
Part VIII Corporate Governance
I General Information of Corporate Governance
Since it was listed, the Company has been attaching great importance to corporate
governance and dedicated to the establishment and refinement of internal control policies.
So far, it has established an organization structure that accommodates the Company’ s
business scale and business management 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 authorization scientifically and forms an
internal control system with well-defined duties and responsibilities, mutual cooperation and
mutual restraints. The Company has comprehensive audit and internal control policies,
especially in terms of internal audit, in respect of which the hierarchies are clear-cut and the
duties and responsibilities are well-defined, which can effectively prevent Group risks; the
Company has purchased liabilities insurance for its directors, supervisors and senior
management for eight consecutive years; although the shareholding proportion of its
majority shareholders is less than 30%, the Company still adopts the cumulative voting
system in the election of directors and supervisors, which is higher than the standards of
corporate governance and effectively protects the voting rights of minority shareholders; in
addition, the Company’s Board of Supervisors works with diligence and the supervisors go
deep into corporate research and proactively propose management suggestions, which
effectively refine the Company’s internal governance mechanism; by establishing new
management policies, the Company continues to improve its information disclosure
management and investor relationship management; the Company is passionate about
commonweal and establishes donation funds for public benefits and all those measures
have enabled the Company to stand in the industry leading position for its governance
level.
During the Reporting Period, in accordance with the Company Law, the Securities Law, the
Code of Corporate Governance for Listed Companies and other relevant laws and
regulations, the Company continued to refine its governance structure and further
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TCL Technology Group Corporation Annual Report 2019
standardized its operations to comply with the requirements of related laws and regulations.
During the Reporting Period, the Company’s directors, supervisors and senior
management furthered their learning of regulations and documents in respect of the
corporate governance for listed companies, strengthened their self-discipline and diligence,
and faithfully safeguarded the interests of all shareholders, in particular the minority
shareholders.
Currently, there is no difference between the actual status of the Company’s corporate
governance structure and the standard documents on the corporate governance for listed
companies published by China Securities Regulatory Commission. The names of the
policies are shown in the following table and all the policies have been published on
www.cninfo.com.cn.
Category of Title of rules
rules
Articles of The Articles of Association of TCL Corporation
Association
Dividend The Dividend Rules of TCL Corporation
rules
The Shareholder Return Plan for 2017-2020 of TCL Corporation
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
Information
The Accountability Rules for Material Errors in Annual Report Disclosure of
disclosure
TCL Corporation
rules
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
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TCL Technology Group Corporation Annual Report 2019
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
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
Governance The Rules of Procedure for the Audit Committee under the Board of
and Directors of TCL Corporation
operation The Rules of Procedure for the Remuneration and Appraisal Committee
rules 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
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
Internal
Instruments of TCL Corporation
control rules
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
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TCL Technology Group Corporation Annual Report 2019
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 the governance of listed companies.
Special corporate governance campaigns, as well as the formulation and
implementation of the rules governing the registration of information insiders:
Upon various special checks of corporate governance by the regulatory authority and work
conferences on the governance of listed companies, the Company has revised its Articles
of Association. The rules strictly standardize the Company’s behaviors and protect the
interests of investors.
The following rules have been revised in 2019 so as to further improve corporate
governance:
Title of rules
Revised The Articles of Association of TCL Corporation
II The Company’s Independence from Its Controlling Shareholder in Business,
Personnel, Asset, Organization and Financial Affairs
□ Applicable ■ Not applicable
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TCL Technology Group Corporation Annual Report 2019
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
Investor Date of the Index to disclosed
Meeting Type Disclosure date
participation ratio meeting information
The First
Combination of
Extraordinary
on-site and online 47.17% 7 January 2019 8 January 2019
General Meeting of
voting
2019
The Second
Combination of
Extraordinary
on-site and online 33.72% 25 January 2019 26 January 2019
General Meeting of
voting
2019
Combination of
The 2018 Annual
on-site and online 33.37% 9 April 2019 10 April 2019
General Meeting
voting
The Third
Combination of
Extraordinary http://www.cninfo.c
on-site and online 33.33% 8 May 2019 9 May 2019
General Meeting of om.cn
voting
2019
The Fourth
Combination of
Extraordinary
on-site and online 33.17% 28 June 2019 29 June 2019
General Meeting of
voting
2019
The Fifth
Combination of
Extraordinary 15 November 201 16 November 201
on-site and online 26.74%
General Meeting of 9 9
voting
2019
The Sixth
Combination of
Extraordinary
on-site and online 26.35% 4 December 2019 5 December 2019
General Meeting of
voting
2019
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with
Resumed Voting Rights
□ Applicable ■Not applicable
117
TCL Technology Group Corporation Annual Report 2019
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
The
Total number
Board independent
of board Board Board
Board meetings director failed
meetings the meetings meetings the General
Independent meetings attended by to attend two
independent attended independent meetings
director attended on way of consecutive
director was through a director failed attended
site telecommuni board
eligible to proxy to attend
cation meetings
attend
(yes/no)
Lu Xin 9 2 7 0 0 No 2
Zhou Guofu 9 2 7 0 0 No 0
Yan Yan 9 0 9 0 0 No 0
Liu Xunci 9 3 6 0 0 No 6
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 the Company’s Articles of Association, the independent directors of the Company
paid attention to the Company’s operations and faithfully fulfilled their duties as
independent directors. They put forward a lot of valuable, professional advice regarding the
improvement of the Company’s rules and daily operating decision-making. They issued
their independent and fair opinion on the matters of the Company that required their opinion.
Therefore, they have played their part in improving the Company’s supervision mechanism,
as well as in protecting the legal interests of the Company and its shareholders.
Type of
Issue date of opinion Matter
opinion
The Plan for the First Phase of the Repurchase of Certain Public Shares, and
11 January 2019 the nomination of director candidates and the appointment of senior Consent
management
118
TCL Technology Group Corporation Annual Report 2019
The 2018 Annual Profit Distribution Plan, the Proposal on Reappointment of
the CPA Firm, the 2018 Annual Internal Control Evaluation Report, The
Proposal on the Guarantee Line for Subsidiaries in 2019, the Special
Statement on the Capital Occupation by the Controlling Shareholder or Other
Related Parties and the Guarantees Provided for External Parties, The
20 March 2019 Consent
Special Statement on Securities Investments in 2018, The Proposal on
Authorization Adjustments for Securities Investment and Wealth
Management, the derivative financial instrument transactions carried out by
the Company in 2018, and The Plan on the Adjustment to the Upper Limit of
the Share Repurchase Price
Changes to the Company’s accounting policies , The Proposal on the
Adjustment to the Share Repurchase Price of The 2018 Restricted Stock
Incentive Plan & Global Innovation Partner Plan, The Second Global Partner
24 April 2019 Plan of TCL Corporation (Draft) and its Summary, The 2019 Restricted Stock Consent
Incentive Plan & The Second Global Innovation Partner Plan of TCL
Corporation (Draft) and its Summary, and the derivati ve financial instrument
transactions carried out by the Company in Q1 2019
The adjustments to The 2019 Restricted Stock Incentive Plan and the Second
11 May 2019 Global Innovation Partner Plan, and the grant of restricted shares to the Consent
awardees
The Proposal on the Satisfaction of the Unlocking Condition for the First
Unlocking Period of the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan, and The Proposal on the Repurchase and
22 May 2019 Consent
Retirement of Restricted Shares That Have Been Granted to Certain
Awardees under the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan But Are Still in Lockup
Related-party transactions, The Proposal on the Adjusted Guarantee Line for
13 June 2019 Subsidiaries, and The Continuing Risk Evaluation Report of TCL Finance Co., Consent
Ltd.
