TCL Corporation Interim Report 2018
TCL CORPORATION
TCL 集团股份有限公司
INTERIM REPORT 2018
28 August 2018
1
TCL Corporation Interim Report 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of TCL Corporation (hereinafter referred to as the
“Company” or the “Group”) hereby guarantee the factuality, accuracy and completeness of
the contents of this Report and its summary, and shall be jointly and severally liable for 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.
Mr. Li Dongsheng, Chairman of the Board of the Company, and Mr. Huang Xubin, the
Company’s Chief Financial Officer (CFO), equivalent to head for financial affairs and head of
the financial department, hereby guarantee that the financial statements carried in this
Report are factual, accurate and complete.
This Report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
2
TCL Corporation Interim Report 2018
Table of Contents
Part I Important Notes, Table of Contents and Definitions ................................................ 2
Part II Corporate Information and Key Financial Information .......................................... 6
Part III Business Summary ...................................................................................................... 10
Part IV Management Discussion and Analysis....................................................................... 14
Part V Significant Events ....................................................................................................... 39
Part VI Share Changes and Shareholder Information .......................................................... 66
Part VII Directors, Supervisors and Senior Management ...................................................... 73
Part VIII Corporate Bonds .......................................................................................................... 75
Part IX Financial Statements ................................................................................................... 81
3
TCL Corporation Interim Report 2018
Definitions
Term Definition
The “Company”, the “Group”, “TCL”, “TCL TCL Corporation and its consolidated subsidiaries, except where the context
Corp.” or “we” otherwise requires
The “Reporting Period” The period from 1 January 2018 to 30 June 2018
Expressed in the Chinese currency of Renminbi, expressed in thousands of
RMB, RMB’000
Renminbi
TCL Electronics TCL Electronics Holdings Limited, a majority-owned subsidiary of the
Company listed on the Stock Exchange of Hong Kong (stock code:
01070.HK)
TCL Communication TCL Communication Technology Holdings Limited
CSOT Shenzhen China Star Optoelectronics Technology Co., Ltd.
Wuhan CSOT Wuhan China Star Optoelectronics Technology Co., Ltd.
TCL Household Electric Appliance Group Huizhou TCL Household Electric Appliance Group Co., Ltd.
Tonly Electronics Tonly Electronics Holdings Limited, a majority-owned subsidiary of the
Company listed on the Stock Exchange of Hong Kong (stock code:
01249.HK)
CDOT China Display Optoelectronics Technology Holdings Limited, a
majority-owned subsidiary of the Company listed on the Stock Exchange of
Hong Kong (stock code: 00334.HK)
Highly Highly Information Industry Co., Ltd., a majority-owned subsidiary of the
Company listed on the National Equities Exchange and Quotations (stock
code: 835281)
Guangdong Juhua Guangdong Juhua Printed Display Technology Co., Ltd.
China Ray Guangzhou China Ray Optoelectronic Materials Co., Ltd.
Bank of Shanghai Bank of Shanghai Co., Ltd. (stock code: 601229.SH), with the Company
holding a 4.99% interest
712 Corp. Tianjin 712 Communication & Broadcasting Co., Ltd. (stock code:
603712.SH), with the Company holding a 19.07% interest as its second largest
shareholder
Fantasia Fantasia Holdings Group Co., Limited
Getech Getech Ltd.
Thunderbird Technology Shenzhen Thunderbird Network Technology Co.
Huan Tech Huan Tech Co., Ltd.
GoLive GoLive Ltd.
HAWK Shenzhen HAWK Internet Co., Ltd.
4
TCL Corporation Interim Report 2018
Educational Web TCL Educational Web Ltd.
TCL Capital Xinjiang TCL Equity Investment Co., Ltd. and Ningbo TCL Equity
Investment Co., Ltd.
Tsinghua Unigroup Tsinghua Unigroup Co., Ltd.
Activated users The users who have used the Internet TV network service at least once
Active users The different users visiting within seven days (the same user visiting more
than once within seven days is deemed as one user)
t1 plant or t1 project The generation 8.5 (or G8.5) TFT-LCD production line of CSOT
t2 plant or t2 project The generation 8.5 (or G8.5) TFT-LCD (including oxide semiconductor and
AMOLED) production line of CSOT
t3 project The generation 6 (or G6) LTPS LCD/AMOLED panel production line of
CSOT
t4 project The generation 6 (or G6) flexible LTPS-AMOLED panel production line of
CSOT
t6 project The generation 11 (or G11) new TFT-LCD and AMOLED production line of
CSOT
t7 project The generation 11 (or G11) new ultra-high-definition (UHD) TFT-LCD and
AMOLED production line of CSOT
TCL Technology Park TCL Technology Park (Huizhou) Co., Ltd.
The 2018 Restricted Stock Incentive Plan and the Global Innovation Partner
The “Incentive Plan”
Plan of TCL Corporation
The First Top 400 and Key Personnel Stock Ownership Plan and the Global
The “Stock Ownership Plan”
Partner Plan of TCL Corporation
5
TCL Corporation Interim Report 2018
Part II Corporate Introduction and Key Financial Information
I Corporate Introduction
Stock name TCL Stock code 000100
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese TCL 集团股份有限公司
Abbr. (if any) TCL 集团
Company name in English (if
TCL Corporation
any)
Abbr. (if any) TCL Corp.
Legal representative Li Dongsheng
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 Other Information
1. Contact Information of the Company
No changes occurred to the registered address, office address and their zip codes, website address and email address of the Company
in the Reporting Period.
Registered address Block 19, Zhongkai Hi-Tech Development District, Huizhou City,
Guangdong Province
Office address TCL Technology Building, 17 Huifeng 3rd Road, Zhongkai Hi-Tech
Development District, Huizhou City, Guangdong Province
6
TCL Corporation Interim Report 2018
Zip code 516001
Company website http://www.tcl.com
Email address ir@tcl.com
2. Media for Information Disclosure and Place where this Report is Kept
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period.
Newspapers designated by the Company for information Securities Times, China Securities Journal, Shanghai Securities News
disclosure and Securities Daily
Website designated by CSRC for publication of this http://www.cninfo.com.cn
Report
Place where this Report is kept Board Office of TCL Corporation
IV Key Financial Information
Series
Item H1 2018 H1 2017 Change (%)
No.
1 Operating revenue (RMB) 52,523,748,293 52,174,517,312 0.67%
2 Gross profit (RMB) 9,399,768,981 10,156,485,100 -7.45%
3 EBITDA 6,743,386,144 5,917,050,093 13.97%
4 Profit before taxation (RMB) 2,185,754,559 2,222,380,189 -1.65%
Net profit (RMB) 1,700,839,860 1,661,318,811 2.38%
Net profit attributable to the listed company’s 1,585,938,283 1,033,844,701 53.40%
shareholders (RMB)
Net profit before non-recurring gains and losses 1,019,677,348 1,161,040,759 -12.18%
5
(RMB)
Net profit attributable to the listed company’s 993,436,861 619,216,177 60.43%
shareholders before non-recurring gains and losses
(RMB)
Basic earnings per share (RMB/share) (note) 0.1173 0.0846 38.65%
Diluted earnings per share (RMB/share) 0.1172 0.0846 38.53%
6
Basic earnings per share before non-recurring gains 0.0734 0.0507 44.77%
and losses (RMB/share)
7
TCL Corporation Interim Report 2018
Weighted average return on equity (%) 5.22% 4.47% Up by 0.75%
7 Weighted average return on equity before
3.27% 2.68% Up by 0.59%
non-recurring gains and losses (%)
Net cash generated from/used in operating activities 4,375,228,294 3,472,540,487 26.00%
(RMB)
8
Net cash per share generated from/used in operating 0.3229 0.2569 25.69%
activities (RMB/share)
30 June 2018 31 December 2017 Change (%)
9 Total assets (RMB) 169,916,843,306 160,293,985,835 6.00%
10 Total liabilities (RMB) 112,238,243,837 106,151,046,949 5.73%
Debt Asset ratio (%) 66.05% 66.22% Down by 0.17%
11 Debt Asset ratio before borrowings obtained using 64.22% 64.55%
Down by 0.33%
bank deposit as a pledge and deferred income (%)
Total owners’ equity (RMB) 57,678,599,469 54,142,938,886 6.53%
12 Owners’ equity attributable to the listed company’s 29,598,029,676 29,747,067,178
-0.50%
shareholders (RMB)
13 Share capital (share) 13,549,648,507 13,514,972,063 0.26%
Equity per share attributable to the listed company’s 2.1844 2.2010 -0.75%
14
shareholders (RMB/share)
Note: 34,676,444 restricted shares were granted and listed in the Reporting Period, increasing the Company’s total number of shares
from 13,514,972,063 to 13,549,648,507. Earnings per share for both H1 2018 and H1 2017 were weighted averages based on the
total share capital. Based on the total share capital on 30 June 2018, diluted earnings per share for H1 2018 were RMB0.1172, up
38.53% from RMB0.0846 for H1 2017.
The total share capital at the end of the last trading session before the disclosure of this Report:
Total share capital at end of last trading session before
13,549,648,507
disclosure of this Report (share)
Fully diluted earnings per share based on latest total share
0.1172
capital above (RMB/share)
V 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 Differences under CAS and IFRS
No such differences for the Reporting Period.
8
TCL Corporation Interim Report 2018
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
No such differences for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable ■ Not applicable
XI Non-Recurring Gains and Losses
Unit: RMB
Item Amount Note
Gain or loss on disposal of non-current assets (inclusive of
17,143,305 Not applicable
impairment allowance write-offs)
Government subsidies charged to current profit or loss (exclusive
of government subsidies given in the Company’s ordinary course
525,524,829 Not applicable
of business at fixed quotas or amounts as per government’s
uniform standards)
Gain or loss on fair-value changes in trading financial assets and An aggregate loss of RMB6.13
liabilities & investment income from disposal of trading financial million on the fair-value changes
assets and liabilities and available-for-sale financial assets -6,131,372 of forward forex contracts and on
(exclusive of effective portion of hedges that arise in the settled such contracts in the
Company’s ordinary course of business) Reporting Period
Other 303,187,412 Not applicable
Less: Corporate income tax -158,561,662 Not applicable
Minority interests (net of tax) -88,661,090 Not applicable
Total 592,501,422
9
TCL Corporation Interim Report 2018
Part III Business Summary
I Core Business Scope of the Company in Reporting Period
In the Reporting Period, the Group accelerated business restructuring to concentrate more on its two
major industries—semiconductor displays and intelligent terminals. Supported by technology and
business model innovations, the Group also explored a new business area based on its core business
and competencies. As such, the Group has reclassified its main industries into the following three
major business groups:
1. The Semiconductor Display Business Group
It consists of CSOT, CDOT (0334.HK), new technologies and new business layout in relation to
semiconductor displays.
2. The Intelligent Terminal Business Group
It includes TCL Electronics (1070.HK) (including the commercial display operations), TCL
Communication, TCL Household Electric Appliance Group and new business related to the
consumer electronics such as smart homes.
3. The Emerging Business Group
It is responsible for the overall management of the Group’s platform services, strategic emerging
business and financial control system.
TCL Corporation
Semiconductor Displays Intelligent Terminals Emerging Business
CSOT TCL Electronics (commercial Platform services
displays inclusive)
CDOT
TCL Communication Strategic emerging business
Guangdong Juhua
TCL Household Electric
China Ray Appliance Group Financial control system
10
TCL Corporation Interim Report 2018
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
See item IV under “Part IV Management Discussion and Analysis” herein.
2. Major Assets Overseas
□ Applicable ■ Not applicable
III Core Competitiveness Analysis
Upon 37 years of development, TCL has become a global conglomerate manufacturing smart
products and providing Internet application services. Up to now, it has been committed to becoming
an icon for China’s intelligent manufacturing and has made a series of remarkable achievements.
With the spirit of continuous innovation, the revolution to forge ahead and the courage to reform,
TCL has successively promoted the internationalization, the vertical integration of the industrial
chain and the “Double +” strategy of “Smart Products + Internet” and “Products + Services”,
aiming to optimize resource allocation through global operations and improve operational
efficiency by way of the vertical integration of the consumer electronics operations. Keeping
abreast of the times and leading technological advancements, TCL has gradually established its
competitive advantages for the future.
1. Great Strength in R&D and Product Innovation
TCL owns 26 R&D centres worldwide, 4 CNAS-certified labs and close to 8,000 high-quality R&D
technicians, covering new semiconductor display technologies and materials such as OLED and
QLED, artificial intelligence in industrial application and product terminals, as well as the big data
application, smart connection, etc. The National Printing and Flexible Display Innovation Centre
launched by Guangdong Juhua is the first national innovation centre in the domestic display sector,
while China Ray is part of the Printing OLED Key Material Industrialization Demonstration
Programme as a specific R&D priority plan of China. Up to the end of the Reporting Period, TCL
has applied for accumulated 33,220 Chinese patents, 7,839 U.S. patents and 9,030 international
patents through PCT (including 647 ones during the Reporting Period). In addition, TCL’s
innovative products have achieved many honours, including the “Innovative Product for the Year”
for TCL Contamination-Free Drum-Inside-Drum Washing Machine at the 13th China Household
11
TCL Corporation Interim Report 2018
Appliances Innovation Award in 2017, as well as the “Quantum Dot Technology Golden Award” for
TCL Electronics’ high-end flagship X6 XESS TV at IFA Berlin 2017.
2. Advantage of Integrated Vertical Industrial Chain
TCL is the first company in China set up the integrated vertical industrial chain of “LCD
panels-backlight modules-TV/mobile phones product”. Since 2008, it started to establish control
management over the upstream supply chain of consumer electronics and make plans for the core
components of home and mobile terminal products. With semiconductor displays as the core
business, TCL works on the R&D, design and manufacturing of key materials and components on
the upstream side, and integrates display terminal products on the downstream side. Through R&D,
manufacturing technology and industrial scale improvements, TCL has formulated an
internationally competitive advantage in, collaborative industrial chain. In terms of home terminals,
CSOT’s t1 and t2 plants produce large-sized LCD panels, the intelligent manufacturing base in
Huizhou specializes in backlight modules, and TCL Electronics manufactures and markets the
intelligent home terminals and provides Internet value-added services. As for mobile terminals,
CSOT’s t3 plant produces small- and medium-sized LTPS LCD panels, CDOT specializes in
small- and medium-sized backlight units, and TCL Communication manufactures and markets the
mobile terminals and provides Internet value-added services. An open and collaborative supply
chain is adopted for all the business units for better resource allocation.
3. Global Operations and Distribution Network
Through branding efforts and cross-border mergers and acquisitions, TCL has become a leader
among Chinese enterprises in internationalization. So far, TCL has more than 75,000 employees
across Asia, Americas, Europe and Oceania, providing smart products and application services for
over 100 million users around the world. Also, it boasts 26 R&D centres and 22 manufacturing
bases worldwide, as well as sales offices in over 80 countries and regions to cover more than 160
countries and regions. Domestically, through the expansion of its 3C Digital Home Experience
Centres and exclusive shops, TCL’s distribution network is able to reach every corner of the country.
In all, the global operations and distribution network has become one of TCL’s core competitive
edges.
4. Global Brand Recognition
12
TCL Corporation Interim Report 2018
TCL adopts a multi-brand strategy for the differentiated users. For TV brands, it has TCL, ROWA,
Thunderbird, etc. for the domestic market, as well as TCL, Thomson and iFFalcon for the
international market. In terms of communication products, it has TCL, Alcatel and Palm brands,
also being licensed by BlackBerry to use its brand name globally. On the list of 2017 (The 23rd) Top
100 Most Valuable Chinese Brands, TCL ranked No. 5 with a brand value of RMB80.656 billion,
topping China’s TV manufacturing industry for consecutive 12 years in a row. It is also award the
top 20 on the ranking of BrandZ Chinese Global Brand Company jointly released in February 2018
by Google, Kantar Millward Brown and WPP. TCL has set up the international renowned brand
recognition. In terms of the North America market, it has been ranked as the fastest growing TV
brand in the U.S. market by the local media for three consecutive years. Due to the years of
overseas branding efforts, TCL is well-received among overseas consumers.
5. Scale Advantage and Leading Market Position
TCL’s products enjoy a leading market position in the global market. In H1 2018, CSOT’s LCD TV
panel shipment ranked the world’s fifth largest, with its 32" shipment being the second largest
worldwide, and its 55" shipment being the largest domestically. In addition, TCL owned the third
largest global market share by LCD TV sales volume, with the market share of its curved TVs
remaining at the top of domestic brands. Meanwhile, its air conditioner sales volume ranked the
world’s fifth highest. With such an enormous scale, TCL is enjoying decreasing marginal costs and
expenses, as well as increasing profits.
6. Internet Application and Service Competency
Based on its existing intelligent terminals, In 2014, TCL greatly promoted a strategic transformation
towards “Intelligent Terminals + Internet” and “Products + Services” business model to provide
platforms and services for users in home, mobile and commercial scenarios. This transformation
was aimed to catch up the fast development of Internet and foster new competitiveness. Up to the
end of June 2018, TCL had accumulated 27.35 million activated users at its home Internet
application platforms, and accumulated 45.37 million activated users at the huan.tv terminals; and
for its mobile Internet application platforms, there were up to 428 million activated users, with 110
million active users on a monthly basis. TCL’s mobile Internet application and service competency
has improved rapidly, boosting fast revenue growth.
13
TCL Corporation Interim Report 2018
Part IV Management Discussion and Analysis
I Overview
In H1 2018, the Group recorded operating revenue of RMB52.524 billion, representing a
year-on-year increase of 0.67%; core business revenue of RMB52.073 billion, rising 1.45%
compared to H1 2017; EBITDA of RMB6.743 billion, growing by 13.97% from H1 2017; the net
profit of RMB1.701 billion, representing a 2.38% year-on-year increase; the net profit attributable
to TCL shareholders of RMB1.586 billion, representing a considerable increase of 53.40%
compared to H1 2017; and the net profit attributable to TCL shareholders before non-recurring
gains and losses of RMB993 million, a strong growth of 60.43% compared to H1 2017.
The Group achieved considerable year-on-year performance improvements primarily driven by the
following factors: (a) profitability of the overseas business continued to improve, TCL Electronics’
effort spent on key customer and distribution channel expansion produced remarkable results with
fast growth in all the major markets, and TCL Communication achieved remarkable sharp decreases
in loss in major overseas markets due to its continuous cost reduction and efficiency improvement;
(b) except for CSOT, all the other industries continued to achieve sustainable growth; and (c)
attributable to the further transformation, net profit and labour efficiency both noticeable increases
with a drop in the overall operating expenses.
The Group’s operating revenue grew at a slower pace was mainly driven by (a) CSOT reported a
year-on-year decline in revenue resulted from significantly lower prices for its main panel products;
and (b) the communication business shrank in scale due to proactive transformation including
optimize the business structure and organization process.
During the Reporting Period, the Group accelerated its business and capital restructurings through
disposing or selling part of its non-core industries or other ways to focus more on semiconductor
displays and intelligent terminals, as well as through developing a new business area based on
technological and business model innovations in relation to the core business for new growth
drivens. Meanwhile, TCL will serve as the main platform for CSOT’s semiconductor display
industry. TCL Multimedia, having renamed as TCL Electronics in the Reporting Period, serving as
14
TCL Corporation Interim Report 2018
the main platform for the Group’s intelligent terminal industry. TCL Electronics is aiming to build
an international business group of TCL-brand intelligent terminals.
The semiconductor display industry layout is become more maturity, with the largest
shipment of TV panels to major brand customers in China.
With the production ramp-up continuously, the higher yield rate and higher utilization rate on its
two G8.5 LCD panel production lines (t1 and t2), CSOT ranks fifth in global LCD TV panel
shipment, first in TV panel shipment to major brand customers in China, first in domestic market
share of its 55" products, and second in global market share of its 32" LCD panels. The t6 project
(the G11 production line), which produces and markets 43", 65", 70" (21:9) and 75" QFHD displays,
is anticipated to start production in this fourth quarter. The t7 project (another G11 production line)
is positioned to produce large-sized UHD and OLED displays. Meanwhile, CSOT’s four production
lines cover major large-sized products. CSOT is well positioned for a larger market share of
large-sized displays with new technological development plans.
As for small- and medium-sized displays, the Company concentrates on medium- and high-end
products and new display technologies application, in order to improve its industrial capacity and
product competitiveness rapidly. The t3 project (the G6 LTPS-LCD production line) is seeing an
increasing production capacity, yield rate and shippment. The t4 project (the G6 flexible
LTPS-AMOLED production line) is scheduled for production in H1 2019, the relevant
technological identification and application are well underway on the existing G4.5 test production
line. The Company will speed up its product and customer layout to establish technological and
efficiency competitiveness in the small- and medium-sized display sector.
At the end of the Reporting Period, the prices for CSOT’s major products have stabilized and show
an increasing trend. According to data from the independent agency, the 32-inch panel was quoted
in this August at a price about 10 U.S. dollars higher than the bottom price in the second quarter.
The LCD panel industry is showing a rising demand with the coming selling peak season of the
terminal products, as well as with extended display applications in various scenarios, which is
expected to contribute to CSOT’s revenue growth in the second half of the year.
15
TCL Corporation Interim Report 2018
The global operation competency has improved and the brand terminal business has achieved
significant growth.
With a well-established global network covering R&D, products, distribution channels and
marketing, and featuring strong competencies of global management and localized operations
covering supply chain management, IP protection, risk control and compliance, TCL is able to deal
with various trade disputes and maintain steady growth in global business. It owns 26 R&D centres,
10 joint labs, 22 manufacturing bases across the world, covering over 160 countries and regions.
TCL’s global competitiveness continued to improve as a global brand in the Reporting Period.
During this period, the sales volume have reached 13.51 million TV sets, grew by 37.8%
year-on-year, of which the overseas sales volume went up 44.4% from a year ago, generating sales
revenue that accounted for 46.95% of the Group’s total overseas sales revenue.
Product and technological innovation is seen as a key drivers.
During the Reporting Period, the Group invested a total of RMB2.558 billion in the R&D, mostly in
the strategic direction of new semiconductor display technologies and materials, artificial
intelligence (AI) and big data, as well as intelligent manufacturing and the industrial Internet.
In terms of new semiconductor display technologies and materials, Guangdong Juhua has been
approved as the “National Printed and Flexible Display Innovation Centre”, which is the only
national innovation centre in China’s display sector. So far, it has established the world’s most
advanced public printed display platform, and has successfully developed multiple printed display
prototypes. As for QLED, a world-leading R&D team has been put in place and high-performance
red-light and green-light quantum dot materials have been developed. Meanwhile, China Ray is
undertaken development of the evaporated and printed OLED materials, as well as the national
“Printed OLED Key Material Commercialization Demonstration Programme”, where prototypes
have been sent to customers.
As for the AI and big data sector, the Group owns multiple R&D centres. The Hong Kong R&D
Centre specializes in intelligent terminal application, as well as key image and big data technologies.
The R&D centre in the U.S. works on supporting Internet operation technologies for intelligent
terminals. And the Wuhan R&D Centre set up in this April concentrates on algorithms in relation to
16
TCL Corporation Interim Report 2018
AI technologies such as image recognition, as well as voice recognition and understanding.
During the Reporting Period, the Group was incorporating a subsidiary to develop an intelligent
manufacturing and industrial Internet system with an independent core intellectual properties (IP).
Meanwhile, the plants of CSOT and the smart TV will adopt more intelligent systems to create new
competitiveness in industrial manufacturing this year.
During the Reporting Period, the Group applied for 647 international patents through PCT,
representing a cumulative number of 9,030, covering Europe, the U.S., South Korea, etc. In addition,
up to the end of the Reporting Period, the Group has cumulatively applied for 33,220 Chinese
patents and 7,839 U.S. patents. Among those, CSOT has applied for 12,672 Chinese patents and
7,190 U.S. patents, indicating a domestically advanced level of patented technologies in
domestically; in terms of the prioritized quantum dot sector, applications have been filed for 648
patents, ranking the world’s second highest in this sector.
The Group is committed to providing the intelligent vision world with the best smart experience for
users. As a result, the Group will strengthen the advantage of integrated vertical industrial chain,
strive for higher marginal profits and lower costs through technological innovation and efficiency
improvement, and keep improving its core competitiveness constantly. It will also enhance the
competitiveness of its terminal products including smart TV, mobile phone and intelligent
household electrical appliance, and expand the emerging business area such as commercial displays
and vehicle-mounted displays, as well as plan for an intelligent terminal portal matrix for various
application scenarios. Being user-oriented, TCL will build household, individual and commercial
eco-systems with premium products and services by means of strategic investment and cooperation.
II Performances of Core Business
In the Reporting Period, the Group accelerated business restructuring to concentrate more on its two
major industries—semiconductor displays and intelligent terminals. Supported by technology and
business model innovations, it also explored a new business area based on its core business and
competencies. As such, the Group has reclassified its main industries into the following three major
business groups:
17
TCL Corporation Interim Report 2018
1. The Semiconductor Display Business Group
It consists of CSOT, CDOT (0334.HK) , new technologies and new business layout in relation to
semiconductor displays. 2. The Intelligent Terminal Business Group
It includes TCL Electronics (1070.HK) (including the commercial display operations), TCL
Communication, TCL Household Electric Appliance Group and other new business related to the
consumer electronics such as smart homes.
3. The Emerging Business Group
It is responsible for the overall management of the Group’s platform services, strategic emerging
business and financial control system.
TCL Corporation
Semiconductor Displays Intelligent Terminals Emerging Business
CSOT TCL Electronics (commercial Platform services
displays inclusive)
CDOT
TCL Communication Strategic emerging business
Guangdong Juhua
TCL Household Electric
China Ray Appliance Group Financial control system
(I) The Semiconductor Display Business Group
1. CSOT
CSOT is mainly engaged in the R&D, production and sales of semiconductor display panels and the
collaborative management of semiconductor display related industries. While further consolidating
its leading position as the TV LCD panel provider, CSOT is actively transforming to be a
multi-application-scenario display interface provider. Focusing on this strategy, CSOT keeps
optimizing the product and customer structures of the existing LCD panel display business and
actively working on development of new products with high added value such as commercial
displays, notebook displays and vehicle-mounted displays for faster business transformation.
Moreover, CSOT is promoting organizational structure optimization and business model
transformation to further improve efficiency and reduce costs for leading efficiency and
18
TCL Corporation Interim Report 2018
effectiveness in the industry.
During the Reporting Period, the two G8.5 lines of CSOT, t1 and t2 projects, maintained full
production and sales. A total of 1.750 million glass substrates were inputted, representing a
year-on-year increase of 7.49%. By means of continuous improvement of the product structure and
product competitiveness, CSOT’s large-sized LCD panel shipment remained the fifth in the global,
the market share of 32-inch LCD panel products accounted for the second largest in the worldwide,
and the shipment of 55-inch UD products ranked second in the world. In the field of large-sized
LCD panels, CSOT consecutively ranked first in shipment to major domestic brand customers. The
production capacity and yield of the G6 LTPS-LCD production line (t3 project) continued to
increase, major brand customers were successfully introduced, and bulk shipments to many brand
customers were materialized. The sales volume increased rapidly, with the proportion of full screen
products rising significantly. During the Reporting Period, due to the impact of the cycle of the
panel industry, the average price of panels of major sizes was significantly lower than that of the
same period last year, and the performance of CSOT decreased year-on-year. However, with the
advantages of the Group’s integrated vertical industrial chain, optimization of the product mix,
reduction of costs and increase of efficiency, the business efficiency and profitability of CSOT
remained ahead in the global industry. As a result, for H1 2018, CSOT recorded sales revenue of
RMB12.14 billion and the EBITDA of RMB4.113 billion.
During the Reporting Period, the construction of the new production line of CSOT was progressing
smoothly. The roof-sealing of the plant of the G6 LTPS-AMOLED flexible production line (t4
project) has been completed, and the equipment procurement and move-in are underway.
Production is expected to start in the first half of 2019. CSOT has a G4.5 flexible AMOLED trail
line in Wuhan, where the product and technology testing is underway, preparing for the rapid mass
production of t4 product. The G11 TFT-LCD and AMOLED new display production line (t6 project)
had entered the stage of equipment loading and installation. This line is expected to start operation
in the fourth quarter of this year, mainly producing 43-inch, 65-inch, 75-inch and other
ultra-large-sized new display panels. The G11 UHD new display production line (t7 project) is
mainly responsible for the production and sales of 65-inch and 70-inch (21:9) 8K UHD displays and
AMOLED display products.
19
TCL Corporation Interim Report 2018
The first phase of the integrated intelligent module manufacturing base (High Generation Module
Project) has been put into production, with an annual processing capacity of 40 million LCD
modules. Supporting the G8.5 and G11 production lines, this project is positioned to provide
high-end and large-sized display modules to solve problems for customers, and further enhance the
manufacturing capability and competitive advantages of CSOT in the sector of semiconductor
displays.
2. CDOT
CDOT (0334.HK) is engaged in the R&D, production and sales of small- and medium-sized
TFT-LCD/OLED display modules.
During the Reporting Period, due to the sluggish demand for smart phones around the world,
shortage of some components and product strategy adjustments of certain customers, the sales
volume of CDOT’s products declined year-on-year. For the Reporting Period, CDOT reported sales
revenue of RMB1.26 billion, showing a year-on-year decrease of 15.6%. However, by active
investment in the R&D of new products and technologies, product portfolio adjustments, an
increased proportion of mid and high-end products and synergies with CSOT, the average price of
CDOT’s products maintained steady growth. Meanwhile, following the business strategy direction
of being a provider of multi-application-scenario display interface, CDOT is actively working with
Internet companies to launch smart home products equipped with its display modules as a way to
improve its business composition and enhance its product competitiveness and profitability.
3. Guangdong Juhua
Guangdong Juhua is mainly engaged in the research of key common technologies of printed and
flexible display. It cooperates with universities, research institutes, internationally renowned
materials and equipment companies and domestic display industry leaders to set up China’s public
R&D platform for printed display.
As the contractor of the "National Printed and Flexible Display Innovation Center", Guangdong
Juhua is the first national innovation center in the display sector. It has applied for nearly 230
invention patents and 50 patents have been granted. During the Reporting Period, Guangdong Juhua
has successfully developed the 31-inch printed OLED and 5-inch printed QLED, and completed the
development of the 5-inch ultra-high resolution printed AMOLED display prototype with a
20
TCL Corporation Interim Report 2018
resolution ratio of 400 ppi, which is the highest resolution display device completed by the printed
technology. Guangdong Juhua has established a world-class R&D team in the QLED field to
develop high-performance red-light and green-light quantum dot materials. Moreover, Guangdong
Juhua has made remarkable progress in the research and development of the service efficiency and
life of Blue-ray devices.
4. China Ray
China Ray is mainly engaged in the development of new OLED key materials with independent IP,
focusing on evaporated OLED small molecule materials and printed OLED materials.
During the Reporting Period, China Ray sent to manufacturers green-light and red-light material
samples based on the evaporation technique, and the R&D of new materials is progressing in a
smoothly manner. To be in line with the national overall planning of new display materials and
technologies, China Ray simultaneously promotes the development of printed OLED materials, and
undertakes the national "Demonstration Project of Commercialization of Printed OLED Display
Key Materials", taking the leading position in the field of solution processible green-light materials.
(II) The Intelligent Terminal Business Group
1. TCL Electronics
TCL Electronics is mainly engaged in the R&D, production and sales of large-screen display
terminals, and provides users with Internet value-added services and system solutions. TCL
Electronics is aimed at becoming the TCL brand's intelligent terminal business group and achieving
market leadership in China and around the world. It leverages its synergies with the semiconductor
display business group to comprehensively enhance its cost and efficiency advantages and get into
key overseas markets to expand global business. It also enhances its application service competency
to improve user experience and customer loyalty. Moreover, TCL Electronics is actively working on
the next generation of display products. It promotes business development with technological
innovation. By keeping pushing new industries such as commercial displays and smart homes, TCL
Electronics further improves its business composition.
During the Reporting Period, the sales revenue of TCL Electronics increased by 14.2% year-on-year
to RMB17.15 billion (HK$21.05 billion). The net profit attributable to the Company as the parent
21
TCL Corporation Interim Report 2018
increased considerably by 237.5% year-on-year to RMB468 million (HK$572 million). The
aggregate sales volume of LCD TVs reached 13.51 million sets (including commercial displays),
showing an increase of 37.8% year-on-year.
By deepening its global strategy, TCL Electronics achieved sales volume of 8.285 million TV sets
in overseas markets, representing an increase of 44.4% year-on-year. TV sales volume in European
market increased by 73.0% year-on-year, showing strong growth in France, Spain and Poland etc.
market. The sales volume in emerging markets increased by 51.5% year-on-year, of which the sales
volume in Brazil market grew by 82.0% year-on-year, and the sales volume in Philippine market
ranked third, while the sales volume in North America market has raisen to third. Facing the
complicated domestic business environment and fierce market competition, TCL Electronics
pressed on with its fine product strategy. It kept increasing the proportion of high-end products, and
according to the China Market Monitor statistics, the brand price index of TCL Electronics for the
first half of the year was 113, ranking first in China.
2. TCL Communication
TCL Communication operates three major brands, namely TCL, Alcatel and BlackBerry worldwide.
It is committed to providing users with innovative mobile terminal products and services. TCL
Communication aims to become the world's leading brand of mobile terminal devices and establish
a customer-oriented sales system to consolidate the core business of Alcatel. Relying on the
technology R&D and resource advantages of the Group, it keeps strengthening product capability to
make TCL a mid-end brand to seize the development opportunities arising from the mid-end smart
phone market.
During the Reporting Period, due to the fiercer market competition and the impact of reforms and
adjustments, 13.705 million units of TCL Communication products were sold with sales revenue of
RMB4.66 billion, representing a decrease of 32.1% year-on-year. However, by active organizational
adjustment, business unit restructuring and product structure optimization, TCL Communication
achieved a steady increase in the average selling price and gross profit margin, and the operating
expenses decreased year-on-year. In the first half of the year, the deficit substantially reduced,
among which, the North American performance was improved significantly, and profit was gained
from the North American business in the first half of the year.
22
TCL Corporation Interim Report 2018
The Group will substantially support the business transformation and performance improvement
actions of TCL Communication. The management is confident to promote the sustainable
improvement of business and performance of TCL Communication.
3. TCL Household Electric Appliance Group
TCL Household Electric Appliance Group is mainly engaged in the R&D, production and sales of
air conditioners, refrigerators, washing machines and health electrical products. It maintains its
market position in the second lineup by large-scale development and product innovation. As a result,
it further promote scale growth to optimize production costs and efficiency, and conduct product
structure optimization by continuous product innovation to achieve better profitability.
During the Reporting Period, TCL Household Electric Appliance Group drove product upgrades
based on the category leading strategy. Collaborating on the marketing and brand advantages of
TCL Electronics, it improved its customer structure and optimized the domestic and foreign sales
mix to achieve high-quality scale growth. In the first half of the year, TCL Household Electric
Appliance Group achieved sales revenue of RMB10.63 billion, representing a year-on-year increase
of 15.2%.
(III) The Emerging Business Group
1. Platform Service Business
The Platform Service Business provides operational support for the Group’s core business and
realizes platform operation with the Group’s resources to support the development of the core
business.
(1) TCL Finance Co., Ltd.
TCL Finance is positioned to provide financial and management support to the industries and
subsidiaries within the Group, and to undertake the functions of efficiency improvement and risk
management of Group assets. During the Reporting Period, TCL Finance enhanced its financial
support to the Group’s business development according to the Group’s strategic goals, and further
improved its active management ability for capital and risks. The operation of TCL Finance is
progressing smoothly.
(2) Supply Chain Finance and Consumer Finance
23
TCL Corporation Interim Report 2018
The supply chain finance business and the consumer finance business under the Group are
positioned to provide financial services for industrial chain partners, Group employees and Group
product consumers respectively. During the Reporting Period, relying on the “Jiandanhui" platform,
the supply chain finance business was improved internally and externally to provide quality and
convenient account receivable financing services for industry chain partners, especially small and
medium enterprises.
(3) TCL Technology Park
TCL Technology Park is mainly engaged in the management of immovable property such as factory
buildings and land, as well as the related business and supporting services. It increases the return on
capital for industries and improves the overall debt asset ratio of the Group through professional
operation.
2. Strategic Emerging Business
The Group develops its strategic emerging business based on its core business and competencies. In
addition to internal business expansion and independent development, the Group will expand its
strategic emerging business also through incubation, investment, strategic cooperation, mergers and
acquisitions to seize forward-looking innovation opportunities and foster new growth points.
(1) Home Internet Application Service
The Group operates its TV+ global smart TV platform via Thunderbird Technology. During the
Reporting Period, the Company kept deepening its strategic cooperation with Tencent and Southern
New Media to build an operation platform featuring “TCL hardware + license provider + content
provider”. In May 2018, Thunderbird Technology and JD.com signed the "Intentional Agreement on
Strategic Cooperation" for the cooperation focusing on basic capabilities of the Internet, content and
services, and ecological resources.
Meanwhile, Thunderbird Technology formed a business model covering the TCL smart TV portal
and the third-party living room large-screen portal together with Huan Tech and GoLive, and by the
collaboration with the smart home and commercial display industries, an intelligent large-screen
ecosystem for multiple application scenarios has been built, which has improved the platform
operation capability and value of TCL’s electronic intelligent terminal portal.
Up to the end of the Reporting Period, the total number of activated users of the Company’s smart
24
TCL Corporation Interim Report 2018
Internet TV terminals reached 27.35 million, and the number of average daily active users (different
users visiting within seven days, with the same user visiting more than once within seven days
deemed as one user) was 12.81 million, with an average daily uptime of 5.15 hours. During the
Reporting Period, Thunderbird Technology achieved operating revenue of RMB126 million,
representing an increase of more than three times year-on-year.
(2) Mobile Internet Application Service
The Company provides system and application development and operation support for its TCL
branded smart phones through the mobile Internet business center of TCL Communication, and
provides mobile Internet application products and services to overseas open market users through
HAWK. The Company integrates its own and third party services and contents to jointly build a
mobile Internet ecosystem to promote profit pattern and business model innovation based on mobile
intelligent terminals.
During the Reporting Period, HAWK achieved rapid growth in the number of users and user
activity by improving the performance of application products such as cleaning and security as well
as optimizing channels. Up to the end of the Reporting Period, the mobile Internet application
platform of the Company has accumulated 428 million activated users, and the number of active
users has reached 110 million, an increase of 70.87% year-on-year. With an increasing user number
and better single-user profit pattern efficiency, the mobile internet application service business
generated revenue of RMB102 million for the Reporting Period.
(3) Sky-tech Cloud
Guangzhou Sky-tech Cloud Info Co., Ltd. (“Sky-tech Cloud”), a joint venture between the
Company and Cisco, is aimed at providing cloud-based, multi-terminal-accessible video
communication and collaborative conferencing systems for Chinese enterprises and users, including
web conferencing, online training, webcast and remote support, intelligent video cloud services, and
intelligent customer service based on AI technology, which covers call centers, premium customer
service and other services. During the Reporting Period, Sky-tech Cloud made breakthroughs in the
accumulation of enterprise customers, as well as the development and marketing of its own
products. The intelligent customer service business, Tianke Cloud, developed rapidly. The
intelligent video business kicked off smoothly with significantly increased operating revenue.
25
TCL Corporation Interim Report 2018
(4) Industrial Internet and Intelligent Manufacturing
During the Reporting Period, the Group integrated internal resources and established Getech Ltd.,
which takes China's leading industry-level industrial Internet platform as strategic. Based on the
years of manufacturing accumulation of the Group, Getech has formed scenario-based intelligent
manufacturing solutions with independent IP to enhance the industrial manufacturing capabilities of
the Group through internal implementation. In addition, it has entered the markets of IoT platforms,
artificial intelligence, intelligent plants and other fields quickly by deep integration of industrial
technology and information technology resources, providing intelligent manufacturing integrated
solutions for external parties. Moreover, Getech will actively build an industrial Internet base with
the local government to promote industrial intelligence upgrading.
During the Reporting Period, the Group established an overseas merge and acquisition fund, namely
TCL Ventures Fund L.P., to join hands with the domestic Shenzhen TCL Strategic Equity
Investment Fund Partnership (Limited Partnership) to seek investment targets across the world
based on the three strategic core technology directions of the Group for better competitiveness in
the Group’s core business and promote business upgrade.
3. Financial Control System
For business that are less relevant to the core business but of great potential for future development
and returns, the Group manages such an investment portfolio primarily through a financial control
system.
(1) Tonly Electronics
Tonly Electronics develops, manufactures and markets high-quality audio and video products and
wireless smart connected products for the world's top consumer electronics brands.
During the Reporting Period, Tonly Electronics promoted the intelligentization of products,
focusing on intelligent voice speakers and intelligent products related to voice. Due to the rapid
development of artificial intelligence and the Internet industry, product upgrades and customer
diversification have become industry trends. By cooperation with other well-known Internet
customers to jointly develop various smart speakers, The market share of Tonly Electronics
increased significantly. In addition, relying on the strong R&D team and technological advantages
in the audio sector, Tonly Electronics greatly expanded structural products of new forms and had
26
TCL Corporation Interim Report 2018
made shipments to a number of customers in batches, which has become a new force to drive
business growth. During the Reporting Period, Tonly Electronics achieved sales revenue of
RMB2.27 billion, representing a year-on-year increase of 26.5% and a net profit of RMB70 million.
(2) Highly Information
Highly Information (835281) is a business platform specializing in the sales and service of IT
products, covering domestic and foreign top-brand notebook computers, desktop computers, digital
products and related accessories.
