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TCL 科技:2019年年度报告(英文版)2020-04-03  

						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




                                                                        1
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




                                                                                                                                        2
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,

                                                                                                  3
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.


                                                                                               4
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.


                                                                                               5
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




                                                                                                7
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.


                                                                                                                                     9
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:


                                                                                                                        12
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

                                                                                                                        18
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.


                                                                                                 19
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


                                                                                                20
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.




                                                                                                21
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.


                                                                                               22
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
                                                                                                23
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.


                                                                                               25
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


                                                                                                 28
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.
                                                                                                29
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.



                                                                                             30
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

                                                                                                31
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



                                                                                                                                     32
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%


                                                                                                                      34
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


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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.




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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



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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

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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.




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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


                                                                                                                         84
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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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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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


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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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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


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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




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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




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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

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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

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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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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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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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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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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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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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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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                                                        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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                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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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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                  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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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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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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                           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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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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                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


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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




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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




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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

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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.


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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



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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

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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.




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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



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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




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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)




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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:

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                                                     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;




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                                                    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                                                        9,600,277                 4,348,117


      Payments for commodities and services                                  (1,440,521)              (2,442,452)
      Cash paid to and for employees                                           (153,043)                (179,932)
      Taxes paid                                                                (73,633)                 (35,117)
      Cash used in other operating activities                                (3,089,974)              (6,590,572)


      Subtotal of cash used in operating activities                          (4,757,171)              (9,248,073)


      Net cash generated from/used in operating
                                                             8
            activities                                                        4,843,106               (4,899,956)


2. Cash flows from investing activities:
      Proceeds from disinvestment                                            16,562,819                48,308,442
      Return on investment                                                      656,095                 5,314,308
      Net proceeds from disposal of fixed assets,
            intangible assets and other long-lived                                   143                 242,768
            assets


      Subtotal of cash generated from investing
            activities                                                       17,219,057                53,865,518


      Payments for acquisition of fixed assets,
          intangible assets and other long-lived
            assets                                                               (5,926)                 (11,466)
      Payments for investments                                             (13,939,067)              (50,693,136)


      Subtotal of cash used in investing activities                        (13,944,993)              (50,704,602)


      Net cash generated from/used in investing
            activities                                                        3,274,064                 3,160,916

                                                                                 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 notes to the financial statements form an integral part of the financial statements.

                                                         11
                                TCL Technology Group Corporation
                   Cash Flow Statement of the Company as the Parent (Continued)
                                            (RMB’000)

                                                         Note XIV                    2019                       2018


3. Cash flows from financing activities:


      Capital contributions received                                                 7,209                  63,458
      Borrowings obtained                                                     11,437,982                 9,771, 712
      Net proceeds from issuance of bonds                                       4,000, 000               5,000, 000


      Subtotal of cash generated from financing
      activities                                                              15,445,191               14,835,170


      Repayment of borrowings                                                (16,491,912)             (10,569,652)
      Payments for interest and dividends                                     (2,394,239)              (2,364,333)
      Cash used in other financing activities                                 (2,037,236)                  (2,937)


      Subtotal of cash used in financing activities                          (20,923,387)             (12,936,922)


      Net cash generated from/used in financing
            activities                                                        (5,478,196)                1,898, 248


4. Effect of foreign exchange rate changes on cash
and cash equivalents                                                              (26,563)                  62,974


5. Net increase in cash and cash equivalents                                    2,612, 411                222,182
Add: Cash and cash equivalents, beginning of the
period                                                                          1,328, 679               1,106, 497


6. Cash and cash equivalents, end of the period                9                3,941, 090               1,328, 679




                                                                                  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 notes to the financial statements form an integral part of the financial statements.
                                                          12
                                                              TCL Technology Group Corporation
                                           Statement of Changes in Shareholders’ Equity of the Company as the Parent
                                                                             (RMB’000)

                                                                                                                         2019
                                                                                                              Other
                                                                                                                                                                                Total
                                                          Share         Capital            Treasury        compreh                Surplus           Retained
                                                                                                                                                                        shareholders’
                                                          capital     reserves                stock          ensive              reserves           earnings
                                                                                                                                                                               equity
                                                                                                            income
 1. Balances as of end of prior year                  13,549,649     8,565,338             (63,458)        (24,870)             1,982,197          8,969,209              32,978,065
 Add: Adjustments for changed accounting policies               -               -                  -             (739)                  -                  739                       -

 2. Balances as of beginning of the year              13,549,649     8,565,338             (63,458)        (25,609)             1,982,197          8,969,948              32,978,065
 3. Increase/decrease in the period                     (21,210)     (182,562)           (1,889,499)        81,673                54,107            (850,115)             (2,807,606)
 3.1 Total comprehensive income                                 -               -                  -        81,673                      -            528,318                  609,991
 3.2 Capital increased and reduced by shareholders      (21,210)     (182,562)           (1,889,499)                 -                  -                     -           (2,093,271)
 3.2.1 Share-based payments included in
                                                        (21,210)        (8,061)            (81,962)                  -                  -                     -              (111,233)
 shareholders’ equity
 3.2.2 Other                                                    -    (174,501)           (1,807,537)                 -                  -                     -           (1,982,038)
 3.3 Profit distribution                                        -               -                  -                 -            54,107          (1,378,433)             (1,324,326)
 3.3.1 Appropriation to surplus reserves                        -               -                  -                 -            52,832             (52,832)                        -
 3.3.2 Appropriation to shareholders                            -               -                  -                 -                  -         (1,337,079)             (1,337,079)

 3.3.3 Other                                                    -               -                  -                 -             1,275                 11,478                12,753

 4. Balances as at end of the period                  13,528,439     8,382,776           (1,952,957)        56,064              2,036,304          8,119,833              30,170,459


                                                                                                                                 Person-in-charge of t
 Legal                                                    Person-in-charge of                                                    he financial departm
 representative:                 Li Dongsheng             financial affairs:                           Du Juan                                   ent:             Xi Wenbo

The attached not es to the financial statements form an integral part of the financial statements.




                                                                                    13
                                                                TCL Technology Group Corporation
                                       Statement of Changes in Shareholders’ Equity of the Company as the Parent (Continued)
                                                                              (RMB’000)

                                                                                                               2018
                                                                                                           Other                                                   Total
                                                         Share          Capital      Treasury                              Surplus            Retained
                                                                                                    comprehensi                                            shareholders’
                                                         capital      reserves          stock                             reserves            earnings
                                                                                                      ve income                                                   equity
 1. Balances as of end of prior year                 13,514,972      8,476,523              -             (13,645)      1,292,236         4,114,531          27,384,617
 2. Balances as of beginning of the year             13,514,972      8,476,523              -             (13,645)      1,292,236         4,114,531          27,384,617
 3. Increase/decrease in the period                     34,677         88,815        (63,458)             (11,225)        689,961         4,854,678             5,593,448
 3.1 Total comprehensive income                                -              -             -             (11,225)               -        6,899,604             6,888,379
 3.2 Capital increased and reduced by shareholders      34,677         88,815        (63,458)                    -               -                   -            60,034
 3.2.1 Capital increased by shareholders                       -              -             -                    -               -                   -                  -
 3.2.2 Share-based payments included in
                                                        34,677         28,781        (63,458)                    -               -                   -                  -
 shareholders’ equity
 3.2.3 Other                                                   -       60,034               -                    -               -                   -            60,034
 3.3 Profit distribution                                       -              -             -                    -        689,961       (2,044,926)          (1,354,965)
  3.3.1 Appropriation to surplus reserves                      -              -             -                    -        689,961         (689,961)                     -
  3.3.2 Appropriation to shareholders                          -              -             -                    -               -      (1,354,965)          (1,354,965)

 4. Balances as at end of the period                 13,549,649      8,565,338       (63,458)             (24,870)      1,982,197         8,969,209          32,978,065




                                                                                                                      Person-in-charge of
Legal                                                   Person-in-charge of                                            the financial depart
representative:                 Li Dongsheng            financial affairs:                      Du Juan                              ment:           Xi Wenbo

The attached not es to the financial statements form an integral part of the financial statements



                                                                                   14
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

I     General information

(I)   Place of incorporation and organization

      TCL Technology Group Corporation (hereinafter referred to as the “Company”) is a limited
      liability company incorporated in the People's Republic of China (hereinafter referred to as
      "China") on 17 July 1997 under the Company Law of the People's Republic of China
      (hereinafter referred to as the “Company Law”). As per the approval documents of YBH
      [2002] No. 94 and YFH [2002] No. 134 issued by the People’s Government of Guangdong
      Province, and YJMH [2002] No. 112 and YJMH [2002] No. 184 issued by the Economic and
      Trade Commission of Guangdong Province, the Company was changed to a joint stock
      limited company with a registered capital of RMB1,591,935,200, which was approved by
      Guangdong Province Administration for Industry and Commerce on 19 April 2002. The
      registration number is 4400001009990.

      Upon the approval of ZJFXZ [2004] Document No. 1 issued by the China Securities
      Regulatory Commission (CSRC) on 2 January 2004, the Company was allowed to issue
      590,000,000 shares to the public on 7 January 2004 and 404,395,944 ordinary shares
      denominated in RMB (A shares) to all public shareholders of TCL Communication
      Equipment Co., Ltd. (hereinafter referred to as " TCL Communication Equipment") in a
      stock-for-stock deal, which were listed on the Shenzhen Stock Exchange on 30 January
      2004. The shares issued to the public were all priced online, with a par value of RMB1 and
      an issue price of RMB4.26 per share, raising a total of RMB2,513,400,000. Upon the
      completion of this deal, the registered capital of the Company increased to
      RMB2,586,331,144, and on 16 July 2004, the Company was approved by the Guangdong
      Province Administration for Industry and Commerce to change its business license to
      Business License QGYZZ No. 003362. Upon the completion of the shareholder structure
      reform and the expiration of the share lockup period, the foreign shareholding ratio in the
      Company was less than 10%. On 11 September 2007, the Company was approved by
      Guangdong Province Administration for Industry and Commerce to change its business
      license to Business License No. 440000000011990.

      Upon the approval of the CSRC on 7 January 2009 with the ZJXK [2009] Document No. 12,
      the Company privately placed 350,600,000 ordinary shares denominated in RMB (A
      shares) to designated investors on 23 April 2009, with a par value of RMB1 and an issue
      price of RMB2.58 per share, raising a total of RMB904,548,000. Upon the completion of this
      deal, the registered capital of the Company increased from RMB2,586,331,144 to
      RMB2,936,931,144, and on 2 June 2009, the Company was approved by Guangdong
      Province Administration for Industry and Commerce to change its business license to
      Business License No. 440000000011990.

      Upon the approval of the CSRC on 27 May 2010 with the ZJXK [2010] Document No. 719,
      the Company privately placed 1,301,178,273 ordinary shares denominated in RMB (A
      shares) to designated investors on 26 July 2010, with a par value of RMB1 and an issue
      price of RMB3.46 per share, raising a total of RMB4,502,076,824.58. Upon the completion
      of this deal, the registered capital of the Company increased from RMB2,936,931,144 to
      RMB4,238,109,417, and on 19 September 2010, the Company was approved by
      Guangdong Province Administration for Industry and Commerce to change its business
      license to Business License No. 440000000011990.

      On 19 May 2011, the Company carried out a bonus issue of 10 additional shares for every
      10 shares to all the shareholders with capital reserves, representing a total of
      4,238,109,417 new shares, with a par value of RMB1 per share. Upon the completion of this
                                                 15
                           TCL Technology Group Corporation
                              Notes to Financial Statements
               (For the period from 1 January 2019 to 31 December 2019)
              (The amounts in tables are expressed in thousands of RMB)

bonus issue, the registered capital of the Company increased from RMB4,238,109,417 to
RMB8,476,218,834, and on 27 June 2011, the Company was approved by Huizhou
Administration for Industry and Commerce to change its business license to Business
License No. 440000000011990.

During the years of 2013 and 2014, the exercise of 58,870,080 stock options increased the
share capital of the Company from 8,476,218,834 shares to 8,535,088,914 shares.




                                         16
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

I     General information (continued)

(I)   Place of incorporation and organization (continued)

      Upon the approval of the CSRC on 13 February 2014 with the ZJXK [2014] Document No.
      201, the Company privately placed 917,324,357 ordinary shares denominated in RMB (A
      shares) to designated investors on 30 April 2014, with a par value of RMB1 and an issue
      price of RMB2.18 per share, raising a total of RMB1,999,767,098.26. Upon the completion
      of this deal, the registered capital of the Company increased from RMB8,535,088,914 to
      RMB9,452,413,271, and on 10 June 2014, the Company was approved by Huizhou
      Administration for Industry and Commerce to change its business license to Business
      License No. 440000000011990.

      In the year of 2015, 48,357,920 stock options were exercised under an incentive plan of the
      Company, and upon the approval of the CSRC on 28 January 2015 with the ZJXK [2015]
      Document No.151, the Company issued 2,727,588,511 shares in a private placement. As
      such, the share capital of the Company increased from 9,452,413,271 shares to
      12,228,359,702 shares.

      In the year of 2016, 923,340 stock options were exercised under an incentive plan of the
      Company, and the share capital of the Company increased from 12,228,359,702 shares to
      12,229,283,042 shares. Later, 15,601,300 shares were repurchased and retired, and the
      share capital of the Company decreased from 12,229,283,042 shares to 12,213,681,742
      shares. On 26 April 2016, the Company was approved by Huizhou Administration for
      Industry and Commerce to change its business license to Business License No.
      91441300195971850Y (unified social credit code).

      In the year of 2017, the Company purchased an interest in subsidiary TCL China Star
      Optoelectronics Technology Co., Ltd. by means of a new issue of 1,301,290,321 shares.
      Upon the completion of this deal, the share capital of the Company increased from
      12,213,681,742 shares to 13,514,972,063 shares.

      In 2018, the Proposal on the Grant of Restricted Stock to Awardees was approved at the 7 th
      Meeting of the 6th Board of Directors, and a total of 34,676,444 shares were subscribed for
      under the restricted stock incentive plan. Upon the completion of this deal, the share capital
      of the Company increased from 13,514,972,063 shares to 13,549,648,507 shares.

      In 2019, the Company repurchased and retired 21,209,788 restricted shares that had been
      granted to certain awardees under the 2018 Restricted Stock Incentive Plan & Global
      Innovation Partner Plan but were still in lockup. As such, the total shares of the Company
      have decreased from 13,549,648,507 to 13,528,438,719 shares.

      The Proposal on the Intended Change of the Company’s Full Name and Stock Name was
      approved respectively at the 23 rd Meeting of the 6th Board of Directors and the First
      Extraordinary General Meeting of 2020 held in January and February 2020. As such, the
      name of the Company has been changed from “TCL Corporation” to “TCL Technology
      Group Corporation”.

      As at 31 December 2019, the total issued share capital of the Company were
      13,528,438,719 shares. Please refer to Note V, 46 for details.

      The registered address of the Company is: TCL Tech Building, 17 Huifeng Third Road,
      Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province.
                                                  17
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

 I       General information (continued)

 (II)    Scope of business

         The Company and its subsidiaries (collectively referred to as the “Company") are primarily
         engaged in the research, development, production and sales of semi-conductor, electronic
         products and communication devices, new optoelectronic products, liquid crys tal display
         devices, import and export of goods and technologies (excluding goods and technologies
         that are prohibited from import and export or require an administrative approval for import
         and export), venture capital business and venture capital consultation, entrepreneurial
         management services for start-up enterprises, participation in the initiation of venture
         capital institutions and investment management advisory institutions, immovable property
         leasing, IT services, conference services, computer technical services and development
         service of electronic products and technologies, development and sale of software, patent
         transfer, customs clearance services, consulting services, payment and settlement (where
         any approval from any relevant department is required according to law, it must be obtained
         before carrying out the relevant operating activities).

 (III)   Authorization of financial statements for issue

         These financial statements were authorized for issue by the Company’s Board of Directors
         on 28 March 2020.

II       Scope of the consolidated financial statements

         As at the end of the Reporting Period, for subsidiaries included in the consolidated financial
         statements, please refer to Note VII, 1, (1) Breakdown of important subsidiaries. For the
         changes to the scope of the consolidated financial statements of the Reporting Period, see
         Note VI.




                                                     18
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)


III   Significant accounting policies and accounting estimates

1     Basis for the preparation of financial statements

      The preparation of financial statements of the Company is based on the actual transactions
      and events in accordance with the "Accounting Standards for Business Enterprises - Basic
      Standards" published by the Ministry of Finance and specific corporate accounting
      standards, application guidelines for corporate accounting standards, corporate accounting
      standards interpretations and other relevant regulations (hereinafter collectively referred to
      as "corporate accounting standards") for confirmation and measurement, combining the
      provisions of “Regulations on the Information Disclosure and Compilation o f Companies
      Offering Securities to the Public No. 15 - General Provisions on Financial Reports” (revised
      in 2014) published by CSRC.

2     Going concern basis
      The Company has evaluated the ability to continue as a going concern for 12 months from
      the end of the Reporting Period and has not identified any issues or circumstances that
      result in significant doubts about its ability to continue as a going concern. Therefore, the
      financial statements have been prepared on a going concern basis.


3     Statement of compliance with corporate accounting standards

      The financial statements are in compliance with the requirements of the corporate
      accounting standards, and truly and completely reflect the financial status, operating results,
      cash flow and other relevant information of the Company during the Reporting Period.




                                                  19
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

4     Accounting period

      The Company adopts the calendar year as accounting year, and a fiscal year is from
      January 1 to December 31 of the Gregorian calendar.

5     Operating cycle

      The Company does not take the operating cycle as the criteria for liquidity classification of
      assets and liabilities.

6     Base currency for bookkeeping

      The base currency for bookkeeping and the preparation of financial statements are all in
      RMB, and are presented in the unit of RMB’000 unless otherwise specified.

      Accounting treatments for business combinations involving enterprises under and not under
7
      common control

(1)   When the terms, conditions and economic influence of transactions in the process of a
      step-by-step combination conform to one or more of the f ollowing, accounting for multiple
      transactions is treated as a package transaction:

      These transactions are made simultaneously or with consideration of influence on each
(a)
      other;

      These transactions can only achieve a complete business outcome when treated as a
(b)
      whole;

      The occurrence of a transaction depends on the occurrence of at least one of the other
(c)
      transactions;

      A transaction is uneconomical when treated alone, but is economical when considered
(d)
      together with other transactions.

(2)   Business combinations involving enterprises under common control

(a)   Individual financial statement

      The assets and liabilities acquired by the Company in business combinations are measured
      in accordance with the book value of assets and liabilities of the combined party on the date
      of combination (including the goodwill of the ultimate controlling party resulting from the
      acquisition of the combined party). The difference between the book value of net assets
      acquired in the combination and the book value of the consideration paid for the
      combination (or the total par value of shares issued) is used to adjust the capital stock
      premium in the capital reserve, and when the capital stock premium in the capital reserve is
      insufficient for offset, it is used to adjust the retained earnings. If there is a contingent
      consideration and it is necessary to confirm the provisions or assets, the difference between
      the estimated amount of liabilities or assets and the settlement amount of subsequent
      contingent consideration is used to adjust the capital reserve (capital stock premium), and
      when the capital reserve is insufficient, it is used to adjust the retained earnings.

                                                 20
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

      Accounting treatments for business combinations involving enterprises under and not under
7
      common control (continued)

(2)   Business combinations involving enterprises under common control (continued)

(a)   Individual financial statements (continued)

      For a business that is ultimately realized through multiple transactions, if it is a package
      transaction, each transaction is treated as a transaction that acquires control; if it is not a
      package transaction, on the date of acquisition of control, the difference between the initial
      cost of long-term equity investment and the book value of long-term equity investment
      before the combination plus the book value of the new paid consideration on the date of
      combination is used to adjust the capital reserve; and when the capital reserve is insufficient
      for offset, it is used to adjust the retained earnings. For equity investments held prior to the
      date of combination, no accounting treatment is carried out for other comprehensive gains
      recognized by equity accounting or financial instrument confirmation and measurement
      standards, and up to the disposal of the investment, the accounting treatment shall be
      based on the same basis as the direct disposal of the assets or liabilities of the invested
      entity; other changes in owner's equity other than net profit or loss, other comprehensive
      income or profit distribution of net assets of the invested company recognized by equity
      method are not subject to accounting, and will be transferred to the current profit and loss
      until the disposal of the investment.

      The agency fees paid for audits, legal services, assessments and other related expenses
      incurred in the business combination are recognized in profit or loss in the period in which
      they are incurred. The transaction costs for the issuance of equity securities for the business
      combination that may be directly attributed to equity transactions can be deducted from
      equity; transaction costs directly related to the issuance of a debt instrument as a
      combination consideration, are treated as an initial recognized amount included in the debt
      instrument.

      If the combined party has a consolidated financial statement, the initial investment cost of
      the long-term equity investment is determined based on the owner's equity attributable to
      the Company as the parent in the consolidated financial statements of the combined party.

(b)   Consolidated financial statements

      The assets and liabilities acquired by the combining party in the business combination are
      measured in accordance with the book value of the owner's equity of the combined party in
      the consolidated financial statements of the ultimate controlling party.

      For the case where a business combination is finally realized through multiple transactions,
      if it is a package transaction, each transaction is treated as a transaction for acquiring
      control; if it is not a package transaction, the long-term equity investment held by the
      combing party before the combination, the gains and losses, other comprehensive income
      and other changes in owners' equity have been recognized between the date of acquisition
      or the date of the combining party and the combined party under the final control of the
      same party, whichever is later, and the date of combination, are used to offset the initial
      retained earnings or current profit and loss during the comparative reporting period
      respectively.

                                                    21
                           TCL Technology Group Corporation
                              Notes to Financial Statements
               (For the period from 1 January 2019 to 31 December 2019)
              (The amounts in tables are expressed in thousands of RMB)

If the accounting policies adopted by the combined parties are inconsistent with those
adopted by the Company, the Company shall make adjustments in accordance with the
accounting policies of the Company on the date of combination, and on this basis, confirm
the consolidated financial statements in accordance with the provisions of Accounting
Standards for Business Enterprises.




                                         22
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

      Accounting treatments for business combinations involving enterprises under and not under
7
      common control (continued)

(3)   Business combinations involving enterprises not under common control

      The assets paid and liabilities incurred or assumed of the Company as a consideration for
      the business combination are measured at fair value on the date of purchase, and the
      difference between the fair value and the book value is recognized in profit or loss. Where a
      future event that may affect the combination costs is agreed in the combination contract, if
      the estimated future events are likely to occur on the date of purchase and the amount of
      the impact on combination costs can be reliably measured, it is also included in the
      combination costs.

      The agency fees paid for audits, legal services, assessments and other related expenses
      incurred in the business combination are recognized in profit or loss in the period in which
      they are incurred. The transaction costs for the issuance of equity securities for the business
      combination that may be directly attributed to equity transactions can be deducted from
      equity

      The difference between the higher combination cost and lower fair value of identifiable net
      assets of the acquired party gained in the combination is recognized as goodwill by the
      Company. In case that the cost of combination is less than the fair value of the identifiable
      net assets of the acquired party gained in the combination, and the difference is still less
      than the fair value of identifiable net assets of the acquired party gain in the combination
      after review, the difference is included in the current profit and loss by the Company.

      For the case where a business combination involving enterprises not under common control
      is finally realized through multiple transactions step by step, if it is a package transaction,
      each transaction is treated as a transaction for acquiring control; if it is not a package
      transaction; if it is not a package transaction, the individual financial statements and
      consolidated financial statements are distinguished for related accounting treatment.

(a)   In the individual financial statements, if the equity investment held before the date of
      combination is accounted for by equity method, the sum of the book value of equity
      investment of the acquired party held before the date of acquisition plus the new investment
      cost on the date of acquisition is recognized as the initial cost of the investment; the other
      comprehensive income confirmed by equity method before the date of acquisition is
      accounted for, when the investment is disposed, on the same basis as those the invested
      party adopted directly to dispose the relevant assets or liabilities.

      If the equity investment held before the date of combination is accounted for by financial
      instrument recognition and measurement criteria, the sum of the fair value of equity
      investment on the date of combination plus the new investment cost is taken as the initial
      investment cost on the date of combination. The difference between the fair valu e and the
      book value of the original equity interest, and the accumulated fair value changes originally
      included in other comprehensive income should be transferred to investment income in the
      current period of combination date.

(b)   In the consolidated financial statements, the equity of the acquired party held before the
      date of acquisition is re-measured according to the fair value of the equity on the date of

                                                  23
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

acquisition. The difference between the fair value and the book value is included in the
current investment income; if the equity of the acquired party involves other comprehensive
income under the equity method, etc., other comprehensive income related to it is converted
into investment income in the current period of acquisition date.




                                          24
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

8     Method for compiling consolidated financial statements

      The scope of consolidation of the Company's consolidated financial statements is
      determined on the basis of control, and all subsidiaries (including separate entities
      controlled by the Company as the parent) are included in the consolidated financial
      statements.

      The accounting policies and accounting periods adopted by all subsidiaries included in the
      consolidated financial statements are consistent with the Company. If the accounting
      policies or accounting periods adopted by the subsidiaries are inconsistent with the
      Company, necessary adjustments will be made in accordance with the Company's
      accounting policies and accounting periods when preparing consolidated financial
      statements. The consolidated financial statements are based on the financial statements of
      the Company and its subsidiaries as well as other relevant information, and are prepared by
      the Company after adjusting the long-term equity investments in the subsidiaries in
      accordance with the equity method based.

      The impact of internal transactions between the Company and its subsidiaries, and internal
      transactions between subsidiaries, on the consolidated balance sheet, consolidated profit
      statement, consolidated cash flow statement and consolidated statement of changes in
      shareholders’ equity is offset in the preparation of consolidated financial statements.

      If the current losses shared by the minority shareholders of a subsidiary exceed the share
      enjoyed by the minority shareholder in the initial owner's equity of the subsidiary, the
      balance will still reduce the minority shareholders' equity.

      During the Reporting Period, if a subsidiary or business is added due to the business
      combination involving enterprises under common control, the opening balance of the
      consolidated balance sheet is adjusted; the income, expenses and profits of the subsidiary
      or business from the beginning of the period of combination to the end of the Reporting
      Period are included in the consolidated income statement; the cash flows of the subsidiary
      or business from the beginning of the period of combination to the end of the Reporting
      Period are included in the consolidated cash flow statement. If a subsidiary or business is
      added due to a business combination involving enterprises under non-common control, the
      opening balance of the consolidated balance sheet is not adjusted; the income, expenses
      and profits of the subsidiary or business from the date of acquisition to the end of the
      Reporting Period are included in the consolidated income statement; the cash flows of the
      subsidiary or business from the date of acquisition to the end of the Reporting Period are
      included in the consolidated cash flow statement.

      During the Reporting Period, if a subsidiary or business is added due to a business
      combination involving enterprises under non-common control, the opening balance of the
      consolidated balance sheet is not adjusted; the income, expenses and profits of the
      subsidiary and business from the date of acquisition to the end of the Reporting Period are
      included in the consolidated income statement; the cash flows of the subsidiary and
      business from the date of acquisition to the end of the Reporting Period are included in the
      consolidated cash flow statement.




                                                 25
                             TCL Technology Group Corporation
                                Notes to Financial Statements
                 (For the period from 1 January 2019 to 31 December 2019)
                (The amounts in tables are expressed in thousands of RMB)

During the Reporting Period, if the Company disposes of a subsidiary or business, the
income, expenses and profits of the subsidiary or business from the beginning of the period
to the disposal date are included in the consolidated income statement; the cash flows of
the subsidiary or business from the beginning of the Reporting Period to the disposal date
are included in the consolidated cash flow statement.

When the Company loses control over the invested party due to disposal of part of the
equity investment or other reasons, the remaining equity investment after disposal will be
re-measured according to its fair value by the Company on the date of loss of control. The
difference of the sum of the consideration obtained from the disposal of the equity and the
fair value of the remaining equity, less the sum of the share of net assets and goodwill of the
original subsidiary that should be enjoyed in accordance with the original share-holding ratio
since the date of acquisition or combination, is accounted for the investment income in the
current period of loss of control. Other comprehensive income or net profit and loss related
to the original subsidiary's equity investment, other comprehensive income and other
changes in owner's equity other than profit distribution, will be converted into current
investment income when control is lost, except for other comprehensive gains arising from
the re-measurement of net liabilities of the Benefit Plan made by the invested party or
changes in net assets.




                                            26
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

9     Criteria for determining cash and cash equivalents

      In the preparation of the cash flow statement, the Company recognizes cash holdings and
      deposits that can be used for payment at any time as cash.

      The Company recognizes cash that is easily converted into known amount with short
      holding period (generally due within three months from the date of purchase) and strong
      liquidity, and investments with low risk of changes in value (including investments in bonds
      within three months, while excluding equity investments), as cash equivalents.

10    Foreign currency business and translation of foreign currency statement

(1)   Foreign currency transactions

      Foreign currency transactions between the Company and its subsidiaries are translated into
      base currency at the spot exchange rate on the transaction date.

      Foreign currency monetary items are translated at the spot exchange rate on the balance
      sheet date, and the exchange differences resulted therefrom, except that the exchange
      differences arising from special foreign currency loans related to the acquisition and
      construction of assets eligible for capitalization should be treated in accordance with the
      principle of capitalization of borrowing costs, are all included in the current profit and loss.
      Foreign currency non-monetary items measured at historical cost are still translated at the
      spot exchange rate on the transaction date, and the amount of base currency for
      bookkeeping is not changed.

      Foreign currency non-monetary items measured at fair value are translated at the spot
      exchange rates on the date when the fair value is determined, and the exchange differences
      resulted therefrom are included in profit or loss in the current period as a change in fair
      value. In the case of foreign currency non-monetary items that are available for sale, the
      exchange differences incurred are included in other comprehensive income.

(2)   Translation of foreign currency financial statement

      When the Company translates the financial statements of overseas operations, the assets
      and liabilities in the balance sheet are translated at the spot exchange rate on the balance
      sheet date. The owner's equity items, except for the "undistributed profit" items, are
      translated at the spot exchange rate at the time of occurrence of items. All the incurred
      items in the income statement are translated at the current average exchange rate of the
      period in which transactions occur.

      The translation differences of foreign currency financial statement arising from the above
      translation are included in other comprehensive income. When disposing of an overseas
      operation, the translation differences in the foreign currency financial statements related to
      the foreign operation listed in other comprehensive income items in the balance sheet are
      transferred from the other comprehensive income item to the current profit and loss. All the
      incurred items in the cash flow statement are translated at the current average exchange
      rate of the period in which transactions occur. All the opening balance and actual amount of
      the previous year are listed on the basis of the amount translated in the previous year.


                                                   27
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

11    Financial instruments (applicable only for 2018)

      Financial instruments include financial assets, financial liabilities and equity instruments.

(1)   Classification of financial instrument

      The Company classifies financial assets and liabilities at initial recognition based on the
      contractual terms of the financial instruments issued and the economic substance they
      reflect but not only the legal form, in combination with the purpose of the acquisition of
      financial assets and liabilities, to the following categories: financial assets (or financial
      liabilities) that are measured at fair value and whose changes are included in current profit
      and loss; held-to-maturity investments; receivables; available-for-sale financial assets.

(2)   Recognition basis and measurement method of financial instruments

      Financial assets and financial liabilities are measured at fair value on initial recognition. For
      financial assets or liabilities that are measured at fair value and whose changes are
      included in the current profits or losses, transaction expenses are directly recognized in the
      current profit and loss. For other financial assets or liabilities, transaction expenses are
      included in the initial recognition amount.

      The Company conducts subsequent measurement of financial assets at fair value, and
      does not deduct the transaction costs that may occur in the future disposal of the financial
      assets, except for the following cases: held-to-maturity investments and loans and
      receivables are measured at amortized cost by the effective interest method; and derivative
      financial assets that are linked to, and required to be settled by the delivery of, equity
      instruments not quoted in an active market with a fair value that cannot be measured in a
      reliable way, are measured at costs.

      The Company conducts subsequent measurement of financial liabilities at amortized costs
      by the effective interest method, except for the following cases: financial liabilities that are
      measured at fair value and whose changes are included in the current profit and loss are
      measured at fair value; and derivative financial liabilities that are linked to, and required to
      be settled by the delivery of, equity instruments not quoted in an active market with a fair
      value that cannot be measured in a reliable way, are measured at costs.

(3)   Recognition basis and measurement method of financial asset transfer

      The transfer of financial assets means that the Company transfers or delivers the financial
      assets to the other party (the transferred party) other than the issuer of the financial assets.

      If the Company has transferred almost all the risks and rewards of the financial asset
      ownership to the transferred party, the recognition of the financial assets will be terminated,
      while if the Company retains almost all the risks and rewards of the financial asset
      ownership, the recognition of the financial assets will not be terminated.

      Where the transfer of financial assets meets the conditions for termination of recognition,
      based on the consideration received for the transfer, the difference between the sum of
      accumulated changes in the fair value originally recorded in the owner's equity (in the case
      where the transferred financial assets are available for sale) and the book value of
      transferred financial assets is included in the current profit and loss. If the transfer of
                                                   28
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

financial assets does not meet the conditions for termination of recognition, the Company
will keep the recognition of the transferred financial assets and recognize the consideration
received as a financial liability.




                                           29
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

11    Financial instruments (continued)

(4)   Conditions for the derecognition of financial liabilities

      If all or part of the current obligations of a financial liability has been discharged, recognition
      of the financial liability or part of it is terminated; if the Company signs an agreement with
      the creditor to replace the existing financial liabilities with new ones, and the terms of the
      contract of new financial liabilities are substantially different from the existing ones, the
      recognition of existing financial liabilities is terminated and the new financial liabilities are
      recognized.

      If substantial changes are made to all or part of the contractual terms of existing financial
      liabilities, the recognition of existing financial liabilities or the part thereof will be terminated,
      and the financial liabilities with modified new terms will be recognized as a new financial
      liability. When the recognition of a financial liability is terminated in whole or in part, the
      difference between the book value of the financial liability with recognition terminated and
      the consideration paid (including the transferred non-cash assets or new financial liabilities
      assumed) will be included in the current profit and loss.

      If the Company repurchases part of the financial liabilities, the book value of the financial
      liabilities as a whole is allocated on the repurchase date based on the relative fair value of
      the portion continue to be recognized and the portion terminated to be recognized. The
      difference between the book value assigned to the portion terminated to be recognized and
      the consideration paid (including the transferred non-cash assets or new financial liabilities
      assumed) is included in the current profit and loss.

(5)   Methods for determining the fair value of financial assets and financial liabilities

      The Company determines the fair value of financial instruments with active markets by the
      quoted prices in active markets. For financial instruments without active market, the
      Company determines the fair value by valuation techniques. In the valuation, the Company
      adopts valuation techniques that are applicable under current circumstances and that are
      with sufficient available data and other information, and selects input values that are
      consistent with the asset or liability characteristics considered by market participants in the
      transactions of related assets or liabilities, and tries the best to give priority to relevant
      observable input values. Non-observable input values are used in the cases that the
      relevant observable input values are not available or are not practicable.

(6)   Impairment of financial assets

      On the balance sheet date, the Company checks the book value of financial assets other
      than the ones measured at fair value and whose changes are included in the current profit
      and loss. In case that objective evidence of impairment of the financial assets is found, the
      impairment loss is recognized and allowance for impairment is made.

(a)   Measurement of impairment losses on held-to-maturity investments, loans and receivables

      If impairment of a financial assets measured at amortized cost, such as held-to-maturity
      investments and loans, occurs, the Company recognizes the difference between the
      present value of the future cash flows of the financial asset and the book value as th e
      impairment loss, which is included in the current profit and loss. The expected present value
                                                     30
                             TCL Technology Group Corporation
                                Notes to Financial Statements
                 (For the period from 1 January 2019 to 31 December 2019)
                (The amounts in tables are expressed in thousands of RMB)

of future cash flows is determined by discounting the original real interest rate of the
financial asset, taking into account the value of the relevant collateral.

The Company conducts separate impairment tests on financial assets with significant single
amount. In case that objective evidence of impairment of a financial asset is found, the
impairment loss is recognized and included in the current profit and loss. Financial assets
with insignificant single amount may be tested individually for impairment or tested in a
combination of financial assets with similar credit risk characteristics together with financial
assets without impairment after being separately tested.




                                             31
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

11    Financial instruments (continued)

(6)   Impairment of financial assets (continued)

      For the impairment loss recognized on the financial assets measured at amortized cost, if
      there is objective evidence that the value of the financial assets has recovered and is
      objectively related to the events occurring after the recognition of the loss, the previously
      recognized impairment loss is reversed and included in the current profit and loss.

      The measurement of impairment losses on receivables is described in the allowance
      policies for doubtful accounts.

(b)   Measurement of impairment losses on available-for-sale financial assets

      The Company conducts a separate inspection of each available-for-sale equity instrument
      investment on the balance sheet date. If the fair value of the equity instrument invested on
      the balance sheet date is less than 50% of its initial investment cost (including 50%) or less
      than its initial investment cost over one year (including one year), it indicates that the
      investment is impaired; if the fair value of the equity instrument invested on the balance
      sheet date is less than its initial investment cost by more than 20% (including 20%) but has
      not yet reached 50%, the Company will consider other relevant factors, such as price
      volatility, to determine whether the equity instrument investment is impaired.

      In the event that the financial assets available for sale are impaired, even if the recognition
      of financial assets is not terminated, the Company transfers the accumulated loss resulting
      from the decline of fair value, which was directly included in other comprehensive income
      originally, from other comprehensive income to the current profit and loss. The accumulated
      loss transferred is equal to the balance of the initial acquisition cost of the financial assets
      available for sale after deducting the recovered principal and the amortized amount, the
      current fair value and the impairment losses already recorded in the profit and loss.

      For equity instrument investments that are not quoted in active markets and whose fair
      value cannot be reliably measured, or derivative financial assets that are linked to the equity
      instruments and required to be settled by delivery of the equity instruments, the Company
      recognizes their impairment as impairment losses based on the difference between the
      present value of future cash flow of the financial asset and its book value, and include the
      impairment losses in the current profit and loss. The impairment losses incurred on these
      assets are not reversed in subsequent accounting periods.

      For available-for-sale debt instruments that have been recognized for impairment loss, if the
      fair value increases in the subsequent accounting period and is objectively related to events
      that occur after the original impairment losses have been recognized, the previously
      recognized impairment losses are transferred back to the current profit and loss; the
      impairment losses on available-for-sale equity instruments are reversed through equity
      when the value of the equity instruments recovers; but for impairment losses on equity
      instruments that are not quoted in active markets and whose fair value cannot be measured
      in a reliably way, or derivative financial assets that are linked to, and required to be settled
      by delivery of the equity instruments, are not reversed.



                                                   32
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (applicable from January 1, 2019)

      When the Company becomes a party to a financial instrument, it recognizes a financial
      asset or liability.

      The effective interest method refers to the method of calculating the amortized cost of
      financial assets or liabilities and allocating interest income or interest expenses into each
      accounting period.

      The effective interest rate refers to the interest rate used to discount the estimated future
      cash flow of a financial asset or financial liability during its expected duration to the book
      balance of the financial asset or the amortized cost of the financial liability. When
      determining the effective interest rate, the expected cash flow is estimated on the basis of
      considering all contract terms of financial assets or liabilities (such as prepayment,
      extension, call options or other similar options), but the expected credit loss is not
      considered.

      The amortized cost of a financial asset or financial liability is the accumulated amortization
      amount formed by deducting the repaid principal from the initial recognition amount of the
      financial asset or financial liability, adding or subtracting the difference between the initial
      recognition amount and the maturity amount by using the effective interest method, and
      then deducting the accumulated accrued loss reserve (only applicable to financial assets).