The acquisition of interest in subsidiary and the related-party transaction, The
Proposal on Adjustments to the Second Global Partner Plan (Draft) and Its
Summary, investments in equity in vestment funds and the related-party
transactions, the derivative financial instrument transactions carried out by the
13 August 2019 Consent
Company in H1 2019, The Continuing Risk Evaluation Report of TCL Finance
Co., Ltd., and The Special Statement on the Capital Occupation by the
Controlling Shareholder or Other Related Parties and the Guarantees
Provided for External Parties
119
TCL Technology Group Corporation Annual Report 2019
The sale of interest in subsidiary and the related-party transaction, the
increase in the estimated amount of continuing related-party transactions with
31 October 2019 Consent
TCL Industries Holdings Inc., and the derivative financial instrument
transactions carried out by the Company in Q1~Q3 2019
19 November 2019 Investment in equity investment fund and the related-party transaction Consent
VI Performance of Duty by Specialized Committees under the Board in the Reporting
Period
1. Performance of Duty by the Audit Committee
In the principle of being diligent, pragmatic and realistic, all the members of the Audit
Committee under the Board proactively pushed forward the 2019 annual audit. During the
annual audit, the Audit Committee convened four meetings to review the audit plan and the
financial statements. It also fully communicated with the accountants responsible for the
annual audit. Two letters were issued to urge the auditor to carry out the audit in strict
compliance with the audit plan.
The Audit Committee summarized the 2019 annual audit carried out by Da Hua Certified
Public Accountants (Special General Partnership) as follows:
On 20 January 2020, we reviewed and confirmed the Audit Plan of the Internal Control of
TCL Technology Group Corporation in 2019 and the Audit Plan of the 2019 Annual
Financial Statements of TCL Technology Group Corporation submitted by Da Hua Certified
Public Accountants (Special General Partnership), the independent auditor for the year
2019.
In October 2019, the auditor started the pre-audit of the annual report. On 2 January 2020,
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 the audit site to offer advice and urge the audit progress. We issued Urge
Letters on 28 February and 4 March 2020 respectively to ask the auditor to carry out the
audit in accordance with the audit plan, as well as to raise the following major questions: 1.
whether the Company’s accounting statements were prepared in strict compliance with the
Chinese Accounting Standards for Business Enterprises, the Company’s financial rules, as
120
TCL Technology Group Corporation Annual Report 2019
well as the applicable laws and regulations; 2. whether the Company’s accounting
treatments needed to be improved; and 3. whether the Company provided sufficient
materials as required by the auditor. The auditor replied to these questions in a timely
manner.
On 4 March 2020, we reviewed the unaudited 2019 annual financial statements of the
Company and agreed that the 2019 annual audit should be carried out based on the said
financial statements.
On 28 March 2020, the auditor issued a preliminary “unmodified unqualified” audit opinion
on the Company’s financial statements, to which we agreed.
We believed that Da Hua Certified Public Accountants (Special General Partnership), the
independent auditor for the year 2019, provided audit service for the Company in a diligent
and responsible way. It completed the audit in strict accordance with the audit plan. The
audited financial statements were a factual and complete reflection of the Company’s
financial position as at 31 December 2019, as well as the operating results and cash flows
of the year then ended. The audit opinion they issued factually reflected the Company’s
realities. On 28 March 2020, the Audit Committee convened a meeting, where the following
proposals were approved and submitted to the Board for further review: The 2019 Annual
Financial Report, the Summary Report of the Audit Committee under the Board Regarding
the 2019 Annual Audit Carried out by Da Hua Certified Public Accountants (Special General
Partnership), and the Proposal on the Reappointment of Da Hua Certified Public
Accountants (Special General Partnership) as the Independent Auditor for 2020.
2. Performance of Duty by the Nomination Committee
During the Reporting Period, the Nomination Committee convened one meeting, where the
Proposal on the Nomination of a Director Candidate for the Sixth Board was reviewed and
Mr. Jin Xuzhi was nominated as a director.
3. Performance of Duty by the Remuneration and Appraisal Committee
During the Reporting Period, the Remuneration and Appraisal Committee convened one
meeting, where The 2019 Restricted Stock Incentive Plan and the Second Global
Innovation Partner Plan (Draft) and other proposals were reviewed.
121
TCL Technology Group Corporation Annual Report 2019
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
Proposal Index to the
Date of the Supervisor
Meeting reviewed at the Resolution disclosed Disclosure date
meeting present
meeting resolution
1. The Proposal
on The 2018
Annual Work
Report of the
Supervisory
Committee; 2.
The Proposal on
The 2018
Annual
Financial
Report; 3. The
Proposal on The
2018 Annual
Report and its
summary; 4.
Resolutions of
The Ninth The Proposal on
the Ninth
Meeting of the He Zhuohui The 2018
Meeting of the http://www.cninf
Sixth 19 March 2019 Qiu Haiyan Annual Internal 20 March 2019
Sixth o.com.cn
Supervisory Mao Tianxiang Control
Supervisory
Committee Evaluation
Committee
Report; 5. The
Proposal on The
Social
Responsibility &
Sustainable
Development
2018; 6. The
proposal on the
write-off of the
doubtful
accounts in
2017; 8. The
Proposal on the
2018 Final
Dividend
122
TCL Technology Group Corporation Annual Report 2019
1. The Proposal
on The First
Quarter Report
2019 and Its
Summary; 2.
The Proposal on
Changes to the
Accounting
Policies; 3. The
Proposal on the
Adjustment to
the Share
Repurchase
Price of The
2018 Restricted
Stock Incentive
Plan & The
Global
Innovation
Partner Plan; 4. Resolutions of
The Tenth
The Proposal on the Tenth
Meeting of the He Zhuohui
The Second Meeting of the
Sixth 23 April 2019 Qiu Haiyan 24 April 2019
Global Partner Sixth
Supervisory Mao Tianxiang
Plan (Draft) and Supervisory
Committee
Its Summary; 5. Committee
The Measures
for the
Management of
The Second
Global Partner
Plan; 6. The
Proposal on The
2019 Restricted
Stock Incentive
Plan and The
Second Global
Innovation
Partner Plan
(Draft) and Its
Summary; 7.
The
Management
Measures for
the
123
TCL Technology Group Corporation Annual Report 2019
Implementation
and Appraisal
with respect to
The 2019
Restricted Stock
Incentive Plan
and The Second
Global
Innovation
Partner Plan; 8.
The Proposal on
the Examination
of the Awardee
List for The
2019 Restricted
Stock Incentive
Plan and The
Second Global
Innovation
Partner Plan
1.The Proposal
on Adjustments
to the 2019
Restricted Stock
Resolutions of
The 11th Incentive Plan
the 11th
Meeting of the He Zhuohui and the Second
Meeting of the
Sixth 10 May 2019 Qiu Haiyan Global 11 May 2019
Sixth
Supervisory Mao Tianxiang Innovation
Supervisory
Committee Partner Plan; 2.