During the Reporting Period, following the strategy of "sales + service", Highly Information kept
diversifying its business and upgrading its professional management capabilities to make itself a
computing equipment provider in the intelligent era. Highly Information achieved sales revenue of
RMB7.08 billion and a net profit of RMB100 million in the first half of the year.
(3) Open Edutainment
Open Edutainment is the largest web-based degree course provider in China. It is a leader in
web-based degree course services and Chinese language proficiency online test services, and also
actively develops Internet education and vocational education. During the Reporting Period, the
enrollment for the degree courses of Educational Web was successfully completed, and teacher
training was steadily processing. On the basis of the existing business, Open Edutainment
intensified the integration of educational resources and B2C business development. Up to the end of
the Reporting Period, the registered users of the Internet IT vocational education platform increased
by 35.4% year-on-year to 13.14 million, ranking first in the peer industry.
(4) Venture Capital and Financial Investment Business
With TCL Capital as the carrier and supported by the industry background and professional
management team of the new display and the integrated vertical intelligent terminal chain, the
Group focuses on financial investment in prospective and technologically innovative business. Up
to the end of the Reporting Period, the funds under TCL Capital’s management reached RMB10.135
billion, which focused on investments in new materials, new energy, major consumption and
high-end manufacturing industries.
In addition, in the non-core financial investments, the Group cautiously evaluates financial
investment opportunities. At present, it holds a 4.99% interest in Bank of Shanghai (601229.SH), a
27
TCL Corporation Interim Report 2018
19.07% interest in 712 Corp. (603712.SH) and a 20.08% interest in Fantasia Holdings (01777.HK).
III Analysis of Core Business
Revenue and Costs
(1) Breakdown of Sales Revenue
Unit: RMB
H1 2018 H1 2017
Sales revenue As % of total Sales revenue As % of total Change (%)
sales revenue sales revenue
CSOT 12,144,065,087 23.32% 13,969,731,275 27.22% -13.07%
TCL Electronics 17,145,948,027 32.93% 15,015,818,297 29.25% 14.19%
TCL Household Electric 10,633,312,285 20.42% 9,226,969,203 17.98% 15.24%
Appliance Group
TCL Communication 4,661,220,695 8.95% 6,865,485,568 13.38% -32.11%
Tonly Electronics 2,270,307,562 4.36% 1,795,341,159 3.50% 26.46%
Highly Information 7,084,621,500 13.61% 7,005,583,818 13.65% 1.13%
Others and eliminated -1,866,059,860 Not applicable -2,550,614,940 Not applicable
intercompany accounts
Total sales revenue 52,073,415,296 100.00% 51,328,314,380 100.00% 1.45%
(2) Sales Revenue by Operating Segment
Unit: RMB
H1 2018 H1 2017
Sales revenue As % of total sales Sales revenue As % of total Change (%)
revenue sales revenue
Domestic core 27,626,264,239 53.05% 28,323,153,771 55.18% -2.46%
business
Overseas core 24,447,151,057 46.95% 23,005,160,609 44.82% 6.27%
business
Total sales revenue 52,073,415,296 100.00% 51,328,314,380 100.00% 1.45%
(3) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable ■Not applicable
28
TCL Corporation Interim Report 2018
(4) Changes in Scope of Consolidated Financial Statements for Reporting Period
Compared with H1 2017, 14 newly incorporated subsidiaries were newly included in and 16 subsidiaries (eight dissolved and another
eight transferred) were excluded from the consolidation scope for H1 2018.
(5) Major Changes in Business Scope or Product or Service Range in Reporting Period
□ Applicable ■ Not applicable
(6) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 8,558,458,004
Total sales to top five customers as % of total sales of 16.44%
Reporting Period (%)
Total sales to related parties among top five customers as % 0.00%
of total sales of Reporting Period (%)
Information about the top five customers:
Sales revenue contributed
No. Customer for Reporting Period As % of total sales revenue (%)
(RMB)
1 Customer A 2,968,717,040 5.71%
2 Customer B 1,466,616,916 2.82%
3 Customer C 1,422,013,524 2.73%
4 Customer D 1,358,490,021 2.61%
5 Customer E 1,342,620,503 2.58%
Total 8,558,458,004 16.44%
Major suppliers:
Total purchases from top five suppliers (RMB) 7,746,576,503
Total purchases from top five suppliers as % of total purchases
18.15%
of Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00%
as % of total purchases of Reporting Period (%)
Information about the top five suppliers:
Purchase in Reporting Period
No. Supplier As % of total purchases (%)
(RMB)
1 Supplier A 2,383,781,204 5.59%
2 Supplier B 2,126,063,432 4.98%
29
TCL Corporation Interim Report 2018
3 Supplier C 1,584,449,303 3.71%
4 Supplier D 908,528,272 2.13%
5 Supplier E 743,754,292 1.74%
Total 7,746,576,503 18.15%
IV Analysis of Non-Core Business
□ Applicable ■ Not applicable
V Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
30 June 2018 31 December 2017 Change in
As % of As % of percentage Reason for significant change
Amount Amount
total assets total assets (%)
Monetary 17,612,564,104 10.37% 27,459,452,839 17.13% -6.77% A rise in cash payments for
capital investment
Investment 1,553,569,605 0.91% 859,890,091 0.54% 0.38%
New investment properties
property
22,926,082,399 13.49% 14,775,237,325 9.22% 4.27% More ongoing constructions for the
Construction in
t3 and G11 LCD panel production
progress
lines
2. Assets and Liabilities at Fair Value
Unit: RMB
Gain/loss on Cumulative
Impairment
fair-value fair-value Purchased in Sold in
Beginning allowance for Ending
Item changes in changes Reporting Reporting
amount Reporting amount
Reporting charged to Period Period
Period
Period equity
Financial assets
1.Financial assets at fair 1,543,843,738 -180,679,730 1,363,164,008
value through profit or
loss (exclusive of
derivatives)
2.Derivative financial 687,431,897 -340,281,121 347,150,776
assets
30
TCL Corporation Interim Report 2018
3.Available-for-sale 1,159,165,770 103,627,499 95,514,998 499,046,749 661,351,323 1,004,973,697
financial assets
Subtotal of financial 3,390,441,405 -520,960,851 103,627,499 95,514,998 499,046,749 661,351,323 2,715,288,481
assets
Financial liabilities 442,942,029 27,462,008 470,404,037
Significant changes in the measurement attributes of the major assets in the Reporting Period:
□ Yes ■ No
3. Restricted Asset Rights as at Period-End
Restricted assets Carrying amount (RMB) Reason for restriction As % of total Remark
assets
Monetary capital 897,086,055 Deposited by the finance subsidiary 0.53% Restricted
in the central bank as the required
reserve
Monetary capital 211,673,211 Other monetary capital 0.12% Restricted
Accounts 12,942,671 Factored or put in pledge for loans 0.01% In pledge
receivable
Fixed assets 35,515,676,837 As collateral for loan 20.90% Collateralized
Intangible assets 2,025,294,686 As collateral for loan 1.19% Collateralized
Total 38,662,673,460 22.75%
VI Investments Made
1. Total Investment Amount
Total investment amount in Reporting Total investment amount in same period of
Change (%)
Period (RMB) last year (RMB)
1,342,350,000 4,466,741,029 -69.95%
2. Major Equity Investments Made in Reporting Period
Unit: RMB
31
TCL Corporation Interim Report 2018
The Invest
Return Index to
Core Compa ment
Amoun Term Project on Any disclose
busines Way of ny’s Fundin Joint Type of progres Disclosu
t of of ed investm legal d
Investee s scope investm interest g investo invest s as at re date
investm invest earning ent in matter informa
of ent in source r ment balanc (if any)
ent ment s Reportin involved tion (if
investee investe e sheet
g Period any)
e date
Shenzh
en Shenzh
China en
Star G11 Major
Optoele UHD Industr
With UHD http://w
ctronics New y
moneta 7,000,0 Self-fu new 22 May ww.cnin
Semico Display 35.89 Develo 7 years - - None
ry 00,000 nded display 2018 fo.com.
nductor Product pment
capital s cn
Display ion Fund
Technol Line One
ogy Co.,
Co., Ltd.
Ltd.
Total -- -- -- -- -- -- -- -- - - -- -- --
3. Major Non-Equity Investments Ongoing in Reporting Period
□Applicable ■Not applicable
4. Financial Investments
(1) Securities Investments
Gain/Lo Accumu
ss on lated
Initial Beginni fair-valu fair-valu Purchas Gain/los
Security Security Security Measure Sold in Ending Account Funding
ng e e ed in s in
investm ment Reportin carrying
type code name carrying changes changes Reportin Reportin
method g Period amount ing title source
ent cost amount in charged g Period g Period
Reportin to
g Period equity
-- -- -- -- -- -- -- -- -- -- -- -- -- --
Other securities
investments held at -- -- -- -- -- -- -- -- -- -- --
period-end
Total -- -- -- -- -- -- -- -- -- -- --
32
TCL Corporation Interim Report 2018
Disclosure date of
announcement on Board’s
39 March 2017
consent for securities
investments
Disclosure date of
announcement on general
meeting’s consent for 14 April 2017
securities investments (if
any)
(2) Investments in Derivative Financial Instruments
Funding source Mostly foreign-currency revenue
Legal matters involved (if applicable) Not applicable
Disclosure date of board
announcement approving derivative 26 February 2011
investment (if any)
Disclosure date of general meeting
announcement approving derivative Not applicable
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
Analysis of risks and control
and trading business related to main business operations, and there is a market risk of loss due
measures associated with derivative
to the fluctuation of underlying interest and exchange rates, which lead to the fluctuation of
investments held in Reporting Period
prices of financial derivatives;
(including but not limited to market
2. Liquidity risk: the derivatives business carried out by the Group is an over-the-counter
risk, liquidity risk, credit risk,
transaction operated by a financial institution, and there is a risk of loss due to paying fees to
operational risk, legal risk, etc.)
the bank for the operations of evening up or selling the derivatives below the buying prices;
3. Performance risk: the Group conducts the derivative business based on rolling budgets for
risk management, and there is a risk of performance failure due to deviation between the
actual operating results and budgets;
4. Other risks: in the case of specific business operations, if the operator fails to finish the
prescribed procedures for report or approval, or fails to record the financial derivative
business information accurately, timely and completely, it may result in loss of derivative
business or trading opportunities. Moreover, if the trading operator fails to fully understand
33
TCL Corporation Interim Report 2018
the terms of transaction contracts or product information, the Group will face the legal risks
and transaction losses therefrom.
Measures taken for risk control:
1. Basic management principles: the Group strictly follows the hedging principle and the main
purpose of locking costs and avoiding risks. It is required that the financial derivatives
business to be carried out matches the variety, size, direction and duration of spot goods, and
no speculative trading should be involved. In the selection of hedging instruments, only
simple financial derivatives that are closely related to the main business operation and meet
the requirements of hedge accounting treatment should be selected, and avoid complex
business that exceeds the prescribed business scope or is difficult to recognize in terms of risk
and pricing;
2. The Group has formulated a special risk management system tailored to the risk
characteristics of the financial derivatives business, covering all key aspects such as
pre-emptive prevention, in-process monitoring and post-processing. Professional personnel
are rationally arranged for investment decision-making, business operations and risk control.
Investment participants are required to fully understand the risks of financial derivatives
investment and strictly implement the business operations and risk management systems of
derivatives. Before starting the derivatives business, the holding company must submit to the
management department of the Group detailed business reports including its internal approval,
main product terms, operational necessity, preparations, risk analysis, risk management
strategy, fair value analysis and accounting methods, and special summary reports on business
operated. Operations can be implemented only after getting opinions from the professional
department of the Group;
3. Relevant departments should track the changes in the open market price or fair value of
financial derivatives, timely assess the risk exposure changes of invested financial derivatives,
and make reports to the board of directors on business development;
4. When the combined impairment of the fair value of derivatives and changes in the value of
the assets (if any) used for risk hedging by the Group results in a total loss or floating loss
amounting to 10% of the recently audited net assets of the Company, and the absolute amount
exceeds RMB10 million, the Group will disclose it in a timely manner.
With the rapid expansion of overseas sales, the Company keeps following the above rules in
Changes in market prices or fair value
the operation of forward foreign exchange contracts, interest rate swap contracts and futures
of derivative investments in
contracts to avoid and hedge foreign exchange risks arising from operation and financing. It
Reporting Period (fair value analysis
saw a loss of RMB6.13 million for the Reporting Period. The fair value of derivatives is
should include measurement method
determined by real-time quoted price of the foreign exchange market, based on the difference
and related assumptions and
between the contractual price and the forward exchange rate quoted immediately in the
parameters)
foreign exchange market on the balance sheet date.
Major changes in accounting policies
and specific accounting principles
adopted for derivative investments in No major changes
Reporting Period compared to last
reporting period
Opinion of independent directors on In view of the fact that nearly half of the main business of the Company is overseas, a wide
34
TCL Corporation Interim Report 2018
derivative investments and risk range of settlement currencies is involved. The Company reduces exchange losses and locks
control transaction costs by reasonable financial derivatives, which helps to reduce risk control costs
and improve company competitiveness. Risks are effectively controlled as the Company has
taken series of measures such as conducting a rigorous internal evaluation for the operation of
financial derivatives business, establishing a corresponding regulatory mechanism,
formulating reasonable accounting policies and specific accounting principles, setting limits
for risk exposure management, and operating simple financial derivatives. The contracting
agent for financial derivatives business of the Company is a sound financial agent with good
credit standing.
The independent directors believe that the financial derivatives transactions carried out by the
Company in the first half of 2018 are closely related to the daily operation needs of the
Company with controllable risks. The business is in line with the interests of minority
shareholders of the company and the relevant laws and regulations.
Unit: RMB’000
Ending contractual amount
Gain/loss
Beginning amount Ending amount as % of the Company’s ending
in
Type of contract net assets
Reporting
Contractual Actual Contractual Actual Contractual Actual
Period
amount amount amount amount amount amount
1. Forward forex 50.01 1.73
contracts 20,369,370 697,160 28,845,060 997,700 -6,130
2. Interest rate 8.80 0.32
swaps 4,168,820 83,380 5,074,930 182,700
3. Currency swaps 1,633,550 31,840 1,323,320 39,700 2.29 0.07
Total 26,171,740 812,380 35,243,310 1,220,100 -6,130 61.10 2.12
VII Sale of Major Assets and Equity Investments
1. Sale of Major Assets
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
Amou Amount Relation Executed
nt contribu ship Owners as Index to
Selling Related
Equity contrib Effect of the ted by Pricing between hip fully scheduled disclose
Count Date price transacti Disclosu
interests uted sale on the the sale principl counter transferr or not, if d
erparty of sale (RMB’0 on or re date
sold by the Company to net e party ed or not, state informat
00) not
equity profit of and the not reason and ion
interes the Compan actions
35
TCL Corporation Interim Report 2018
ts to Compan y taken
net y as %
profit of the
of the Compan
Comp y’s net
any profit
from (%)
period
-begin
ning to
date of
sale
(RMB
’000)
This
transaction
is expected
to help
optimize the http://w
Huizhou
EVE 28 structure of ww.cnin
Hyperpo Not 29
Energ Decem the Not fo.com.c
wer 62,500 - -- Not applicab Not Decemb
y Co., ber Company’s applicable n/cninfo
Batteries le er 2017
Ltd. 2017 supply -new/ind
Inc.
chain, with ex
no major
effects on
the
Company.
VIII Major Subsidiaries
Major wholly/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net
profit:
Unit: RMB
Core Net profit
Relationship with the busines Registered Operating Operating
Name Total assets Net assets attributable
Company s capital revenue profit
to the parent
TCL 19,710,602,338 8,366,920,055 17,300,342,5 626,344,363 467,957,675
Electronics Wholly/majority-ow Colour HK$1.748 94
Holdings ned subsidiary TVs billion
Limited (as a
36
TCL Corporation Interim Report 2018
consolidated
group)
Shenzhen 102,085,490,546 44,679,557,40 12,192,597,3 1,254,203,7 1,218,006,0
China Star 4 73 78 33
Optoelectroni
cs Wholly/majority-ow LCD RMB18.34
Technology ned subsidiary panels 2 billion
Co., Ltd. (as a
consolidated
group)
Bank of Financi 1,918,725,038,0 153,177,717,0 19,749,818,0 9,929,881,0 9,371,747,0
Minority-owned RMB7.8
Shanghai Co., al 00 00 00 00 00
subsidiary billion
Ltd. services
IX Structured Bodies Controlled by the Company
□Applicable ■Not applicable
X Operating Performance Forecast for January-September 2018
□Applicable ■Not applicable
XI Risks Facing the Company and Countermeasures
1. Impact of Macro-Environment
In the first half of 2018, the trade war between China and the U.S. escalated, with developed
countries such as the U.S. imposing a new round of protectionism measures, which has caused
uncertainty to the global economy.
Upon 37 years of development, TCL has become a globally renowned brand in the consumer
electronics sector. It optimizes the allocation of its resources through its global operations, including
sales offices in over 80 countries and regions, as well as manufacturing bases in Mexico, Poland,
Southeast Asia, etc. In addition to the U.S., TCL boasts strong brand competitiveness and marketing
competency in Latin America, Europe, the Middle East, the Asia Pacific region, etc. Domestically,
with a distribution network covering every corner of the country, TCL’s major products enjoy top
sales. These global operations assure the steady growth of the Company. Going forward, TCL will
keep abreast of the dynamics in the international situation and take effective measures to protect its
37
TCL Corporation Interim Report 2018
interests.
2. Risk of Technological Transitions
New technologies have emerged in an unprecedented pace in the past decade. Along with the
advancement of the “Made in China 2025” program, AI, cloud computing, big data, the industrial
Internet and other new technologies and materials have entered the commercialization stage and
given rise to many new industries. This means opportunities, but also poses challenges to traditional
enterprises. In order to adapt to these external changes, an enterprise must strengthen its existing
competitive edges, and at the same time building new technological strength, so as to achieve
continuous growth. In the time to come, TCL will enhance product and technological innovation,
focus on AI and Internet application technologies, and take it as a priority to make breakthroughs in
relation to the semiconductor display technology and the related key materials.
38
TCL Corporation Interim Report 2018
Part V Significant Events
I Annual and Extraordinary General Meetings Convened during Reporting Period
1. General Meetings Convened during Reporting Period
Investor Date of resolution Index to disclosed
Meeting Type Convened date
participation ratio disclosure resolutions
First Extraordinary Both on-site and
General Meeting of online voting 37.36% 19 March 2018 19 March 2018
2018 allowed
Both on-site and
2017 Annual
online voting 40.56% 18 May 2018 18 May 2018
General Meeting http://www.cninfo.com.cn
allowed
Second
Both on-site and
Extraordinary
online voting 37.04% 6 June 2018 6 June 2018
General Meeting of
allowed
2018
2. Extraordinary General Meetings Convened at Request of Preferred Shareholders with Resumed Voting
Rights
□Applicable ■Not applicable
II Interim Dividend Plan
The Company has no interim dividend plan, either in the form of cash or stock.
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and Other Entities Fulfilled in Reporting Period or
Ongoing at Period-End
Date of
Type of Details of Term of
Commitment Promisor commitment Fulfillment
commitment commitment commitment
making
Huizhou Investment Holding Co., These holders
Commitments made Share
Ltd., Beijing Ziguang Investment of the shares 26 February 25 February
in time of IPO or lockup No violations
Co., Ltd., Xinjiang Dongxing obtained in 2015 2018
refinancing commitment
Huarui Equity Investment this private
39
TCL Corporation Interim Report 2018
Partnership (Limited Partnership), placement of
Xinjiang Jiutian Liancheng Equity TCL shall not
Investment Partnership (Limited transfer these
Partnership), CDB Innovation shares within
Capital Co., Ltd., BOSC Asset 36 months
Management Co., Ltd., CDB starting from
Jingcheng (Beijing) Investment the end of this
Fund Co., Ltd., CDB Equipment private
Manufacturing Industry Investment placement.
Fund Co., Ltd., CITIC Capital
(Tianjin) Equity Investment
Partnership (Limited Partnership),
and Tianjin Chengbai Equity
Investment Partnership (Limited
Partnership)
Fulfilled on time Yes
Specific reasons for
failing to fulfill
commitments on time Not applicable
and plans for next
step (if any)
IV Engagement and Disengagement of Independent Auditor
The interim financial statements are unaudited.
V Explanations Given by Board of Directors and Supervisory Committee Regarding
Independent Auditor's “Modified Opinion” on Financial Statements of Reporting Period
□Applicable ■Not applicable
VI Explanations Given by Board of Directors Regarding Independent Auditor's “Modified
Opinion” on Financial Statements of Last Year
□Applicable ■Not applicable
VII Insolvency and Reorganization
No such cases in the Reporting Period.
VIII Legal Matters
Major lawsuits and arbitrations:
40
TCL Corporation Interim Report 2018
□Applicable ■Not applicable
Other legal matters:
□Applicable ■Not applicable
IX Punishments and Rectifications
No such cases in the Reporting Period.
X Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
As per Article 217 of the Company Law, a controlling shareholder refers to a shareholder who owns
over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total
share capital; or, despite the ownership of less than 50% of a limited liability company’s total
capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in
the resolution of a meeting of shareholders or a general meeting of shareholders according to the
voting rights corresponding to his interest in the limited liability company’s total capital or the joint
stock company’s total number of shares. According to the definition above, the Company has no
controlling shareholder or actual controller.
On 19 May 2017, TCL Corporation (hereinafter referred to as “TCL” or the “Company”) was
notified by shareholders Mr. Li Dongsheng, Xinjiang Dongxing Huarui Equity Investment
Partnership (Limited Partnership) (hereinafter referred to as “Dongxing Huarui”) and Xinjiang
Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as
“Jiutian Liancheng”) that they intended to form acting-in-concert parties as a way to help improve
the Company’s governance competency and management efficiency, so as to maintain stable
management and development strategies. They have officially become acting-in-concert parties on
TCL after signing the Acting-in-Concert Agreement in Relation to TCL Corporation (hereinafter
referred to as the “Agreement”) on 19 May 2017. Up to the disclosure date of this Report, these
three acting-in-concert parties combined is the biggest shareholder of TCL, with a total of
1,499,833,496 shares in TCL (an 11.07% stake). The biggest shareholder is not involved in any
unsatisfied court judgments, large-amount overdue liabilities or the like.
41
TCL Corporation Interim Report 2018
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
1. On 2 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on the
Measures for the Implementation of the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation, the Proposal on Asking the General Meeting to
Authorize the Board to Handle Matters Related to the 2018 Restricted Stock Incentive Plan and
other proposals were approved at the Sixth Meeting of the Sixth Board of Directors. Meanwhile, the
Company’s independent directors expressed their independent opinion on whether these incentive
plans would be good for the Company’s sustained development and whether the interests of the
Company and its shareholders would be jeopardized in an observable way.
2. On 2 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on the
Measures for the Implementation of the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation, and the Proposal on the Awardee List for the 2018
Restricted Stock Incentive Plan were approved at the Third 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 2018 Restricted Stock
Incentive Plan and the Global Innovation Partner Plan of TCL Corporation was disclosed to the
public on 16 March 2018.
4. On 19 March 2018, the Proposal on the 2018 Restricted Stock Incentive Plan and the Global
Innovation Partner Plan of TCL Corporation (Draft) and the Summary, the Proposal on the
Measures for the Implementation of the 2018 Restricted Stock Incentive Plan and the 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 2018 Restricted Stock Incentive Plan were
approved at the First Extraordinary General Meeting of 2018.
42
TCL Corporation Interim Report 2018
5. On 21 March 2018, the Proposal on the Grant of Restricted Stock to the Awardees, and the
Proposal on the Adjustments to the 2018 Restricted Stock Incentive Plan and the Global Innovation
Partner Plan of TCL Corporation were approved at the Seventh Meeting of the Sixth Board of
Directors and at the Fourth Meeting of the Sixth Supervisory Committee. As such, it was approved
to grant 35,944,000 restricted shares to 1,522 eligible awardees on 21 March 2018. The Company’s
independent directors expressed their independent opinion that the awardee determination method
and the grant date were in compliance with the applicable requirements.
6. On 3 April 2018, the First Meeting of the Holders of the First Top 400 and Key Personnel Stock
Ownership Plan and the Global Partner Plan of TCL Corporation was convened, where the Proposal
on the Establishment of a Management Committee for the Stock Ownership Plan and other
proposals were approved, and Fu Heping was elected as the director of this management committee.
7. On 16 May 2018, the Company disclosed the Announcement on the Completion of the Grant of
Restricted Stock for 2018. This grant had been completed by the Board. As certain awardees had
voluntarily waived their rights to some to-be-granted restricted shares due to lack of subscription
funds or other personal reasons, the number of the granted restricted shares had been reduced to
34,676,444, which were listed on 16 May 2018.
8. During the period from 22 June 2018 to 25 July 2018, Shanghai Guotai Junan Securities Asset
Management Co., Ltd., the administrator of the Company’s Stock Ownership Plan, purchased a
total of 99,148,115.00 TCL shares from the secondary market at an average price of RMB2.82/share,
which was funded by TCL’s specialized fund of RMB279,682,200 for the Stock Ownership Plan.
These purchased shares will be locked up from 26 July 2018 to 25 July 2019.
XII Major Related-Party Transactions
1. Continuing Related-Party Transactions
Relation As % of Approv Over Obtaina
Type Total Metho
ship Specific Pricing Transac total ed appro ble Disclo Index to
Related of value d of
with the transacti principl tion value of transact ved market sure disclosed
party transac (RMB’ settle
Compan on e price all ion line line or price date information
tion 000) ment
y same-ty (RMB’ not for
43
TCL Corporation Interim Report 2018
pe 000) same-ty
transact pe
ions transact
ions
Bankin Routine The
g services interest
service and other rate for
s financial the
services, Compan
including y’s
deposits, deposits
loans, in Bank
financing of
s, Shangha
interbank i shall
loans, not be
note lower
discounti than the
ng, benchm
low-risk ark
wealth interest
A legal manage rate
Bank of person ment and stipulate
Not 28
Shangha of the intermedi d by the http://www.cninf
- 9,309.3 1.3% 714,000 Not - applica April
i Co., Compan ary People’s o.com.cn
ble 2018
Ltd. y’s services Bank of
director China
for the
same
type of
deposits
for the
same
period,
nor shall
it be
lower or
higher
than the
interest
rate of
the
Bank of
Shangha
44
TCL Corporation Interim Report 2018
i for any
third-par
ty
same-ki
nd
deposit
for the
same
period.
CJ Labour Logistics Based
Speedex service services on the
Logistic s from including market
s Co., related transport price
Ltd. party ation and and with
warehous a fair
ing and
reasona
ble
pricing
principl
e, the
price is
determi
ned
A legal
accordin
person
g to the Not 28
of the 47,670. http://www.cninf
operatin - 72.37% 145,000 Not - applica April
Compan 83 o.com.cn
g costs ble 2018
y’s
plus the
director
manage
ment
expense
s plus
rational
profits.
The
price is
finalized
in a
logistics
service
agreeme
nt
signed
45
TCL Corporation Interim Report 2018
by both
parties.
Shenzhe Labour Purchase
n A legal service s and Raw
Thunder person s from sales of material
Not 28
bird of the related whole costs + 4,609.6 http://www.cninf
- 1.92% 20,000 Not - applica April
Networ Compan party TV sets processi 7 o.com.cn
ble 2018
k y’s and ng costs
Technol director parts,
ogy Co. etc.
53,211.
Total -- -- -- 236,400 -- -- -- -- --
43
Large-amount sales return in detail Not applicable
Give the actual situation in the
Reporting Period (if any) where an
estimate had been made for the total
Not applicable
value of continuing related-party
transactions by type to occur in the
Reporting Period
Reason for significant difference
between transaction price and
Not applicable
market reference price (if
applicable)
2. Related-Party Transactions Regarding Purchases or Sales of Assets or Equity Interests
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
Unit: RMB’000
Total
capital
Balance Total Balance at
Related party Relationsh Accounting occupi Reason for Nature of
at 1 repayment in 31
occupying the ip with the title of the ed in capital capital
January Reporting December
Company’s capital Company Company Report occupation occupation
2018 Period 2017
ing
Period
46
TCL Corporation Interim Report 2018
Active Industries Associate Other 161,795 - 76,121 85,674 Current For operating
International Limited receivable account purposes
Good Vision Limited Associate Account 5,454 - 5,454 0 For selling For operating
receivable products purposes
Good Vision Limited Associate Other - 6,525 6,512 13 For selling For operating
receivable products purposes
Harvey Holdings Associate Account 44 - 44 - Current For operating
Limited receivable account purposes
Harvey Holdings Associate Interest 2,411 1,217 170 3,459 Current For operating
Limited receivable account purposes
Harvey Holdings Associate Other 42,353 66 7,495 34,924 Current For operating
Limited receivable account purposes
Kaios Technologies Associate Other 43,988 7,857 8,149 43,696 Current For operating
Inc receivable account purposes
T2Mobile Joint Account 15,365 - 6,492 8,873 Current For operating
International Limited venture receivable account purposes
T2Mobile Joint Other - 7 1 6 Dividend For operating
International Limited venture receivable distributio purposes
n
TCL Sun, Inc. Joint Account 73,999 13,046 - 87,045 For selling For operating
venture receivable products purposes
TCL Zhiyi Joint Account 6,764 8,647 11,899 3,512 For selling For operating
Technology Huizhou venture receivable products purposes
Co., Ltd.
TCT Associate’ Account - 17,964 17,964 - For selling For operating
Mobile-Telefones s receivable products purposes
LTDA subsidiary
Beijing National Joint Account 98 7,674 7,270 502 For selling For operating
Center for Open & venture’s receivable products purposes
Distance Education subsidiary
Co., Ltd.
Beijing WeMed Associate Other 3,777 - 3,777 - For selling For operating
Medical Equipment receivable products purposes
Co., Ltd.
Wealthy Way Group Associate Other - - - - Current For operating
Limited receivable account purposes
Guangdong Regency Associate Other 184 10 57 137 Current For operating
Optics-Electron receivable account purposes
Corp.
47
TCL Corporation Interim Report 2018
Huan Tech Co., Ltd. Associate Other 3 - - 3 Current For operating
receivable account purposes
Huan Tech Co., Ltd. Associate Account 566 18 584 - For selling For operating
receivable products purposes
Honpe Technology Associate’ Other - 8 - 8 Current For operating
(Shenzhen) Co., Ltd. s receivable account purposes
subsidiary
Honpe Technology Associate’ Prepayment 1,057 - 1,057 - Current For operating
(Shenzhen) Co., Ltd. s account purposes
subsidiary
Hubei Changjiang Associate Account - 70 70 For selling For operating
Hezhi Equity receivable products purposes
Investment Fund
Management Co.,
Ltd.
Huizhou TCL Real Associate’ Account 242 80 - 322 For selling For operating
Estate Development s receivable products purposes
Co., Ltd. subsidiary
Huizhou Gaoshengda Associate’ Interest - 25 - 24 Current For operating
Technology Co., Ltd. s receivable account purposes
subsidiary
Huizhou Shenghua Associate’ Account - 792 792 - Current For operating
Industrial Co., Ltd. s receivable account purposes
subsidiary
LG Innotek Huizhou Associate Account 10,705 - 10,705 - For selling For operating
Co., Ltd. receivable products purposes
LE SHI ZHI XIN Key Account - 9,812 9,812 - For selling For operating
Electronic & subsidiary’ receivable products purposes
Technology Co., Ltd. s minority
shareholde
r
LE SHI ZHI XIN Key Prepayment 2,128 - 1,856 272 For selling For operating
Electronic & subsidiary’ products purposes
Technology Co., Ltd. s minority
shareholde
r
LE SHI ZHI XIN Key Note 607 2,319 607 2,319 For selling For operating
Electronic & subsidiary’ receivable products purposes
Technology Co., Ltd. s minority
shareholde
r
48
TCL Corporation Interim Report 2018
LE SHI ZHI XIN Key Other 800 - - 800 Current For operating
Electronic & subsidiary’ receivable account purposes
Technology Co., Ltd. s minority
shareholde
r
Nanjing Zijin Associate Other - 296 - 296 Current For operating
Chuangdong receivable account purposes
Investment
Partnership (Limited
Partnership)
Qihang Associate’ Account 162,963 305,79 385,727 83,034 For selling For operating
Import&Export s receivable 9 products purposes
Limited subsidiary
Qihang Associate’ Other - 205,87 - 205,873 Current For operating
Import&Export s receivable 3 account purposes
Limited subsidiary
Qihang Associate’ Interest - 157 - 157 Current For operating
Import&Export s receivable account purposes
Limited subsidiary
Saipwell TCL Associate Other - 331,44 - 331,442 Current For operating
Electronics Industrial receivable 2 account purposes
Technology Co., Ltd.
Saipwell TCL Associate Dividend 88 1 - 89 Dividend For operating
Electronics Industrial receivable distributio purposes
Technology Co., Ltd. n
Saipwell TCL Associate Account 167,674 75,100 - 242,773 Current For operating
Electronics Industrial receivable account purposes
Technology Co., Ltd.
T2 Mobile Associate’ Other 3,676 - 3,676 - Current For operating
(Shanghai) Limited s receivable account purposes
subsidiary
T2 Mobile Associate’ Prepayment 1,784 - 1,784 - Current For operating
(Shanghai) Limited s account purposes
subsidiary
T2 Mobile Associate’ Account 404 3,426 - 3830 Current For operating
(Shanghai) Limited s receivable account purposes
subsidiary
Shanghai Associate Other 2,180 - 2,180 - Current For operating
Chuangxiang Venture receivable account purposes
Capital Partnership
(Limited Partnership)
49
TCL Corporation Interim Report 2018
Shenzhen Jucai Associate Other - 1,280 - 1,280 Current For operating
Supply Chain receivable account purposes
Technology Co., Ltd.
Shenzhen Jucai Associate Prepayment - 492 - 492 Current For operating
Supply Chain account purposes
Technology Co., Ltd.
Shenzhen Qianhai Associate Account 299,867 497,36 403,942 393,293 For selling For operating
Qihang Supply Chain receivable 8 products purposes
Management Co.,
Ltd.
Shenzhen Qianhai Associate Other 49,500 115 27,498 22,117 Current For operating
Qihang Supply Chain receivable account purposes
Management Co.,
Ltd.
Shenzhen Qianhai Associate Prepayment 22,693 1,789 - 24,482 Current For operating
Qihang Supply Chain account purposes
Management Co.,
Ltd.
Shenzhen Qianhai Associate Interest 77 2 - 79 Current For operating
Qihang Supply Chain receivable account purposes
Management Co.,
Ltd.
Shenzhen Jiutian Associate Other - 1 - 1 Current For operating
Matrix Investment receivable account purposes
Management Co.,
Ltd.
Shenzhen Associate’ Other 695 129 194 630 For selling For operating
Thunderbird s receivable products purposes
Network Media Co., subsidiary
Ltd.
Shenzhen Associate’ Account 70 347 70 347 For selling For operating
Thunderbird s receivable products purposes
Network Media Co., subsidiary
Ltd.
Shenzhen Associate Other 545 188 733 - For selling For operating
Thunderbird receivable products purposes
Network Technology
Co.
Shenzhen Associate’ Other 762 6 462 306 For selling For operating
Thunderbird s receivable products purposes
Information subsidiary
50
TCL Corporation Interim Report 2018
Technology Co., Ltd.
Shenzhen Associate’ Other 36 40 - 76 For selling For operating
Thunderbird Smart s receivable products purposes
Products Co., Ltd. subsidiary
Shenzhen Associate’ Account 3,810 13,647 - 17,457 Current For operating
Thunderbird Smart s receivable account purposes
Products Co., Ltd. subsidiary
Shenzhen Yisheng Associate’ Other - 67 67 - Current For operating
Kangyun Technology s receivable account purposes
Development Co., subsidiary
Ltd.
CJ Speedex Logistics Joint Prepayment 1,760 39,093 - 40,853 Current For operating
Co., Ltd. venture account purposes
CJ Speedex Logistics Joint Account - 2,284 2,284 - Current For operating
Co., Ltd. venture receivable account purposes
Taiyang Electro-optic Associate Dividend - 1,163 - 1,163 Dividend For operating
(Huizhou) Co., Ltd. receivable distributio purposes
n
Tianjin 712 Associate Dividend - 4,417 - 4,417 Current For operating
Communication & receivable account purposes
Broadcasting Co.,
Ltd.
Tianjin 712 Associate Other 6 - - 6 Current For operating
Communication & receivable account purposes
Broadcasting Co.,
Ltd.
Urumqi Dongpeng Associate Account - 17 - 17 Current For operating
Chuangdong Equity receivable account purposes
Investment
Management
Partnership (Limited
Partnership)
Wuhan Lesheng Associate’ Prepayment - 8,052 - 8,052 Current For operating
Times Trading Co., s account purposes
Ltd. subsidiary
Tibet Dongwei Associate Account - 2 - 2 Current For operating
Investment receivable account purposes
Management Center
(Limited Partnership)
Xinjiang Dongpeng Associate Dividend 11,015 - 9,611 1,404 For selling For operating
Weichuang Equity receivable products purposes
51
TCL Corporation Interim Report 2018
Investment
Partnership (Limited
Partnership)
Xinjiang Dongpeng Associate Other 40,300 - 40,300 - Current For operating
Weichuang Equity receivable account purposes
Investment
Partnership (Limited
Partnership)
Xionghua Investment Associate’ Other 17 - 17 - Current For operating
Co., Ltd. s receivable account purposes
subsidiary
Total 1,568, 1,055,364 1,655,625
1,142,25 730
9
5. Other Major Related-Party Transactions
No such cases in the Reporting Period.
XIII Occupation of the Company’s Capital by Controlling Shareholder or Its Related Parties
for Non-Operating Purposes
No such cases in the Reporting Period.
XIV Major Contracts and Their Execution
1. Entrustment, Contracting and Leases
(1) Entrustment
No such cases in the Reporting Period.
(2) Contracting
No such cases in the Reporting Period.
(3) Leases
No such cases in the Reporting Period.
52
TCL Corporation Interim Report 2018
2. Major Guarantees
(1) Guarantees
Unit: RMB'000
Guarantees provided by the Company as the parent for external parties (exclusive of those for subsidiaries)
Disclosure
Actual Guarante
date of
occurrence date Actual Having e for
announcem Line of Type of Term of
Obligor (date of guarantee expired or related
ent on guarantee guarantee guarantee
agreement amount not party or
guarantee
signing) not
line
Canyon Circuit
Technology
2018/4/28 50,000 2018/1/17 40,130 Joint-liability 6 months Not Not
(Huizhou) Co.,
Ltd.
Huizhou Shenghua
2018/4/28 90,000 2017/12/29 74,400 Joint-liability 9 months Not Not
Industrial Co., Ltd.
Taiyang
Electro-optic
2018/4/28 40,000 2018/2/2 23,380 Joint-liability 7 months Not Not
(Huizhou) Co.,
Ltd.
Shenzhen Qianhai
Qihang Supply
Chain 2018/4/28 1,100,000 2017/12/20 375,730 Joint-liability 1 year Not Not
Management Co.,
Ltd.
Huizhou
Gaoshengda
2018/4/28 90,000 2018/1/29 73,420 Joint-liability 6 months Not Not
Technology Co.,
Ltd.
Total approved line for such Total actual amount of such
guarantees in Reporting Period 1,729,200 guarantees in Reporting Period 724,480
(A1) (A2)
Total approved line for such Total actual balance of such
guarantees at end of Reporting 1,729,200 guarantees at end of Reporting 587,060
Period (A3) Period (A4)
Guarantees provided by the Company as the parent for subsidiaries
Disclosure Actual Actual Having Guarante
Line of Type of Term of
Obligor date of occurrence date guarantee expired or e for
guarantee guarantee guarantee
announcem (date of amount not related
53
TCL Corporation Interim Report 2018
ent on agreement party or
guarantee signing) not
line
TCL King
Electrical
Appliances 2018/4/28 3,450,000 2017/10/16 849,840 Joint-liability 1 year Not Not
(Huizhou) Co.,
Ltd.
TCL Overseas
Electronics 2018/4/28 1,200,000 2018/1/26 534,060 Joint-liability 9 months Not Not
(Huizhou) Ltd.
TCL King
Electrical
Appliances 2018/4/28 600,000 2017/7/6 169,480 Joint-liability 15 months Not Not
(Chengdu) Co.,
Ltd.
Huizhou TCL
Mobile
2018/4/28 4,500,000 2017/7/24 2,390,810 Joint-liability 1 year Not Not
Communication
Co., Ltd.
TCL
Communication
2018/4/28 1,200,000 2017/11/20 1,101,450 Joint-liability 3 years Not Not
Technology
Holdings Limited
TCL Mobile
Communication
2018/4/28 1,800,000 2018/1/3 648,480 Joint-liability 6 months Not Not
(HK) Company
Limited
TCT Mobile
2018/4/28 32,000 2018/1/6 11,750 Joint-liability 6 months Not Not
Overseas Limited
TCT Mobile (US)
2018/4/28 845,000 2018/4/7 363,330 Joint-liability 6 months Not Not
Inc.
TCT Mobile
International 2018/4/28 310,000 2018/01/07 88,310 Joint-liability 6 months Not Not
Limited
TCT Mobile Italy
2018/4/28 16,000 2018/04/19 7,070 Joint-liability 6 months Not Not
S.R.L
TCT
MOBILE-TELEF 2018/4/28 120,000 2018/5/31 102,770 Joint-liability 1 year Not Not
ONESLTDA.
Wuhan China Star 2018/4/28 7,500,000 2016/4/13 3,652,950 Joint-liability 70 months Not Not
54
TCL Corporation Interim Report 2018
Optoelectronics
Technology Co.,
Ltd.