(1)   Classification and measurement of financial assets

      According to the business model of the financial assets under management and the
      contractual cash flow characteristics of the financial assets, the Company divides the
      financial assets into the following three categories:

(a)   Financial assets measured at amortized cost.

      Financial assets measured at fair value and whose changes are included in other
(b)
      comprehensive income.

      Financial assets measured at fair value and whose changes are included in the current
(c)
      profit and loss.

      Financial assets are measured at fair value when initially recognized, but if the accounts or
      notes receivable arising from the sale of goods or the provision of services do not contain
      significant financing components or do not consider financing components for no more than
      one year, the initial measurement shall be made at the transaction price.

      For financial assets measured at fair value and whose changes are included in the current
      profit and loss, transaction expenses are directly recognized in the current profit and loss.
      For other financial assets, transaction expenses are included in the initial recognition
      amount.

      Subsequent measurement of financial assets depends on their classification. All related
      financial assets affected will be reclassified when and only when the Company changes its
      business model of managing financial assets.

                                                   33
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

(a)   Financial assets classified as measured at amortized cost

      The contract terms of a financial asset stipulate that the cash flow generated on a specific
      date is only the payment of the principal and the interest on the amount of outstanding
      principal, and the business model for managing the financial asset is to collect the
      contractual cash flow, then the Company classifies the financial asset as measured at
      amortized cost. Financial assets of the Company that are classified as measured at
      amortized cost include monetary funds, notes receivable, accounts receivable, other
      receivables, long-term receivables, creditors' investments, etc.




                                                 34
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III      Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(1)   Classification and measurement of financial assets (continued)

      The Company recognizes interest income from such financial assets with the effective
      interest method, and carries out subsequent measurement at amortized cost. Gains or
      losses arising from impairment or derecognition or modification are included in the current
      profit and loss. The Company calculates and determines the interest income based on the
      book balance of financial assets multiplied by the effective interest rate except for the
      following circumstances:

      ① For purchased or originated credit-impaired financial assets, the Company calculates
      and determines their interest income at the amortized cost of the financial asset and the
      credit-adjusted effective interest rate since the initial recognition.
      ② For financial assets not credit-impaired at the time of being purchased or originated but
      in the subsequent period, the Company calculates and determines their interest income at
      the amortized cost and the effective interest rate of the financial assets in the subsequent
      period. If the financial instrument is no longer credit-impaired due to the improvement of its
      credit risk in the subsequent period, the Company calculates and determines the interest
      income by multiplying the effective interest rate by the book balance of the financial asset.

      Financial assets classified as measured at fair value and whose changes are included in
(b)
      other comprehensive income

      The contract terms of a financial asset stipulate that the cash flow generated on a specific
      date is only the payment of the principal and the interest on the amount of outstanding
      principal, and the business model for managing the financial asset is both to collect
      contractual cash flows and for its sale, then the Company classifies the financial ass et as
      measured at fair value and whose changes are included in other comprehensive income.

      The Company recognizes interest income from such financial assets with the effective
      interest method. Except that the interest income, impairment loss and exchange difference
      are recognized as the current profit and loss, other changes in fair value are included in
      other comprehensive income. When the financial asset is derecognized, the accumulated
      gains or losses previously included in other comprehensive income are transferred out and
      included in the current profit and loss.

      Notes and accounts receivable measured at fair value with changes included in other
      comprehensive income are reported as receivables financing, and such other financial
      assets are reported as other creditors' investments. Among them, other creditors'
      investments maturing within one year from the balance sheet date are reported as
      non-current assets maturing within one year, and other creditors' investments maturing
      within one year are reported as other current assets.
      Financial assets designated as measured at fair value and whose changes are included in
(c)
      other comprehensive income

      At the time of initial recognition, the Company may irrevocably designate non-trading equity
      instrument investments as financial assets measured at fair value and whose changes are
      included in other comprehensive income on the basis of individual financial assets.

                                                  35
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

Changes in the fair value of such financial assets are included in other comprehensive
income without provision for impairment. When the financial asset is derecognized, the
accumulated gains or losses previously included in other comprehensive income are
transferred out and included in the retained earnings. During the investm ent period when
the Company holds the equity instrument, the dividend income is recognized and included
in the current profit and loss when the Company's right to receive dividends has been
established, the economic benefits related to dividends are likely to flow into the Company,
and the amount of dividends can be measured reliably. The Company reported such
financial assets under other equity instrument investment items.




                                           36
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(1)   Classification and measurement of financial assets (continued)

      An investment in equity instruments is a financial asset measured at fair value and whose
      changes are included in the current profit and loss when it is obtained mainly for recent sale,
      or is part of the identifiable portfolio of financial assets centrally managed, and objective
      evidence exists for a short-term profit model in the near future when initially recognized, or
      is a derivative (except derivatives defined as financial guarantee contracts and designated
      as effective hedging instruments).

      Financial assets classified as measured at fair value and whose changes are included in the
(d)
      current profit and loss

      If failing to be classified as measured at amortized cost or at fair value and whose changes
      are included in other comprehensive income, or not designated as measured at fair value
      and whose changes are included in other comprehensive income, financial assets are all
      classified as measured at fair value and whose changes are included in the current profit
      and loss.

      The Company carries out subsequent measurement of such financial assets at fair value,
      and includes gains or losses arising from changes in fair value as well as dividends and
      interest income associated with such financial assets into current profits and losses.

      The Company reports such financial assets as trading financial assets and other
      non-current financial assets according to their liquidity.

      Financial assets designated as measured at fair value and whose changes are included in
(e)
      the current profit and loss

      At the time of initial recognition, the Company may irrevocably designate financial assets as
      measured at fair value and whose changes are included in the current profit and loss on the
      basis of individual financial assets in order to eliminate or significantly reduce accounting
      mismatches.

      If the mixed contract contains one or more embedded derivative instruments and its main
      contract is not any financial asset as above, the Company may designate the whole of the
      mixed contract as a financial instrument measured at fair value and whose changes are
      included in the current profits and losses. Except under the following circumstances:

      ① Embedded derivatives do not significantly change the cash flow of mixed contracts.
      ② When determining for the first time whether similar mixed contracts need to be split, it is
      almost clear that embedded derivatives contained in them should not be split without
      analysis. If the prepayment right embedded in a loan allows the holder to prepay the loan at
      an amount close to the amortized cost, the prepayment right does not need to be split.

      The Company carries out subsequent measurement of such financial assets at fair value,
      and includes gains or losses arising from changes in fair value as well as dividends and
      interest income associated with such financial assets into current profits and losses.


                                                  37
                          TCL Technology Group Corporation
                             Notes to Financial Statements
              (For the period from 1 January 2019 to 31 December 2019)
             (The amounts in tables are expressed in thousands of RMB)

The Company reports such financial assets as trading financial assets and other
non-current financial assets according to their liquidity.




                                       38
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(2)   Classification and measurement of financial liabilities

      The Company classifies a financial instrument or its components into financial liabilities or
      equity instruments upon initial recognition according to the contract terms of and the
      economic essence reflected by the financial instrument issued, rather than only in legal
      form, in combination with the definitions of financial liabilities and equity instruments.
      Financial liabilities are classified at initial recognition as measured at fair value and whose
      changes are included in current profits and losses, or other financial liabilities, or derivatives
      designated as effective hedging instruments.

      Financial liabilities are measured at fair value upon initial recognition. For financial liabilities
      measured at fair value and whose changes are included in current profits and losses,
      relevant transaction expenses are directly included in current profits and losses; For other
      categories of financial liabilities, relevant transaction expenses are included in the initial
      recognition amount.

      Subsequent measurement of financial liabilities depends on their classification:

      Financial liabilities measured at fair value and whose changes are included in the current
(a)
      profit and loss

      Such financial liabilities include trading financial liabilities (including derivatives falling under
      financial liabilities) and financial liabilities designated as measured at fair value upon initial
      recognition and whose changes are included in current profits and losses.

      The financial liability is a trading financial liability if it is mainly undertaken for recent sale or
      repurchase, or is part of the identifiable portfolio of financial instruments centrally managed,
      and there is objective evidence that the enterprise has recently employed a short-term profit
      model, or is a derivative instrument, except derivatives designated as effective hedging
      instruments and derivatives conforming to financial guarantee contracts. Trading financial
      liabilities (including derivatives falling under financial liabilities) are subsequently measured
      at fair value. All changes in fair values except for hedging accounting are included in current
      profits and losses.

      The Company irrevocably designates financial liabilities as measured at fair value and
      whose changes are included in current profits and losses at the time of initial recognition in
      order to provide more relevant accounting information if:

      ① Such financial liabilities can eliminate or significantly reduce accounting mismatches.
      ② The financial liability portfolio or the portfolio of financial assets and liabilities is managed
      and evaluated for performance on the basis of fair value according to the enterprise risk
      management or investment strategy stated in the official written documents, and is reported
      to key management personnel within the enterprise on this basis.
      The Company subsequently measures such financial liabilities at fair value. Except
      changes in fair value that are brought about by changes in the Company's own credit risk
      are included in other comprehensive income, other changes in fair value are included in
      current profits and losses. Unless including such changes in other comprehensive income
      will cause or expand accounting mismatch in profit or loss, the Company will include all

                                                     39
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

changes in fair value (including the amount affected by changes in its own credit risk) in
current profits and losses.




                                          40
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(2)   Classification and measurement of financial liabilities (continued)

(b)   Other financial liabilities

      The Company classifies financial liabilities except for the following items as measured at
      amortized cost. Such financial liabilities are recognized by the effective interest method and
      subsequently measured at amortized cost. Gains or losses arising from derecognition or
      amortization are included in the current profits and losses:

      ① Financial liabilities measured at fair value and whose changes are included in the
      current profit and loss.
      ② Financial liabilities resulting from the transfer of financial assets that do not meet the
      conditions for derecognition or continue to be involved in the transferred financial assets.
      ③ Financial guarantee contracts that do not fall under the first two categories of this article,
      and loan commitments that do not fall under category (1) of this article and lend at a
      below-market interest rate.

      Financial guarantee contracts refer to contracts that require the issuer to pay a specific
      amount to the contract holder who has suffered losses when a specific debtor fails to pay
      the debt in accordance with the original or modified terms of the debt instrument. Financial
      guarantee contracts that are not financial liabilities designated as measured at fair value
      and whose changes are included in current profits and losses are measured after initial
      recognition according to the loss reserve amount and of the initial recognition amount, less
      the accumulated amortization amount during the guarantee period, whichever is higher.

(3)   Derecognition of financial assets and liabilities

(a)   Financial asset are derecognized, i.e. written off from its account and balance sheet if:

      ① The contractual right to receive cash flow from the financial asset is terminated; or
      ② The financial asset has been transferred, which meets the requirements for
      derecognition of financial assets.

(b)   Conditions for derecognition of financial liabilities

      If the current obligation of a financial liability (or part thereof) has been discharged, such
      financial liability (or part thereof) is derecognized.

      The existing financial liability is derecognized with a new one recognized, and the difference
      between the carrying amount and the consideration paid (including transferred non-cash
      assets or assumed liabilities) is included in the current profits and losses, if an agreement is
      signed between the Company and the lender to replace the existing financial liability by
      assuming a new one, and the contract terms of these two financial liabilities are
      substantially different, or the contract terms of the existing financial liability (or part thereof)
      are substantially modified.

      If the Company repurchases part of a financial liability, the carrying amount of the financial
      liability shall be distributed according to the proportion of the fair value of the continuing
                                                    41
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

recognition portion and the derecognition portion to the overall fair value on the repurchase
date. The difference between the carrying amount allocated to the derecognized portion
and the consideration paid (including transferred non-cash assets or liabilities assumed)
shall be included in the current profits and losses.




                                           42
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(4)   Recognition basis and measurement method of financial asset transfer

      When a financial asset is transferred, the Company evaluates the risks and rewards
      retained of the financial asset ownership:

      If almost all the risks and rewards of the financial asset ownership are transferred, such
(a)   financial asset shall be derecognized, and the rights and obligations generated or retained
      in the transfer shall be separately recognized as assets or liabilities.

      If almost all the risks and rewards of the financial asset ownership are retained, such
(b)
      financial asset shall continue to be recognized.

      In circumstances when the Company neither transfers nor retains almost all the risks and
(c)   rewards of the financial asset ownership (i.e. circumstances other than ① and ② of this
      article), according to whether it retains control over such financial asset,

      ① the financial asset shall be derecognized, and the rights and obligations generated or
      retained in the transfer shall be separately recognized as assets or liabilities if such control
      is not retained; or
      ② the relevant financial asset shall continue to be recognized to the extent that it continues
      to be involved in the transferred financial asset, and the relevant liabilities shall be
      recognized accordingly if such control is retained. The extent that it continues to be involved
      in the transferred financial asset refers to the extent the Company bears the risks or
      rewards on changes in the value of the transferred financial asset.

      When judging whether the transfer of financial assets meets the above conditions for
      derecognition of financial assets, the principle of substance over form shall be adopted. The
      Company divides the transfer of financial assets into overall transfer and partial transfer.

      If the overall transfer of financial assets meets the conditions for derecognition, the
(a)   difference between the following two amounts shall be included in the current profits and
      losses:

      ① The carrying amount of the transferred financial asset on the date of derecognition.
      ② The sum of the consideration received for the transfer of financial assets and the amount
      of the corresponding derecognized portion of the accumulated changes in fair value
      originally included in other comprehensive income directly (the financial assets involved in
      the transfer are financial assets measured at fair value and whose changes are included in
      other comprehensive income).

      If the financial asset is partially transferred and the transferred part meets the conditions for
      derecognition, the carrying amount of the financial asset before transfer shall be allocated
      between the derecognition portion and the continuing recognition portion (in this case, the
(b)   retained service asset shall be regarded as the continuing recognition part of the financial
      asset) according to the respective relative fair values on the transfer date, and the
      difference between the following two amounts shall be included in the current profits and
      losses:

                                                   43
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)


① The carrying amount of the derecognized portion on the derecognition date.
② The sum of the consideration received for the derecognized portion and the amount of
the corresponding derecognized portion of the accumulated changes in fair value originally
included in other comprehensive income (the financial assets involved in the transfer are
financial assets measured at fair value and whose changes are included in other
comprehensive income).




                                          44
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(4)   Recognition basis and measurement method of financial asset transfer (continued)

      If the transfer of a financial asset does not meet the conditions for derecognition, the
      financial asset shall continue to be recognized and the consideration received shall be
      recognized as a financial liability.

(5)   Determination of fair value of financial assets and liabilities

      The fair value of a financial asset or liability with an active market shall be determined by the
      quoted price in the active market, unless the financial asset has a sell-off period for the
      asset itself. For the financial assets restricted for the assets themselves, the compensation
      amount demanded by market participants due to the risk of not being able to sell the
      financial assets on the open market within the specified period shall be deducted from the
      quoted price in the active market. Quoted prices in the active market includes those for
      related assets or liabilities that can be easily and regularly obtained from exchanges,
      dealers, brokers, industry groups, pricing or regulatory agencies, and can represent actual
      and recurring market transactions on the basis of fair trade.

      Financial assets initially acquired or derived or financial liabilities assumed shall be
      determined on the basis of market transaction price.

      The fair value of financial assets or liabilities without an active market shall be determined
      by valuation techniques. At the time of valuation, the Company adopts valuation techniques
      that are applicable under the current circumstances and are supported by sufficient
      available data and other information, selects input values consistent with the characteristics
      of relevant assets or liabilities considered by market participants in the transactions thereof,
      and gives priority to the use of relevant observable input values whenever possible. If the
      relevant observable input value cannot be obtained or be feasibly obtained, the
      unobservable input value shall be used.




                                                    45
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(6)   Impairment of financial instruments

      Based on the expected credit loss, the Company conducts impairment accounting of
      financial assets classified as measured at amortized cost, financial assets classified as
      measured at fair value and whose changes are included in other comprehensive income
      and financial guarantee contracts and recognizes loss reserves.

      Expected credit loss refers to the weighted average of the credit losses of financial
      instruments weighted by the risk of default. Credit loss refers to the difference between all
      contractual cash flows discounted at the original effective interest rate and receivable
      according to the contract and all cash flows expected to be collected of the Company, i.e.
      the present value of all cash shortfalls. Among them, credit-impaired purchased or
      originated financial assets of the Company shall be discounted at the credit-adjusted
      effective interest rate of such financial assets.

      For receivables arising from transactions regulated by the income criteria, the Company
      uses the simplified measurement method to measure the loss reserve according to the
      amount equivalent to the expected credit loss during the entire duration.

      For credit-impaired purchased or originated financial assets, only the accumulated changes
      in the expected credit losses during the entire duration since the initial recognition are
      recognized as loss reserves on the balance sheet date. On each balance sheet d ate, the
      amount of change in the expected credit loss during the entire duration is included in the
      current gains and losses as impairment losses or gains. Even if the expected credit loss
      during the entire duration on the balance sheet date is less than that reflected in the
      estimated cash flow upon initial recognition, the favorable change in the expected credit
      loss is recognized as impairment gains.

      In addition to other financial assets adopting the above simplified measurement method and
      other than the credit-impaired purchased or originated ones, the Company evaluates
      whether the credit risk of relevant financial instruments has increased significantly since the
      initial recognition, measures its loss reserves and recognizes the expected credit los s and
      its changes respectively according to the following circumstances on each balance sheet
      date:

      If the credit risk of the financial instrument has not increased significantly since its initial
      recognition and is in the first stage, its loss reserve shall be measured according to an
(a)
      amount equivalent to its expected credit loss in the next 12 months, and the interest income
      shall be calculated at the book balance and the effective interest rate.

      If the credit risk of the financial instrument has increased significantly since the initial
      recognition but no credit impairment has occurred, it is in the second stage, then its loss
(b)   reserve shall be measured according to an amount equivalent to its expected credit loss
      throughout its life, and the interest income shall be calculated at the book balance and the
      effective interest rate.

      If the financial instrument is credit-impaired since its initial recognition, it is in the third stage,
(c)   and the Company shall measure its loss reserve according to an amount equivalent to its
      expected credit loss throughout its life, and calculate the interest income at the amortized
                                                      46
                             TCL Technology Group Corporation
                                Notes to Financial Statements
                 (For the period from 1 January 2019 to 31 December 2019)
                (The amounts in tables are expressed in thousands of RMB)

cost and the effective interest rate.

The increase or reversed amount of the credit loss reserve for financial instruments shall be
included in the current profits and losses as impairment losses or gains. Except for financial
assets classified as measured at fair value and whose changes are included in other
comprehensive income, the credit loss reserve will offset the carrying amount of the
financial assets. For financial assets classified as measured at fair value and whose
changes are included in other comprehensive income, the Company recognizes its credit
loss reserve in other comprehensive income without reducing its carrying amount presented
in the balance sheet.




                                            47
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)


      Important Accounting Policies and Accounting Estimates (Continued)
III

12    Financial instruments (continued)

(6)   Impairment of financial instruments (continued)

      In the previous accounting period, the Company has measured the loss reserve, the
      amount of which is equivalent to the expected credit loss of the financial instrument
      throughout its life. However, on the balance sheet date of the current period, the financial
      instrument no longer conforms to the situation of significant increase in credit risk since
      initial confirmation; on the balance sheet date of the current period, the Company has
      measured the loss reserve of the financial instrument, the amount of which is equivalent to
      the expected credit loss in the next 12 months, and the reversed amount of the loss reserve
      thus formed is included in the current profit and loss as impairment profit.

(a)   Significant increase of credit risk

      In order to determine whether the credit risk of financial instruments has increased
      significantly since the initial recognition, the Company uses the available reasonable and
      based forward-looking information and compares the risk of default of financial instruments
      on the balance sheet date with the risk of default on the initial confirmation date. When the
      Company applies provisions on depreciation of financial instruments to financial guarantee
      contracts, the initial recognition date shall be regarded as the date when the Company
      becomes a party to make irrevocable commitments.

      For the assessment of whether the credit risk has increased significantly, the Company will
      consider the following factors

      ① According to the actual or as expected, whether the debtor's operating results have
      changed significantly;
      ② Whether the regulatory, economic or technological environment of the debtor has
      undergone significant adverse changes;
      ③ Whether the following items have changed significantly: the value of collateral as debt
      mortgage, or the guarantee provided by a third party, or the quality of credit enhancement;
      these changes will reduce the debtor's economic motivation to repay the loan within the
      time limit stipulated in the contract or impact the probability of default;
      ④ Whether the debtor's expected performance and repayment behavior have changed
      significantly;
      ⑤ Whether the Company's credit management methods for financial instruments have
      changed, etc.

      If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by
      the company, the company assumes that the credit risk of the financial instrument has not
      increased significantly since the initial recognition. The financial instrument will be deemed
      to have lower credit risk under the following circumstances: the default risk of the financial
      instrument is lower; the borrower has a strong ability to fulfill its contractual cash flow
      obligations in a short time; furthermore, even if there are adverse changes in the economic
      situation and operating environment for a long period of time, it may not necessarily reduce
      the borrower's ability to fulfill its contractual cash flow obligations.
                                                   48
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)


III   Important Accounting Policies and Accounting Estimates (Continued)

12    Financial instruments (continued)

(6)   Impairment of financial instruments (continued)

(b)   Financial assets with depreciation of credit

      If one or more events have adverse effects on the expected future cash flow of a financial
      asset, the financial asset will become a financial asset that has suffered credit impairment.
      The following observable information can be regarded as evidence of credit impairment of
      financial assets:

      ① The issuer or debtor is in serious financial difficulties;
      ② The debtor breaches the contract, such as default or overdue payment of interest or
      principal, etc.;
      ③ The creditor gives concessions to the debtor due to economic or contractual
      considerations related to the debtor's financial difficulties; the concessions will not be made
      under any other circumstances;
      ④ There is a great possibility of bankruptcy or other financial restructuring of the debtor;
      ⑤ The issuer or debtor has financial difficulties, resulting in the disappearance of the active
      market for the financial asset;
      ⑥ Purchasing or originating a financial asset with a large discount, which reflects the fact of
      credit loss.

      Credit impairment of financial assets may not be caused by separately identifiable events,
      but may be caused by the combined effect of multiple events.

(c)   Determination of expected credit loss

      The Company's assessment of the expected credit losses of financial instruments is based
      on single items and combinations. During the evaluation, the company will take into account
      reasonable and reliable information about past events, current situation and future
      economic situation forecast.

      The Company divides financial instruments into different combinations on the basis of
      common credit risk characteristics. Common credit risk characteristics adopted by the
      Company include: financial instrument type, credit risk rating, aging combination, overdue
      aging combination, contract settlement cycle, debtor's industry, etc. To understand the
      individual evaluation criteria and combined credit risk characteristics of relevant financial
      instruments, please refer to the accounting policies of relevant financial instruments for
      details.

      The Company adopts the following methods to determine the expected credit losses of
      relevant financial instruments:

      ① In terms of financial assets, credit loss is equivalent to the present value of the difference
      between the contract cash flow that the company shall receive and the expected cash flow.
      ② In terms of the financial guarantee contract, credit loss is equal to the expected amount
      of payment made by the Company to the holder of the contract for credit loss incurred, less
      the present value of the difference between the amount expected to be collected from the
                                                     49
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

holder of the contract, the debtor or any other party.
③ If, on the balance sheet date, a financial asset has suffered credit impairment, but one
does not purchase or originate a financial asset that has suffered credit impairment, the
credit loss is equivalent to the difference between the book balance of the financial asset
and the present value of the estimated future cash flow discounted at the original actual
interest rate.

Factors reflected in the Company's method of predicting credit losses by quantitative
finance tools include: unbiased probability weighted average amount determined by
evaluating a series of possible results; time value of money; reasonable and reliable
information about past events, current situation and future economic situation forecast that
can be obtained on the balance sheet date without unnecessary extra costs or efforts.




                                           50
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)


III   Important Accounting Policies and Accounting Estimates (Continued)


12    Financial instruments (continued)

(6)   Impairment of financial instruments (continued)

(d)   Write-off of financial assets

      If the Company cannot reasonably expect the contract cash flow of the financial asset to be
      fully or partially recovered, the book balance of the financial asset will be written off directly.
      This write-off constitutes the derecognition of relevant financial assets.

(7)   Offset of financial assets and financial liabilities

      In the balance sheet, financial assets and financial liabilities are shown separately without
      offsetting each other. However, if the following conditions are met at the same time, the net
      amount after offset will be listed in the balance sheet:

      The Company has the legal right, which is currently enforceable, to offset the confirmed
(a)
      amount;

      The Company plans to settle on a net basis, or realize the financial assets and settle the
(b)
      financial liabilities at the same time.




                                                     51
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)


III   Important Accounting Policies and Accounting Estimates (Continued)

      Recognition standard and accrual method of provision for bad debt for receivables
13
      (applicable before December 31, 2018)

      Receivables refer to non-derivative financial assets that are not quoted in an active market,
      but have fixed or fixable recovery amount.
      The recognition standard and accrual method of the company's provision for bad debt for
      receivables in 2018 are shown as follows: the Company adopts the allowance method to
      account for bad debt losses for receivables.

(1)   Recognition standard of provision for bad debt for receivables

      On the balance sheet date, the Company checks the book value of receivables. In case that
      objective evidence shows that receivables are impaired, impairment losses shall be
      confirmed and impairment reserves shall be accrued. It indicates that the receivables show
      signs of impairment when one of the following circumstances occurs:

(a)   The debtor is stuck in serious financial difficulties;

      The debtor's violation of the contract terms, breach of the contract or overdue performance
(b)
      of its duty of debt repayment;

      Considering economic or legal factors, the creditor makes concessions to the debtor who is
(c)
      in financial difficulties;

(d)   There is a great possibility of bankruptcy or other financial restructuring of the debtor;

(e)   There is other objective evidence that shows impairment of receivables.

(2)   Recognition criteria of bad debts

      The debtor goes bankrupt or dies, but still cannot recover the receivables after his bankrupt
(a)
      property or estate is paid off;

(b)   The debtor fails to fulfill its debt-paying obligations within the time limit, which obviously
      indicates that the receivable cannot be recovered or the possibility of recovery is extremely
      small.

      If it is determined that the receivables cannot be recovered, the receivables shall be written
      off as bad debts after being reported to and approved by the board of directors.

(3)   Method of provision for bad debts

      For receivables with significant single amount, the Company will conduct impairment test
      separately. If objective evidence shows that the receivables have been impaired, the
      Company will recognize impairment losses and accrue bad debt reserves according to the
      difference between the present value of its future cash flow and its book value. For
      receivables with insignificant single amount, impairment test can be carried out separately,
      or they can be divided into several combinations according to similar credit risk
      characteristics together with receivables that have not suffered impairment through
      separate test, and then impairment losses can be calculated and determined according to a
                                                    52
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

certain proportion of the balance of receivables combination on the balance sheet date, and
bad debt reserves can be accrued. The calculation and determination of bad debt reserves
shall be based on a certain proportion of the balance of the receivables portfolio, and shall
fully reflect the actual impairment losses incurred by each item. The determination of the
accrual proportion shall be based on the actual loss rate of such portfolio and reasonably
determined in combination with the current situation. The Company and its subsidiaries
shall determine similar credit risk characteristic combinations according to actual conditions,
including but not limited to industry distribution, regional distribution, overdue status and
aging, etc. If the Company cannot reasonably determine the combination of similar credit
risk characteristics, impairment test shall be conducted separately.




                                            53
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

      Important Accounting Policies and Accounting Estimates (Continued)
III

14    Notes receivable (applicable since January 1, 2019)

      For the determination method and accounting treatment method of the Company's
      expected credit loss on bills receivable, please refer to 12(6) of note III Impairment of
      financial instruments.

      When sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost
      at the level of single instrument, the Company will refer to the experience of historical credit
      loss, combines the current situation and judgment on future economic situation, divides
      bills receivable into several combinations according to the characteristics of credit risk, and
      calculates expected credit loss on the basis of combinations.

15    Accounts receivable (applicable since January 1, 2019)

      For the determination method and accounting treatment method of the Company's
      expected credit loss on accounts receivable, please refer to 12(6) of note III Impairment of
      financial instruments.

      As for the accounts receivable bill, if there is objective evidence that the company will not be
      able to recover the money according to the original terms of the accounts receivable, the
      Company will separately determine its credit loss.

      If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the
      level of single instrument, the Company will divide the accounts receivable into several
      combinations according to the credit risk characteristics, and calculate the expected credit
      loss on the basis of the combinations (with reference to the experience of historical credit
      loss, and in combination with the current situation with the judgment of future economic
      situation)

16    Other receivables (applicable since January 1, 2019)

      For the determination method and accounting treatment method of the Company's
      expected credit loss of other receivables, please refer to 12(6) of note III Impairment of
      financial instruments.

      For other accounts receivable for which there is objective evidence that the Company will
      not be able to recover the amount according to the original terms of the accounts
      receivable, the Company will separately determine its credit loss.

      If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the
      level of single instrument, the Company will refer to the experience of historical credit loss,
      combine the current situation and judgment on future economic situation, divide other
      receivables into several combinations according to the characteristics of credit risk, and
      calculate expected credit loss on the basis of combinations.

17    Inventories

(1)   Classification of inventories

      The Company classifies inventories into raw materials, in-process products, development
                                                   54
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

      costs, and finished products, goods shipped in transit, turnover materials and molds with an
      expected benefit period of less than one year, depending on the purpose of holding the
      inventories. Turnover materials include low-value consumables and packaging materials.

(2)   Valuation method for inventories shipped in transit
      All types of inventories are accounted for at actual cost, and actual costs include purchase
      costs, processing costs and other costs. Inventories are shipped in transit by weighted
      average method.




                                                 55
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

17    Inventories (continued)

      Basis for determining the net realizable value of inventories and accrual method for
(3)
      inventory valuation allowance

      Ending inventories are measured at cost or net realizable value, whichever is lower. In
      cases that difference exists due to the net realizable value is less than the cost of
      inventories, inventory valuation allowance is made based on individual inventory item or
      inventory category, and the difference is recognized in the current profit and loss.

      For inventories of goods directly used for sale, such as finished goods, merchandise
      inventories and materials for sale, in the normal production and operation process, the net
      realizable value is determined by the amount of the estimated selling price of the inventory
      less the estimated sales cost and relevant taxes and fees; for material inventories that need
      to be processed, in the normal production and operation process, the net realizable value is
      determined by the amount of the estimated selling price of finished products produced less
      the estimated cost to be occurred at the time of completion, the estimated selling expenses
      and related taxes; for inventories held for the execution of sales contracts or labor contracts,
      the net realizable value is calculated on the basis of the contract price, and if the quantity of
      inventories held is more than the quantity specified in sales contracts, the net realizable
      value of excess inventories is calculated based on the general sales price.

      At the end of the period, inventory valuation allowance is accrued according to individual
      inventory items; but for a large number of inventories with lower unit prices, inventory
      valuation allowance is accrued according to inventory category; for inventories related to
      the product series produced and sold in the same region with the same or similar end use or
      purpose, and that is difficult to be measured separately from other items, inventory valuation
      allowance is accrued combined with other items.

      If the influencing factors of the write-down of inventory value have disappeared, the amount
      written-down is recovered and reversed to the amount of inventory valuation allowance
      already accrued, and the amount reversed is included in the current profit and loss.

(4)   Inventory system

      The Company adopts a perpetual inventory system for inventory management.

(5)   Amortization method of turnover materials

      The Company amortizes turnover materials by the one-off amortization method, and the
      molds with a benefit period of less than one year are amortized within the period of not
      exceeding one year according to the expected benefit period.




                                                   56
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

18    Long-term equity investments

      Long-term equity investments comprise the Company’s long-term equity investments in its
      subsidiaries, and the Company’s long-term equity investments in its associates and joint
      ventures.

      Subsidiaries are the investees over which the Company is able to exercise control. A joint
      venture is a joint arrangement which is structured through a separate vehicle over which the
      Company has joint control together with other parties and only has rights to the net assets
      of the arrangement based on legal forms, contractual terms and other facts and
      circumstances. Associates are the investees that the Company has significant influence on
      their financial and operating policies.

      Investments in subsidiaries are presented in the Company’s financial statements using the
      cost method, and are adjusted to the equity method when preparing the consolidated
      financial statements. Investments in a joint venture and associates are accounted for using
      the equity method.

(1)   Recognition of initial investment cost

(a)   Long-term equity investment formed by business combination

      For long-term equity investment acquired by business combination involving enterprises
      under common control, the book value of assets and liabilities of the combined party in the
      consolidated financial statements of the ultimate controlling party as at the date of
      combination (including the goodwill formed by the ultimate controlling party's acquisition of
      the combined party) is recognized as investment cost. For long-term equity investment
      formed by combination, the share of the book value of shareholders’ equity of the combined
      party acquired on the date of combination is recognized as initial investment cost. The
      difference between the initial investment cost and assets paid as the consideration for
      combination, the book value of liabilities incurred or assumed and the total par value of
      shares issued, is used to adjust capital reserve, and when the capital reserve is insufficient,
      it is used to adjust retained earnings.

      For long-term equity investment acquired by business combinations involving enterprises
      under non-common control, the combination cost is recognized as investment cost of the
      long-term equity investment. The combination cost is the fair value of assets paid, the
      liabilities incurred or assumed, and the equity securities issued to acquire the control of
      acquired party on the date of acquisition. The difference between the higher combination
      cost and lower fair value of identifiable net assets of the acquired party acquired in the
      combination is recognized as goodwill; the difference between the lower combination cost
      and higher fair value of identifiable net assets of the acquired party acquired in the
      combination is included in the current profit and loss after review. For business combination
      involving enterprises under non-common control realized step by step through multiple
      transactions, the sum of the book value of equity investment held by the acquirer before the
      date of acquisition and the new investment cost on the date of acquisition is recognized as
      initial investment cost, and the combination cost includes the sum of assets paid, the
      liabilities incurred or assumed by the acquirer, and the fair value of equity securities issued.

(b)   Long-term equity investment acquired by other means

                                                   57
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

For long-term equity investment acquired by cash payment, the actual acquisition price is
recognized as initial investment cost. The initial investment cost includes expenses, taxes
and other necessary expenses directly related to the acquisition of the long-term equity
investment; the transaction costs incurred when issuing or acquiring the own equity
instruments of acquirer attributed directly to equity transactions can be deducted from the
equity.

For long-term equity investment acquired by issuing equity securities, the fair value of
equity securities issued is recognized as initial investment cost.




                                          58
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

18    Long-term equity investments (continued)

      Provided that the non-monetary asset exchange contains commercial substance and the
      fair value of the assets received or assets surrendered can be reliably measured, the initial
      investment cost of the long-term equity investment received with non-monetary assets is
      determined based on the fair value of the assets surrendered, except that there is
      conclusive evidence indicates that the fair value of assets received is more reliable. For
      non-monetary assets that do not satisfy the above condition, the book value of assets
      surrendered and related taxes and fees payable are recognized as the initial investment
      cost of the long-term equity investment.

      The initial investment cost of a long-term equity investment acquired by debt restructuring is
      determined on the basis of fair value.

(2)   Subsequent measurement and recognition of related profit and loss

(a)   Subsequent measurement

      The Company adopts the cost method to account for the long-term equity investments
      under the control of investee, and the consolidated financial statements are adjusted in
      accordance with the equity method in preparation.

      The Company adopts the equity method to account for the long-term equity investments in
      associates and joint ventures. The difference between the higher initial investment cost and
      the fair value share of identifiable net assets of the investee enjoyed in the investment is not
      used to adjust the initial investment cost of the long-term investment; the difference
      between the lower initial investment cost and the fair value share of identifiable net assets
      of the investee enjoyed at the time of conducting the investment is included in the current
      profit and loss.

(b)   Recognition of profit and loss

      Under the cost method, in addition to the actual payment or the cash dividends or profits
      included in the consideration that have been declared but not yet paid, the Company
      recognizes the investment income according to the cash dividends or profits that the
      investee declared to pay.




                                                   59
                             TCL Technology Group Corporation
                                Notes to Financial Statements
                 (For the period from 1 January 2019 to 31 December 2019)
                (The amounts in tables are expressed in thousands of RMB)

Under the equity method, when the investment enterprise confirms that it should enjoy the
net profit or net loss of the investee, it should adjust the net profit of the investee based on
the fair value of identifiable assets of the investee at the time of conducting the investment
before the confirmation, and the part of profit and loss of internal transaction between the
investor and associates and joint venture that should be attributed to the investor according
to the shareholding ratio, should be offset, and the investment profit and loss should be
confirmed on this basis. When the Company confirms that it should assume the loss
occurred by the investee, the process hereunder is followed: first, the book value of the
long-term equity investment is offset. Secondly, if the book value of the long-term equity
investment is insufficient for the offset, the investment loss is continued to be recognized,
and the book value of long-term receivable items is offset, subject to other book value of the
long-term equity that substantially constitutes the net investment of the investee. Finally,
after the above-mentioned treatment, if the Company still bears additional obligations in
accordance with the investment contract or agreement, the provisions are recognized
according to the estimated obligations and included in the current investment losses.

If the investee realizes profit in the future period, the Company shall, after deducting the
unconfirmed loss share, conduct the process in the reverse order of the above to write
down the book balance of the confirmed liabilities and recover other long-term equity that
substantially constitute net investment of the investee and the book value of the long-term
equity, and recognize the profit as investment income.

Other changes in the owner's equity other than net profit or loss, other comprehensive
income and profit distribution of the investee, are used to adjust the book value of the
long-term equity investment and included in capital reserve. The unrealized profit and loss
from internal transactions between the Company and the investee attributed to the
Company according to the shareholding ratio, is offset, and the investment profit and loss is
recognized on this basis. In respect of the internal transaction losses incurred by the
Company and the investee, for the part recognized asset impairment losses, the
corresponding unrealized losses are not offset.




                                             60
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

18    Long-term equity investments (continued)

(3)   Step-by-step disposal of investment in subsidiaries

      When the terms, conditions and economic influence of transactions of the equity investment
      of the subsidiary conform to one or more of the following, accounting for multiple
      transactions is treated as a package transaction:

(a)   These transactions are made simultaneously or with consideration of influence on each
      other;

(b)   These transactions can only achieve a complete business outcome as a whole;

(c)   The occurrence of a transaction depends on the occurrence of at least one of the other
      transaction;

(d)   A transaction alone is uneconomical, but is economical when considered together with other
      transactions.

      When an enterprise loses control over the original subsidiary due to disposal of part of the
      equity investment or other reasons, if the transactions do not belong to a package
      transaction, the accounting treatment of individual financial statements and consolidated
      financial statements should be distinguished as follows:

(a)   In the individual financial statements, the disposed equity should be accounted for in
      accordance with the “Accounting Standards for Business Enterprises No. 2 – Long-term
      Equity Investment”; meanwhile, the remaining equity should be recognized as long-term
      equity or other related financial assets based on its book value. If the remaining equity after
      disposal can be used to exercise common control or significant influence on the original
      subsidiary, it shall be accounted for in accordance with the relevant provisions on the
      conversion of the cost method into the equity method.

(b)   In the consolidated financial statements, the remaining equity should be re-measured in
      accordance with its fair value on the date of loss of control. The difference between the sum
      of the consideration acquired from the disposal of the equity and the fair value of the
      remaining equity, less the share of net assets of the original subsidiary that should be
      enjoyed in accordance with the original share-holding ratio from the date of acquisition, is
      included in the current profit and loss of the period in which loss of control occurred. Other
      comprehensive income related to the original subsidiary's equity investment should be
      converted into current investment income when control is lost. The enterprise shall disclose
      in the notes the fair value of the remaining equity after disposal on the date of loss of control
      and the amount of relevant gains or losses arising from the disposal remeasured based on
      the fair value.