Committee
The Proposal on
the Grant of
Restricted Stock
to the Awardees
1. The Proposal
on the
Satisfaction of
Resolutions of
The 12th the Unlocking
the 12th
Meeting of the He Zhuohui Condition for the
Meeting of the
Sixth 20 May 2019 Qiu Haiyan First Unlocking 21 May 2019
Sixth
Supervisory Mao Tianxiang Period of the
Supervisory
Committee 2018 Restricted
Committee
Stock Incentive
Plan and the
Global
124
TCL Technology Group Corporation Annual Report 2019
Innovation
Partner Plan; 2.
The Proposal on
the Repurchase
and Retirement
of Restricted
Shares That
Have Been
Granted to
Certain
Awardees under
the 2018
Restricted Stock
Incentive Plan
and the Global
Innovation
Partner Plan But
Are Still in
Lockup
Resolutions of
The 13th 1. The Proposal
the 13th
Meeting of the He Zhuohui on The Interim
Meeting of the
Sixth 12 August 2019 Qiu Haiyan Report 2019 13 August 2019
Sixth
Supervisory Mao Tianxiang and Its
Supervisory
Committee Summary
Committee
1. Third Quarter
Report 2019
and its
summary; 2.
The Proposal on Resolutions of
The 14th
Increase in the the 14th
Meeting of the He Zhuohui
30 October Estimated Meeting of the 31 October
Sixth Qiu Haiyan
2019 Amount of Sixth 2019
Supervisory Mao Tianxiang
Continuing Supervisory
Committee
Related-Party Committee
Transactions
with TCL
Industries
Holdings Inc.
The Supervisory Committee raised no objections in the Reporting Period.
125
TCL Technology Group Corporation Annual Report 2019
VIII Appraisal of and Incentive for Senior Management
During the Reporting Period, the Company carried out performance appraisal and
competence examination on managers. The KPI (key performance indicators) system was
used for performance appraisal. In respect of the team led by each manager, the key
factors of performance appraisal included 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 the accomplishment of each goal were considered as
the main basis for motivating managers. In that way, corporate strategies were converted
into internal management activities through the process of goal settings, implementation
and accomplishment to steer the work orientation of all systems of the Company and serve
the purpose of enhancing the overall efficiency of the Company. Leader examination
consisted of four dimensions of assessment, being leader’s performance, competence,
experience and quality (potential, personality and aspiration/values). An annual
examination report for leaders was generated through annual performance assessment,
virtual assessment center, 360-degree behavior interview or online assessment, supported
by key experience, personality or management style assessment, which served as the
main basis for appraising, appointing and dismissing leaders.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes ■ No
2. Internal Control Self-Evaluation Report
Disclosure date of the internal control
31 March 2020
self-evaluation report
Index to the disclosed internal control
http://www.cninfo.com.cn
self-evaluation report
Evaluated entities’ combined assets
95%
as % of consolidated total assets
Evaluated entities’ combined revenue
94%
as % of consolidated revenue
126
TCL Technology Group Corporation Annual Report 2019
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control not
Type
financial reporting related to financial reporting
Material weaknesses: (1) material
violations of the country’s laws or
regulations in the Company’s
Material weaknesses: (1) an invalid
operating activities; (2) any material
control environment; (2) fraud of
decision-making error that is caused
directors, supervisors and senior
by an irrational decision-making
management; (3) any material
procedure and causes material
misstatement of the financial reporting of
property loss to the Company; (3) a
the current period which is identified by
massive loss of the key managerial or
the registered accountants but the
technical personnel; and (4) frequent
Company fails to do so; and (4) invalid
negative news coverage that causes
internal control supervision by the Audit
Nature standard great concern of the regulatory
Committee and the internal audit organ.
administration and a material
Serious weaknesses: A single weakness
long-lasting impact on the Company’s
or a group of weaknesses which are less
brand and reputation.
serious than a material weakness but
Serious weaknesses: A single
could still cause deviation from the
weakness or a group of weaknesses
control objectives
which are less serious than a material
Common weaknesses: Other internal
weakness but could still cause
control weaknesses that are neither
deviation from the control objectives
material nor serious
Common weaknesses: Other internal
control weaknesses that are neither
material nor serious
Material weaknesses: misstatements≥
5% of profit before tax;
Serious weaknesses: 3% of profit before
Quantitative standard tax≤misstatements <5% of profit before Not applicable
tax;
Common weaknesses: misstatements
<3% of profit before tax
Number of material weaknesses in
0
internal control over financial reporting
Number of material weaknesses in
internal control not related to financial 0
reporting
Number of serious weaknesses in
0
internal control over financial reporting
Number of serious weaknesses in
0
internal control not related to financial
127
TCL Technology Group Corporation Annual Report 2019
reporting
X Independent Auditor’s Report on Internal Control
Opinion paragraph in the independent auditor’s report on internal control
In our opinion, TCL Technology Group Corporation maintained, in all material respects, effective internal control over
financial reporting as of 31 December 2019, based on the Basic Rules on Enterprise Internal Control and other
applicable rules.
Independent auditor’s report on The Internal Control Audit Report of TCL Technology Group Corporation disclosed on
internal control disclosed or not http://www.cninfo.com.cn dated 31 March 2020
Disclosure date 31 March 2020
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 None
reporting
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.
□ Yes ■ No
Indicate whether the independent auditor’s report on the Company’s internal control is consistent with the internal contr ol
self-evaluation report issued by the Company’s Board.
■ Yes □ No
128
TCL Technology Group Corporation Annual Report 2019
Part IX Corporate Bonds
I General Information of Corporate Bonds
Way of
principal
Balance
Bond name Abbr. Bond code Value date Maturity Coupon rate repayment
(RMB’0,000)
and interest
payment
TCL
Corporation’s
Corporate Interest
Bonds payable
Publicly annually and
16 March 16 March
Offered in 16TCL02 112353 150,000 3.56% principal
2016 2021
2016 to repayable in
Qualified full upon
Investors maturity
(Tranche 1)
(Type 2)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly
16TCL03 112409 7 July 2016 7 July 2021 200,000 3.50% principal
Offered in
repayable in
2016 to
full upon
Qualified
maturity
Investors
(Tranche 2)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly
17TCL01 112518 19 April 2017 19 April 2022 100,000 4.80% principal
Offered in
repayable in
2017 to
full upon
Qualified
maturity
Investors
(Tranche 1)
129
TCL Technology Group Corporation Annual Report 2019
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly
17TCL02 112542 7 July 2017 7 July 2022 300,000 4.93% principal
Offered in
repayable in
2017 to
full upon
Qualified
maturity
Investors
(Tranche 2)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly
18TCL01 112717 6 June 2018 6 June 2023 100,000 5.48% principal
Offered in
repayable in
2018 to
full upon
Qualified
maturity
Investors
(Tranche 1)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly 20 August 20 August
18TCL02 112747 200,000 5.30% principal
Offered in 2018 2023
repayable in
2018 to
full upon
Qualified
maturity
Investors
(Tranche 2)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly
19TCL01 112905 20 May 2019 20 May 2024 100,000 4.33% principal
Offered in
repayable in
2019 to
full upon
Qualified
maturity
Investors
(Tranche 1)
TCL Interest
Corporation’s 19TCL02 112938 23 July 2019 23 July 2024 100,000 4.30% payable
Corporate annually and
130
TCL Technology Group Corporation Annual Report 2019
Bonds principal
Publicly repayable in
Offered in full upon
2019 to maturity
Qualified
Investors
(Tranche 2)
TCL
Corporation’s
Interest
Corporate
payable
Bonds
annually and
Publicly 21 October 21 October
19TCL03 112983 200,000 4.20% principal
Offered in 2019 2024
repayable in
2019 to
full upon
Qualified
maturity
Investors
(Tranche 3)
Place for bond listing and
Shenzhen Stock Exchange
trading
Investor eligibility These bonds are for qualified investors only.