Shenzhen China
Star
Optoelectronics
Semiconductor 2018/4/28 21,500,000 2017/4/17 15,239,590 Joint-liability 94 months Not Not
Display
Technology Co.,
Ltd.
Shenzhen China
Star
Optoelectronics 2018/4/28 6,000,000 2015/3/23 3,358,360 Joint-liability 57 months Not Not
Technology Co.,
Ltd.
Wuhan China Star
Optoelectronics
Semiconductor
2018/4/28 11,600,000 2017/9/29 5,365,200 Joint-liability 90 months Not Not
Display
Technology Co.,
Ltd.
Huizhou China
Star
Optoelectronics 2018/4/28 5,000,000 2018/3/9 280,450 Joint-liability 5 months Not Not
Technology Co.,
Ltd.
China Star
Optoelectronics
2018/4/28 2,600,000 2018/1/8 298,460 Joint-liability 2 years Not Not
International (HK)
Limited
China Display
Optoelectronics
Technology 2018/4/28 1,500,000 2018/1/5 450,750 Joint-liability 1 year Not Not
(Huizhou) Co.,
Ltd.
Wuhan China
Display
Optoelectronics 2018/4/28 300,000 2018/5/11 10,790 Joint-liability 6 months Not Not
Technology Co.,
Ltd.
Guangdong Juhua
2018/4/28 300,000 2017/12/22 10,380 Joint-liability 135 months Not Not
Printed Display
55
TCL Corporation Interim Report 2018
Technology Co.,
Ltd.
TCL Home
Appliances 2018/4/28 1,200,000 2017/10/11 908,750 Joint-liability 15 months Not Not
(HeFei) Co., Ltd.
TCL Home
Appliances
2018/4/28 120,000 2018/1/15 90,060 Joint-liability 6 months Not Not
(Zhongshan) Co.,
Ltd.
TCL
Air-Conditioner
2018/4/28 1,300,000 2016/3/24 1,163,310 Joint-liability 3 years Not Not
(Zhongshan) Co.,
Ltd.
TCL Air
Conditioner 2018/4/28 1,250,000 2018/1/3 962,820 Joint-liability 8 months Not Not
(Wuhan) Co., Ltd.
Zhongshan TCL
Refrigeration
2018/4/28 600,000 2018/1/12 340,680 Joint-liability 6 months Not Not
Equipment Co.,
Ltd.
Guangdong TCL
Smart Heating &
Ventilation 2018/4/28 50,000 2018/5/24 19,640 Joint-liability 6 months Not Not
Equipment Co.,
Ltd.
TCL Tonly
Electronics
2018/4/28 200,000 2017/12/21 78,900 Joint-liability 4 years Not Not
(Huizhou) Co.,
Ltd.
TCL Commercial
Information
Technology 2018/4/28 140,000 2018/6/11 35,030 Joint-liability 1 month Not Not
(Huizhou) Co., Ltd
.
Huizhou TCL
Light Electrical
2018/4/28 55,000 2018/1/17 28,880 Joint-liability 6 months Not Not
Appliances Co.,
Ltd.
Huizhou VERY
Light Source 2018/4/28 40,000 2018/1/5 36,210 Joint-liability 8 months Not Not
Technology Co.,
56
TCL Corporation Interim Report 2018
Ltd.
Highly Information
2018/4/28 3,000,000 2016/6/23 1,520,000 Joint-liability 3 years Not Not
Industry Co., Ltd.
Beijing Hecheng
Nuoxin
2018/4/28 200,000 2018/1/1 190,000 Joint-liability 3 years Not Not
Technology Co.,
Ltd.
Beijing Lingyun
Data Technology 2018/4/28 350,000 2017/6/1 274,470 Joint-liability 15 months Not Not
Co., Ltd.
Beijing
Sunpiestore
2018/4/28 500,000 2012/6/1 340,000 Joint-liability 79 months Not Not
Technology Co.,
Ltd.
Huizhou Cool
Friends Network
2018/4/28 130,000 2016/6/24 81,990 Joint-liability 30 months Not Not
Technology Co.,
Ltd.
SHIFENDAOJIA
Online Service 2018/4/28 30,000 2017/12/12 29,250 Joint-liability 8 months Not Not
Co., Ltd.
Guangzhou
Yunsheng Tianji
2018/4/28 1,100,000 2017/9/28 402,000 Joint-liability 12 years Not Not
Technology Co.,
Ltd.
TCL Industries
Holdings (HK) 2018/4/28 7,000,000 2016/10/4 3,980,440 Joint-liability 5 years Not Not
Limited
Huizhou TCL
Environment
2018/4/28 60,000 2018/4/2 9,710 Joint-liability 3 months Not Not
Technology Co.,
Ltd.
Total approved line for such Total actual amount of such
guarantees in Reporting Period 96,368,000 guarantees in Reporting Period 39,661,060
(B1) (B2)
Total approved line for such Total actual balance of such
guarantees at end of Reporting 96,368,000 guarantees at end of Reporting 45,426,420
Period (B3) Period (B4)
Guarantees provided between subsidiaries
Obligor Disclosure Line of Actual Actual Type of Term of Having Guarante
57
TCL Corporation Interim Report 2018
date of guarantee occurrence date guarantee guarantee guarantee expired or e for
announcem (date of amount not related
ent on agreement party or
guarantee signing) not
line
- - - - -- - - -
Total approved line for such Total actual amount of such
guarantees in Reporting Period - guarantees in Reporting Period -
(C1) (C2)
Total approved line for such Total actual balance of such
guarantees at end of Reporting - guarantees at end of Reporting -
Period (C3) Period (C4)
Total guarantee amount (total of three kinds of guarantees above)
Total actual guarantee amount
Total guarantee line approved in
98,097,200 in Reporting Period 40,385,540
Reporting Period (A1+B1+C1)
(A2+B2+C2)
Total approved guarantee line at Total actual guarantee balance
end of Reporting Period 98,097,200 at end of Reporting Period 46,013,480
(A3+B3+C3) (A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
155%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual
controller and their related parties (D)
Balance of debt guarantees provided directly or indirectly for
16,902,850
obligors with over 70% debt asset ratio (E)
Amount by which total guarantee amount exceeds 50% of the
31,139,960
Company’s net assets (F)
Total of three amounts above (D+E+F) 48,042,810
Joint liability possibly borne or already borne in Reporting
None
Period for outstanding guarantees (if any)
Guarantees provided in breach of prescribed procedures (if
None
any)
(2) Irregularities in Provision of Guarantees
No such cases in the Reporting Period.
58
TCL Corporation Interim Report 2018
3. Other Major Contracts
No such cases in the Reporting Period.
XV Corporate Social Responsibility (CSR)
1. Major Environmental Issues
Approved
Number Governing
Name of the Distribution of Discharge Total total
Major Discharge of discharge Excess
Company or discharge concentration discharge discharge
pollutants method discharge standards discharge
subsidiary outlets (mg/L) (metric ton) (metric
outlets (mg/L)
tons/year)
COD Discharged 72.5 260 237.4 1226.05 None
Shenzhen
after being
China Star
duly treated
Optoelectronics Northwest of
Ammonia in waste 1
Technology plant 3.64 30 12.0 / None
nitrogen water
Co., Ltd.
treatment
(Phase I)
system
COD Discharged 18.77 30 36.3 174.89 None
after being
duly treated
Shenzhen
in waste
China Star
water Artificial
Optoelectronics
Ammonia treatment 1 wetland to
Technology 0.23 1.5 0.58 7.7 None
nitrogen system and north of plant
Co., Ltd.
going through
(Phase II)
artificial
wetland
system
COD Discharged 9.06-115.64 400mg/L 55.65 353.55 None
Wuhan China after being
Star duly treated
Northwest of
Optoelectronics Ammonia in waste 1
plant 0.02--4.40 30 5.57 35.36 None
Technology nitrogen water
Co., Ltd. treatment
system
TCL-AOBO PM (dust Discharged at Exhaust funnel
Environmental from physical high altitude of physical
1 2.86 120 0.096 5.76 None
Protection And crushing after being crushing
Development workshop) duly treated workshop
Co., Ltd. PM (plastic in bag 1 Exhaust funnel 3.7 120 0.061 5.76 None
59
TCL Corporation Interim Report 2018
dust) dust-cleaning of plastic
system treatment
workshop
Discharged at
Shantou TCL
high altitude
Deqing
after being
Environmental Exhaust funnel
PM duly treated 1 15.2 120 0.236 2.9 None
Protection of workshop B
in bag
Development
dust-cleaning
Co., Ltd.
system
COD Discharged 19.29 90 0.48 3.996 None
after being
Huizhou TCL
duly treated
Environment
Ammonia in waste 1 West of plant
Technology 1.73 10 0.035 0.444 None
nitrogen water
Co., Ltd.
treatment
system
Construction and Operation of Pollution Prevention Facilities
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, 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
60
TCL Corporation Interim Report 2018
treatment system, where waste gases are discharged at a high altitude after meeting relative
standards. The concentration and total amount of waste water and exhaust gas discharged meet the
relevant national and local standards. The solid wastes generated by each subsidiary include general
waste, hazardous waste and domestic garbage, of which, hazardous wastes are treated by an
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.
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 environmental 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 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
61
TCL Corporation Interim Report 2018
managed by local environmental authorities or subsidiary websites.
Other Environmental Information Required to Be Disclosed
None
Other Related Environmental Information
None
2. Measures Taken to Fulfill the Social Responsibility of Targeted Poverty Alleviation
(1) Targeted Poverty Alleviation Planning
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 Company 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 rewards and funding in the country. The investment to this project is over
RMB30 million in five 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.
(2) Summary of Work Done for Targeted Poverty Alleviation during H1 2018
In the 2018 "Candlelight Awards Program", a total of 400 outstanding rural teachers were selected.
The 100 rural teacher representatives who participated in the award ceremony were awarded the
"Candlelight Award" for dedication, innovation and guidance. The award-winning teachers will
receive funding and training support. The individual award, which is worth RMB12,000, includes a
cash reward of RMB8,000 and a "candle classroom" training of RMB4,000 in online and offline
"Flipped Classroom" per person. In 2018, the coverage of "Candlelight Micro-Loan" was expanded.
Except for the outstanding teachers who were rewarded by the "TCL Hope Engineering Candlelight
Awards", all the teachers under training in 2018 who belong to the Hope Primary School Teacher
Training Office of CYDF can apply for the loan.
(3) Results of Targeted Poverty Alleviation Efforts
Indicators Measurement Unit Quantity/Development
62
TCL Corporation Interim Report 2018
I. Overall summary —— ——
Of which: 1. Cash RMB’000 5,436.8
2. Goods in cash RMB’000
3. Number of registered poor population who have been lifted
Person
from poverty
II. Investment breakdown —— ——
1. Poverty alleviation by industrial development —— ——
Of which: 1.1 Types of poverty alleviation projects by industrial
——
development
1.2 Number of poverty alleviation projects by industrial
——
development
1.3 Investment amount in poverty alleviation projects by
RMB’000
industrial development
1.4 Number of registered poor population who have been
Person
lifted from poverty
2. Poverty alleviation by employment transfer —— ——
Of which: 2.1 Investment amount for vocational skills training RMB’000
2.2 Number of persons accepting vocational skills training Person-time
2.3 Number of registered poor population who have been
Person
employed with the Company’s help
3. Poverty alleviation by migration —— ——
Of which: 3.1 Number of migrated population who have been employed
Person
with the Company’s help
4. Poverty alleviation by education —— ——
Of which: 4.1 Investment amount in aiding students in poverty RMB’000
4.2 Number of students in poverty who got aid Person
4.3 Investment amount in improvement of educational
RMB’000 5,400
resources in poverty-stricken areas
5. Poverty alleviation by improving health —— ——
Of which: 5.1 Investment amount in medical and health resources in
RMB’000
poverty-stricken areas
6. Poverty alleviation by ecological protection —— ——
Of which：6.1 Project types ——
6.2 Investment amount RMB’000
7. Guaranteed bottom —— ——
Of which: 7.1 Investment amount in assisting elderly, women and RMB’000
63
TCL Corporation Interim Report 2018
children left behind
7.2 Number of elderly, women and children left behind who
Person
got aid
7.3 Investment amount in impoverished disabled people RMB’000
7.4 Number of impoverished disabled people who got aid Person
8. Poverty alleviation by public programmes —— ——
Of which: 8.1 Investment amount in poverty alleviation cooperation
RMB’000
between the East and the West areas
8.2 Investment amount in targeted poverty alleviation RMB’000 36.8
8.3 Investment amount in public fund for poverty alleviation RMB’000
9. Other projects —— ——
Of which: 9.1. Number of projects ——
9.2. Investment amount RMB’000
9.3. Number of registered poor population who have been
Person
lifted from poverty
III. Awards won (for what and at what levels) —— ——
(4) Subsequent Plans for Targeted Poverty Alleviation
The Group will keep expanding the existing award scale and publicity impact of the TCL Hope
Engineering Candlelight Awards Program, and improving user interaction on the Internet platform
for social concern. It will also expand the coverage of the Candlelight Micro-loan Project to solve
the financial needs of some rural teachers for their better services in rural education. 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.
XVI Other Significant Events
No such cases in the Reporting Period.
64
TCL Corporation Interim Report 2018
XVII Significant Events of Subsidiaries
Title of current announcement Disclosure date Disclosure website
Voluntary Announcement on the Result of
18 January 2018 http://www.cninfo.com.cn
Subsidiary TCL Multimedia’s Rights Issue
Reminder of the IPO Shares of
Minority-Owned Subsidiary 712 Corp. 26 February 2018 http://www.cninfo.com.cn
Beginning Public Trading
Announcement on the Establishment of a
23 March 2018 http://www.cninfo.com.cn
Strategic Investment Fund
Voluntary Announcement on Subsidiary
Thunderbird Technology Bringing in a 2 May 2018 http://www.cninfo.com.cn
Strategic Investment from JD.com
Announcement on the Construction of the G11
22 May 2018 http://www.cninfo.com.cn
New UHD Display Production Line
Voluntary Announcement on the Acquisition
by TCL Multimedia of an Interest in TCL
1 June 2018 http://www.cninfo.com.cn
Commercial Information Technology
(Huizhou) Co., Ltd.
65
TCL Corporation Interim Report 2018
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in Reporting Period (+/-) After
Shares as
Shares as
dividend
dividend
Percentag New converted Percentag
Shares converted Other Subtotal Shares
e (%) issues from e (%)
from
capital
profit
reserves
4,513,615, 34,676,44 -2,726,573 -2,691,897 1,821,717
1. Restricted shares 33.40% 13.44%
359 4 ,811 ,367 ,992
1.1 Shares held by
government
1.2 Shares held by 1,244,019, -1,244,019 -1,244,019
9.20% 0 0
state-owned legal persons 136 ,136 ,136
1.3 Shares held by other 3,179,063, 34,392,30 -1,482,554 -1,448,162 1,730,901
23.53% 12.77%
domestic investors 876 0 ,675 ,375 ,501
Among which: Shares held 2,694,327, -1,483,569 -1,483,569 1,210,757
19.94% 8.94%
by domestic legal persons 349 ,375 ,375 ,974
Shares held
484,736,5 34,392,30 35,407,00 520,143,5
by domestic natural 3.59% 1,014,700 3.84%
27 0 0 27
persons
1.4 Shares held by foreign 90,532,34 90,816,49
0.67% 284,144 284,144 0.67%
investors 7 1
Among which: Shares held 90,532,34 90,532,34
0.67% 0.67%
by foreign legal persons 7 7
Shares held
284,144 284,144 284,144 0.00
by foreign natural persons
9,001,356, 2,726,573, 2,726,573, 11,727,93
66.60% 86.56%
2. Unrestricted shares 704 811 811 0,515
2.1 RMB-denominated 9,001,356, 2,726,573, 2,726,573, 11,727,93
66.60% 86.56%
ordinary shares 704 811 811 0,515
3. Total shares 13,514,97 100.00% 34,676,44 0 34,676,44 13,549,64 100.00%
66
TCL Corporation Interim Report 2018
2,063 4 4 8,507
Reasons for share changes:
During the Reporting Period, the 2,727,588,511 shares in a private placement in 2015 were unlocked on 26 February 2018, reducing
the restricted shares and increasing the unrestricted shares accordingly; director Mr. Bo Lianming resigned as director, increasing the
restricted shares by 1,014,700 shares and decreasing the unrestricted shares accordingly; and 34,676,444 restricted shares were
granted and listed as incentives, increasing the total shares from 13,514,972,063 shares to 13,549,648,507 shares.
Approval of share changes:
□Applicable ■Not applicable
Transfer of share ownership:
□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 restricted Reason for
Shareholder Date of unlocking
restricted shares Reporting Period Reporting Period shares restriction
Hubei Changjiang
Hezhi Hanyi
Equity Investment IPO restricted
1,059,849,533 0 0 1,059,849,533 2018-12-25
Fund Partnership shares
(Limited
Partnership)
Locked-up shares
Other 484,736,527 0 1,014,700 485,751,227 of senior 9999-99-99
management
Star Century
IPO restricted
Enterprises 90,532,347 0 0 90,532,347 2020-12-25
shares
Limited
Duilong Xinglan
Venture IPO restricted
42,521,163 0 0 42,521,163 2020-12-25
Investment shares
Management
67
TCL Corporation Interim Report 2018
Partnership
(Limited
Partnership)
Duilong
Xingyong
Venture
Investment IPO restricted
38,380,684 0 0 38,380,684 2020-12-25
Management shares
Partnership
(Limited
Partnership)
Duilong
Xingyuan Venture
Investment
IPO restricted
Management 37,695,315 0 0 37,695,315 2020-12-25
shares
Partnership
(Limited
Partnership)
Awardees of Restricted shares
restricted stock 0 0 34,676,444 34,676,444 granted as 2019-03-21
incentives incentives
Duilong Xinglian
Venture
Investment
IPO restricted
Management 32,311,279 0 0 32,311,279 2020-12-25
shares
Partnership
(Limited
Partnership)
Total 1,786,026,848 0 35,691,144 1,821,717,992 -- --
II Issuance and Listing of Securities
Name of
Issue price Number Termination Index to
stock and its Issued Disclosure
Issue date (or interest Listing date approved for date of disclosed
derivative number date
rate) public trading transaction information
securities
Stock
21 March http://www.c
Shares 1.83 34,674,444 16 May 2018 34,674,444 - 15 May 2018
2018 ninfo.com.cn
Corporate bonds, including convertibles and warrant bonds
68
TCL Corporation Interim Report 2018
Corporate http://www.c
6 June 2018 5.48 10,000,000 2 July 2018 10,000,000 27 June 2018
bonds ninfo.com.cn
III Shareholders and Their Holdings at Period-End
Unit: share
Number of preferred
Number of ordinary shareholders with resumed
472,986
shareholders voting rights (if any) (see note
8)
5% or greater ordinary shareholders or top 10 ordinary shareholders
Increase/de Shares in pledge or frozen
Shareholdin Restricted Unrestricte
Name of Nature of Ordinary crease in
g ordinary d ordinary
shareholder shareholder shares Reporting Status Shares
percentage shares shares
Period
Hubei
Changjiang
Hezhi Hanyi
Equity Domestic
1,059,950 1,059,849
Investment non-state-owned 7.82 100,800 In pledge 687,420,000
,333 ,533
Fund legal person
Partnership
(Limited
Partnership)
Huizhou
Domestic
Investment 878,419,7 878,419,74
state-owned legal 6.48
Holding Co., 47 7
person
Ltd.
Domestic natural 638,273,6 478,705,2 159,568,42
Li Dongsheng 4.71 In pledge 528,234,787
person 88 66 2
Beijing Ziguang Domestic
484,468,9 484,468,90
Investment Co., state-owned legal 3.58
00 0
Ltd. person
Xinjiang
Dongxing
Huarui Equity Domestic
452,660,2 452,660,28
Investment non-state-owned 3.34 In pledge 452,660,287
87 7
Partnership legal person
(Limited
Partnership)
Xinjiang Jiutian Domestic 3.02 408,899,5 408,899,52 In pledge 408,899,521
69
TCL Corporation Interim Report 2018
Liancheng non-state-owned 21 1
Equity legal person
Investment
Partnership
(Limited
Partnership)
CDB
Domestic
Innovation 320,685,2 320,685,21
state-owned legal 2.37
Capital Co., 19 9
person
Ltd.
Guangdong
Domestic
Guangxin 316,834,6 316,834,68
state-owned legal 2.34
Holdings Group 83 3
person
Ltd.
China Securities
Domestic
Finance 313,481,6 313,481,60
non-state-owned 2.31
Corporation 02 2
legal person
Limited
BOSC Asset－
SPD Bank－
Domestic
BOSC Asset 301,447,4 301,447,43
non-state-owned 2.22
Wealth Asset 37 7
legal person
Management
Plan No. 10
Huizhou Investment Holding Co., Ltd., Beijing Ziguang Investment Co., Ltd., Xinjiang
Dongxing Huarui Equity Investment Partnership (Limited Partnership), Xinjiang Jiutian
Liancheng Equity Investment Partnership (Limited Partnership), CDB Innovation Capital
Co., Ltd., BOSC Asset Management Co., Ltd. and CDB Jingcheng (Beijing) Investment
Fund Co., Ltd. have appeared among the top 10 shareholders due to their subscriptions in a
Strategic investor or general legal
private placement offered by the Company, with their shareholdings locked up from 26
person becoming top-10 ordinary
February 2015 to 26 February 2018. For further information, see the Issuance Report and
shareholder due to rights issue (if
Listing Announcement on the Private Share Placement of TCL Corporation. Meanwhile,
any) (see note 3)
Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) has
also become a top-10 shareholder in a share offering of the Company, with its shareholdings
locked up from 25 December 2017 to 25 December 2018. For further information, see the
Implementation Report on TCL Corporation’s Asset Purchase via Share Offering and the
Related-Party Transaction & the New Share Listing Announcement.
Mr. Li Dongsheng, Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited
Partnership) and Xinjiang Dongxing Huarui Equity Investment Partnership (Limited
Related or acting-in-concert parties
Partnership) have signed an agreement to become acting-in-concert parties. For further
among shareholders above
information, see the Reminder of Shareholders Signing an Agreement to Act in concert and
the Change of the Biggest Shareholder.
70
TCL Corporation Interim Report 2018
Top 10 unrestricted ordinary shareholders
Type of shares
Name of shareholder Unrestricted ordinary shares
Type Shares
Huizhou Investment Holding Co., RMB-denominate
878,419,747 878,419,747
Ltd. d ordinary stock
Beijing Ziguang Investment Co., RMB-denominate
484,468,900 484,468,900
Ltd. d ordinary stock
Xinjiang Dongxing Huarui Equity
RMB-denominate
Investment Partnership (Limited 452,660,287 452,660,287
d ordinary stock
Partnership)
Xinjiang Jiutian Liancheng Equity
RMB-denominate
Investment Partnership (Limited 408,899,521 408,899,521
d ordinary stock
Partnership)
RMB-denominate
CDB Innovation Capital Co., Ltd. 320,685,219 320,685,219
d ordinary stock
Guangdong Guangxin Holdings RMB-denominate
316,834,683 316,834,683
Group Ltd. d ordinary stock
China Securities Finance RMB-denominate
313,481,602 313,481,602
Corporation Limited d ordinary stock
BOSC Asset－SPD Bank－ BOSC
RMB-denominate
Asset Wealth Asset Management 301,447,437 301,447,437
d ordinary stock
Plan No. 10
Central Huijin Asset Management RMB-denominate
206,456,500 206,456,500
Co., Ltd. d ordinary stock
RMB-denominate
Li Dongsheng 159,568,422 159,568,422
d ordinary stock
1. It is unknown whether there is, among the above domestic non-state-owned legal-person
shareholders, any related parties or acting-in-concert parties as defined in the Measures for the
Related or acting-in-concert parties Administration of Disclosure of Shareholder Equity Changes of Listed Companies.
among top 10 unrestricted ordinary 2. Huizhou Investment Holding Co., Ltd., Huizhou Investment and Development Co., Ltd.
shareholders, as well as between top and Central Huijin Asset Management Co., Ltd. are state-owned legal-person shareholders.
10 unrestricted ordinary 3. Mr. Li Dongsheng, Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited
shareholders and top 10 ordinary Partnership) and Xinjiang Dongxing Huarui Equity Investment Partnership (Limited
shareholders Partnership) have signed an agreement on 19 May 2017 to become acting-in-concert parties.
For further information, see the Reminder of Shareholders Signing an Agreement to Act in
concert and the Change of the Biggest Shareholder.
Top 10 ordinary shareholders
involved in securities margin None
trading (if any) (see note 4)
71
TCL Corporation Interim Report 2018
Whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conducted any
promissory repo during the Reporting Period:
No such cases in the Reporting Period.
IV Change of Controlling Shareholder or Actual Controller in Reporting Period
Change of the controlling shareholder in the Reporting Period:
The controlling shareholder remained unchanged in the Reporting Period.
Change of the actual controller in the Reporting Period:
The actual controller remained unchanged in the Reporting Period.
72
TCL Corporation Interim Report 2018
Part VII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
Their shareholdings did not change in the Reporting Period.
Increas Decrea
Beginnin
e in se in Ending
Start g Other
Office Incumbent/F Gen A End of Report Report sharehol
Name of sharehol increase/dec
title ormer der ge tenure ing ing ding
tenure ding rease (share)
Period Period (share)
(share)
(share) (share)
Li Chairma Incumbent Male 60 2017- 2020-8 638,273, - - - 638,273,
Dongshe n of the 9-1 -31 688 688
ng Board
and
CEO
Liu Bin Vice Incumbent Male 48 2017- 2020-8 0 - - - 0
Chairma 9-1 -31
n of the
Board
He Jinlei Vice Incumbent Male 44 2017- 2020-8 0 - - - 0
Chairma 9-1 -31
n of the
Board
Bo Director Incumbent Male 54 2017- 2020-8 4,058,80 - - - 4,058,80
Lianmin and 9-1 -31 1 1
g COO
HuangX Director Incumbent Male 52 2017- 2020-8 3,383,38 - - - 3,383,38
ubin and 9-1 -31 0 0
CFO
Huang Director Incumbent Male 55 2017- 2020-8 0 - - - 0
Wei 9-1 -31
Liao Director Incumbent Male 37 2017- 2020-8 0 - - - 0
Qian and 9-1 -31
Board
Secreta
ry
Wu Director Incumbent Fem 46 2017- 2020-8 0 - - - 0
Xiaohui ale 9-1 -31
73
TCL Corporation Interim Report 2018
Yan Yan Indepen Incumbent Male 61 2017- 2020-8 0 - - - 0
dent 9-1 -31
Director
Lu Xin Indepen Incumbent Fem 55 2017- 2020-8 0 - - - 0
dent ale 9-1 -31
Director
Zhou Indepen Incumbent Male 54 2017- 2020-8 0 - - - 0
Guofu dent 9-1 -31
Director
Liu Indepen Incumbent Male 59 2017- 2020-8 0 - - - 0
Xunci dent 9-1 -31
Director
He Chairma Incumbent Male 52 2017- 2020-8 0 - - - 0
Zhuohui n of the 9-1 -31
Supervis
ory
Committ
ee
Mao Employ Incumbent Male 37 2017- 2020-8 0 - - - 0
Tianxian ee 9-1 -31
g Supervis
or
Qiu Supervis Incumbent Fem 43 2017- 2020-8 0 - - - 0
Haiyan or ale 9-1 -31
II Change of Directors, Supervisors and Senior Management
Name Office title Type of change Date of change Reason for change
President and
Departure from
Bo Lianming Executive 2 March 2018 Personal reasons
the Company
Director
COO and
Du Juan Executive Elected 19 March 2018 Nominated by the Board
Director
Senior Vice
Wang Cheng Hired 19 March 2018 Nominated by the Board
President
74
TCL Corporation Interim Report 2018
Part VIII Corporate Bonds
I General Information of Corporate Bonds
Way of
principal
Balance
Bond name Abbr. Bond code Value date Maturity Coupon rate repayment and
(RMB’000)
interest
payment
TCL
Interest
Corporation’s
payable
Corporate Bonds
annually and
Publicly Offered
16TCL01 112352.SZ 16 March 2016 16 March 2019 2,500,000 3.08% principal
in 2016 to
repayable in
Qualified
full upon
Investors (Phase
maturity
1) (Type 1)
TCL
Interest
Corporation’s
payable
Corporate Bonds
annually and
Publicly Offered
16TCL02 112353.SZ 16 March 2016 16 March 2021 1,500,000 3.56% principal
in 2016 to
repayable in
Qualified
full upon
Investors (Phase
maturity
1) (Type 2)
TCL
Interest
Corporation’s
payable
Corporate Bonds
annually and
Publicly Offered
16TCL03 112409.SZ 7 July 2016 7 July 2021 2,000,000 3.50% principal
in 2016 to
repayable in
Qualified
full upon
Investors (Phase
maturity
2)
TCL Interest
Corporation’s payable
Corporate Bonds annually and
Publicly Offered 17TCL01 112518.SZ 19 April 2017 19 April 2022 1,000,000 4.80% principal
in 2017 to repayable in
Qualified full upon
Investors (Phase maturity
75
TCL Corporation Interim Report 2018
1)
TCL
Interest
Corporation’s
payable
Corporate Bonds
annually and
Publicly Offered
17TCL02 112542.SZ 7 July 2017 7 July 2022 3,000,000 4.93% principal
in 2017 to
repayable in
Qualified
full upon
Investors (Phase
maturity
2)
TCL
Interest
Corporation’s
payable
Corporate Bonds
annually and
Publicly Offered
18TCL01 112717.SZ 6 June 2018 6 June 2023 1,000,000 5.48% principal
in 2018 to
repayable in
Qualified
full upon
Investors (Phase
maturity
1)
Place for bond listing and
Shenzhen Stock Exchange
trading
Investor eligibility These bonds are for qualified investors only.
1. The interest for the period from 16 March 2017 to 15 March 2018 on “16TCL01” and
“16TCL02” was paid on 16 March 2018.
Interest payment and principal
2. The interest for the period from 19 April 2017 to 18 April 2018 on “17TCL01” was paid on 19
repayment during Reporting
April 2018.
Period
3. The interest for the period from 7 July 2017 to 6 July 2018 on “16TCL03” and “17TCL02” was
paid on 9 July 2018.
Where the bond carries any
issuer or investor option clause,
interchangeable clause or other
special clauses, give the Not applicable
execution details (if applicable)
of these clauses during the
Reporting Period
II Bond Trustee and Credit Rating Agency
Bond trustee:
35/F, New
Guotain Junan World Center,
Zhang
Name Securities Co., Office address 6009 Yitian Contact person Tel. 0755-23976367
Chongzhen
Ltd. Road,
Shenzhen,
76
TCL Corporation Interim Report 2018
Guangdong
Province
Credit rating agency which conducted follow-up ratings for bonds during Reporting Period:
Room 968, Tower 1, 599 Xinye Road, Qingpu
Name China Chengxin Securities Rating Co., Ltd. Office address
District, Shanghai
Where the bond trustee or credit rating
agency was changed during the Reporting
Period, explain the reasons, the executed Not applicable
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, which is
Utilization of funds raised through in strict compliance with the prospectus. And with the authorization of the Board and
corporate bonds and procedures executed the general meeting, the related internal decision-making procedure was executed
according to the relevant rules approved by the Board and the general meeting.
Ending balance (RMB’000) 0
The Company has signed the Escrow Account Agreement for the Funds Raised through
TCL Corporation’s Corporate Bonds Publicly Offered in 2015 to Qualified Investors,
the Escrow Account Agreement for the Funds Raised through TCL Corporation’s
Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 1), the Escrow
Operation of special account for raised Account Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds
funds Publicly Offered in 2017 to Qualified Investors (Phase 2), and the Escrow Account
Agreement for the Funds Raised through TCL Corporation’s Corporate Bonds Publicly
Offered in 2018 to Qualified Investors (Phase 1) with China Development Bank
(Guangdong branch) and the Industrial and Commercial Bank of China (Huizhou
branch) to ensure that the raised funds will be used as earmarked.
Whether the utilization of raised funds is in
line with the promised usages, utilization Yes
plan or other promises in the prospectus
IV Rating Results of Corporate Bonds
According to the Credit Rating Report on TCL Corporation’s Corporate Bonds Publicly Offered in
2018 to Qualified Investors (Phase 1) issued by China Chengxin Securities Rating Co., Ltd. on 28
May 2018, TCL Corporation was rated AAA with a “Stable” outlook, and the said bonds were also
rated AAA.
According to the Follow-up Rating Report (2018) on TCL Corporation’s Corporate Bonds Publicly
77
TCL Corporation Interim Report 2018
Offered in 2016 to Qualified Investors (Phase 1 and 2) and the Follow-up Rating Report (2018) on
TCL Corporation’s Corporate Bonds Publicly Offered in 2017 to Qualified Investors (Phase 1 and 2)
issued by China Chengxin Securities Rating Co., Ltd. on 25 June 2018, the AAA credit status of
TCL Corporation and the said bonds was affirmed with a “Stable” outlook.
V Credit Enhancement, Repayment Plans and Other Repayment Guarantee Measures
No credit enhancement measures were taken for the Company’s bonds during the Reporting Period.
The capital for principal repayment and interest payment for the Company’s bonds is primarily
sourced from the revenue, net profit and cash flows arising from its ordinary course of business.
The repayment guarantee measures include a specialized task group, a strict capital management
plan, a bond trustee, the Rules for Bondholders’ Meetings, strict information disclosure, and an
undertaking to not distribute profits to shareholders, as well as suspend capital expenditures such 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 “16TCL01”, “16TCL02”, “16TCL03”, “17TCL01”, “17TCL02” and
“18TCL01” bonds, Guotain Junan Securities Co., Ltd., in strict accordance with the applicable laws
and regulations including the Measures for the Issue and Trading of Corporate Bonds and the
Professional Code of Conduct for Corporate Bond Trustees, keeps a close eye on the Company’s
operating, financial and credit conditions to fulfill its duties as a bond trustee and protect the legal
rights and interests of the bondholders. And the bond trustee has no conflicts of interests in any kind
with the Company.
78
TCL Corporation Interim Report 2018
VIII Selected Financial Information of the Company as at 30 June 2018 and 31 December
2017 (or for H1 2018 and H1 2017)
Item 30 June 2018 31 December 2017 Change (%)
Current ratio (%) 108% 111% -3%
Debt asset ratio (%) 66.05% 66.22% -0.17%
Quick ratio (%) 64% 77% -13%
H1 2018 H1 2017 Change (%)
EBITDA-to-interest coverage 7.73 6.84 12.93%
(times)
Debt repayment ratio (%) 100% 100% 0.00%
Interest payment ratio (%) 100% 100% 0.00%
Main reasons for any over 30% YoY movements in the data above:
□Applicable ■Not applicable
IX Debt Defaults
No debt defaults.
X Principal Repayment and Interest Payment of Other Bonds and Debt Financing
Instruments during Reporting Period
Principal Principal repayment
No. Bond abbreviation Value date Maturity Coupon rate
amount and interest payment
RMB500
1 13TCL-MTN1 2013-1-18 5 years 6.05% Repaid in full on time
million
The interest for the
period from 2 April
RMB500
2 15TCL-MTN001 2015-4-2 5 years 5.50% 2017 to 1 April 2018
million
was paid on 2 April
2018
XI Credit Lines Granted by Banks, as well as Their Utilization and Repayment during
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
79
TCL Corporation Interim Report 2018
30 June 2018, the credit lines granted by the major bank partners to the Company totaled
RMB190.8 billion, with RMB63.2 billion utilized and RMB127.6 billion left.
During the Reporting Period, there were no defaults on bank loans.
XII Fulfillment of Commitments Made in Bond Prospectuses during Reporting 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.
XIII Significant Events during Reporting Period
Except for the aforesaid, there were no other significant events as listed in Article 45 of the
Measures for the Issue and Trading of Corporate Bonds during the Reporting Period.
XIV Guarantor for Corporate Bonds
□ Yes ■ No
80
TCL Corporation Interim Report 2018
Part IX Financial Statements
I Independent Auditor’s Report
The interim financial statements are unaudited by an independent auditor.
81
TCL Corporation
Unaudited Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
Contents Page
I Unaudited Financial Statements
1. Consolidated Balance Sheet 1 -2
2. Consolidated Income Statement 3
3. Consolidate d Cash Flow Statement 4 -5
4. Consolidated Statement of Changes in
6 -7
Shareholders ’ Equity
5 . Balance Sheet of the Company as the Parent 8 -9
6 . Income Statement of the Company as the Parent 10
7 . Cash Flow Statement of the Company as the
11 -12
Parent
8. Statement of Changes in Shareholders’ Equity of
13 -1 4
the Company as the Parent
9. Notes to Financial Statements 15 -135
Supplementary Information to
II
Financial Statements
1. Return on Equity and Earnings per Share AI-1
2. Schedules of Allowances for Asset Impairments AI-2
3. Analysis of Data Changes in Financial
AI-3 to AI-5
Statements
1
TCL Corporation
Consolidated Balance Sheet
(In thousands of RMB)
Assets: Note IV 30 June 2018 31 December 2017
Current assets:
Monetary capital 1 17,612,564 27,459,453
Financial assets at fair value
2 1,710,315 2,231,276
through profit or loss
Notes receivable 3 5,388,074 6,170,349
Accounts receivable 4 15,192,641 14,747,223
Factored accounts receivable 5 12,943 46,449
Prepayments 6 1,093,650 910,215
Interest receivable 7 65,159 53,622
Dividends receivable 8 9,454 11,103
Other receivables 9 4,293,320 3,853,591
Inventories 10 11,902,029 12,946,303
Other current assets 11 19,724,189 11,666,323
Total current assets 77,004,338 80,095,907
Non-current assets:
Loans and advances to customers 12 848,778 555,133
Available-for-sale financial assets 13 3,219,690 3,202,055
Long-term equity investments 14 16,177,691 15,352,014
Investment property 15 1,553,570 859,890
Fixed assets 16 29,923,846 32,597,979
Construction in progress 17 22,926,082 14,775,237
Intangible assets 18 6,858,592 6,372,511
R&D expense 19 992,740 872,804
Goodwill 20 420,534 420,534
Long-term prepaid expense 21 942,049 929,124
Deferred income tax assets 22 946,059 871,843
Other non-current assets 23 8,102,876 3,388,953
Total non-current assets 92,912,507 80,198,077
Total assets 169,916,845 160,293,984
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
1
TCL Corporation
Consolidated Balance Sheet (Continued)
(In thousands of RMB)
Liabilities and shareholders’ equity: Note IV 30 June 2018 31 December 2017
Current liabilities:
Short-term borrowings 24 12,982,141 15,990,105
Factorage financings 5 12,943 46,449
Borrowings from central bank 25 230,406 39,997
Customer deposits and interbank
deposits 26 466,417 310,875
Financial liabilities at fair value
27 470,404 442,942
through profit or loss
Notes payable 28 2,018,054 2,061,471
Accounts payable 29 19,183,740 19,324,249
Advances from customers 30 1,311,110 1,307,900
Payroll payable 31 2,029,408 2,292,668
Taxes payable 32 881,750 1,273,792
Interest payable 33 445,218 444,846
Dividends payable 34 71,251 47,110
Other payables 35 19,601,061 16,662,797
Short-term commercial papers
payable 36 2,000,000 -
Current portion of non-current
liabilities 37 5,759,804 5,927,528
Other current liabilities 38 3,512,002 6,075,073
Total current liabilities 70,975,709 72,247,802
Non-current liabilities:
Long-term borrowings 39 28,766,500 20,283,381
Bonds payable 40 8,998,248 10,497,248
Long-term payables 41 98,067 76,309
Long-term payroll payable 31 24,906 25,519
Deferred income 42 3,106,229 2,664,877
Deferred income tax liabilities 22 263,028 271,157
Other non-current liabilities 5,561 84,755
Total non-current liabilities 41,262,539 33,903,246
Total liabilities 112,238,248 106,151,048
Share capital 43 13,549,649 13,514,972
Capital reserves 44 6,034,565 5,940,471
Less: Treasury stock 63,458 -
Other comprehensive income 60 (226,052) 219,272
Surplus reserves 45 1,494,300 1,494,300
General reserve 46 361 361
Retained earnings 47 8,808,662 8,577,688
Total equity attributable to shareholders
of the Company as the parent 29,598,027 29,747,064
Non-controlling interests 28,080,570 24,395,872
Total shareholders’ equity 57,678,597 54,142,936
Total liabilities and shareholders’ equity 169,916,845 160,293,984
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
2
TCL Corporation
Consolidated Income Statement
(In thousands of RMB)
Note IV H1 2018 H1 2017
1. Revenue 52,581,847 52,294,573
Including: Operating revenue 48 52,523,748 52,174,517
Interest income 49 58,099 120,056
2. Operating costs and expenses 52,717,148 51,721,350
Including: Cost of sales 48 42,918,658 41,555,705
Interest expense 49 41,337 32,372
Taxes and surcharges 50 318,542 250,384
Selling expense 4,450,980 4,617,614
Administrative expense 3,911,801 4,272,099
Finance costs 51 441,312 811,233
Asset impairment loss 52 634,518 181,943
Add: Gain on changes in fair value (loss shown in brackets) 53 (103,911) 131,012
Investment income (loss shown in brackets) 54 1,093,958 799,245
Including: Share of profit or loss of joint ventures and
associates 54 615,227 386,544
Foreign exchange gain (loss shown in brackets) 49 (24,065) (9,630)
Asset disposal income (loss shown in brackets) 55 129 5,053
Other income 56 1,052,395 621,840
3. Operating profit 1,883,205 2,120,743
Add: Non-operating income 57 346,754 166,334
Less: Non-operating expense 58 44,203 64,696
4. Profit before tax 2,185,756 2,222,381
Less: Income tax expense 59 484,915 561,061
5. Net profit 1,700,841 1,661,320
5.1 By operational continuity
Net profit from continuing operations 1,700,840 1,661,320
Net profit from discontinued operations - -
5.2 By ownership
Net profit attributable to owners of the Company as the
parent 1,033,845
1,585,939
Net profit attributable to non-controlling interests 114,902 627,474
6. Other comprehensive income, net of tax 60 (472,949) 795,472
6.1 Other comprehensive income that will not be
reclassified to profit or loss -
-
6.2 Other comprehensive income that may subsequently
be reclassified to profit or loss (472,949) 795,472
7. Total comprehensive income 1,227,892 2,456,791
Attributable to shareholders of the Company as the parent 1,140,615 1,850,316
Attributable to non-controlling interests 87,277 606,475
8. Earnings per share 61
8.1 Basic earnings per share (RMB yuan/share) 0.1173 0.0846
8.2 Diluted earnings per share (RMB yuan/share) 0.1172 0.0846
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
3
TCL Corporation
Consolidated Cash Flow Statement
(In thousands of RMB)
Note IV H1 2018 H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 56,530,176 55,464,944
Net increase/(decrease) in customer deposits and interbank
155,541 169,757
deposits
Net increase/(decrease) in borrowings from central bank 190,409 324,160
Interest, handling charges and commissions received 58,497 120,120
Tax rebates 2,091,698 2,452,084
Cash generated from other operating activities 62 1,881,237 1,193,334
Subtotal of cash generated from operating activities 60,907,558 59,724,399
Payments for commodities and services (44,915,951) (43,098,935)
Net increase/(decrease) in loans and advances to customers (17,635) (380,261)
Net increase/(decrease) in deposits in central bank and in
3,048,341 2,617
interbank loans granted
Cash paid to and for employees (3,747,850) (4,231,419)
Taxes paid (2,535,665) (1,247,602)
Cash used in other operating activities 63 (8,363,572) (7,296,258)
Subtotal of cash used in operating activities (56,532,332) (56,251,858)
Net cash generated from/used in operating activities 65 4,375,226 3,472,541
2. Cash flows from investing activities:
Proceeds from disinvestment 13,999,884 9,813,449
Investment income 277,006 438,836
Net proceeds from disposal of fixed assets, intangible assets
339,385 147,596
and other long-lived assets
Net proceeds from disposal of subsidiaries or other business
62,955 60,431
units
Subtotal of cash generated from investing activities 14,679,230 10,460,312
Payments for acquisition of fixed assets, intangible assets
(12,002,181) (6,879,777)
and other long-lived assets
Payments for investments (21,037,698) (14,375,950)
Net payments for acquisition of subsidiaries and other
(2,081) (63,645)
business units
Cash decreased by non-consolidated subsidiaries - (1,023)
Subtotal of cash used in investing activities (33,041,960) (21,320,395)
Net cash generated from/used in investing activities (18,362,730) (10,860,083)
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral
part of the financial statements.