      If the transactions of disposal of equity investment in a subsidiary until the loss of control is
      a package transaction, the accounting treatment of individual financial statements and
      consolidated financial statements should be distinguished as follows: :




                                                   61
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

(a)   In the individual financial statements, the difference between each disposal price and the
      book value of the long-term equity investment corresponding to the disposed equity before
      the loss of control is recognized as other comprehensive income, and transferred to the
      current profit and loss of the period in which the loss of control occurred;

(b)   In the consolidated financial statements, the difference between each disposal price and the
      disposal of investment corresponding to the share of the net assets of the subsidiary before
      the loss of control is recognized as other comprehensive income, and transferred to the
      current profit and loss of the period in which the loss of control occurred.




                                                 62
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

18    Long-term equity investments (continued)

(4)   Basis for determining control, common control and significant influence on the investee

      Control means having the power of control over the investee, enjoying variable returns by
      participating in the relevant activities of the investee, and having the ability to use the power
      over the investee to influence the amount of returns.

      Common control means the control that is common to an arrangement in accordance with
      the relevant agreement, and the decisions of relevant activities of the arrangement must be
      made upon agreement of the Company and other parties sharing the control rights.

      Significant influence means the power to participate in the decision-making of the financial
      and operating policies of the investee, but by which cannot control or commonly control
      together with other parties the formulation of the policies.

(5)   Impairment test and allowance for impairment

      On the balance sheet date, if there is any indication that the long-term equity investment is
      impaired due to continuous decline in the market price or deterioration of operating
      conditions of the investee, the recoverable amount of long-term equity investment is
      determined according to the net value of a single long-term equity investment less the
      disposal expenses or the present value of expected future cash flows of the long-term
      equity investment, whichever is higher. When the recoverable amount of the long-term
      equity investment is lower than the book value, the book value of assets is written-off to the
      recoverable amount, and the amount written-down is recognized as asset impairment
      losses, which is included in the current profit and loss, and the corresponding allowance for
      asset impairment is made.

      For long-term equity investments without significant influence or quotation in an active
      market and whose fair value cannot be measured in a reliable way, the impairment loss is
      determined by the difference between the book value and the present value determined by
      discounting the future cash flows of similar financial assets at the current market rate of
      return.

      Other long-term equity investments with signs of impairment other than goodwill arising
      from business combination, if the measurement of recoverable amount indicates that the
      recoverable amount of the long-term equity investment is lower than its book value, the
      difference is recognized as impairment losses.

      Goodwill arising from a business combination is tested for impairment annually, regardless
      of whether there is any indication of impairment.

      Once the impairment loss of long-term equity investment is confirmed, it will not be
      reversed.

19    Investment property




                                                   63
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

The Company's investment property means the property held for the purpose of earning
rent or capital appreciation, or both, including the land use rights that have been leased, the
land use rights that are held for transfer upon appreciation, and the leased buildings. In
addition, for the vacant buildings held by the Company for the purpose of leases, if the
Board of Directors makes a written resolution that expressly indicates that the buildings will
be used for leases and the intention of holding will not change in a short-term, the building
will also be reported as investment property.

The Company adopts the cost model for subsequent measurement of investment property.
For the purpose of depreciation or amortization method, the same amortization policy
adopted for buildings as fixed assets and land use rights as intangible assets are used.




                                            64
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

20    Fixed assets

(1)   Recognition criteria for fixed assets

      Fixed assets mean tangible assets held for the purpose of producing goods, rendering of
      services, leases or operation management, whose service life is more than one fiscal year.
      Fixed assets satisfying the following conditions are recognized:

(a)   The economic benefits associated with the fixed assets are likely to flow into the enterprise;

(b)   The cost of the fixed asset can be measured in a reliable way.

      The Company's fixed assets are classified into buildings, machinery and equipment, office
      and electronic equipment, transportation vehicles and fixed assets renovation in line with
      capitalization conditions. Where each component of a fixed asset with a different service life
      provides economic benefits to the Company in different ways and applies different
      depreciation rates, it is recognized as a single fixed asset.

      Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the
      purchase price, related taxes, and other expenses attributable to the fixed asset before it is
      ready for the intended use, such as the expenses on transportation, handling, installation
      and professional services, etc. When determining the cost of fixed assets, discard expenses
      should be considered. Subsequent expenditures related to fixed assets that satisfy the
      recognition criteria of fixed assets are included in the cost of fixed assets; otherwise, they
      are recognized in profit and loss in the period in which they arise.

(2)   Recognition and initial measurement of fixed assets under a financing lease

      If one of the following conditions specified in the terms of the lease agreement of an asset
      singed between the Company and the leasing party, it is recognized as an asset under
      financing lease:

(a)   The ownership of the leased asset is attributable to the Company upon the expiry of lease;

      The Company has the option to purchase the asset, and the purchase price is much lower
(b)
      than the fair value of the asset when the option is exercised;

(c)   The lease term represents the majority of the service life of the leased asset;

      The present value of the minimum lease payments on the lease start date is not significantly
(d)
      different from the fair value of the asset.

      On the date of the lease starts, the Company recognizes the fair value of the leased asset
      or the present value of the minimum lease payment as the book value of the leased asset,
      whichever is lower, and recognizes the minimum lease payment amount as the book value
      of the long-term payable, the difference is recognized as unconfirmed financing costs.
      Unrecognized financing expenses are apportioned over the lease term by the effective
      interest method.



                                                  65
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

20    Fixed assets (continued)

(3)   Depreciation method for fixed assets

      Fixed assets are depreciated by the straight-line method. The depreciation rate of various
      fixed assets is determined according to the estimated service life and estimated residual
      value (the estimated residual value is 0-10% of the original value). The depreciation rate of
      classified fixed assets is as follows:

                                                                                              Annual
                                                            Estimated Service
      Asset Category                                                                     Depreciation
                                                                         Life
                                                                                                Rate

      Houses and buildings                                        20-50 years                    2-5%
      Machinery and equipment (exclude mold)                       5-11 years                  9-20%
      Mold (with benefit period more than one year)                 1-3 years                33-100%
      Office and electronic equipment                               3-5 years                 20-33%
      Transportation equipment                                      4-5 years                 20-25%
      Other devices                                                 4-5 years                 20-25%

      Fixed assets renovation is amortized evenly over the benefit period.

      All fixed assets are subject to depreciation, except for fixed assets that have been fully
      depreciated and continue to be used, and the land that is priced and recorded separately.
      Fixed assets are depreciated on a monthly basis. Fixed assets added are not depreciated in
      the current month when being added but from the following month; fixed assets reduced are
      still depreciated in the current month when being reduced, and no depreciation is made
      from the following month. Fixed assets that are not profitable for the enterprise or not used
      temporarily (other than seasonally deactivated) are recognized as idle fixed assets. The
      estimated life expectancy and depreciation rate of idle fixed assets should be re estimated,
      and depreciation is directly included in the current profit and loss.

21    Construction in progress

      Construction in progress refers to the necessary expenses incurred by the Company for the
      purchase and construction of fixed assets or investment property before being ready for the
      expected usable status, including engineering materials costs, labor costs, related taxes
      and fees, borrowing costs that should be capitalized and indirect costs that should be
      apportioned. Construction in progress is accounted for separately according to individual
      projects.

      After the construction in progress is ready for its intended use, it must be transferred to fixed
      assets or investment property, whether the final accounting procedures are completed or
      not.




                                                   66
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

22    Borrowing costs

      Borrowing costs refer to interest and other related costs incurred by the Company as a
      result of borrowings, including interest on borrowings, amortization of discounts or
      premiums, ancillary expenses, and exchange differences arising from foreign currency
      borrowings.

      Borrowing costs that can be directly attributable to the acquisition, construction or
      production of assets eligible for capitalization are capitalized and included in the relevant
      asset cost. Other borrowing costs are recognized as expenses in the period in which they
      are incurred, and are included in the current profit and loss. Assets eligible for capitalization
      refer to fixed assets, investment property and inventories (only refers to inventories with an
      acquisition, construction and production process for more than one year) that require a
      substantial period of acquisition, construction or production activities to get ready for the
      intended use or sale status.

      Borrowing costs refer to the interest of borrowings, the amortization of discounts or
      premiums, auxiliary expenses and exchange differences arising from foreign currency
      borrowings incurred by the Company. Borrowing costs begin to be capitalized when the
      following three conditions are all satisfied:

(1)   Asset expenditure has occurred;

(2)   Borrowing costs have occurred;

      The acquisition, construction or production activities necessary to enable the assets to be
(3)
      ready for the intended usable or saleable state have commenced.

      When an asset satisfied the capitalization conditions is abnormally interrupted during the
      process of acquisition, construction or production and the interruption period lasts for more
      than three months, the capitalization of the borrowing costs is suspended and recognized
      as the current expenses until the acquisition, construction or production of the assets starts
      again. When an asset satisfied the capitalization conditions is ready for its intended use or
      sale, the capitalization is stopped and the borrowing costs incurred in the future are
      included in the current profit and loss. The period of capitalization refers to the period from
      the time when the borrowing costs start to be capitalized to the point when the capitalization
      is stopped, and the period in which the borrowing costs are suspended for capitalization is
      not included.




                                                   67
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)

During the period of capitalization, if special borrowings are made for the acquisition,
construction or production of assets eligible for capitalization, the amount of the interest
expenses actually incurred during the current period of the special borrowings, less the
amount of interest income earned by depositing unused borrowing funds in a bank or
investment income earned by temporary investment, is recognized as the amount of
capitalization. When a general loan is occupied for the purpose of purchasing, constructing
or producing assets satisfied the capitalization conditions, the amount of capitalization is
determined according to the weighted average of the accumulated asset expenditure
exceeding the special loan portion multiplied by the capitalization rate of the general loan
occupied; the capitalization rate is determined based on the weighted average interest rate
of general borrowings.




                                           68
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

23    Intangible assets

      Intangible assets are recorded at the actual cost at the time of acquisition. The service life of
      intangible assets is analyzed and judged at the time of acquisition. Intangible assets with a
      finite service life are amortized on the shortest of the estimated service lives, the beneficial
      period of the contract and the effective period specified by law from the time when the
      intangible assets are available for use. The amortization period is as follows:

      Category                          Amortization years
                                        The shorter of the years of the land use rights and the
      Land use rights
                                        operating years of the Company
      Patents and non-patent            10 years or the shorter of service life, beneficiary years and
      technologies                      legally valid years
      Software usage fee                Beneficiary period
      Other                             Beneficiary period

      The Company reviews the service life and amortization method of intangible assets with
      limited service life at least at the end of each year, and made adjustment if necessary.

      If an intangible asset is unforeseen to bring economic benefits to the Company, it is
      regarded as an intangible asset with an indefinite service life, which will be reviewed in each
      accounting period. If there is evidence indicates that the service life of the intangible asset is
      limited, then it is converted to an intangible asset with limited service life. Intangible assets
      with indefinite service lives are not amortized.

      The expenditures of the Company's internal research and development projects are
      classified into expenditures in the research phase and expenditures in the development
      phase. Research means an original, planned survey of acquiring and understanding new
      scientific or technical knowledge. Development means the application of research results or
      other knowledge to a plan or design to produce new or substantially improved materials,
      devices, products, etc. prior to commercial production or use.

      The expenditures in the research phase of the Company's internal research and
      development projects are included in the current profit and loss when incurred;
      expenditures in the development phase are recognized as intangible assets only when the
      following conditions are all satisfied:

(1)   It is technically feasible to complete the intangible asset to enable it to be used or sold;

(2)   There is intent to complete the intangible asset and use or sell it;

(3)   The intangible assets can bring economic benefits;

(4)   There are sufficient technical, financial and other resources to support the development of
      the intangible assets as well as ability to use or sell the intangible assets;

      Expenditures attributable to the development stage of the intangible asset can be measured
(5)
      in a reliable way.

      If the above conditions cannot be all satisfied, the expenditures are included in the current
      profit and loss when incurred.
                                                    69
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

24    Long-term prepaid expenses

      Long-term prepaid expenses refer to various expenses that the Company has paid and
      whose period of amortization is more than one year, such as the improvement expenses
      incurred in renting fixed assets by operating leases. Long-term prepaid expenses are
      amortized on a straight-line basis within the beneficial period of the expense items.

25    Impairment of long-lived assets

      The impairment of assets other than inventories, financial assets and deferred income tax
      assets is determined by the Company as follows:

      On the balance sheet date, if there is evidence indicates that the asset is idle, there is a use
      termination plan or the market price drops sharply, or the external environment changes
      significantly, impairment test should be conducted. The difference between the recoverable
      amount of the asset and its book value is recognized as impairment loss and included in the
      current profit and loss, and corresponding allowance for asset impairment is made. For the
      goodwill formed by business combination and the intangible assets with indefinite service
      life, impairment test is carried out every year regardless of whether there is any indication of
      impairment. The recoverable amount is determined based on the net amount of fair value of
      assets less the disposal expenses, or the present value of estimated future cash flows of
      the assets, whichever is lower. The Company estimates the recoverable amount based on
      the individual assets. If it is difficult to estimate the recoverable amount of the individual
      assets, the recoverable amount of the asset is determined based on the asset group to
      which the asset belongs. After the asset impairment loss is recognized, the depreciation or
      amortization expense of the impaired assets will be adjusted accordingly in the future
      period.

      Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting
      period.

      Treatment of goodwill impairment: in the impairment test of goodwill, the book value of
      goodwill is apportioned to the asset group or asset group portfolio expected to benefit from
      the synergy of business combination, and the book value of goodwill is apportioned to the
      relevant asset group or asset group combination in a reasonable way. In the case of
      impairment test, the asset group or asset group portfolio that does not contain goodwill is
      tested for impairment first to confirm the corresponding asset impairment loss, and then the
      asset group or asset group containing goodwill is tested for impairment to confirm the
      corresponding goodwill impairment loss.

26    Asset transfer with repurchase conditions

      When the Company sells products or transfers other assets, it signs a product or a transfer
      asset repurchase agreement with the purchaser, and determines whether the sales
      commodity satisfies the revenue recognition conditions according to the terms of the
      agreement. If the after-sales repurchase is a financing transaction, the Company does not
      recognize the sales revenue when the product or asset is delivered. If the repurchase price
      is greater than the difference between the sales prices, interest of the difference is accrued
      on time during the repurchase period, and included in financial expenses.


                                                   70
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

27    Provisions

      When the Company is involved in any litigation, debt guarantee, contract loss or
      reorganization, which is likely in need of future delivery of assets or rendering of services,
      and the amount of which can be measured in a reliable way, it is recognized as provisions.

(1)   Recognition criteria of provisions

      When an obligation related to the contingent events satisfies all the following conditions, it is
      recognized by the Company as provisions:

(a)   The obligation is the current obligation of the Company;

      The fulfillment of the obligation is likely to cause economic benefits to flow out of the
(b)
      Company;

(c)   The amount of the obligation can be measured in a reliable way.

(2)   Measurement of provisions

      The provisions of the Company are initially measured on the basis of the best estimate of
      the expenditure required to perform the relevant current obligations.

      When determining the best estimate, the Company considers factors such as risks,
      uncertainties and time value of money related to contingent events. Where the time value
      of money has a significant impact, the best estimate is determined by discounting the
      relevant future cash outflows.

      The best estimates are handled as follows:

      In case that there is a continuous range (or interval) of required expenditures, within which
      the possibility of occurrence of various results is the same, the best estimate is determined
      by the average of the middle value of the range, that is, the average of the upper and lower
      limits.

      In case that there is no continuous range (or interval) of required expenditures, or there is a
      continuous range but the possibility of various results in the range is different, if the
      contingency involves a single item, the best estimate is determined based on the most
      probable amount; if a contingency involves multiple items, the best estimate is determined
      based on various possible outcomes and associated probabilities.

      If all or part of the expenses required by the Company to settle the provisions are expected
      to be compensated by a third party, the compensation amount is separately recognized as
      an asset when it is basically confirmed to be received, and the recognized compensation
      amount should not exceed the book value of provisions.




                                                   71
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

28    Employee benefits

      Employee benefits include short-term employee benefits, post-employment benefits,
      termination benefits and other long-term employee benefits provided in various forms of
      consideration in exchange for service rendered by employees or compensations for the
      termination of employment relationship.

(a)   Short-term employee benefits

      Short-term employee benefits include employee wages or salaries, bonus, allowances and
      subsidies, staff welfare, premiums or contributions on medical insurance, work injury
      insurance and maternity insurance, housing funds, union running costs and employee
      education costs, and short-term paid absences. The employee benefit liabilities are
      recognized in the accounting period in which the service is rendered by the employees, with
      a corresponding charge to the profit or loss for the current period or the cost of relevant
      assets. Non-monetary benefits are measured at their fair value.

(b)   Post-employment benefits

      The Company classifies post-employment benefit plans as either defined contribution plans
      or defined benefit plans. Defined contribution plans are post-employment benefit plans
      under which the Company pays fixed contributions into a separate fund and will have no
      obligation to pay further contributions; and defined benefit plans are post-employment
      benefit plans other than defined contribution plans. During the Reporting Period, the
      Company’s defined contribution plans mainly include basic pensions and unemployment
      insurance.

(c)   Termination benefits

      If the Company terminates the labor relationship with an employee before the labor contract
      expires, or offers compensation for encouraging the employee to accept the redundancies
      voluntarily, the liabilities arising from the termination of labor relations with the employee is
      determined, and also included in the current profit and loss, at the time when the group
      cannot unilaterally withdraw the termination of the labor relationship plan or redundancies
      proposal, or the time when the cost associated with reorganization involving payment of
      termination benefits is confirmed, whichever is earlier.

(d)   Other long-term employee benefits

      Other long-term employee benefits refer to all employee benefits except short-term
      employment benefits, post-employment benefits and termination benefits.




                                                   72
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

29    Share-based payments

      The share-based payments of the Company are mainly equity-settled share-based
      payments, and only allow to be exercised by employees after the completion of their
      services in the waiting period. On each balance sheet date in the waiting period, based on
      the best estimate of the number of vesting equity instruments, the services obtained in the
      current period are included in the relevant costs or expenses and capital reserve based on
      the fair value at the grant date of the equity instruments.

      The fair value of equity instruments is determined by the external appraiser or management
      based on the binomial distribution method. The best estimate of the vesting equity
      instrument is determined by the management based on historical statistics on the vesting
      weights and turnover rates on the balance sheet date.

      Equity-settled share-based payments are measured based on the fair value of the equity
      instruments granted to employees. In case that the vesting right is available immediately
      after the grant, it is included in relevant cost or expense based on the fair value of the equity
      instrument on the grant date, and the capital reserve is increased accordingly. In case that
      the vesting right is available after the completion of services in the waiting period or
      satisfaction of stipulated performance conditions, on each balance sheet day during the
      waiting period, the services acquired in the current period are included into the relevant
      costs or expenses and capital reserve on the basis of the best estimate of the number of
      feasible equity instruments and at the fair value of the date on which the equity instruments
      are granted. No adjustments are made to the identified related costs or expenses or total
      owner's equity after the vesting date.

30    Revenue recognition

      Revenue is recognized only when economic benefits are likely to flow in and the amount of
      income and associated costs can be measured in a reliable way, and the following
      conditions are all satisfied:

(1)   Sales of goods

      The Company has transferred the main risks and rewards of ownership of the goods to the
      purchaser, and no longer retains any continuing management right or effective control of the
      goods, which are usually linked to the ownership, and recognizes the realization of sales
      revenue of the goods.

(2)   Sales of property development products

      The realization of sales revenue is recognized when the sales of property is completed and
      acceptance of the property is qualified, the terms of delivery stipulated in the sales contract
      are satisfied, and the buyer has obtained the certificate of payment for the delivery of the
      property stipulated in the sales contract (usually the first payment of the sales contract is
      received and the payment arrangement of the remaining payment is confirmed).

(3)   Rendering of services



                                                   73
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

      In the case that the transaction results of service rendering can be estimated in a reliable
      way, the Company confirms the relevant labor revenue according to the percentage of
      completion method on the balance sheet date; otherwise, the revenue is recognized based
      on the amount of labor costs that have occurred and are expected to be compensated.

(4)   Interest income

      Accounted for according to the time and actual interest rate of the Company's monetary
      funds used by others.




                                                 74
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

30    Revenue recognition (continued)

(5)   User fee income

      Accounted for according to the time and method of charging as stipulated in the relevant
      contract or agreement.

31    Government subsidies

(1)   Category

      Government subsidies are transfers of monetary or non-monetary assets from the
      government to the Group at nil consideration. According to the subsidy targets stipulated in
      the relevant government documents, government subsidies are classified into government
      subsidies related to assets and government subsidies related to income.

(2)   Recognition of government subsidies

      If a government subsidy is a monetary asset, it is measured at the amount received or
      receivable. If a government subsidy is a non-monetary asset, it is measured at fair value. If
      the fair value cannot be obtained in a reliable way, it is measured at the nominal amount
      (RMB1). Government subsidies measured at nominal amounts are recognized directly in
      the current profit and loss.

(3)   Accounting treatment

      Government subsidies related to assets offset the book value of the underlying assets.

      If the government subsidies related to income are used to compensate related costs or
      losses in the subsequent period, it is recognized as deferred income and included in the
      current profit and loss or offset costs in the period in which the related costs or losses are
      recognized; government subsidies used to compensate costs or losses incurred by the
      enterprise are directly included in the current profit or loss or offset related costs. For
      government subsidies related to the daily activities of the enterprise, the R&D and
      VAT-related subsidies are included in other income; other government subsidies offset
      related costs according to the nature of economic activities. Government subsidies not
      related to daily activities of the Company are included in the non-operating income and
      expenditure. For preferential loans for policy discount, if the government finance
      department appropriates the discounted funds to the lending bank, the borrowing cost is
      accounted for according to the principal of the loan and the policy preferential interest rate,
      with the amount actually received as the entry value of the loan. If the government finance
      department directly appropriates the interest subsidy funds to the Company, the subsidies
      offset the related borrowing costs.

      In case that a confirmed government subsidy is required to be returned, the book value of
      the asset is adjusted if the book value of relevant assets is offset at the initial recognition; if
      there is related deferred income, the book balance of deferred income is offset, and the
      excess is included in the current profit and loss; in case of other circumstances, it is directly
      included in the current profit and loss.


                                                    75
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

32    Deferred income tax assets and deferred income tax liabilities

      The income taxes of the Company include current income tax and deferred income tax.
      Both current income tax and deferred income tax are recognized in the current profit and
      loss as income tax expense or gain, except for the following:

(1)   Adjusting goodwill due to income tax arising from business combination;

      Income tax related to transactions or events directly included in shareholders' equity is
(2)
      included in shareholders’ equity.

      On the balance sheet date, the Company recognizes the deferred income tax assets or
      deferred income tax liabilities in accordance with the balance sheet liability method on
      temporary differences between the book value of assets or liabilities and their tax base.

      The Company recognizes all taxable temporary differences as deferred tax liabilities except
      the taxable temporary differences incurred in the following transactions:

(1)   Initial recognition of goodwill; or initial recognition of assets or liabilities arising from
      transactions with the following characteristics: the transaction is not a business
      combination, and does not affect the accounting profits or the amount of taxable income
      when occurs;

(2)   For taxable temporary differences related to investments in subsidiaries, associates and
      joint ventures, the timing of the reversal of the temporary differences can be controlled and
      the temporary differences are unlikely to be reversed in the foreseeable future.

      The Company recognizes deferred income tax assets arising from deductible temporary
      differences, subject to the amount of taxable income likely to be obtained to offset the
      deductible temporary differences, except the deductible temporary differences incurred in
      the following transactions:

      The transaction is not a business combination, and does not affect the accounting profits or
(1)
      the amount of taxable income when occurs;

(2)   The deductible temporary differences related to investment in subsidiaries, associates and
      joint ventures cannot satisfy all the following: the temporary differences are likely to be
      reversed in the foreseeable future and are likely to be used for deduction of deductible
      taxable income for temporary differences in the future.

      On the balance sheet date, the Company measures the deferred income tax assets and
      deferred income tax liabilities according to the tax law based on the applicable tax rate
      during the period of expectation of recovering the assets or paying off the liabilities, and
      reflects the income tax impact of the expected recovery of assets or liquidation of liabilities
      on the balance sheet date.

      On the balance sheet date, the Company reviews the book value of deferred income tax
      assets. If it is probable that no sufficient taxable income will be available in the future to
      offset the benefits of deferred tax assets, the book value of deferred tax assets is written
      down. When it is probable that sufficient taxable income will be available, the amount
      written-down will be reversed.
                                                  76
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

33    Leases

(1)   Accounting treatment of operating leases

(a)   The rental fees paid by the Company for the lease of assets are apportioned on a
      straight-line basis over the entire lease term without deduction of the rent-free period and
      included in the current expenses. The initial direct costs associated with the lease
      transactions paid by the Company are included in the current expenses.

      When the lessor of an asset bears the expenses related to the lease that should be borne
      by the Company, the Company deducts the part of the expenses from the total rent. The
      deducted rental expenses are apportioned during the lease term and included in the current
      expenses.

(b)   The rental fees charged by the Company for renting out assets are apportioned on a
      straight-line basis over the entire lease term without deduction of the rent-free period and is
      recognized as rental income. The initial direct expenses related to lease transactions paid
      by the Company are included in the current expenses; if the amount is a significant one, it is
      capitalized and included in the current income in the same period as the lease income is
      recognized throughout the lease period.

      When the Company bears the lease-related expenses that should be borne by the lessee,
      the Company deducts the part of the expenses from the total rental income, and distributes
      the deducted rental expenses within the lease term.

(2)   Financial leased assets

      On the date when lease starts, the Company recognizes the fair value of the leased asset or
      the present value of the minimum lease payment as the book value of the leased asset,
      whichever is lower, and recognizes the minimum lease payment amount as the book value
      of the long-term payable, and the difference between the two is recognized as unconfirmed
      financing expenses. The Company adopts the effective interest rate method to amortize the
      unrecognized financing expenses during the asset lease period and includes them in
      financial expenses.

(3)   Financial leasing assets

      On the date when lease starts, the Company recognizes the receivable of the financial
      lease, the difference between the sum of unsecured residual value and its present value as
      unrealized financing income, and recognizes the lease income in the future period of the
      lease. The initial direct costs incurred by the Company in connection with lease transactions
      are included in the initial measurement of financial lease receivable, and the amount of
      income recognized during the lease term is reduced.

34    Related parties

      If one party controls, commonly controls or exerts a significant influence on the other party,
      and two or more parties are under the control, common control or significant influence of the
      other party, they constitute related parties.

35    Discontinued operations
                                                  77
                            TCL Technology Group Corporation
                               Notes to Financial Statements
                (For the period from 1 January 2019 to 31 December 2019)
               (The amounts in tables are expressed in thousands of RMB)


The Company recognizes a component disposed of or classified as a component that can
be separately distinguished from the category held for sale and satisfied any of the following
as a component of discontinued operations: (1) The component represents an independent
major business or a separate major business area; (2) This component is part of a related
plan to dispose of an independent major business or a separate major operating area; (3)
This component is a subsidiary that is acquired for resale. Operating profit and loss, such as
impairment losses for discontinued operations and the amount reversed, and disposal profit
and loss are presented in the income statement as profit and loss of discontinued
operations.




                                            78
                                           TCL Technology Group Corporation
                                              Notes to Financial Statements
                               (For the period from 1 January 2019 to 31 December 2019)
                              (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)
36    Changes to major accounting policies and estimates
(1)   Changes to accounting policies
      The Company has adopted since 1 January 2019 the revised versions of certain
      accounting standards (revised by the Ministry of Finance in 2017), namely, the
      Accounting Standard No. 22 for Business Enterprises—Recognition and Measurement of
      Financial Instruments, the Accounting Standard No. 23 for Business
      Enterprises—Transfer of Financial Assets, the Accounting Standard No. 24 for Business
(a)
      Enterprises—Hedge Accounting, and the Accounting Standard No. 37 for Business
      Enterprises—Presentation of Financial Instruments (together, the “New Accounting
      Standards for Financial Instruments”). For details of the changed accounting policies,
      please refer to Item 12 in Note III to the financial statements in the full version of this
      report.

      For the financial instruments recognized and measured before 1 January 2019 in a way
      that is inconsistent with the New Accounting Standards for Financial Instruments, the
      Company makes transitional adjustments according to the new standards. And the
      Company does not restate the comparable financial data of the previous period that is
      inconsistent with the New Accounting Standards for Financial Instruments. The difference
      between the original carrying amount of a financial instrument and the new carrying
      amount on the date of the adoption of the New Accounting Standards for Financial
      Instruments is recorded in the retained earnings or other comprehensive income as at 1
      January 2019.
      The effects of the adoption of the New Accounting Standards for Financial Instruments on
      the presentation of the balance sheet items as at 1 January 2019 are as follows:
                                                    Carrying amount as per                    Carrying amount as per
                                                         the old accounting                      the New Accounting
      Item                                                                         Change
                                                     standards for financial                  Standards for Financial
                                                                instruments                              Instruments
      Held-for-trading financial assets                                    -     2,438,866                 2,438,866
      Financial assets at fair value through                     1,137,580      (1,137,580)                         -
      profit or loss
      Derivative financial assets                                          -       391,558                  391,558
      Notes and accounts receivable                             17,876,580     (17,876,580)                         -
      Notes receiv able                                                    -     4,272,222                 4,272,222
      Accounts receiv able                                                 -    13,600,479                13,600,479
      Other receivables                                          5,719,379          (3,196)                5,716,183
      Other current assets                                       7,624,097         627,123                 8,251,220
      Loans and advances to customers                            1,123,800       (627,123)                  496,677
      Available-for-sale financial assets                        4,270,845      (4,270,845)                         -
      Long-term equity investments                              16,957,109         160,827                17,117,936
      Investments in other equity instruments                              -       488,457                  488,457
      Other non-current financial assets                                   -     2,163,735                 2,163,735
      Financial liabilities at fair value through
      profit or loss                                                212,097      (212,097)                          -

      Derivative financial liabilities                                     -       212,097                  212,097
      Deferred income tax liabilities                               440,352            820                  441,172
      Other comprehensive income                                (1,174,162)        334,950                 (839,212)
      Retained earnings                                         10,000,973       (106,833)                 9,894,140
      Total equity attributable to owners of the
      Company as the parent                                     30,494,365         228,117                30,722,482
      Non-controlling interests                                 30,377,308            (994)               30,376,314




                                                               79
                                           TCL Technology Group Corporation
                                              Notes to Financial Statements
                               (For the period from 1 January 2019 to 31 December 2019)
                              (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)
36    Changes to major accounting policies and estimates (continued)
(1)   Changes to accounting policies (continued)
      Carrying amount adjustments of financial assets classified and measured as per the New
      Accounting Standards for Financial Instruments:
                                                      Carrying amount as        Reclassification                   Carrying amount as per
                                                                                                     Change
                                                      per the old accounting    (exclusive      of                 the    New Accounting
                                                                                                     incurred by
                                                      standards for financial   change incurred                    Standards for Financial
                                                                                                     measureme
                                                      instruments        (31    by                                 Instruments (1 January
                                                                                                     nt
                                                      December 2018)            measurement)                       2019)
      Held-for-trading financial assets                                     -          2,378,390         60,476                 2,438,866
      Financial assets at fair value through profit
      or loss reclassified to held-for-trading
      financial assets                                                      -             37,084               -
      Available-for-sale      financial     assets
      reclassified to held-for-trading financial
      assets                                                                -          2,341,306         60,476

      Financial assets at fair value through
      profit or loss                                              1,137,580           (1,137,580)              -                         -
      Financial assets at fair value through profit
      or loss reclassified to held-for-trading
      financial assets                                                      -            (37,084)              -
      Financial assets at fair value through profit
      or loss reclassified to derivative financial
      assets                                                                -          (391,558)               -
      Financial assets at fair value through profit
      or loss reclassified to other non-current
      financial assets                                                      -          (708,938)               -


      Deriv ative financial assets                                          -            391,558               -                  391,558
      Financial assets at fair value through profit
      or loss reclassified to derivative financial
      assets                                                                -            391,558               -


      Notes receivable                                                      -          4,272,222               -                4,272,222


      Accounts receivable                                                   -         13,604,358         (3,879)               13,600,479


      Other receivables                                           5,719,379                      -       (3,196)                5,716,183


      Available-for-sale financial assets                         4,270,845           (4,270,845)              -                         -
      Available-for-sale     financial     assets
      reclassified to held-for-trading financial
      assets                                                                -         (2,341,306)              -
      Available-for-sale     financial     assets
      reclassified to investments in other equity
      instruments                                                           -          (474,742)               -
      Available-for-sale     financial     assets
      reclassified to other non-current financial
      assets                                                                -         (1,454,797)              -


      Long-term equity inv estments                              16,957,109                      -      160,827                 17,117,936


      Inv estments in other equity instruments                              -            474,742         13,715                   488,457
      Available-for-sale     financial     assets
      reclassified to investments in other equity
      instruments                                                           -            474,742         13,715                          -




                                                                   80
                                                TCL Technology Group Corporation
                                                   Notes to Financial Statements
                                    (For the period from 1 January 2019 to 31 December 2019)
                                   (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)
36    Changes to major accounting policies and estimates (continued)
(1)   Changes to accounting policies (continued)
      Carrying amount adjustments of financial assets classified and measured as per the New
      Accounting Standards for Financial Instruments (continued):
                                                                                                                      Carrying amount as
                                                      Carrying amount as per                                                 per the New
                                                                                 Reclassif ication        Change
                                                           the old accounting                                                 Accounting
                                                                                 (exclusive        of   incurred by
                                                       standards for financial                                              Standards for
                                                                                 change incurred        measureme
                                                              instruments (31                                                    Financial
                                                                                 by measurement)             nt
                                                             December 2018)                                                Instruments (1
                                                                                                                           January 2019)
      Other non-current financial assets                                     -            2,163,735               -             2,163,735
      Financial assets at fair value through profit
      or loss reclassified to other non-current
      financial assets                                                       -              708,938               -
      Available-for-sale financial assets
      reclassif ied to other non-current financial
      assets                                                                 -            1,454,797               -

      Financial liabilities at fair value through
      profit or loss                                                 212,097              (212,097)               -                     -
      Financial liabilities at fair value through
      profit or loss reclassif ied to deriv ative
      financial liabilities                                                  -            (212,097)               -

      Derivative financial liabilities                                       -              212,097               -              212,097
      Financial liabilities at fair value through
      profit or loss reclassif ied to deriv ative
      financial liabilities                                                  -              212,097               -


      The effects of the reclassification or measurement of financial assets as per the New
      Accounting Standards for Financial Instruments on the beginning retained earnings, other
      comprehensive income, deferred income tax liabilities, equity attributable to owners of the
      Company as the parent and non-controlling interests:

                                                                                                                  Carrying amount as per
                                                       Carrying amount as per the
                                                                                               Effect of the         the New Accounting
                                                      old accounting standards for
      Item                                                                             accounting standard        Standards for Financial
                                                          financial instruments (31
                                                                                                  revisions       Instruments (1 January
                                                                  December 2018)
                                                                                                                                   2019)

      Deferred income tax liabilities                                      440,352                       820                     441,172
      Other comprehensive income                                        (1,174,162)                 334,950                     (839,212)
      Retained earnings                                                 10,000,973                 (106,833)                   9,894,140
      Total equity attributable to owners of the
      Company as the parent                                             30,494,365                  228,117                   30,722,482
      Non-controlling interests                                         30,377,308                      (994)                 30,376,314


      The Company has adopted the revised version of the Accounting Standard No. 7 for Business
      Enterprises—Exchange of Non-Monetary Assets since 10 June 2019, and the revised version of
      the Accounting Standard No. 12 for Business Enterprises—Debt Restructuring since 17 June
(b)   2019. These accounting policy changes are dealt with using the prospective application method.
      Exchanges of non-monetary assets and debt restructuring from 1 January 2019 to the date of the
      adoption of the said revised standards are adjusted according to the revised standards. The first
      adoption of the said standards by the Company has no impact on the financial statements.




                                                                   81
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

III   Significant accounting policies and accounting estimates (continued)

37    Correction of previous accounting errors

      During the Reporting Period, there are no corrections in the previous accounting errors
      made by the Company.

38    Changes to financial statement line items

      The Ministry of Finance issued on 30 April 2019 the Notice on Revising and Issuing the
      Format of the 2019 Annual Financial Statements of General Enterprises (CK〔2019〕No. 6),
      splitting certain balance sheet items.

      The Company has prepared the financial statements according to the new requirements for
      the format of financial statements, and adjusted the comparative data as per the Accounting
      Standards No. 30 for Business Enterprises—Presentation of Financial Statements. The
      effects of the said changes on the financial statement items and amounts of the
      comparative period are as follows:

      Item                       31 December 2018                    Effect       1 January 2019

      Notes and accounts
      receivable                        17,876,580            (17,876,580)                       -
      Notes rec eivable                           -              4,272, 222            4,272, 222
      Accounts receivable                         -             13,600,479            13,600,479
      Notes and accounts
      payable                           27,015,286            (27,015,286)                       -
      Notes payable                               -              3,092, 574            3,092, 574
      Accounts payable                            -             23,922,712            23,922,712




                                                  82
                                 TCL Technology Group Corporation
                                    Notes to Financial Statements
                     (For the period from 1 January 2019 to 31 December 2019)
                    (The amounts in tables are expressed in thousands of RMB)

IV   Taxes

1    Value-added tax

     Starting from 1 April 2019, output tax was calculated at 6%, 9% or 13% of the
     taxable income of general taxpayers and the value added-tax was paid based on
     the difference after deducting the allowance deduction of input tax in the current
     period. The value added-tax payment for the Company’s directly exported goods
     is executed in accordance with the regulations of “Exemption, Offset and
     Refund”. Starting from 1 April 2019, the tax refund rate is 0%-13%.

2    Urban maintenance and construction tax

     Subject to the relevant tax laws and regulations of the state and local
     regulations, urban maintenance and construction tax is paid based on the
     proportion stipulated by the state according to the individual circumstances of
     each member of the Company.

3    Education surcharges

     Education surcharges are paid according to the individual circumstances of each
     member of the Company based on the proportion stipulated by the state in
     accordance with the relevant national tax regulations and local regulations.

4    Dike protection fee

     Dike protection fee is paid according to relevant national tax regulations and
     local regulations.

5    Property tax

     Property tax is paid on the houses with property rights according to the
     proportion stipulated by the state in accordance with the relevant national tax
     regulations and local regulations.

6    Corporate income tax

     The corporate income tax rate for the Company was 25% in the Current Period
     (2018: 25%).

     According to Article 28 of the Enterprise Income Tax Law of the People's
     Republic of China, a reduced corporate income tax rate of 15% is applied to
     important high-tech enterprises that the government supports.




                                               83
                                 TCL Technology Group Corporation
                                    Notes to Financial Statements
                     (For the period from 1 January 2019 to 31 December 2019)
                    (The amounts in tables are expressed in thousands of RMB)

IV   Taxes (continued)

6    Corporate income tax (continued)

     The following subsidiaries are entitled to tax preferences, overseas subsidiaries
     adopt the local tax rates, and the other subsidiaries of the Company are all taxed
     at a rate of 25%.