1. The principal of “16TCL01” was repaid with interest on 18 March 2019.
2. The interest for the period from 16 March 2018 to 15 March 2019 on “16TCL02” was
paid on 18 March 2019.
3. The interest for the period from 19 April 2018 to 18 April 2019 on “17TCL01” was paid
on 19 April 2019.
Interest payment and 4. The interest for the period from 6 June 2018 to 5 June 2019 on “18TCL01” was paid on
principal repayment during 6 June 2019.
Reporting Period 5. The interest for the period from 7 July 2018 to 5 July 2019 on “16TCL03” was paid on 8
July 2019.
6. The interest for the period from 7 July 2018 to 5 July 2019 on “17TCL02” was paid on 8
July 2019.
7. The interest for the period from 20 August 2018 to 19 August 2019 on “18TCL02” was
paid on 20 August 2019.
1. TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors
Where the bond carries any
(Tranche 1) is of a five-year term, with the issuer’s call option, the issuer’s coupon rate
issuer or investor option
adjustment option and the investors’ sell-back option at the end of the third year. The
clause, interchangeable
interest payment day is April 19 from 2018 to 2022 (the subsequent first trading day if it is
clause or other special
a statutory holiday or rest day, with no additional interest for the postponement). If an
clauses, give the execution
investor chooses to exercise the sell-back option, the interest payment day for the
details (if applicable) of these
sold-back bonds is April 19 from 2018 to 2020 (the subsequent first trading day if it is a
clauses during the Reporting
statutory holiday or rest day, with no additional interest for the postponement).
Period
2. TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors
131
TCL Technology Group Corporation Annual Report 2019
(Tranche 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
(Tranche 1) is of a five-year term, with the issuer’s call option, the issuer’s coupon ra te
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
(Tranche 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).
5. TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors
(Tranche 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 May 20 from 2020 to 2024 (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 May 20 from 2020 to 2022 (the subsequent first trading day if it is a
statutory holiday or rest day, with no additional interest for the postponement).
6. TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors
(Tranche 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 23 from 2020 to 2024 (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 23 from 2020 to 2022 (the subsequent first trading day if it is a
statutory holiday or rest day, with no additional interest for the postponement).
7. TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to Qualified Investors
(Tranche 3) 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 October 21 from 2020 to 2024 (the subsequent first trading day if
it is a statutory holiday or rest day, with no additional interest for th e postponement). If an
132
TCL Technology Group Corporation Annual Report 2019
investor chooses to exercise the sell-back option, the interest payment day for the
sold-back bonds is October 21 from 2020 to 2022 (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
Bond trustee:
33/F, Bohua
Guotai Junan
Office Plaza, 669 Contact 021-3867650
Name Securities Wu Lei Tel.
address Xinzha Road, person 3
Co., Ltd.
Shanghai
8 Zhongxin
Third Road,
CITIC Futian
Office Contact Deng 0755-238358
Name Securities District, Tel.
address person Xiaoqiang 88
Co., Ltd. Shenzhen,
Guangdong
Province
Credit rating agency which conducted follow-up ratings for bonds during Reporting Period:
Office Room 968, Tower 1, 599 Xinye Road,
Name China Chengxin Securities Rating Co., Ltd.
address Qingpu District, Shanghai
Where the bond trustee or credit rating
agency was changed during the
Reporting Period, explain the reasons, Not applicable
the executed procedures, the impact on
investors’ interests, etc. (if applicable)
III Utilization of Funds Raised through Corporate Bonds
The raised funds were used to supplement the working capital and repay debt,
Utilization of funds raised through which is in strict compliance with the prospectus. And with the authorization of
corporate bonds and procedures the Board and the general meeting, the related internal decision -making
executed procedure was executed according to the relevant rules approved by the Board
and the general meeting.
Ending balance (RMB’0,000) 0
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
Operation of special account for raised
through TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to
funds
Qualified Investors (Tranche 1), the Escrow Account Agreement for the Funds
Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to
Qualified Investors (Tranche 2), the Escrow Account Agreement for the Funds
133
TCL Technology Group Corporation Annual Report 2019
Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to
Qualified Investors (Tranche 1), the Escrow Account Agreement for the Funds
Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2018 to
Qualified Investors (Tranche 2), the Escrow Account Agreement for the Funds
Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 201 9 to
Qualified Investors (Tranche 1), the Escrow Account Agreement for the Funds
Raised through TCL Corporation’s Corporate Bonds Publicly Offered in 2019 to
Qualified Investors (Tranche 2) and the Escrow Account Agreement for the
Funds Raised through TCL Corporation’s Corporate Bonds Publicly Offered in
2019 to Qualified Investors (Tranche 3),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,
Yes
utilization plan or other promises in the
prospectus
IV Rating Results of Corporate Bonds
According to the Follow-up Rating Report (2019) on TCL Corporation’s Corporate Bonds
Publicly Offered in 2016 to Qualified Investors (Tranches 1 and 2) issued by China
Chengxin Securities Rating Co., Ltd. on 9 May 2019, the AAA credit status of TCL
Corporation and the said bonds was affirmed with a “Stable” outlook.
According to the Follow-up Rating Report (2019) on TCL Corporation’s Corporate Bonds
Publicly Offered in 2017 to Qualified Investors (Tranches 1 and 2) and on TCL
Corporation’s Corporate Bonds Publicly Offered in 2018 to Qualified Investors (Tranches 1
and 2) issued by China Chengxin Securities Rating Co., Ltd. on 9 May 2019, the AAA credit
status of TCL Corporation and the said bonds was affirmed with a “Stable” outlook.
According to the Credit Rating Report on TCL Corporation’s Corporate Bonds Publicly
Offered in 2019 to Qualified Investors (Tranche 1) issued by China Chengxin Securities
Rating Co., Ltd. on 9 May 2019, TCL Corporation was rated AAA with a “Stable” outlook,
and the said bonds were also rated AAA.
According to the Credit Rating Report on TCL Corporation’s Corporate Bonds Publicly
Offered in 2019 to Qualified Investors (Tranche 2) issued by China Chengxin Securities
Rating Co., Ltd. on 9 September 2019, TCL Corporation was rated AAA with a “Stable”
134
TCL Technology Group Corporation Annual Report 2019
outlook, and the said bonds were also rated AAA.
According to the Credit Rating Report on TCL Corporation’s Corporate Bonds Publicly
Offered in 2019 to Qualified Investors (Tranche 3) issued by China Chengxin Securities
Rating Co., Ltd. on 9 October 2019, 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 Guarantee Measures
No credit enhancement measures were taken for the Company’s bonds during the
Reporting Period.
The capital for principal repayment and interest payment for the Company’s bonds is
primarily sourced from the revenue, net profit and cash flows arising from its ordinary
course of business. The repayment guarantee measures include a specialized task group,
a strict capital management plan, a bond trustee, the Rules for Bondholders’ Meetings,
strict information disclosure, and an undertaking to not distribute profits to shareholders, as
well as suspend capital expenditures such as major investments in external parties and
mergers and acquisitions where the Company fails to, or expectedly fails to, repay the
principal and pay the interest on any bonds on time.