4
TCL Corporation
Consolidated Cash Flow Statement (Continued)
(In thousands of RMB)
Note IV H1 2018 H1 2017
3. Cash flows from financing activities:
Capital contributions received 4,281,683 2,750,071
Including: Capital contributions by non-controlling
4,218,225 2,750,071
interests to subsidiaries
Increase in borrowings obtained 26,806,259 23,630,278
Net proceeds from issuance of bonds 1,000,000 2,377,240
Cash generated from other financing activities - 158,270
Subtotal of cash generated from financing activities 32,087,942 28,915,859
Repayment of borrowings (22,155,913) (20,819,683)
Payments for interest and dividends (2,852,219) (2,130,719)
Including: Dividends paid by subsidiaries to
(294,279) (343,628)
non-controlling interests
Cash used in other financing activities 64 - (38,360)
Subtotal of cash used in financing activities (25,008,132) (22,988,762)
Net cash generated from/used in financing activities 7,079,810 5,927,097
4. Effect of foreign exchange rate changes on cash and cash
equivalents 130,330 (147,361)
5. Net increase in cash and cash equivalents (6,777,364) (1,607,806)
Add: Cash and cash equivalents, beginning of the period 23,281,169 23,815,656
6. Cash and cash equivalents, end of the period 66 16,503,805 22,207,850
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral
part of the financial statements.
5
TCL Corporation
Consolidated Statement of Changes in Shareholders’ Equity
(In thousands of RMB)
H1 2018
Equity attributable to shareholders of the Company as the parent
Other Non-control Total
Share Capital Treasur comprehen Surplus General Retained ling shareholder
capital reserves y stock sive reserves reserve earnings interests s’ equity
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
Add: Adjustments for changed
accounting policies - - - - - - - - -
2. Balances as at beginning of the
year 13,514,972 5,940,471 - 219,272 1,494,300 361 8,577,688 24,395,872 54,142,936
3. Increase/decrease in the period 34,677 94,094 (63,458 (445,324) - - 230,974 3,684,697 3,535,660
- - )- (445,324) - - 1,585,939 87,278 1,227,893
3.1 Total comprehensive income
3.2 Capital increased and reduced (63,458
by shareholders 34,677 94,094 ) - - - - 4,068,026 4,133,339
3.2.1 Capital increased by (63,458
shareholders 34,677 28,781 - - - - 4,068,026 4,068,026
)
3.2.2 Share-based payments
included in shareholders’ equity - - - - - - - - -
3.2.3 Other - 65,313 - - - - - - 65,313
3.3 Profit distribution - - - - - - (470,606)
3.3.1 Appropriation to surplus (1,354,965) (1,825,571)
reserves - - - - - - - - -
3.3.2 Appropriation to shareholders - - - - - - (548,993)
- - - - - - (1,354,965)- 78,387 (1,903,958)
78,387
3.3.3 Other
4. Balances as at end of the period 6,034,565 (63,458 (226,052) 1,494,300 361 8,808,662
13,549,649 ) 28,080,570 57,678,597
Legal Head of the financial
representative： Head for Financial Affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
6
TCL Corporation
Consolidated Statement of Changes in Shareholders’ Equity (Continued)
(In thousands of RMB)
Year 2017
Equity attributable to shareholders of the Company as the parent
Non-control Total
Treas Other Genera
Share Capital Surplus Retained ling shareholders’
ury comprehensi l
capital reserves reserves earnings interests equity
stock ve income reserv
e
1. Balances as of end of prior year 12,213,682 3,531,323 - (1,365,163) 1,078,761 361 7,305,927 22,981,890 45,746,781
Add: Adjustments for changed
accounting policies - - - - - - - - -
2. Balances as of beginning of the
year 12,213,682 3,531,323 - (1,365,163) 1,078,761 361 7,305,927 22,981,890 45,746,781
3. Increase/decrease in the period 1,301,290 2,409,148 - 1,584,435 415,539 - 1,271,761 1,413,982 8,396,155
3.1 Total comprehensive income - - - 1,584,435 - - 2,664,395 1,018,218 5,267,048
3.2 Capital increased and reduced
by shareholders 1,301,290 2,409,148 - - - - - 1,182,573 4,893,011
3.2.1 Capital increased by
shareholders 1,301,290 2,732,710 - - - - - 1,059,447 5,093,447
3.2.2 Share-based payments
included in shareholders’ equity - - - - - - - - -
3.2.3 Other - (323,562) - - - - - 123,126 (200,436)
3.3 Profit distribution - - - - 415,539 - (1,392,634) (786,809) (1,763,904)
3.3.1 Appropriation to surplus
reserves - - - - 415,539 - (415,539) - -
3.3.2 Appropriation to shareholders - - - - - - (977,095) (786,809) (1,763,904)
4. Balances as at end of the period 13,514,972 5,940,471 - 219,272 1,494,300 361 8,577,688 24,395,872 54,142,936
Legal Head of the financial
representative： Head for Financial Affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
7
TCL Corporation
Balance Sheet of the Company as the Parent
(In thousands of RMB)
Assets: Note XII 30 June 2018 31 December 2017
Current assets:
Monetary capital 3,918,265 1,116,725
Financial assets at fair value
1,225,049 1,543,844
through profit or loss
Notes receivable 41,170 23,031
Accounts receivable 1 347,661 340,349
Prepayments 49,132 30,648
Interest receivable 163,969 103,343
Dividends receivable 3,678,349 3,458,737
Other receivables 2 12,020,137 10,078,258
Inventories 803 803
Other current assets 8,203,675 3,065,895
Total current assets 29,648,210 19,761,633
Non-current assets:
Available-for-sale financial assets 3 1,198,656 1,224,518
Long-term equity investments 4 37,931,248 34,983,565
Investment property 13,710 15,339
Fixed assets 41,121 46,319
Construction in progress 575 1,668
Intangible assets 28,919 26,367
Long-term prepaid expense 462,044 466,049
Total non-current assets 39,676,273 36,763,825
Total assets 69,324,483 56,525,458
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
8
TCL Corporation
Balance Sheet of the Company as the Parent (Continued)
(In thousands of RMB)
Liabilities and shareholders’ equity Note XII 30 June 2018 31 December 2017
Current liabilities:
Short-term borrowings 4,360,260 5,675,260
Notes payable - 176,488
Accounts payable 401,728 133,412
Advances from customers 101 81
Payroll payable 29,918 35,789
Taxes payable 50,899 51,544
Interest payable 420,822 340,461
Dividends payable 4,550 1,082
Other payables 16,492,721 5,896,199
Short-term commercial papers payable 2,000,000 -
Current portion of non-current liabilities 4,231,371 2,422,940
Total current liabilities 27,992,370 14,733,256
Non-current liabilities:
Long-term borrowings 3,840,956 3,840,956
Bonds payable 8,998,248 10,497,248
Long-term payables 1,909 1,909
Long-term payroll payable 24,906 25,519
Deferred income 70,567 41,953
Total non-current liabilities 12,936,586 14,407,585
Total liabilities 40,928,956 29,140,841
Share capital 13,549,649 13,514,972
Capital reserves 8,545,932 8,476,523
Less: Treasury stock 63,458 -
Surplus reserves 1,292,236 1,292,236
Retained earnings 5,107,504 4,114,531
Other comprehensive income (36,336) (13,645)
Total shareholders’ equity 28,395,527 27,384,617
Total liabilities and shareholders’ equity 69,324,483 56,525,458
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
9
TCL Corporation
Income Statement of the Company as the Parent
(In thousands of RMB)
Note XII H1 2018 H1 2017
1. Operating revenue 5 1,028,097 621,347
Less: Cost of sales 5 932,415 514,460
Taxes and surcharges 6,292 1,074
Selling expense 13,364 9,058
Administrative expense 170,978 145,742
Finance costs 397,461 295,230
Asset impairment loss 920 -
Add: Gain on changes in fair value (loss shown in
brackets) (72,394) (30,025)
Investment income (loss shown in brackets) 6 2,626,472 658,554
Including: Share of profit or loss of joint ventures
6
and associates 490,009 289,681
Asset disposal income (loss shown in brackets) 12 1,346
Other income - -
2. Operating profit 2,060,757 285,658
Add: Non-operating income 296,536 4,436
Less: Non-operating expense 9,355 23,773
3. Profit before tax 2,347,938 266,321
Less: Income tax expense - -
4. Net profit 2,347,938 266,321
5. Other comprehensive income 22,691 (8,047)
6. Total comprehensive income 2,325,247 258,274
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
10
TCL Corporation
Cash Flow Statement of the Company as the Parent
(In thousands of RMB)
Note
XII H1 2018 H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering
994,894 680,570
of services
Interest, handling charges and commissions
8,874 -
received
Cash generated from other operating activities 5,849,290 295,978
Subtotal of cash generated from operating
6,853,058 976,548
activities
Payments for commodities and services (1,286,222) (681,677)
Cash paid to and for employees (78,554) (64,671)
Taxes paid (23,328) (3,655)
Cash used in other operating activities (495,200) (1,640,689)
Subtotal of cash used in operating activities (1,883,304) (2,390,692)
Net cash generated from/used in operating
7 4,969,754 (1,414,144)
activities
2. Cash flows from investing activities:
Proceeds from disinvestment 11,499,240 5,909,134
Investment income 1,843,083 1,260,144
Net proceeds from disposal of fixed assets,
212,232 4,658
intangible assets and other long-lived assets
Subtotal of cash generated from investing
13,554,555 7,173,936
activities
Payments for acquisition of fixed assets, intangible
(4,286) (9,735)
assets and other long-lived assets
Payments for investments (16,877,016) (7,415,105)
Subtotal of cash used in investing activities (16,881,302) (7,424,840)
Net cash generated from/used in investing
(3,326,747) (250,904)
activities
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral
part of the financial statements.
11
TCL Corporation
Cash Flow Statement of the Company as the Parent (Continued)
(In thousands of RMB)
Note XII H1 2018 H1 2017
3. Cash flows from financing activities:
Capital contributions received 63,458 -
Increase in borrowings obtained 7,181,712 5,080,956
Net proceeds from issuance of bonds 1,000,000 1,000,000
Cash generated from other financing activities - 8,000
Subtotal of cash generated from financing
activities 8,245,170 6,088,956
Repayment of borrowings (5,641,532) (5,151,347)
Payments for interest and dividends (1,349,906) (1,386,423)
Subtotal of cash used in financing activities (6,991,438) (6,537,770)
Net cash generated from/used in financing
activities 1,253,732 (448,814)
4. Effect of foreign exchange rate changes on cash
and cash equivalents (34,911) 1,236
5. Net increase in cash and cash equivalents 2,861,828 (2,112,626)
Add: Cash and cash equivalents, beginning of the
period 1,056,211 4,906,046
6. Cash and cash equivalents, end of the period 8 2,793,420
3,918,039
Legal Head for financial Head of the financial
representative: affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5
form an integral part of the financial statements.
12
TCL Corporation
Statement of Changes in Shareholders’ Equity of the Company as the Parent
(In thousands of RMB)
H1 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
Add: Adjustments for changed accounting policies - - - - - - -
2. Balances as of beginning of the year 13,514,972 8,476,523 - (13,645) 1,292,236 4,114,531 27,384,617
3. Increase/decrease in the period 34,677 69,409 (63,458) (22,691) - 992,973 1,010,910
3.1 Total comprehensive income - - - (22,691) - 2,347,938 2,325,247
3.2 Capital increased and reduced by shareholders 34,677 69,409 (63,458) - - - 40,628
3.2.1 Capital increased by shareholders 34,677 28,781 (63,458) - - - -
3.2.2 Share-based payments included in
- - - - - - -
shareholders’ equity
3.2.3 Other - 40,628 - - - - 40,628
3.3 Profit distribution - - - - - (1,354,965) (1,354,965)
3.3.1 Appropriation to surplus reserves - - - - - - -
3.3.2 Appropriation to shareholders - - - - - (1,354,965) (1,354,965)
4. Balances as at end of the period 13,549,649 8,545,932 (63,458) (36,336) 1,292,236 5,107,504 28,395,527
Legal Head of the financial
representative： Head for Financial Affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
13
TCL Corporation
Statement of Changes in Shareholders’ Equity of the Company as the Parent (Continued)
(In thousands of RMB)
Year 2017
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 12,213,682 4,724,955 - 30,871 876,697 1,351,771 19,197,976
Add: Adjustments for changed accounting policies - - - - - - -
2. Balances as of beginning of the year 12,213,682 4,724,955 - 30,871 876,697 1,351,771 19,197,976
3. Increase/decrease in the period 1,301,290 3,751,568 - (44,516) 415,539 2,762,760 8,186,641
3.1 Total comprehensive income - - - (44,516) - 4,155,393 4,110,877
3.2 Capital increased and reduced by shareholders 1,301,290 3,751,568 - - - - 5,052,858
3.2.1 Capital increased by shareholders 1,301,290 2,732,710 - - - - 4,034,000
3.2.2 Share-based payments included in
shareholders’ equity - - - - - - -
3.2.3 Other - 1,018,858 - - - - 1,018,858
3.3 Profit distribution - - - - 415,539 (1,392,633) (977,094)
3.3.1 Appropriation to surplus reserves - - - - 415,539 (415,539) -
3.3.2 Appropriation to shareholders - - - - - (977,094) (977,094)
4. Balances as at end of the period 13,514,972 8,476,523 - (13,645) 1,292,236 4,114,531 27,384,617
Legal Head of the financial
representative： Head for Financial Affairs： department：
The attached notes to the financial statements and the supplementary information on pages from AI-1 to AI-5 form an integral part of the financial statements.
14
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
I General information
(I) Place of incorporation and organization
TCL Corporation (hereinafter referred to as the “Company”) is a limited liability company
incorporated in the People's Republic of China (hereinafter referred to as "China") on 17 July 1997
under the Company Law of the People's Republic of China (hereinafter referred to as the “Company
Law”). As per the approval documents of YBH [2002] No. 94 and YFH [2002] No. 134 issued by
the People’s Government of Guangdong Province, and YJMH [2002] No. 112 and YJMH [2002]
No. 184 issued by the Economic and Trade Commission of Guangdong Province, the Company was
changed to a joint stock limited company with a registered capital of RMB1,591,935,200, which
was approved by Guangdong Province Administration for Industry and Commerce on 19 April
2002. The registration number is 4400001009990.
Upon the approval of ZJFXZ [2004] Document No. 1 issued by the China Securities Regulatory
Commission (CSRC) on 2 January 2004, the Company was allowed to issue 590,000,000 shares to
the public on 7 January 2004 and 404,395,944 ordinary shares denominated in RMB (A shares) to
all public shareholders of TCL Communication Equipment Co., Ltd. (hereinafter referred to as "
TCL Communication Equipment") in a stock-for-stock deal, which were listed on the Shenzhen
Stock Exchange on 30 January 2004. The shares issued to the public were all priced online, with a
par value of RMB1 and an issue price of RMB4.26 per share, raising a total of RMB2,513,400,000.
Upon the completion of this deal, the registered capital of the Company increased to
RMB2,586,331,144, and on 16 July 2004, the Company was approved by the Guangdong Province
Administration for Industry and Commerce to change its business license to Business License
QGYZZ No. 003362. Upon the completion of the shareholder structure reform and the expiration of
the share lockup period, the foreign shareholding ratio in the Company was less than 10%. On 11
September 2007, the Company was approved by Guangdong Province Administration for Industry
and Commerce to change its business license to Business License No. 440000000011990.
Upon the approval of the CSRC on 7 January 2009 with the ZJXK [2009] Document No. 12, the
Company privately placed 350,600,000 ordinary shares denominated in RMB (A shares) to
designated investors on 23 April 2009, with a par value of RMB1 and an issue price of RMB2.58
per share, raising a total of RMB904,548,000. Upon the completion of this deal, the registered
capital of the Company increased from RMB2,586,331,144 to RMB2,936,931,144, and on 2 June
2009, the Company was approved by Guangdong Province Administration for Industry and
Commerce to change its business license to Business License No. 440000000011990.
Upon the approval of the CSRC on 27 May 2010 with the ZJXK [2010] Document No. 719, the
Company privately placed 1,301,178,273 ordinary shares denominated in RMB (A shares) to
designated investors on 26 July 2010, with a par value of RMB1 and an issue price of RMB3.46 per
share, raising a total of RMB4,502,076,824.58. Upon the completion of this deal, the registered
capital of the Company increased from RMB2,936,931,144 to RMB4,238,109,417, and on 19
September 2010, the Company was approved by Guangdong Province Administration for Industry
and Commerce to change its business license to Business License No. 440000000011990.
On 19 May 2011, the Company carried out a bonus issue of 10 additional shares for every 10 shares
to all the shareholders with capital reserves, representing a total of 4,238,109,417 new shares, with a
par value of RMB1 per share. Upon the completion of this bonus issue, the registered capital of the
Company increased from RMB4,238,109,417 to RMB8,476,218,834, and on 27 June 2011, the
Company was approved by Huizhou Administration for Industry and Commerce to change its
business license to Business License No. 440000000011990.
During the years of 2013 and 2014, the exercise of 58,870,080 stock options increased the share
15
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
capital of the Company from 8,476,218,834 shares to 8,535,088,914 shares.
16
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
I General information (continued)
(I) Place of incorporation and organization (continued)
Upon the approval of the CSRC on 13 February 2014 with the ZJXK [2014] Document No. 201, the
Company privately placed 917,324,357 ordinary shares denominated in RMB (A shares) to
designated investors on 30 April 2014, with a par value of RMB1 and an issue price of RMB2.18
per share, raising a total of RMB1,999,767,098.26. Upon the completion of this deal, the registered
capital of the Company increased from RMB8,535,088,914 to RMB9,452,413,271, and on 10 June
2014, the Company was approved by Huizhou Administration for Industry and Commerce to change
its business license to Business License No. 440000000011990.
In the year of 2015, 48,357,920 stock options were exercised under an incentive plan of the
Company, and upon the approval of the CSRC on 28 January 2015 with the ZJXK [2015] Document
No.151, the Company issued 2,727,588,511 shares in a private placement. As such, the share capital
of the Company increased from 9,452,413,271 shares to 12,228,359,702 shares.
In the year of 2016, 923,340 stock options were exercised under an incentive plan of the Company,
and the share capital of the Company increased from 12,228,359,702 shares to 12,229,283,042
shares. Later, 15,601,300 shares were repurchased and retired, and the share capital of the Company
decreased from 12,229,283,042 shares to 12,213,681,742 shares. On 26 April 2016, the Company
was approved by Huizhou Administration for Industry and Commerce to change its business license
to Business License No. 91441300195971850Y (unified social credit code).
In the year of 2017, the Company purchased an interest in subsidiary Shenzhen China Star
Optoelectronics Technology Co., Ltd. by means of a new issue of 1,301,290,321 shares. Upon the
completion of this deal, the share capital of the Company increased from 12,213,681,742 shares to
13,514,972,063 shares.
In 2018, the Proposal on the Grant of Restricted Stock to Awardees was approved at the 7th Meeting
of the 6th Board of Directors, and a total of 34,676,444 shares were subscribed for under the
restricted stock incentive plan. Upon the completion of this deal, the share capital of the Company
increased from 13,514,972,063 shares to 13,549,648,507 shares.
As at 30 June 2018, the total issued share capital of the Company was 13,549,648,507 shares. Please
refer to Note IV, 43 for details.
The registered address of the Company is: Block 19, Zhongkai Hi-Tech Development District,
Huizhou City, Guangdong Province.
17
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
I General information (continued)
(II) Scope of business
The Company and its subsidiaries (collectively referred to as the “Company") are primarily engaged
in the research, development, production and sales of electronic products and communication
devices, new optoelectronic products, liquid crystal display devices, hardware and electrical
equipment , VCD and DVD video players, home theater systems, computers and accessories,
batteries, digital satellite TV receivers, building materials, general machinery; computer technology
services; freight and warehousing; film and television equipment maintenance; waste materials
recycling; real estate development and management on legally acquired land; import and export of
goods and technologies; venture capital business and venture capital consultation, management of
entrusted venture capital of other venture capital institutions, entrepreneurial management services
for start-up enterprises, participation in the initiation of venture capital institutions and investment
management advisory institutions.
(III) Authorization of financial statements for issue
These financial statements were authorized for issue by the Company’s Board of Directors on 28
August 2018.
II Significant accounting policies and accounting estimates
1 Basis for the preparation of financial statements
The preparation of financial statements of the Company is based on the actual transactions and
events in accordance with the "Accounting Standards for Business Enterprises - Basic Standards"
published by the Ministry of Finance and specific corporate accounting standards, application
guidelines for corporate accounting standards, corporate accounting standards interpretations and
other relevant regulations (hereinafter collectively referred to as "corporate accounting standards")
for confirmation and measurement, combining the provisions of “Regulations on the Information
Disclosure and Compilation of Companies Offering Securities to the Public No. 15 - General
Provisions on Financial Reports” (revised in 2014) published by CSRC.
2 Going concern basis
The Company has evaluated the ability to continue as a going concern for 12 months from the end
of the Reporting Period and has not identified any issues or circumstances that result in significant
doubts about its ability to continue as a going concern. Therefore, the financial statements have been
prepared on a going concern basis.
3 Statement of compliance with corporate accounting standards
The financial statements are in compliance with the requirements of the corporate accounting
standards, and truly and completely reflect the financial status, operating results, cash flow and other
relevant information of the Company during the Reporting Period.
18
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
4 Accounting period
The Company adopts the calendar year as accounting year, and a fiscal year is from January 1 to
December 31 of the Gregorian calendar.
5 Operating cycle
The Company does not take the operating cycle as the criteria for liquidity classification of assets
and liabilities.
6 Base currency for bookkeeping
The base currency for bookkeeping and the preparation of financial statements are all in RMB, and
are presented in the unit of RMB’000 unless otherwise specified.
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 following, accounting for multiple transactions is treated
as a package transaction:
(a) These transactions are made simultaneously or with consideration of influence on each other;
(b) These transactions can only achieve a complete business outcome when treated as a whole;
(c) The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
A transaction is uneconomical when treated alone, but is economical when considered together with
(d)
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. .
19
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
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.
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.
20
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
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 value and the book value of the original equity
interest, and the accumulated fair value changes originally included in other comprehensive income
should be transferred to investment income in the current period of combination date.
(b) In the consolidated financial statements, the equity of the acquired party held before the date of
acquisition is re-measured according to the fair value of the equity on the date of acquisition. The
difference between the fair value and the book value is included in the current investment income; if
the equity of the acquired party involves other comprehensive income under the equity method, etc.,
other comprehensive income related to it is converted into investment income in the current period
of acquisition date.
21
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
8 Method for compiling consolidated financial statements
The scope of consolidation of the Company's consolidated financial statements is determined on the
basis of control, and all subsidiaries (including separate entities controlled by the Company as the
parent) are included in the consolidated financial statements.
The accounting policies and accounting periods adopted by all subsidiaries included in the
consolidated financial statements are consistent with the Company. If the accounting policies or
accounting periods adopted by the subsidiaries are inconsistent with the Company, necessary
adjustments will be made in accordance with the Company's accounting policies and accounting
periods when preparing consolidated financial statements. The consolidated financial statements are
based on the financial statements of the Company and its subsidiaries as well as other relevant
information, and are prepared by the Company after adjusting the long-term equity investments in
the subsidiaries in accordance with the equity method based.
The impact of internal transactions between the Company and its subsidiaries, and internal
transactions between subsidiaries, on the consolidated balance sheet, consolidated profit statement,
consolidated cash flow statement and consolidated statement of changes in shareholders’ equity is
offset in the preparation of consolidated financial statements.
If the current losses shared by the minority shareholders of a subsidiary exceeds the share enjoyed
by the minority shareholder in the initial owner's equity of the subsidiary, the balance will still
reduce the minority shareholders' equity.
During the Reporting Period, if a subsidiary or business is added due to the business combination
involving enterprises under common control, the opening balance of the consolidated balance sheet
is adjusted; the income, expenses and profits of the subsidiary or business from the beginning of the
period of combination to the end of the Reporting Period are included in the consolidated income
statement; the cash flows of the subsidiary or business from the beginning of the period of
combination to the end of the Reporting Period are included in the consolidated cash flow statement.
If a subsidiary or business is added due to a business combination involving enterprises under
non-common control, the opening balance of the consolidated balance sheet is not adjusted; the
income, expenses and profits of the subsidiary or business from the date of acquisition to the end of
the Reporting Period are included in the consolidated income statement; the cash flows of the
subsidiary or business from the date of acquisition to the end of the Reporting Period are included in
the consolidated cash flow statement.
During the Reporting Period, if a subsidiary or business is added due to a business combination
involving enterprises under non-common control, the opening balance of the consolidated balance
sheet is not adjusted; the income, expenses and profits of the subsidiary and business from the date
of acquisition to the end of the Reporting Period are included in the consolidated income statement;
the cash flows of the subsidiary and business from the date of acquisition to the end of the Reporting
Period are included in the consolidated cash flow statement..
During the Reporting Period, if the Company disposes of a subsidiary or business, the income,
expenses and profits of the subsidiary or business from the beginning of the period to the disposal
date are included in the consolidated income statement; the cash flows of the subsidiary or business
from the beginning of the Reporting Period to the disposal date are included in the consolidated cash
flow statement.
22
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
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.
23
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
9 Criteria for determining cash and cash equivalents
In the preparation of the cash flow statement, the Company recognizes cash holdings and deposits
that can be used for payment at any time as cash.
The Company recognizes cashes that is easily converted into known amount with short holding
period (generally due within three months from the date of purchase) and strong liquidity, and
investments with low risk of changes in value (including investments in bonds within three months,
while excluding equity investments), as cash equivalents.
10 Foreign currency business and translation of foreign currency statement
(1) Foreign currency transactions
Foreign currency transactions between the Company and its subsidiaries are translated into base
currency at the spot exchange rate on the transaction date.
Foreign currency monetary items are translated at the spot exchange rate on the balance sheet date,
and the exchange differences resulted therefrom, except that the exchange differences arising from
special foreign currency loans related to the acquisition and construction of assets eligible for
capitalization should be treated in accordance with the principle of capitalization of borrowing costs,
are all included in the current profit and loss. Foreign currency non-monetary items measured at
historical cost are still translated at the spot exchange rate on the transaction date, and the amount of
base currency for bookkeeping is not changed.
Foreign currency non-monetary items measured at fair value are translated at the spot exchange
rates on the date when the fair value is determined, and the exchange differences resulted therefrom
are included in profit or loss in the current period as a change in fair value. In the case of foreign
currency non-monetary items that are available for sale, the exchange differences incurred are
included in other comprehensive income.
(2) Translation of foreign currency financial statement
When the Company translates the financial statements of overseas operations, the assets and
liabilities in the balance sheet are translated at the spot exchange rate on the balance sheet date. The
owner's equity items, except for the "undistributed profit" items, are translated at the spot exchange
rate at the time of occurrence of items. All the incurred items in the income statement are translated
at the current average exchange rate of the period in which transactions occur.
The translation differences of foreign currency financial statement arising from the above translation
are included in other comprehensive income. When disposing of an overseas operation, the
translation differences in the foreign currency financial statements related to the foreign operation
listed in other comprehensive income items in the balance sheet are transferred from the other
comprehensive income item to the current profit and loss. All the incurred items in the cash flow
statement are translated at the current average exchange rate of the period in which transactions
occur. All the opening balance and actual amount of the previous year are listed on the basis of the
amount translated in the previous year.
24
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
11 Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
(1) Classification of financial instrument
The Company classifies financial assets and liabilities at initial recognition based on the contractual
terms of the financial instruments issued and the economic substance they reflect but not only the
legal form, in combination with the purpose of the acquisition of financial assets and liabilities, to
the following categories: financial assets (or financial liabilities) that are measured at fair value and
whose changes are included in current profit and loss; held-to-maturity investments; receivables;
available-for-sale financial assets.
(2) Recognition basis and measurement method of financial instruments
Financial assets and financial liabilities are measured at fair value on initial recognition. For
financial assets or liabilities that are measured at fair value and whose changes are included in the
current profits or losses, transaction expenses are directly recognized in the current profit and loss.
For other financial assets or liabilities, transaction expenses are included in the initial recognition
amount.
The Company conducts subsequent measurement of financial assets at fair value, and does not
deduct the transaction costs that may occur in the future disposal of the financial assets, except for
the following cases: held-to-maturity investments and loans and receivables are measured at
amortized cost by the effective interest method; and derivative financial assets that are linked to, and
required to be settled by the delivery of, equity instruments not quoted in an active market with a
fair value that cannot be measured in a reliable way, are measured at costs.
The Company conducts subsequent measurement of financial liabilities at amortized costs by the
effective interest method, except for the following cases: financial liabilities that are measured at
fair value and whose changes are included in the current profit and loss are measured at fair value;
and derivative financial liabilities that are linked to, and required to be settled by the delivery of,
equity instruments not quoted in an active market with a fair value that cannot be measured in a
reliable way, are measured at costs.
(3) Recognition basis and measurement method of financial asset transfer
The transfer of financial assets means that the Company transfers or delivers the financial assets to
the other party (the transferred party) other than the issuer of the financial assets.
If the Company has transferred almost all the risks and rewards of the financial asset ownership to
the transferred party, the recognition of the financial assets will be terminated, while if the Company
retains almost all the risks and rewards of the financial asset ownership, the recognition of the
financial assets will not be terminated.
Where the transfer of financial assets meets the conditions for termination of recognition, based on
the consideration received for the transfer, the difference between the sum of accumulated changes
in the fair value originally recorded in the owner's equity (in the case where the transferred financial
assets are available for sale) and the book value of transferred financial assets is included in the
current profit and loss. If the transfer of financial assets does not meet the conditions for termination
of recognition, the Company will keep the recognition of the transferred financial assets and
25
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
recognize the consideration received as a financial liability.
26
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
11 Financial instruments (continued)
(4) Conditions for the derecognition of financial liabilities
If all or part of the current obligations of a financial liability have been discharged, recognition of
the financial liability or part of it is terminated; if the Company signs an agreement with the creditor
to replace the existing financial liabilities with new ones, and the terms of the contract of new
financial liabilities are substantially different with the existing ones, the recognition of existing
financial liabilities is terminated and the new financial liabilities are recognized.
If substantial changes are made to all or part of the contractual terms of existing financial liabilities,
the recognition of existing financial liabilities or the part thereof will be terminated, and the
financial liabilities with modified new terms will be recognized as a new financial liability. When
the recognition of a financial liability is terminated in whole or in part, the difference between the
book value of the financial liability with recognition terminated and the consideration paid
(including the transferred non-cash assets or new financial liabilities assumed) will be included in
the current profit and loss.
If the Company repurchases part of the financial liabilities, the book value of the financial liabilities
as a whole is allocated on the repurchase date based on the relative fair value of the portion continue
to be recognized and the portion terminated to be recognized. The difference between the book
value assigned to the portion terminated to be recognized and the consideration paid (including the
transferred non-cash assets or new financial liabilities assumed) is included in the current profit and
loss.
(5) Methods for determining the fair value of financial assets and financial liabilities
The Company determines the fair value of financial instruments with active markets by the quoted
prices in active markets. For financial instruments without active market, the Company determines
the fair value by valuation techniques. In the valuation, the Group adopts valuation techniques that
are applicable under current circumstances and that are with sufficient available data and other
information, and selects input values that are consistent with the asset or liability characteristics
considered by market participants in the transactions of related assets or liabilities, and tries the best
to give priority to relevant observable input values. Non-observable input values are used in the
cases that the relevant observable input values are not available or are not practicable.
(6) Impairment of financial assets
On the balance sheet date, the Company checks the book value of financial assets other than the
ones measured at fair value and whose changes are included in the current profit and loss. In case
that objective evidence of impairment of the financial assets is found, the impairment loss is
recognized and allowance for impairment is made.
(a) Measurement of impairment losses on held-to-maturity investments, loans and receivables
If impairment of a financial assets measured at amortized cost, such as held-to-maturity investments
and loans, occurs, the Company recognizes the difference between the present value of the future
cash flows of the financial asset and the book value as the impairment loss, which is included in the
current profit and loss. The expected present value of future cash flows is determined by discounting
the original real interest rate of the financial asset, taking into account the value of the relevant
collateral.
27
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
The Company conducts separate impairment tests on financial assets with significant single amount.
In case that objective evidence of impairment of a financial asset is found, the impairment loss is
recognized and included in the current profit and loss. Financial assets with insignificant single
amount may be tested individually for impairment or tested in a combination of financial assets with
similar credit risk characteristics together with financial assets without impairment after being
separately tested.
28
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
11 Financial instruments (continued)
(6) Impairment of financial assets (continued)
For the impairment loss recognized on the financial assets measured at amortized cost, if there is
objective evidence that the value of the financial assets has recovered and is objectively related to
the events occurring after the recognition of the loss, the previously recognized impairment loss is
reversed and included in the current profit and loss.
The measurement of impairment losses on receivables is described in the allowance policies for
doubtful accounts.
(b) Measurement of impairment losses on available-for-sale financial assets
The Company conducts a separate inspection of each available-for-sale equity instrument
investment on the balance sheet date. If the fair value of the equity instrument invested on the
balance sheet date is less than 50% of its initial investment cost (including 50%) or less than its
initial investment cost over one year (including one year), it indicates that the investment is
impaired; if the fair value of the equity instrument invested on the balance sheet date is less than its
initial investment cost by more than 20% (including 20%) but has not yet reached 50%, the
Company will consider other relevant factors, such as price volatility, to determine whether the
equity instrument investment is impaired.
In the event that the financial assets available for sale are impaired, even if the recognition of
financial assets is not terminated, the Company transfers the accumulated loss resulting from the
decline of fair value, which was directly included in other comprehensive income originally, from
other comprehensive income to the current profit and loss. The accumulated loss transferred is equal
to the balance of the initial acquisition cost of the financial assets available for sale after deducting
the recovered principal and the amortized amount, the current fair value and the impairment losses
already recorded in the profit and loss.
For equity instrument investments that are not quoted in active markets and whose fair value cannot
be reliably measured, or derivative financial assets that are linked to the equity instruments and
required to be settled by delivery of the equity instruments, the Company recognizes their
impairment as impairment losses based on the difference between the present value of future cash
flow of the financial asset and its book value, and include the impairment losses in the current profit
and loss. The impairment losses incurred on these assets are not reversed in subsequent accounting
periods.
For available-for-sale debt instruments that have been recognized for impairment loss, if the fair
value increases in the subsequent accounting period and is objectively related to events that occur
after the original impairment losses have been recognized, the previously recognized impairment
losses are transferred back to the current profit and loss; the impairment losses on available-for-sale
equity instruments are reversed through equity when the value of the equity instruments recovers;
but for impairment losses on equity instruments that are not quoted in active markets and whose fair
value cannot be measured in a reliably way, or derivative financial assets that are linked to, and
required to be settled by delivery of the equity instruments, are not reversed.
29
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
12 Recognition criteria and accrual method for allowance for doubtful accounts receivable
Receivables refer to non-derivative financial assets that are not quoted in active markets with fixed
or determinable recovery amounts.
The Company adopts allowance method for the accounting of losses arising from doubtful accounts.
(1) Recognition criteria for allowance for doubtful accounts receivable
On the balance sheet date, the Company checks the book value of receivables. In case that objective
evidence of impairment of the receivables is found, the impairment loss is recognized and allowance
for impairment is made. When one of the following conditions occurs, it indicates that receivables
are impaired:
(a) The debtor is in serious financial difficulties;
(b) The debtor violated the terms of a contract, broke a contract or failed to perform its debt service
obligations;
(c) The creditor made concessions to the debtor with financial difficulties due to economic or legal
considerations;
(d) The debtor is likely to go bankrupt or undergo other financial restructuring;
(e) Other objective evidence of impairment of receivables.
(2) Recognition criteria for doubtful accounts
(a) The debtor has gone bankrupt or died, and the receivables still cannot be recovered after the
liquidity of bankrupt’s estate or legacy; or
(b) The debtor failed to perform its debt-servicing obligations and the obvious characteristics
indicate that it is impossible or unlikely to recover the receivables.
Receivables confirmed to be unrecoverable are written off as dead accounts after being approved by
the Board of Directors.
(3) Accrual method for allowance for doubtful accounts
The Company conducts separate impairment tests on receivables with significant single amount. In
case that objective evidence of impairment of a receivable is found, the impairment loss is
recognized based on the difference between the present value of estimated future cash flows and the
book value, and allowance for doubtful accounts is made. For receivables with insignificant single
amount, impairment test may be conducted individually, or classify the receivables into portfolios
based on similar credit risk characteristics together with receivables without impairment after being
separately tested, and determinate the impairment losses according to a certain proportion of the
receivable portfolio in the balance on the balance sheet date, and made allowance for doubtful
accounts. The allowance for doubtful accounts determined according to a certain proportion of the
balance of the receivables portfolio can fully reflect the actual impairment losses incurred by each
item, and the accrual ratio are reasonably determined based on the actual loss rate of the portfolios,
taking account of the current situation. Similar credit risk characteristics are determined by the
Company and its subsidiaries based on actual conditions, including but not limited to industry
30
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
distribution, regional distribution, overdue status and aging. If a receivable is not possible to be
reasonably classified into a portfolio with similar credit risk characteristics, a separate impairment
test is required.
31
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
13 Inventories
(1) Classification of inventories
The Company classifies inventories into raw materials, in-process products, development costs,
finished products, goods shipped in transit, turnover materials and molds with an expected benefit
period of less than one year, depending on the purpose of holding the inventories. Turnover
materials include low-value consumables and packaging materials.
(2) Valuation method for inventories shipped in transit
All types of inventories are accounted for at actual cost, and actual costs include purchase costs,
processing costs and other costs. Inventories are shipped in transit by weighted average method.
Basis for determining the net realizable value of inventories and accrual method for inventory
(3)
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
32
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
The Company amortizes turnover materials by the one-off amortization method, and the molds with
a benefit period of less than one year are amortized within the period of not exceeding one year
according to the expected benefit period.
33
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
14 Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its
subsidiaries, and the Group’s long-term equity investments in its associates and joint ventures.
Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is
a joint arrangement which is structured through a separate vehicle over which the Group has joint
control together with other parties and only has rights to the net assets of the arrangement based on
legal forms, contractual terms and other facts and circumstances. Associates are the investees that
the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are presented in the Company’s financial statements using the cost
method, and are adjusted to the equity method when preparing the consolidated financial statements.
Investments in a joint venture and associates are accounted for using the equity method.