     Subsidiaries entitled to tax preferences:

                                                      Preferent
      Company
                                                      ial tax              Reason
      name
                                                      rate
      TCL China Star Optoelectronics                                       High-tech
                                                          15%
      Technology Co., Ltd.                                                 enterprise
      Shenzhen China Star Optoelectronics
                                                                           High-tech
      Semiconductor Display Technology Co.,               15%
                                                                           enterprise
      Ltd.
      Wuhan China Star Optoelectronics                                     High-tech
                                                          15%
      Technology Co., Ltd.                                                 enterprise
      Qingdao Blue Business Consulting Co.,                                High-tech
                                                          15%
      Ltd.                                                                 enterprise
      Wuhan China Star Optoelectronics
                                                                           High-tech
      Semiconductor Display Technology Co.,               15%
                                                                           enterprise
      Ltd.

7    Personal income tax

     Personal income tax of income paid to employees by the Company is withheld by the
     Company on behalf of employees in accordance with to the relevant national tax
     regulations.




                                                 84
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements

1     Monetary assets

                                            December 31, 2019                                 December 31, 2018


                                                                       RMB
                                      Amount in    Exchange                     Amount in original   Exchang RMB equivalent
                                                                  equivalent
                               original currency        rate                            currency        e rate     Amount
                                                                    Amount



      Cash                                                             966                                            5,065


      Bank deposits -
                                                                17,636,777                                        25,702,447
        RMB                         14,917,520        1.0000    14,917,520            19,687,152      1.0000      19,687,152
        USD
                                       377,494        6.9762      2,633,477              733,139      6.8632       5,031,682
        HKD                             36,165        0.8959        32,400               572,877      0.8763        502,012
        EUR                                   -       7.8252              -               24,717      7.8549        194,150
        RUB                                   -       0.1125              -              300,870      0.0987         29,696
        Other currencies                                            53,380                                          257,755


      Deposit w ith central
      bank
                                                                   570,999                                          868,895



      Other monetary
        assets -                                                   374,473                                          224,936
        RMB                            132,132        1.0000       132,132               224,936      1.0000        224,936
        HKD                            270,500        0.8959       242,341



      Interest receivable on
      deposits                                                      64,970                                                 -


      Total                                                     18,648,185                                        26,801,343


(1)   Sub-nature of other monetary assets


                                                                               December 31, 2019         December 31, 2018


      Margin deposit                                                                      54,150                    204,417
      Others                                                                             320,323                     20,519

                                                                                         374,473                    224,936




                                                           85
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

1     Monetary assets (Continued)

(2)   Monetary assets with restricted use rights:
                                                                   December 31, 2019     December 31, 2018
      TCL Finance’s deposit reserve funds with the central bank             570,999               868,895
      Other monetary assets                                                  374,473               224,936
      Deposit interest receivable                                             64,970                      -
      Factoring mor tgage deposit of accounts receivable                           -                 5,128


                                                                           1,010,442             1,098,959

      As of December 31, 2019, the Company's bank deposits of RMB 570,999,000 (at the end of 2018:
      868,895,000) are the legal deposit res erves deposited in the central bank by TCL Finance Co.,
      Ltd., a subsidiary of the Company.

      As of December 31, 2019, the Company's monetary funds deposited abroad amounted to RMB
      523,583,000 (at the end of 2018: RMB 4,884,301,000), all of which were the monetary funds
      owned by the overseas subsidiaries of the Company.

2     Trading financial assets (applicable in 2019 only)

                                                                   December 31, 2019        January 1, 2019

      Credit instrument investment                                         5,772,747               867,439
      Equity instrument investment                                           302,004             1,571,427

                                                                           6,074,751             2,438,866

      Financial assets measured at fair value and whose changes are included in current profits
3
      and losses (applicable in 2018 only)

                                                                                          December 31, 2018

      Fund management plan                                                                         708,938
      Derivative financial assets                                                                  418,635
      Monetary funds                                                                                10,007

                                                                                                  1,137,580

      The fair value of the Company's derivative financial assets is determined based on the real-time
      quotation in the foreign exchange market. The fair value change of the derivative financial assets is
      determined based on the differenc e between the contract price and the forward exchange rate
      quoted in the foreign exchange market on the balance sheet date.
      There is no significant restriction on the realization of the Company's financial asset investments
      measured at fair value and whose changes are included in the current profits and losses.



                                                            86
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

V   Notes to Items in Consolidated Financial Statements (Continued)

4   Derivative financial assets (applicable in 2019 only)

                                                               December 31, 2019         January 1, 2019

    Foreign exchange forwards                                            121,255                65,873
    Interest rate swap                                                     7,727                67,247
    Others                                                                30,054               258,438

                                                                         159,036               391,558

5   Notes receivable

                                                               December 31, 2019      December 31, 2018

    Bank acceptance                                                      207,713              2,372,024
    Commercial acceptance                                                 21,229              1,900,198


                                                                         228,942              4,272,222




6   Accounts receivable

                                           December 31, 2019        January 1, 2019    December 31, 2018


    Accounts receivable                            8,385,374            14,039,251             14,039,251
    Less: provision for bad debts                     45,020               438,772                434,893

                                                   8,340,354            13,600,479             13,604,358




                                                 87
                                 TCL Technology Group Corporation
                                    Notes to Financial Statements
                     (For the period from 1 January 2019 to 31 December 2019)
                    (The amounts in tables are expressed in thousands of RMB)

V   Notes to Items in Consolidated Financial Statements (Continued)

6   Accounts receivable (continued)

(1) Accounts receivable in 2019 are classified by bad debt accrual method as follows:

                                                                       December 31, 2019
                                                                                     Provision for bad debts
                                                                                 The entire duration
                                                              Book balance      Expected credit loss    Book balance
                                                                                                rate

    Accounts receivable with provision for bad
       debts on a single basis
    Including:
    Accounts receivable 1                                           19,250                  69.87%             13,450

    Accounts receivable with provision for bad
       debts according to combination
    Including:
    Combination 1: Aging analysis                                5,998,078                   0.52%             31,132
    Combination 2: Combination of related
       parties                                                   2,368,046                   0.02%                438

                                                                 8,366,124                                     31,570


                                                                 8,385,374                                     45,020


(2) The aging of accounts receivable is analyzed as follows:

                                                 December 31, 2019                        December 31, 2018
                                                  Amount           Proportion              Amount          Proportion


    Within 1 year                                8,258,361             98.49%           13,486,519             96.06%
    1 to 2 years                                    96,100              1.15%              387,369             2.76%
    2 to 3 years                                    10,451              0.12%               58,823             0.42%
    More than 3 years                               20,462              0.24%              106,540             0.76%


                                                 8,385,374              100%            14,039,251              100%




                                                         88
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

6     Accounts receivable (continued)

(3)   The provision for bad debts for accounts receivable is analyzed as follows:
                                                                December 31, 2019    December 31, 2018

      Late last year                                                      434,893              384,267
      Changes in accounting policies                                        3,879                     -
      Adjusted beginning                                                  438,772              384,267
      Increased subsidiaries                                                    -                3,863
      Current accrual                                                      46,633              302,172
      Reversal of current period                                          (11,940)           (102,542)
      Write-off of current period                                          (8,604)           (143,763)
      Reduced subsidiaries                                              (419,974)              (11,418)
      Exchange adjustment                                                      133                2,314

      Amount at the end of period                                          45,020              434,893

(4)   There is no debt owed by shareholders holding 5% or more voting shares in this
      account balance.

      As of December 31, 2019, the accounts receivable of the top five balances are as
(5)
      follows:

                                                                December 31, 2019    December 31, 2018

      Total amount owed by the top five                                 3,991,332            2,694,561

      Proportion of total accounts receivable                             47.60%               19.19%

7     Accounts receivable factoring/factoring loans

      As of December 31, 2019, there is no factoring of accounts receivable (at the end of 2018: RMB
      47,087,000). According to the provisions of various factoring agreements, as the subsidiaries of
      the Company retain some risks related to accounts receivable (risks of customers' non-payment
      or delayed payment ), the Company reflects bank loans obtained from factoring and factoring
      accounts receivable on the balance sheet.




                                                  89
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

8     Prepayment

(1)   Prepayments is analyzed as follows:

                                                                 December 31, 2019            December 31, 2018


      Within 1 year                                                       364,423                     1,194,972


(2)   As of December 31, 2019, the prepayments of the top five balances are as follows:

                                                                 December 31, 2019            December 31, 2018

      Total amount owed by the top five                                   169,266                       578,751

      Percentage of total prepayments                                      46.45%                       48.43%

9     Other receivables

                                           December 31, 2019           January 1, 2019        December 31, 2018

      Interest receivable                                   -                     70,777                 70,778
      Dividend receivable                              5,771                      47,748                 47,748
      Other receivables                            2,744,271                   5,597,658              5,600,853

                                                   2,750,042                   5,716,183              5,719,379

      Other receivables mainly include account current.

(1)   Interest receivable
                                           December 31, 2019              January 1, 2019     December 31, 2018

      Interest on deposits and financial                                             70,777              70,778
      management                                             -


                                                             -                       70,777              70,778

      Note: The Company has no balance of interest receivable at the end of the period, which is in
      accordance wit h the requirements of the Notice on Revising and Issuing the Format of General
      Enterprise Financial Statements for 2019 (CK [2019] No.6) issued by t he Ministry of Finance on
      April 30, 2019. For an enterprise that has implemented the new financial instrument accounting
      standard, the interest receivable is included in the book balance of the corresponding financial
      instruments based on the interest accrued by the effective interest rate method.




                                                        90
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

9      Other receivables (continued)

(2)    Dividend receivable

                                                                   December 31, 2019        December 31, 2018

       Wuxi TCL Venture Capital Partnership (Limited
                                                                               5,771                        -
       Partnership)
       TV University Online Distance Education Technology
                                                                                    -                  47,656
       Co., Ltd.
       SEMP TCL INDUSTRIA E COMERCIO DE
                                                                                    -                      92
       ELETROELETRONICOS S.A.

                                                                               5,771                   47,748

(3)   Other receivables

                                              December 31, 2019           January 1, 2019   December 31, 2018

      Other accounts receivable                        2,844,737                6,026,004           6,026,004
      Less: provision for bad debts                      100,466                  428,346             425,151


                                                       2,744,271                5,597,658           5,600,853

(a)   Nature of other receivables is analyzed as follows:

                                             December 31, 2019            January 1, 2019   December 31, 2018

      Subsidy receivable                              1,354,557                  933,187              933,187
      External unit current account                     993,962                  892,391              892,391
      Deposit and security deposit                      162,934                  253,144              253,144
      Others                                            232,818                3,518,936            3,522,131


                                                      2,744,271                5,597,658            5,600,853




                                                             91
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

9     Other receivables (continued)

(3)   Other receivables (continued)


(b)   Bad debt accrual for other receivables is analyzed as follows:

                                                                                     Expected credit loss
                                                                                             for the entire
                                               In the next 12 months                   duration (incurred
                                                 Expected credit loss                 credit impair ment)               Total


      Late last year                                          42,200                             382,951             425,151
      Change and adjustment of accounting
                                                               3,195                                      -            3,195
      policy
      Adjusted beginning                                      45,395                             382,951             428,346
      Current accrual                                          4,737                                      -            4,737
      Reversal of current period                             (7,172)                                      -           (7,172)
      Write-off in current period                                    -                           (25,627)            (25,627)
      Decrease in disposal subsidiaries                              -                          (302,015)          (302,015)
      Exchange adjustment                                      2,197                                      -            2,197


      December 31, 2019                                       45,157                               55,309            100,466


(c)   The aging of other receivables is analyzed as follows:

                                                   December 31, 2019                             December 31, 2018
                                            Book amount             Proportion             Book amount         Proportion


      Within 1 year                              2,635,597                  92.65%                5,134,601          85.21%
      1 to 2 years                                  77,938                   2.74%                  343,730           5.70%
      2 to 3 years                                  48,704                   1.71%                  300,090           4.98%
      More than 3 years                             82,498                   2.90%                  247,583           4.11%

      Amount at the end of period               2,844,737                    100%                 6,026,004            100%

      There is no debt owed by shareholders holding 5% or more voting shares in this account
(d)
      balance.




                                                               92
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

9     Other receivables (continued)

(3)   Other receivables (continued)

(e)   As of December 31, 2019, the other receivables of the top five balances are as follows:

                                                                  December 31, 2019                             December 31, 2018

      Total amount owed by the top
      five                                                                    1,830,213                                 2,015,077
      Proportion of total other
      receivables                                                               64.34%                                    33.44%


(f)   As of Dec ember 31, 2019, there is no transfer of other receivables that do not conform to the conditions for
      derecognition in the balance of this account; no transaction arrangement for asset securitization with other
      receivables as the subject asset; and no financial instrument that is the subject of securitization and does not
      conform to the conditions for derecognition.


10    Inventory

(1)   Inventory is classified as follows:

                                              December 31, 2019                                    December 31, 2018
                                                  Reserve for                                           Reserve for
                                      Book          inventory        Book                     Book        inventory          Book
                                   balance       depreciation        value                 balance     depreciation          value

      Raw material                1,033,927          129, 254      904, 673               3,362,179         361, 962     3,000,217

      Goods in process             760, 881          149, 624      611,257                1,157,557         165, 335      992, 222
      Finished goods              4,066,809          172, 044     3,894,765           11,925, 676           251, 218    11,674, 458

      Turnover material            268, 086              818       267, 268                575, 885             849       575, 036
      The real estate
      development cost                    -                 -             -               3,646,039                -     3,646,039



                                  6,129,703          451, 740     5,677,963           20,667,336            779, 364    19,887,972



      As of December 31, 2019, the Company has no invent ory for liabilities guarantee.




                                                            93
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

10     Inventory (continued)

(2)    The inventory depreciation reserves is analyzed as follows:

                                       Current       Current
                       January          period        period         Current period       Decreased     Remittance    December
                        1, 2019      Provision      Reversal              Write-off      subsidiaries   adjustment      31, 2019
       Raw
                       361,962         122,168      (24,735)             (127,458)         (202,648)          (35)        129,254
       material
       Goods in        165,335         242,331      (38,157)             (181,012)          (38,873)             -        149,624
       process
       Finished        251,218         280,748      (13,909)             (168,275)         (177,608)         (130)        172,044
       goods
       Turnover            849              28          (31)                     -              (28)             -            818
       material

                       779,364         645,275      (76,832)             (476,745)         (419,157)         (165)        451,740




11     Other current asset
                                                    December 31, 2019                 January 1, 2019        December 31, 2018

       Creditors' investment                                    1,596,741                  3,495,330                 3,495,330
       VAT to be deducted, to be cer tified, etc.               2,299,416                  4,056,515                 4,056,515
       Loans and advances due within one year
                                                                1,968,056                    627,123                          -
       (note)
       Other                                                          47,614                  72,252                    72,252


                                                                    5,911,827              8,251,220                 7,624,097

Note   Loans and advances due within one year are loans due within the next year issued by TCL Finance Co., Ltd.
s      (a subsidiary of the Company), Guangz hou TCL Internet Microcredit Co., Ltd. and Huizhou Zhongkai TCL
       Zhirong Technology Microcredit Co., Ltd., of which interest receivable is RMB 13,626,000.

12     Loans and advances paid

                                                       December 31, 2019              January 1, 2019        December 31, 2018

        Loans and advances paid (note)                              3,637,768                496,677                  1,123,800

Note Loans and advances granted are loans granted by TCL Finance Co., Ltd. (a subsidiary of the Company),
s    Guangzhou TCL Internet Microcredit Co., Ltd. and Huizhou Zhongk ai TCL Zhirong Technology Microcredit Co.,
       Ltd., of which interest receivable is RMB 73,407,000.

13     Creditors' investment (applicable in 2019 only)

                                                                                 December 31, 2019               January 1, 2019
       National debt                                                                           20,373                          -




                                                               94
                                           TCL Technology Group Corporation
                                              Notes to Financial Statements
                               (For the period from 1 January 2019 to 31 December 2019)
                              (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

14     Available-for-sale financial assets (applicable in 2018 only)

                                                                                                                           December 31, 2018

       Available- for-sale equity instruments - measured at fair value (note)                                                      1,917,168
       Available- for-sale equity instruments - measured at costs                                                                  2,353,677

                                                                                                                                   4,270,845

Note
       Available-for-sale equity instruments - measured at fair value
s
                                                                                                                           December 31, 2018

       Costs                                                                                                                       2,452,730
       Changes in fair value                                                                                                       (438,844)
       Less: provision for impair ment                                                                                                96,718


                                                                                                                                   1,917,168


15     Long-term equity investments

                                                      December 31, 2019                                    January 1, 2019
                                             Book          Prov i ion for             Book        Book        Prov i ion for             Book
                                           balance          impairment                value     balance        impairment                value

       Unconsolidated subsidiaries                -                    -                  -      20,373             20,373                     -
       (1)
       Long-term equity investm ent      17,217,130              22,846          17,194,284   17,268,423           150,487          17,117,936
       calculated by equity method
       Including: Associates (2)         17,042,572              22,846          17,019,726   16,630,772           133,725          16,497,047

                Joint Ventures (3)         174,558                     -           174,558      637,651             16,762            620,889
                                         17,217,130              22,846          17,194,284   17,288,796           170,860          17,117,936




                                                                            95
                                         TCL Technology Group Corporation
                                            Notes to Financial Statements
                             (For the period from 1 January 2019 to 31 December 2019)
                            (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

15   Long-term equity investment (continued)

                                                                                    December 31, 2018


                                                                           Book          Prov i ion for        Book
                                                                         balance          impairment           value




     Unconsolidated subsidiaries
                                                                          20,373               20,373              -
     (1)



     Long-term equity investm ent
                                                                       17,107,596            150,487      16,957,109
     calculated by equity method



     Including: Associates (2)                                         16,469,945            133,725      16,336,220


              Joint Ventures (3)                                         637,651               16,762       620,889

                                                                       17,127,969            170,860      16,957,109



     As of December 31, 2019, the Company has set aside long -term investment impairment reserve for the
     amount of invested units with poor management and insolvent assets. In addition, there are no major
     restrictions on t he realization of investment and the remittance of investment income for long -term
     equity investment.




                                                       96
                                                                     TCL Technology Group Corporation
                                                                        Notes to Financial Statements
                                                         (For the period from 1 January 2019 to 31 December 2019)
                                                        (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

15    Long-term equity investment (continued)

(1)   Unconsolidated subsidiaries

                                                                                                                Profit and loss adjustment
                                      Percentage of                                       Changes in                                      Provision for impair ment
      Name of invested company         its registered                              current profits and   Cumulative change                Decrease in           Cumulative   December 31, 2
                                              capital         Initial investment               losses       in profit or loss           current period             amount               019

      Jinke Holding Group Co., Ltd.         75.50%                      20,373                       -                      -                (20,373)            (20,373)                 -




                                                                                   97
                                                                                 TCL Technology Group Corporation
                                                                                    Notes to Financial Statements
                                                                     (For the period from 1 January 2019 to 31 December 2019)
                                                                    (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

15     Long-term equity investment (continued)

(2)    Associates
                                                                                                                 Increase or decrease in current period
                                                                    Openin      Increase or                                                Change                                                     Other
                                                                                                   Investment gains             Other
                                                    Amount at             g        decrease                                                     s in                                  Accrued     increases
                                                                                                         and losses     comprehens                              Declared cash
       Name of invested company                     beginning       adjustm   investment in                                                   other                               Provision for         and   December 3
                                                                                                      recognized by       ive income                       dividends or profits
                                                      of year           ent      the current                                               interest                                impairment     decrease        1, 2019
                                                                                                      equity method     adjustments
                                                                                      period                                                       s                                                      s


                                                                          -                                                                            -                                      -
      Bank of Shanghai Co., Ltd.                    8,363,564                       188, 813             1,018,493             81,483                               (245,339)                      (92,403)     9,314,611
      Zhongxin Financial Capital Management
                                                                -         -         838, 800                 39,120                  -                 -                      -               -           -       877, 920
      Company Limited
      Huan Tech Co., Ltd.                             180, 364            -                    -               (684)                 -                 -                      -               -   (179,680)              -
      Tianjin 712 Communication & Broadcasting
                                                      704, 224                                               65,853                                                    (7,362)                        (245)       762, 470
      Co., Ltd.
      LG Electronics(Hui Zhou) INC.                    83,902             -                    -             16,881                  -                 -               (8,200)                -           -        92,583
      Shenzhen Qianhai Qihang Supply Chain
                                                       45,034             -                    -             (4,197)                 -                 -                      -               -           -        40,837
      Management Co., Ltd.
      Shenzhen Jucai Supply Chain Technology
                                                        5,158             -                    -                184                  -                 -                      -               -           -         5,342
      Co., Ltd.
      Shenzhen Tixiang Management Technology
                                                        2,013             -                    -                 65                  -                 -                      -               -           -         2,078
      Co., Ltd.
      TCL Nanyang Electric Appliance
                                                        4,706             -                    -               (577)                 -                 -                      -               -     (2,314)         1,815
      (Guangzhou) Co., Ltd.
      TCL Air Conditioner (Wuhan) Co., Ltd.                     -         -          27,720                    9,946                 -                 -                      -               -           -        37,666
      TCL Finance (Hong Kong) Co., Limited                      -         -          12,031                 (11,059)                 -                 -                      -               -           -           972
      Zhihui Xinyuan Commercial (Huizhou) Co.,
                                                                -         -           7,500                   1,188                  -                 -                      -               -           -         8,688
      Ltd.
      Huizhou TCL Environmental Resource Co.,
                                                                -         -          77,434                   2,556                  -                 -                      -               -           -        79,990
      Ltd.
      Guangdong Rongchuang Lingyue Intelligent
      Manufacturing and Information Technology
                                                                -         -         375, 000                     20                  -                 -                      -               -           -       375, 020
      Industry Equity Investment Fund Partnership
      (Limited Partnership)
                                                                                                       98
                                                                   TCL Technology Group Corporation
                                                                      Notes to Financial Statements
                                                       (For the period from 1 January 2019 to 31 December 2019)
                                                      (The amounts in tables are expressed in thousands of RMB)

  V Notes to Items in Consolidated Financial Statements (Continued)

  15 Long-term equity investment (continued)

 (2) Associates (continued)
Guangdong Yuecai Emerging Industry
Equity Investment Fund Partnership (Limited       -          -     150, 000          (507)        -       -       -   -   -   149, 493
Partnership)
Shenzhen Tianyi Hemeng Education Co.,
                                                  -          -       8,000          (1,675)       -       -       -   -   -     6,325
Ltd.
Yizheng Zeyu Electric Light Co., Ltd.         2,507      -                -               -      -        -       -   -   -     2,507




                                                                               99
                                                            TCL Technology Group Corporation
                                                               Notes to Financial Statements
                                                (For the period from 1 January 2019 to 31 December 2019)
                                               (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(2) Associates
                                                                                         Increase or decrease in current period
                                                                         Increase or Investment                                                  Other December
                                                    Amount                 decrease gains and            Other           DeclaredAccrued
                                                                                                               Changes             Provision increases      31,
                                                          at     Opening investment       losses comprehensive                 cash
     Name of invested company                                                                                   in other                  for      and
                                                  beginning    adjustment      in the recognized       income            dividends                         2019
                                                                                                               interests              impair decrease
                                                     of year                 current    by equity  adjustments            or profits
                                                                                                                                       ment          s
                                                                              period     method

    Urumqi TCL Equity In vestment Management Co.,
                                                       1,048           -             -     (178)                 -         -             -   -        -       870
    Ltd.
    Hubei Changjiang Hezhi Equity In vestment Fund
                                                   1,047,882     19,646              -   58,642                  -         -             -   -   11,329 1,137,499
    Partnership (Limited Partnership)
    Xinjiang Dongpeng Weichuang Equity Investment
                                                     956,754           -   (469,015)     257,210                5          - (117,898)       - (41,833)   585,223
    Partnership (Limited Partnership)
    Deqing Puhua Equity In vestment Fund
                                                     207,047           -             -   (1,571)                 -         -             -   -        -   205,476
    Partnership (Limited Partnership)
    Xinjiang Dongpeng Heli Equity In vestment
                                                     116,550           -     86,816      (3,763)                 -         -             -   -        -   199,603
    Partnership (Limited Partnership)
    Wuxi TCL Aisikai Semiconductor Industry
    Investment Fund Partnership (Limited              86,121           -     25,508        3,291                 -         -        (152)    -        -   114,768
    Partnership)
    Wuxi TCL Venture Capital Partnership (Limited
                                                      92,382           -    (24,477)     31,130           (4,789)          -      (32,836)   - (26,864)    34,546
    Partnership)
    Ningbo Meishan Bonded Port Qiyu Investment
                                                      69,178           -             -   (1,410)                 -         -             -   -        -    67,768
    Management Partnership (Limited Partnership)
    Changzhou A Dynamic Venture Capital
                                                      58,578           -    (60,000)       1,422                 -         -             -   -        -         -
    Partnership (Limited Partnership)




                                                                               100
                                                    TCL Technology Group Corporation
                                                       Notes to Financial Statements
                                        (For the period from 1 January 2019 to 31 December 2019)
                                       (The amounts in tables are expressed in thousands of RMB)

 V Notes to Items in Consolidated Financial Statements (Continued)

 15 Long-term equity investment (continued)

 (2) Associates (continued)

Shanghai Chuangxiang Venture Capital        25,828    4,903   (6,498)        (33)        16        -         -   -   5,451   29,667
Partnership (Limited Partnership)
Nanjing Zijin Chuangdong Investment
                                            25,997        -           -      (22)         7        -         -   -       -   25,982
Partnership (Limited Partnership)
Huizhou Kaichuang Venture Investment
                                            23,839        -           -   (3,940)    (6,188)       -   (7,188)   -   2,231    8,754
Partnership (Limited Partnership)




                                                                101
                                                              TCL Technology Group Corporation
                                                                 Notes to Financial Statements
                                                  (For the period from 1 January 2019 to 31 December 2019)
                                                 (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(2) Associates
                                                                                 Increase or decrease in current period
                                                            Increase
                                                                         Investment
                                       Amount                       or                                                                              Other
                                                                          gains and            Other                 Declared         Accrued               December
                                            at              decrease                                     Changes                                increases
                                                   Opening investme          losses    comprehensive                       cash      Provision                   31,
     Name of invested company          beginni                                                            in other                                    and
                                                 adjustment              recognized          income                  dividends              for                 2019
                                         ng of               nt in the                                   interests                               decrease
                                                                           by equity     adjustments                  or profits   impairment
                                          year                current                                                                                   s
                                                                             method
                                                               period

    Beijing A D ynamic Venture
    Capital Center (Limited            20,366            -           -         (19)            (1,029)           -            -              -     1,690      21,008
    Partnership)
    Yixing Jiangnan Tianyuan
    Venture Capital Company            22,173            -     (1,517)      (1,675)            (1,013)           -            -              -       (37)     17,931
    (Limited Partnership)
    Shenzhen Chuangdong New
    Industry In vestment Fund          12,408            -     (1,183)          212                  -           -            -              -          -     11,437
    Enterprise (Limited Partnership)
    Hubei Changjiang Hezhi Equity
    Investment Fund Management          4,391            -           -         (90)                  -           -            -              -          -      4,301
    Co., Ltd.
    Huizhou Kaimeng Angel
    Investment Partnership (Limited     2,869            -           -             -                 -           -            -              -          -      2,869
    Partnership)
    Shenzhen Jiutian Matrix
    Investment Management Co.,          1,445            -           -          508                  -           -            -              -          -      1,953
    Ltd.
    Urumqi Qixinda Equity
    Investment Management Co.,            945            -           -          451                  -           -            -              -          -      1,396
    Ltd.
    Urumqi TCL Create Dynamic
    Equity In vestment Management         763            -           -           (3)                 -           -            -              -          -       760
    Co., Ltd.

                                                                               102
                                                         TCL Technology Group Corporation
                                                            Notes to Financial Statements
                                             (For the period from 1 January 2019 to 31 December 2019)
                                            (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(2) Associates (continued)
    Beijing A D ynamic Investment
                                     635           -         -       (80)             -        -        -   -         -   555
    Consulting Co., Ltd.
    Shanghai Gen Auspicious
    Investment Management Co.,       516           -         -         2              -        -        -   -         -   518
    Ltd.
    Changzhou Chuangdong Fund
                                     506           -         -         30             -        -        -   -         -   536
    Management Co., Ltd.
    Nanjing A D ynamic Equity
    Investment Fund Management       386           -         -       (99)             -        -        -   -         -   287
    Co., Ltd.
    Ningbo Meishan Bonded Port
    Renxing Culture Investment      3,767          -   (3,854)     1,208              -        -        -   -   (1,121)     -
    Center (Limited Partnership)




                                                                     103
                                                           TCL Technology Group Corporation
                                                              Notes to Financial Statements
                                               (For the period from 1 January 2019 to 31 December 2019)
                                              (The amounts in tables are expressed in thousands of RMB)

V   Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(2) Associates (continued)

                                                                             Increase or decrease in current period
                                                       Increase
                                                                    Investment
                                                               or
                                 Amount                              gains and             Other                Declared         Accrued         Other   December
                                              Opening decrease                                      Changes
    Name of invested                   at                               losses     comprehensive                      cash      Provision    increases        31,
                                            adjustment investme                                      in other
    company                     beginning                           recognized           income                 dividends              for         and       2019
                                                        nt in the                                   interests
                                  of year                             by equity      adjustments                 or profits   impairment     decreases
                                                         current
                                                                        method
                                                          period

    Wuxi TCL Medical Imaging
                                        -           -     30,730        19,488                  -           -            -              -          46      50,264
    Technology Co., Ltd.
    Beijing WeMed Medical
                                   5,104            -       (193)      (5,830)                  -           -            -              -      12,891      11,972
    Equipment Co., Ltd.
    Shanghai Huiying Medical
                                        -           -      1,000         (891)                  -           -            -              -         333        442
    Technology Co., Ltd.
    AGC New Electronic
    Display Glass (Shenzhen)     220,468            -     96,138      (37,164)                  -           -            -              -            -    279,442
    Co., Ltd.
    TCL Ventures Fund L.P.              -           -     44,706       (6,653)                  -           -            -              -        1,556     39,609
    Getech Ltd.                         -           -     20,000      (12,424)                  -           -            -              -            -      7,576
    Qingteng Intellectual
    Property Holding               3,921            -           -      (3,921)                  -           -            -              -            -          -
    (Shenzhen) Co., Ltd.
    Canyon Circuit Technology
                                  22,085            -           -          884                  -           -            -              -     (22,969)          -
    (Huizhou) Co., Ltd.
    TCL Rechi (Huizhou)
    Refrigeration Equipment      177,112            -           -        2,773                  -           -            -              -    (179,885)          -
    Co., Ltd.




                                                                             104
                                                     TCL Technology Group Corporation
                                                        Notes to Financial Statements
                                         (For the period from 1 January 2019 to 31 December 2019)
                                        (The amounts in tables are expressed in thousands of RMB)

V   Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(2) Associates (continued)
    Wuhan Shangde Plastics
                                5,968        -         -         25             -        -          -   -     (5,993)   -
    Technology Co., Ltd.
    Gaoshengda Holdings
                              60,960         -         -      6,710             -        -          -   -    (67,670)   -
    (Huizhou) Co., Ltd.
    Shenzhen
    Shenchangcheng
                                2,844        -         -        417             -        -          -   -     (3,261)   -
    Commercial Property
    Service Co., Ltd.
    Amlogic (Shanghai)
                              144,589        -         -       (876)            -        -          -   -   (143,713)   -
    Limited
    SEMP TCL INDUSTRIA E
    COMERCIO DE               327,631        -         -           -            -        -          -   -   (327,631)   -
    ELETROELETRONICOS
    S.A.
    Naturedao Information
    Science and Technology,     3,063        -         -           -            -        -          -   -     (3,063)   -
    Ltd.
    T2Mobile Limited          21,612         -         -     (1,184)            -        -          -   -    (20,428)   -
    Harvey Holdings Limited   22,261         -         -     (1,847)            -        -          -   -    (20,414)   -
    Shenzhen Thunderbird
    Network Technology Co.,   289,752        -         -     11,332             -        -          -   -   (301,084)   -
    Ltd.
    Jiangxi Broadcasting TV
    Network E-Commerce Co.,     1,480        -         -        (39)            -        -          -   -     (1,441)   -
    Ltd.




                                                                  105
                                                                          TCL Technology Group Corporation
                                                                             Notes to Financial Statements
                                                              (For the period from 1 January 2019 to 31 December 2019)
                                                             (The amounts in tables are expressed in thousands of RMB)

V Notes to Items in Consolidated Financial Statements (Continued)
15 Long-term equity investment (continued)
(2) Associates
                                                                                                                 Increase or decrease in current period

                                                                                     Increase
                                                                                                  Investment
                                                                                             or
                                                                   Opening                         gains and                                                Declared        Accrued           Other    December
                                                      Amount at                     decrease                                                 Changes
                                                                 adjustmen                             losses      Other comprehensive                           cash      Provision      increases         31,
    Name of invested company                        beginning of                  investment                                                   in other
                                                                          t                       recognized        income adjustments                     dividends              for           and        2019
                                                            year                         in the                                              interests
                                                                                                    by equity                                               or profits   impairment      decreases
                                                                                       current
                                                                                                     method
                                                                                        period

   Tibet Dongwei Investment Management
                                                             232            -           (250)              (1)                          -              -            -               -           19             -
   Center (Limited Partnership)
   Active Industries International Limited               15,417             -                -               -                          -              -            -               -     (15,417)             -
   China Merchants Real Estate (Pingshan,
                                                        377, 122            -                -               -                          -              -            -               -    (377,122)             -
   Shenzhen) Co., Ltd.
   Taiyang Electro-optic (Huizhou) Co., Ltd.             13,707             -                -            282                           -              -            -               -     (13,989)             -
   Palm Venture Group                                    87,869             -                -        (3,582)                           -              -            -               -     (84,287)             -
   Huarui (Huizhou) Co., Ltd.                            19,753             -                -           (33)                           -              -            -               -     (19,720)             -
   TCL Very Lighting Technology (Huizhou)
                                                         16,736             -                -          (158)                           -              -            -               -     (16,578)             -
   Co., Ltd.
   Sontec TCL Argentina S.A.                                512             -                -               -                          -              -            -               -         (512)            -
   Radio Victoria TCL Argentina S.A.                      8,667             -                -               -                          -              -            -               -       (8,667)            -
   Huizhou Gaoshengda Metals Co., Ltd.                   29,539             -                -             26                           -              -            -               -     (29,565)             -
   Beijing Shangdao Yuetu Technology Co.,
                                                          7,278             -                -        (1,351)                           -              -            -               -       (5,927)            -
   Ltd.
   Other                                              2,276,692     136, 278                 -       192, 178                           -              -    (45,810)                -    (160,941)     2,398,397

                                                     16,336,220     160, 827      1,423,209        1,634,991                     68,492                -   (464,785)                -   (2,139,228)   17,019,726
   Note: Associates with zero closing balance of long-term equity investment are due to the transfer of assets reorganization in the current period.




                                                                                                     106
                                                               TCL Technology Group Corporation
                                                                  Notes to Financial Statements
                                                   (For the period from 1 January 2019 to 31 December 2019)
                                                  (The amounts in tables are expressed in thousands of RMB)

V Notes to Items in Consolidated Financial Statements (Continued)

15 Long-term equity investment (continued)

(3) Joint Ventures

                                                                                                     Increase or decrease in current period
                                                                           Increase
                                                                                     Investment
                                                                                  or
                                                                                      gains and                Other Other Declared      Accrued      Other
                                                              Amount at decrease
                                                                                         losses        comprehensive change      cash Provision increases December
                 Name of invested company                   beginning of investment recognized               income      in dividends         for       and 31, 2019
                                                                    year      in the
                                                                                       by equity         adjustments equity or profits impairment decreases
                                                                             current
                                                                                         method
                                                                              period

   TV University Online Distance Education Technology
   Co., Ltd.                                                   111,062              -     25,754                     -        -          -           -       1,087 137,903
   Huizhou TCL Taidong Shihua Investment Co., Ltd.               19,143             -     (6,364)                    -        -          -           -            -   12,779
   Shanxi TCL Huirong Venture In vestment Co., Ltd.               6,098             -     16,535                     -        -          -           -            -   22,633
   TCL Huizhou City, Kai Enterprise Management
   Limited                                                          514             -        729                     -        -          -           -            -    1,243


   TCL Sun, Inc.                                                 13,899             -       1,437                    -        -          -           -     (15,336)        -


   CJ Speedex Logistics Co., Ltd.                              467,888              -     (1,489)                    -        -          -           - (466,399)           -

   TCL Zhiyi Technology (Huizhou) Co., Ltd.                       2,285             -          (5)                   -        -          -           -      (2,280)        -


                                                               620,889              -     36,597                     -        -          -           - (482,928) 174,558

   Note: Joint ventures with zero closing balance of long-term equity investment are due to the transfer of assets reorganization in the current period.


                                                                                    107
                                        TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)



V       Notes to Items in Consolidated Financial Statements (Continued)

15      Long-term equity investment (continued)

(4)    Impairment Provision for Long-Term Equity Investments

                                                               Increase         Decrease
                                                                                                    December 31,   Notes
                                       January 1, 2019        in current        in current
                                                                                                           2019
                                                                  period            period




         Pride Telecom Limited                                                                                      Note
                                                1,624                  -                 -                1,624
                                                                                                                       1
         Naturedao Information                                                                                      Note
           Science and Technology,              2,221                  -         (2,221)                       -       2
           Ltd.
         Jinke Holding Group Co.,                                                                                   Note
                                               20,373                  -        (20,373)                       -
           Ltd.                                                                                                        2
         China United Magnesium                                                                                     Note
                                               97,387                  -        (97,387)                       -
           Co.,Ltd.                                                                                                    2
         Wealthy Way Group Limited
                                                                                                                    Note
                                                1,215                  -         (1,215)                       -
                                                                                                                       2
         Beijing WeMed Medical                                                                                      Note
                                               31,278                  -        (10,056)                 21,222
           Equipment Co., Ltd.                                                                                         1
         TCL - I MAX Entertainment
           Co.,                                                                                                     Note
                                               16,762                  -        (16,762)                       -
         Limited                                                                                                       2

                                             170,860                   -       (148,014)                 22,846

Note    Impairment provisions were established for t he long -term investments in t hese investees at the rec overable
1       amounts because continuous operating loss occurred to these investees wit h poor management.