The Company’s credit enhancement mechanism, repayment plans and other repayment
guarantee measures remained unchanged during the Reporting Period.
VI Meetings of Bondholders Convened during Reporting Period
No such cases in the Reporting Period.
VII Performance of Duties by Bond Trustee during Reporting Period
As the trustee of the “16TCL02”, “16TCL03”, “17TCL01”, “17TCL02”, “18TCL01”, “18TCL02”
and “19TCL01” bonds, Guotai Junan Securities Co., Ltd., in strict accordance with the
applicable laws and regulations including the Measures for the Issue and Trading of
Corporate Bonds and the Professional Code of Conduct for Corporate Bond Trustees,
keeps a close eye on the Company’s operating, financial and credit conditions to fulfill its
duties as a bond trustee and protect the legal rights and interests of the bondholders. And
135
TCL Technology Group Corporation Annual Report 2019
the bond trustee has no conflicts of interests in any kind with the Company.
As the trustee of the “19TCL02” and “19TCL03” bonds, CITIC Securities Co., Ltd., in strict
accordance with the applicable laws and regulations including the Measures for the Issue
and Trading of Corporate Bonds and the Professional Code of Conduct for Corporate Bond
Trustees, keeps a close eye on the Company’s operating, financial and credit conditions to
fulfill its duties as a bond trustee and protect the legal rights and 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 2019 2018 Change (%)
EBITD A (R MB’0,000) 1,422,433 1,409,652 0.91%
Current ratio 1.12 1.02 9.97%
Debt/asset ratio (%) 61.25 68.42 -7.17
Quick ratio 0.85 0.67 17.97%
Debt/EBITDA ratio 14.09% 10.69% 3.40%
Interest cover (times) 2.16 2.40 -10.00%
Cash-to-interest cover (times) 5.32 5.46 -2.56%
EBITDA-to-interest cover (times) 5.17 5.53 -6.51%
Debt repayment ratio (%) 100 100.00 0.00
Interest payment ratio (%) 100 100.00 0.00
Explanation of why any financial indicator in the table above registered a year-on-year change of over 30%:
□ Applicable ■ Not applicable
IX Principal Repayment and Interest Payment of Other Bonds and Debt Financing
Instruments during the Reporting Period
Principal amount Coupon Principal repayment
No. Bond abbreviation Issue date Maturity
(RMB’00,000,000) rate and interest payment
1 18TCL-SCP001 20 2018-4-23 0.74 year 4.80% Repaid in full on time
The interest for the
period from 2 April
2 15TCL-MTN001 5 2015-4-1 5 years 5.50% 2018 to 1 April 2019
was paid on 2 April
2019
136
TCL Technology Group Corporation Annual Report 2019
The interest for the
period from 3
December 2018 to 2
3 18TCL-MTN001 20 2018-12-3 3 years 4.58%
December 2019 was
paid on 3 December
2019
Credit Lines Granted by Banks, as well as Their Utilization and Repayment during
the Reporting Period
The Company operates in compliance, with a fine credit reputation, strong profitability and
a great ability to repay debt. Additionally, it maintains a long-term partnership with the China
Development Bank, The Export-Import Bank of China, the Industrial and Commercial Bank
of China, etc. As at 31 December 2019, the credit lines granted by the major bank partners
to the Company totaled RMB199.6 billion, with RMB59.3 billion utilized and RMB140.3
billion left. During the Reporting Period, there were no defaults on bank loans.
Fulfillment of Commitments Made in Bond Prospectuses during Reporting Period
Up to the date of the approval of this Report for issue, the Company has been executing all
the commitments given in its bond prospectuses, without any negative impact on the
investors caused by the Company’s weak execution of such commitments.
Significant Events during the Reporting Period
□ Applicable ■ Not applicable
Guarantor for Corporate Bonds
□ Yes No
Indicate whether the guarantor is a legal person or other organization.
□ Yes No
Indicate whether the financial statements of the guarantor (including the balance sheet, the income statement, the cash
flow statement, the statement of changes in owners ’/shareholders’ equity and the notes to the financial statements) for
the reporting period are disclosed separately within four months when every accounting year ends.
□ Yes No
The Company is required to separately provide the financial statements of the guarantor for the reporting period within
four months when every accounting year ends, and indicate whether the financial statements are audited or not.
137
TCL Technology Group Corporation
For the Year Ended 31 December 2019
Independent Auditor’s Report
Da Hua Shen Zi [2020] No. 000688
Da Hua Certified Public Accountants（Special General Partnership）
TCL Technology Group Corporation
Annual Report 2019
TCL Technology Group Corporation
Independent Auditor’s Report and Financial Statements
(For the year from 1 January 2019 to 31 December 2019)
Contents Page
I Independent Auditor’s Report 1-7
II Financial Statements for Year 2019
1． Co nso lida ted Ba la nce S hee t 1-2
2． Co nso lida ted Inc om e S ta te me nt 3
3． Co nso lida ted Ca s h F lo w Statem e nt 4-5
4． Co nso lida ted S ta te me nt o f C ha nges i n
6-7
Sha re ho lde rs’ Eq ui ty
5． Ba la nce S he et o f the Co mpa ny as the
8-9
Pare nt
6． Inc ome S ta te me nt o f the Co mpa ny as the
10
Pare nt
7． Cas h Flo w S ta te me nt o f the Co mpa ny as
11-12
the Pa re nt
8． S ta te me nt o f C ha ng es i n S ha re ho lder s’
13-14
Equi ty of the Co mpa ny as the Pa re nt
9． No tes to Fi na ncia l S ta te me nts 15-197
Da Hua Shen Zi [2020] No. 000688
Independent Auditor’s Report
Da Hua Shen Zi [2020] No. 000688
To the Shareholders of TCL Technology Group Corporation
I Opinion
We have audited the financial statements of TCL Technology Group
Corporation (the “Company”), which comprise the consolidated and parent
company (the Company as the parent exclusive of subsidiaries) balance
sheets as at 31 December 2019, the consolidated a nd 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
material respects, the consolidated and parent company financial position of
the Company at 31 December 2019, and the consolidated and parent
company operating results and cash flows for the year then ended, in
conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese
Registered Accountants. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for Audit of Financial Statements
section of our report. We are independent of the Company in accordance with
the China Code of Ethics for Certified Public Accountants, and we have fulfilled
our other ethical responsibilities in accordance with the said Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
And key audit matter identified in our audit is summarized as follows:
1
Da Hua Shen Zi [2020] No. 000688
1. Related-party transactions and outstanding amounts
2. Revenue recognition
(I) Balances and Transactions of Related Parties
1. Matter description
Please refer to the Note " IX. Related Parties and Related-party Transactions"
to the financial statements. Related-party transactions in 2019 are about RMB
17.1 billion, up 98% over the previous period.
As the fair reflection of financial statements will be significantly impacted by
whether related parties and related-party transactions are disclosed completely,
whether related-party transactions are authentic, and whether the transaction
prices are fair, we identify balances and transactions of related parties as key
audit matters.
2. Audit response
The important audit procedures we carried out in respect of related-party
transactions include:
(1) Understand and evaluate the management's internal control of recognizing
and disclosing related party relations and transactions, and review the
effectiveness of internal control design and implementation;
(2) Obtain management's statement on related party relations and their
transaction integrity, and obtain the list of related party relations provided by
management, and check against information obtained from other public
channels;
(3) Check customers, suppliers and other related parties that have business
with the company to recognize any missing of related parties. At the same time,
obtain the resolutions of the board of directors and the shareholders' meeting
relevant to the related party transactions, check the decision-making authority
and procedures of the related party transactions, and evaluate the legality and
compliance of the related party transactions and whether they have been
properly authorized and approved.