(1) Recognition of initial investment cost
(a) Long-term equity investment formed by business combination
For long-term equity investment acquired by business combination involving enterprises under
common control, the book value of assets and liabilities of the combined party in the consolidated
financial statements of the ultimate controlling party as at the date of combination (including the
goodwill formed by the ultimate controlling party's acquisition of the combined party) is recognized
as investment cost. For long-term equity investment formed by combination, the share of the book
value of shareholders’ equity of the combined party acquired on the date of combination is
recognized as initial investment cost. The difference between the initial investment cost and assets
paid as the consideration for combination, the book value of liabilities incurred or assumed and the
total par value of shares issued, is used to adjust capital reserve, and when the capital reserve is
insufficient, it is used to adjust retained earnings.
For long-term equity investment acquired by business combinations involving enterprises under
non-common control, the combination cost is recognized as investment cost of the long-term equity
investment. The combination cost is the fair value of assets paid, the liabilities incurred or assumed,
and the equity securities issued to acquire the control of acquired party on the date of acquisition.
The difference between the higher combination cost and lower fair value of identifiable net assets of
the acquired party acquired in the combination is recognized as goodwill; the difference between the
lower combination cost and higher fair value of identifiable net assets of the acquired party acquired
in the combination is included in the current profit and loss after review. For business combination
involving enterprises under non-common control realized step by step through multiple transactions,
the sum of the book value of equity investment held by the acquirer before the date of acquisition
and the new investment cost on the date of acquisition is recognized as initial investment cost, and
the combination cost includes the sum of assets paid, the liabilities incurred or assumed by the
acquirer, and the fair value of equity securities issued.
(b) Long-term equity investment acquired by other means
For long-term equity investment acquired by cash payment, the actual acquisition price is
recognized as initial investment cost. The initial investment cost includes expenses, taxes and other
necessary expenses directly related to the acquisition of the long-term equity investment; the
transaction costs incurred when issuing or acquiring the own equity instruments of acquirer
attributed directly to equity transactions can be deducted from the equity.
For long-term equity investment acquired by issuing equity securities, the fair value of equity
securities issued is recognized as initial investment cost.
34
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Provided that the non-monetary asset exchange contains commercial substance and the fair value of
the assets received or assets surrendered can be reliably measured, the initial investment cost of the
long-term equity investment received with non-monetary assets is determined based on the fair
value of the assets surrendered, except that there is conclusive evidence indicates that the fair value
of assets received is more reliable. For non-monetary assets that do not satisfy the above condition,
the book value of assets surrendered and related taxes and fees payable are recognized as the initial
investment cost of the long-term equity investment.
The initial investment cost of a long-term equity investment acquired by debt restructuring is
determined on the basis of fair value.
35
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
14 Long-term equity investment (continued)
(2) Subsequent measurement and recognition of related profit and loss
(a) Subsequent measurement
The Company adopts the cost method to account for the long-term equity investments under the
control of investee, and the consolidated financial statements are adjusted in accordance with the
equity method in preparation.
The Company adopts the equity method to account for the long-term equity investments in
associates and joint ventures. The difference between the higher initial investment cost and the fair
value share of identifiable net assets of the investee enjoyed in the investment is not used to adjust
the initial investment cost of the long-term investment; the difference between the lower initial
investment cost and the fair value share of identifiable net assets of the investee enjoyed at the time
of conducting the investment is included in the current profit and loss.
(b) Recognition of profit and loss
Under the cost method, in addition to the actual payment or the cash dividends or profits included in
the consideration that have been declared but not yet paid, the Company recognizes the investment
income according to the cash dividends or profits that the investee declared to pay.
Under the equity method, when the investment enterprise confirms that it should enjoy the net profit
or net loss of the investee, it should adjust the net profit of the investee based on the fair value of
identifiable assets of the investee at the time of conducting the investment before the confirmation,
and the part of profit and loss of internal transaction between the investor and associates and joint
venture that should be attributed to the investor according to the shareholding ratio, should be offset,
and the investment profit and loss should be confirmed on this basis. When the Company confirms
that it should assume the loss occurred by the investee, the process hereunder is followed: first, the
book value of the long-term equity investment is offset. Secondly, if the book value of the long-term
equity investment is insufficient for the offset, the investment loss is continue to be recognized, and
the book value of long-term receivable items is offset, subject to other book value of the long-term
equity that substantially constitutes the net investment of the investee. Finally, after the
above-mentioned treatment, if the Company still bears additional obligations in accordance with the
investment contract or agreement, the provisions are recognized according to the estimated
obligations and included in the current investment losses.
If the investee realizes profit in the future period, the Company shall, after deducting the
unconfirmed loss share, conduct the process in the reverse order of the above to write down the
book balance of the confirmed liabilities and recover other long-term equity that substantially
constitute net investment of the investee and the book value of the long-term equity, and recognize
the profit as investment income.
Other changes in the owner's equity other than net profit or loss, other comprehensive income and
profit distribution of the investee, are used to adjust the book value of the long-term equity
investment and included in capital reserve. The unrealized profit and loss from internal transactions
between the Group and the investee attributed to the Group according to the shareholding ratio, is
offset, and the investment profit and loss are recognized on this basis. In respect of the internal
transaction losses incurred by the Group and the investee, for the part recognized asset impairment
losses, the corresponding unrealized losses is not offset.
36
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
14 Long-term equity investment (continued)
(3) Step-by-step disposal of investment in subsidiaries
When the terms, conditions and economic influence of transactions of the equity investment of the
subsidiary conform to one or more of the following, accounting for multiple transactions is treated
as a package transaction:
(a) These transactions are made simultaneously or with consideration of influence on each other;
(b) These transactions can only achieve a complete business outcome as a whole;
(c) The occurrence of a transaction depends on the occurrence of at least one of the other
transaction;
(d) A transaction alone is uneconomical, but is economical when considered together with other
transactions.
When an enterprise loses control over the original subsidiary due to disposal of part of the equity
investment or other reasons, if the transactions do not belong to a package transaction, the
accounting treatment of individual financial statements and consolidated financial statements should
be distinguished as follows:
(a) In the individual financial statements, the disposed equity should be accounted for in accordance
with the “Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investment”;
meanwhile, the remaining equity should be recognized as long-term equity or other related financial
assets based on its book value. If the remaining equity after disposal can be used to exercise
common control or significant influence on the original subsidiary, it shall be accounted for in
accordance with the relevant provisions on the conversion of the cost method into the equity
method..
(b) In the consolidated financial statements, the remaining equity should be re-measured in
accordance with its fair value on the date of loss of control. The difference between the sum of the
consideration acquired from the disposal of the equity and the fair value of the remaining equity,
less the share of net assets of the original subsidiary that should be enjoyed in accordance with the
original share-holding ratio from the date of acquisition, is included in the current profit and loss of
the period in which loss of control occurred. Other comprehensive income related to the original
subsidiary's equity investment should be converted into current investment income when control is
lost. The enterprise shall disclose in the notes the fair value of the remaining equity after disposal on
the date of loss of control and the amount of relevant gains or losses arising from the disposal
remeasured based on the fair value.
If the transactions of disposal of equity investment in a subsidiary until the loss of control is a
package transaction, the accounting treatment of individual financial statements and consolidated
financial statements should be distinguished as follows: :
(a) In the individual financial statements, the difference between each disposal price and the book
value of the long-term equity investment corresponding to the disposed equity before the loss of
control is recognized as other comprehensive income, and transferred to the current profit and loss
of the period in which the loss of control occurred;
37
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
(b) In the consolidated financial statements, the difference between each disposal price and the
disposal of investment corresponding to the share of the net assets of the subsidiary before the loss
of control is recognized as other comprehensive income, and transferred to the current profit and
loss of the period in which the loss of control occurred.
38
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
14 Long-term equity investment (continued)
(4) Basis for determining control, common control and significant influence on the investee
Control means having the power of control over the investee, enjoying variable returns by
participating in the relevant activities of the investee, and having the ability to use the power over
the investee to influence the amount of returns.
Common control means the control that is common to an arrangement in accordance with the
relevant agreement, and the decisions of relevant activities of the arrangement must be made upon
agreement of the Group and other parties sharing the control rights.
Significant influence means the power to participate in the decision-making of the financial and
operating policies of the investee, but by which cannot control or commonly control together with
other parties the formulation of the policies.
(5) Impairment test and allowance for impairment
On the balance sheet date, if there is any indication that the long-term equity investment is impaired
due to continuous decline in the market price or deterioration of operating conditions of the
investee, the recoverable amount of long-term equity investment is determined according to the net
value of a single long-term equity investment less the disposal expenses or the present value of
expected future cash flows of the long-term equity investment, whichever is higher. When the
recoverable amount of the long-term equity investment is lower than the book value, the book value
of assets is written-off to the recoverable amount, and the amount written-down is recognized as
asset impairment losses, which is included in the current profit and loss, and the corresponding
allowance for asset impairment is made.
For long-term equity investments without significant influence or quotation in an active market and
whose fair value cannot be measured in a reliable way, the impairment loss is determined by the
difference between the book value and the present value determined by discounting the future cash
flows of similar financial assets at the current market rate of return.
Other long-term equity investments with signs of impairment other than goodwill arising from
business combination, if the measurement of recoverable amount indicates that the recoverable
amount of the long-term equity investment is lower than its book value, the difference is recognized
as impairment losses.
Goodwill arising from a business combination is tested for impairment annually, regardless of
whether there is any indication of impairment.
Once the impairment loss of long-term equity investment is confirmed, it will not be reversed.
15 Investment property
The Company's investment property means the property held for the purpose of earning rent or
capital appreciation, or both, including the land use rights that have been leased, the land use rights
that are held for transfer upon appreciation, and the leased buildings. In addition, for the vacant
buildings held by the Company for the purpose of leases, if the Board of Directors makes a written
resolution that expressly indicates that the buildings will be used for leases and the intention of
holding will not change in a short-term, the building will also be reported as investment property.
39
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
The Company adopts the cost model for subsequent measurement of investment property. For the
purpose of depreciation or amortization method, the same amortization policy adopted for buildings
as fixed assets and land use rights as intangible assets is used.
40
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
16 Fixed assets
(1) Recognition criteria for fixed assets
Fixed assets means tangible assets held for the purpose of producing goods, rendering of services,
leases or operation management, whose service life is more than one fiscal year. Fixed assets
satisfying the following conditions are recognized:
(a) The economic benefits associated with the fixed assets are likely to flow into the enterprise;
(b) The cost of the fixed asset can be measured in a reliable way.
The Company's fixed assets are classified into buildings, machinery and equipment, office and
electronic equipment, transportation vehicles and fixed assets renovation in line with capitalization
conditions. Where each component of a fixed asset with a different service life provides economic
benefits to the Company in different ways and applies different depreciation rates, it is recognized as
a single fixed asset.
Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase
price, related taxes, and other expenses attributable to the fixed asset before it is ready for the
intended use, such as the expenses on transportation, handling, installation and professional services,
etc. When determining the cost of fixed assets, discard expenses should be considered. Subsequent
expenditures related to fixed assets that satisfy the recognition criteria of fixed assets are included in
the cost of fixed assets; otherwise, they are recognized in profit and loss in the period in which they
arise.
(2) Recognition and initial measurement of fixed assets under financing lease
If one of the following conditions specified in the terms of the lease agreement of an asset singed
between the Company and the leasing party, it is recognized as an asset under financing lease:
(a) The ownership of the leased asset is attributable to the Company upon the expiry of lease;
(b) The Company has the option to purchase the asset, and the purchase price is much lower than the
fair value of the asset when the option is exercised;
(c) The lease term represents the majority of the service life of the leased asset;
(d) The present value of the minimum lease payments on the lease start date is not significantly
different from the fair value of the asset.
On the date of the lease starts, the Company recognizes the fair value of the leased asset or the
present value of the minimum lease payment as the book value of the leased asset, which ever is
lower, and recognizes the minimum lease payment amount as the book value of the long-term
payable, the difference is recognized as unconfirmed financing costs. Unrecognized financing
expenses are apportioned over the lease term by the effective interest method.
41
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
16 Fixed assets (continued)
(3) Depreciation method for fixed assets
Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed
assets is determined according to the estimated service life and estimated residual value (the
estimated residual value is 0-3% of the original value). The depreciation rate of classified fixed
assets is as follows:
Annual
Asset Category Estimated Service Life
Depreciation Rate
Houses and buildings 20-50 years 2-5%
Machinery and equipment (exclude mold) 5-11 years 9-20%
Mold (with benefit period more than one year) 1-3 years 33-100%
Office and electronic equipment 3-5 years 20-33%
Transportation equipment 4-5 years 20-25%
Other devices 4-5 years 20-25%
Fixed assets renovation is amortized evenly over the benefit period.
All fixed assets are subject to depreciation, except for fixed assets that have been fully depreciated
and continue to be used, and the land that is priced and recorded separately. Fixed assets are
depreciated on a monthly basis. Fixed assets added are not depreciated in the current month when
being added but from the following month; fixed assets reduced are still depreciated in the current
month when being reduced, and no depreciation is made from the following month. Fixed assets that
are not profitable for the enterprise or not used temporarily (other than seasonally deactivated) are
recognized as idle fixed assets. The estimated life expectancy and depreciation rate of idle fixed
assets should be re estimated, and depreciation is directly included in the current profit and loss.
17 Construction in progress
Construction in progress refers to the necessary expenses incurred by the Company for the purchase
and construction of fixed assets or investment property before being ready for the expected usable
status, including engineering materials costs, labor costs, related taxes and fees, borrowing costs that
should be capitalized and indirect costs that should be apportioned. Construction in progress is
accounted for separately according to individual projects.
After the construction in progress is ready for its intended use, it must be transferred to fixed assets
or investment property, whether the final accounting procedures are completed or not.
42
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
18 Borrowing costs
Borrowing costs refer to interest and other related costs incurred by the Company as a result of
borrowings, including interest on borrowings, amortization of discounts or premiums, ancillary
expenses, and exchange differences arising from foreign currency borrowings.
Borrowing costs that can be directly attributable to the acquisition, construction or production of
assets eligible for capitalization are capitalized and included in the relevant asset cost. Other
borrowing costs are recognized as expenses in the period in which they are incurred, and are
included in the current profit and loss. Assets eligible for capitalization refer to fixed assets,
investment property and inventories (only refers to inventories with an acquisition, construction and
production process for more than one year) that require a substantial period of acquisition,
construction or production activities to get ready for the intended use or sale status.
Borrowing costs refer to the interest of borrowings, the amortization of discounts or premiums,
auxiliary expenses and exchange differences arising from foreign currency borrowings incurred by
the Company. Borrowing costs begin to be capitalized when the following three conditions are all
satisfied:
(1) Asset expenditure has occurred;
(2) Borrowing costs have occurred;
(3) The acquisition, construction or production activities necessary to enable the assets to be ready
for the intended usable or saleable state have commenced.
When an asset satisfied the capitalization conditions is abnormally interrupted during the process of
acquisition, construction or production and the interruption period lasts for more than three months,
the capitalization of the borrowing costs is suspended and recognized as the current expenses until
the acquisition, construction or production of the assets starts again. When an asset satisfied the
capitalization conditions is ready for its intended use or sale, the capitalization is stopped and the
borrowing costs incurred in the future are included in the current profit and loss. The period of
capitalization refers to the period from the time when the borrowing costs start to be capitalized to
the point when the capitalization is stopped, and the period in which the borrowing costs are
suspended for capitalization is not included.
During the period of capitalization, if special borrowings are made for the acquisition, construction
or production of assets eligible for capitalization, the amount of the interest expenses actually
incurred during the current period of the special borrowings, less the amount of interest income
earned by depositing unused borrowing funds in a bank or investment income earned by temporary
investment, is recognized as the amount of capitalization. When a general loan is occupied for the
purpose of purchasing, constructing or producing assets satisfied the capitalization conditions, the
amount of capitalization is determined according to the weighted average of the accumulated asset
expenditure exceeding the special loan portion multiplied by the capitalization rate of the general
loan occupied; the capitalization rate is determined based on the weighted average interest rate of
general borrowings.
43
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
19 Intangible assets
Intangible assets are recorded at the actual cost at the time of acquisition. The service life of
intangible assets are analyzed and judged at the time of acquisition. Intangible assets with a finite
service life are amortized on the shortest of the estimated service lives, the beneficial period of the
contract and the effective period specified by law from the time when the intangible assets are
available for use. The amortization period is as follows:
Category Amortization period
The length of land use rights or the Company's operating period,
Land use rights
whichever is shorter
Patents and non-patent 10 years or service life, years of benefit or effective years
technologies specified by law, whichever is shorter
Software usage fee Benefit period
Other Benefit period
The Company reviews the service life and amortization method of intangible assets with limited
service life at least at the end of each year, and made adjustment if necessary.
If an intangible asset is unforeseen to bring economic benefits to the Company, it is regarded as an
intangible asset with an indefinite service life, which will be reviewed in each accounting period. If
there is evidence indicates that the service life of the intangible asset is limited, then it is converted
to an intangible asset with limited service life. Intangible assets with indefinite service lives are not
amortized.
The expenditures of the Company's internal research and development projects are classified into
expenditures in the research phase and expenditures in the development phase. Research means an
original, planned survey of acquiring and understanding new scientific or technical knowledge.
Development means the application of research results or other knowledge to a plan or design to
produce new or substantially improved materials, devices, products, etc. prior to commercial
production or use.
The expenditures in the research phase of the Company's internal research and development projects
are included in the current profit and loss when incurred; expenditures in the development phase are
recognized as intangible assets only when the following conditions are all satisfied:
(1) It is technically feasible to complete the intangible asset to enable it to be used or sold;
(2) There is intent to complete the intangible asset and use or sell it;
(3) The intangible assets can bring economic benefits;
(4) There is sufficient technical, financial and other resources to support the development of the
intangible assets as well as ability to use or sell the intangible assets;
(5) Expenditures attributable to the development stage of the intangible asset can be measured in a
reliable way.
If the above conditions cannot be all satisfied, the expenditures are included in the current profit and
loss when incurred.
44
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
20 Long-term prepaid expenses
Long-term prepaid expenses refer to various expenses that the Company has paid and whose period
of amortization is more than one year, such as the improvement expenses incurred in renting fixed
assets by operating leases. Long-term prepaid expenses are amortized on a straight-line basis within
the beneficial period of the expense items.
21 Impairment of long-lived assets
The impairment of assets other than inventories, financial assets and deferred income tax assets is
determined by the Company as follows:
On the balance sheet date, if there is evidence indicates that the asset is idle, there is a use
termination plan or the market price drops sharply, or the external environment changes
significantly, impairment test should be conducted. The difference between the recoverable amount
of the asset and its book value is recognized as impairment loss and included in the current profit
and loss, and corresponding allowance for asset impairment is made. For the goodwill formed by
business combination and the intangible assets with indefinite service life, impairment test is carried
out every year regardless of whether there is any indication of impairment. The recoverable amount
is determined based on the net amount of fair value of assets less the disposal expenses, or the
present value of estimated future cash flows of the assets, whichever is lower. The Company
estimates the recoverable amount based on the individual assets. If it is difficult to estimate the
recoverable amount of the individual assets, the recoverable amount of the asset is determined based
on the asset group to which the asset belongs. After the asset impairment loss is recognized, the
depreciation or amortization expense of the impaired assets will be adjusted accordingly in the
future period.
Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting period.
Treatment of goodwill impairment: in the impairment test of goodwill, the book value of goodwill is
apportioned to the asset group or asset group portfolio expected to benefit from the synergy of
business combination, and the book value of goodwill is apportioned to the relevant asset group or
asset group combination in a reasonable way. In the case of impairment test, the asset group or asset
group portfolio that does not contain goodwill is tested for impairment first to confirm the
corresponding asset impairment loss, and then the asset group or asset group containing goodwill is
tested for impairment to confirm the corresponding goodwill impairment loss.
22 Asset transfer with repurchase conditions
When the Company sells products or transfers other assets, it signs a product or a transfer asset
repurchase agreement with the purchaser, and determines whether the sales commodity satisfies the
revenue recognition conditions according to the terms of the agreement. If the after-sales repurchase
is a financing transaction, the Company does not recognize the sales revenue when the product or
asset is delivered. If the repurchase price is greater than the difference between the sales price,
interest of the difference is accrued on time during the repurchase period, and included in financial
expenses.
45
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
23 Provisions
When the Company is involved in any litigation, debt guarantee, contract loss or reorganization,
which is likely in need of future delivery of assets or rendering of services, and the amount of which
can be measured in a reliable way, it is recognized as provisions.
(1) Recognition criteria of provisions
When an obligation related to the contingent events satisfies all the following conditions, it is
recognized by the Company as provisions:
(a) The obligation is the current obligation of the Company;
(b) The fulfillment of the obligation is likely to cause economic benefits to flow out of the
Company;
(c) The amount of the obligation can be measured in a reliable way.
(2) Measurement of provisions
The provisions of the Company are initially measured on the basis of the best estimate of the
expenditure required to perform the relevant current obligations.
When determining the best estimate, the Company considers factors such as risks, uncertainties and
time value of money related to contingent events. Where the time value of money has a significant
impact, the best estimate is determined by discounting the relevant future cash outflows.
The best estimate are handled as follows:
In case that there is a continuous range (or interval) of required expenditures, within which the
possibility of occurrence of various results is the same, the best estimate is determined by the
average of the middle value of the range, that is, the average of the upper and lower limits..
In case that there is no continuous range (or interval) of required expenditures, or there is a
continuous range but the possibility of various results in the range is different, if the contingency
involves a single item, the best estimate is determined based on the most probable amount; if a
contingency involves multiple items, the best estimate is determined based on various possible
outcomes and associated probabilities.
If all or part of the expenses required by the Company to settle the provisions are expected to be
compensated by a third party, the compensation amount is separately recognized as an asset when it
is basically confirmed to be received, and the recognized compensation amount should not exceed
the book value of provisions.
46
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
24 Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits provided in various forms of consideration in
exchange for service rendered by employees or compensations for the termination of employment
relationship.
(a) Short-term employee benefits
Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies,
staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity
insurance, housing funds, union running costs and employee education costs, and short-term paid
absences. The employee benefit liabilities are recognized in the accounting period in which the
service is rendered by the employees, with a corresponding charge to the profit or loss for the
current period or the cost of relevant assets. Non-monetary benefits are measured at their fair value.
(b) Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under which
the Company pays fixed contributions into a separate fund and will have no obligation to pay further
contributions; and defined benefit plans are post-employment benefit plans other than defined
contribution plans. During the Reporting Period, the Company’s defined contribution plans mainly
include basic pensions and unemployment insurance.
(c) Termination benefits
If the Company terminates the labor relationship with an employee before the labor contract expires,
or offers compensation for encouraging the employee to accept the redundancies voluntarily, the
liabilities arising from the termination of labor relations with the employee is determined, and also
included in the current profit and loss, at the time when the group cannot unilaterally withdraw the
termination of the labor relationship plan or redundancies proposal, or the time when the cost
associated with reorganization involving payment of termination benefits is confirmed, whichever is
earlier.
(d) Other long-term employee benefits
Other long-term employee benefits refer to all employee benefits except short-term employment
benefits, post-employment benefits and termination benefits.
47
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
25 Share-based payments
The share-based payments of the Company are mainly equity-settled share-based payments, and
only allow to be exercised by employees after the completion of their services in the waiting period.
On each balance sheet date in the waiting period, based on the best estimate of the number of
vesting equity instruments, the services obtained in the current period are included in the relevant
costs or expenses and capital reserve based on the fair value at the grant date of the equity
instruments.
The fair value of equity instruments is determined by the external appraiser or management based
on the binomial distribution method. The best estimate of the vesting equity instrument is
determined by the management based on historical statistics on the vesting weights and turnover
rates on the balance sheet date.
Equity-settled share-based payments are measured based on the fair value of the equity instruments
granted to employees. In case that the vesting right is available immediately after the grant, it is
included in relevant cost or expense based on the fair value of the equity instrument on the grant
date, and the capital reserve is increased accordingly. In case that the vesting right is available after
the completion of services in the waiting period or satisfaction of stipulated performance conditions,
on each balance sheet day during the waiting period, the services acquired in the current period are
included into the relevant costs or expenses and capital reserve on the basis of the best estimate of
the number of feasible equity instruments and at the fair value of the date on which the equity
instruments are granted. No adjustments is made to the identified related costs or expenses or total
owner's equity after the vesting date.
26 Revenue recognition
Revenue is recognized only when economic benefits are likely to flow in and the amount of income
and associated costs can be measured in a reliable way, and the following conditions are all
satisfied:
(1) Sales of goods
The Company has transferred the main risks and rewards of ownership of the goods to the
purchaser, and no longer retains any continuing management right or effective control of the goods,
which are usually linked to the ownership, and recognizes the realization of sales revenue of the
goods.
(2) Sales of property development products
The realization of sales revenue is recognized when the sales of property is completed and
acceptance of the property is qualified, the terms of delivery stipulated in the sales contract are
satisfied, and the buyer has obtained the certificate of payment for the delivery of the property
stipulated in the sales contract (usually the first payment of the sales contract is received and the
payment arrangement of the remaining payment is confirmed).
(3) Rendering of services
48
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
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.
49
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
26 Revenue recognition (continued)
(5) User fee income
Accounted for according to the time and method of charging as stipulated in the relevant contract or
agreement.
27 Government subsidies
(1) Category
Government subsidies are transfers of monetary or non-monetary assets from the government to the
Group at nil consideration. According to the subsidy targets stipulated in the relevant government
documents, government subsidies are classified into government subsidies related to assets and
government subsidies related to income.
(2) Recognition of government subsidies
If a government subsidy is a monetary asset, it is measured at the amount received or receivable. If a
government subsidy is a non-monetary asset, it is measured at fair value. If the fair value cannot be
obtained in a reliable way, it is measured at the nominal amount (RMB1). Government subsidies
measured at nominal amounts are recognized directly in the current profit and loss.
(3) Accounting treatment
Government subsidies related to assets offset the book value of the underlying assets.
If the government subsidies related to income are used to compensate related costs or losses in the
subsequent period, it is recognized as deferred income and included in the current profit and loss or
offset costs in the period in which the related costs or losses are recognized; government subsidies
used to compensate costs or losses incurred by the enterprise are directly included in the current
profit or loss or offset related costs. For government subsidies related to the daily activities of the
enterprise, the R&D and VAT-related subsidies are included in other income; other government
subsidies offset related costs according to the nature of economic activities. Government subsidies
not related to daily activities of the Company are included in the non-operating income and
expenditure. For preferential loans for policy discount, if the government finance department
appropriates the discounted funds to the lending bank, the borrowing cost is accounted for according
to the principal of the loan and the policy preferential interest rate, with the amount actually
received as the entry value of the loan. If the government The government finance department
directly appropriates the interest subsidy funds to the Company, the subsidies offset the related
borrowing costs.
In case that a confirmed government subsidy is required to be returned, the book value of the asset is
adjusted if the book value of relevant assets is offset at the initial recognition; if there is related
deferred income, the book balance of deferred income is offset, and the excess is included in the
current profit and loss; in case of other circumstances, it is directly included in the current profit and
loss.
50
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
28 Deferred income tax assets and deferred income tax liabilities
The income taxes of the Company include current income tax and deferred income tax. Both current
income tax and deferred income tax are recognized in the current profit and loss as income tax
expense or gain, except for the following:
(1) Adjusting goodwill due to income tax arising from business combination;
(2) Income tax related to transactions or events directly included in shareholders' equity is included
in shareholders’ equity.
On the balance sheet date, the Company recognizes the deferred income tax assets or deferred
income tax liabilities in accordance with the balance sheet liability method on temporary differences
between the book value of assets or liabilities and their tax base.
The Company recognizes all taxable temporary differences as deferred tax liabilities except the
taxable temporary differences incurred in the following transactions:
(1) Initial recognition of goodwill; or initial recognition of assets or liabilities arising from
transactions with the following characteristics: the transaction is not a business combination, and
does not affect the accounting profits or the amount of taxable income when occurs;
(2) For taxable temporary differences related to investments in subsidiaries, associates and joint
ventures, the timing of the reversal of the temporary differences can be controlled and the temporary
differences are unlikely to be reversed in the foreseeable future.
The Company recognizes deferred income tax assets arising from deductible temporary differences,
subject to the amount of taxable income likely to be obtained to offset the deductible temporary
differences, except the deductible temporary differences incurred in the following transactions:
(1) The transaction is not a business combination, and does not affect the accounting profits or the
amount of taxable income when occurs;
(2) The deductible temporary differences related to investment in subsidiaries, associates and joint
ventures cannot satisfy all the following: the temporary differences are likely to be reversed in the
foreseeable future and are likely to be used for deduction of deductible taxable income for
temporary differences in the future.
On the balance sheet date, the Company measures the deferred income tax assets and deferred
income tax liabilities according to the tax law based on the applicable tax rate during the period of
expectation of recovering the assets or paying off the liabilities, and reflects the income tax impact
of the expected recovery of assets or liquidation of liabilities on the balance sheet date.
On the balance sheet date, the Company reviews the book value of deferred income tax assets. If it is
probable that no sufficient taxable income will be available in the future to offset the benefits of
deferred tax assets, the book value of deferred tax assets is written down. When it is probable that
sufficient taxable income will be available, the amount written-down will be reversed.
51
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
29 Leases
(1) Accounting treatment of operating leases
(a) The rental fees paid by the Company for the lease of assets are apportioned on a straight-line basis
over the entire lease term without deduction of the rent-free period and included in the current
expenses. The initial direct costs associated with the lease transactions paid by the Company are
included in the current expenses.
When the lessor of an asset bears the expenses related to the lease that should be borne by the
Company, the Company deducts the part of the expenses from the total rent. The deducted rental
expenses are apportioned during the lease term and included in the current expenses.
(b) The rental fees charged by the Company for renting out assets are apportioned on a straight-line
basis over the entire lease term without deduction of the rent-free period and is recognized as rental
income. The initial direct expenses related to lease transactions paid by the Company are included in
the current expenses; if the amount is a significant one, it is capitalized and included in the current
income in the same period as the lease income is recognized throughout the lease period.
When the Company bears the lease-related expenses that should be borne by the lessee, the
Company deducts the part of the expenses from the total rental income, and distributes the deducted
rental expenses within the lease term.
(2) Financial leased assets
On the date when lease starts, the Company recognizes the fair value of the leased asset or the
present value of the minimum lease payment as the book value of the leased asset, whichever is
lower, and recognizes the minimum lease payment amount as the book value of the long-term
payable, and the difference between the two is recognized as unconfirmed financing expenses. The
Company adopts the effective interest rate method to amortize the unrecognized financing expenses
during the asset lease period and includes them in financial expenses.
(3) Financial leasing assets
On the date when lease starts, the Company recognizes the receivable of the financial lease, the
difference between the sum of unsecured residual value and its present value as unrealized financing
income, and recognizes the lease income in the future period of the lease. The initial direct costs
incurred by the Company in connection with lease transactions are included in the initial
measurement of financial lease receivable, and the amount of income recognized during the lease
term is reduced.
30 Related parties
If one party controls, commonly controls or exerts a significant influence on the other party, and two
or more parties are under the control, common control or significant influence of the other party,
they constitute related parties.
31 Discontinued operations
The Company recognizes a component disposed of or classified as a component that can be
separately distinguished from the category held for sale and satisfied any of the following as a
52
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
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.
53
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Significant accounting policies and accounting estimates (continued)
32 Changes in major accounting policies and estimates
On May 28, 2017, the Group began to adopt the “Accounting Standards for Business Enterprises
No. 42 – Non-current Assets and Disposal Groups Held for Sale and Discontinued Operations”
newly published by the Ministry of Finance in 2017, and on June 12, 2017, the Company began to
adopt the “Accounting Standards for Business Enterprises No. 16 – Government Subsidies”
revised by the Ministry of Finance in 2017. In addition, the financial statements are prepared in
accordance with the Notice on Revising and Issuing of the Format of General Corporate Financial
Statements (CK (2017) No. 30, hereinafter referred to as the “Financial Accounting Document No.
30”) issued by the Ministry of Finance on December 25, 2017.
Non-current assets held for sale, disposal groups and discontinued operations:
The “Accounting Standards for Business Enterprises No. 42 – Non-current Assets and Disposal
Groups Held for Sale and Discontinued Operations” specifies the classification and measurement of
non-current assets or disposal groups held for sale, requiring that the profit and loss of both
continuous and discontinued operations be presented separately in the profit statement, and that the
information of non-current assets or disposal groups held for sale and discontinued operations be
disclosed in the notes in detail. The standards require the adoption of future applicable law and bring
no impact on the comparable annual financial statements.
Government subsidies:
Prior to the implementation of the “Accounting Standards for Business Enterprises No. 16 –
Government Subsidies” (revised), government subsidies included in the current profit and loss are
presented as non-operating income.
After the implementation of the “Accounting Standards for Business Enterprises No. 16 -
Government Subsidies” (revised), government subsidies related to assets offset the book value of
relevant assets. Government subsidies related to income are recognized as deferred income, which
are included in the current profit and loss in the period in which relevant cost or loss is recognized,
or offset the relative costs. Among the government subsidies related to daily activities of the
Company, the R&D-related subsidies and VAT refunds are included in other income. Government
subsidies not related to daily activities of the Company are included in non-operating income and
expenditure.
The Group adopts the future applicable method to account for the above changes in accounting
policies, and the change in accounting policies brings no impact on the comparable annual financial
statements.
Presentation of asset disposal income:
54
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Prior to the release of the Financial Accounting Document No. 30, the Group’s disposal profit and
loss recognized in the sales of non-current assets (other than financial instruments, long-term equity
investments and investment properties) or disposal groups (other than subsidiaries and industries)
classified as held for sale or disposal groups, and the disposal profit and loss arising from disposal of
fixed assets, construction in progress and intangible assets that are not classified as held for sale, are
presented in the “non-operating income” or “non-operating expenses” item. After the publish of
Financial Accounting Document No. 30, the disposal profit and loss arising from the sale of the
above assets are presented in the “Asset Disposal Income” item by the Group. For the
above-mentioned changes in the presentation items, the Group adopts the retrospective adjustment
method for accounting treatment and adjusts the comparative data of the previous year.
33 Correction of previous accounting errors
During the Reporting Period, there is no corrections in the previous accounting errors made by the
Company.
55
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
III Taxes
1 Value-added tax
According to the national tax regulations, the Company’s product sales revenue, taxable sales
service income and income from sales of intangible assets or property are identified as VAT income.
The income from main products is calculated at the rate of 17%, and the value-added tax is paid
based on the difference after deducting the allowable deduction of input tax in the current period.
According to the Notice of the Ministry of Finance and the State Taxation Administration on the
Pilot of Changing Business Tax to Value-Added Tax (CS [2016] No. 36) and related regulations
published by the Ministry of Finance and the State Taxation Administration, from May 1, 2016, the
business incomes such as leasing services, property management services, financial services,
consulting services, logistics services of the Company and its subsidiaries are subject to VAT, and
business tax is applied to these business before May 1, 2016.
In respect of the import goods of the Company, the amount of VAT payable is calculated based on
the composing taxable price and the tax rate stipulated in the “Provisional Regulations on Value
Added Tax of the People's Republic of China”, and collected by the customs. The goods directly
exported by the Company are all taxed according to the provisions of value-added tax first, and
then, subject to the tax refund approved by the tax authorities in charge of export tax rebate in
accordance with the prescribed tax rebate rate in the national export tax rebate plan.
The overseas subsidiaries of the Company pay the corresponding value-added tax according to the
local tax laws.
2 Urban maintenance and construction tax
Subject to the relevant tax laws and regulations of the state and local regulations, urban
maintenance and construction tax is paid based on the proportion stipulated by the state according
to the individual circumstances of each member of the Company.
3 Education surcharges
Education surcharges are paid according to the individual circumstances of each member of the
Company based on the proportion stipulated by the state in accordance with the relevant national
tax regulations and local regulations.
4 Dike protection fee
Dike protection fee is paid according to relevant national tax regulations and local regulations.
5 Property tax
Property tax is paid on the houses with property rights according to the proportion stipulated by the
state in accordance with the relevant national tax regulations and local regulations.
56
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
III Taxes (continued)
6 Corporate income tax
The Company calculates corporate income tax based on the taxable income in accordance with the
“Enterprise Income Tax Law of the People's Republic of China”. The situation of each member of
the Company varies and so do tax rates. Domestic enterprises under the Company pay corporate
income tax in accordance with the relevant provisions of the “Enterprise Income Tax Law of the
People's Republic of China”. All overseas subsidiaries of the Company (including subsidies in the
Hong Kong Special Administrative Region of the People's Republic of China) calculate and pay
taxes in accordance with the taxes and tax rates applicable according to local tax laws.
7 Personal income tax
Personal income tax of income paid to employees by the Company is withheld by the Company on
behalf of employees in accordance with to the relevant national tax regulations.
57
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements
1 Monetary Capital
30 June 2018 31 December 2017
In original Exchang In original Exchange
In RMB In RMB
currency e rate currency rate
Cash 5,354 4,759
Cash at bank－ 16,498,451 23,276,412
RMB 10,681,617 1.0000 10,681,617 15,800,948 1.0000 15,800,948
USD 737,021 6.6166 4,876,571 1,072,179 6.5342 7,005,832
HKD 812,804 0.8431 685,275 175,953 0.8358 147,062
EUR 14,791 7.6534 113,201 20,855 7.8035 162,742
RUB 137,902 0.1053 14,521 106,336 0.1135 12,069
Other currencies 127,266 147,759
Cash due from central bank 842,936 3,945,427
Other monetary capital－ 265,823 232,855
RMB 263,374 1.0000 263,374 229,302 1.0000 229,302
USD 370 6.6166 2,449 544 6.5342 3,553
Total 17,612,564 27,459,453
(1) Other Monetary Capital by Nature
30 June 2018 31 December 2017
Security deposits 263,037 219,320
L/C security deposits 2,569 3,280
Customs security deposits 217 10,255
265,823 232,855
58
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
1 Monetary Capital (Continued)
(2) Monetary Capital with Restricted Right of Use：
30 June 2018 31 December 2017
TCL Finance’s required reserve with central bank 842,936 3,945,429
Other monetary capital 265,823 232,855
1,108,759 4,178,284
As at 30 June 2018, among the Company’s cash at bank, RMB842,936,000 (31 December 2017: RMB3,945,429,000)
was required reserve deposited by subsidiary TCL Finance Co., Ltd. in the central bank.
As at 30 June 2018, the Company’s monetary capital abroad equaled RMB4,124,824,000 (31 December 2017:
RMB2,429,037,000), which were all owned by the Company’s overseas subsidiaries.
2 Financial Assets at Fair Value through Profit or Loss
30 June 2018 31 December 2017
Derivative financial assets 940,983 687,432
Wealth management instruments at fair value 769,332 1,543,844
1,710,315 2,231,276
The fair value of the Company’s derivative financial assets is their real-time quotes on the forex market, and the change
in fair value is the difference between the contractual price and the real-time quote on the forex market based on the
forward exchange rate on the balance sheet date.
There are no significant restrictions on the Company’s investment in and realization of financial assets at fair value
through profit or loss.
3 Notes Receivable
30 June 2018 31 December 2017
Bank acceptance notes 3,492,884 4,081,181
Commercial acceptance notes 1,895,190 2,089,168
Total 5,388,074 6,170,349
As at 30 June 2018, there were no notes receivable in pledge, commercial acceptance notes or bank acceptance notes that
had been discounted but were still outstanding, or notes receivable from any shareholder with a 5% or greater voting
stock. The notes receivable from related parties amounted to RMB2,319,000 (31 December 2017: RMB607,000).
59
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
4 Accounts Receivable
30 June 2018 31 December 2017
Accounts receivable 15,644,643 15,131,490
Less: Allowance for doubtful accounts 452,002 384,267
15,192,641 14,747,223
(1) Aging Analysis of Accounts Receivable：
30 June 2018 31 December 2017
Amount As % of Allowance Allowan Amount As % of Allowan Allowan
total for ce ratio total ce for ce ratio
accounts doubtful accounts doubtful
receivable accounts receivable accounts
Within 1 year 15,002,890 95.90% 50,615 0.34% 14,537,233 96.07% 46,177 0.32%
1-2 years 465,568 2.98% 235,611 50.61% 426,154 2.82% 178,727 41.94%
2-3 years 71,551 0.46% 64,975 90.81% 65,432 0.43% 59,214 90.50%
Over 3 years 104,634 0.66% 100,801 96.34% 102,671 0.68% 100,149 97.54%
15,644,643 100.00% 452,002 2.89% 15,131,490 100.00% 384,267 2.54%
(2) Accounts Receivable by Category：
30 June 2018 31 December 2017
Amount As % of Allowance Allowan Amount As % Allowance Allowan
total for ce ratio of for doubtful ce ratio
accounts doubtful total accounts
receivable accounts accou
nts
receiv
able
Accounts receivable with
81.87
amounts that are individually 12,340,863 78.88% 295,835 2.40% 12,388,084 294,573 2.38%
%
significant
Accounts receivable with
amounts that are not
individually significant but - - - - - - - -
carry a major risk on the
credit risk grouping basis
Other insignificant accounts 18.13
3,303,780 21.12% 156,167 4.73% 2,743,406 89,694 3.27%
receivable %
100.00
15,644,643 100.00% 452,002 2.89% 15,131,490 % 384,267 2.54%
An account receivable that is individually significant refers to an account receivable with an individual amount
60
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
equal to over US$500,000 (inclusive).
61
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
4 Accounts Receivable (Continued)
(3) Allowance for Doubtful Accounts Receivable:
H1 2018 Year 2017
Beginning amount 384,267 314,436
Newly consolidated subsidiaries - -
Established in the period 124,916 180,199
Reversed in the period (29,439) (81,988)
Written off in the period (14,527) (16,002)
Newly deconsolidated subsidiaries (10,268) (3,184)
Exchange adjustments (2,947) (9,194)
Ending amount 452,002 384,267
(4) As at 30 June 2018, accounts receivable from related parties amounted to RMB841,077,000 (31 December 2017:
RMB748,024,000), accounting for 5.38% of the total accounts receivable (31 December 2017: 4.94%). For further
information, see Note VII. And there were no accounts receivable from any shareholder with a 5% or greater
voting stock.