Note    The decreas e in the current period is the trans fer -out caused by asset reorganization.
2




                                                            108
                                          TCL Technology Group Corporation
                                            Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

16   Other equity instruments (applicable in 2019 only)
                                                                              December 31, 2019                 January 1, 2019

     Non-trading equity instruments                                                         279,884                    488,457

                                                                                                 Reasons
                                                                                               designated as    Reasons for
                                                                         Amount of other      measured at fair       other
                      Dividend                                            comprehensive          value and     comprehensive
                                      Accumulated       Accumulated
      Item name        income                                                  income         whose changes        income
                                         gains             losses
                     recognized                                            transferred to      are included in transferred to
                                                                        retained earnings            other        retained
                                                                                              comprehensive       earnings
                                                                                                   income




      Non-trading                                                                             Non-transaction
                                                                                                                 Sale in current
         equity                -                    -       (144,193)             (5,569)       al financial
                                                                                                                     period
      instruments                                                                                 assets




17   Other non-current financial assets (applicable in 2019 only)
                                                                              December 31, 2019                 January 1, 2019

     Equity investment                                                                  2,531,111                    1,454,797
     Creditors' investment                                                                 11,578                      708,938

                                                                                       2,542,689                     2,163,735




                                                                109
                          TCL Technology Group Corporation
                            Notes to Financial Statements
              (For the period from 1 January 2019 to 31 December 2019)
             (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

18   Investment property

                                     Housing and
                                                      Land use right           Total
                                        buildings

     Gross amount:
     January 1, 2019                    2,702, 083            247,463     2,949, 546

     Increase
       Increase in current period          70,788              75,486       146,274
       Reclassified from fixed
                                           26,920                 595        27,515
     assets and intangible assets
       Reclassified from
                                               552                   -          552
     construction in progress
     Decreased
       Decrease in current
                                         (69,134)             (75,486)    (144,620)
     period
       Reduced subsidiaries            (2,543,912)           (247,463)   (2,791,375)
       Reclassified to fixed
                                         (52,653)                (118)     (52,771)
     assets and intangible assets

     December 31, 2019                    134,644                 477       135,121

     Accumulated depreciation
     and amortization:
     January 1, 2019                    1,260, 111             13,224     1,273, 335
     Increase
       Increase in current period          98,214               1,278        99,492
       Reclassified from fixed
                                            3,021                 126         3,147
     assets and intangible assets
     Decreased
       Decrease in current
                                         (63,976)                (630)     (64,606)
     period
       Reduced subsidiaries            (1,210,610)            (13,866)   (1,224,476)
       Reclassified to fixed
                                         (34,018)                 (26)     (34,044)
     assets and intangible assets

     December 31, 2019                     52,742                 106        52,848

     Net value of investment
     property:
     December 31, 2019                     81,902                 371        82,273
     January 1, 2019                    1,441, 972            234,239     1,676, 211




                                         110
                                                    TCL Technology Group Corporation
                                                      Notes to Financial Statements
                                   (For the period from 1 January 2019 to 31 December 2019)
                                  (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

19   Fixed assets

                                                             Fixed                     Office and
                                    Housing and             assets     Machinery        electronic   Means of
                                       buildings        renovation     equipment       equipment     transport        Total
     Gross amount:
     January 1, 2019                  13,062,161          382,091      47,752,417       1,831,728     112,496    63,140,893

     Increase
       Purchase                           27,460             2,293          487,844       189,086      23,448       730,131
       Reclassif ied from
                                          52,653                 -                 -             -           -       52,653
     investment property
       Reclassif ied from
                                       6,556,484              527      12,358,589         643,873        2,199   19,561,672
     construction in progress
     Decreased
       Written down with
                                               -                 -         (694,587)       (5,945)       (503)    (701,035)
     government subsidies
       Reduced subsidiaries          (3,255,850)         (376,732)    (3,348,480)       (844,702)     (48,207)   (7,873,971)
       Reclassif ied to
                                        (26,920)                 -                 -             -           -     (26,920)
     investment property
       Other decreases                    (3,964)          (2,269)      (122,140)        (54,371)      (4,733)    (187,477)
     Exchange adjustment                  (4,779)              661         (2,847)         (1,114)       (113)       (8,192)
     December 31, 2019                16,407,245             6,571     56,430,796       1,758,555      84,587    74,687,754

     Accumulated
     depreciation:
     January 1, 2019                   2,410,859          283,254      23,235,237       1,077,885      67,708    27,074,943
     Increase
       Provision                        497,160              7,973         6,294,411      238,368      15,916     7,053,828
       Reclassif ied from
                                          34,018                 -                 -             -           -       34,018
     investment property
     Decreased
       Written down with
                                        (34,215)                 -         (901,358)       (6,048)       (503)    (942,124)
     government subsidies
       Reduced subsidiaries          (1,029,450)         (280,961)    (1,930,748)       (608,368)     (28,766)   (3,878,293)
       Reclassif ied to
                                         (3,021)                 -                 -             -           -       (3,021)
     investment property
       Other decreases                    (1,888)          (1,537)       (65,028)        (47,983)      (3,598)    (120,034)
     Exchange adjustment                    1,823          (4,436)         (2,950)        (1,533)         (94)       (7,190)
     December 31, 2019                 1,875,286             4,293     26,629,564        652,321       50,663    29,212,127

     Net value of fixed assets:
     December 31, 2019                14,531,959            2,278      29,801,232       1,106,234      33,924    45,475,627
     January 1, 2019                  10,651,302           98,837      24,517,180         753,843      44,788    36,065,950




                                                                     111
                                              TCL Technology Group Corporation
                                                Notes to Financial Statements
                             (For the period from 1 January 2019 to 31 December 2019)
                            (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

19   Fixed Assets (Continued)
                                                                                           Office and
                               Housing and        Fix ed assets            Machinery                        Means of
                                                                                            electronic                            Total
                                  buildings          renov ation           equipment                        transport
                                                                                           equipment
     Provision for
     impair ment:
     January 1, 2019                1,141                  990               69,329          11,276                83           82,819
     Current accrual                     -                   -                 2,957                 43              -            3,000
     Reduced subsidiaries          (1,141)               (990)              (63,160)            (1,130)           (83)         (66,504)
     Write-off in current
     period                               -                    -             (2,760)             (298)               -          (3,058)
     Exchange adjustment                  -                    -                 300                 -               -              300
     December 31, 2019                    -                   -               6,666             9,891                -          16,557

     Net amount of fixed
     assets:
     December 31, 2019         14,531,959               2,278          29,794,566         1,096,343             33,924      45,459,070
     January 1, 2019           10,650,161              97,847          24,447,851           742,567             44,705      35,983,131

     Please refer to Item 42 of Not e V for information on fixed asset mortgage. As at December 31, 2019, the
     Company has no temporarily idle fixed assets; the gross amount of the fixed assets that were sufficiently
     depreciated and still in use was RMB 12,064,591,000.

     Fixed assets with pending ownership certificates at the end of the current period:

                                                                                                                    Expected time of
                                                                                   Provision
                                               Gross       Accumulated                               Carrying              obtaining
                                                                                          for
                                              amount       depreciation                               amount              ownership
                                                                                 impairment
                                                                                                                          certificate

     Housing and buildings
                                         8,678, 263                345,457                  -      8,332, 806            Within 2020
     (Not e)

N    As at December 31, 2019, the fixed assets with pending ownership certificates of the Company are mainly
ot   the housing and buildings of CS OT’s T4 and T6 manufacturing bases and Huizhou module factory.
es




                                                                     112
                                                                      TCL Technology Group Corporation
                                                                         Notes to Financial Statements
                                                          (For the period from 1 January 2019 to 31 December 2019)
                                                          (The amounts in tables are expressed in thousands of RMB)
V     Notes to Items in Consolidated Financial Statements (Continued)
20    Construction in progress
                                                                                                                                            Reclassified                           Investme
                                                                                                                                                       to                         nt in cur
                                                                                                                                                                                  rent year
                                                                                                                          Reclassified to    investment
                                                                                                                          fixed assets in    property in                                  as
                                                                                              Amount at     Increase in   current period         current        Other   December       % of       Source of
     Project name                                                            Budget    beginning of year current period     Fixed assets          period    decreases    31, 2019    budget             fund
                                                                                                                                                                                                 Self-owned
     t6 production line of LCD panel                                      46,500,000        19,030,563       6,381,846       (8,143,075)                -     (1,892) 17,267,442                 capital and
                                                                                                                                                                                         55%
                                                                                                                                                                                                 borrowings
                                                                                                                                                                                                 Self-owned
     t7 production line of LCD panel                                      42,683,000            346, 143     3,003,993                  -               -           -   3,350,136                capital and
                                                                                                                                                                                          8%
                                                                                                                                                                                                 borrowings
                                                                                                                                                                                                 Self-owned
     t4 production line of LCD panel                                      35,000,000        13,003,038       3,228,943       (6,207,472)                -           - 10,024,509                 capital and
                                                                                                                                                                                         46%
                                                                                                                                                                                                 borrowings
                                                                                                                                                                                                 Self-owned
     Huizhou modular integration project                                   9,600,000           1,305,373     1,061,628        (914,432)                 -    (11,109)   1,441,460                capital and
                                                                                                                                                                                         25%
                                                                                                                                                                                                 borrowings
                                                                                                                                                                                                 Self-owned
     Huizhou whole-widget integration project                              3,099,400            566, 876       498, 730                 -               -           -   1,065,606                capital and
                                                                                                                                                                                         34%     borrowings
                                                                                                                                                                                                 Self-owned
     t3 production line of LCD panel                                      16,000,000           2,339,781       419, 827      (2,686,299)                -           -     73,309         17%     capital and
                                                                                                                                                                                                 borrowings

                                                                                                                                                                                                 Self-owned
     Upgrade of the t2 production line of LCD panel                                                            121, 285      (1,159,707)                                  31,784                 capital and
                                                                           1,471,000           1,070,206                                                -           -                    81%     borrowings

                                                                                                                                                                                           Not   Self-owned
     Yunsheng Technology Park in Guangzhou Science City                    1,200,000            611,184         19,805                  -               -   (630,989)           -                capital and
                                                                                                                                                                                    applicable
                                                                                                                                                                                                 borrowings




                                                                                         113
                                                 TCL Technology Group Corporation
                                                    Notes to Financial Statements
                                     (For the period from 1 January 2019 to 31 December 2019)
                                    (The amounts in tables are expressed in thousands of RMB)

V Notes to Items in Consolidated Financial Statements (Continued)
20 Construction in progress (continued)

                                                                         651, 422     829, 217      (450,687)    (552)   (705,356)   324, 044          Not          Not
Other                                             Not applicable
                                                                                                                                                applicable   applicable
                                                                     38,924,586     15,565,274   (19,561, 672)   (552) (1,349,346) 33,578,290




                                                                   114
                                             TCL Technology Group Corporation
                                                Notes to Financial Statements
                                 (For the period from 1 January 2019 to 31 December 2019)
                                (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)
21   Intangible assets
                                                              Non-patented
                                        Land use                                   Trademark use
                                                               technologies                              Other            Total
                                            right                                          rights
                                                                   /patents
     Gross amount:
     January 1, 2019                    4,188,127                 2,620,190               346, 160     1,042,630      8,197,107
     Increase
        Purchase                          207, 579                  224, 721                       -    103, 530        535, 830
        Reclassified from
                                              118                             -                    -             -           118
     investment property
        Reclassified from
                                                    -                     219                      -     14,921          15,140
     construction in progress
        Reclassified from R&D
                                                    -               633, 163                       -       6,233        639, 396
     expense
     Decreased
        Sale and disposal                    (109)                      (918)                      -    (29,954)        (30,981)
        Reclassified to investment
                                             (595)                            -                    -             -         (595)
     property
        Reduced subsidiaries            (915,883)                 (175,012)             (338,777)      (357,972)     (1,787,644)
     Exchange adjustment                   (1,318)                    (902)                (6,822)        (1,153)        (10,195)
     December 31, 2019                  3,477,919                 3,301,461                    561       778, 235      7,558,176
     Accumulated amortization:
     January 1, 2019                      463, 334                  883, 515              159, 085      666, 305      2,172,239
     Increase
        Provision                         110,275                   309, 537                   5,179    120, 506        545, 497
        Reclassified from
                                                26                            -                    -             -            26
     investment property
     Decreased
        Sale and disposal                    (109)                      (918)                      -    (28,374)        (29,401)
        Reclassified to investment
                                             (126)                            -                    -             -         (126)
     property
        Reduced subsidiaries             (231,178)                 (110,208)            (160,831)      (357,352)      (859,569)
        Written down with
                                           (6,835)                            -                    -             -       (6,835)
     government subsidies
     Exchange adjustment                     (493)                   (1,388)               (3,243)         (220)         (5,344)
     December 31, 2019                    334, 894                1,080,538                    190      400, 865      1,816,487
     Net value of intangible assets:
     December 31, 2019                  3,143,025                 2,220,923                    371      377, 370      5,741,689
     January 1, 2019                    3,724,793                 1,736,675               187, 075      376, 325      6,024,868
     Provision for impairment:
     January 1, 2019                                -                  34,316                      -      35,679          69,995
     Provision                                      -                        -                     -      11,845          11,845
     Write-off in current period                    -                        -                     -    (25,300)        (25,300)
     Exchange adjustment                            -                     565                      -            -            565
     December 31, 2019                              -                  34,881                      -      22,224          57,105

     Net amount of intangible
     assets:
     December 31, 2019                  3,143,025                 2,186,042                    371      355, 146      5,684,584
     January 1, 2019                    3,724,793                 1,702,359               187, 075      340, 646      5,954,873
     Please refer to Item 42 of Note V for infor mation on collateralized intangible assets.


                                                                 115
                                           TCL Technology Group Corporation
                                              Notes to Financial Statements
                               (For the period from 1 January 2019 to 31 December 2019)
                              (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
22    R&D Expense
      The Company's R& D expense is listed as follows:
                                                                          December 31, 2019       December 31, 2018


      LCD panels                                                                 1,548,471                 846,925
      Mobile phones                                                                      -                 150,186
      Other                                                                              -                  14,393


                                                                                 1,548,471               1,011,504
23    Goodwill
(1)   Name of invested company                Reason     Initial amount     December 31, 2019     December 31, 2018
      TCL (Vietnam) Corporation Ltd.          Note 1            1,947                         -                778
      TCL Mobile Communication (HK)
      Company Limited                                             310                         -                124
      TCL Electronics Holdings Limited        Note 2           11,419                         -               4,567
      TCL Electronics Holdings Limited        Note 3          (5,409)                         -             (2,705)
      TCL Electronics Holdings Limited        Note 4           39,130                         -              19,565
      TCL Electronics Holdings Limited        Note 5           28,017                         -              15,409
      TCL Electronics Holdings Limited        Note 6            8,952                         -               5,372
      TCL Electronics Holdings Limited        Note 7           36,259                         -              25,381
      TCL Communication Technology
      Holdings Limited                        Note 8         316,893                          -            194,551
      JRD Communication Inc.                  Note 9         134,968                          -            134,968
      TCL Medical Radiological Technology
                                               Note
      (Beijing) Co., Ltd.                       10             28,967                  28,967                28,967
      Huizhou TCL Environment Technology
                                               Note
      Co., Ltd.                                  11            92,952                         -              92,952
                                               Note
      TCL Communication (Ningbo) Co., Ltd.      12             89,196                         -              89,196
      Toshiba Visual Products (China) Co.,
                                               Note
      Ltd.                                      13             12,065                         -              12,065
                                               Note
      Pusheng Group Co., Ltd.                   14              3,506                         -               3,506
                                               Note
      East Fair Investments Limited             15             50,729                         -              50,729
      Qingdao Blue Business Consulting Co.,
                                               Note
      Ltd.                                      16              2,452                   2,452                 2,452
      Gross amount                                                                     31,419              677,877
                                               Note
      Less: provision for impair ment            17                                    28,967              320,765

      Net carrying amount                                                               2,452               357,112




                                                       116
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
23    Goodwill (Continued)

Note TCL Overseas Holdings Limited, a wholly-owned subsidiary of TCL Electronics Holdings Limit ed
1.    (hereinafter referred to as “TCL Electronics”) (a subsidiary of the Company’s wholly-owned subsidiary
      TCL Industries Holdings (HK ) Limited), increased in November 2000 its interest in TCL (Vietnam)
      Corporation Ltd. (hereinafter referred to as “TCL Vietnam”) to 100% with a capital of HK$ 10,690,000. As
      such, the difference bet ween the accumulated investment of TCL Overseas Holdings Limited in TCL
      Vietnam (corresponding to a 100% interest) and the owner’s equity of TCL Vietnam attribut able to TCL
      Overseas Holdings Limited on the settlement date (equal to RMB 1,947,000) was recorded in the
      Company’s goodwill, and was trans ferred out in 2019 due to disposal of subsidiaries.


Note TCL Industries Holdings (HK ) Limited, a wholly-owned s ubsidiary of the Company, purchased in 2000
2.    another 19,220,000 shares in TCL Electronics with a capit al of HK$ 29,872,000. As such, the difference
      between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics
      (corresponding to a 51.82% interest) and the owner’s equity of TCL Electronics attributable to TCL
      Industries Holdings (HK) Limited on the settlement date (equal to RMB 11,419,000) was rec orded in the
      Company’s goodwill, and was trans ferred out in 2019 due to disposal of subsidiaries.


Note TCL Industries Holdings (HK) Limited, a wholly-owned s ubsidiary of the Company, purchased in 2001
3.    another 32,556,000 shares in TCL Electronics with a capit al of HK $ 30,608,000. As such, the difference
      between the accumulated investment of TCL Industries Holdings (HK ) Limited in TCL Electronics
      (corresponding to a 55.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL
      Industries Holdings (HK) Limited on the settlement date (equal to RMB -5,409, 000) was recorded in the
      Company’s goodwill, and was trans ferred out in 2019 due to disposal of subsidiaries.


Note According to a conditional agreement on the acquisition of Huizhou TCL Computer Technology Co., Ltd.
4.    signed in late 2000 between TCL Industries Holdings (HK) Limited and TCL Holdings (BVI) Limited, a
      wholly -owned subsidiary of TCL Electronics (a subsidiary of the Company’s wholly -owned subsidiary
      TCL Industries Holdings (HK) Limited), TCL Electronics offered, at the price of HK$ 1.78/share,
      105,619,289 shares as the consideration for the acquisition, to TCL Industries Holdings (HK) Limited. As
      such, the difference between the accumulated investment of TCL Industries Holdings (HK ) Limited in
      TCL Electronics (corresponding to a 53.86% interest) and the shareholders’ equity of TCL Electronics
      attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB39, 130, 000)
      was recorded in the Company’s goodwill, and was transferred out in 2019 due to disposal of subsidiaries.




                                                     117
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

23    Goodwill (Continued)

Note TCL Industries Holdings (HK) Limited, a wholly-owned s ubsidiary of the Company, purchased in 2002
5.    another 39,610,000 shares in TCL Electronics with a capit al of HK $ 76,719,000. As such, the difference
      between the accumulated investment of TCL Industries Holdings (HK ) Limited in TCL Electronics
      (corresponding to a 54.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL
      Industries Holdings (HK) Limited on the settlement date (equal to RMB 28,017,000) was recorded in the
      Company’s goodwill, and was trans ferred out in 2019 due to disposal of subsidiaries.



Note TCL Industries Holdings (HK) Limited, a wholly-owned s ubsidiary of the Company, purchased in 2003
6.    another 37, 080, 000 shares in TCL Electronics with a capital of HK$62, 304, 820. As such, the difference
      between the accumulated investment of TCL Industries Holdings (HK ) Limited in TCL Electronics
      (corresponding to a 54.51% interest) and the shareholders’ equity of TCL Electronics attributable to TCL
      Industries Holdings (HK) Limited on the settlement date (equal to RMB 8,952,000) was recorded in the
      Company’s goodwill, and was trans ferred out in 2019 due to disposal of subsidiaries.


Note TCL Industries Holdings (HK) Limited, a wholly-owned s ubsidiary of the Company, purchased in 2004
7.    another 50,436,000 shares in TCL Electronics with a capital of HK$ 126,814,000. As such, the difference
      between the accumulated investment of TCL Industries Holdings (HK ) Limited in TCL E lectronics
      (corresponding to a 54.83% interest) and the shareholders’ equity of TCL Electronics attributable to TCL
      Industries Holdings (HK) Limited on the settlement date (equal to RMB 36,259,000) was recorded in the
      Company’s goodwill, and was trans ferre d out in 2019 due to disposal of subsidiaries.




                                                      118
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
23    Goodwill (Continued)

Note TCL Industries Holdings (HK ) Limited, a wholly-owned subsidiary of the Company, acquired in 2004 a
8.    57.4% interest in TCL Communication with a consideration of RMB 1,510,016,000. As such, the
      difference bet ween the accumulat ed investment of TCL Industries Holdings (HK ) Limited in TCL
      Communication (corresponding to a 57.4% interest) and the shareholders’ equity of TCL Communication
      attributable to TCL Industries Holdings (HK ) Limited on the settlement dat e (equal to RMB 316, 893, 000)
      was recorded in the Company’s goodwill. An impairment allowance of RMB 194,551,000 had been
      established on this goodwill item for 2017. And this item was transferred out in 2019 due to disposal of
      subsidiaries.


Note TCL Communication, a subsidiary of the Company’s subsidiary TCL Industries Holdings (HK) Limited,
9.    acquired in July 2007 a combined 61.46% interest in JRD Communication Inc. (hereinafter referred to as
      “JRDC”) from the other shareholders, with a total consideration of US$ 39,313,000 (equivalent to
      approximately RMB 296,584,000). As such, the difference between the accumulated investment of TCL
      Communication in JRDC (corresponding to a 100% interest) and the fair value of the identifiable net
      assets of JRDC attributable to TCL Communication on the settlement date (equal to approximately RMB
      134,968,000) was recorded in the Company’s goodwill. An impairment allowance of RMB 34,453,000
      had been established on this goodwill item for 2018. And this item was transferred out in 2019 due to
      disposal of subsidiaries.


Note The Company acquired in 2010 a 51.82% interest in TCL Medical Radiological Technology (Beijing) Co.,
10    Ltd. (hereinafter referred to as “TCL Medical Radiological Technology”) with a capital of RMB 52,319,000.
      As such, the differenc e between the accumulated investment of the Company in TCL Medical
      Radiological Technology (corresponding to a 51.82% interest) and the fair value of the identifiable net
      assets of TCL Medical Radiological Technology attributable to the Company on the settlement date
      (equal to RMB 28,967, 000) was recorded in the Company’s goodwill. An impairment allowanc e of RMB
      28,967,000 had been established on this goodwill item for 2018.


Note Huizhou TCL Environmental Resource Co., Ltd. (hereinafter referred to as “TCL Environmental
11    Resource”), a subsidiary of the Company, acquired in 2010 the 100% interest in Huizhou TCL
      Environment Technology Co., Ltd. (hereinaft er referred to as “TCL Environment Technology”) with a
      capital of RMB 98,024,000. As such, the difference between the accumulated investment of TCL
      Environmental Resource in TCL Environment Technology (correspondin g to a 100% interest) and the fair
      value of the identifiable net assets of TCL Environment Technology attributable t o TCL Environmental
      Resource on the settlement date (equal to RMB 92,952,000) was recorded in the Company’s goodwill.
      And this item was trans ferred out in 2019 due to disposal of subsidiaries.




                                                      119
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
23    Goodwill (Continued)

Note TCL Communication, a s ubsidiary of the Company’s wholly -owned subsidiary TCL Industries Holdings
12    (HK) Limited, acquired in May 2011 the 100% interest in TCL Communication (Ningbo) Co., Ltd.
      (hereinafter referred to as “TCL Communication Ningbo”) with a capit al of 11 million euros (equivalent to
      RMB 102,690,000). As such, the difference bet ween the accumulat ed investment of TCL Communication
      in TCL Communication Ningbo (corresponding to a 100% interest) and the fair value of the identifiable
      net assets of TCL Communication Ningbo attributable to TCL Communication on the settlement date
      (equivalent to RMB 89,196,000) was recorded in the Company’s goodwill, and was transferred out in
      2019 due to disposal of subsidiaries.


Note Huizhou TCL Household A ppliance Marketing Co., Ltd. (hereinafter referred to as “Huizhou TCL
13    Hous ehold Appliance Mark eting”), a subsidiary of TCL Electronics (a s ubsidiary of the Company’s
      wholly -owned subsidiary TCL Industries Holdings (HK ) Limited), ac quired in May 2014 a 21% interest in
      Toshiba Visual Products (China) Co., Ltd. (hereinafter referred to as “Toshiba Visual Products”) with a
      capital of RMB 0. As such, the difference bet ween the accumulated investment of Huizhou TCL
      Hous ehold Appliance Marketing in Toshiba Visual Products (corresponding to a 70% interest) and the fair
      value of the identifiable net assets of Toshiba Visual Products attributable to Huizhou TCL Household
      Appliance Marketing on the settlement date (equivalent to RMB 12,065,000) was recorded in the
      Company’s goodwill. An impairment allowance of RMB 12,065,000 had been established on this goo dwill
      item for 2017. And this item was transferred out in 2019 due to disposal of subsidiaries.


Note Tonly Electronics, a subsidiary of the Company’s wholly -owned subsidiary TCL Industries Holdings (HK )
14    Limited, acquired in Sept ember 2015 the 100% interest in Pusheng Group Co., Ltd. (hereinafter referred
      to as “Pusheng Group”) with a capital of RMB 95,546,000. As such, the difference bet ween the
      accumulated investment of Tonly Electronics in Pusheng Group (corres ponding to a 100% interest) and
      the fair value of the identifiable net assets of Pusheng Group attributable to Tonly Electronics on the
      settlement date (equivalent to RMB 3,506,000) was recorded in the Company’s goodwill, and was
      transferred out in 2019 due to disposal of subsidiaries.




                                                      120
                                           TCL Technology Group Corporation
                                              Notes to Financial Statements
                               (For the period from 1 January 2019 to 31 December 2019)
                              (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
23    Goodwill (Continued)

Note Prosper Wide Limited and TCL Communication Technology Holdings Limited, subsidiaries of the
15    Company’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in September 2015
      a 40% interest and a 19.99% interest in East Fair Investments Limited (hereinafter referred to as “East
      Fair Investments”), respectively, with a capital of RMB 9, 600, 000 and a c apital of RMB 4,798, 000. As
      such, the differenc e bet ween the accumulated investment of P rosper Wide Limited and TCL
      Communication Tec hnology Holdings Limited in East Fair Investments (corresponding to a combined
      interest of 59.99%) and the fair value of the identifiable net assets of East Fair Investments attributable to
      Prosper Wide Limited and TCL Communication Technology Holdings Limited on the settlement date
      (equivalent to RMB 50,729,000) was recorded in the Company’s goodwill. An impairment allowance of
      RMB 50,729, 000 had been established on this goodwill item for 2017. And this item was transferred out
      in 2019 due to disposal of subsidiaries.


Note Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired in October 2016 a 60%
16    interest in Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as “Blue Business
      Cons ulting”) with a capital of RMB 10,000,000. As such, the difference between t he accumulated
      investment of Highly Information Industry Co., Ltd. in Blue Business Consulting (corresponding to a 60%
      interest) and the fair value of the identifiable net assets of Blue Business Consulting attributable to Highly
      Information Industry Co., Ltd. on the settlement date (equivalent to RMB 2,452,000) was recorded in the
      Company’s goodwill.


Note On December 31, 2019, the Company tested asset groups inclusive of goodwill for impairment. Upon the
17    test, goodwill is not impaired.


(1)   Provision for impairment of goodwill
                                                       Opening        Increase in     Decrease in
      Name of invested company                         balance     current period   current period    Closing balance
      TCL Communication Technology Holdings
                                                       194,551                  -       (194,551)                   -
      Limited
      Toshiba Vis ual Products (China) Co., Ltd.        12,065                  -        (12,065)                   -
      JRD Communication Inc.                            34,453                  -        (34,453)                   -
      East Fair Investments Limited                     50,729                  -        (50,729)                   -
      TCL Medical Radiological Technology (Beijing)
                                                        28,967                  -               -             28,967
      Co., Ltd.
      Huizhou TCL Environment Technology Co.,
                                                             -            92,952         (92,952)                   -
      Ltd.


                                                       320,765            92,952        (384,750)             28,967




                                                       121
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

23    Goodwill (Continued)

(2)   The Company tested goodwill acquired from business combination that has been allocated to the
      following asset groups or asset group combinations for impairment:


      The Company distribut es goodwill to the following independent asset groups:


      Business asset group of Qingdao Blue: fixed assets and goodwill of Qingdao Blue Business Consulting
      Co., Ltd. are the asset group where goodwill is located.




                                                      122
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
23    Goodwill (Continued)
      The carrying amount of each asset group including goodwill and the amount of allocated
(a)
      goodwill are as follows:

                                                              December 31, 2019
                                      Carrying amount of asset group             Allocated goodwill amount


      Business asset group of
                                                                 2,780                                2,452
      Qingdao Blue


                                                                 2,780                                2,452


(b)   The recoverable amount of the asset group and the asset group combination is calculated based on
      the five-y ear budget approved by the management and the cash flow after the detailed annual
      forecast period at a specific long-term average growth rate, and is calculated using the present value
      model of future cash flow. Key assumptions used include:


                                                                                   Business asset group of
                                                                                               Qingdao Blue


      Income growth rate in
                                                                                                         8%
      forecast period
      Income growth rate in stable
                                                                                                         0%
      period
      Net profit rate in forecast
                                                                                                         5%
      period
      Net profit rate in stable
                                                                                                         4%
      period
      Discount rat e                                                                                     8%


(c)   Goodwill Impairment Test Results

      At the end of the reporting period, the Company tested the above goodwill for impairment. During the
      impairment test, the Company compared the carrying amount of the relevant asset group including
      goodwill with its recoverable amount. If the recoverable amount is lower than the carrying amount,
      the relevant difference is included in the current profits and losses. According to the goodwill
      impairment test, the goodwill of Business asset group of Qingdao Blue is not impaired.




                                                   123
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)
24    Long-term deferred expenses

                                     Increase                                    Amortizati               December
                                                                    Reduced
                              2019         in       Increased                         on in                      31,
                                                                  subsidiarie                   Other
                      January 1       current     subsidiaries                      current                    2019
                                                                             s
                                       period                                       period


      Improvement
      expense on
                       1,460,293     165,252                  -       (2,027)      (95,392)        32      1,528,158
      leased fixed
      assets

      Other               401,040    390,523            1,874       (276,068)     (477,773)       (63)        39,533



                       1,861,333      555,775           1,874       (278,095)     (573,165)       (31)     1,567,691


25     Deferred income tax assets and deferred income tax liabilities

(1)    Deferred income tax assets

                                            December 31, 2019                             December 31, 2018
                                            Deductible            Deferred              Deductible         Deferred
                                                temporary     income tax                temporary        income tax
                                                difference         assets               difference          assets
      Estimated liabilities                       177,421           28,473              1,475, 703         226,083
      Unrealized profit
                                                         -               -              1,590, 469         261,126
      within the Group
      Provision for
                                                  444,625           74,208                629,031          100,264
      impairment of assets
      Changes in fair value                         2,862             429                     95,609        18,252
      Deductible losses                          4,202,964         671,868                364,596           89,707
      Other                                       353,392           65,896                525,125          102,450


                                                5,181, 264        840,874               4,680, 533         797,882




                                                        124
                                          TCL Technology Group Corporation
                                             Notes to Financial Statements
                              (For the period from 1 January 2019 to 31 December 2019)
                             (The amounts in tables are expressed in thousands of RMB)

V       Notes to Items in Consolidated Financial Statements (Continued)


25      Deferred Income Tax Assets and Deferred Income Tax Liabilities (Continued)


(2)     Deferred Income Tax Liabilities

                                               December 31, 2019                                 January 1, 2019
                                                 Taxable            Deferred                     Taxable             Deferred
                                               temporary          Income Tax                   temporary          Income Tax

        Accelerated depreciation              differences
                                               4,924,463           Liabilities
                                                                    782,644                 differences
                                                                                             2,292,445              Liabilities
                                                                                                                     347,327
        Changes in fair value                     242,663            54,491                     204,717                38,171
        Government subsidies                      314,595            52,290                      81,854                15,098
        Other                                     307,929            63,253                     215,910                40,576

                                               5,789,650            952,678                    2,794,926              441,172

                                                                                               December 31, 2018
                                                                                     Taxable                 Deferred
                                                                                     temporary               Income Tax
        Accelerated depreciation                                                     differences             Liabilities
                                                                                              2,292,445                347,327
        of fixed assets
        Changes in fair value                                                                    201,438                37,351
        Government subsidies                                                                      81,854                15,098
        Other                                                                                    215,910                40,576

                                                                                               2,791,647              440,352


26      Other non-current assets
                                                                                 December 31, 2019         December 31, 2018


        Advance payment for equipment and
                                                                                         3,336,619                   2,649,080
        land use rights (Note)
        Advance payment for patents                                                       225,576                       362,608
        Other                                                                             688,464                       526,068


                                                                                        4,250,659                    3,537,756


Notes   The Company reclassifies long-term assets such as advance payment for equipment and land use
        rights reflected in prepaid accounts to other non-current assets.




                                                            125
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)
27   Short-term borrowings
     Classification of short-term borrowings


                                                       December 31, 2019               December 31, 2018


     Unsecured borrowings                                        11,291,664                    13,240,637
     Pledge borrowings                                              754,794                                  -

     Interest payable                                                  23,199                                -


                                                                 12,069,657                    13,240,637


     As at December 31, 2019, the short-t erm pledged borrowings of the Company amounted to RMB
     754,794,000, which was pledged by trading financial assets of about RMB 1,743,204,000 (the
     Company had no pledged short -term borrowings balance as at the end of 2018).


     As at December 31, 2019, the Company does not have any short -term borrowings that have expired
     and have not been repaid.


28   Borrowings from the Central Bank

     As of December 31, 2019, the balance of the borrowings of TCL Finance Co., Ltd., a subsidiary of the
     Company, from the central bank was RMB 573,222,000 (as at the end of 2018: RMB 231,404,000).


29   Deposits and placements from other financial institutions
                                                December 31, 2019               December 31, 2018


     Deposits and placements from other
                                                            1,355, 129                    545,053
     financial institutions


     Deposits and placements from other financial institutions are the deposits of affiliated and
     non-affiliated enterprises absorbed by TCL Finance Co., Ltd., a subsidiary of the Company, within the
     business scope approved by the regulatory authority.
30   Trading financial liabilities (applicable in 2019 only)
                                               December 31, 2019                   January 1, 2019


     Financial liabilities measured at fair
     value and whose changes are                             188,220                              -
     included in the current profit and loss



                                                   126
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)
     Financial liabilities measured at fair value and whose changes are included in the
31
     current profit and loss (applicable in 2018 only)
                                                                                   December 31, 2018


     Derivative financial liabilities -forward
                                                                                               106,901
     foreign exchange contracts
     Derivative financial liabilities -interest
                                                                                               105,196
     rate swap contracts


                                                                                               212,097


     The fair value of the Company's trading financial liabilities is determined based on the real -time
     quoted price in the foreign exchange and interest rate open market. The fair value change of
     the trading financial liabilities is determined based on the difference between the forward
     exchange rate and interest rate of the contract price and quoted price in the foreign exchange
     and interest rate open mark et on the balance sheet date.
32   Derivative financial liabilities (applicable in 2019 only)
                                                  December 31, 2019                    January 1, 2019


     Derivative financial liabilities                          84,705                          212,097

33   Notes payable
                                                  December 31, 2019                       December 31, 2018


     Bank acceptance                                        1,595, 901                               2,234, 882

     Commercial accept ance                                   124,501                                  857,692


                                                            1,720, 402                               3,092, 574


     There is no amount payable to shareholders holding 5% or more voting shares in the Company in the
     account balance.
34   Accounts payable
     Accounts payable mainly include the Company's accounts payable for raw materials and purchased
     components. As of December 31, 2019, the balance of accounts payable was RMB 11, 549, 133, 000
     (as at the end of 2018: RMB 23, 922,712,000), of which the accounts payable for more than one year
     was RMB 31,013,000 (As of the end of 2018: RMB 262,062,000), accounting for about 0.27% of all
     accounts payable (as at the end of 2018: 1.10%).


     There is no amount pay able to shareholders holding 5% or more voting shares in this account.



                                                      127
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)


35   Advances from customers

     The end-of-term advance payment is mainly the sales of goods received in advance by the Company.
     As at December 31, 2019, the balance of advance payment was RMB 141,749,000 (as at the end of
     2018: RMB 1,460, 773, 000), and the Company had no large amount of advance payment older than
     one year.
     There is no advance payment from s hareholders holding 5% or more voting shares in this account
     balance.




                                                 128
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)
36     Payroll Payable and Long-Term Payroll Payable
(1)    Payroll Payable
                                                                 December 31, 2019                  December 31, 2018


       Short-term payroll payable (not e)                                    1,089, 163                     2,802, 947

       Defined contribution plans payable                                        1,371                         16,124

       Dismissal benefits payable                                                3,683                         72,322


                                                                             1,094, 217                     2,891, 393


Notes Short-term payroll payable


                                                               Increase in           Decrease in
                                       January 1, 2019    current period           current period     December 31, 2019


       Wages, bonuses, allowances
                                            2,178,857          5,717,529             (6,976,060)                920,326
       and subsidies

       Social insurance premium                25,762            224,077               (207,665)                 42,174

       Housing fund                             8,846            177,014               (165,852)                 20,008
       Trade union funds and staff
                                               90,355              14,977              (103,282)                  2,050
       education funds

       Others                                 499,127              99,615              (494,137)                104,605



                                            2,802,947          6,233,212             (7,946,996)              1,089,163

(2)    Long-Term Payroll Payable
                                                                  December 31, 2019                 December 31, 2018


       Supplementary old age security pensions
       (note)                                                                   23,018                          24,246


Note    This item is the supplementary old age security pensions payable to retired employees.
s




                                                         129
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)
37   Taxes payable
                                                            December 31, 2019             December 31, 2018


     VAT                                                                26,997                          238,049

     Corporate income tax                                              154,027                          214,140

     Individual inc ome tax                                             22,666                           34,204

     City construction tax                                               1,965                           18,504

     Educational surcharge                                               1,450                           13,328

     Embankment charges                                                      27                          51,785
     Waste electric appliance and electronic
                                                                               -                         60,870
     product treatment fund

     Other                                                              19,674                           85,654


                                                                       226,806                          716,534


     Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates.


38   Other payables
                                                            December 31, 2019             December 31, 2018


     Interest payable                                                          -                        586,819

     Dividends payable                                                  11,058                           22,553

     Other payables                                                 12,282,508                     22,511,402


                                                                    12,293,566                    23,120,774




                                                      130
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

38    Other payables (continued)

(1)   Interest payable

                                                             December 31, 2019            December 31, 2018

      Interest payable on MTN                                                 -                        27,922
      Interest payable on
      corporate bonds                                                         -                      314,321
      Interest payable on
      short-term commercial
      papers                                                                  -                        67,467
      Interest payable on bank
      borrowings                                                              -                      177,109

                                                                              -                      586,819

      Note: The Company has no balance of interest payable at the end of the period, which is in accordance
      with the requirements of the Notice on Revising and Issuing the Format of General Ent erprise Financial
      Statements for 2019 (CK [2019] No. 6) issued by the Ministry of Finance on April 30, 2019. For an
      enterprise that has implemented the new financial instrument accounting standard, the interest payable
      is included in the book balance of the corresponding financial instruments based on the interest accrued
      by the effective int erest rate method. For a long-term financial instrument with periodic interest
      payments, during the holding period, the undue interest accrued using the effective int erest method is
      classified as “current assets” or “current liabilities”.

(2)   Dividends payable
                                                             December 31, 2019            December 31, 2018

      Other minority shareholders                                       11,058                         22,553

(3)   Other payables
                                                             December 31, 2019            December 31, 2018

      Engineering and equipment expense                              8,515, 216                   10,236,446
      Ordinary current payables to external entities                 2,711, 596                     6,705, 566
      Unpaid expenses                                                  856,377                      4,709, 423
      Deposit and security deposit                                     199,319                       407,967
      Payables for land acquisition                                           -                      452,000

      Total                                                         12,282,508                    22,511,402

      There is no amount payable to shareholders holding 5% or more voting shares in this account.

39    Short-Term Commercial Papers Payable

                                                             December 31, 2019            December 31, 2018

      Short-term commercial papers                                            -                     2,000, 000
                                                       131
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

40     Current Portion of Non-Current Liabilities

                                                       Note V     December 31, 2019            December 31, 2018

       Long-term borrowings (note 1)                      42                   800,000                     3,509, 915
       MTN (note 2)                                                            499,748                              -
       Corporate bonds                                                                  -                  2,500, 000
        Current portion of interest payable                                    392,215                              -

                                                                             1,691, 963                    6,009, 915

Note 1 The current portion of long-term borrowings was RMB 800,000,000 of unsecured borrowings.

       The interest rate of the Company 's current portion of long-term borrowing in the current period ranges
       from 2.33% to 6.00% (in 2018: 2.33% to 5.57% ).