(4) Compared the sales prices of related parties with those of non-related
parties for similar products to judge the fairness of related transaction prices;
2
Da Hua Shen Zi [2020] No. 000688
(5) Obtain details of the amount and balance of related party transactions, and
check the financial vouchers corresponding to the transactions and the
attached contracts or orders, transfer orders, statements, invoices and bank
receipts of the selected samples; In addition, send notice for the amount and
balance of related transactions of important related parties.
(6) We checked TCL Technology Group Corporation's presentation and
disclosure of related parties and related-party transactions in the financial
statements;
Based on the audit work executed, we believe that the integrity of
management's disclosure of related party relationships, the authenticity of
related-party transactions and the fairness of transaction prices are
reasonable.
(II) Revenue recognition
1. Matter description
Please refer to the accounting policies as stated in 30. “Revenue recognition”
under Note III to the financial statements and 52. Operating revenue under
Note V to the financial statements. The Company’s operating revenue for the
current period was approximately RMB74.9 billion, which was a decrease of
around 34% from the previous period.
As operating revenue is one of the Company’s key operating indicators with
the hereditary risk of the management manipulating the revenue recognition
time point for the purpose of achieving a specific objective or expectation, and
the revenue recognition for the current period has a big influence on the
financial statements, we identify revenue recognition as a key audit matter.
2. Audit response
The important audit procedures we carried out in respect of revenue
recognition include:
(1) We understood and assessed whether the management’s design and
operation of key internal control in respect of revenue recognition were
effective or not;
(2) We understood and assessed whether the management’s selection and
implementation of the policies related to revenue recognition complied with the
3
Da Hua Shen Zi [2020] No. 000688
accounting standards for business enterprises;
(3) We selected samples of recorded transactions with revenue for the year
and examined relevant supporting documents involved during the transaction
process, including outbound delivery orders, customers’ receipt records, sale
invoices， customs declarations and fund receipt proofs;
(4) We selected samples of the recorded transactions with revenue around the
balance sheet data and examined outbound delivery orders and other
supporting documents to assess 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 analytic
review procedures on the operating revenue to determine the reasonableness
of changes in the revenue and gross profit margin for the current period;
(6) We executed confirmation procedures with key accounts and inquired
about the sales amount and the current account balance incurred for the
current period; we carried out substitute audit procedures on the accounts with
no replies;
Based on the audit work executed, we believe that the Company’s recognition
of revenue complies with relevant requirements of the accounting standa rds
for business enterprises.
IV Other Information
The Company’s management is responsible for the other information. The
other information comprises all of the information included in the Company’s
2019 Annual Report other than the financial statements a nd our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material
4
Da Hua Shen Zi [2020] No. 000688
misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance
for Financial Statements
The Company’s management is responsible for the preparation of the financial
statements that give a fair view in accordance with CAS, and for designing,
implementing and maintaining such internal control as the management
determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the management either intends to liquidate the Company
or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance 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 the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment
and maintain 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 those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
5
Da Hua Shen Zi [2020] No. 000688
detecting a material misstatement resulting from fraud is higher 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
design audit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
management.
4. Conclude on the appropriateness of the management’s use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required by CAS to
draw users’ attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Company to express
an opinion on the financial statements. We are responsible for the direction,
supervision and performance of the Company audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any noteworthy deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and
6
Da Hua Shen Zi [2020] No. 000688
communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Da Hua Certified Public Accountants Chinese CPA:
(Special General Partnership)
（ Engagement Partner）
BeijingChina
Chinese CPA:
28 March 2020
7
TCL Technology Group Corporation
Consolidated Balance Sheet
(RMB’000)
Assets: Note V 31 December 2019 31 December 2018
Current assets:
Monetary assets 1 18,648,185 26,801,343
Held-for-trading financial assets 2 6,074, 751 -
Financial assets at fair value
through profit or loss 3 - 1,137, 580
Derivative financial assets 4 159,036 -
Notes receivable 5 228,942 4,272, 222
Accounts receivable 6 8,340, 354 13,604,358
Factored accounts receivable 7 - 47,087
Prepayments 8 364,423 1,194, 972
Other receivables 9 2,750, 042 5,719, 379
Inventories 10 5,677, 963 19,887,972
Assets classified as held for
sale - 18,791
Other current assets 11 5,911, 827 7,624, 097
Total current assets 48,155,523 80,307,801
Non-current assets:
Loans and advances to
customers 12 3,637, 768 1,123, 800
Investments in debt obligations 13 20,373 -
Available-for-sale financial
assets 14 - 4,270, 845
Long-t erm equity investments 15 17,194,284 16,957,109
Investments in other debt
obligations 16 279,884 -
Other non-current financial
assets 17 2,542, 689 -
Investment property 18 82,273 1,676, 211
Fixed assets 19 45,459,070 35,983,131
Construction in progress 20 33,578,290 38,924,586
Intangible assets 21 5,684, 584 5,954, 873
R&D expense 22 1,548, 471 1,011, 504
Goodwill 23 2,452 357,112
Long-t erm prepaid ex pense 24 1,567, 691 1,861, 333
Deferred income tax assets 25 840,874 797,882
Other non-current assets 26 4,250, 659 3,537, 756
Total non-current assets 116,689,362 112,456,142
Total assets 164,844,885 192,763,943
Person-in-c
Person-in-charg harge of the
Legal e of financial financial
representative: Li Dongsheng affairs ： Du Juan department: Xi Wenbo
The attached not es to the financial statements form an integral part of the financial statements.
1
TCL Technology Group Corporation
Consolidated Balance Sheet (Continued)
(RMB’000)
Liabilities and shareholders’ equity: Note V 31 December 2019 31 December 2018
Current liabilities:
Short-term borrowings 27 12,069,657 13,240,637
Factorage financings 7 - 47,087
Borrowings from central bank 28 573,222 231,404
Customer deposits and interbank deposits 29 1,355,129 545,053
Held-for-trading financial liabilities at fair value
30 188,220 -
through profit or loss
Financial liabilities at fair value through profit or
31 - 212,097
loss
Derivative financial liabilities 32 84,705 -
Notes payable 33 1,720,402 3,092,574
Accounts payable 34 11,549,133 23,922,712
Ad vances from customers 35 141,749 1,460,773
Payroll payable 36 1,094,217 2,891,393
Taxes payable 37 226,806 716,534
Other payables 38 12,293,566 23,120,774
Short-term commercial papers payable 39 - 2,000,000
Current portion of non-current liabilities 40 1,691,963 6,009,915
Other current liabilities 41 69,022 1,344,451
Total current liabilities 43,057,791 78,835,404
Non-current liabilities:
Long-term borrowings 42 38,512,059 36,864,923
Bonds payable 43 16,479,085 12,985,628
Long-term payables 44 24,206 73,902
Long-term payroll payable 36 23,018 24,246
Deferred income 45 1,912,421 2,637,229
Deferred income tax liabilities 25 952,678 440,352
Other non-current liabilities 483 30,586
Total non-current liabilities 57,903,950 53,056,866
Total liabilities 100,961,741 131,892,270
Share capital 46 13,528,439 13,549,649
Capital reserves 47 5,716,667 5,996,741
Less: Treasury stock 48 1,952,957 63,458
Other comprehensive income 68 (534,082) (1,174,162)
Surplus reserves 49 2,238,368 2,184,261
General reserve 50 361 361
Retained earnings 51 11,115,150 10,000,973
Total equity attributable to shareholders of the
Company as the parent 30,111,946 30,494,365
Non-controlling interests 33,771,198 30,377,308
Total shareholders’ equity 63,883,144 60,871,673
Total liabilities and shareholders’ equity 164,844,885 192,763,943
Person-in
-charge Person-in-ch
of arge of the
Legal financial financial
representative: Li Dongsheng affairs ： Du Juan department: Xi Wenbo
The attached not es to the financial statements form an integral part of the financial statements.