(5) Top Five Accounts Receivable on 30 June 2018：
30 June 2018 31 December 2017
Top five accounts receivable combined 3,024,695 2,102,125
As % of total accounts receivable 19.33% 13.89%
5 Factored Accounts Receivable/Factorage Financings
As at 30 June 2018, RMB12,943,000 of accounts receivable (31 December 2017: RMB46,449,000) were factored
in the current period according to the agreements signed between the Company’s subsidiaries and banks.
According to the agreements, because the Company’s subsidiaries retained partial risk in connection with the
factored accounts receivable (the risk of customers’ non-payment or untimely payment), the Company reflected
the factored accounts receivable and the bank borrowings obtained therefrom in the balance sheet.
62
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
6 Prepayments
(1) Analysis of Prepayments：
30 June 2018 31 December 2017
Within 1 year 1,093,650 910,215
(2) Top Five Prepayments on 30 June 2018：
30 June 2018 31 December 2017
Top five prepayments combined 673,257 442,136
As % of total prepayments 61.56% 48.57%
(3) As at 30 June 2018, prepayments to related parties amounted to RMB74,151,000 (31 December 2017:
RMB29,421,000), accounting for 6.78% of the total prepayments (31 December 2017: 3.23%). And there were
no prepayments to any shareholder with a 5% or greater voting stock.
7 Interest Receivable
30 June 2018 31 December 2017
Interest on bank deposits 65,159 53,622
As at 30 June 2018, interest receivable related parties amounted to RMB3,719,000 (31 December 2017:
RMB2,488,000), accounting for 5.71% of the total interest receivable (31 December 2017: 4.64%). And there
was no interest receivable from any shareholder with a 5% or greater voting stock.
8 Dividends Receivable
30 June 2018 31 December 2017
Tianjin 712 Communication & Broadcasting
4,417 -
Co., Ltd.
DK Electronic Materials, Inc. 1,996 -
Xinjiang Dongpeng Weichuang Equity
1,404 11,015
Investment Partnership (Limited Partnership)
Taiyang Electro-optic (Huizhou) Co., Ltd. 1,163 -
Shenzhen Refond Optoelectronics Co., Ltd. 385 -
SEMP TCL Industria E Comercio De
89 88
Eletroeletronicos S.A.
9,454 11,103
63
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
9 Other Receivables
30 June 2018 31 December 2017
Other receivables 4,742,214 4,290,709
Less: Allowance for doubtful other
receivables 448,894 437,118
4,293,320 3,853,591
(1) Aging Analysis of Other Receivables：
30 June 2018 31 December 2017
Amount As % of Allowanc Allowanc Amount As % of Allowan Allowan
total e for e ratio total ce for ce ratio
other doubtful other doubtful
receivabl accounts receivabl accounts
es es
Within 1 4,051,00 3,557,91
year 3 85.42% 22,524 0.56% 3 82.92% 21,429 0.60%
1-2 years 294,417 6.21% 106,339 36.12% 238,773 5.56% 96,045 40.22%
2-3 years 185,410 3.91% 132,893 71.68% 329,263 7.67% 193,656 58.81%
Over 3
years 211,384 4.46% 187,138 88.53% 164,760 3.85% 125,988 76.47%
4,742,21 4,290,70
4 100.00% 448,894 9.47% 9 100.00% 437,118 10.19%
(2) Other Receivables by Category：
30 June 2018 31 December 2017
Amount As % of Allowan Allow Amount As % of Allowan Allowan
total ce for ance total ce for ce ratio
other doubtful ratio other doubtful
receivabl accounts receivabl accounts
es es
Other
receivables with
amounts that are 3,348,755 70.62% 401,302 11.98% 3,378,755 78.75% 404,322 11.97%
individually
significant
Other
receivables with
amounts that are
not individually
- - - - - - - -
significant but
carry a major
risk on the
credit risk
64
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
grouping basis
Other
insignificant
1,393,459 29.38% 47,592 3.42% 911,954 21.25% 32,796 3.60%
other
receivables
4,742,214 100.00% 448,894 9.47% 4,290,709 100.00% 437,118 10.19%
The balance of the Company’s other receivables primarily consisted of export tax rebates receivable,
government subsidies receivable, security deposits in external entities, etc.
65
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
9 Other Receivables (Continued)
(3) Allowance for Doubtful Other Receivables：
H1 2018 Year 2017
Beginning amount 437,118 369,119
Established in the period 15,589 86,473
Reversed in the period (1,115) (763)
Written off in the period (1,715) (1,818)
Newly deconsolidated subsidiaries (572) (14,439)
Exchange adjustments (411) (1,454)
Ending amount 448,894 437,118
(4) As at 30 June 2018, other receivables from related parties amounted to RMB727,288,000 (31 December 2017:
RMB350,617,000), accounting for 15.34% of the total other receivables (31 December 2017: 8.17%). For
further information, see Note VII. And there were no other receivables from any shareholder with a 5% or
greater voting stock.
(5) Top Five Other Receivables on 30 June 2018：
30 June 2018 31 December 2017
Top five other receivables combined 1,409,351 1,546,652
As % of total other receivables 29.72% 36.05%
(6) As at 30 June 2018, there were no transfers of other receivables not meeting the derecognition conditions,
securitization on other receivables, or financial instruments that backed securities and did not meet the
derecognition conditions.
66
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
10 Inventories
(1) Inventories by Category：
30 June 2018 31 December 2017
Gross Valuation Carrying Gross amount Valuation Carrying
amount allowance amount allowance amount
Raw materials 2,788,679 372,595 2,416,084 2,995,068 403,182 2,591,886
Unfinished goods 920,394 177,815 742,579 939,613 48,590 891,023
Finished goods 8,567,532 242,282 8,325,250 9,254,989 254,119 9,000,870
Revolving
materials 261,493 818 260,675 320,350 818 319,532
Moulds 128,884 116 128,768 120,395 116 120,279
Real estate
development costs 28,673 - 28,673 22,713 - 22,713
12,695,655 793,626 11,902,029 13,653,128 706,825 12,946,303
As at 30 June 2018, there were no inventories used as security for debt.
(2) Inventory Valuation Allowances：
Revers Newly
Establish ed in Written off deconsol Exchange
1 January the 30 June
ed in the in the idated adjustment
2018 period 2018
period period subsidiar s
ies
Raw
materials 403,182 162,535 (42,116) (139,953) (10,913) (140) 372,595
Unfinished
goods 48,590 143,040 (2,719) (10,816) (280) - 177,815
Finished
goods 254,119 261,398 (52,708) (195,502) (25,481) 456 242,282
Revolving
materials 818 - - - - - 818
Moulds 116 - - - - - 116
706,825 566,973 (97,543) (346,271) (36,674) 316 793,626
67
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
11 Other Current Assets
30 June 2018 31 December 2017
Wealth management instruments (note 1) 13,659,938 4,710,164
VAT to be deducted or approved, etc. 3,083,570 2,075,997
Assets and creditor’s rights purchased from non-financial
institutions (note 2) 1,582,570 3,216,620
Currency swaps 1,323,320 1,633,550
Other 74,791 29,992
19,724,189 11,666,323
Note 1: In order for better utilization, the Company purchased low-risk wealth management products with its
own idle funds. For further information, see the Announcement of TCL Corporation on the Line Adjustment
for Wealth Management Product Investment with Self-Owned Idle Funds disclosed by the Company on the
designated information disclosure media dated 28 March 2017.
Note 2: Mostly notes discounting, held-to-maturity investments due within 1 year such as personal short-term
loans.
12 Loans and Advances to Customers
30 June 2018 31 December 2017
Loans and advances to customers (note 1) 848,778 555,133
Note 1: Loans and advances to customers were loans granted to their customers by subsidiaries Guangzhou
TCL Internet Microcredit Co., Ltd. and Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd.
13 Available-for-Sale Financial Assets
30 June 2018 31 December 2017
Available-for-sale equity instruments——at fair value (1) 1,004,975 1,159,166
Available-for-sale equity instruments——at cost (2) 2,214,715 2,042,889
3,219,690 3,202,055
68
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
13 Available-for-Sale Financial Assets (Continued)
(1) Available-for-Sale Equity Instruments——at Fair Value
Change in fair Impairment Ending
Cost value allowance amount
Tencent Holdings Limited 0700 85,481 (2,478) - 83,003
New China Life Insurance Company Ltd.
1336 29,448 (10,358) - 19,090
GAC Group 2238 11,144 (7,033) - 4,111
China Construction Bank 0939 17,835 (2,187) - 15,648
CSPC 1093 4,105 1,889 - 5,994
China Molybdenum Co., Ltd. 3993 15,307 (2,485) - 12,822
AAC Technologies 2018 30,992 (7,794) - 23,198
China Education Group 0839 8,247 (2,249) - 5,998
Sino Biopharmaceutical Limited 1177 57,550 3,356 - 60,906
HKEX 0388 99,261 (11,713) - 87,548
NASDAQ-Gilead Sciences Inc. 31,479 (5,232) - 26,247
(GILD.NASD)
Ping An Insurance (Group) Company of
China, Ltd. 2318 69,258 (10,212) - 59,046
Health and Happiness (H&H)
International Holdings Limited 1112 20,167 (1,170) - 18,997
Geely Automobile Holdings Limited
0175 27,806 (2,070) - 25,736
Yuhua Education 6169 14,361 (718) - 13,643
Alibaba Group Holding (NYSE-BABA) 68,857 (7,479) - 61,378
Thunder Software Technology CO LTD 3,438 58,437 - 61,875
Beijing D.Phone Trade&Commerce
Stock Co., Ltd. 18,692 (597) 9,291 8,804
Shenzhen Wintone Culture Co., Ltd. 4,800 - - 4,800
Shenzhen Refond Optoelectronics Co.,
Ltd. 40,000 13,962 - 53,962
SKYS 18,021 (4,325) 11,422 2,274
Restricted stock of Petro-king Oilfield
Technology Ltd. (HK.2178) 115,259 2,319 74,803 42,775
Focaltech Inc.(3545.TW) 5,898 17,324 - 23,222
O Luxe Holdings Limited 199,456 84,442 - 283,898
996,862 103,629 95,516 1,004,975
69
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
13 Available-for-Sale Financial Assets (Continued)
(2) Available-for-Sale Equity Instruments——at Cost
The Company’s Actual investment
interest
31 December
Investee Direct Indirect 30 June 2018
2017
Samsung Suzhou LCD Co., Ltd. 10.00% - 625,949 625,949
Boluo County Rural Commercial Bank 6.05% - 203,669 203,669
Guokai Siyuan (Beijing) Investment Fund Co., Ltd. 3.95% - 200,000 200,000
Mango International Group Limited - 2.31% 189,199 32,493
China Broadband Capital Partners III LP. - 8.90% 170,425 145,391
Changjiang Chendao (Hubei) New Energy Industry
- 4.76% 150,000 150,000
Investment Partnership (Limited Partnership)
Sierra Ventures X ,LP - 15.13% 118,000 109,763
Kateeva,lnc - 1.77% 52,273 51,820
Beijing Shangyun Chuangzhan Investment Center 10.00% - 50,000 50,000
(Limited Partnership)
Kunshan Wantong Kaiyuan Equity Investment Center 5.00% - 50,000 50,000
(Limited Partnership)
Sierra Ventures XI ,LP - 8.78% 41,891 36,607
Sensetime Group lnc - 0.34% 33,197 33,197
Cannan Partners - 11.63% 33,120 30,539
Huzhou Zhongze Jiameng Equity Investment
- 8.33% 28,833 28,833
Partnership (Limited Partnership)
DK Electronic Materials, Inc. - 13.31% 24,303 24,303
Rechi Precision Mechanism (Huizhou) Co., Ltd. - 7.14% 21,753 21,753
Amiti Fund II LP - 12.68% 20,783 20,046
Palm Venture Group - 30.00% 19,849 19,919
Najing Technology Co., Ltd. - 2.65% 18,825 18,825
Shanghai Guanmu Investment Management Partnership
- 17.20% 17,500 17,500
(Limited Partnership)
Innoviz Technologies Ltd - 0.70% 13,359 13,359
Wonder Workshop.Inc - 1.90% 13,279 13,279
Hailo Technologies Ltd - 6.50% 12,659 -
Guangdong Poly OptoElectronics Co., Ltd. - 8.00% 12,000 12,000
Guiyang Dongshi Cloud Technology Co., Ltd. - 7.46% 11,000 11,000
Beijing Youpinyuedong Trade Co., Ltd. - 2.00% 10,000 10,000
Chipone Technology (Beijing) Co., Ltd. - 10.00% 10,000 -
Shanlian Information Technology Engineering Center 19.23% - 10,000 10,000
Co., Ltd.
Zhongdao Optoelectronic Equipment Co., Ltd. - 2.58% 9,738 9,738
Moblabs,INC - 2.43% 6,616 -
Beijing Taimei Huigu Culture Media Co., Ltd. - 10.00% 6,000 6,000
Shenzhen Zhongcailian Technology Co., Ltd. - 11.50% 6,000 1,153
National Source Coding Center (Beijing) 7.52% - 5,000 5,000
70
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
13 Available-for-Sale Financial Assets (Continued)
(2) Available-for-Sale Equity Instruments——at Cost
The Company’s interest Actual investment
31 December
Investee Direct Indirect 30 June 2018 2017
Suzhou Enhanry Advanced Material Co., Ltd. - 0.34% 4,800 -
Foshan Chuangshanghui E-Commerce Co., Ltd. - 6.76% 3,654 3,654
Shanghai Digital TV National Engineering Research
Center Co., Ltd. - 4.26% 2,400 2,400
Huizhou Kaifengda Intelligent Manufacturing
Technology Development Co., Ltd. - 10.00% 2,000 2,000
West Eagle Vent - 33.33% 1,979 1,962
Guizhou UbiLink Information Technology Co., Ltd. - 3.46% 1,500 1,500
Shenzhen Digital TV National Engineering Research
Center Co., Ltd. - 6.00% 1,153 6,000
Beijing Shixunsuda Information Technology Co., Ltd. - 7.50% 1,000 -
Henan Melody Huana Electronics Co., Ltd. - 5.00% 500 573
Screlec S.A. - 4.26% 234 234
Jiangxi Guangke E-Commerce Co., Ltd. - 10.00% 150 150
Huizhou TCL Magnet Products Co., Ltd. 5.00% - 76 76
Shenzhen Adot Network Co., Ltd. - 1.66% 33 33
Hangzhou UATA Technology Co., Ltd. - 1.60% 16 316
Beijing Ruichuang Investment Management Center
(Limited Partnership) - 10.00% - 10,000
Aurora Mobile Ltd - 2.54% - 51,855
2,214,715 2,042,889
71
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
14 Long-Term Equity Investments
30 June 2018 31 December 2017
Impairm
ent Impairme
Gross allowan Carrying Gross nt Carrying
amount ce amount amount allowance amount
Unconsolidated subsidiaries (1) 20,373 786 19,587 20,373 20,373 -
Long-term equity investments
measured at equity method 16,296,900 138,796 16,158,104 15,471,223 119,209 15,352,014
Including: Associates (2) 15,623,804 138,796 15,521,357 14,806,411 102,447 14,703,964
Joint ventures (3) 673,096 - 656,334 664,812 16,762 648,050
16,317,273 139,582 16,177,691 15,491,596 139,582 15,352,014
As at 30 June 2018, the Company established impairment allowances for its long-term investments in insolvent
investees. Other than that, there were no significant restrictions on sale of the long-term equity investments or
collection of the investment income.
72
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(1) Unconsolidated Subsidiaries
Profit/loss adjustment
Investee The Company’s
Impairment allowance
percentage in
investee’s Change in Accumulated Increase in current Accumulated
registered capital Initial investment profit/loss in change in period increase
amount current period profit/loss 30 June 2018
a b c d=a+b+c
Jinke Holding Group Co., Ltd. 75.50% 20,373 - - - - 20,373
73
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(2) Associates
Change in current period
Investee Increase/de Adjustmen
Share of Other
crease in ts of other Other Impairme
Beginning profit/loss Cash dividends or increases
investment comprehen change nt
amount using equity profits declared /decrease
in current sive in equity allowance 30 June
method s
period income 2018
Bank of Shanghai Co., Ltd. 7,630,711 - 467,562 3,171 - - - - 8,101,444
Hubei Consumer Finance Company 120,343 - 5,836 - - - - - 126,179
Huan Tech Co., Ltd. 158,042 - 561 - - - - - 158,603
LG Innotek Huizhou Co., Ltd. 81,554 - 3,402 - - (10,135) - 2,037 76,858
Huizhou Shangdian Law Firm Waterway 48,081 - (223) - - (47,858) -
- -
Construction Investment Co., Ltd.
Canyon Circuit Technology (Huizhou) Co., Ltd. - 16,103 2,068 - - - - - 18,171
Tianjin 712 Communication & Broadcasting Co., 637,000 - 6,936 - - 25,751 669,687
- -
Ltd.
Shenzhen Qianhai Qihang Supply Chain 53,012 - 4,393 - - - 57,405
- -
Management Co., Ltd.
Ningbo Meishan Bonded Port Renxing Culture 8,001 (3,091) - - - - 4,910
- -
Investment Center (Limited Partnership)
TCL Rechi (Huizhou) Refrigeration Equipment Co., 165,465 - 8,524 - (3,333) - 170,656
- -
Ltd.
Wuhan Shangde Plastics Technology Co., Ltd. 5,683 - 464 - - - - - 6,147
Gaoshengda Holdings (Huizhou) Co., Ltd. 49,733 - 7,713 - - - - - 57,446
Beijing WeMed Medical Equipment Co., Ltd. 39,435 - (2,647) - - - - - 36,788
Million China International Holdings Limited 19,410 - (12) - - - - 5 19,403
Shenzhen Changcheng Commercial Technology 1,200 - 1,595 - - - 2,795
- -
Property Service Co., Ltd.
Amlogic (Shanghai) Limited 146,739 - 10,794 - - - - 2,853 160,386
74
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(2) Associates (Continued)
Change in current period
Investee Increase/decre Adjustments
Share of Other Cash dividends Impairmen Other
Beginning ase in of other
profit/loss using change in or profits t increases/de
amount investment in comprehensiv 30 June
equity method equity declared allowance creases
current period e income 2018
SEMP TCL Industria E Comercio De 229,558 - (5,971) - - 223,587
- - -
Eletroeletronicos S.A.
Kai Os Technologies Inc 2,023 - - - - - - - 2,023
Naturedao Information Science and Technology, 2,628 - 4 - (336) 2,296
- - -
Ltd.
T2Mobile Limited 20,258 - 1,149 - - - - (1,107) 20,300
Harvey Holdings Limited 19,689 - (1,662) - - - - 1,282 19,309
Petro AP (Hong Kong) Company Limited - - (4,597) - - - - 4,597 -
Petro AP S.A. - - (174) - - - - 174 -
Guangdong Regency Optics-Electron Corp. 21,082 - 850 - - - - - 21,932
Shenzhen Jucai Supply Chain Technology Co., 6,000 - (541) - - - - - 5,459
Ltd.
Shenzhen Thunderbird Network Technology Co. 247,685 30,000 11,771 - - - - - 289,456
Jiangxi Broadcasting TV Network E-Commerce 1,470 - (25) - (4) 1,441
- - -
Co., Ltd.
Yizheng Zeyu Electric Light Co., Ltd. 2,537 - 5 - - - - - 2,542
Urumqi TCL Equity Investment Management Co., 1,278 - (105) - - - 1,173
- -
Ltd.
Wuxi TCL Venture Capital Partnership (Limited 53,651 - 516 - (224) 53,627
(316) - -
Partnership)
Yixing Jiangnan Tianyuan Venture Capital 62,471 (12,746) 15,889 (15,013) 11 29,539
(21,073) - -
Company (Limited Partnership)
Beijing A Dynamic Investment Consulting Co., 517 - 125 - - 642
- - -
Ltd.
Shanghai Gen Auspicious Investment 288 - (191) - - - 97
- -
Management Co., Ltd.
75
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Shanghai Gen Auspicious Investment 30,398 - (367) - - 30,031
- - -
Management Co., Ltd.
Shanghai Chuangxiang Venture Capital 35,573 - 1,160 - - 34,113
(2,620) - -
Partnership (Limited Partnership)
76
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(2) Associates (Continued)
Change in current period
Investee Increase/decre Share of Adjustments
Other Cash dividends Impairmen Other
Beginning ase in profit/loss of other
change in or profits t increases/de
amount investment in using equity comprehensiv 30 June
equity declared allowance creases
current period method e income 2018
Nanjing A Dynamic Equity Investment Fund 335 - (1) - - - 334
- -
Management Co., Ltd.
Urumqi TCL Create Dynamic Equity Investment 781 - (15) - - 766
- - -
Management Co., Ltd.
Nanjing Zijin Chuangdong Investment Partnership 43,022 - (7) - - 43,024
9 - -
(Limited Partnership)
Huizhou Kaichuang Venture Investment 27,648 - 1 - - 27,649
- - -
Partnership (Limited Partnership)
Shenzhen Chuangdong New Industry Investment 16,810 - 6 - - 16,816
- - -
Fund Enterprise (Limited Partnership)
Xizang Rongxin Venture Investment Management 4,871 - (2) - - 4,869
- - -
Co., Ltd.
Xizang Rongxing Venture Investment Partnership 961 - - - - 961
- - -
(Limited Partnership)
Wuxi TCL Aisikai Semiconductor Industry
Investment Fund Partnership (Limited 64,926 10,292 (558) - - - - - 74,660
Partnership)
Urumqi Qixinda Equity Investment Management 734 - (2) - - 732
- - -
Co., Ltd.
Xizang Dongwei Investment Management Center 238 - (5) - - 233
- - -
(Limited Partnership)
Hubei Changjiang Hezhi Equity Investment Fund 4,257 - (100) - - 4,157
- - -
Management Co., Ltd.
Hubei Changjiang Hezhi Equity Investment Fund 1,051,495 - 7,249 - - - 1,058,744
- -
Partnership (Limited Partnership)
Xinjiang Dongpeng Heli Equity Investment 77,478 45,000 (2,954) - - 119,524
- - -
Partnership (Limited Partnership)
Xinjiang Dongpeng Weichuang Equity Investment 783,751 - (10,327) - - 789,161
15,737 - -
Partnership (Limited Partnership)
TCL Nanyang Electric Appliance (Guangzhou) 5,077 - (203) - - 4,874
- - -
Co., Ltd.
Fantasia Holdings Group Co., Limited 2,125,346 20,651 - - (65,972) - - 2,080,025
77
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(2) Associates (Continued)
Change in current period
Investee Increase/decre Share of Adjustments
Other Cash dividends Impairmen Other
Beginning ase in profit/loss of other
change in or profits t increases/de
amount investment in using equity comprehensi 30 June
equity declared allowance creases
current period method ve income 2018
Active Industries International Limited 13,943 - 726 - - - - - 14,669
China Merchants Real Estate (Pingshan, 271,985 - 67,460 - - 339,445
- - -
Shenzhen) Co., Ltd.
Huizhou Kaimeng Angel Investment Partnership 2,878 - (11) - - 2,867
- - -
(Limited Partnership)
Shenzhen Jiutian Matrix Investment Management 640 - (162) - - 478
- - -
Co., Ltd.
AGC New Electronic Display Glass (Shenzhen) 16,839 170,874 (3,573) - - 184,140
- - -
Co., Ltd.
Taiyang Electro-optic (Huizhou) Co., Ltd. 12,921 - 1,229 - - (1,163) - - 12,987
Deqing Puhua Equity Investment Fund 209,981 - - - - 209,981
- - -
Partnership (Limited Partnership)
Ningbo Meishan Bonded Port Qiyu Investment 70,000 - - - 70,000
- - - -
Management Partnership (Limited Partnership)
Huizhou TCL Resource Investment Co., Ltd. 65,532 - (9,716) - - - - - 55,816
Total
14,703,964 326,432 604,488 (5,092) - (95,616) - (12,819) 15,521,357
78
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(3) Joint Ventures
Change in current period
Increase/decre Adjustments Impairm
Share of Other Cash dividends Other
Beginnin ase in of other ent
Investee
g amount investment in
profit/loss using
comprehensiv
change in or profits
allowanc
increases/dec 30 June 2018
equity method equity declared reases
current period e income e
TCL Sun, Inc. 11,945 - 519 - - - - (1,035) 11,429
TV University Online Distance Education
Technology Co., Ltd. 135,341 - 12,873 - - - - (1,420) 146,794
CJ Speedex Logistics Co., Ltd. 468,286 - (2,258) - - - - - 466,028
Shanxi TCL Huirong Venture Investment
Co., Ltd. 5,774 - 350 - - - - - 6,124
Shanxi TCL Huirong Venture Investment
Management Co., Ltd. 503 - 1 - - - - - 504
TCL Huizhou City, Kai Enterprise
Management Limited 1,147 - 29 - - - - - 1,176
TCL-IMAX Entertainment Co., Limited (3) - 3 - - - - - -
TCL Zhiyi Technology (Huizhou) Co.,
Ltd. 2,467 - (72) - - - - - 2,395
Huizhou TCL Taidong Shihua Investment
Co., Ltd. 22,590 - (706) - - - - - 21,884
648,050 - 10,739 - - - - (2,455) 656,334
79
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
14 Long-Term Equity Investments (Continued)
(4) Impairment Allowances for Long-Term Equity Investments
Incre
ase in
curre Reaso
nt Decrease n for
1 January perio in current 30 June allow
2018 d period 2018 ance
Note
Pride Telecom Limited 1,624 - - 1,624 1
Naturedao Information Science and Note
Technology, Ltd. 2,221 - - 2,221 2
Note
Jinke Holding Group Co., Ltd. 20,373 - - 20,373 3
Note
China United Magnesium Co.,Ltd. 97,387 - - 97,387 1
Note
Wealthy Way Group Limited 1,215 - - 1,215 2
TCL-IMAX Entertainment Co., Note
16,762 - - 16,762
Limited 2
139,582 - - 139,582
Note Impairment allowances were established for the long-term investments in these investees at the recoverable
1 amounts because continuous operating loss occurred to these investees with poor management.
Note Impairment allowances were established for the long-term investments in Naturedao Information Science and
2 Technology, Ltd., Wealthy Way Group Limited and TCL-IMAX Entertainment Co., Limited at the recoverable
amounts because continuous operating loss occurred to these investees with poor management.
Note According to the equity transfer agreement with Gardex Enterprises Ltd., the Company transferred its equity
3 interests in Jinke Holding Group Co. and its subsidiaries (together, “Jinke Group”) in April 2004. Upon the
signing of the agreement, the Company no longer had control over Jinke Group’s operation and finance, so it
deconsolidated Jinke Group from April 2004. However, as Gardex Enterprises Ltd. has not yet paid in full
according to the payment schedule in the agreement, the equity transfer formalities are still pending. As such,
the Company established a full-amount impairment allowance for its long-term investment in Jinke Group.
80
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
15 Investment Property
Buildings Land use rights Total
Gross amount:
1 January 2018 2,056,279 25,805 2,082,084
Increases:
Increase in current period 155,056 - 155,056
Reclassified from fixed assets
and intangible assets 274,519 716,592 991,111
Reclassified from construction
in progress 490,728 - 490,728
Decreases:
Decrease in current period (220,413) (9,947) (230,360)
Newly deconsolidated
subsidiaries - - -
Reclassified to fixed assets and
intangible assets (152,425) (563,403) (715,828)
Exchange adjustments 5,679 46 5,725
30 June 2018 2,609,423 169,093 2,778,516
Accumulated depreciation and
amortization:
1 January 2018 1,215,651 6,543 1,222,194
Increases:
Increase in current period 3,752 5,414 9,166
Reclassified from fixed assets
and intangible assets 13,721 2,654 16,375
Decreases:
Decrease in current period - - -
Newly deconsolidated
subsidiaries (13,546) - (13,546)
Reclassified to fixed assets and
intangible assets (6,856) (3,131) (9,987)
Exchange adjustments 726 18 744
30 June 2018 1,213,448 11,498 1,224,946
Investment property, net:
30 June 2018 1,395,975 157,595 1,553,570
1 January 2018 840,628 19,262 859,890
81
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
16 Fixed Assets
Office
and
Decoration Machinery electronic
of fixed and equipmen Motor
Buildings assets equipment t vehicles Total
Gross amount:
1 January 2018 12,333,627 372,125 41,201,902 1,561,753 104,551 55,573,958
Increases:
Newly consolidated
subsidiaries - - - 2 463 465
Purchased 260,643 13,848 266,816 70,458 6,362 618,127
Reclassified from
investment property 152,425 - - - - 152,425
Reclassified from
construction in progress 226,138 7,929 478,482 30,243 - 742,792
Decreases:
Written down with
government subsidies - - (11,342) (6) - (11,348)
Newly deconsolidated
subsidiaries (801) (4,114) (684,428) (32,125) (1,138) (722,606)
Sold or retired (480,016) (35,030) (140,544) (51,801) (6,997) (714,388)
Reclassified to
investment property (537,032) (38,249) - - - (575,281)
Exchange adjustments 10,646 14,592 (221,380) 166,227 7,093 (22,822)
30 June 2018 11,965,630 331,101 40,889,506 1,744,751 110,334 55,041,322
Accumulated
depreciation:
1 January 2018 2,110,019 282,293 18,948,357 957,236 65,313 22,363,218
Increases:
Newly consolidated
subsidiaries - - - - - -
Depreciation
established 283,215 25,932 3,006,967 124,753 7,766 3,448,633
Reclassified from
investment property 6,856 - - - - 6,856
Decreases:
Written down with
government subsidies (17,762) - (408,912) (65) - (426,739)
Newly deconsolidated
subsidiaries (3) (2,499) (163,517) (23,344) (1,022) (190,385)
Sold or retired (102,753) (30,028) (173,403) (35,041) (6,604) (347,829)
Reclassified to
investment property (13,721) - - - - (13,721)
Exchange adjustments 3,594 5,856 (112,423) 94,708 (759) (9,024)
30 June 2018 2,269,445 281,554 21,097,069 1,118,247 64,694 24,831,009
Fixed assets, net:
30 June 2018 9,696,185 49,547 19,792,437 626,504 45,640 30,210,313
1 January 2018 10,223,608 89,832 22,253,545 604,517 39,238 33,210,740
82
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
16 Fixed Assets (Continued)
Impairment allowances:
1 January 2018 1,141 994 608,117 2,426 83 612,761
Established in current
period - - 47,065 - - 47,065
Newly deconsolidated
subsidiaries - - (335,944) (208) - (336,152)
Written off in current
period - - (16) - - (16)
Exchange adjustments 7 - (36,623) (575) - (37,191)
30 June 2018 1,148 994 282,599 1,643 83 286,467
Fixed assets, net:
30 June 2018 9,695,037 48,553 19,509,838 624,861 45,557 29,923,846
1 January 2018 10,222,467 88,838 21,645,428 602,091 39,155 32,597,979
For the collateralized fixed assets, see Note V, item 39. As at 30 June 2018, the carrying amount of the temporarily
idle fixed assets was RMB8,763,000, and the gross amount of the fixed assets that were sufficiently depreciated
and still in use was RMB84,054,000.
Fixed assets with pending ownership certificates at the end of the current period：
Accumulate Expected time of
Impairmen Carrying
Gross amount d obtaining ownership
t allowance amount
depreciation certificate
Buildings (note) 2,784,541 238,696 - 2,545,845 Within 2018
Note: As at 30 June 2018, the fixed assets with pending ownership certificates were mostly the buildings of CSOT’s
T2 and T3 manufacturing bases and the Hefei manufacturing base that had been completed and put into use.
83
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
17 Construction in Progress
Reclassified
Reclassified to investment Investment
Increase in to fixed assets property in as % of
1 January current in current current budget
Project Budget 2018 period period period Other decreases 30 June 2018 Funding source
Self-owned capital
G11 LCD panel 46,500,000 3,293,073 3,067,227 - - - 6,360,300 14% and borrowings
t3 production line of LCD Self-owned capital
panel 14,500,000 9,066,479 3,342,461 (218,190) - (9,263) 12,181,487 84% and borrowings
Yunsheng Technology Park Self-owned capital
in Guangzhou Science City 1,200,000 223,909 300,287 - - - 524,196 44% and borrowings
Self-owned capital
Xili project 583,460 316,650 176,000 - (490,728) - 1,922 100% and borrowings
T2 production line of LCD Self-owned capital
panel 22,400,000 368,399 726,391 (3,686) - - 1,091,104 99% and borrowings
Huizhou modular Self-owned capital
integration project 17,550,000 591,969 1,317,687 - - (146,350) 1,763,306 10% and borrowings
Huizhou whole-widget Self-owned capital
integration project 24,650,000 - 185,026 - - - 185,026 1% and borrowings
Not Not
Other applicable 914,758 434,209 (520,916) - (9,310) 818,741 applicable
14,775,237 9,549,288 (742,792) (490,728) (164,923) 22,926,082
84
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
18 Intangible Assets
Non-patented
Land use Trademark
technologies Other Total
rights use rights
/patents
Gross amount：
1 January 2018 4,705,551 1,982,225 330,599 1,181,100 8,199,475
Increases:
Newly consolidated subsidiaries - - - - -
Purchased 227,843 16,209 - 69,834 313,886
Reclassified from investment
property 563,403 - - - 563,403
Reclassified from construction in
progress 75,319 - - 10,641 85,960
Reclassified from R&D expense - 220,961 - 1,310 222,271
Decreases:
Sold or disposed - (5) - (8,857) (8,862)
Reclassified to investment
property (433,800) - - 17,970 (415,830)
Newly deconsolidated
subsidiaries - (1,486) - (23,753) (25,239)
Exchange adjustments 483 14,612 3,908 (50,664) (31,661)
30 June 2018 5,138,799 2,232,516 334,507 1,197,581 8,903,403
Accumulated amortization：
1 January 2018 367,288 657,024 131,693 625,295 1,781,300
Increases:
Amortization established 86,176 105,943 9,783 66,155 268,057
Reclassified from investment
property 3,131 - - - 3,131
Decreases:
Sold or disposed (1,156) - - (1,160) (2,316)
Reclassified to investment
property (2,654) - - - (2,654)
Newly deconsolidated
subsidiaries - (1,450) - (9,837) (11,287)
Written down with government
subsidies (3,418) - - - (3,418)
Exchange adjustments 261 14,192 2,414 (41,621) (24,754)
30 June 2018 449,628 775,709 143,890 638,832 2,008,059
Intangible assets, net：
30 June 2018 4,689,171 1,456,807 190,617 558,749 6,895,344
1 January 2018 4,338,263 1,325,201 198,906 555,805 6,418,175
Impairment allowances：
1 January 2018 - 11,388 - 34,276 45,664
Exchange adjustments - - - (8,912) (8,912)
30 June 2018 - 11,388 - 25,364 36,752
Intangible assets, net：
30 June 2018 4,689,171 1,445,419 190,617 533,385 6,858,592
1 January 2018 4,338,263 1,313,813 198,906 521,529 6,372,511
For the collateralized intangible assets, see Note IV, item 39.
85
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
19 R&D Expense
The Group’s R&D expense is listed as follows：
30 June 2018 31 December 2017
Mobile phones 297,394 297,394
LCD panels 635,102 526,840
Other 60,244 48,570
992,740 872,804
20 Goodwill
Investee Reason Initial amount 30 June 2018 31 December 2017
Note
TCL (Vietnam) Corporation Ltd. 1 1,947 778 778
TCL Mobile Communication (HK)
Company Limited 310 124 124
Note
TCL Electronics Holdings Limited 2 11,419 4,567 4,567
TCL Electronics Holdings Limited Note
3 (5,409) (2,705) (2,705)
TCL Electronics Holdings Limited Note
4 39,130 19,565 19,565
TCL Electronics Holdings Limited Note
5 28,017 15,409 15,409
TCL Electronics Holdings Limited Note
6 8,952 5,372 5,372
TCL Electronics Holdings Limited Note
7 36,259 25,381 25,381
TCL Communication Technology Note
Holdings Limited 8 316,893 194,551 194,551
Note
JRD Communication Inc. 9 134,968 134,968 134,968
TCL MEDICAL RADIOLOGICAL
TECHNOLOGY (BEIJING) CO., Note
LTD. 10 28,967 28,967 28,967
Huizhou TCL Environment Note
Technology Co., Ltd. 11 92,952 92,952 92,952
TCL Communication (Ningbo) Co., Note
Ltd. 12 89,196 89,196 89,196
Toshiba Visual Products (China) Co., Note
Ltd. 13 12,065 12,065 12,065
Note
Pusheng Group Co., Ltd. 14 3,506 3,506 3,506
Note
East Fair Investments Limited 15 50,729 50,729 50,729
Qingdao Blue Business Consulting Note
Co., Ltd. 16 2,452 2,452 2,452
Gross amount 677,877 677,877
Note
Less: impairment allowances 17 257,343 257,343
Carrying amount, net 420,534 420,534
86
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Note TCL Overseas Holdings Limited, a wholly-owned subsidiary of TCL Electronics Holdings Limited (hereinafter
1. referred to as “TCL Electronics”) (a subsidiary of the Company’s wholly-owned subsidiary TCL Industries
Holdings (HK) Limited), increased in November 2000 its interest in TCL (Vietnam) Corporation Ltd.
(hereinafter referred to as “TCL Vietnam”) to 100% with a capital of HK$10,690,000. As such, the difference
between the accumulated investment of TCL Overseas Holdings Limited in TCL Vietnam (corresponding to a
100% interest) and the owner’s equity of TCL Vietnam attributable to TCL Overseas Holdings Limited on the
settlement date (equal to RMB1,947,000) was recorded in the Company’s goodwill.
87
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
20 Goodwill (Continued)
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2000 another
2. 19,220,000 shares in TCL Electronics with a capital of HK$29,872,000. As such, the difference between the
accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a
51.82% interest) and the owner’s equity of TCL Electronics attributable to TCL Industries Holdings (HK)
Limited on the settlement date (equal to RMB11,419,000) was recorded in the Company’s goodwill.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2001 another
3. 32,556,000 shares in TCL Electronics with a capital of HK$30,608,000. As such, the difference between the
accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a
55.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK)
Limited on the settlement date (equal to RMB-5,409,000) was recorded in the Company’s goodwill.
Note 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.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2002 another
5. 39,610,000 shares in TCL Electronics with a capital of HK$76,719,000. As such, the difference between the
accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a
54.15% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK)
Limited on the settlement date (equal to RMB28,017,000) was recorded in the Company’s goodwill.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2003 another
6. 37,080,000 shares in TCL Electronics with a capital of HK$62,304,820. As such, the difference between the
accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a
54.51% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK)
Limited on the settlement date (equal to RMB8,952,000) was recorded in the Company’s goodwill.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, purchased in 2004 another
7. 50,436,000 shares in TCL Electronics with a capital of HK$126,814,000. As such, the difference between the
accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a
54.83% interest) and the shareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK)
Limited on the settlement date (equal to RMB36,259,000) was recorded in the Company’s goodwill.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, acquired in 2004 a 57.4%
8. interest in TCL Communication with a consideration of RMB1,510,016,000. As such, the difference between
the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Communication (corresponding
to a 57.4% interest) and the shareholders’ equity of TCL Communication attributable to TCL Industries
Holdings (HK) Limited on the settlement date (equal to RMB316,893,000) was recorded in the Company’s
goodwill. An impairment allowance of RMB194,551,000 had been established on this goodwill item for 2017.
88
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Note 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 RMB296,584,000). As such, the difference between the accumulated investment of TCL
Communication in JRDC (corresponding to a 100% interest) and the fair value of the identifiable net assets of
JRDC attributable to TCL Communication on the settlement date (equal to approximately RMB134,968,000)
was recorded in the Company’s goodwill.
89
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
20 Goodwill (Continued)
Note The Company acquired in 2010 a 51.82% interest in TCL Medical Radiological Technology (Beijing) Co., Ltd.
10 (hereinafter referred to as “TCL Medical Radiological Technology”) with a capital of RMB52,319,000. As such,
the difference between the accumulated investment of the Company in TCL Medical Radiological Technology
(corresponding to a 51.82% interest) and the fair value of the identifiable net assets of TCL Medical
Radiological Technology attributable to the Company on the settlement date (equal to RMB28,967,000) was
recorded in the Company’s goodwill.
Note Huizhou TCL Environmental Resource Co., Ltd. (hereinafter referred to as “TCL Environmental Resource”), a
11 subsidiary of the Company, acquired in 2010 the 100% interest in Huizhou TCL Environment Technology Co.,
Ltd. (hereinafter referred to as “TCL Environment Technology”) with a capital of RMB98,024,000. As such, the
difference between the accumulated investment of TCL Environmental Resource in TCL Environment
Technology (corresponding to a 100% interest) and the fair value of the identifiable net assets of TCL
Environment Technology attributable to TCL Environmental Resource on the settlement date (equal to
RMB92,952,000) was recorded in the Company’s goodwill.
Note TCL Communication, a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK)
12 Limited, acquired in May 2011 the 100% interest in TCL Communication (Ningbo) Co., Ltd. (hereinafter
referred to as “TCL Communication Ningbo”) with a capital of 11 million euros (equivalent to
RMB102,690,000). As such, the difference between the accumulated investment of TCL Communication in
TCL Communication Ningbo (corresponding to a 100% interest) and the fair value of the identifiable net assets
of TCL Communication Ningbo attributable to TCL Communication on the settlement date (equivalent to
RMB89,196,000) was recorded in the Company’s goodwill.