Note 2 The current portion of medium-term notes payable of RMB 499,748,000 at the end of the period was
       reclassified to the item of “current portion of non-current liabilities”.

41      Other current liabilities

                                                                  December 31, 2019            December 31, 2018


        After-sales service expense (note)                                      35,435                     1,108, 360
        Financial assets sold under
                                                                                        -                    185,364
        repurchase agreements
        Other                                                                   33,587                        50,727


                                                                               69,022                      1,344, 451

Note    After-sales service expense expected to occur within 1 year is reflected in current liabilities.
s




                                                         132
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

42   Long-term borrowings

                                                           December 31, 2019          December 31, 2018

     Mortgage                                                       33,589,761                29,516,297
     borrowings
     Unsecured                                                       5,722, 298               10,858,541
     borrowings

                                                                    39,312,059                40,374,838


     Of which: Current portion of long-t erm borrowings              (800,000)                (3,509,915)

                                                                    38,512,059                36,864,923

     The maturities of the Company’s long-term borrowings vary from 2020 to 2029.

     As at December 31, 2019, the carrying amount of long-t erm mortgage borrowings was RMB
     33,589,761,000, with land use rights, buildings, machinery and equipment and construction in progress
     equivalent to RMB 39,055,477, 000 as the collateral.

     The interest rate of the Company's current portion of long-term borrowing ranges from 2.33% to 6.00%
     (in 2018: 2.33% to 5.57%).

43   Bonds payable

                                                           December 31, 2019         December 31, 2018

     Corporate bonds (note 1)                                      14,483,130                 10,492,914
     MTN (note 2)                                                   1,995, 955                 2,492, 714

                                                                   16,479,085                 12,985,628




                                                    133
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)

43     Bonds Payable (Continued)

Note   On March 16, 2016, the Company issued RMB 1.5 billion of five-year corporate bonds. On July 7,
1      2016, the Company issued RMB 2 billion of 2016 (P hase II) five-year corporate bonds.

       On April 19, 2017, the Company issued RMB 1 billion of 2017 (Phase I) five-year corporate bonds.
       On July 7, 2017, the Company issued RMB 3 billion of 2017 (Phase II) five-year corporate bonds.

       On June 6, 2018, the Company issued RMB 1 billion of 2018 (Phase I) five -year corporat e bonds. On
       August 20, 2018, the company issued RMB 2 billion of 2018 (Phase II) five-year corporate bonds.

       On May 20, 2019, the Company issued RMB 1 billion of 2019 (Phase I) five -year corporate bonds.
       On July 23, 2019, the Company issued RMB 1 billion of 2019 (P hase II) five-year corporate bonds.
       On October 21, 2019, the Company issued RMB 2 billion of 2019 (Phas e III) five-y ear corporate
       bonds.

Note   On April 2, 2015, the Company issued RMB 500 million of 5-year medium-t erm notes.
2

       On December 3, 2018, the Company issued RMB 2 billion of 3-year medium -term notes.

       The current portion of medium -term notes payable of RMB 499,748,000 at the end of this period was
       reclassified to the item of “current portion of non-current liabilities”.

44     Long-term payables

                                                             December 31, 2019         December 31, 2018

       Technological development fund                                      24,000                  73,000
       Other                                                                  206                      902


                                                                           24,206                  73,902

45     Deferred income

                                                             December 31, 2019        December 31, 2018

       Government subsidies (note)                                      1,912, 421              2,637, 229



       Note: Mainly income-related




                                                     134
                                                     TCL Technology Group Corporation
                                                        Notes to Financial Statements
                                         (For the period from 1 January 2019 to 31 December 2019)
                                        (The amounts in tables are expressed in thousands of RMB)



V    Notes to Items in Consolidated Financial Statements (Continued)

46   Share Capital

                                           January 1, 2019            Increase or decrease in current period                December 31, 2019
     (Unit: Thousand yuan)             Amount   Proportion         New issues               Other            Subtotal     Amount   Proportion

     I. Restricted shares             1,825,654      13.47%                  -            (957,888)         (957,888)      867,766      6.41%
     II. Unrestricted shares         11,723,995      86.53%                  -              936,678           936,678   12,660,673     93.59%
     III. Total shares               13,549,649     100.00%                  -             (21,210)          (21,210)   13,528,439    100.00%




                                                                       135
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V      Notes to Items in Consolidated Financial Statements (Continued)
46     Share Capital (Continued)
       As at 31 December 2019, the Company’s total share capital was 13,528,439,000 shares.
Note
       Except for Chairman of the Board Mr. Li Dongsheng who holds restricted shares subscribed for in a
       private placement, none of the other incumbent directors, supervisors or senior management hold
       any restricted shares from a split-share structure reform or a private placement. The shares held by
       these personnel will stay partially frozen as per the Rules on the Management of Shares Held by the
       Directors, Supervisors and Senior Management Officers of Listed Companies and the Changes
       thereof. The trading and information disclosure in relation to these shares shall be in strict
       compliance with the applicable laws, regulations and rules.
47     Capital Reserves
                                                             Increase in     Decrease in
                                      January 1, 2019     current period   current period   December 31, 2019

        Share premium                      4,930,142                   -          (5,930)           4,924,212
        Other capital reserves             1,066,599                   -       (274,144)              792,455

                                           5,996,741                   -       (280,074)            5,716,667
48     Treasury stock
                                      January 1, 2019        Increase in     Decrease in    December 31, 2019
                                                          current period   current period

       Incentive shares                        63,458           126,726         (44,764)              145,420
       Repurchased shares                                     1,934,263        (126,726)            1,807,537

                                              63,458        2,060,989          (171,490)         1,952,957
       The increase in incentive shares in the current period was RMB126,726,000 trans ferred through a
       non-deal manner from repurchased t reas ury stock to incentive shares, while t he decrease in the
       current period was prim arily driven by the grant, unlocking and retirement of shares.
       The increase in repurchas ed shares in t he current period was repurchases in the current period,
       while the decrease in the current period was primarily driven by the non -deal transfer from
       repurchased treasury stock to incentive shares.
49     Surplus Reserves
                                                            Increase in      Decrease in
                                      January 1, 2019    current period    current period   December 31, 2019

       Statutory surplus reserves          2,001,391            54,107                  -           2,055,498
       Discretionary        surplus
       reserves                              182,870                  -                 -            182,870

                                         2,184,261           54,107                -              2,238,368
       As per China’s Company Law, Articles of Association for Companies, accounting standards, the
       Company and several of its subsidiaries shall appropriate 10% of net profits as statutory surplus
       reserves until the reserve amount reaches 50% of the registered capital. According to the aforesaid
       laws and regulations, part of the statutory surplus reserves can be converted into share capital of
       the Company, and the remaining amount shall not be lower than 25% of the regist ered capital.

       After the appropriation to the statutory surplus reserves, the Company may appropriate the
       discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be us ed to
       make up the previous loss or increase the share capital.


                                                        136
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

50   General Reserve

                                                                                  Decrease in
                                                         Increase in current          current
                                     January 1, 2019                  period           period     December 31, 2019

     General Reserve                            361                        -                  -                361

     As per the General Rules on Financial Affairs of Financial E nterprises and the Guide t o the
     Implementation of the General Rules on Financial Affairs of Financial Enterprises promulgated by
     the Ministry of Finance, as well as the Articles of Association of TCL Finance Co., Ltd., this
     subsidiary appropriated 1% of its net profit as general reserve in the previous years.

51   Retained Earnings

                                                                                     2019                    2018

     Beginning retained earnings                                               10,000,973               8,577, 688
     Changes in accounting policies                                              (106,833)                        -
     Net profit for current period                                               2,617, 765             3,468, 211
     Decrease in current period                                                (1,396,755)            (2,044,926)
     Including: Appropriated as surplus reserves                                  (52,832)              (689,961)
            Distributed to ordinary shareholders as
                                                                               (1,337,079)
     dividends                                                                                        (1,354,965)
            Others                                                                 (6,844)                      -

     Ending retained earnings                                                  11,115,150              10,000,973




                                                   137
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

52    Operating Revenue and Cost of Sales

                                              2019                                         2018
                                      Operating                                    Operating
                                       revenue        Cost of sales                 revenue           Cost of sales

      Core business                  74,056,389            66,003,229            112,282,593            91,888,990
      Non-core business                 876,697               333,888              1,077, 483              716,599

                                     74,933,086            66,337,117            113,360,076            92,605,589

(1)   Core Business by Operating Area

                        Revenue                       Cost of sales                          Gross profit
                     2019             2018           2019                 2018            2019                 2018

      Dome
      stic
      sales    47,799,405       56,473,133    42,114,424         46,197,816         5,684, 981          10,275,317
      Export
      sales    26,256,984       55,809,460    23,888,805         45,691,174         2,368, 179          10,118,286

               74,056,389      112,282,593    66,003,229         91,888,990         8,053, 160          20,393,603

(2)   The sales revenue from the top five customers combined was RMB 21,701,693,000 and RMB
      17,833,273,000 respectively for 2019 and 2018, accounting for 29. 3% and 15.88% of the core business
      revenue.

53    Interest Income/Expense and Exchange Gain

                                                                         2019                                  2018

      Interest income                                                 144,720                                 87,362
      Interest expense                                                  17,230                                72,248
      Exchange gain/(loss)                                            (12,499)                              (47,714)

      The interest income, int erest expense and exchange gain/(loss) above occurred with the Company’s
      subsidiary TCL Finance Co., Ltd., which are presented separately herein as required for a financial
      enterprise.




                                                     138
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

54   Taxes and Surcharges

                                                               2019                   2018

     City maintenance and construction tax                    64,586               132,326
     Property tax                                             93,039               109,329
     Stamp tax                                                67,689               103,995
     Educational surcharge                                    47,761                 96,329
     Land use tax                                             12,370                 15,064
     Others                                                   45,143               204,219


                                                            330,588                661,262

     The applicable tax and surcharge standards
     are detailed in Note IV.

55   Sales Expenses

                                                               2019                   2018

     Employee salaries and benefits                         647,645               1,890, 522
     Traffic expense                                        481,379               1,707, 790
     Advertising and sales promotional expense              434,422               1,520, 470
     After-sales service expense                            424,439               1,448, 773
     Brand promotion expense                                225,349                 808,948
     Others                                                 644,255               1,510, 518

                                                           2,857, 489             8,887, 021

56   General and Administrative Expenses

                                                               2019                   2018
     Employee salaries and benefits                          855,810              2,142, 861
     Depreciation and amortization expense                   378,404                568,048
     Expense for hiring intermediary organizations           333,300                422,194
     Insuranc e expense                                      101,074                192,146
     Others                                                  226,500                974,358

                                                           1,895, 088             4,299, 607




                                                     139
                                TCL Technology Group Corporation
                                   Notes to Financial Statements
                    (For the period from 1 January 2019 to 31 December 2019)
                   (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

57   Research and Development Expenses

                                                            2019                    2018

     Depreciation and amortization expense              1,185, 695               798,740
     Employee salaries and benefits                       905,908              1,678, 164
     Material expens e                                    872,466              1,252, 141
     Outsourcing development expense                      124,889                101,496
     Insuranc e expense                                    68,894                135,169
     Others                                               238,953                711,869

                                                        3,396, 805             4,677, 579

58   Financial Expenses

                                                            2019                    2018

     Interest expense                                   1,958, 251             1,782, 408
     Interest income                                    (401,645)              (621,949)
     Exchange loss/(income)                             (355,134)              (321,412)
     Others                                                47,329                134,214

                                                        1,248, 801               973,261

59   Other Incomes

                                                            2019                    2018

     R&D subsidies                                      1,811, 757             1,851, 643
     VAT rebates on software                               62,208                367,075
     VAT accrual and deduction                              7,323                        -
     Others                                                19,348                        -

                                                        1,900, 636             2,218, 718




                                             140
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

60   Return on Investment
                                                                     2019             2018

     Proceeds from disposal of credit instruments
                                                                  346,391                  -
     at fair value through profit or loss
     Proceeds from disposal of equity
     instruments at fair value through profit or                (113,316)                  -
     loss
     Proceeds from holding of equity instruments
                                                                   28,747
     at fair value through profit or loss
     Proceeds from holding of credit instruments
                                                                   99,859                  -
     at fair value through profit or loss
     Credit instruments measured at amortized
                                                                    7,217                  -
     cost through profit or loss
     Income from disposal of wealth
     management instruments                                               -        691,917
     Income from disposal of derivative financial
     assets/liabilities                                                   -         (64,779)
     Share of net income of associates                          1,620, 874        1,334, 263
     Share of net income of joint ventures                         36,597             26,005
     Net income from dispos al of long-term
     equity investments                                         1,416, 185         (48,708)
     Income from disposal of available-for-s ale
     financial assets                                                     -        109,175
     Income during period of holding
     available-for-sale financial assets                                  -         119,381

                                                                3,442, 554        2,167, 254

61   Gains on Changes in Fair Value

                                                                     2019             2018
     Tradable financial asset                                     555,470                 -
     Derivative financial assets                                  138,119                 -
     Tradable financial liabilities                                (4,771)                -
     Derivative financial liabilities                           (215,145)                 -
     Financial assets/liabilities at fair value
     through profit or loss – forward forex                              -           5,834
     contracts
     Financial liabilities at fair value through profit
                                                                          -         (9,380)
     or loss - wealth management instruments
     Financial assets at fair value through profit
                                                                          -           (333)
     or loss - interest rate swap contracts

                                                                  473,673           (3,879)




                                                          141
                                 TCL Technology Group Corporation
                                    Notes to Financial Statements
                     (For the period from 1 January 2019 to 31 December 2019)
                    (The amounts in tables are expressed in thousands of RMB)

V    Notes to Items in Consolidated Financial Statements (Continued)

62   Credit impairment loss (for 2019 only)

                                                                                    2019

     Loss on uncollectible accounts of accounts
     receivable                                                                   34,693
     Loss on uncollectible accounts of other
     receivables                                                                  (2,435)

                                                                                  32,258

63   Asset Impairment Loss

                                                             2019                   2018

     Loss on uncollectible accounts                              -               217,800
     Inventory valuation loss                             568,443                999,690
     Loss on impairments of available-for-sale
     financial assets (for 2018 only)                             -               22,548
     Loss on impairment of long-term equity
     investments                                                  -               31,277
     Loan impairment loss                                 123,761                  7,522
     Loss on impairments of fixed assets                     3,000                61,572
     Loss on impairment of intangible assets                11,845                43,548
     Loss on impairment of goodwill                        92,952                 62,823
     Loss on impairment of other assets                    (8,889)                76,339

                                                          791,112               1,523, 119




64   Asset Disposal Income
                                                             2019                   2018

     Income/(loss) from disposal of fixed assets            1,042                129,282
     Income/(loss) from disposal of intangible
                                                                                (116,206)
     assets                                                     26
     Income from disposal of other non-current
                                                                                  (3,005)
     assets                                                     89

                                                            1,157                 10,071




                                                   142
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)


V     Notes to Items in Consolidated Financial Statements (Continued)

65    Non-Operating Income

                                                              2019                 2018

      Gains on retired or damaged non-current
                                                                84                  742
      assets
         Including: Gains on retired or damaged
                                                                84                  714
      fixed assets
      Others                                               128,525               956,067

                                                           128,609               956,809

66    Non-Operating Expense

                                                              2019                 2018

      Losses on retired or damaged non-current
                                                             1,763                 8,398
      assets
         Including: Losses on retired or damaged
                                                               946                 7,926
      fixed assets
                Losses on retired or damaged
                                                                 -                  232
      intangible assets
      Others                                                47,882                96,233

                                                            49,645               104,631

67    Income Tax Expense

(1)   Income tax expense statement

                                                              2019                 2018

      Current income tax expense                           198,993               641,006
      Deferred income tax expense                          199,076               238,176

                                                           398,069               879,182




                                                   143
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

67    Income Tax Expense (Continued)

(2)   Accounting profits and income tax adjustment process

                                                                         2019        2018

      Total profit                                                 4,055, 803    4,944, 380
      Income tax expense calculated at statutory/applicable tax
                                                                   1,013, 951    1,236, 095
      rate
      Impact of different tax rates applied to subsidiaries        (699,553)     (300,160)
      Impact of adjusting income tax in previous periods              12,009        21,235
      Impact of non-taxable income                                 (113,147)     (535,444)
      Impact of non-deductible costs, expenses and losses             13,977       287,277
      Impact of deductible losses on the use of previously
                                                                    (19,689)     (119,824)
      unrecognized deferred income tax assets
      Impact of deductible temporary differences or deductible
      losses of unrecognized deferred income tax assets in the          45,798            -
      current period
      Others                                                        144,723       290,003

      Income Tax Expense                                            398,069       879,182




                                                   144
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

68    Other Comprehensive Income

(1)   Other comprehensive income items, income tax effects and reclassifications to profit or loss

                                                                                    2019             2018

      I. Items that cannot be reclassified to profit or loss subsequently         27,642               -

      1. Share of other comprehensive income of investees that will be
                                                                                    8,980               -
        reclassif ied to profit or loss under equity method
        Amount attributable to the Company in the current period                   15,065               -
        Previous other comprehensive income reclassif ied to retained
                                                                                  (6,085)               -
        earnings for current period
                                                                                  18,662               -
      2. Changes in fair value of other equity instruments
      Current gain/(loss)                                                          9,798               -
      Previous other comprehensiv e income reclassified to retained
                                                                                  13,251               -
        earnings for current period
      Income tax effects recorded in other comprehensiv e income                  (4,387)              -

      II. Items that w ill be reclassif ied to profit or loss subsequently       461,163     (1,663,194)
      1. Share of other comprehensive income of investees that will be
                                                                                  32,200        132,924
         reclassif ied to profit or loss under equity method
         Amount attributable to the Company in the current period                 59,512        132,924
      Income tax effects recorded in other comprehensiv e income                (27,312)              -

      2. Available-for-sale financial assets                                            -     (803,456)
      Current gain/(loss)                                                               -     (576,616)
      Previous other comprehensiv e income reclassified to profit for current
                                                                                        -     (226,840)
        period
      Income tax effects recorded in other comprehensiv e income                        -

      3. Cash flow hedges                                                        (86,576)       (96,064)
      Current gain/(loss)                                                       (118,895)       (45,368)
      Previous other comprehensiv e income reclassified to profit for current
                                                                                  31,056        (40,471)
        period
      Income tax effects recorded in other comprehensiv e income                   1,263        (10,225)

      4. Differences arising from translation of foreign currency financial
                                                                                 250,005       (896,598)
        statements of overseas operations

      5. Net amount transferred to profit or loss in the current period for
                                                                                 265,534               -
        disposal of overseas operations

      Total                                                                      488,805     (1,663,194)




                                                                 145
                                                              TCL Technology Group Corporation
                                                                 Notes to Financial Statements
                                                  (For the period from 1 January 2019 to 31 December 2019)
                                                 (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

68    Other comprehensive income (continued)

(2)   Changes in Other Comprehensive Income Items

                                                       Equity attributable to shareholders of the Company as the parent
                                                                                             Differenc es
                                               Share of other                                arising from
                                               comprehensive      Gain/Loss on                translation
                                                  income of        changes in                  of foreign
                                             investees that will fair value of Gain/(Loss) currency-d Fair value                                  Total other
                            Accounting        be reclassified to available-for- on changes enominated changes of                       Non-cont r comprehen
                              policy         profit or loss under sale financial in cash flow financial other equity                     olling       sive
                             Change            equity method         assets         hedges   statements instruments       Subtotal     interests    income

      January 1, 2018                    -              56,074        400,380      121,329      (358,511)          -         219,272      48,069     267,341


      Change in 2018                     -             132,924      (750,787)     (89,078)      (686,493)          -      (1,393,434) (269,760) (1,663,194)


      December 31, 2018                  -             188,998      (350,407)          32,251 (1,045,004)          -      (1,174,162) (221,691) (1,395,853)


      Changes in 2019          334,950                  41,181               -    (66,723)       311,357     19,315          640,080    183,675      823,755


      December 31, 2019        334,950                 230,179      (350,407)     (34,472)      (733,647)    19,315        (534,082)    (38,016)   (572,098)




                                                                                 146
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

69    Earnings per Share (EPS)

(1)   Basic EPS

                                                                          2019                     2018

      Net profit attributable to owners of the Company as the
                                                                     2,617, 765              3,468, 211
      parent

      Weighted average outstanding ordinary shares (in
                                                                    13,178,283             13,514,972
      thousand shares)

      Basic EPS (RMB yuan/share)                                         0.1986                0.2566

(2)   Diluted EPS

                                                                          2019                     2018

      Net profit attributable to owners of the Company as the
                                                                     2,617, 765              3,468, 211
      parent

      Diluted weighted average outstanding ordinary shares
                                                                    13,528,439             13,538,282
      (in thous and shares )

      Diluted EPS (RMB yuan/share)                                       0.1935                0.2562



70    Cash Generated from Other Operating Activities

      Cash generated from other operating activities in the consolidated cas h flow statement was
      RMB2,329,643,000, which primarily consisted of other current payments received and government
      subsidies.

71    Cash Used in Other Operating Activities

      Cash used in other operating activities in the consolidated        cash     flow statement   was
      RMB3,780,067,000, which primarily consisted of various expenses.

72    Cash Used in Other Financing Activities

      Cash used in other operating activities in the consolidated cash flow            statement   was
      RMB2,350,627,000, which was mainly cash paid to repurchase treasury stock.




                                                    147
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

V     Notes to Items in Consolidated Financial Statements (Continued)

73    Net Cash Generated from/Used in Operating Activities

      Reconciliation of Net Profit to Net Cash Generated from/ Used in Operating Activities
                                                                        2019                       2018

      Net profit                                                   3,657, 734                 4,065, 198
      Add:Asset impairment allowance                                823,370                  1,523, 119
      Depreciation of fixed assets                                 7,153, 320                 6,941, 175
      Amortization of intangible assets                              545,523                    548,421
      Amortization of long-term prepaid expense                      573,165                    481,053
      Loss/(Inc ome) from disposal of fixed assets,
      intangible assets and ot her long-lived assets                    (1,157)              (10,071)
      Loss on retired or damaged fixed assets                             1,679                 7,656
      Loss/(Gain) on changes in fair value                          (473,673)                   3,879
      Financial Expenses                                            1,632, 846             1,580, 958
      Return on Investment                                        (3,442,554)            (2,167,254)
      Decrease/(Increase) in deferred inc ome tax assets              (42,992)                 73,961
      Increase/(Decrease) in deferred income tax
      liabilities                                                    512,326                 169,195
      Decrease/(Increase) in inventory                            13,641,565             (7,941,359)
      Decrease/(Increase) in operating receivables                10,891,929               1,228, 167
      Increase/(Decrease) in operating receivables              (24,131,345)                 898,032
      Other                                                          148,360               3,084, 449

      Net cash generated from/used in operating activities        11,490,096             10,486,579

74    Changes in Cash and Cash Equivalents, Net

       Ending cash and cash equivalents                           17,637,743             25,702,384
       Less: Beginning cash                                       25,702,384             23,281,169

       Net increase in cash and cash equivalents                  (8,064,641)                 2,421, 215

      Analysis of ending cash and cash equivalents:

       Ending monetary assets                                     18,648,185             26,801,343
       Less: Ending non-cash equivalents (note)                    1,010, 442             1,098, 959

       Ending cash and cash equivalents                           17,637,743             25,702,384

Not   The ending non-cash equivalents primarily included bank deposits, the required reserve
e:    deposited by TCL Finance Co., Ltd. in the central bank and other monetary assets. For further
      information, see Note V, item 1.




                                                    148
                                 TCL Technology Group Corporation
                                    Notes to Financial Statements
                     (For the period from 1 January 2019 to 31 December 2019)
                    (The amounts in tables are expressed in thousands of RMB)


V    Notes to Items in Consolidated Financial Statements (Continued)

75   Foreign currency monetary items

                                                          December 31, 2019
                                   Foreign currency balanc e    Conversion rate   RMB balance
     Monetary assets
     Including: US D                                377,494             6.9762       2,633, 477
                HKD                                 306,665             0.8959         274,741

     Accounts receivable
     Including: US D                                295,367              6.9762      2,060,539
                HKD                                   5,403              0.8959          4,841

     Accounts payable
     Including: US D                                 150,246             6.9762      1,048,146
                HKD                                1,105,500             0.8959        990,417
                JPY                                1,682,029             0.0642        107,986

     Other receivables
     Including: US D                                 11,875              6.9762         82,842
                HKD                                 271,690              0.8959        243,407
                JPY                                  11,970              0.0642            768
                PLN                                     118              1.8387            217
                INR                                 624,138              0.0978         61,041
     Other payables
     Including: US D                                 21,373              6.9762        149,102
                HKD                                  65,523              0.8959         58,702
                JPY                                  13,306              0.0642            854
                INR                                  45,356              0.0978          4,436
     Short-term borrowings
     Including: US D                                199,198              6.9762      1,389,645

     Long-term borrowings
     Including: US D                               2,626,000             6.9762     18,319, 501




                                             149
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

VI Changes in Consolidation Scope
1 Newly Consolidated Entities for Current Period
                                                                                                                The
                                                 Consolidated
                     Investee                                      Reason for change    Registered capital   Company’s
                                                   period
                                                                                                              interest

    Huizhou Hongsheng Technology
                                               Jan.-Dec. 2019      Newly incorporated      RMB 1,000,000           100%
    Development Co., Ltd.

    Kunshan Ruiying Medical Imaging
                                               Feb.-June 2019      Newly incorporated     RMB 50,000,000           100%
    Diagnosis Center Co., Ltd.

    Zhongshan Hongyuan Technology
                                               Feb.-March 2019     Newly incorporated        RMB 100,000           100%
    Development Co., Ltd.

    Wuxi TCL Medical Imaging Technology
                                               Feb.-June 2019      Newly incorporated     RMB 43,900,000            70%
    Co., Ltd.

    Tongxinggongxue Education Technology
                                               Feb.-Dec. 2019      Newly incorporated      RMB 5,000,000           100%
    (Huizhou) Co., Ltd.

    AHFG ESOP Limited                          Feb.-Dec. 2019      Newly incorporated         HKD 50,000           100%


    TCL Entertainment Solutions Limited        March-March 2019 Newly incorporated        RMB 20,000,000           100%

    Guangzhou Tianshi Cloud Intelligence
                                               March-March 2019 Newly incorporated        RMB 50,000,000            80%
    Technology Co., Ltd.

    Zhihui Xinyuan Commercial (Huizhou) Co.,
    Ltd.                                       March-March 2019 Newly incorporated        RMB 30,000,000           100%


    Jiaozuo Kangying Clinic Co., Ltd.          March-June 2019     Newly incorporated     RMB 10,000,000            99%


    Shenzhen Huaying Clinic                    April-June 2019     Newly incorporated     RMB 12,000,000            70%

    Shenzhen Huaying Medical Imaging
                                               April-June 2019     Newly incorporated     RMB 20,000,000           100%
    Diagnosis Center
    TCL Industrial Technology Research
                                               May - Dec. 2019     Newly incorporated     PLN 10,000,000           100%
    Institute (Europe) Co., Ltd.

    TCL Technology Investments Limited         July - Dec. 2019    Newly incorporated    HKD 214,115, 600          100%

    Admiralty Harbour Global Credit
                                               Aug. - Dec. 2019    Newly incorporated            USD 0.01          100%
    Opportunities Fund

    GARFORD LIMITED                            Sept. - Dec. 2019   Newly incorporated                USD1          100%

    Chongqing Blue Business Consulting Co.,
                                               Oct.- Dec. 2019     Newly incorporated     RMB 10,000,000           100%
    Ltd.




                                                          150
                                TCL Technology Group Corporation
                                   Notes to Financial Statements
                    (For the period from 1 January 2019 to 31 December 2019)
                   (The amounts in tables are expressed in thousands of RMB)

VI   Changes in Consolidation Scope (Continued)
2    Subjects that are no longer included in the consolidation scope in the current period (continued)
                                                         Time of no longer
                                                                included in
     Investee                                          consolidation scope              Reas on for change
     TCL Technology Park (Wuhan) Co., Ltd.                         Jan. 2019                         Transfer
     Shanghai Xinying Medical Technology Co.,
     ltd.                                                          Jan. 2019                     Cancellation
     Taiwan Dabis Mobile Communication Co.,
     ltd.                                                        March 2019                      Cancellation
     Xingyun Enterprise Co., Ltd.                                March 2019                      Cancellation
     Beijing Xunying Renren Medical
     Technologies Co., Ltd.                                      March 2019                      Cancellation
     Shaanxi Shangxinfeng Environmental
     Technology Co., Ltd.                                          April 2019                        Transfer
     Shanghai Huiying Medical Technology Co.,                                            Capital Increase by
     Ltd.                                                          April 2019          Minority Shareholders
     TCL Industries Holdings (HK) Limited and its
     subsidiaries                                                  April 2019                        Transfer
     Huizhou TCL Household Electric Appliance
     Group Co., Ltd. and its subsidiaries                          April 2019                        Transfer
     TCL Home Appliances (Hefei) Co., Ltd. and
     its subsidiaries                                              April 2019                        Transfer
     Huizhou Cool Friends Network Technology
     Co., Ltd. and its subsidiaries                                April 2019                        Transfer
     Koyoo Online Service Co., Ltd.                                April 2019                        Transfer
     TCL Technology Park Co., Ltd. and its
     subsidiaries                                                  April 2019                        Transfer
     Getech Ltd. and its subsidiaries                              April 2019                        Transfer
     JDH Information Tech (Zhuhai) Co., Ltd.                      April 2019                        Transfer
     Shenzhen HYT E-Commerce Limited                              June 2019                      Cancellation
     Techne Corporation                                           June 2019                      Cancellation
     Wuxi TCL Medical Imaging Technology Co.,                                            Capital Increase by
     Ltd. and its subsidiaries                                    June 2019            Minority Shareholders
     Shenzhen Haixing Education Technology
     Co., Ltd.                                                     July 2019                     Cancellation
     Caixingqiu (Shenzhen) Technology Co., Ltd.                    July 2019                     Cancellation
     Shenzhen Thunderbird Digital Entertainment
     Technology Co., Ltd.                                          Aug. 2019                         Transfer
     Shenzhen HAWK Internet Co., Ltd. and its
     subsidiaries                                                  Nov. 2019                         Transfer
     Huizhou TCL Environmental Resource Co.,
     Ltd. and its subsidiaries                                     Nov. 2019                         Transfer
     Guangzhou Zhilang Credit Investigation Co.,
     Ltd.                                                          Nov. 2019                         Transfer
     Xi' an Huaxian Software Development
     Service Co., Ltd.                                             Dec. 2019                     Cancellation
     Huizhou TCL Light Electrical Appliances Co.,
     Ltd.                                                          Dec. 2019                         Transfer




                                                    151
                                                              TCL Technology Group Corporation
                                                                 Notes to Financial Statements
                                                  (For the period from 1 January 2019 to 31 December 2019)
                                                  (The amounts in tables are expressed in thousands of RMB)


VI   Changes in Consolidation Scope (Continued)


3    Subsidiaries Disposed in Current Period


                                                                         TCL Industries
                                                                 Holdings (HK) Limited
                                                                    and its subsidiaries
                                                                           Huizhou TCL
                                                                    Hous ehold Electric
                                                                 Appliance Group Co.,
                                                               Ltd. and its subsidiaries
                                                                TCL Home Applianc es
                                                               (Hefei) Co., Ltd. and its
                                                                            subsidiaries
                                                                 Huizhou Cool Friends      Shaanxi Shangxinfeng       Shanghai Huiying        Wuxi TCL Medical
                                          TCL Technology Park      Network Tec hnology
     Name of subsidiaries                                                                         Environmental Medical Technology Co., Imaging Technology Co.,
                                             (Wuhan) Co., Ltd.         Co., Ltd. and its    Technology Co., Ltd.                   Ltd. Ltd. and its subsidiaries
                                                                            subsidiaries
                                                                 Koyoo Online Service
                                                                               Co., Ltd.
                                                                 TCL Technology Park
                                                                       Co., Ltd. and its
                                                                            subsidiaries
                                                                    Getech Ltd. and its
                                                                            subsidiaries
                                                                  JDH Information Tech
                                                                      (Zhuhai) Co., Ltd.
                                                                                                            435                        -                        -
     Price for equity interest disposal               255,000                 4,760, 000




                                                                                 152
                                                                TCL Technology Group Corporation
                                                                   Notes to Financial Statements
                                                    (For the period from 1 January 2019 to 31 December 2019)
                                                   (The amounts in tables are expressed in thousands of RMB)

VI Changes in Consolidation Scope (Continued)
3 Subsidiaries Disposed in Current Period (Continued)

                                                                                                                   51.00%                     90.00%                      35.00%
    % equity interest disposed                           51.00%              Not applicable
                                                                                                                 Transfer        Capit al Increase by       Capit al Increase by
    Way of disposal                                        Transfer                 Transfer                                   Minority Shareholders      Minority Shareholders
    Time of loss of cont rol                             Jan. 2019                April 2019                   April 2019                   May 2019                   June 2019
                                             When the rights and                                      When the rights and        When the rights and        When the rights and
                                            obligations in relation    When the rights and        obligations in relation to obligations in relation to obligations in relation to
                                              to the target equity obligations in relation to    the target equity interest the target equity interest the target equity interest
    Determination basis for time of loss   interest have all been the target equity interest    have all been transferred have all been transferred have all been transferred
    of control                                         transferred have all been trans ferred
    Differenc e between the disposal
    price and the Company’s share of
    the subsidiary’s net assets in the
                                                           1,265                  1,238, 377                          (43)                      1,494                      28,728
    consolidated financial statements
    relevant to the disposed equity
    interest




                                                                                     153
                                                                 TCL Technology Group Corporation
                                                                    Notes to Financial Statements
                                                     (For the period from 1 January 2019 to 31 December 2019)
                                                    (The amounts in tables are expressed in thousands of RMB)



VI   Changes in Consolidation Scope (Continued)


     Subsidiaries Disposed in Current Period (Continued)
3


                                           Shenzhen Thund                                                                       Huizhou TCL          Huizhou TCL
                                                                   Shenzhen HAWK                Guangzhou Zhilang
                                           erbird Digital Ent                                                                 Environmental        Light Electrical
     Name of subsidiaries                                           Internet Co., Ltd.          Credit Investigation
                                            ertainment Tech                                                              Resource Co., Ltd.       Appliances Co.,
                                                                  and its subsidiaries                     Co., Ltd.
                                            nology Co., Ltd.                                                             and its subsidiaries                  Ltd.
     Price for equity interest disposal                 0.002                 200,110                                -                274,891               31,240

     % equity interest disposed                         100%                    100%                           100%                      71%                 100%

     Way of disposal                                  Transfer                Transfer                       Transfer                 Transfer             Transfer
     Time of loss of cont rol                     Aug. 2019                 Nov. 2019                     Nov. 2019                Nov. 2019             Dec. 2019
                                                                                                                                                  When the rights
                                             When the rights      When the rights and
                                                                                                When the rights and      When the rights and       and obligations
                                            and obligations in           obligations in
                                                                                                        obligations in           obligations in   in relation to the
                                                relation to the         relation to the
                                                 target equity                                  relation to the target   relation to the target       target equity
                                                                          target equity
                                             interest have all
                                                                                                 equity interest have     equity interest have    interest have all
                                                                     interest have all
     Determination basis for time of         been transferred                                    all been trans ferred    all been trans ferred                been
                                                                    been transferred
     loss of control                                                                                                                                    transferred
     Differenc e between the disposal
     price and the Company’s share of
     the subsidiary’s net assets in the
                                                          200                  20,552                                -                 37,287               22,305
     consolidated financial statements
     relevant to the disposed equity
     interest




                                                                                          154
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

VII Interests in Other Entities
1 Interests in Subsidiaries
(1) Major Subsidiaries
                                                    Place of          Nature of     The Company’s interest How subsidiary
                        Investee
                                                  registration        business           Direct      Indirect was obtained
    TCL China Star Optoelectronics Technology                       Manufacturing
                                                  Shenzhen                              88.82%            - Incorporated
    Co., Ltd. (note 1)                                               and sales

    Shenzhen China Star Optoelectronics                             Manufacturing
                                                  Shenzhen                                    -     53.87% Incorporated
    Semiconductor Display Technology Co., Ltd.                       and sales

    Guangzhou China Ray Optoelectronic                              Research and
                                                  Guangzhou                                   -    100. 00% Incorporated
    Materials Co., Ltd.                                             development

    Wuhan China S tar Optoelectronics                               Manufacturing
                                                   Wuhan                                      -     45.55% Incorporated
    Technology Co., Ltd. (Note 2)                                    and sales

    Wuhan China S tar Optoelectronics
                                                                    Manufacturing
    Semiconductor Display Technology Co., Ltd.     Wuhan                                      -     33.88% Incorporated
                                                                     and sales
    (Note 2)
                                                                                                            Obtained in a
                                                                                                             business
                                                                    Manufacturing                           combination
    Shenzhen CPT Display Technology Co., Ltd.     Shenzhen                                    -    100. 00%
                                                                     and sales                               not under
                                                                                                              common
                                                                                                               control

    China Star Optoelectronics International      Hong Kong            Sales                  -    100. 00% Incorporated
    (HK) Limited
                                                                                                           Obtained in a
                                                                                                            business
    China Display Optoelectronics Technology                         Investment                            combination
                                                   Bermuda                                    -     64.21%
    Holdings Limited                                                   holding                              not under
                                                                                                             common
                                                                                                              control
    China Display Optoelectronics Technology                        Manufacturing
                                                   Huizhou                                    -    100. 00% Incorporated
    (Huizhou) Co., Ltd.                                              and sales

    Wuhan China Display Optoelectronics                             Manufacturing
                                                   Wuhan                                      -    100. 00% Incorporated
    Technology Co., Ltd.                                             and sales

                                                  The Virgin         Investment
    TCL Educational Web Ltd.                                                                  -    100. 00% Incorporated
                                                   Islands             holding

    Shenzhen TCL Educational Technology Co.,                         Educational
                                                  Shenzhen                                    -    100. 00% Incorporated
    Ltd.                                                              services

    Silk Road (Beijing) International Education                      Educational
                                                    Beijing                                   -     80.00% Incorporated
    and Technology Center Co., Ltd.                                   services

    Beijing HAWK Cloud Information Technology
                                                    Beijing      Internet service      100. 00%           - Incorporated
    Co., Ltd.

    TCL Culture Media (Shenzhen) Co., Ltd.        Shenzhen           Ad planning       100. 00%           - Incorporated

                                                                       Product
    Highly Information Industry Co., Ltd.           Beijing                             73.69%            - Incorporated
                                                                     distribution

    Beijing Sunpiestore Technology Co., Ltd.        Beijing            Sales                  -     60.00% Incorporated

    Beijing Lingyun Data Technology Co., Ltd.       Beijing            Sales                  -     60.00% Incorporated

                                                              155
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

VII   Interests in Other Entities (Continued)


1     Interests in Subsidiaries (Continued)

(1)   Major Subsidiaries (Continued)

                                                                             The Company’s interest      How
                                                  Place of
                                                                 Nature of                              subsidiary
      Investee                                   registratio
                                                                 business        Direct        Indirect    was
                                                     n
                                                                                                         obtained

      TCL Finance Holdings Group                 Guangzho                                                  Incorporate
                                                                 Financial         100%                -
      (Guangzhou) Co., Ltd.                         u                                                           d

                                                                                                           Incorporate
      TCL Finance Co., Ltd.                      Huizhou         Financial          82%                -
                                                                                                                d

      TCL Finance Technology (Shenzhen)                                                                    Incorporate
                                                 Shenzhen        Financial                -      100%
      Co., Ltd.                                                                                                 d

      Shenzhen Baisi Asset Management Co.,            Asset                                                Incorporate
                                           Shenzhen management                            -      100%
      Ltd.                                                                                                      d

      TCL Financial Service (Guangzhou) Co., Guangzho            Financial                                 Incorporate
                                                                                          -      100%
      Ltd.                                      u                services                                       d

      TCL Commercial Factoring (Shenzhen)                       Commercial                                 Incorporate
                                                 Shenzhen                                 -      100%
      Co., Ltd.                                                  factoring                                      d

      Huizhou Zhongkai TCL Zhirong
                                                 Huizhou         Financial       89.84%                -    Acquired
      Technology Microcredit Co., Ltd.