2
TCL Technology Group Corporation
Consolidated Income Statement
(RMB’000)
Note V 2019 2018
1. Revenue 75,077,806 113,447,438
Including: Operating revenue 52 74,933,086 113,360,076
Interest income 53 144,720 87,362
Less: Cost of sales 52 66,337,117 92,605,589
Interest expense 53 17,230 72,248
Taxes and surcharges 54 330,588 661,262
Selling expense 55 2,857,489 8,887,021
Administrative expense 56 1,895,088 4,299,607
R&D expense 57 3,396,805 4,677,579
Finance costs 58 1,248,801 973,261
Including: Interest expense 1,958,251 1,782,408
Interest income 401,645 621,949
Add: Other income 59 1,900,636 2,218,718
Return on investment 60 3,442,554 2,167,254
Including: Share of profit or loss of joint ventures and associates 1,657,471 1,360,268
Foreign exchange gain 53 (12,499) (47,714)
Gain on changes in fair value 61 473,673 (3,879)
Less: Credit impairment loss 62 32,258 -
Asset impairment loss 63 791,112 1,523,119
Add: Asset disposal income 64 1,157 10,071
2. Operating profit 3,976,839 4,092,202
Add: Non-operating income 65 128,609 956,809
Less: Non-operating expense 66 49,645 104,631
3. Profit before tax 4,055,803 4,944,380
Less: Income tax expense 67 398,069 879,182
4. Net profit 3,657,734 4,065,198
4.1 By operational continuity
Net profit from continuing operations 2,325,647 3,553,189
Net profit from discontinued operations 1,332,087 512,009
4.2 By ownership
Net profit attributable to owners of the Company as the parent 2,617,765 3,468,211
Net profit attributable to non-controlling interests 1,039,969 596,987
5. Other comprehensive income, net of tax 68 488,805 (1,663,194)
5.1 Other comprehensive income that will not be reclassified to profit
27,642 -
or loss
5.2 Other comprehensive income that may subsequently be
461,163 (1,663,194)
reclassified to profit or loss
6. Total comprehensive income 4,146,539 2,402,004
Attributable to shareholders of the Company as the parent 2,922,896 2,074,777
Attributable to non-controlling interests 1,223,643 327,227
7. Earnings per share 69
7.1 Basic earnings per share (RMB yuan/share) 0.1986 0.2566
7.2 Diluted earnings per share (RMB yuan/share) 0.1935 0.2562
Person-in-charg
Person-in-charge of e of the financial
Legal representative: Li Dongsheng financial affairs： Du Juan department: Xi Wenbo
The attached notes to the financial statements form an integral part of the financial statements.
3
TCL Technology Group Corporation
Consolidated Cash Flow Statement
(RMB’000)
Note V 2019 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 78,966,837 123,443,026
Net increase/(decrease) in customer deposits and interbank deposits 810,076 234,178
Net increase/(decrease) in borrowings from central bank 341,818 191,407
Interest, handling charges and commissions received 144,720 88,208
Tax rebates 3,671,801 4,003,111
Cash generated from other operating activities 70 2,329,643 2,141,672
Subtotal of cash generated from operating activities 86,264,895 130,101,602
Payments for commodities and services (58,275,622) (90,509,473)
Net increase/(decrease) in loans and advances to customers (4,468,399) (1,068,789)
Net increase/(decrease) in deposits in central bank and in interbank loans
297,896 3,076,532
granted
Cash paid to and for employees (4,257,331) (10,174,024)
Taxes paid (4,291,276) (5,000,449)
Cash used in other operating activities 71 (3,780,067) (15,938,820)
Subtotal of cash used in operating activities (74,774,799) (119,615,023)
Net cash generated from/used in operating activities 73 11,490,096 10,486,579
2. Cash flows from investing activities:
Proceeds from disinvestment 26,240,545 58,385,497
Return on investment 814,671 1,309,354
Net proceeds from disposal of fixed asset s, intangible asset s and other
92,802 81,287
long-lived asset s
891,326 281,174
Net proceeds from disposal of subsidiaries or other business units
Cash generated from other investing activities - 1,562
Subtotal of cash generated from investing activities 28,039,344 60,058,874
Payments for acquisition of fixed asset s, intangible asset s and other
(20,116,210) (32,798,364)
long-lived asset s
Payments for investments (29,519,049) (55,491,053)
Net payments for acquisition of subsidiaries and other business units (170,198) -
Cash used in other investing activities (9,965,596) -
Subtotal of cash used in investing activities (59,771,053) (88,289,417)
Net cash generated from/used in investing activities (31,731,709) (28,230,543)
Person-in-ch
arge of the
Person-in-charge of financial
Legal representative: Li Dongsheng financial affairs ： Du Juan department: Xi Wenbo
The attached notes to the financial statements form an integral part of the financial statements.
4
TCL Technology Group Corporation
Consolidated Cash Flow Statement
(RMB’000)
Note V 2019 2018
3. Cash flows from financing activities:
Capital contributions received 7,531,053 7,759,258
Including: Capital contributions by non-controlling
7,523,844 7,695,800
interests to subsidiaries
Borrowings obtained 36,378,744 50,564,652
Net proceeds from issuance of bonds 4,000,000 5,000,000
Subtotal of cash generated from financing activities 47,909,797 63,323,910
Repayment of borrowings (29,273,623) (38,554,966)
Payments for interest and dividends (4,334,741) (4,144,148)
Including: Dividends paid by subsidiaries to
(99,073) (411,272)
non-controlling interests
Cash used in other financing activities 72 (2,350,627) (584,974)
Subtotal of cash used in financing activities (35,958,991) (43,284,088)
Net cash generated from/used in financing activities 11,950,806 20,039,822
4. Effect of foreign exchange rate changes on cash and
226,166 125,357
cash equivalents
5. Net increase in cash and cash equivalents (8,064,641) 2,421,215
Add: Cash and cash equivalents, beginning of the period 25,702,384 23,281,169
6. Cash and cash equivalents, end of the period 74 17,637,743 25,702,384
Person-in-c
Person-in-charge harge of the
Legal of financial financial
representative: Li Dongsheng affairs ： Du Juan department: Xi Wenbo
The attached notes to the financial statements form an integral part of the financial statements.