Note Huizhou TCL Household Appliance Marketing Co., Ltd. (hereinafter referred to as “Huizhou TCL Household
13 Appliance Marketing”), a subsidiary of TCL Electronics (a subsidiary of the Company’s wholly-owned
subsidiary TCL Industries Holdings (HK) Limited), acquired in May 2014 a 21% interest in Toshiba Visual
Products (China) Co., Ltd. (hereinafter referred to as “Toshiba Visual Products”) with a capital of RMB0. As
such, the difference between the accumulated investment of Huizhou TCL Household Appliance Marketing in
Toshiba Visual Products (corresponding to a 70% interest) and the fair value of the identifiable net assets of
Toshiba Visual Products attributable to Huizhou TCL Household Appliance Marketing on the settlement date
(equivalent to RMB12,065,000) was recorded in the Company’s goodwill. An impairment allowance of
RMB12,065,000 had been established on this goodwill item for 2017.
Note Tonly Electronics, a subsidiary of the Company’s wholly-owned subsidiary TCL Industries Holdings (HK)
14 Limited, acquired in September 2015 the 100% interest in Pusheng Group Co., Ltd. (hereinafter referred to as
“Pusheng Group”) with a capital of RMB95,546,000. As such, the difference between the accumulated
investment of Tonly Electronics in Pusheng Group (corresponding to a 100% interest) and the fair value of the
identifiable net assets of Pusheng Group attributable to Tonly Electronics on the settlement date (equivalent to
RMB3,506,000) was recorded in the Company’s goodwill.
Note Prosper Wide Limited and TCL Communication Technology Holdings Limited, subsidiaries of the Company’s
15 wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in September 2015 a 40% interest
and a 19.99% interest in East Fair Investments Limited (hereinafter referred to as “East Fair Investments”),
respectively, with a capital of RMB9,600,000 and a capital of RMB4,798,000. As such, the difference between
the accumulated investment of Prosper Wide Limited and TCL Communication Technology Holdings Limited
in East Fair Investments (corresponding to a combined interest of 59.99%) and the fair value of the identifiable
net assets of East Fair Investments attributable to Prosper Wide Limited and TCL Communication Technology
Holdings Limited on the settlement date (equivalent to RMB50,729,000) was recorded in the Company’s
goodwill. An impairment allowance of RMB50,729,000 had been established on this goodwill item for 2017.
90
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Note Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired in October 2016 a 60% interest in
16 Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as “Blue Business Consulting”) with a
capital of RMB10,000,000. As such, the difference between the accumulated investment of Highly Information
Industry Co., Ltd. in Blue Business Consulting (corresponding to a 60% interest) and the fair value of the
identifiable net assets of Blue Business Consulting attributable to Highly Information Industry Co., Ltd. on the
settlement date (equivalent to RMB2,452,000) was recorded in the Company’s goodwill.
Note On 30 June 2018, the Company tested asset groups inclusive of goodwill for impairment.
17
91
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
21 Long-Term Prepaid Expense
Newly Amortizat
Increase Newly
1 January deconsolidat ion in 30 June
in current consolidated Other
2018 ed current 2018
period subsidiaries
subsidiaries period
Improvement
expense on
853,233 4,539 - - (15,811) - 841,961
leased fixed
assets
Other 75,891 212,795 - (9,601) (179,013) 16 100,088
929,124 217,334 - (9,601) (194,824) 16 942,049
22 Deferred Income Tax Assets and Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets
Change in
Change in current Newly Exchang
current period period consolidated e
1 January (charged to (charged to subsidiaries adjustm
2018 profit/loss) equity) ents 30 June 2018
Unrealized profits
within the Group 250,385 (9,472) - - (407) 240,506
Provisions 287,495 52,470 - - 35 340,000
Deductible tax losses 66,610 (2,361) - 11 (1,310) 62,950
Inventory valuation
allowances 79,663 (9,042) - - 8 70,629
Financial instruments
72,038 9,451 3,903 - 173 85,565
at fair value
Amortization of
long-lived assets 29,219 - - - - 29,219
Other 86,433 19,761 10,659 - 337 117,190
871,843 60,807 14,562 11 (1,164) 946,059
(2) Deferred Income Tax Liabilities
Change in
Change in current Newly Exchang
current period period consolidated e
1 January (charged to (charged to subsidiaries adjustm
2018 profit/loss) equity) ents 30 June 2018
Fair value
adjustments of 55,844 (478) - - 51 55,417
subsidiary
acquisitions
92
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Financial instruments 17,035 8,466 (8,822) - - 16,679
at fair value
Available-for-sale
financial assets 753 - - - - 753
Government subsidy
adjustments 4,941 (3,129) - - (43) 1,769
Other 192,584 (4,033) - - (141) 188,410
271,157 826 (8,822) - (133) 263,028
93
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
23 Other Non-Current Assets
Increase in decrease in
1 January 2018 current current 30 June 2018
period period
Prepayments for equipment and
land use rights (note 1) 2,493,017 5,545,530 (768,040) 7,270,507
Front-end investments for
development projects 120,000 - - 120,000
Wealth management instruments 201,080 - (77,000) 124,080
Other 574,856 172,009 (158,576) 588,289
-
3,388,953 5,717,539 (1,003,616) 8,102,876
Note Prepayments for equipment and land use rights and some other long-lived assets were reclassified from
1 prepayments to other non-current assets.
94
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
24 Short-Term Borrowings
Short-Term Borrowings by Category
30 June 2018 31 December 2017
Pledge borrowings 1,178,271 1,394,814
Unsecured borrowings 11,803,870 14,595,291
12,982,141 15,990,105
As at 30 June 2018, pledge borrowings from banks were equivalent to RMB1,178,271,000 (31 December 2017:
RMB1,394,814,000), with letters of credit equivalent to RMB1,190,988,000 (31 December 2017:
RMB1,404,853,000) as the pledge.
As at 30 June 2018, there were no overdue short-term borrowings.
25 Borrowings from Central Bank
As at 30 June 2018, the balance of the borrowings of TCL Finance Co., Ltd., a subsidiary of the Company, from
the central bank was RMB230,406,000 (31 December 2017: RMB39,997,000).
95
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
26 Customer Deposits and Interbank Deposits
30 June 2018 31 December 2017
Customer deposits and interbank deposits 466,417 310,875
Customer deposits and interbank deposits are deposits absorbed by subsidiary TCL Finance Co., Ltd. from its
associates and joint ventures.
27 Financial Liabilities at Fair Value through Profit or Loss
30 June 2018 31 December 2017
Derivative financial liabilities-forward forex
contracts 194,241 349,506
Derivative financial liabilities –interest rate
swap contracts 276,163 93,436
470,404 442,942
The fair value of the Company’s trading financial liabilities is their real-time quotes on the forex and interest rate
open markets, and the change in fair value is the difference between the contractual price and the real-time quote on
the forex or interest rate open market based on the forward exchange rate or interest rate on the balance sheet date.
28 Notes Payable
30 June 2018 31 December 2017
Bank acceptance notes 1,246,706 1,206,258
Commercial acceptance
notes 771,348 855,213
2,018,054 2,061,471
As at 30 June 2018, notes payable to related parties were RMB8,793,000 (31 December 2017:
RMB14,377,000), accounting for 0.44% of the total notes payable (31 December 2017: 0.70%). There were
no notes payable to any shareholder with a 5% or greater voting stock.
29 Accounts Payable
Accounts payable are largely for purchases of raw materials and components. As at 30 June 2018, the carrying
amount of accounts payable was RMB19,183,740,000 (31 December 2017: RMB19,324,249,000), of which
accounts payable with aging over 1 year were RMB433,446,000 (31 December 2017: RMB154,765,000),
accounting for approximately 2.26% of the total accounts payable (31 December 2017: 0.80%).
As at 30 June 2018, accounts payable to related parties were RMB273,130,000 (31 December 2017:
RMB493,212,000), accounting for 1.42% of the total accounts payable (31 December 2017: 2.55%). For
further information, see Note VII. There were no accounts payable to any shareholder with a 5% or greater
voting stock.
96
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
30 Advances from Customers
Advances from customers as at the end of the current period were mostly advances on sales. As at 30 June
2018, there were no large-amount advances from customers with aging over 1 year.
As at 30 June 2018, advances from related parties were RMB3,672,000 (31 December 2017: RMB208,000),
accounting for 0.28% of the total advances from customers (31 December 2017: 0.02%). There were no
advances from any shareholder with a 5% or greater voting stock.
31 Payroll Payable and Long-Term Payroll Payable
(1) Payroll Payable
30 June 2018 31 December 2017
Short-term payroll payable (note) 1,990,133 2,207,545
Defined contribution plans payable 12,928 15,624
Dismissal benefits payable 26,347 69,499
2,029,408 2,292,668
(Note) Short-Term Payroll Payable
Increase in Decrease in
1 January 2018 current period current period 30 June 2018
Wages and
salaries,
bonuses, 2,057,182 4,133,006 (4,677,134) 1,513,054
allowances and
subsidies
Social security
contributions 18,465 121,798 (118,287) 21,976
Housing funds 5,615 119,359 (120,531) 4,443
Labour union
funds 32,957 14,947 (15,206) 32,698
Employee
education funds 71,038 35,566 (36,676) 69,928
Other 22,288 416,813 (91,067) 348,034
2,207,545 4,841,489 (5,058,901) 1,990,133
(2) Long-Term Payroll Payable
30 June 2018 31 December 2017
Supplementary old age security pensions
(note) 24,906 25,519
Note Supplementary old age security pensions payable to retired employees.
：
97
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
32 Taxes Payable
30 June 2018 31 December 2017
VAT 159,948 119,646
Corporate income tax 378,413 759,743
Individual income tax 88,917 117,032
City construction tax 24,454 46,861
Embankment fees 51,149 51,139
Educational surcharges 18,654 35,151
Waste electric appliance and electronic product
treatment fund 68,697 58,448
Other 91,518 85,772
881,750 1,273,792
For the standards for provisions for taxes and the applicable tax rates, see Note III.
33 Interest Payable
30 June 2018 31 December 2017
Interest payable on MTN 33,449 60,781
Interest payable on corporate
bonds 247,502 244,027
Interest payable on short-term
commercial papers 18,400 -
Interest payable on bank
borrowings 145,867 140,038
445,218 444,846
34 Dividends Payable
30 June 2018 31 December 2017
Non-controlling interests 71,251 47,110
71,251 47,110
98
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
35 Other Payables
30 June 2018 31 December 2017
Patent and franchise royalties 1,732,796 2,196,631
Engineering and equipment expense 8,523,534 5,676,045
Ordinary current accounts 3,802,017 3,128,571
Security deposits 366,298 636,414
Technological development fund and potential
exploitation fund 9,685 7,618
Deposits from joint ventures and associates 15,477 15,477
Payables for equity transfers 795 9,018
Maintenance cost 571,257 660,012
Installation cost 348,806 183,676
R&D expense 192,318 213,395
Advertising expense 586,650 519,776
Transport and warehousing expense 396,536 346,414
Utilities 123,601 109,522
Rental expense 33,173 20,508
Sales promotional expense 293,474 427,472
Intermediary fees 377,252 374,420
Compensation for price adjustments 262,926 193,179
Sales commissions and rebates 856,019 874,094
Software and Internet service expense 85,892 130,789
Travel and office expense 52,555 68,243
Insurance expense 19,211 13,721
Other 950,789 857,802
Total 19,601,061 16,662,797
As at 30 June 2018, other payables to related parties were RMB656,666,000 (31 December 2017:
RMB258,159,000), accounting for 3.35% of the total other payables (31 December 2017: 1.55%). For further
information, see Note VII. There were no other payables to any shareholder with a 5% or greater voting stock.
36 Short-Term Commercial Papers Payable
30 June 2018 31 December 2017
Short-term commercial papers (note) 2,000,000 -
Note The Phase 1 of 2018 Short-Term Commercial Papers of RMB2 billion issued by the Company in April 2018.
99
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
37 Current Portion of Non-Current Liabilities
Note IV 30 June 2018 31 December 2017
Long-term borrowings (note 1) 39 2,759,804 4,930,778
MTN (note 2) 500,000 996,750
Corporate bonds 2,500,000 -
5,759,804 5,927,528
Note 1 The current portion of long-term borrowings included RMB419,849,000 of unsecured borrowings, RMB831,370,000 of
pledge borrowings and RMB1,508,585,000 of mortgage borrowings.
Note 2 The current portion of MTN of RMB500,000,000 as at the end of the current period was reclassified to the item of “current
portion of non-current liabilities”.
Note 3 The current portion of bonds payable of RMB2,500,000,000 as at the end of the current period was reclassified to the item
of “current portion of non-current liabilities”.
(1) Top Five of Current Portions of Long-Term Borrowings：
Curren Interest
Lender Start date End date cy rate 30 June 2018
China Development Bank-6000
special account for loans February 2011 January 2019 USD 3.00% 846,925
The Export-Import Bank of China
(Guangdong branch) June 2015 July 2018 RMB 3.15% 600,000
China Development Bank-a November
syndicated loan for the t2 project March 2015 2018 USD 4.00% 330,830
China Development Bank-a
syndicated loan for the t2 project March 2015 May 2019 USD 4.00% 330,830
The Export-Import Bank of China December September
(Guangdong branch) 2016 2018 RMB 2.65% 300,000
2,408,585
38 Other Current Liabilities
30 June 2018 31 December 2017
Financial assets sold under repurchase
agreements 1,130,697 3,206,902
Currency swaps (note 1) 1,290,000 1,697,240
After-sales service expense (note 2) 1,088,132 1,109,100
Other 3,173 61,831
3,512,002 6,075,073
Note Currency swaps due within 1 year.
1
Note After-sales service expense expected to occur within 1 year is reflected in current liabilities. After-sales service expense is
2 increased by the provisions for such expense established in the current period, and decreased by such expense that occurred
in the current period.
100
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
39 Long-Term Borrowings
30 June 2018 31 December 2017
Mortgage
borrowings 24,247,472 18,420,345
Pledge
borrowings 831,370 1,026,190
Unsecured
borrowings 6,447,462 5,767,624
31,526,304 25,214,159
Of which：Current portion of long-term borrowings (2,759,804) (4,930,778)
28,766,500 20,283,381
The maturities of the Company’s long-term borrowings vary from 2018 to 2026.
As at 30 June 2018, the carrying amount of long-term mortgage borrowings was RMB24,247,472,000, with land
use rights, buildings, machinery and equipment and construction in progress equivalent to RMB37,540,971,000
as the collateral.
As at 30 June 2018, the carrying amount of long-term pledge borrowings was RMB831,370,000 (31 December
2017: RMB1,026,190,000), with the Company’s interest in TCL Industries Holdings (HK) Limited as the
collateral.
Top Five Long-Term Borrowings：
Lender Start date End date Currency Interest rate 30 June 2018
China Development Bank-a
syndicated loan for the t2 project March 2015 March 2023 USD 4.00% 4,300,790
China Development Bank
(Hubei branch) April 2016 April 2024 USD 5.20% 3,791,312
China Development Bank-a
syndicated loan for the t2 project March 2015 March 2023 RMB 4.90% 3,513,600
China Development Bank
(Hubei branch) April 2016 February 2021 RMB 4.75% 2,310,000
China Development Bank
(Hubei branch) March 2018 January 2026 RMB 4.45% 1,870,000
15,785,702
101
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
40 Bonds Payable
30 June 2018 31 December 2017
MTN (note 1) 498,250 497,250
Corporate bonds (note 2) 8,499,998 9,999,998
8,998,248 10,497,248
Note The Company issued RMB500 million of five-year MTNs on 21 August 2013, and another RMB500 million of
1 five-year MTNs on 2 April 2015. The RMB500 million of five-year MTNs that would be due within 1 year as
at the end of the current period was reclassified to “current portion of non-current liabilities”.
Note The Company issued RMB2.5 billion of 2016 three-year corporate bonds (phase 1) and RMB1.5 billion of
2 five-year corporate bonds on 16 March 2016, RMB 2 billion of 2016 five-year corporate bonds (phase 2) on 7
July 2016, RMB1 billion of 2017 five-year corporate bonds (phase 1) on 19 April 2017, RMB3 billion of 2017
five-year corporate bonds (phase 2) on 7 July 2017, and RMB1 billion of 2018 five-year corporate bonds
(phase 1) on 6 June 2018. The RMB2.5 billion of corporate bonds that would be due within 1 year as at the end
of the current period was reclassified to “current portion of non-current liabilities”.
41 Long-Term Payables
30 June 2018 31 December 2017
Technological development fund 73,000 73,000
Other 25,067 3,309
98,067 76,309
42 Deferred Income
30 June 2018 31 December 2017
Income-related government
subsidies 3,106,229 2,664,877
3,106,229 2,664,877
102
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
43 Share Capital
1 January 2018 Change in current period 30 June 2018
(In thousand shares) Shares Percentage New issues Other Subtotal Shares Percentage
1. Restricted shares 4,513,615 33.40% 34,677 (2,726,574) (2,691,897) 1,821,718 13.44%
1.1 Shares held by government - - - - - - 0.00%
1.2 Shares held by state-owned legal
persons 1,244,019 9.20% - (1,244,019) (1,244,019) - 0.00%
1.3 Shares held by other domestic
investors 3,179,064 23.53% 34,392 (1,482,554) (1,448,162) 1,730,902 12.77%
Among which: Shares held by
domestic non-state-owned legal
persons 2,694,327 19.94% - (1,483,569) (1,483,569) 1,210,758 8.94%
Shares held by domestic
natural persons 484,737 3.59% 34,392 1,015 35,407 520,144 3.84%
1.4 Shares held by foreign investors 90,532 0.67% 284 - 284 90,816 0.67%
Among which: Shares held by
foreign legal persons 90,532 0.67% - - - 90,532 0.67%
Shares held by foreign
natural persons - - 284 - 284 284 0.00%
2. Unrestricted shares 9,001,357 66.60% - 2,726,574 2,726,574 11,727,931 86.56%
2.1 RMB-denominated ordinary
shares 9,001,357 66.60% - 2,726,574 2,726,574 11,727,931 86.56%
2.2 Domestically listed foreign
shares - - - - - - 0.00%
2.3 Overseas listed foreign shares - - - - - - 0.00%
2.4 Other - - - - - - 0.00%
3. Total shares 13,514,972 100.00% 34,676 - 34,677 13,549,649 100.00%
103
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
43 Share Capital (Continued)
Note As at 30 June 2018, the Company’s total share capital was 13,549,649,000 shares.
Except for Chairman of the Board Mr. Li Dongsheng who holds restricted shares subscribed for in a
private placement, none of the other incumbent directors, supervisors or senior management hold any
restricted shares from a split-share structure reform or a private placement. The shares held by these
personnel will stay partially frozen as per the Rules on the Management of Shares Held by the
Directors, Supervisors and Senior Management Officers of Listed Companies and the Changes
thereof. The trading and information disclosure in relation to these shares shall be in strict
compliance with the applicable laws, regulations and rules.
44 Capital Reserves
Increase in Decrease in
1 January 2018 current period current period 30 June 2018
Share premium
(note) 4,901,361 28,781 - 4,930,142
Other capital
reserves 1,039,110 65,313 - 1,104,423
5,940,471 94,094 - 6,034,565
Note See the relevant analyses of the changes in financial statement data.
104
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
45 Surplus Reserves
Increase in Decrease in
1 January 2018 current period current period 30 June 2018
Statutory surplus reserves 1,311,430 - - 1,311,430
Discretionary surplus reserves 182,870 - - 182,870
1,494,300 - - 1,494,300
As per China’s Company Law, Articles of Association for Companies, accounting standards, the Company and
several of its subsidiaries shall appropriate 10% of net profits as statutory surplus reserves until the reserve
amount reaches 50% of the registered capital. According to the aforesaid laws and regulations, part of the
statutory surplus reserves can be converted into share capital, and the remaining amount shall not be lower
than 25% of the registered capital.
After the appropriation to the statutory surplus reserves, the Company may appropriate net profits to the
discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used to make up the
previous loss or increase the share capital.
46 General Reserve
Decrease in
Increase in current
1 January 2018 current period period 30 June 2018
General reserve 361 - - 361
As per the General Rules on Financial Affairs of Financial Enterprises and the Guide to the Implementation of
the General Rules on Financial Affairs of Financial Enterprises promulgated by the Ministry of Finance, as
well as the Articles of Association of TCL Finance Co., Ltd., this subsidiary appropriated 1% of its net profit as
general reserve in the previous years.
47 Retained Earnings
H1 2018 H1 2017
Beginning retained earnings 8,577,688 7,305,927
Net profit for current period 1,585,939 1,033,845
Decrease in current period (1,354,965) (977,095)
Including: Appropriated as surplus reserves - -
Distributed to ordinary shareholders as dividends (1,354,965) (977,095)
Ending retained earnings 8,808,662 7,362,677
105
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
48 Operating Revenue and Cost of Sales
H1 2018 H1 2017
Operating revenue Cost of sales Operating revenue Cost of sales
Core business 52,073,415 42,673,646 51,328,314 40,811,716
Non-core business 450,333 245,012 846,203 743,989
52,523,748 42,918,658 52,174,517 41,555,705
(1) Core Business by Operating Division
Revenue Cost of sales Gross profit
H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017
TCL
Electronics 17,145,948 15,015,818 14,419,287 12,692,435 2,726,661 2,323,383
TCL
Communication 4,661,221 6,865,486 3,603,990 5,355,697 1,057,231 1,509,789
CSOT 12,144,065 13,969,731 9,759,672 10,358,954 2,384,393 3,610,777
TCL Household
Electric
Appliance
Group 10,633,312 9,226,969 9,095,910 7,871,483 1,537,402 1,355,486
Tonly
Electronics 2,270,308 1,795,341 1,984,277 1,523,300 286,031 272,041
Marketing and
logistics service 11,250,905 10,057,308 10,635,971 9,567,516 614,934 489,792
business group
Others and
eliminated
intercompany
accounts (6,032,344) (5,602,339) (6,825,461) (6,557,669) 793,117 955,330
52,073,415 51,328,314 42,673,646 40,811,716 9,399,769 10,516,598
(2) Core Business by Operating Segment
Revenue Cost of sales Gross profit
H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017
Domest
ic 27,626,264 28,323,154 22,144,576 22,903,520 5,481,688 5,419,634
Overse
as 24,447,151 23,005,160 20,529,070 17,908,196 3,918,081 5,096,964
52,073,415 51,328,314 42,673,646 40,811,716 9,399,769 10,516,598
The sales revenue from the top five customers combined was RMB8,558,458,000 and RMB8,950,429,000
respectively for H1 2018 and H1 2017, accounting for 16.44% and 17.44% of the core business revenue.
106
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
49 Interest Income/(Expense) and Exchange Income/(Loss)
H1 2018 H1 2017
Interest income 58,099 120,056
Interest expense 41,336 32,372
Exchange income/(loss) (24,065) (9,630)
The interest income, interest expense and exchange income/(loss) above occurred with the Company’s
subsidiary TCL Finance Co., Ltd., which are presented separately herein as required for a financial enterprise.
50 Taxes and Surcharges
H1 2018 H1 2017
City construction and maintenance tax 63,382 55,214
Commodity circulation tax (Brazil) 6,107 48,780
Educational surcharge 46,835 29,654
Stamp tax 43,434 39,198
Property tax 50,049 31,881
Land use tax 8,211 9,085
Other 100,524 36,572
318,542 250,384
The applicable tax and surcharge standards are detailed in Note III.
51 Finance Costs
H1 2018 H1 2017
Interest expense 904,654 734,386
Less: Interest income (385,014) (196,643)
Exchange loss/(income) (173,933) 201,725
Other 95,605 71,765
441,312 811,233
107
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
52 Asset Impairment Loss
H1 2018 H1 2017
Loss on uncollectible accounts 109,951 26,122
Inventory valuation loss 469,430 152,608
Loss on impairments of available-for-sale
financial assets 4,299 1,447
Loss on impairments of discounted notes 3,773 1,573
Loss on impairments of fixed assets 47,065 193
634,518 181,943
53 Gains/(Losses) on Changes in Fair Value
H1 2018 H1 2017
Financial assets/liabilities at fair value through
(79,169) 125,610
profit or loss –forward forex contracts
Financial liabilities at fair value through profit
(24,425) 14,794
or loss-wealth management instruments
Financial assets at fair value through profit or
(317) (9,392)
loss-interest rate swap contracts
(103,911) 131,012
108
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
54 Investment Income
H1 2018 H1 2017
Investment income from disposal of wealth
management instruments 386,543 211,701
Income from disposal of derivative financial
assets/liabilities (33,745) 43,867
Income from investments in money market funds - 4,155
Share of current period profit/(loss) of associates 604,488 395,494
Share of current period profit/(loss) of joint
ventures 10,739 (8,950)
Net income from disposal of long-term equity
investments 17,651 20,708
Investment income from disposal of
available-for-sale financial assets 91,563 68,978
Investment income during period of holding
available-for-sale financial assets 16,719 63,292
1,093,958 799,245
55 Asset Disposal Income
H1 2018 H1 2017
Income from disposal of fixed assets (loss shown
in brackets) 85 5,045
Income from disposal of intangible assets (loss
shown in brackets) (10) 8
Income from disposal of other non-current assets
(loss shown in brackets) 54 -
129 5,053
56 Other Income
H1 2018 H1 2017
R&D subsidies 890,017 360,113
VAT rebates on software 162,378 261,727
1,052,395 621,840
109
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
57 Non-Operating Income
H1 2018 H1 2017
Gains on retired or damaged non-current assets 367 4,440
Including：Gains on retired or damaged fixed 367 2,184
assets
Gains on retired or damaged - 2,256
intangible assets
Negative goodwill - 82,582
Other 346,387 79,312
346,754 166,334
58 Non-Operating Expense
H1 2018 H1 2017
Losses on retired or damaged non-current assets 729 10,345
Including：Losses on retired or damaged fixed
assets 722 10,345
Losses on retired or damaged
intangible assets 7 -
Other 43,474 54,351
44,203 64,696
59 Income Tax Expense
H1 2018 H1 2017
Current income tax expense 544,896 562,232
Deferred income tax expense (note) (59,981) (1,171)
484,915 561,061
For further information on the deferred income tax expense as recognized in the income statement for the
Note
current period, see Note IV, item 22.
110
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
60 Other Comprehensive Income
(1) Other Comprehensive Income Items, Income Tax Effects and Reclassifications to Profit or Loss
H1 2018 H1 2017
Share of other comprehensive income of investees that will be
(5,092) 88,475
reclassified to profit or loss under equity method
Gain/(Loss) on available-for-sale financial assets - 215,060
Previous other comprehensive income reclassified to profit for
current period (218,318) (53,025)
Subtotal (218,318) 162,035
Current gain/(loss) on cash flow hedges (110,096) 171,807
Previous other comprehensive income reclassified to profit for
current period (37,265) 15,289
Income tax effects recorded in other comprehensive income for
current period 23,384 -
Subtotal (123,977) 187,096
Differences arising from translation of foreign currency-denominated
financial statements (125,562) 357,866
Total (472,949) 795,472
(2) Changes in Other Comprehensive Income Items
Equity attributable to shareholders of the Company as the parent
Share of other
Gain/Loss Differences
comprehensiv
on changes arising from
e income of Gain/(Los Total
in fair value translation
investees that s) on Non-cont other
of of foreign
will be changes in Subtotal rolling compreh
available-for currency-de
reclassified to cash flow interests ensive
-sale nominated
profit or loss hedges income
financial financial
under equity
assets statements
method
1 January 2017 44,356 303,079 (220,378) (1,492,220) (1,365,163) (89,842) (1,455,005)
Change in 2017 11,718 97,301 341,707 1,133,709 1,584,435 137,911 1,722,346
31 December 2017 56,074 400,380 121,329 (358,511) 219,272 48,069 267,341
Change in H1 2018 (5,025) (218,318) (108,896) (113,085) (445,324) (27,625) (472,949)
30 June 2018 51,049 182,062 12,433 (471,596) (226,052) 20,444 (205,608)
111
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
61 Earnings per Share (EPS)
(1) Basic EPS
H1 2018 H1 2017
Net profit attributable to owners of the Company as the
parent 1,585,939 1,033,845
Weighted average outstanding ordinary shares (in thousand
13,526,146
shares) 12,213,682
Basic EPS (RMB yuan/share) 0.1173 0.0846
(2) Diluted EPS
H1 2018 H1 2017
Net profit attributable to owners of the Company as the
parent 1,585,939 1,033,845
Diluted weighted average outstanding ordinary shares (in
thousand shares) 13,542,435 12,213,682
Diluted EPS (RMB yuan/share) 0.1172 0.0846
62 Cash Generated from Other Operating Activities
Cash generated from other operating activities in the consolidated cash flow statement was RMB1,881,237,000,
which primarily consisted of other current payments received and government subsidies.
63 Cash Used in Other Operating Activities
Cash used in other operating activities in the consolidated cash flow statement was RMB8,363,572,000, which
primarily consisted of selling expense and administrative expense.
64 Cash Used in Other Financing Activities
None.
112
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IV Notes to Consolidated Financial Statements (Continued)
65 Net Cash Generated from/Used in Operating Activities
Reconciliation of Net Profit to Net Cash Generated from/Used in Operating Activities
H1 2018 H1 2017
Net profit 1,700,841 1,661,319
Add：Asset impairment allowance 634,518 181,943
Depreciation of fixed assets 3,457,799 2,700,024
Amortization of intangible assets 268,057 200,523
Amortization of long-term prepaid expense 194,824 129,448
Loss/(Income) from disposal of fixed assets,
(129) 852
intangible assets and other long-lived assets
Loss/(Income) on retired or damaged fixed assets 379 -
Loss/(Gain) on changes in fair value 103,911 (131,012)
Finance costs 796,123 978,113
Investment income (1,093,958) (799,245)
Increase/(Decrease) in deferred income tax assets (74,216) (10,574)
Increase/(Decrease) in deferred income tax
liabilities (8,129) 2,240
Decrease/(Increase) in inventories 574,843 (72,414)
Increase in operating receivables (176,106) (298,476)
Decrease in operating payables (2,073,055) (969,526)
Other 69,524 (100,674)
Net cash generated from/used in operating
activities 4,375,226 3,472,541
66 Changes in Cash and Cash Equivalents, Net
Ending cash and cash equivalents 16,503,805 22,207,850
Less: Beginning cash (23,281,169) (23,815,656)
Net increase in cash and cash equivalents (6,777,364) (1,607,806)
Analysis of ending cash and cash equivalents：
Ending monetary capital 17,612,564 24,028,220
Less: Ending non-cash equivalents (note) (1,108,759) (1,820,370)
Ending cash and cash equivalents 16,503,805 22,207,850
Note: The ending non-cash equivalents primarily included bank deposits, the required reserve deposited by
TCL Finance Co., Ltd. in the central bank and other monetary capital. For further information, see Note IV,
item 1.
113
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
V Changes in Consolidation Scope
1 Newly Consolidated Entities for Current Period
Consolidated Registered The Company’s
Investee period Reason for change capital interest
Guangdong Tonly Precision Structural Feb.-Jun. 2018 Newly incorporated RMB 100%
Parts Co., Ltd. 20,000,000
TCL Netherlands B.V. Feb.-Jun. 2018 Newly incorporated - 100%
China Star Optoelectronics Technology Mar.-Jun. 2018 Newly incorporated JPY 100%
(Japan) Co., Ltd. 10,000,000
Ningbo TCL Equity Investment Co., Ltd. H1 2018 Newly incorporated RMB 99%
30,000,000
Karley Investment Limited H1 2018 Newly incorporated USD 100%
1
Zhonggang Finance Group Limited H1 2018 Newly incorporated HKD 100%
1
Guangxi Tonly Electronics Technology Mar.-Jun. 2018 Newly incorporated RMB 100%
Co., Ltd. 50,000,000
TCL Air-Conditioner (Jiujiang) Co., Ltd. Feb.-Jun. 2018 Newly incorporated RMB 100%
20,000,000
Beijing Xunying Renren Medical Feb.-Jun. 2018 Newly incorporated RMB 100%
Technologies Co., Ltd. 50,000,000
Shenzhen Xiaoxiang Technology Apr.-Jun. 2018 Newly incorporated RMB 100%
Development Co., Ltd. 15,000,000
TCL Ventures Inc Jun. 2018 Newly incorporated RMB 100%
10,000,000
TCL Ventures Fund Limited Partnership Jun. 2018 Acquired RMB 100%
1,000,000
Peaklink Investments Limited Jun. 2018 Newly incorporated RMB 100%
50,000
TCL Intelligent Appliances (Vietnam) Co., Jun. 2018 Newly incorporated VND 100%
Ltd. 11,000,000
114
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
V Changes in Consolidation Scope (Continued)
2 Deconsolidated Entities for Current Period
Net assets at
Date of transfer Net profit in
deconsolidatio Reason for day/dissolutio consolidated
Investee n change n day period
TCL Network Equipment (Shenzhen) Co.,
Ltd. 2018/1/1 Dissolved - -
Foshan TCL Household Appliances
(Nanhai) Co., Ltd. 2018/2/1 Dissolved - (170)
Huizhou TCL Hyperpower Batteries Inc. 2018/2/28 Transferred 69,795 (6,333)
Qujing Sunpiestore Technology Co., Ltd. 2018/3/1 Dissolved - -
Cheers Overseas Limited 2018/5/31 Dissolved - (16,748)
JRD (Beijing) Technology Co., Ltd. 2018/5/31 Dissolved - (737)
Beijing Luote Pacific Communication
Technology Co., Ltd. 2018/1/1 Dissolved - -
Shanke Technology Holdings Limited 2018/2/28 Transferred - -
TCT Mobile (Singapore) Pte.Ltd 2018/6/30 Dissolved - -
Huizhou Taichuang Investment
Development Co., Ltd. 2018/1/31 Transferred 15,439 -
Canyon Circuit Technology (Huizhou) Co.,
Ltd. 2018/3/31 Transferred 81,121 1,727
Tairui (Hong Kong) Limited 2018/3/31 Transferred (140) 43
TCT Mobile - Telefones LTDA 2018/3/31 Transferred 376,688 (33,411)
Petro AP (Hong Kong) Company Limited 2018/3/31 Transferred 678,748 (11,131)
PETRO AP S.A. 2018/3/31 Transferred (274,804) (1,941)
Xi’an TCL Industrial Technology Research
Institute Co., Ltd. 2018/3/31 Dissolved - (118)
115
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
V Changes in Consolidation Scope (Continued)
3 Subsidiaries Disposed in Current Period
Huizhou Taichuang Petro AP (Hong
Huizhou TCL Canyon Circuit
Investment Tairui (Hong TCT Mobile - Kong) Company
Subsidiary Hyperpower Technology
Development Co., Kong) Limited Telefones LTDA Limited
Batteries Inc. (Huizhou) Co., Ltd.
Ltd.