                                                                Investment                                 Incorporate
      Xinjiang TCL Equity In vestment Co., Ltd   Xinjiang                          100%                -
                                                                 business                                       d

                                                                Property                                   Incorporate
      TCL Technology Park (Huizhou) Co., Ltd. Huizhou                              100%                -
                                                               management                                       d

                                                 The Virgin Investment                                     Incorporate
      Winshero Investment Limited                                                  100%                -
                                                  Islands    business                                           d

                                                                Research
                                                                                                           Incorporate
      TCL Research America Inc.                     U.S.           and                    -      100%
                                                                                                                d
                                                               development

                                                                Research
      TCL Industrial Technology Research           Hong            and                    -      100% Incorporate
      Institute (Hong Kong) Limited                Kong                                                    d
                                                               development

                                                   Hong         Investment                                 Incorporate
      TCL Technology Investments Limited                                           100%                -
                                                   Kong          business                                       d




                                                               156
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

VII    Interests in Other Entities (Continued)


1      Interests in Subsidiaries (Continued)

(1)    Major Subsidiaries (Continued)

Note
1    Shenzhen China Star Optoelectronics Technology Co., Ltd. was renamed “TCL China Star Optoelectronics
       Technology Co., Ltd.” in October 2019.

Note TCL China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as “TCL CSOT”), a subsidiary
2    of the Company, has a 45.55% interest in Wuhan China Star Optoelectronics Technology Co., Ltd.
       (hereinafter referred to as “Wuhan CSOT”) and a 33.88% interest in Wuhan China Star Optoelectronics
       Semiconductor Display Technology Co., Ltd. (hereinafter referred to as “Wuhan CSOT Optoelectronics
       Semiconductor”). TCL CSOT appoints key management personnel of Wuhan CSOT and Wuhan CSOT
       Optoelectronics Semiconductor and decides its business and financial policies, so TCL CSOT is considered
       to have substantial control over Wuhan CSOT. Therefore, Wuhan CSOT is included in the Company’s
       consolidated financial statements.

      (2) Subsidiaries with Significant Non-Controlling Interests

                                                                 Current period     Current period
                                                                                                        Ending equity
                                                                   Profit or loss        Dividends
                                               Non-controlling                                          attributable to
          Name of subsidiaries                                    attributable to     distributed to
                                                     interests                                         non-controlling
                                                                 non-controlling    non-controlling           interests
                                                                        interests          interests

          TCL China Star Optoelectronics
                                                      11.18%            576,102                   -        32,986,429
          Technology Co., Ltd.
          Highly Information Industry Co., L td.      26.31%             64,251             27,910            297,835




                                                           157
                                                                     TCL Technology Group Corporation
                                                                        Notes to Financial Statements
                                                         (For the period from 1 January 2019 to 31 December 2019)
                                                        (The amounts in tables are expressed in thousands of RMB)

VII Interests in Other Entities (Continued)

1 Interests in Subsidiaries (Continued)

(2) Subsidiaries with Significant Minority Shareholders'' Interests (Continued)

   The main financial information of the above subsidiary is listed as follows:

                                                        December 31, 2019                                                                         December 31, 2018
                            Current     Non-current        Assets       Current        Non-current     Liabilities     Current     Non-current     Assets       Current       Non-current      Liabilities
                            Assets          Assets           Total    Liabilities        Liabilities       Total       Assets          Assets        Total    Liabilities       Liabilities        Total
   TCL China Star
   Optoelectronics
                          39,784,300       90,798,110   130,582,410   36,200,599         39,150,594    75,351,193    37,654,261      78,694,317 116,348,578   35,014,430         33,644,993     68,659,423
   Technology Co.,
   Ltd.
   Highly Information
                          4,482,847           37,662      4,520,509    3,484,042             33,587     3,517,629     3,937,368         20,555    3,957,923    3,050,859            20,000       3,070,859
   Industry Co., Ltd.


                                                                         2019                                                                                          2018
                                                                                                                                                                                                Net Cash
                                                                                                                                                                                              Generated
                                                                                                                                                                                              from/Used
                                                                                             Total        Net Cash Generated                                                     Total                   in
                                                                                    comprehensive      from/Used in Operating              Operating           Net      comprehensive          Operating
                             Operating revenue                 Net profit                 income                     Acti vities            revenue           profit          income            Acti vities
   TCL China Star
   Optoelectronics                     33,993,534                964,444                   846,436                   8,253,015             27,666,368 2,321,582                2,225,619       9,025,339
   Technology Co., Ltd.
   Highly Information
                                       20,835,617                215,604                   215,604                     194,578             16,566,993     195,939                195,939         (80,265)
   Industry Co., Ltd.




                                                                                                158
                                             TCL Technology Group Corporation
                                                Notes to Financial Statements
                                 (For the period from 1 January 2019 to 31 December 2019)
                                (The amounts in tables are expressed in thousands of RMB)

VII    Interests in Other Entities (Continued)
2      Interests in Joint Ventures and Associates
(1)    Basic Information about Major Joint Ventures and Associates
                                                                                                                        The Company’s
                                                                                                                            interest
                                                          Principal
       Investee                                           place of    Nature of business
                                                      business/pla                              Strategic to the         Direct    Indirect
                                                              ce of                         Group’s activities or
                                                       registration                                            not
       Joint ventures–

       TV University Online Distance Education                                Educational
       Technology Co., Ltd.                                Beijing               services                    Yes              -    50.00%

       Huizhou TCL Taidong Shihua Investment
       Co., Ltd.                                          Huizhou                 Shihua                     Yes              -    50.00%
       Associates–

       Tianjin 712 Communication & Broadcasting
       Co., Ltd.                                          Tianjin        Communication                       Yes              -    19.07%
       Bank of Shanghai Co., Ltd.                        Shanghai               Financial                    Yes              -     5.14%
Not    For the Reporting Period, the Company had a 5.14% interest in Bank of Shanghai Co., Ltd. and appointed
e:     one of its directors to be a member of the Risk Management Committee under the Board of the Bank of
       Shanghai.
       Therefore, the Company is deemed to have significant influence on the Bank of Shanghai, and this long -term
       equity investment is thus measured using the equity method.
(2)   Key Financial Information of Major Joint Ventures
                                                          December 31, 2019                                December 31, 2018




                                                   TV University                                 TV University
                                                 Online Distance                               Online Distance
                                                       Education  Huizhou TCL Taidong                Education        Huizhou TCL Taidong
                                                 Technology Co., Shihua Investment Co.,        Technology Co.,       Shihua Investment Co.,
                                                             Ltd.                  Ltd.                    Ltd.                        Ltd.


      Current assets                                   1,280,911                   2,488               1,237,435                      8,504
      Non-current assets                                 73,852                   45,741                  76,396                    32,517
      Total assets                                    1,354,763                   48,229               1,313,831                    41,021


      Current liabilities                             1,033,623                   22,671               1,049,238                      2,734
      Non-current liabilities                            29,140                         -                 27,385                              -
      Total liabilities                               1,062,763                   22,671               1,076,623                      2,734


      Non-controlling interests                           8,489                         -                   7,236                             -


      Equity attributable to shareholders of            283,511                   25,558                 229,972                    38,287
      the Company as the parent

      Share of equity in proportion to the              141,756                   12,779                 114,986                    19,143
      Company’s interest

      Carrying amount of investment in joint            137,902                   12,779                 111,062                    19,143
      venture


                                                               159
                                         TCL Technology Group Corporation
                                            Notes to Financial Statements
                             (For the period from 1 January 2019 to 31 December 2019)
                            (The amounts in tables are expressed in thousands of RMB)

VII   Interests in Other Entities (Continued)

2     Interests in Joint Ventures and Associates (Continued)

(2)   Key Financial Information of Major Joint Ventures (Continued)

                                                   2019                                    2018
                                      TV University                            TV University
                                    Online Distance                          Online Distance      Huizhou TCL
                                         Education Huizhou TCL Taidong            Education            Taidong
                                    Technology Co.,  Shihua Investment       Technology Co., Shihua Investment
                                                Ltd.           Co., Ltd.                 Ltd.          Co., Ltd.


      Operating revenue                   1,795,624                12,849          1,685,044             42,253
      Net profit                             54,791               (12,728)            55,116             (6,894)
      Other Comprehensive
                                                   -                     -                  -                  -
      Income
      Total comprehensive
                                             54,791               (12,728)            55,116             (6,894)
      income
      Group from joint venture
                                                   -                     -            52,954                   -
      for current period

(3)   Key Financial Information of Major Associates

                                           December 31, 2019                       December 31, 2018
                                        Tianjin 712                              Tianjin 712
                                    Communication                            Communication
                                    & Broadcasting     Bank of Shanghai      & Broadcasting Bank of Shanghai
                                           Co., Ltd.          Co., Ltd.             Co., Ltd.        Co., Ltd.


      Current assets                     4,747, 834                   N/A         4,044, 512       340,781,435
      Non-current assets                   716,851                    N/A           686,246       1,686, 990,964
      Total assets                       5,464, 685        2,237, 082,000         4,730, 758      2,027, 772,399


      Current liabilities                2,844, 593                   N/A         2,360, 757      1,670, 100,906
      Non-current liabilities               61,820                    N/A           117,493        195,902,885
      Total liabilities                  2,906, 413                   N/A         2,478, 250      1,866, 003,791


      Non-cont rolling interests                   -                     -                  -           492,059
      Equity attributable to
      shareholders of the                2,558, 272         176,709,000           2,252, 508       161,276,549
      Company as the parent

      Share of equity in
      proportion to the                    487,862              9,077, 785          429,553           8,045, 973
      Company’s interest
      Carrying amount of
                                           762,470              9,314, 611          704,224           8,363, 564
      investment in associate




                                                          160
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)

VII    Interests in Other Entities (Continued)

2      Interests in Joint Ventures and Associates (Continued)

(3)    Key Financial Information of Major Associates (Continued)

                                                 2019                                        2018
                                      Tianjin 712                                    Tianjin 712
                                  Communication                                Communication &
                                  & Broadcasting     Bank of Shanghai          Broadcasting Co., Bank of Shanghai
                                         Co., Ltd.            Co., Ltd.                      Ltd.         Co., Ltd.


      Operating revenue                2,140, 653         49,800,000                  1,625, 550       43,887,822
      Net profit                         345,317                    N/A                 224,927        18,067,835
      Other Comprehensive                        -                      -                      -
      Income                                                                                            1,180, 474
      Total comprehensive                345,317              22,400, 000               224,927
      income                                                                                           19,248,309

      Group from joint venture
      for current period                    7,362               245,339                   4,417           194,713


(4)   Financial Information of Insignificant Joint Ventures and Associates Combined Respectively

                                                                             2019                            2018
      Joint vent ures:

      Aggregat ed carrying amount of
                                                                            23,876                        490,684
      investments
      Aggregat e of following items calculated in
      proportion to the Company’s interest
      Net profit (note)                                                     17,207                           1,926
      Other comprehensive income (note)                                          -                                -
      Total comprehensive inc ome                                           17,207                           1,926


      Associates:


      Aggregat ed carrying amount of
                                                                       6,942, 645                       7,268, 434
      investments
      Aggregat e of following items calculated in
      proportion to the Company’s interest
      Net profit (note)                                                   550,645                          393,086

      Other comprehensive income (note)                                   (12,991)                         105,061

      Total comprehensive inc ome                                         537,654                          498,147


Note: The net profit and other comprehensive income have taken into account the impacts of both the fair
      value of the identifiable assets and liabilities upon the acquisition of investment and accounting
      policies unifying.



                                                        161
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

VIII   Classification of Financial Instruments and Fair Value

       Fair value of financial instruments and levels

1、 Fair value is divided into the following levels in measurement and disclosure:

       Level 1 refers to the (unadjusted) quotation of the same type of assets or liabilities on the
       active market; and the Company mainly adopts the closing price as the value of a financial
       asset. Financial instruments of level 1 mainly include exchange listed stocks and bonds.

       Level 2 refers to the directly or indirectly observable input of a financial asset or liability that
       does not belong to level 1.

       Level 3 refers to the input of a financial asset or liability determined based on variables
       other than the observable market data (non-observable input).

2、 Basis for determining the market value of items measured at continuous level 1 fair value

       The Company adopts the active market quotation as the fair value of a level 1 financial
       asset.

3、 Items measured at continuous level 2 fair value adopt the following valuation techniques
    and parameters:

       Derivative financial assets and liabilities are multiple IRS and CCS signed between the
       Group and financial institutions. The Company adopts the quotation provided by the
       financial institution in valuation.

4、 Items measured at continuous level 3 fair value adopt the following valuation techniques
    and parameters (nature and quantity):

       Other non-current financial assets measured at continuous level 3 fair value are mainly
       unlisted equity investments held by the Company. In measuring the fair value, the Company
       mainly adopts the valuation technique of comparison with listed companies, taking into
       account the price of similar securities and liquidity discount.

       Held-for-trading financial assets measured at continuous level 3 fair value are mainly wealth
       management products held by the Company. In valuation of the fair value, the Company
       adopts the method of discounting future cash flows based on the agreed expected yield
       rate.




                                                     162
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

VII   Classification of Financial Instruments and Fair Value (Continued)
I


5、 Financial instruments measured at three levels of fair value


      Financial assets
                     Item                     Level 1             Level 2            Level 3              Total
      Held-for-trading financial assets       2,675, 15                              3,043, 44
      (see Note V, 2)                                 4           356,155                    2             6,074, 751
      Derivative financial assets (see
      Note V, 4)                                        -         159,036                      -             159,036
      Investments in other equity
      instruments (see Note V, 16)            192,489                       -          87,395                279,884
      Other non-current financial                                                    2,542, 68
        assets(see Note V, 17)                          -                   -                9             2,542, 689


      Total assets continuously               2,867, 64                              5,673, 52
       measured at fair value                         3           515,191                    6             9,056, 360


      Financial liabilities
                         Item                      Level 1             Level 2              Level 3           Total
      Held-for-trading financial
       liabilities(see Note V, 30)                   43,000             145,220                       -      188,220
      Derivative financial liabilities (see
      note V, 32)                                             -             84,705                    -       84,705

      Total liabilities continuously
      measured at fair value                         43,000             229,925                       -      272,925




                                                            163
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

IX   Related Parties and Related-Party Transactions

1    Actual controller and its acting-in-concert parties

     The Company has no controlling shareholder.


     Mr. Li Dongsheng and Xinjiang Jiutian Joint Equity Investment Partnership (Limit ed Partnership)
     became t he concerted parties due to the signing of the Concerted Action A greement, holding a total
     of 1.221 million shares, making them the largest shareholder of the company.


     As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who owns
     over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total
     share c apital; 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 vot ing
     rights corresponding to his interest in the limited liability company’s total capital or the joint stock
     company’s total number of shares. According to the definition above, the Company has no
     controlling shareholder or actual controller.




                                                      164
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

IX   Relat ed Parties and Related-P arty Transactions (Continued)


2    Relat ed Parties that Do Not Control or Are Not Controlled by the Company


     Information about such related parties:


     Relat ed party                                                              Relationship with the
                                                                                            Company
     Petro AP (Hong Kong) Company Limited                                                   Associate
     Huizhou TCL Taidong Shihua Investment Co., Ltd.                                    Joint Venture
     TV University Online Distance Education Technology Co., Ltd.                       Joint Venture
     Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.                                          Associate
     Yizheng Zeyu Electric Light Co., Ltd.                                                  Associate
     AGC New Electronic Display Glass (Shenzhen) Co., Ltd.                                  Associate
     Xinjiang Dongpeng Weichuang Equity Investment Partnership
                                                                                            Associate
     (Limited Partnership)
     Xinjiang Dongpeng Heli Equity Investment Partnership (Limited
                                                                                            Associate
     Partnership)
     Tibet Dongwei Investment Management Cent er (Limited
                                                                                            Associate
     Partnership)
     Urumqi Dongpeng Chuangdong Equity Investment Management
                                                                                            Associate
     Partnership (Limited Partnership)
     Urumqi TCL Create Dynamic Equity Investment Management Co.,
                                                                                            Associate
     Ltd.
     Shenzhen Tianyi Hemeng Education Co., Ltd.                                             Associate
     Shenzhen Tixiang Management Technology Co., Ltd.                                       Associate
     Shenzhen Qianhai Qihang S upply Chain Management Co., Ltd.                             Associate
     Shenzhen Jucai Supply Chain Technology Co., Ltd.                                       Associate
     Shanghai Huiying Medical Technology Co., Ltd.                                          Associate
     Shanghai Gen A uspicious Investment Management Co., Ltd.                               Associate
     Nanjing A Dynamic Equity Investment Fund Management Co., Ltd.                          Associate
     Huizhou Kaichuang Vent ure Investment Partnership (Limited
                                                                                            Associate
     Partnership)
     Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                            Associate
     subsidiaries
     Huizhou TCL Real Estate Development Co., Ltd.                                          Associate
     Hubei Changjiang Hezhi Equity Investment Fund Management
     Co., Ltd.                                                                              Associate

     Beijing A Dynamic Investment Consulting Co., Ltd.                                      Associate




                                                   165
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

IX   Relat ed Parties and Related-P arty Transactions (Continued)


2    Relat ed Parties that Do Not Control or Are Not Controlled by the Company (Continued)


     TCL Air Conditioner (Wuhan) Co., Ltd. and Its Subsidiary                                  Associate
     Getech Ltd. and its subsidiaries                                                          Associate
     TCL Finance (HK) Limited                                                                  Associate
     Bank of Shanghai Co., Ltd.                                                                Associate
     Purplevine IP Operating (Shenzhen) Co. Ltd                                   Associate’s subsidiary
     Zijins han Investment Co., Ltd.                                              Associate’s subsidiary
     Elite Excellent Investments Limited                                          Associate’s subsidiary
     Qihang Import&Export Limited                                                 Associate’s subsidiary
     Huixing Holdings Limited                                                     Associate’s subsidiary
     UNION DY NAMIC INVES TME NT LIMITE D                                         Associate’s subsidiary
     MARVEL PARADISE LIMITE D                                                     Associate’s subsidiary
     ESTEEM VENTURE INVES TME NT LIMITE D                                         Associate’s subsidiary
     PETRO AP S.A.                                                                Associate’s subsidiary
     Shenzhen Xirang International Commercial Travel Co., Ltd.                    Associate’s subsidiary
     Beijing National Center for Open & Distance Education Co., Ltd.          Joint vent ure’s subsidiary
                                                                            Enterprises Greatly Affected
     CJ Speedex Logistics Co., Ltd.
                                                                                   by the same director
                                                                           Enterprises under the control
     TCL Industries Holdings Inc.and its Subsidiaries
                                                                                    of the same director




                                                   166
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)
3     Major related-party transactions

                                                                         2019            2018
(1)   Sale of raw materials and finished products            note1

                                                                     6,963,427               -
      TCL Industries Holdings Inc. and its subsidiaries

      Shenzhen Qianhai Qihang Supply Chain                            652,343         550,794
      Management Co., Ltd.
                                                                      511,551         474,640
      Qihang Import and Export Limited
                                                                      252,078         901,905
      Saipu TCL Electronic Industrial Technology Co., Ltd.
                                                                       85,540         179,939
      Subida Xijie Logistics Co., Ltd.
                                                                       79,594         273,062
      TCL Sun Inc.
                                                                       44,889         103,045
      TCT Mobile - Telefones LTDA
                                                                       23,346          84,163
      T2Mobile International Limited

      Huizhou TCL Environmental Resource Co., Ltd. and                  5,177                -
      its subsidiaries

      Ziteng Intellectual Property Operation (Shenzhen)                   713              61
      Co., Ltd.
                                                                          336             144
      Taiyang Electro-optic (Huizhou) Co., Ltd.
                                                                          240                -
      Beijing Shangdao Yuetu Technology Co., Ltd.
                                                                          238          63,947
      Palm Venture Group
                                                                          116          21,130
      Shenzhen Thunderbir d Smart Products Co.,Ltd.

      Shenzhen Tixiang Enterprise Management                               40              18
       Technology Co., Ltd.
                                                                           19             136
      Shenzhen Jucai Supply Chain Technology Co., Ltd.
                                                                           15              41
      Huizhou Gaoshengda Technology Co., Ltd.

      Beijing National Center for Open & Distance                          12              92
      Education Co., Ltd.
                                                                             -          8,653
      TCL Zhiyi Technology Huizhou Co., Ltd.
                                                                             -         41,217
      TCL Very Lighting Technology (Huizhou) Co., Ltd.
                                                                             -          2,665
      T2Mobile (Shanghai) Limited
                                                                             -            185
      Honpe Technology (Shenzhen) Co., Ltd.

      Shenzhen Thunderbir d Netw ork Technology Co.,                         -             37
       Ltd.
                                                                             -          3,031
      Huizhou Shenghua Industrial Co., Ltd.
                                                                             -              6
      Huizhou TCL Real Estate Development Co.,Ltd.

      Shenzhen Thunderbir d Information Technology Co.,                      -              7
      Ltd.
                                                                             -          1,229
      Shenzhen Thunderbir d Netw ork Media Co.,Ltd.
                                                                     8,619,674       2,710,147


                                                              167
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

3     Major Related-Party Transactions
                                                             2019                     2018

      Finished Goods from Related           Note
(2)
      Parties                               2

      AGC New Electronic Display Glass
                                                         1,147, 113                  13,651
      (Shenzhen) Co., Ltd.
      TCL Industries Holdings Inc.and its
                                                          813,551                          -
      Subsidiaries
      Huizhou Gaoshengda Technology
                                                          154,843                 1,257, 707
      Co., Ltd.
      Shenzhen Qianhai Qihang Supply                        95,669                 405,848
      Chain Management Co., Ltd.
      CJ Speedex Logistics Co., Ltd.                        78,847                 340,253
      Shenzhen Jucai Supply Chain
                                                            68,832                   44,272
      Technology Co., Ltd.
      Taiyang Electro-optic (Huizhou)
                                                            50,882                 236,562
      Co., Ltd.
      TCL Very Lighting Technology                          41,946                 257,248
      (Huizhou) Co., Ltd.
      Wuhan Shangde Plastics                                33,866                 132,862
      Technology Co., Ltd.
      Huizhou Shenghua Industrial Co.,
                                                            20,659                 329,165
      Ltd.
      Amlogic Co., Limited                                  13,947                   99,940
      Qihang Import&Export Limited                           3,529                 242,316
      Huizhou TCL Taidong Shihua
                                                             1,551                         -
      Investment Co., Ltd.
      Shenzhen Thunderbird Network
                                                               695                    2,457
      Media Co., Ltd.
      Shenzhen Thunderbird Smart
                                                               370                   21,841
      Products Co., Ltd.
      Canyon Circuit Technology                                 58                    3,166
      (Huizhou) Co., Ltd.
      Guangdong Regency                                            -                 56,909
      Optics-Electron Corp.
      Yizheng Zeyu Electric Light Co.,                             -                  7,371
      Ltd.
      Tairui (Hong Kong) Limited                                   -                  7,337
      TCL Rechi (Huizhou) Refrigeration                            -                  3,156
      Equipment Co., Ltd.
      Rechi Precision Mechanism                                    -                    513
      (Huizhou) Co., Ltd.

                                                         2,526, 358               3,462, 574




                                                   168
                                  TCL Technology Group Corporation
                                     Notes to Financial Statements
                      (For the period from 1 January 2019 to 31 December 2019)
                     (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

3     Major Related-Party Transactions (Continued)

                                                                       2019        2018
(3)   Getting Funding from Related Parties            Note 3

      TCL Air Conditioner (Wuhan) Co., Ltd. and Its
                                                                    652,105            -
      Subsidiary
      Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.                 350,004            -
      Xinjiang Dongpeng Weichuang Equity
                                                                    169,288            -
      Investment Partnership (Limited Partnership)
      Huizhou TCL Environmental Resource Co., Ltd.
                                                                      82,659           -
      and its subsidiaries
      Shenzhen Qianhai Qihang Supply Chain                            30,475      29,876
      Management Co., Ltd.
      Qihang Import&Export Limited                                    28,267      64,677
      Shenzhen Jucai Supply Chain Technology Co.,
                                                                      22,535      17,346
      Ltd.
      Beijing National Center for Open & Distance
                                                                       5,081      13,177
      Education Co., Ltd.
      Elite Excellent Investments Limited                              2,164       2,162
      Shenzhen Tixiang Management Technology Co.,                      1,599        845
      Ltd.
      Huixing Holdings Limited                                           665        668
      MARVEL PARADISE LIMITED                                            640        641
      TV University Online Distance Education                            554       1,534
      Technology Co., Ltd.
      UNION DYNAMIC INVESTMENT LIMITED                                   471        775
      Xinjiang Dongpeng Heli Equity Investment
                                                                         297           -
      Partnership (Limited Partnership)
      Petro AP (Hong Kong) Company Limited                               140           -
      ESTEEM VENT URE INVEST MENT LIMITED                                 97           -
      Zijinshan Investment Co., Ltd.                                       1          6
      Huan Tech Co., Ltd.                                                   -       467
      Shenzhen Thunderbird Network Technology Co.,                          -    436,565
      Ltd.
      CJ Speedex Logistics Co., Ltd.                                        -     25,138
      Huizhou Gaoshengda Technology Co., Ltd.                               -     28,907
      Shenzhen Thunderbird Network Media Co., Ltd.                          -     84,760
      Canyon Circuit Technology (Huizhou) Co., Ltd.                         -     60,085
      Huizhou Shenghua Industrial Co., Ltd.                                 -      5,863
      Taiyang Electro-optic (Huizhou) Co., Ltd.                             -      4,658
      Shenzhen Thunderbird Smart Products Co., Ltd.                         -      1,620
      Shenzhen Thunderbird Information Technology                           -      4,663
      Co., Ltd.
                                                                   1,347, 042    784,433




                                               169
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)
3     Major Related-Party Transactions (Continued)
                                                                        Note
(4)   Providing Funding for Related Parties                              3        2019      2018

      TCL Industries Holdings Inc.and its Subsidiaries                         2,692,921         -
      Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                427,593          -
      subsidiaries
      TCL Air Conditioner ( Wuhan) Co., Ltd. and Its Subsidiary                 146,439          -
      Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd.                 112,318     43,000
      Qihang Import&Export Limited                                                     -     5,230
      Huizhou Gaoshengda Technology Co., Ltd.                                          -    45,819
      Canyon Circuit Technology (Huizhou) Co., Ltd.                                    -    10,000

                                                                               3,379,271   104,049

(5)   Lease                                                                       2019      2018
      Rental income
      AGC New Electronic Display Glass (Shenzhen) Co., Ltd.                       40,629    24,082
      TCL Industries Holdings Inc.and its Subsidiaries                            22,572         -
      Beijing National Center for Open & Distance Education Co., Ltd.              3,361    13,625
      Huizhou TCL Real Estate Development Co., Ltd.                                  866        70
      Shenzhen Thunderbird Network Media Co., Ltd.                                   787     1,575
      Shenzhen Thunderbird Infor mation Technology Co., Ltd.                         608     1,041
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                               449         -
      Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd.                      445     1,703
      CJ Speedex Logistics Co., Ltd.                                                 431     1,109
      Purplevine IP Operating (Shenzhen) Co. Ltd                                     366       211
      Hubei Changjiang Hezhi Equity Investment Fund Management                      253       871
      Co., Ltd.
      Shanghai Huiying Medical Technology Co., Ltd.                                 213          -
      Zhihui Xinyuan Commerce (Huizhou) Co., Ltd.                                   169          -
      Urumqi Dongpeng Chuangdong Equity Investment Management                        60       215
      Partnership (Limited Par tnership)
      Shenzhen Tianyi Hemeng Education Co., Ltd.                                     34         -
      Shenzhen Yisheng Kangyun Technology Development Co., Ltd.                      31       122
      Huan Tech Co., Ltd.                                                            10         68
      Huizhou Shenghua Industrial Co., Ltd.                                           1          1
      Taiyang Electro-optic (Huizhou) Co., Ltd.                                       1          2
      TCL Very Lighting Technology (Huizhou) Co., Ltd.                                -          1
      Beijing A Dynamic Investment Consulting Co., Ltd.                               -          4
      Huizhou Kaichuang Venture Investment Partner ship (Limited
      Partnership)                                                                     -         4

      Nanjing A Dynamic Equity Investment Fund Management Co., Ltd.                    -         4
      Qingteng Intellectual Proper ty Holding (Shenzhen) Co., Ltd.
                                                                                       -      396
      Shanghai Gen Auspicious Investment Management Co., Ltd.                          -         4
      Urumqi TCL Create Dynamic Equity Investment Management Co.,                      -      215
      Ltd.
                                                                170
                                       TCL Technology Group Corporation
                                          Notes to Financial Statements
                           (For the period from 1 January 2019 to 31 December 2019)
                          (The amounts in tables are expressed in thousands of RMB)


IX    Related Parties and Related-Party Transactions (Continued)

3     Major Related-Party Transactions (Continued)

(5)   Lease (continued)

      Shenzhen Thunderbird Network Technology Co., Ltd.                       -                1
      Tibet Dongwei Fund Management Center (Limited
      Partnership)                                                            -               12
      Guangdong Regency Optics-Electron Corp.                                 -               46

                                                                        71,286            45,382

      Rental expense
      TCL Industries Holdings Inc.and its Subsidiaries                  38,110                 -
      Wuhan Lesheng Times Trading Co., Ltd.                              9,544            42,565
      CJ Speedex Logistics Co., Ltd.                                     4,558                 -
      TCL Very Lighting Technology (Huizhou) Co., Ltd.                     603                 -
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                        -              272
      Shenzhen Yisheng Kangyun Technology Development Co.,
                                                                              -               52
      Ltd.


                                                                        52,815            42,889

(6)   Providing Labour Service for or Accepting
      Labour Service from Related Parties
      Providing labour service for related parties                    306,009            74,722
      Accepting labour service from related parties                   639,429         1,329, 540




                                                          171
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

IX     Related Parties and Related-Party Transactions (Continued)
3      Major Related-Party Transactions (Continued)

                                                                                  2019                     2018
(7)    Receiving Interest from or Paying Interest to
       Related Parties

       Interest received                                                       104,297                   16,421
       Interest paid                                                            14,226                   15,854



                                                                                  2019                     2018
 (8) Remuneration of key management personnel                                   29,639                   25,864

Note   Sale of Raw Materials and Finished Goods to Related Parties
1
       The Company sells raw materials, spare parts, auxiliary materials and finished goods to its joint
       ventures and associates at market prices, which are settled in the same way as non-related-party
       transactions. These related-party transactions have no material impact on the Company’s net profit,
       but play an important role as to the Company’s continued operations.
Note   Finished Goods from Related Parties
2

       The Company purchas es raw materials and finished goods from its joint ventures and associates at
       prices similar to those paid to third -party suppliers, which are settled in the same way as
       non-related-party transactions. These related-party transactions have no material imp act on t he
       Company’s net profit, but play an important role as to the Company’s continued operations.

Note   Providing Funding for or Getting Funding from Related Parties and Corresponding Interest Received
3      or Paid
       The Company set up a settlement centre in 1997 and TCL Finance Co., Ltd. in 2006 (together, the
       “Financial Settlement Centre”). The Financial Settlement Centre is responsible for the financial affairs
       of the Company, including capital operation and allocation. The Centre settles accounts with t he
       Company’s subsidiaries, joint vent ures and associates and pays the interest. It also allocates the
       money deposited by the subsidiaries, joint ventures and associates in it to these enterprises and
       charges interest. The interest income and expense between t he Company and the Centre are
       calculated according to the interest rates declared by the People’s Bank of China. The funding
       amount provided refers to the outstanding borrowings due from the Centre to related parties, while
       the funding amount received means the balances of related parties’ deposits in the Centre.

Note   The following trans actions between the Company and the Company in January and March of this
4      period are related transactions

       Relat ed party                                                           Relationship with the Company
       Active Industries International Limited                                                        Associate
       Harvey Holdings Limited                                                                        Associate
       KAI OS TE CHNOLOGIES INC                                                                       Associate
       Opta Corporation                                                                               Associate
       Palm Venture Group                                                                             Associate
       TCL Very Lighting Technology (Huizhou) Co.,
                                                                                                      Associate
       Ltd.
       TCL Mingchuang (Xi’an) Co., Ltd.                                                              Associate


                                                        172
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

3     Major Related-Party Transactions (Continued)

Not   The following transactions between the Company and the Company in January -March of this
e4    period are related transactions (continued)


      Relat ed party                                                 Relationship with the Company
      TCL Rec hi (Huizhou) Refrigeration Equipment                                          Associate
      Co., Ltd.
      Beijing Shangdao Yuetu Technology Co., Ltd.                                           Associate
      Wealthy Way Group Limited                                                             Associate
      Amlogic (Shanghai) Inc.                                                               Associate
      Saipwell TCL Electronics Industrial
                                                                                            Associate
      Technology Co., Ltd.
      China Merchants Real Estate (Pingshan,
                                                                                             Associat
      Shenzhen) Co., Ltd.
      Cany on Circuit Technology (Huizhou) Co.,                                             Associate
      Ltd.
      Taiyang Electro-optic (Huizhou) Co., Ltd.                                             Associate
      Wuhan Shangde Plastics Technology Co., Ltd.                                           Associate
      Shenzhen Shenchangcheng Commercial
                                                                                            Associate
      Property Service Co., Ltd.
      TCL Sun, Inc.                                                                    Joint vent ure
      TCL Zhiyi Technology (Huizhou) Co., Ltd.                                         Joint vent ure
      T2Mobile Limited                                                                 Joint vent ure
      Amlogic Co., Limited                                                    Associate’s subsidiary
      Good Vision Limited                                                     Associate’s subsidiary
      TCT Mobile - Telefones LTDA                                             Associate’s subsidiary
      Gaoweida Digital Technology (Huizhou) Co.,                              Associate’s subsidiary
      Ltd.
      Honpe Technology (Shenzhen) Co., Ltd.                                   Associate’s subsidiary
      Huizhou Gaoshengda Technology Co., Ltd.                                 Associate’s subsidiary
      Huizhou Shenghua Industrial Co., Ltd.                                   Associate’s subsidiary
      Jinpe Tec hnology (HK) Co., Limited                                     Associate’s subsidiary
      Shenzhen Yisheng Kangyun Technology
                                                                              Associate’s subsidiary
      Development Co., Ltd.
      Tairui (Hong Kong) Limit ed                                             Associate’s subsidiary
      Wuhan Lesheng Times Trading Co., Ltd.                                   Associate’s subsidiary
      Xiong Hua Investment Co., Ltd.                                          Associate’s subsidiary
      T2Mobile International Limited                                       Joint vent ure’s subsidiary
      T2Mobile (Shanghai) Limited                                          Joint vent ure’s subsidiary
      Le Shi Zhi Xin Electronics & Technology         Major subsidiary’s non-cont rolling shareholder
      (Tianjin) Co., Ltd.




                                                     173
                                         TCL Technology Group Corporation
                                            Notes to Financial Statements
                             (For the period from 1 January 2019 to 31 December 2019)
                            (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

4     Amounts Due from and to Related Parties

(1)   Accounts receivable

                                                                       December 31, 2019   December 31, 2018

      TCL Industries Holdings Inc.and its Subsidiaries                        2,169,426                   -
      Shenzhen Qianhai Qihang Supply Chain Management Co.,
                                                                                 32,242             136,049
      Ltd.
      Qihang Import&Export Limited                                               24,892              50,223
      Shanghai Huiying Medical Technology Co., Ltd.                               1,000                   -
      Bank of Shanghai Co., Ltd.                                                     68                   -
      Purplevine IP Operating (Shenzhen) Co. Ltd                                     39                   -
      CJ Speedex Logistics Co., Ltd.                                                 33                   -
      Huizhou TCL Real Estate Development Co., Ltd.                                   -                   6
      Saipwell TCL Electronics Industrial Technology Co., Ltd.                        -             173,651
      TCL Sun,Inc.                                                                    -              79,672
      Shenzhen Thunderbird Smart Products Co., Ltd.                                   -              12,513
      T2Mobile International Limited                                                  -              46,362
      T2Mobile (Shanghai) Limited                                                     -               2,774
      TCL Zhiyi Technology (Huizhou) Co., Ltd.                                        -               1,479
      Beijing National Center for Open & Distance Education Co.,
                                                                                      -                 102
      Ltd.
      Palm Venture Group                                                              -              18,582
      Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd.                     -               3,442
      Huan Tech Co., Ltd.                                                             -                 430


                                                                              2,227,700             525,285




                                                                 174
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

4     Amounts Due from and to Related Parties

(2)   Accounts payable


                                                                    December 31, 2019   December 31, 2018


      AGC New Electronic Display Glass (Shenzhen) Co., Ltd.                  410,872              14,839
      TCL Industries Holdings Inc.and its Subsidiaries                       294,817
      Huizhou TCL Environmental Resource Co., Ltd. and its                    54,112                    -
      subsidiaries
      Getech Ltd. and its subsidiaries                                        23,617                    -
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                        19,746              24,711
      TCL Nanyang Electr ic Appliance (Guangzhou) Co., Ltd.                        -                 136
      Huizhou Gaoshengda Technology Co., Ltd.                                      -             359,391
      Taiyang Electro-optic (Huizhou) Co., Ltd.                                    -              91,306
      Wuhan Shangde Plastics Technology Co., Ltd.                                  -               8,576
      Huizhou Shenghua Industrial Co., Ltd.                                        -              91,947
      Shenzhen Thunderbird Network Media Co., Ltd.                                 -               2,879
      Amlogic Co., Limited                                                         -              14,057
      CJ Speedex Logistics Co., Ltd.                                               -              81,585
      Harvey Holdings Limited                                                      -                  12
      Shenzhen Shenchangcheng Commercial Proper ty Service Co.,
                                                                                   -                   5
      Ltd.