5
TCL Technology Group Corporation
Consolidated Statement of Changes in Shareholders’ Equity
(RMB’000)
2019
Equity attributable to shareholders of the Company as the parent
Total
Non-controllin
Share Capital Treasury
Other
Surplus General Retained shareholders’
comprehensi g interests
capital reserves stock reserves reserve earnings equity
ve income
1. Balances as at end of prior year 13,549,649 5,996,741 (63,458) (1,174,162) 2,184,261 361 10,000,973 30,377,308 60,871,673
Add: Adjustments for changed
accounting policies - - - 334,950 - - (106,833) (994) 227,123
2. Balances as at beginning of the year 13,549,649 5,996,741 (63,458) (839,212) 2,184,261 361 9,894,140 30,376,314 61,098,796
(21,210) (280,074) (1,889,499) 305,130 54,107 - 1,221,010 3,394,884 2,784,348
3. Increase/decrease in the period
- - - 299,561 - - 2,617,765 1,223,644 4,140,970
3.1 Total comprehensive income
3.2 Capital increased and reduced by 56,535
shareholders (21,210) (280,074) (1,889,499) - - - - 2,247,318
3.2.1 Capital increased by shareholders - - - - - - - 7,327,174 7,327,174
3.2.2 Share-based payments included in
shareholders’ equity (21,210) (8,061) (81,962) - - - - - (111,233)
- (272,013) (1,807,537) - - - - (5,079,856) (7,159,406)
3.2.3 Other
- - - - 54,107 - (1,391,186) (76,078) (1,413,157)
3.3 Profit distribution
3.3.1 Appropriation to surplus reserves - - - - 52,832 - (52,832) (16,923) (16,923)
- - - - - - (1,337,079) (59,155) (1,396,234)
3.3.2 Appropriation to shareholders
- - - - 1,275 - (1,275) - -
3.3.3 Other
3.4 Transfers within owners’ equity - - - 5,569 - - (5,569) - -
3.4.1 Other comprehensive income 5,569 - (5,569) -
transferred to retained earnings - - - - -
- - - - - - - - -
3.4.2 Other
4. Balances as at end of the period 13,528,439 5,716,667 (1,952,957) (534,082) 2,238,368 361 11,115,150 33,771,198 63,883,144
Person-in-charge of financial Person-in-charge of the fina
Legal representative: Li Dongsheng affairs: Du Juan ncial department: Xi Wenbo
The attached notes to the financial statements form an integral part of the financial statements.
6
TCL Technology Group Corporation
Consolidated Statement of Changes in Shareholders’ Equity (Continued)
(RMB’000)
2018
Equity attributable to shareholders of the Company as the parent Total
Non-controllin shareholders
Share Capital Treasury Other Surplus General Retained g interests ’ equity
capital reserves stock comprehensiv reserves reserve earnings
e income
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
2. Balances as of 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)
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
Person-in-charge of financial Person-in-charge of the
Legal representative: Li Dongsheng affairs: Du Juan financial department: Xi Wenbo
The attached notes to the financial statements form an integral part of the financial statements.
7
TCL Technology Group Corporation
Balance Sheet of the Company as the Parent
(RMB’000)
Assets: Note XIV 31 December 2019 31 December 2018
Current assets:
Monetary assets 3,966, 899 1,328, 707
Held-for-trading financial
2,969, 106 -
assets
Financial assets at fair value
- 711,741
through profit or loss
Notes rec eivable 22,514 20,497
Accounts receivable 1 445,090 194,959
Prepayments 97,127 187,895
Other receivables 2 17,129,473 18,773,353
Inventories 14,869 826
Other current assets 6,471 1,873, 962
Total current assets 24,651,549 23,091,940
Non-current assets:
A vailable-for-sale financial
3 - 1,185, 430
assets
Long-term equity investments 4 39,297,272 41,803,450
Investments in other equity
5 15,000 -
instruments
Other non-current financial
1,540, 913 -
assets
Investment property 92,623 5,158
Fixed assets 54,238 40,058
Construction in progress 1,241 552
Intangible assets 19,145 18,776
Long-term prepaid expense 454,969 461,056
Total non-current assets 41,475,401 43,514,480
Total assets 66,126,950 66,606,420
Person-in-
charge of
the
Person-in-charg financial
Legal e of financial departmen
representative: Li Dongsheng affairs ： Du Juan t: Xi Wenbo
The attached not es to the financial statements form an integral part of the financial statements.
8
TCL Technology Group Corporation
Balance Sheet of the Company as the Parent (Continued)
(RMB’000)
Note XIV 31 December 2019 31 December 2018
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings 6,484, 481 3,300, 260
Derivative financial liabilities 5,981 -
Notes payable 30,283 123,708
Accounts payable 424,225 252,801
Ad vances from customers 17,471 38,615
Payroll payable 125,095 98,753
Taxes payable 10,355 3,437
Other payables 9,347, 608 6,407, 742
Short-term commercial papers payable - 2,000, 000
Current portion of non-current liabilities 847,327 3,000, 003
Total current liabilities 17,292,826 15,225,319
Non-current liabilities:
Long-term borrowings 2,110, 000 5,340, 956
Bonds payable 16,479,085 12,985,628
Long-term payables - 700
Long-term payroll payable 23,018 24,246
Deferred income 51,562 51,506
Total non-current liabilities 18,663,665 18,403,036
Total liabilities 35,956,491 33,628,355
Share capital 13,528,439 13,549,649
Capital reserves 8,382, 776 8,565, 338
Less: Treasury stock 1,952, 957 63,458
Other comprehensive income 56,064 (24,870)
Surplus reserves 2,036, 304 1,982, 197
Retained earnings 8,119, 833 8,969, 209
Total shareholders’ equity 30,170,459 32,978,065
Total liabilities and shareholders’ equity 66,126,950 66,606,420
Person-in-c
Person-in-charge harge of the
Legal of financial financial
representative: Li Dongsheng affairs ： Du Juan department: Xi Wenbo
The attached not es to the financial statements form an integral part of the financial statements.
9
TCL Technology Group Corporation
Income Statement of the Company as the Parent
(RMB’000)
Note XIV 2019 2018
1. Operating revenue 6 1,730, 187 2,055, 950
Less: Cost of sales 6 1,482, 346 1,854, 623
Taxes and surcharges 11,972 6,951
Selling expense 29,931 29,160
Administrative expense 354,036 368,820
R&D expense 160,796 123,609
Finance costs 917,158 634,124
Including: Interest expense 1,383, 429 1,330, 315
Interest income 502,967 652,821
Add: Other income 6,395 8,000
Return on investment 7 1,379, 544 7,126, 393
Including: Share of profit or loss of joint
7 1,149, 694 931,721
ventures and associates
Gain on changes in fair value 39,986 (54,003)
Less: Credit impairment loss (1,542) -
Asset impairment loss - 41,872
Add: Asset disposal income 256,615 22,238
2. Operating profit 458,030 6,099, 419
Add: Non-operating income 80,181 809,277
Less: Non-operating expense 9,893 9,092
3. Profit before tax 528,318 6,899, 604
Less: Income tax expense - -
4. Net profit 528,318 6,899, 604
5. Other comprehensive inc ome 81,669 (11,225)
6. Total comprehensive income 609,987 6,888, 379
Person-in-
charge of
the
Person-in-char financial
Legal ge of financial departmen
representative: Li Dongsheng affairs ： Du Juan t: Xi Wenbo
The attached not es to the financial statements form an integral part of the financial statements.
10
TCL Technology Group Corporation
Cash Flow Statement of the Company as the Parent
(RMB’000)
Note
XIV 2019 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities and
rendering of services 1,489,327 2,346,705
Cash generated from other operating
activities 8,110,950 2,001,412
Subtotal of cash generated from operating
activities