                                                                             803,164             689,444




                                                              175
                                         TCL Technology Group Corporation
                                            Notes to Financial Statements
                             (For the period from 1 January 2019 to 31 December 2019)
                            (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)

4     Amounts Due from and to Related Parties (Continued)

(3)   Other receivables

                                                                          December 31, 2019   December 31, 2018

      TCL Industries Holdings Inc.and its Subsidiaries                              59,769                   -
      Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                    22,253                   -
      subsidiaries
      PETRO AP S.A.                                                                  1,296                   -
      Nanjing Zijin Chuangdong Investment Partnership (Limited
                                                                                       296                 296
      Partnership)
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                                 144               3,358
      Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd.                         75              22,092
      LG Electronics(Hui Zhou) INC.                                                     46                  10
      Wuxi TCL Medical Imaging Technology Co., Ltd.                                      5                   -
      Beijing WeMed Medical Equipment Co., Ltd.                                          2                   -
      TCL Air Conditioner (Wuhan) Co., Ltd. and Its Subsidiary                           2                   -
      Huan Tech Co., Ltd.                                                                -                  22
      Saipw ell TCL Electronics Industrial Technology Co., Ltd.                          -             236,839
      China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd.                         -             147,037
      Active Industries International Limited                                            -              88,882
      Harvey Holdings Limited                                                            -              33,372
      KAI OS TECHNOLOGIES INC                                                            -              12,816
      Palm Venture Group                                                                 -              12,266
      Wuhan Lesheng Times Trading Co., Ltd.                                              -               8,000
      Hubei Changjiang Hezhi Equity Investment Fund Partnership
                                                                                         -               7,845
      (Limited Partnership)
      Good Vision Limited                                                                -               5,722
      Shenzhen Thunderbir d Smart Products Co., Ltd.                                     -               1,849
      Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd.                        -                 800
      Shenzhen Tixiang Management Technology Co., Ltd.                                   -                 341
      Shenzhen Thunderbir d Netw ork Media Co., Ltd.                                     -                 251
      Wealthy Way Group Limited                                                          -                  78
      Shenzhen Changcheng Commercial Technology Property Service
                                                                                         -                  21
      Co., Ltd.
      Xiong Hua Investment Co., Ltd.                                                     -                  17
      T2Mobile International Limited                                                     -                   6
      Changzhou Chuangdong Fund Management Co., Ltd.                                     -                   2
      Shenzhen Jiutian Matrix Investment Management Co., Ltd.                            -                   2


                                                                                    83,888             581,924




                                                                    176
                                      TCL Technology Group Corporation
                                         Notes to Financial Statements
                          (For the period from 1 January 2019 to 31 December 2019)
                         (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)
4     Amounts Due from and to Related Parties (Continued)
(4)   Other payables
                                                                      December 31, 2019   December 31, 2018
      TCL Industries Holdings Inc.and its Subsidiaries                          49,029                   -
      Qihang Import&Export Limited                                              28,268              59,446
      TCL Air Conditioner ( Wuhan) Co., Ltd. and Its Subsidiary                 27,654                   -
      Getech Ltd. and its subsidiaries                                          23,137                   -
      Petro AP (Hong Kong) Company Limited                                      23,100                   -
      TCL Finance (HK) Limited                                                  12,208
      Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.                              5,541                   -
      AGC New Electronic Display Glass (Shenzhen) Co., Ltd.                      4,701               4,659
      Shenzhen Tixiang Management Technology Co., Ltd.                           3,591                   -
      Purplevine IP Operating (Shenzhen) Co. Ltd                                 3,238                   -
      Shenzhen Xirang International Business Travel Co., Ltd.                    2,769                   -
      Elite Excellent Investments Limited                                        2,164               2,162
      TCL Nanyang Electr ic Appliance (Guangzhou) Co., Ltd.                      2,035               2,035
      Xinjiang Dongpeng Weichuang Equity Investment Par tnership
                                                                                 1,102                   -
      (Limited Par tnership)
      CJ Speedex Logistics Co., Ltd.                                             1,040              87,330
      Huixing Holdings Limited                                                     665                 668
      MARVEL PARADISE LIMITED                                                      640                 641
      UNION DYNAMIC INVESTMENT LIMITED                                             471                 775
      Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                   384                   -
      subsidiaries
      Beijing National Center for Open & Distance Education Co.,
                                                                                   168               3,282
      Ltd.
      Huizhou TCL Real Estate Development Co., Ltd.                                165                   2
      TV University Online Distance Education Technology Co., Ltd.                 138                 139
      ESTEEM VENTURE INVESTMENT LIMITED                                             97                   -
      Xinjiang Dongpeng Heli Equity Investment Partnership (Limited
      Partnership)                                                                  37                   -

      Zijinshan Investment Co., Ltd.                                                 1                   6
      Shenzhen Thunderbird Network Technology Co., Ltd.                              -             409,752
      Opta Corporation                                                               -              34,190
      Good Vision Limited                                                            -               5,708
      Jinpe Technology (HK) Co., Limited                                             -               1,976
      Wuhan Shangde Plastics Technology Co., Ltd.                                    -                 784
      Shenzhen Yisheng Kangyun Technology Development Co., Ltd.                      -                 777
      Huizhou Shenghua Industrial Co., Ltd.                                          -                 718
      Shenzhen Thunderbird Infor mation Technology Co., Ltd.                         -                 241
      T2Mobile Limited                                                               -                 176
      Hubei Changjiang Hezhi Equity Investment Fund Management                       -                 172
      Co., Ltd.
      Taiyang Electro-optic (Huizhou) Co., Ltd.                                      -                  93
      Urumqi Dongpeng Chuangdong Equity Investment
                                                                                     -                  42
      Management Par tnership (Limited Par tnership)
      Honpe Technology (Shenzhen) Co., Ltd.                                          -                  27
      T2Mobile (Shanghai) Limited                                                    -                  14
                                                             177
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

IX    Related Parties and Related-Party Transactions (Continued)
4     Amounts Due from and to Related Parties (Continued)
(4)   Other payables (continued)
                                                                        December 31, 2019    December 31, 2018

      Gaoweida D igital Technology (Huizhou) Co., Ltd.                                  -                    2
      Canyon Circuit Technology (Huizhou) Co., Ltd.                                     -                    1
                                                                                 192,343               615,818


(5)   Advance payment


                                                                         December 31, 2019   December 31, 2018

      Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd.                    31,592                    -
      Shenzhen Xirang International Business Travel Co., Ltd.                       1,446                    -
      TCL Industries Holdings Inc.and its Subsidiaries                               565                     -
      Shenzhen Tixiang Management Technology Co., Ltd.                               200                     -
      TCL Air Conditioner ( Wuhan) Co., Ltd. and Its Subsidiary                       35                     -
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                                  -                   29
      CJ Speedex Logistics Co., Ltd.                                                    -                1,758
      T2Mobile (Shanghai) Limited                                                       -                1,130
      Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd.                       -                   18


                                                                                   33,838                2,935


(6)   Advances from customers
                                                                         December 31, 2019   December 31, 2018

      TCL Industries Holdings Inc.and its Subsidiaries                              1,994                    -
      Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                      328                    -
      subsidiaries
      Huizhou TCL Real Estate Development Co., Ltd.                                    76                    -
      Qihang Import&Export Limited                                                      -                7,526
      Palm Venture Group                                                                -                   25
      Huizhou Gaoshengda Technology Co., Ltd.                                           -                   10


                                                                                    2,398                7,561




                                                                  178
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

IX     Related Parties and Related-Party Transactions (Continued)
4      Amounts Due from and to Related Parties (Continued)
(7)    Dividend receivable

                                                                          December 31, 2019          December 31, 2018


       Wuxi TCL Venture Capital Partnership (Limited Par tnership)                    5,771                           -
       TV University Online Distance Education Technology Co., Ltd.                         -                   47,656
       Saipwell TCL Electronics Industrial Technology Co., Ltd.                             -                        92
                                                                                      5,771                     47,748
      (8)       Deposits from Related Parties (Note)
                                                                        December 31, 2019       December 31, 2018
      TCL Air Conditioner ( Wuhan) Co., Ltd. and Its Subsidiary                   652,130                        -
      TCL Industries Holdings Inc.and its Subsidiaries                            350,004                       -
      Xinjiang Dongpeng Weichuang Equity Investment Par tnership
                                                                                  169,316                       -
      (Limited Par tnership)
      Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                   83,149                       -
      subsidiaries
      Shenzhen Qianhai Qihang Supply Chain Management Co.,
                                                                                   30,489                  29,876
      Ltd.
      Qihang Import&Export Limited                                                 28,267                       -
      Shenzhen Jucai Supply Chain Technology Co., Ltd.                             22,544                  17,346
      Beijing National Center for Open & Distance Education Co.,
                                                                                    5,087                  13,032
      Ltd.
      Elite Excellent Investments Limited                                           2,164                       -
      Shenzhen Tixiang Management Technology Co., Ltd.                              1,601                     845
      Huixing Holdings Limited                                                        665                       -
      MARVEL PARADISE LIMITED                                                         640                       -
      TV University Online Distance Education Technology Co.,
                                                                                     554                    1,394
      Ltd.
      UNION DYNAMIC INVESTMENT LIMITED                                               471                        -
      Xinjiang Dongpeng Heli Equity Investment Partnership
                                                                                     297                        -
      (Limited Par tnership)
      Zhihui Xinyuan Commerce (Huizhou) Co., Ltd.                                    243
      Petro AP (Hong Kong) Company Limited                                           140                        -
      ESTEEM VENTURE INVESTMENT LIMITED                                               97                        -
      Zijinshan Investment Co., Ltd.                                                   1                        -
      Huan Tech Co., Ltd.                                                              -                      467
      Shenzhen Thunderbird Network Media Co., Ltd.                                     -                   84,760
      Canyon Circuit Technology (Huizhou) Co., Ltd.                                    -                   60,085
      Huizhou Gaoshengda Technology Co., Ltd.                                          -                   28,907
      Shenzhen Thunderbird Network Technology Co., Ltd.                                -                   26,565
      CJ Speedex Logistics Co., Ltd.                                                   -                   14,465
      Huizhou Shenghua Industrial Co., Ltd.                                            -                    5,144
      Shenzhen Thunderbird Infor mation Technology Co., Ltd.                           -                    4,663
      Taiyang Electro-optic (Huizhou) Co., Ltd.                                        -                    4,565
      Shenzhen Thunderbird Smart Products Co., Ltd.                                    -                    1,620
      Shenzhen Yisheng Kangyun Technology Development Co.,
                                                                                        -                       -
      Ltd.

                                                                        1,347,859               293,734
      These deposits are made by related parties in the Company’s subsidiary TCL Finance Co., Ltd.


                                                                  179
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)


IX     Related Parties and Related-Party Transactions (Continued)

4      Amounts Due from and to Related Parties (Continued)

(9)    Interest receivable

                                                                           December 31, 2019     December 31, 2018



       Shenzhen Qianhai Qihang Supply Chain Management                                      -                   71
       Co., Ltd.
                                                                                            -                4,953
       Harvey Holdings Limited
                                                                                            -                   78
       Qihang Import&Export Limited
                                                                                            -                   34
       Huizhou Gaoshengda Technology Co., Ltd.
                                                                                            -                   18
       Canyon Circuit Technology (Huizhou) Co., Ltd.


                                                                                            -                5,154


(10)   Other non-current assets
                                                                         December 31, 2019       December 31, 2018
       Purplevine IP Operating (Shenzhen) Co. Ltd                                      129,965                       -

                                                                                      129,965                        -

(11)   Other current asset
                                                                         December 31, 2019       December 31, 2018
       TCL Industries Holdings Inc.and its Subsidiaries                                  5,208                       -
       Huizhou TCL Environmental Resource Co., Ltd. and its
                                                                                          738                        -
       subsidiaries
       Shenzhen Qianhai Qihang Supply Chain Management
                                                                                          193                        -
       Co., Ltd.
       TCL Air Conditioner ( Wuhan) Co., Ltd. and Its Subsidiary                          189

                                                                                         6,328                       -




                                                                   180
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

X      Commitments

1      Lease commitments

       The following table presents the minimum lease payables after the balance sheet date according to
       the irrevocable operating lease contracts signed by the Company :

                                               December 31, 2019                     December 31, 2018

       Year 1                                                26,347                              101,775
       Year 2                                                16,748                               87,092
       Year 3                                                 6,705                               42,858
       Thereafter                                             5,416                               67,742

                                                             55,216                              299,467

2      Capital commitments

                                               December 31, 2019                      December 31, 2018

       Under contractual
       obligations but not         Note                   6,733, 484                           8,609, 241
       provided for                1
       Approved by Board but
       not under contractual       Note                      77,087                                8,627
       obligations                 2

                                                          6,810, 571                           8,617, 868

Note   The capital commitments under contractual obligations but not provided for in the current period
1      primarily consisted of such commitments for construction of investment projects and external
       investments.

Note   The capital commitments approved by the Board but not under contractual obligations in the current
2      period primarily consisted of such commitments for CSOT’s LCD panel project.

       As at 31 Dec ember 2019, except for the disclosures above, there were no other major commitments
       that are required to be disclosed.




                                                    181
                                    TCL Technology Group Corporation
                                       Notes to Financial Statements
                        (For the period from 1 January 2019 to 31 December 2019)
                       (The amounts in tables are expressed in thousands of RMB)

XI    Contingencies

      Guarant ees Provided for External Parties

      The guarantee amount for related party bank loan, commercial drafts, letters of credit, etc. is RMB
      18,160,168,000.

      As at 31 December 2019, the Company estimated that it was not likely for the afores aid guarantees to
      cause a material loss, so it did not record a provision in the financial statements for it. Except for the said
      contingencies, there were no other major contingencies that are require d to be disclosed as at 31
      December 2019.

XII   Events after Balance Sheet Date

                                                               th                 th
      The 2019 Final Dividend Plan was approved at the 25 Meeting of the 6 Board of Directors on 28 March
      2020. Based on the share capital of 13,000,372,307 shares on 27 Marc h 2020 that are eligible for profit
1     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. There will be no bonus issue from capital reserves or profit.


      On 27 March 2020, according to the Zhong S hi Xie Zhu 【2020】MTN223 Document—Acceptance of
2     Registration issued by the National Association of Financial Market Institutional Investors and the Offering
      Plan and Commitment Letter of the First Tranche of MTN of 2020 of TCL Technology Group Corporation,
      the Company completed the offering of the three -year MTN of RMB 3 billion, with interest carrying from 27
      March 2020 and a coupon rate of 3.60%.

      Since the COV ID-19 outbreak, the Company has taken active meas ures to fulfil its social responsibilities as
      a listed company. It protects the life security and health of all employees and fight against the impact of the
      epidemic on the operating activities. As the manufacturing process of semi-conductor display devices is
      special, TCL CSOT was carrying out production and operation as scheduled during the Spring Festival.
      There is no direct impact on the production or construction of the t1, t2, t6 and t7 factories of TCL CS OT in
      Shenzhen, and the module factory in Huizhou City. Since the t3 and t4 factories are locat ed in Wuhan City,
      there was once short-t erm pressure in terms of work resumption of employees and the supply of certain raw
3     materials. The Company arranged for the return to work of employees in strict compliance with the
      requirements for prevention and control of the COV ID -19, and ensured the normal supply of raw materials
      through coordination of logistics channels, communication with strategic suppliers, etc.
      The Company will continue to keep an eye on the developments of the COV ID-19 epidemic, seize
      integration opportunities in the industry, and solidify the leadership of TCL CSOT in efficiency and earnings.
      It will increase the market share through efficient production capacity arrangements, and increase the
      proportions of commercial display, AMOLE D and foldable screens with high -added value through improving
      product and technology capabilities, so as to achieve global leadership in the semi -conductor display
      industry. As of 28 March 2020, the Company has seen no material advers e impact of the COV ID-19
      epidemic.

      Except for the aforesaid event, there were no other signific ant post -balance-sheet-date events that are
      required to be disclosed as at the date of the authorization of the financial statements for issue.




                                                      182
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

XIII   Description of other important matters

(I)    Discontinued operations

       On January 7, 2019, the major asset restructuring approved at the First Extraordinary General Meeting of
       2019:
       The Company will directly hold 100% equity in TCL Industries Holdings (HK) Limited, 100% equity in
       Huizhou TCL Household Electric Appliance Group Co., Ltd., 100% equity in TCL Home A ppliances (Hefei)
       Co., Ltd., 55% equity in Huizhou Cool Friends Network Technology Co., Ltd., 100% equity in Koyoo Online
       Service Co., Ltd., 100% equity in TCL Technology Park Co., Ltd.,     Getech Ltd. owns 36% of the shares,
       and through its wholly-owned subsidiary TCL Finance Holdings Group (Guangzhou) Co., Ltd., indirectly
       holds 75% of the shares of JDH Information Tech (Zhuhai) Co., Ltd., and Huizhou TCL Light Electrical
       Appliances Co., Ltd., indirectly holds 1.50% of the shares of Huizhou Cool Friends Net work Technology Co.,
       Ltd., all sold to TCL Industries Holdings Inc. at a price of RMB 4.76 billion. The Major Asset Restructuring
       has been completed in A pril 2019.

                                                                           Amount in 2019          Amount in 2018


       Income from discontinued operations                                     20,167,401               77,791,560
       Total profit from discontinued operations                                  171,147                  933,252
       Income tax expense from discontinued operations                             77,436                  421,243
       Net profit from discontinued operations                                     93,710                  512,009
       Add: Net profit and loss on disposal of discontinued
       operations                                                                1,238, 377                       -
       Total net profit from discontinued operations                             1,332, 087                512,009



(II)   Segment Reporting

1      Basis for Determining Reporting Segment and Accounting Policies

       According to the Company's internal organizational structure, management requirements and internal
       reporting system, the Company's business is divided into three reporting segments: semiconductor display
       and mat erials business, distribution business and other business. The Company's management regularly
       evaluates the operating results of these reporting segments to determine the allocation of resources and
       evaluate their performance. The Company's three reporting segments are:

       Semiconductor display and mat erials business: mainly includes researc h and development, manufacturing
(1)
       and sales of semiconductor display panels and semiconductor display modules.


(2)    Distribution businesses: mainly includes the sales of computers, soft ware, tablet computers, mobile phones
       and ot her electronic products.
(3)    Other business: other businesses besides the above, including industrial finance and investment business,
       technology development servic es and patent maintenance services provided by the company, etc.



                                                      183
                                     TCL Technology Group Corporation
                                        Notes to Financial Statements
                         (For the period from 1 January 2019 to 31 December 2019)
                        (The amounts in tables are expressed in thousands of RMB)

XIII   Description of other important matters (continued)

(II)   Segment Reporting (continued)
       Segment assets include all current assets such as tangible assets, intangible assets, other long-term assets
       and receivables attributable t o each segment. Segment liabilities include payables, bank loans and other
       long-term liabilities attributable to each segment.


       Segment operating results refer to the income generated by eac h segment (including external trans actions
       income and inter-s egment transaction income), net of expenses incurred by each segment, depreciation,
       amortization and impairment losses of assets attributable to each segment, gains or losses from changes
       in fair value, investment income, non -operating income and income tax expenses. Trans fer pricing of
       inter-segment income is calculated on terms similar to other foreign transactions.




                                                        184
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

XIII   Notes on other important matters (continued)

(II)   Segment reporting (continued)

2      Report the financial information of the segment

                                                For the 12-month period ending December 31, 2019


                                                                                 Others and
                                    Semiconductor                                eliminated
                                                             Distribution
                                           display                              intercompa               Total
                                                               business
                                     and mat erials                                      ny
                                         business                                 accounts
       Operating revenue                33,993,534            20,835,617         20,103,935         74,933,086
       Total profit                        963,401               285,511          2,806,891          4,055,803
       Income Tax Expense                   (1,043)               69,907            329,205           398,069
       Net profit                          964,444               215,604          2,477,686          3,657,734
       Total assets                    130,582,410             4,520,509         29,741,966        164,844,885
       Total liabilities                75,351,193             3,517,629         22,092,919        100,961,741


       Other items
       Depreciation and
       amortization                      6,863,247                 6,626          1,402,134          8,272,007
       expenses
       Capit al expenditure             19,737,178                      -           379,032         20,116,210
       Net interest expense                232,301                56,871          1,139,943          1,429,115




                                                      185
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

XIII   Notes on other important matters (continued)


(II)   Segment reporting (continued)


2      Report the financial information of the segment (continued)


                                                For the 12-month period ending December 31, 2018


                                    Semiconductor
                                           display           Distribution         Non-core
                                                                                                         Total
                                     and mat erials            business           business
                                         business
       Operating revenue                27,666,368            16,566,993         69,126,715        113,360,076
       Total profit                      2,600,818               272,614          2,070,948          4,944,380
       Income Tax Expense                  279,236                76,675            523,271           879,182
       Net profit                        2,321,582               195,939          1,547,677          4,065,198
       Total assets                    116,348,578             3,957,923         72,457,442        192,763,943
       Total liabilities                68,659,423             3,070,859         60,161,988        131,892,270


       Other items
       Depreciation and
       amortization                      5,896,622                 5,382          2,068,645          7,970,649
       expenses
       Capit al expenditure             30,664,197                      -         2,134,167         32,798,364
       Net interest expense                161,647                37,312            946,386          1,145,345




                                                      186
                                          TCL Technology Group Corporation
                                             Notes to Financial Statements
                              (For the period from 1 January 2019 to 31 December 2019)
                             (The amounts in tables are expressed in thousands of RMB)

XIV Notes to Financial Statements of the Company as Parent
1   Accounts receivable
                                                December 31, 2019                                             December 31, 2018
                                                Bad
                                                                                                             Bad
                                                 de
                                                                                                               de
                                                bt
                    Amount        Proportion            Proportion          Amount       Proportion          bt p        Proportion
                                                pro
                                                                                                             rovi
                                                visi
                                                                                                             sion
                                                 on

       Within
                   445,539            100%       449            0.10%      194,959           100%                   -        0%
       1 year

      As of December 31, 2019, there was not such accounts receivable from any shareholder with a 5% or greater
      voting stock.

2     Other receivables
                                                                                            December 31, 2019              December 31, 2018

      Interest receivable                                                                                       -                        212,200
      Dividend receivable                                                                              4,211,824                       4,211,824
      Other receivables                                                                               12,917,649                      14,349,329

                                                                                                      17,129,473                      18,773,353

(a)   Nature of other receivables is analyzed as follows:
                                                                                            December 31, 2019              December 31, 2018

      External unit current account                                                                      440,600                         617,647
      Deposit and security deposit                                                                           792                           2,304
      Other                                                                                           12,476,257                      13,729,378

                                                                                                      12,917,649                      14,349,329

(b)   Bad debt accrual for other receivables is analyzed as follows:

                                                                     Expected credit loss for
                                      Expected credit loss in       the entire duration (credit
                                                                                                              Total
                                         next 12 months                  impairment has
                                                                             occurred)
      December 31, 2018                                         -                      65,873                            65,873
      Change and adjustment
      of accounting policy                                      -                           -                                 -
      January 1, 2019                                                                  65,873                            65,873
      Current accrual                                     753                              32                               785
      Reversal of current
      period                                                 -                        (2,777)                            (2,777)
      Write-off in current period                         (35)                       (21,828)                           (21,863)
      December 31, 2019                                   718                          41,300                             42,018




                                                                187
                                   TCL Technology Group Corporation
                                      Notes to Financial Statements
                       (For the period from 1 January 2019 to 31 December 2019)
                      (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent(Continued)

2     Other receivables (continued)

(c)   The aging of other receivables is analyzed as follows:

                                             December 31, 2019                          December 31, 2018
                                  Amount            Proportion              Amount             Proportion

      Within 1                   9,708,317              74.91%            11,333, 489              78.62%
      year
      1 to 2                     2,080,024                                 2,506,592               17.39%
      years                                             16.05%
      2 to 3                      940, 910                                  316, 189                2.19%
      years                                              7.26%

      More than
                                  230, 416                                  258, 932                1.80%
      3 years
                                                         1.78%

                                12,959,667             100. 00%           14,415,202              100. 00%

      The outstanding other receivables were mostly current accounts with related parties. As of
      December 31, 2019, there were no such other rec eivables from any shareholder with a 5% or greater
      voting stock.

      The top five other receivables of the Company are about RMB 9,544,224, 000 (end of 2018: RMB
      6,598, 913,000), accounting for 73.65% (end of 2018: 45.78%) of the total other receivables of the
      Company.




                                                      188
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

XIV    Notes to Financial Statements of the Company as Parent(Continued)

3      Available-for-sale financial assets (applicable in 2018 only)

                                                                                                      December 31, 2018

       Available- for-sale equity instruments - measured at fair
                                                                                                                 40,736
       value (note)
       Available- for-sale equity instruments - measured at costs                                             1,144,694

                                                                                                              1,185,430

Note   Available-for-sale equity instruments - measured at fair value
s

                                                                                                      December 31, 2018

       Costs                                                                                                     40,000
       Changes in fair value                                                                                        736

                                                                                                                 40,736



4      Long-term equity investments

                                                    December 31, 2019                       December 31, 2018
                                                        Provision                               Provision
                                                               for                                     for
                                                  Book impairm      Carrying             Book impairmen       Carrying
                                                balance       ent     amount           balance           t     amount

       Long-term equity investment
                                              11,863,148            -   11,863,148    9,545,711         -     9,545,711
       calculated by equity method
       Among them: Associates (1)             11,850,369            -   11,850,369    9,526,568         -     9,526,568
              Joint Ventures (1)                  12,779            -       12,779       19,143         -        19,143

              Subsidiaries (2)                27,434,124            -   27,434,124   32,257,739         -    32,257,739


                                              39,297,272            -   39,297,272   41,803,450         -    41,803,450


       As of December 31, 2019, there are no major restrictions on the realiz ation of investment and the
       remittance of investment income for long -term equity investment.




                                                                189
                                                                         TCL Technology Group Corporation
                                                                           Notes to Financial Statements
                                                          (For the period from 1 January 2019 to 31 December 2019)
                                                         (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent(Continued)
4     Long-term equity investment (continued)
(1)   Joint Ventures and Associates
                                                                                                            Increase or decrease in current period
                                                                    Increase or
                                                                     decrease           Investment           Other                            Cash                           Other
                                                  Amount at                                                                Changes
                                                                    investment           gains and       comprehensiv                     dividends or   Impair ment       increases    December
                                                 beginning of                                                               in other
                                                                       in the             losses           e income                          profits      allowance           and        31, 2019
                                                     year                                                                  interests
                                                                      current         recognized by       adjustments                       declared                       decreases
                                                                       period         equity method

      Bank of Shanghai Co., Ltd.                    8,363,564          188,813            1,018,493            81,483               -        (245,339)                 -     (92,403)   9,314,611
      Zhongxin Financial Capital Management
                                                                -      838,800                39,120                 -              -                -                 -            -    877,920
      Company Limited
      LG Electronics(Hui Zhou) INC.                    83,902                     -           16,881                 -              -          (8,200)                 -            -      92,583
      Shenzhen Qianhai Qihang Supply Chain
                                                       45,034                     -          (4,197)                 -              -                -                 -            -      40,837
      Management Co., Ltd.
      TCL Nanyang Electr ic Appliance
                                                        2,023                     -            (207)                 -              -                -                 -            -       1,816
      (Guangzhou) Co., Ltd.
      Huan Tech Co., Ltd.                             180,364                     -          (2,261)                 -              -                -                 -   (178,103)            -
      Tianjin 712 Communication & Broadcasting
                                                      704,224                     -           65,853                                           (7,362)                         (245)     762,470
      Co., Ltd.
      Huizhou TCL Taidong Shihua Investment
                                                       19,143                     -          (6,364)                 -              -                -                 -            -     12,779
      Co., Ltd.
      Shenzhen Jucai Supply Chain Technology
                                                        5,158                     -                184               -              -                -                 -            -       5,342
      Co., Ltd.
      Shenzhen Tixiang Management Technology
                                                        2,013                     -                 65               -              -                -                 -            -       2,078
      Co., Ltd.
      Huizhou TCL Environmental Resource Co.,
                                                                -        71,300                    438               -              -                -                 -            -     71,738
      Ltd.



                                                                                             190
                                                               TCL Technology Group Corporation
                                                                 Notes to Financial Statements
                                                  (For the period from 1 January 2019 to 31 December 2019)
                                                 (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent (Continued)

4     Long-term equity investment (continued)

(1)   Joint Ventures and Associates

                                                                                        Increase or decrease in current period
                                                            Increase
                                                                    or   Investment                                                                  Other
                                                                                               Other    Change            Cash
                                            Amount at      decrease        gains and                                                              increase
                                                                                         comprehen           s in    dividends       Impairment               December
                                          beginning of   investmen            losses                                                                 s and
                                                                                        sive income        other      or profits      allowance                31, 2019
                                                  year        t in the   recognized                                                                decreas
                                                                                        adjustments    interests      declared
                                                              current       by equity                                                                   es
                                                               period        method
      Guangdong Rongchuang Lingyue
      Intelligent Manufacturing and
      Information Technology Industry                -      375,000                20              -            -                -            -           -     375,020
      Equity Investment Fund
      Partnership (Limited Partnership)
      Guangdong Yuecai Emerging
      Industry Equity Investment Fund                -      150,000            (507)               -            -                -            -           -     149,493
      Partnership (Limited Partnership)
      Other                                   140,286                -        22,176               -            -       (6,001)               -           -     156,461

                                             9,545,711    1,623,913        1,149,694         81,483             -     (266,902)               -   (270,751)   11,863,148




                                                                             191
                                              TCL Technology Group Corporation
                                                 Notes to Financial Statements
                                  (For the period from 1 January 2019 to 31 December 2019)
                                 (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent (Continued)
4     Long-term equity investment (continued)
(2)   subsidiaries
                                                                               Increase in
                                                  Vote           January 1,                       Decrease in
                                                                                  current                             December 31,2019
                                                Proportion         2019                          current period
                                                                                  period
      TCL Industries Holdings (HK) Limited                   -    1,327,882                  -       (1,327,882)                      -
      TCL China Star Optoelectronics
                                                   88.82%        21,895,698        268, 400                       -          22,164,098
      Technology Co., Ltd.
      Huizhou TCL Household Electric
                                                             -      448, 000                 -         (448,000)                      -
      Appliance Group Co., Ltd.
      Huizhou Cool Friends Network
                                                             -      273, 144                 -         (273,144)                      -
      Technology Co., Ltd.
      Koyoo Online Service Co., Ltd.                         -       25,469                  -          (25,469)                      -
      Techne Corporation                                     -       37,954                  -          (37,954)                      -
      Xinjiang TCL Equity Investment Co., Ltd        100%           200, 000                 -                    -            200, 000
      Wuhan TCL Industrial Technology
                                                     100%            20,000                  -                    -             20,000
      Research Institute, Ltd.
      Huizhou TCL Environmental Resource
                                                     100%           273, 000                 -         (273,000)                      -
      Co., Ltd.
      Highly Information Industry Co., Ltd.        73.69%           107, 296                 -                    -            107, 296
      TCL Communication Equipment
                                                   75.00%            79,500                  -                    -             79,500
      (Huizhou) Co., Ltd.
      TCL Finance Co., Ltd.                        82.00%         1,256,003                  -                    -           1,256,003
      Shenzhen TCL High-Tech Development
                                                     100%            20,000                  -                    -             20,000
      Co., Ltd.
      TCL Home Appliances (Hefei) Co., Ltd.                  -      300, 000                 -         (300,000)                      -
      Huizhou TCL Light Electrical Appliances
                                                     100%            70,037                             (70,037)                      -
      Co., Ltd.

      TCL Culture Media (Shenzhen) Co., Ltd.         100%           353, 414          8,000                       -            361, 414
      TCL Finance Holdings Group
                                                     100%           772, 000                 -                    -            772, 000
      (Guangzhou) Co., Ltd.
      Guangzhou TCL Internet Microcredit
                                                     100%           500, 000                 -                    -            500, 000
      Co., Ltd.
      Shenzhen HAWK Internet Co., Ltd.               100%           350, 000                           (350,000)                      -
      Shenzhen Thunderbird Digital
                                                     100%            50,000                  -          (50,000)                      -
      Entertainment Technology Co., Ltd.
      TCL Intelligent Industry (Huizhou) Co.,
                                                             -       59,000                  -          (59,000)                      -
      Ltd.
      Huizhou Zhongkai TCL Zhirong
                                                   89.84%           405, 624         52,370                       -            457, 994
      Technology Microcredit Co., Ltd.



                                                                     192
                                              TCL Technology Group Corporation
                                                 Notes to Financial Statements
                                  (For the period from 1 January 2019 to 31 December 2019)
                                 (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent(Continued)
4     Long-term equity investment (continued)
(2)   Subsidiaries (continued)
                                                                               Current
                                                   Vote       January 1,                      Current period       December
                                                                               period
                                                 Proportion     2019                            Decreased           31, 2019
                                                                               Increase


      Beijing HAWK Cloud Information
                                                     100%           20,000                -                    -      20,000
      Technology Co., Ltd.
      TCL Technology Park (Huizhou) Co., Ltd.        100%        625,324                           (120,374)         504,950
      TCL Technology Park Co., Ltd.                       -    2,563,631                  -       (2,563,631)               -
      Huizhou Sailuote Communication Co., Ltd.       100%           82,500        27,500                       -     110,000
      TCL Medical Radiological Technology
                                                     100%           58,497                -                    -      58,497
      (Beijing) Co., Ltd.
      Shenzhen TCL Strategic Equity Investment
                                                     100%           20,000                -                    -      20,000
      Fund Partnership (Limited Partnership)
      Getech Ltd.                                         -         36,000                -          (36,000)               -
      TCL Industrial Technology Research
                                                     100%                  -      20,000                       -      20,000
      Institute, Ltd. (Europe)
      Peer College Education Technology
                                                     100%                  -       5,000                       -       5,000
      (Huizhou)
      Huizhou Hongsheng Technology
                                                     100%                  -       1,000                       -       1,000
      Development Co., Ltd.
      Ningbo TCL Equity Investment Co., Ltd.         100 %                 -     300,000                             300,000
      TCL Technology Investments Limited             100%                  -     188,293                             188,293
      Beijing Zhiqujia Technology Co., Ltd.          100%                  -     257,627                       -     257,627
      Equity incentives of subsidiaries                   -         27,766           322             (17,636)         10,452


                                                              32,257,739       1,128,512           (5,952,127)     27,434,124



      For the registered capit al of subsidiaries and the Company’s equity interests in the subsidiaries, see Note V.




                                                              193
                                                 TCL Technology Group Corporation
                                                    Notes to Financial Statements
                                     (For the period from 1 January 2019 to 31 December 2019)
                                    (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent(Continued)
5     Other equity instrument investment (2019 only)
                                                                                                          December 31, 2019                          January 1, 2019
      Non-trading equity instruments                                                                                 15,000                                  15,076
                                                                                                                                                  Reasons for other
                                                                                    Amount of other              Reasons designated as
                                        Div i end        Accumu                                                                                    comprehensiv e
                                                                      Accumulat      comprehensiv e            measured at fair value and
              Item name                  income           lated                                                                                   income transferred
                                                                      ed losses    income transferred         whose changes are included in
                                       recogniz ed        gains                                                                                      to retained
                                                                                   to retained earnings        other comprehensiv e income
                                                                                                                                                      earnings
               Non-trading equity
                      instruments                    -            -        (76)                         -                                     -                     -

6     Operating Revenue and Cost of Sales
                                                                        2019                                                         2018
                                                         Operating                Cost of sales                Operating revenue                     Cost of sales
                                                          revenue
      Core business                                      1,216,047                   1,200,847                           1,255,708                      1,247,345
      Non-core business                                   514,140                      281,499                             800,242                         607,278
                                                         1,730,187                   1,482,346                           2,055,950                      1,854,623
7     Return on Investment
                                                                                                                                2019                          2018
      Income from disposal of credit instruments measured at fair value and whose
                                                                                                                           177,073                                    -
      changes are included in current profit and loss
      Income from disposal of equity instruments measured at fair value and whose
                                                                                                                           210,848                                    -
      changes are included in current profit and loss
      Income held by credit instruments measured at fair value and whose changes
                                                                                                                              46,726                                  -
      are included in current profit and loss
      Credit instruments measured at amor tized cost through profit or loss                                                    7,217
      Income held by equity instruments measured at fair value and whose changes
                                                                                                                              17,361                                  -
      are included in current profit and loss
      Income from disposal of wealth management instruments                                                                         -                      412,800
      Dividends from subsidiaries                                                                                          257,126                      5,384,073
      Share of profit of associates for current period                                                                   1,156,058                         935,168
      Share of profit of joint ventures for current period                                                                    (6,364)                       (3,447)
      Income during period of holding available- for-sale financial assets                                                          -                       31,282
      Net income from disposal of long- ter m investments                                                                 (486,501)                        366,517


                                                                                                                         1,379,544                      7,126,393
      As of December 31, 2019, there were no significant restrictions on the collection of the investment
      income.




                                                                          194
                                          TCL Technology Group Corporation
                                             Notes to Financial Statements
                              (For the period from 1 January 2019 to 31 December 2019)
                             (The amounts in tables are expressed in thousands of RMB)

XIV   Notes to Financial Statements of the Company as Parent(Continued)

8     Cash flows generated from operating activities

      The net cash inflow from operating activities in the company's cash flow statement was RMB
      4,843, 106,000.

9     Balance of cash and cash equivalents at the end of period

      The Company's balance of cash and cash equivalents at the end of the period was RMB 3,941,090,000.

10    Contingent Liabilities

      As at December 31, 2019, the contingent liabilities not provided for in the financial report are as follows:


                                                                                   December 31, 2019   December 31, 2018


      Guarantees for commercial drafts and letters of guarantee of
                                                                                           9,809,585          25,162,875
      subsidiaries


      Guarantees for bank loans of subsidiaries                                           22,119,613          23,408,535


      Guarantee bank loans, commercial bills, letters of credit, etc. of related
                                                                                          18,160,168           1,112,147
      parties




                                                                   195
                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)

XV    Comparative Data

      Cert ain comparative data have been reclassified to comply with the present ation of the current period.


XVI   Non-recurring profit and loss items and amounts

                                                                                        2019                2018


      Gain or loss on disposal of non-current assets (inclusive of
                                                                                   1,419, 021           (58,305)
      impairment allowance write-offs)


      Government subsidies charged to current profit or loss (exclusive of
      government subsidies given in the Company’s ordinary cours e of             1,170, 649          1,377, 065
      business at fixed quotas or amounts as per the government’s
      uniform standards)


      In addition to the effective hedging business related to the normal                                        -
      operation of the company, gains and losses on fair value changes               186,339             162,729
      arising from the holding of trading financial assets and trading
      financial liabilities, as well as investment gains from the disposal of
      trading financial assets, trading financial liabilities and
      available-for-sale financial assets.


      Non-operating income and expense ot her than the above                          77,286             871,847


      Income tax impact                                                             (165,398)          (191,942)


      Number of Minority Shares Affected                                            (305,250)          (280,578)


      Non-recurring gains and losses attributable to ordinary shareholders
                                                                                   2,382, 647          1,880, 816
      of the Company as parent


      The confirmation of non-recurring profit and loss items by the company shall be carried out in accordance
      with the provisions of (2008) No.43 "Explanat ory Announcement No.1-Non-recurring Profit and Loss
      (2008)" issued by the China Securities Regulat ory Commission.




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                                        TCL Technology Group Corporation
                                           Notes to Financial Statements
                            (For the period from 1 January 2019 to 31 December 2019)
                           (The amounts in tables are expressed in thousands of RMB)



XVII   Weighted Average Return on Equity (ROE) and Earnings per Share (EPS)

       The Company calculates the ROE and EPS as follows in accordance with "the Compilation Rules No. 9
       for Information Disclosure of Companies Offering Securities to the Public -Calculation and Disclosure of
       Return on Equity and Earnings per Share (Revis ed in 2010)" issued by China Securities Regulatory
       Commission and relevant provisions of accounting standards:


       Item                                   Reporting     Weighted                 EPS (RMB yuan)
                                                 period     average
                                                                             Basic EPS           Diluted EPS
                                             Net profit     ROE


       Net profit attributable to ordinary
                                              2,617, 765           9.09%             0.1986             0.1935
       shareholders of the Company
       Net profit attributable to ordinary
       shareholders of the Company before       235,119            0.76%             0.0178             0.0174
       non-recurring gains and losses




                                             Company Name: TCL Technology Group Corporation
                                                                              Date: March 28, 2020


      The financial statements and the notes thereto from page 1 to page 197 are signed
      by:
                                Person-in-char                      Person-in-ch
Legal                           ge of                               arge of the
Representative          Li      financial                           financial
:                  Dongsheng affairs:                 Du Juan      department:       Xi Wenbo




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