Price for equity 50,821 62,498 80,515 81 380,954 -
interest disposal
% equity interest 100% 100.00% 35.00% 28.35% 100.00% -
disposed
Way of disposal Transfer Transfer Transfer Transfer Transfer Transfer
Time of loss of Jan. 2018 Feb. 2018 Mar. 2018 Mar. 2018 Mar. 2018 Mar. 2018
control
When the rights When the rights When the rights When the rights When the rights When the rights
and obligations in and obligations in and obligations in and obligations in and obligations in and obligations in
Determination basis relation to the relation to the relation to the relation to the relation to the relation to the
for time of loss of target equity target equity target equity target equity target equity target equity
control interest have all interest have all interest have all interest have all interest have all interest have all
been transferred been transferred been transferred been transferred been transferred been transferred
Difference between
the disposal price
and the Company’s
share of the
subsidiary’s net
assets in the 35,382 4,931 414 225 (43,475) 10,016
consolidated
financial statements
relevant to the
disposed equity
interest
116
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities
1 Interests in Subsidiaries
(1) Major Subsidiaries
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary
registration business
yuan) Direct Indirect was obtained
TCL Industries Holdings (HK) Limited Hong Kong Investment HKD 100% - Incorporated
holdings 1,578,942,506
TCL Electronics Holdings Limited Cayman Investment HKD - 52.46% Incorporated
Islands holdings 2,333,388,113
Guangzhou Digital Lehua Technology Co., Guangzhou Manufacturing RMB - 70% Incorporated
Ltd. and marketing 120,000,000
Shenzhen TCL New Technology Co., Ltd. Shenzhen R&D HKD - 100% Incorporated
10,000,000
Shenzhen TCL Digital Technology Co., Ltd. Shenzhen R&D RMB - 100% Incorporated
100,000,000
TCL King Electrical Appliances (Huizhou) Huizhou Manufacturing HKD - 98.51% Incorporated
Co., Ltd. and marketing 507,562,684
TCL Overseas Electronics (Huizhou) Ltd. Huizhou Manufacturing RMB - 100% Incorporated
and marketing 239,330,000
TCL Operation Polska Sp.zo.o Poland Manufacturing PLN - 100% Incorporated
and marketing 126,716,500
TCL Moka Manufacturing, S.A. de C.V. Mexico Manufacturing - 100% Obtained in a
and marketing business
combination
not under
MXN common
50,000 control
TCL (Vietnam) Corporation Ltd. Vietnam Manufacturing VND - 100% Incorporated
and marketing 37,135,000,000
Huizhou TCL Household Appliance Huizhou Marketing RMB - 100% Incorporated
Marketing Co., Ltd. 30,000,000
TCL Electronics (HK) Limited Hong Kong Marketing HKD - 100% Incorporated
30,000,000
TCL verseas Marketing (Macao Commercial Macau Marketing MOP - 100% Incorporated
Offshore) Limited 100,000
TCL Communication Technology Holdings Cayman Investment HKD - 51% Incorporated
Limited Islands holdings 1,275,545,082
TCL Communication Technology (Chengdu) Chengdu R&D USD - 100% Incorporated
Co., Ltd. 12,000,000
117
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary
registration business
yuan) Direct Indirect was obtained
JRD Communication (Shanghai) Co., Ltd. Shanghai R&D USD - 100% Incorporated
10,000,000
TCL Mobile Communication Technology Ningbo R&D USD - 100% Incorporated
(Ningbo) Co., Ltd. 5,000,000
JRD Communication (Shenzhen) Ltd. Shenzhen R&D USD - 100% Incorporated
10,000,000
Huizhou TCL Mobile Communication Co., Huizhou Manufacturing USD - 100% Incorporated
Ltd. and marketing 199,600,000
TCL Mobile Communication (HK) Hong Kong Marketing HKD - 100% Incorporated
Company Limited 5,000,000
TCT Mobile Europe SAS France Marketing EUR - 100% Incorporated
23,031,072
TCT Mobile (US) Inc. The U.S. Marketing USD - 100% Incorporated
1
TCT Mobile International Ltd Hong Kong Marketing HKD - 100% Incorporated
5,000,000
TCT Mobile SA de CV Mexico Marketing MXN - 100% Incorporated
1,299,103,498
“TMC Rus” Limited Liability Company Russia Marketing RUB - 99% Incorporated
10,000
TCT Mobile Italy S.R.L Italy Marketing EUR - 100% Incorporated
10,000
Shenzhen China Star Optoelectronics Shenzhen Manufacturing RMB 86.81% - Incorporated
Technology Co., Ltd. and marketing 18,341,942,877
Shenzhen China Star Optoelectronics Shenzhen Manufacturing - 57.29% Incorporated
Semiconductor Display Technology Co., and marketing RMB
Ltd. 21,500,000,000
118
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
The Company’s How
Place of Nature of Registered capital
Investee interest subsidiary
registration business (in RMB yuan)
Direct Indirect was obtained
Guangzhou China Ray Optoelectronic Guangzhou R&D RMB - 100% Incorporated
Materials Co., Ltd. 30,000,000
Wuhan China Star Optoelectronics Wuhan Manufacturing RMB - 43.04% Incorporated
Technology Co., Ltd. (note 1) and marketing 8,760,000,000
Wuhan China Star Optoelectronics Wuhan Manufacturing - 34.43% Incorporated
Semiconductor Display Technology Co., and marketing RMB
Ltd. 1,800,000,000
Shenzhen CPT Display Technology Co., Ltd. Shenzhen Manufacturing - 100% Obtained in
and marketing a business
combination
not under
USD common
30,000,000 control
China Star Optoelectronics International Hong Kong Marketing USD - 100% Incorporated
(HK) Limited 9,000,000
China Display Optoelectronics Technology Bermuda Investment - 52.59% Obtained in
Holdings Limited holdings a business
combination
not under
HKD common
208,385,062 control
CHINA Display Optoelectronics Technology Huizhou Manufacturing RMB - 100% Incorporated
(Huizhou) Co., Ltd. and marketing 231,900,000
Wuhan China Display Optoelectronics Wuhan Manufacturing RMB - 100% Incorporated
Technology Co., Ltd. and marketing 500,000,000
Huizhou TCL Household Electric Appliance Huizhou Investment RMB 100% - Incorporated
Group Co., Ltd. holdings 448,000,000
Zhongshan Haibeirui Intelligent Software Zhongshan R&D - 100% Incorporated
Technology Co., Ltd. RMB5,000,000
TCL Intelligent Technology (Hefei) Co., Ltd. Hefei R&D RMB1,000,000 - 100% Incorporated
TCL Air-Conditioner (Zhongshan) Co., Ltd. Zhongshan Manufacturing USD - 80% Incorporated
and marketing 62,311,649
TCL Delong Home Appliances (Zhongshan) Zhongshan Manufacturing USD - 100% Incorporated
Co., Ltd. and marketing 5,000,000
Zhongshan TCL Refrigeration Equipment Zhongshan Manufacturing RMB - 100% Incorporated
Co., Ltd. and marketing 20,000,000
TCL Home Appliances (Zhongshan) Co., Zhongshan Manufacturing RMB - 100% Incorporated
Ltd. and marketing 80,000,000
119
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary was
registration business
yuan) Direct Indirect obtained
TCL Air Conditioner (Wuhan) Co., Ltd. Wuhan Manufacturin - 100% Incorporated
g and RMB
marketing 110,878,990
TCL Home Appliances (Hefei) Co., Ltd. Hefei Manufacturin 100% - Incorporated
g and RMB
marketing 300,000,000
TCL Home Appliances (Hong Kong) Hong Marketing HKD - 100% Incorporated
Limited Kong 100,000
TCL Home Appliances (North America) The U.S. Marketing USD - 100% Incorporated
Co. 100,000
Tonly Electronics Holdings Limited The Virgin Investment HKD - 48.73% Incorporated
Islands holdings 268,357,390
Shenzhen Tonly Technology Development Shenzhen R&D RMB - 100% Incorporated
Co., Ltd. 10,000,000
Xi’an TCL Software Development Co., Xi’an R&D USD - 100% Incorporated
Ltd. 2,000,000
TCL Tonly Electronics (Huizhou) Co., Huizhou Manufacturin - 100% Incorporated
Ltd. g and RMB
marketing 161,500,000
Dongguan Pusheng Electronic Technology Dongguan Manufacturin - 100% Obtained in a
Co., Ltd. g and business
marketing combination
not under
RMB common
31,700,000 control
TCL OEM Marketing Co., Ltd. Hong Marketing HKD - 100% Incorporated
Kong 2
TCL Tonly Technology (Hong Kong) Hong Marketing HKD - 100% Incorporated
Limited Kong 50,000,000
TCL Commercial Information Technology Huizhou Manufacturin 65% - Incorporated
(Huizhou) Co., Ltd. g and RMB
marketing 100,000,000
TCL New Technology (Huizhou) Co., Ltd. Huizhou Manufacturin - 100% Incorporated
g and RMB
marketing 80,000,000
Huizhou TCL Light Electrical Appliances Huizhou Manufacturin 100% - Incorporated
Co., Ltd. g and RMB
marketing 70,000,000
120
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Huizhou VERY Light Source Technology Huizhou Manufacturin - 100% Obtained in a
Co., Ltd. g and business
marketing combination
not under
RMB common
100,077,277 control
121
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary was
registration business
yuan) Direct Indirect obtained
Guangzhou Sky-tech Cloud Info Co., Ltd. Guangzho Information USD - 100% Incorporated
u technology 200,000,000
Guangzhou Sky-tech Shichang Guangzho Information RMB - 100% Incorporated
Information Technology Co., Ltd. u technology 10,000,000
TCL Healthcare Holding Co., Ltd. Hong Investment USD - 66.67% Incorporated
Kong holdings 74,060,000
Guangzhou TCL Medical Equipment Co., Guangzho Manufacturin - 100% Incorporated
Ltd. u g and RMB
marketing 200,000,000
TCL Medical MRI Technology (Wuxi) Wuxi Manufacturin - 100% Incorporated
Co., Ltd. g and USD
marketing 30,000,000
TCL Medical Ultrasonic Technology Wuxi Manufacturin - 100% Incorporated
(Wuxi) Co., Ltd. g and USD
marketing 30,000,000
TCL Medical Radiological Technology Beijing Manufacturin 100% - Obtained in a
(Beijing) Co., Ltd. g and business
marketing combination
not under
RMB common
125,346,000 control
Huizhou TCL Environmental Resource Huizhou Investment RMB 91% - Incorporated
Co., Ltd. holdings 300,000,000
TCL Aobo Environmental Protection and Tianjin Manufacturin - 60% Incorporated
Development Co., Ltd. g and RMB
marketing 150,000,000
Huizhou TCL Environment Technology Huizhou Manufacturin - 51% Obtained in a
Co., Ltd. g and business
marketing combination
not under
RMB common
110,000,000 control
Shantou TCL Deqing Environmental Shantou Manufacturin - 51% Incorporated
Protection Development Co., Ltd. g and RMB
marketing 50,000,000
TCL Educational Web Ltd. The Virgin Investment HKD - 100% Incorporated
Islands holdings 42,819,044
122
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Shenzhen TCL Educational Technology Shenzhen Educational HKD - 100% Incorporated
Co., Ltd. service 31,000,000
Confucius Institute (Beijing) E-Learning Beijing Educational RMB - 80% Incorporated
Technology Center Co., Ltd. service 39,000,000
GoLive TV Tech Co., Ltd. Beijing Information RMB - 100% Incorporated
technology 30,834,300
123
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary was
registration business
yuan) Direct Indirect obtained
Quanying Technology (Beijing) Co., Ltd. Beijing Information - 100% Obtained in a
technology business
combination
not under
USD common
750,000 control
Shenzhen TCL Smart Home Technologies Shenzhen Information RMB - 100% Incorporated
Co., Ltd. technology 90,000,000
Shenzhen HAWK Internet Co., Ltd. Shenzhen Internet RMB 100%- - Incorporated
services 500,000,000
Shenzhen HAWK Cloud Information Beijing Internet RMB 100% - Incorporated
Technology Co., Ltd. services 20,000,000
TCL Culture Media (Shenzhen) Co., Ltd. Shenzhen Ad planning RMB 100% - Incorporated
550,000,000
Huizhou Cool Friends Network Huizhou E-commerce RMB 55% 45% Incorporated
Technology Co., Ltd. 500,000,000
Koyoo Online Service CO., Ltd. Huizhou After-sales RMB 100% - Incorporated
service 35,000,000
SHIFENDAOJIA Online Service Co., Ltd. Shenzhen Services RMB - 48.20% Incorporated
38,991,526
Highly Information Industry Co., Ltd. Beijing Product RMB 73.69% - Incorporated
distribution 132,600,000
Beijing Sunpiestore Technology Co., Ltd. Beijing Marketing RMB - 60% Incorporated
20,000,000
Beijing Lingyun Data Technology Co., Beijing Marketing RMB - 75% Incorporated
Ltd. 15,000,000
TCL Finance Holdings Group Shenzhen Finance RMB 100% - Incorporated
(Guangzhou) Co., Ltd. 1,000,000,000
TCL Finance Co., Ltd. Huizhou Finance RMB 82% 18% Incorporated
1,500,000,000
TCL Finance Technology (Shenzhen) Co., Shenzhen Finance RMB - 100% Incorporated
Ltd. 5,000,000
Shenzhen Baisi Asset Management Co., Shenzhen Asset RMB - 100% Incorporated
Ltd. management 30,000,000
124
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary was
registration business
yuan) Direct Indirect obtained
TCL Financial Service (Shenzhen) Co., Shenzhen Financial RMB - 100% Incorporated
Ltd. service 5,000,000
TCL Commercial Factoring (Shenzhen) Shenzhen Commercial RMB100,000,00 - 100% Incorporated
Co., Ltd. factoring 0
Huizhou Zhongkai TCL Zhirong Huizhou Finance RMB200,000,00 80% - Acquired
Technology Microcredit Co., Ltd. 0
Xinjiang TCL Equity Investment Co., Ltd. Huizhou Investment RMB200,000,00 100% - Incorporated
0
Petro AP Limited (note 2) The Virgin Investment USD - 45% Incorporated
Islands holdings 12,000,000
TCL Technology Park Co., Ltd. Zhuhai Property RMB3,000,000, 100% - Incorporated
management 000
TCL Technology Park (Huizhou) Co., Ltd. Huizhou Property RMB500,000,00 100% - Incorporated
management 0
Shenzhen TCL Real Estate Co., Ltd. Shenzhen Property RMB100,000,00 - 70% Incorporated
management 0
Shenzhen TCL Lighting Technology Co., Shenzhen Property RMB200,000,00 - 60% Incorporated
Ltd. management 0
Winshero Investment Limited The Virgin Investment USD - 100% Incorporated
Islands 1
Shenzhen TCL Industrial Technology Shenzhen R&D - 100% Incorporated
Research Institute, Ltd. RMB50,000,000
125
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Interests in Other Entities
VI
(Continued)
1 Interests in Subsidiaries (Continued)
(1) Major Subsidiaries (Continued)
Registered The Company’s How
Place of Nature of
Investee capital (in RMB interest subsidiary was
registration business
yuan) Direct Indirect obtained
TCL Research America Inc. The U.S. R&D USD - 100% Incorporated
10
TCL Industrial Technology Research Hong R&D HKD - 100% Incorporated
Institute (Hong Kong) Limited Kong 30,000,000
Thunderbird Technology Holding Limited Hong Investment HKD - 100% Incorporated
Kong holding 1
Guangdong TCL Smart Heating & Zhongshan Manufacturin - 80% Incorporated
Ventilation Equipment Co., Ltd. g and
marketing RMB
100,000,000
Note 1 Shenzhen China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as “CSOT”), a subsidiary of the
Company, has a 43.04% interest in Wuhan China Star Optoelectronics Technology Co., Ltd. (hereinafter referred to as
“Wuhan CSOT”). CSOT appoints key management personnel of Wuhan CSOT and decides its business and financial
policies, so CSOT is considered to have substantial control over Wuhan CSOT. Therefore, Wuhan CSOT is included
in the Company’s consolidated financial statements.
Note 2 TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, is the biggest shareholder of
Petro AP Limited, taking over half of the board seats. Therefore, TCL Industries Holdings (HK) Limited is considered to
have substantial control over the business and financial policies of Petro AP Limited, which is thus included in the
Company’s consolidated financial statements.
126
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(2) Subsidiaries with Significant Non-Controlling Interests
Profit or loss
Dividends distributed Ending equity
attributable to
to non-controlling attributable to
Non-controlling non-controlling
Subsidiary interests for current non-controlling
interests interests for current
period interests
period
TCL Electronics Holdings Limited 47.48% 217,270 136,414 3,998,552
Shenzhen China Star
Optoelectronics Technology Co.,
Ltd. 13.19% 58,478 285,625 22,623,400
Highly Information Industry Co.,
Ltd. 26.31% 24,791 15,699 5,398
127
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(2) Subsidiaries with Significant Non-Controlling Interests
The following table presents the key financial information of the aforesaid subsidiaries:
30 June 2018 31 December 2017
Non-curre
Current Non-curren Total Current Non-curren Total Current Non-curre Total Current Total
nt
assets t assets assets liabilities t liabilities liabilities assets nt assets assets liabilities liabilities
liabilities
TCL Electronics
17,059,281 2,651,321 19,710,602 10,787,681 556,002 11,343,683 18,942,326 2,826,681 21,769,007 14,865,668 485,010 15,350,678
Holdings Limited
Shenzhen China
Star
Optoelectronics 42,381,104 59,704,387 102,085,491 28,386,716 29,019,217 57,405,933 40,956,744 48,743,798 89,700,542 27,187,180 20,420,363 47,607,544
Technology Co.,
Ltd.
Highly
Information 3,080,687 16,917 3,097,604 2,303,415 - 2,303,415 2,833,869 16,439 2,850,308 2,096,563 - 2,096,563
Industry Co., Ltd.
128
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
1 Interests in Subsidiaries (Continued)
(2) Subsidiaries with Significant Non-Controlling Interests
The following table presents the key financial information of the aforesaid subsidiaries:
H1 2018 H1 2017
Operating Net profit Total Net cash Operating Net profit Total Net cash generated
revenue comprehensive generated revenue comprehensive from/used in operating
income from/used in income activities
operating
activities
TCL Electronics Holdings Limited 17,300,343 467,958 380,444 159,427 15,184,689 138,663 224,219 (418,234)
Shenzhen China Star
Optoelectronics Technology Co.,
Ltd. 12,192,597 1,218,006 1,226,434 3,612,642 13,987,060 2,420,574 2,726,769 5,614,327
Highly Information Industry Co.,
Ltd. 7,098,305 103,572 101,114 (479,311) 7,023,699 85,753 86,303 (140,658)
129
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
2 Interests in Joint Ventures and Associates
(1) Basic Information about Major Joint Ventures and Associates
Principal
Strategic to the
place of
Nature of Group’s The Company’s
Investee business/pla
business activities or interest
ce of
not
registration
Direct Indirect
Joint ventures–
TV University Online Distance Educationa
Yes -
Education Technology Co., Ltd. Beijing l service 50.00%
Logistics
CJ Speedex Logistics Co., Ltd. Yes -
Shenzhen service 50.00%
Associates–
The Cayman Real estate Yes
Fantasia Holdings Group Co., Limited
Islands
20.08% -
Bank of Shanghai Co., Ltd. Shanghai Finance Yes - 4.99%
Note For the Reporting Period, the Company had a 4.99% interest in Bank of Shanghai Co., Ltd. and appointed one
： of its directors to be a member of the Risk Management Committee under the Board of the Bank of Shanghai.
Therefore, the Company is deemed to have significant influence on the Bank of Shanghai, and this long-term
equity investment is thus measured using the equity method.
(2) Key Financial Information of Major Joint Ventures
30 June 2018 31 December 2017
TV University
TV University
Online Distance
CJ Speedex Online Distance CJ Speedex
Education
Logistics Co., Ltd. Education Logistics Co., Ltd.
Technology Co.,
Technology Co., Ltd.
Ltd.
Current assets 1,564,690 422,473 1,353,831 406,296
Non-current assets 68,846 24,470 72,837 17,707
Total assets 1,633,536 446,943 1,426,668 424,003
Current liabilities 1,293,285 300,080 1,109,984 272,522
Non-current liabilities 28,059 - 28,059 -
Total liabilities 1,321,344 300,080 1,138,043 272,522
Equity attributable to
non-controlling interests 6,494 - 5,547 -
Equity attributable to
shareholders of the Company as
the parent 305,698 146,863 283,078 151,482
Share of equity in proportion to
the Company’s interest 152,849 73,432 141,539 75,741
Carrying amount of investment in
joint venture 146,794 466,028 135,342 468,286
130
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
2 Interests in Joint Ventures and Associates (Continued)
(2) Key Financial Information of Major Joint Ventures (Continued)
H1 2018 H1 2017
TV University
TV University Online Distance
Online Distance Education
Education CJ Speedex Technology Co., CJ Speedex
Technology Co., Ltd. Logistics Co., Ltd. Ltd. Logistics Co., Ltd.
Operating revenue 801,916 663,566 613,395 475,273
Finance costs (754) (45) (928) (1,048)
Income tax expense 4,159 - 5,292 -
Net profit 23,568 (4,619) 29,990 (650)
Other comprehensive income - - - -
Total comprehensive income 23,568 (4,619) 29,990 (650)
Dividends received by the
Group from joint venture for
current period - - - -
(3) Key Financial Information of Major Associates
30 June 2018 31 December 2017
Fantasia Holdings Bank of Shanghai Fantasia Holdings Bank of Shanghai
Group Co., Limited Co., Ltd. Group Co., Limited Co., Ltd.
Current assets 57,710,693 345,836,931 46,448,956 317,912,792
Non-current assets 23,019,748 1,572,888,107 22,507,784 1,489,854,146
Total assets 80,730,441 1,918,725,038 68,956,740 1,807,766,938
Current liabilities 33,506,392 1,548,905,856 26,895,112 1,489,271,838
Non-current liabilities 29,503,339 216,641,465 24,363,597 171,053,697
Total liabilities 63,009,731 1,765,547,321 51,258,709 1,660,325,535
Equity attributable to
non-controlling interests 5,354,436 484,974 5,061,114 456,267
Equity attributable to
shareholders of the Company as
the parent 12,366,274 152,692,743 12,636,917 146,985,136
Share of equity in proportion to
the Company’s interest 2,483,148 7,617,733 2,537,493 7,332,984
Carrying amount of investment
in associate 2,080,025 8,101,444 2,125,346 7,630,711
131
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VI Interests in Other Entities (Continued)
2 Interests in Joint Ventures and Associates (Continued)
(3) Key Financial Information of Major Associates (Continued)
H1 2018 H1 2017
Fantasia Holdings Bank of Shanghai Fantasia Holdings Bank of Shanghai
Group Co., Limited Co., Ltd. Group Co., Limited Co., Ltd.
Operating revenue 5,270,806 19,749,818 3,822,660 15,396,008
Finance costs (814,317) Not applicable (609,780) Not applicable
Income tax expense (452,803) 618,499 (521,390) 320,842
Net profit 179,911 9,388,824 145,346 7,806,208
Other comprehensive income 8,628 228,594 5,529 222,751
Total comprehensive income 188,539 9,617,418 150,875 8,028,959
Dividends received by the
Group from associate for 65,972 - - -
current period
(4) Financial Information of Insignificant Joint Ventures and Associates Combined Respectively
H1 2018 H1 2017
Joint ventures：
Aggregated carrying amount of investments 43,512 44,422
Aggregate of following items calculated in -
proportion to the Company’s interest -
Net profit (note) 124 (13,107)
Other comprehensive income (note) - -
Total comprehensive income 124 (13,107)
Associates：
Aggregated carrying amount of investments 14,681,014 13,901,499
Aggregate of following items calculated in
proportion to the Company’s interest - -
Net profit (note) 582,677 1,030,673
Other comprehensive income (note) (5,092) 12,915
Total comprehensive income 577,585 1,043,588
Note： The net profit and other comprehensive income have taken into account the impacts of both the fair value of the
identifiable assets and liabilities upon the acquisition of investment and accounting policies unifying.
132
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions
1 Biggest Shareholder of the Company
The Company has no controlling shareholder.
Hubei Changjiang Hezhi Hanyi Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred
to as “Changjiang Hanyi”), the biggest shareholder of the Company, holds 1,059,950,300 shares (or 7.82%) in
the Company. Mr. Li Dongsheng directly holds 638,273,700 shares (or 4.71%) in the Company, and indirectly
holds 408,899,500 (or 3.02%) in the Company through Xinjiang Jiutian Liancheng Equity Investment
Partnership (Limited Partnership) (hereinafter referred to as “Jiutian Liancheng”) and 452,660,300 shares (or
3.35%) in the Company through Xinjiang Dongxing Huarui Equity Investment Partnership (Limited
Partnership) (hereinafter referred to as “Dongxing Huarui”). Therefore, Mr. Li Dongsheng is the real biggest
shareholder of the Company for he controls a total of 1,499,833,500 shares (or 11.10%) in the Company.
133
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
2 Related Parties that Do Not Control or Are Not Controlled by the Company
Information about such related parties：
Related party Relationship with the Company
Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. Associate
LG Innotek Huizhou Co., Ltd. Associate
Saipwell TCL Electronics Industrial Technology Co., Ltd. Associate
Taiyang Electro-optic (Huizhou) Co., Ltd. Associate
T2Mobile Limited Associate
Guangdong Regency Optics-Electron Corp. Associate
TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. Associate
Shenzhen Thunderbird Network Technology Co. Associate
Yizheng Zeyu Electric Light Co., Ltd. Associate
Wuhan Shangde Plastics Technology Co., Ltd. Associate
TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. Associate
Huizhou TCL Resource Investment Co., Ltd. Associate
Shenzhen Jucai Supply Chain Technology Co., Ltd. Associate
Huan Tech Co., Ltd. Associate
Active Industries International Limited Associate
Gaoshengda Holdings (Huizhou) Co., Ltd. Associate
Good Vision Limited Associate
Harvey Holdings Limited Associate
Hubei Changjiang Hezhi Equity Investment Fund Management Co., Associate
Ltd.
Beijing WeMed Medical Equipment Co., Ltd. Associate
Wealthy Way Group Limited Associate
Kai Os Technologies Inc Associate
China Merchants Real Estate (Pingshan, Shenzhen) Co., Ltd. Associate
Opta Corporation Associate
TCL Mingchuang (Xi’an) Co., Ltd. Associate
Shanghai Chuangxiang Venture Capital Partnership (Limited
Associate
Partnership)
Shanghai Gen Auspicious Investment Management Co., Ltd. Associate
Xizang Dongwei Investment Management Center (Limited
Associate
Partnership)
Xinjiang Dongpeng Weichuang Equity Investment Partnership
Associate
(Limited Partnership)
Xinjiang Dongpeng Heli Equity Investment Partnership (Limited
Associate
Partnership)
Urumqi Dongpeng Chuangdong Equity Investment Management
Associate
Partnership (Limited Partnership)
Nanjing Zijin Chuangdong Investment Partnership (Limited
Associate
Partnership)
Nanjing A Dynamic Equity Investment Fund Management Co., Ltd. Associate
Shanghai Gen Auspicious Investment Management Co., Ltd. Associate
Beijing A Dynamic Investment Consulting Co., Ltd. Associate
Urumqi TCL Create Dynamic Equity Investment Management Co.,
Associate
Ltd.
Urumqi Qixinda Equity Investment Management Co., Ltd. Associate
Shenzhen Jiutian Matrix Investment Management Co., Ltd. Associate
134
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
2 Related Parties that Do Not Control or Are Not Controlled by the Company (Continued)
Information about such related parties：
Tianjin 712 Communication & Broadcasting Co., Ltd. Associate
Canyon Circuit Technology (Huizhou) Co., Ltd. Associate
Amlogic (Shanghai) Inc. Associate
TCL Sun , Inc. Joint venture
TCL Zhiyi Technology (Huizhou) Co., Ltd. Joint venture
CJ Speedex Logistics Co., Ltd. Joint venture
Huizhou TCL Taidong Shihua Investment Co., Ltd. Joint venture
TV University Online Distance Education Technology Co., Ltd. Joint venture
T2Mobile Limited Joint venture
TCL Huizhou City, Kai Enterprise Management Limited Joint venture
Huizhou Gaoshengda Technology Co., Ltd. Associate’s subsidiary
Shenzhen Thunderbird Smart Products Co., Ltd. Associate’s subsidiary
Shenzhen Thunderbird Network Media Co., Ltd. Associate’s subsidiary
Shenzhen Thunderbird Information Technology Co., Ltd. Associate’s subsidiary
Qihang Import&Export Limited Associate’s subsidiary
Huizhou Shenghua Industrial Co., Ltd. Associate’s subsidiary
Huizhou TCL Real Estate Development Co., Ltd. Associate’s subsidiary
T2 Mobile (Shanghai) Limited Associate’s subsidiary
T2Mobile International Limited Associate’s subsidiary
Amlogic Co., Limited Associate’s subsidiary
Elite Excellent Investments Limited Associate’s subsidiary
Union Dynamic Investment Limited Associate’s subsidiary
Huixing Holdings Limited Associate’s subsidiary
Marvel Paradise Limited Associate’s subsidiary
Shenzhen Yisheng Kangyun Technology Development Co., Ltd. Associate’s subsidiary
Xinjiang TCL Coal Co., Ltd. Associate’s subsidiary
Huizhou TCL Hongrong Properties Co., Ltd. Associate’s subsidiary
Gaoweida Digital Technology (Huizhou) Co., Ltd. Associate’s subsidiary
Huizhou TCL Cultural Development Co., Ltd. Associate’s subsidiary
Xionghua Investment Co., Ltd. Associate’s subsidiary
Wuhan Lesheng Times Trading Co., Ltd. Associate’s subsidiary
Jinpe Technology (HK) Co., Limited Associate’s subsidiary
Honpe Technology (Shenzhen) Co., Ltd. Associate’s subsidiary
Chengdu Legao Times Industrial Co., Ltd. Associate’s subsidiary
Xinjiang TCL Energy Co., Ltd. Associate’s subsidiary
TCT Mobile - Telefones LTDA Associate’s subsidiary
Tairui (Hong Kong) Limited Associate’s subsidiary
Beijing National Center for Open & Distance Education Co.,
Ltd. Joint venture’s subsidiary
Major subsidiary’s non-controlling
Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. shareholder
135
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
3 Major Related-Party Transactions
As % of As %
total of total
transaction transactio
s of same ns of same
H1 2018 kind H1 2017 kind
Sale of Raw Materials and Finished Goods to Not
(1)
Related Parties e1
Saipwell TCL Electronics Industrial 578,024 1.11% - 0.00%
Technology Co., Ltd.
Shenzhen Qianhai Qihang Supply Chain 332,546 0.64% 305,759 0.60%
Management Co., Ltd.
Qihang Import&Export Limited 249,243 0.48% 280,461 0.55%
TCL Sun,Inc. 138,387 0.27% 125,736 0.24%
Shenzhen Thunderbird Smart Products Co., 20,746 0.04% - 0.00%
Ltd.
T2Mobile International Limited 16,503 0.03% - 0.00%
TCT Mobile - Telefones LTDA 13,575 0.03% - 0.00%
TCL Zhiyi Technology (Huizhou) Co., Ltd. 8,651 0.02% 3,449 0.01%
Le Shi Zhi Xin Electronics & Technology 5,771 0.01% 435,473 0.85%
(Tianjin) Co., Ltd.
Huizhou Shenghua Industrial Co., Ltd. 2,679 0.01% - 0.00%
CJ Speedex Logistics Co., Ltd. 321 0.00% 38 0.00%
Huizhou TCL Real Estate Development Co., 80 0.00% - 0.00%
Ltd.
Taiyang Electro-optic (Huizhou) Co., Ltd. 78 0.00% - 0.00%
Huizhou Gaoshengda Technology Co., Ltd. 17 0.00% 31,600 0.06%
Beijing National Center for Open & Distance 17 0.00% - 0.00%
Education Co., Ltd.
Shenzhen Thunderbird Information 7 0.00% - 0.00%
Technology Co., Ltd.
Shenzhen Thunderbird Network Media Co., 1 0.00% - 0.00%
Ltd.
Hubei Changjiang Hezhi Equity Investment - 0.00% 14 0.00%
Fund Management Co., Ltd.
T2Mobile Limited - 0.00% 62,130 0.12%
LG Innotek Huizhou Co., Ltd. - 0.00% 25,886 0.05%
1,366,646 2.64% 1,270,546 2.48%
136
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
3 Major Related-Party Transactions
As % of As %
total of total
transaction transactio
s of same ns of same
H1 2018 kind H1 2017 kind
Procurement of Raw Materials and
(2)
Finished Goods from Related Parties Note 2
Huizhou Gaoshengda Technology Co.,
Ltd. 641,079 1.50% 478,359 1.18%
Taiyang Electro-optic (Huizhou) Co.,
Ltd. 110,424 0.26% - 0.00%
Wuhan Shangde Plastics Technology
Co., Ltd. 97,136 0.23% 73,968 0.18%
Shenzhen Qianhai Qihang Supply Chain
Management Co., Ltd. 81,206 0.19% 61,913 0.15%
Guangdong Regency Optics-Electron
Corp. 33,978 0.08% 11,395 0.03%
Amlogic Co., Limited 28,033 0.07% 37,434 0.09%
Shenzhen Thunderbird Network Media
Co., Ltd. 15,076 0.04% - 0.00%
Qihang Import&Export Limited 7,510 0.02% 880 0.00%
Yizheng Zeyu Electric Light Co., Ltd. 5,375 0.01% 3,612 0.01%
Tairui (Hong Kong) Limited 4,905 0.01% - 0.00%
TCL Rechi (Huizhou) Refrigeration
Equipment Co., Ltd. 3,156 0.01% 3,556 0.01%
Le Shi Zhi Xin Electronics &
Technology (Tianjin) Co., Ltd. Note a 1,751 0.00% 132,843 0.33%
Canyon Circuit Technology (Huizhou)
Co., Ltd. 1,163 0.00% - 0.00%
Huizhou Shenghua Industrial Co., Ltd. 272 0.00% - 0.00%
Honpe Technology (Shenzhen) Co., Ltd. 140 0.00% 9,782 0.02%
Huizhou TCL Taidong Shihua
Investment Co., Ltd. - 0.00% 13,866 0.03%
1,031,204 2.42% 827,608 2.03%
Note Because Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., Ltd. has significant influence on the
Company’s subsidiary TCL Electronics Holdings Limited, the transactions and accounts between them are
disclosed as related-party transactions.
137
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
3 Major Related-Party Transactions
H1 2018 H1 2017
Not
(3)
Getting Funding from Related Parties e3
Shenzhen Thunderbird Network Technology Co. 439,862 -
CJ Speedex Logistics Co., Ltd. 59,349 104,570
Huizhou Gaoshengda Technology Co., Ltd. 48,894 86,154
Qihang Import&Export Limited 25,228 8,710
Shenzhen Thunderbird Network Media Co., Ltd. 17,471 -
Huizhou TCL Resource Investment Co., Ltd. 11,272 937
Beijing National Center for Open & Distance Education 9,306 2,517
Co., Ltd.
Shenzhen Jucai Supply Chain Technology Co., Ltd. 6,867 -
Shenzhen Qianhai Qihang Supply Chain Management 6,729 7,964
Co., Ltd.
Taiyang Electro-optic (Huizhou) Co., Ltd. 3,615 4,502
Shenzhen Thunderbird Smart Products Co., Ltd. 2,580 -
TV University Online Distance Education Technology 918 4,880
Co., Ltd.
Union Dynamic Investment Limited 771 -
Marvel Paradise Limited 635 -
Huan Tech Co., Ltd. 464 459
Shenzhen Thunderbird Information Technology Co., 299 -
Ltd.
Xinjiang Dongpeng Weichuang Equity Investment 79 78
Partnership (Limited Partnership)
Opta Corporation - 210
Huizhou TCL Hongrong Properties Co., Ltd. - 6
Gaoweida Digital Technology (Huizhou) Co., Ltd. - 2
634,339 220,989
Not
(4) Providing Funding for Related Parties e3
Qihang Import&Export Limited 231,102 -
Shenzhen Qianhai Qihang Supply Chain Management
Co., Ltd. 60,000 79,200
Huizhou Gaoshengda Technology Co., Ltd. 32,856 9,577
Huizhou TCL Resource Investment Co., Ltd. 31,800 31,800
Canyon Circuit Technology (Huizhou) Co., Ltd. 10,000 -
Providing Labour Service for or Accepting Labour
(5)
Service from Related Parties
Providing labour service for related parties 181,962 110,802
Accepting labour service from related parties 476,708 405,674
138
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
3 Major Related-Party Transactions (Continued)
H1 2018 H1 2017
(6) Service Charges for Related Parties
Shenzhen Thunderbird Network Media Co., Ltd. 9,877 -
Not
Huan Tech Co., Ltd. e4 1,667 18,600
Receiving Interest from or Paying Interest to Related
(7)
Parties
Interest received 12,016 7,729
Interest paid 400 547
(8) Leases
Rental income 8,905 10,448
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 Procurement of Raw Materials and Finished Goods from Related Parties
2.
The Company purchases raw materials and finished goods from its joint ventures and associates at prices
similar to those paid to third-party suppliers, which are settled in the same way as non-related-party
transactions. These related-party transactions have no material impact on the Company’s net profit, but play an
important role as to the Company’s continued operations.
Note Providing Funding for or Getting Funding from Related Parties and Corresponding Interest Received or Paid
3.
The Company set up a settlement centre in 1997 and TCL Finance Co., Ltd. in 2006 (together, the “Financial
Settlement Centre”). The Financial Settlement Centre is responsible for the financial affairs of the Company,
including capital operation and allocation. The Centre settles accounts with the Company’s subsidiaries, joint
ventures and associates and pays the interest. It also allocates the money deposited by the subsidiaries, joint
ventures and associates in it to these enterprises and charges interest. The interest income and expense between
the Company and the Centre are calculated according to the interest rates declared by the People’s Bank of
China. Except for the accounts mentioned in Note 4 below, the funding amount provided refers to the
outstanding borrowings due from the Centre to related parties, while the funding amount received means the
balances of related parties’ deposits in the Centre.
Note Service Charges for Related Parties
4.
Huan Tech Co., Ltd. is a service provider in China for the Internet TVs produced and sold by the Company’s
majority-owned subsidiary Huizhou TCL Household Appliance Marketing Co., Ltd. Therefore, Huizhou TCL
Household Appliance Marketing Co., Ltd. pays proportional service charges to Huan Tech Co., Ltd. on those
Internet TVs.
139
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
4 Amounts Due from and to Related Parties
(1) Accounts Receivable from Related Parties
30 June 2018 31 December 2017
Shenzhen Qianhai Qihang Supply Chain Management
Co., Ltd. 393,293 299,867
Saipwell TCL Electronics Industrial Technology Co.,
Ltd. 242,773 167,674
TCL Sun,Inc. 87,045 73,999
Qihang Import&Export Limited 83,034 162,963
Shenzhen Thunderbird Smart Products Co., Ltd. 17,457 3,810
T2Mobile International Limited 8,873 15,365
T2 Mobile (Shanghai) Limited 3,830 404
TCL Zhiyi Technology (Huizhou) Co., Ltd. 3,512 6,764
Beijing National Center for Open & Distance Education
Co., Ltd. 502 98
Shenzhen Thunderbird Network Media Co., Ltd. 347 70
Huizhou TCL Real Estate Development Co., Ltd. 322 241
Hubei Changjiang Hezhi Equity Investment Fund
Management Co., Ltd. 70 -
Urumqi Dongpeng Chuangdong Equity Investment
Management Partnership (Limited Partnership) 17 -
Xizang Dongwei Investment Management Center
(Limited Partnership) 2 -
Good Vision Limited - 5,454
LG Innotek Huizhou Co., Ltd. - 10,705
Huan Tech Co., Ltd. - 566
Harvey Holdings Limited - 44
841,077 748,024
140
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
4 Amounts Due from and to Related Parties
(2) Accounts Payable to Related Parties
30 June 2018 31 December 2017
Huizhou Gaoshengda Technology Co., Ltd. 153,638 322,688
Taiyang Electro-optic (Huizhou) Co., Ltd. 49,545 74,446
Wuhan Shangde Plastics Technology Co., Ltd. 22,330 19,487
Le Shi Zhi Xin Electronics & Technology (Tianjin) Co., 18,182 18,790
Ltd.
Guangdong Regency Optics-Electron Corp. 14,678 19,441
Amlogic Co., Limited 6,058 7,163
CJ Speedex Logistics Co., Ltd. 4,916 28,085
Shenzhen Jucai Supply Chain Technology Co., Ltd. 3,474 162
Huan Tech Co., Ltd. 154 -
TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. 136 136
Harvey Holdings Limited 11 -
Honpe Technology (Shenzhen) Co., Ltd. 8 -
Wealthy Way Group Limited - -
TCL Rechi (Huizhou) Refrigeration Equipment Co., Ltd. - -
Yizheng Zeyu Electric Light Co., Ltd. - 1,037
Huizhou TCL Taidong Shihua Investment Co., Ltd. - 1,012
Shenzhen Thunderbird Network Technology Co. - 734
Beijing WeMed Medical Equipment Co., Ltd. - 31
273,130 493,212
141
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
4 Amounts Due from and to Related Parties (Continued)
(3) Other Receivables from Related Parties
30 June 2018 31 December 2017
Saipwell TCL Electronics Industrial Technology Co., 331,442 -
Ltd.
Qihang Import&Export Limited 205,873 -
Active Industries International Limited 85,674 161,795
Kai Os Technologies Inc 43,696 43,988
Harvey Holdings Limited 34,924 42,353
Shenzhen Qianhai Qihang Supply Chain 22,117 49,500
Management Co., Ltd.
Shenzhen Jucai Supply Chain Technology Co., Ltd. 1,280 -
Le Shi Zhi Xin Electronics & Technology (Tianjin) 800 800
Co., Ltd.
Shenzhen Thunderbird Network Media Co., Ltd. 630 695
Shenzhen Thunderbird Information Technology Co., 306 762
Ltd.
Nanjing Zijin Chuangdong Investment Partnership 296 -
(Limited Partnership)
Guangdong Regency Optics-Electron Corp. 137 184
Shenzhen Thunderbird Smart Products Co., Ltd. 76 36
Good Vision Limited 13 -
Honpe Technology (Shenzhen) Co., Ltd. 8 -
T2Mobile International Limited 6 -
Tianjin 712 Communication & Broadcasting Co., 6 6
Ltd.
Huan Tech Co., Ltd. 3 3
Shenzhen Jiutian Matrix Investment Management 1 -
Co., Ltd.
Xinjiang Dongpeng Weichuang Equity Investment - 40,300
Partnership (Limited Partnership)
Beijing WeMed Medical Equipment Co., Ltd. - 3,777
T2 Mobile (Shanghai) Limited - 3,676
Shanghai Chuangxiang Venture Capital Partnership - 2,180
(Limited Partnership)
Xionghua Investment Co., Ltd. - 17
Shenzhen Thunderbird Network Technology Co. - 545
727,288 350,617
142
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
4 Amounts Due from and to Related Parties (Continued)
(4) Other Payables to Related Parties
30 June 2018 31 December 2017
Shenzhen Thunderbird Network Technology Co. 439,031 -
CJ Speedex Logistics Co., Ltd. 84,450 68,590
China Merchants Real Estate (Pingshan, Shenzhen) Co.,
Ltd. 40,915 109,754
Beijing WeMed Medical Equipment Co., Ltd. 38,417 -
Opta Corporation 32,895 32,610
Huizhou TCL Resource Investment Co., Ltd. 6,268 6,267
Shenzhen Yisheng Kangyun Technology Development
Co., Ltd. 2,646 786
Huizhou TCL Real Estate Development Co., Ltd. 2,454 2,385
TCL Nanyang Electric Appliance (Guangzhou) Co., Ltd. 2,035 255
Jinpe Technology (HK) Co., Limited 1,908 1,396
Beijing National Center for Open & Distance Education
Co., Ltd. 1,155 300
Wealthy Way Group Limited 994 986
Wuhan Shangde Plastics Technology Co., Ltd. 784 784
Union Dynamic Investment Limited 771 761
Marvel Paradise Limited 635 627
Huizhou Gaoshengda Technology Co., Ltd. 484 17,359
T2Mobile Limited 169 166
TCL Mingchuang (Xi’an) Co., Ltd. 161 161
TV University Online Distance Education Technology
Co., Ltd. 139 141
Hubei Changjiang Hezhi Equity Investment Fund
Management Co., Ltd. 112 74
Taiyang Electro-optic (Huizhou) Co., Ltd. 92 93
T2 Mobile (Shanghai) Limited 68 -
Xionghua Investment Co., Ltd. 43 -
Urumqi Dongpeng Chuangdong Equity Investment
Management Partnership (Limited Partnership) 35 35
Xizang Dongwei Investment Management Center
(Limited Partnership) 3 3
Gaoweida Digital Technology (Huizhou) Co., Ltd. 2 2
Qihang Import&Export Limited - 6,170
Good Vision Limited - 5,440
Elite Excellent Investments Limited - 2,076
Huixing Holdings Limited - 676
143
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions
(Continued)
Amounts Due from and to Related Parties
4
(Continued)
(4) Other Payables to Related Parties (Continued)
30 June 2018 31 December 2017
Honpe Technology (Shenzhen) Co., Ltd. - 238
Nanjing A Dynamic Equity Investment Fund
Management Co., Ltd. - 5
Shanghai Gen Auspicious Investment Management Co.,
Ltd. - 5
Beijing A Dynamic Investment Consulting Co., Ltd. - 4
Urumqi TCL Create Dynamic Equity Investment
Management Co., Ltd. - 4
TCL Huizhou City, Kai Enterprise Management Limited - 4
LG Innotek Huizhou Co., Ltd. - 2
656,666 258,159
144
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions (Continued)
4 Amounts Due from and to Related Parties (Continued)
(5) Notes Receivable from Related Parties
30 June 2018 31 December 2017
Le Shi Zhi Xin Electronics & Technology (Tianjin) Co.,
Ltd. 2,319 607
2,319 607
(6) Notes Payable to Related Parties
30 June 2018 31 December 2017
Shenzhen Thunderbird Smart Products Co., Ltd. 3,822 -
Shenzhen Qianhai Qihang Supply Chain Management Co.,
Ltd. 2,467 14,377
CJ Speedex Logistics Co., Ltd. 2,504 -
8,793 14,377
(7) Prepayments to Related Parties
30 June 2018 31 December 2017
CJ Speedex Logistics Co., Ltd. 40,853 1,760
Shenzhen Qianhai Qihang Supply Chain Management Co.,
Ltd. 24,482 22,693
Wuhan Lesheng Times Trading Co., Ltd. 8,052 -
Shenzhen Jucai Supply Chain Technology Co., Ltd. 492 -
Le Shi Zhi Xin Electronics & Technology (Tianjin) Co.,
Ltd. 272 2,128
T2 Mobile (Shanghai) Limited - 1,784
Honpe Technology (Shenzhen) Co., Ltd. - 1,056
74,151 29,421
(8) Advances from Related Parties
30 June 2018 31 December 2017
Xinjiang Dongpeng Weichuang Equity Investment
Partnership (Limited Partnership) 3,000 -
Saipwell TCL Electronics Industrial Technology Co., Ltd. 617 -
Beijing National Center for Open & Distance Education
Co., Ltd. 55 -
Shenzhen Qianhai Qihang Supply Chain Management Co.,
Ltd. - 131
TCL Sun,Inc. - 69
Huizhou Gaoshengda Technology Co., Ltd. - 7
CJ Speedex Logistics Co., Ltd. - 1
3,672 208
145
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VII Related Parties and Related-Party Transactions
(Continued)
Amounts Due from and to Related Parties
4
(Continued)
(9) Dividends Receivable from Related Parties
30 June 2018 31 December 2017
Tianjin 712 Communication & Broadcasting Co., Ltd. 4,417 -
Xinjiang Dongpeng Weichuang Equity Investment 1,404 11,015
Partnership (Limited Partnership)
Taiyang Electro-optic (Huizhou) Co., Ltd. 1,163 -
Saipwell TCL Electronics Industrial Technology Co., Ltd. 89 88
7,073 11,103
(10) Interest Receivable from Related Parties
30 June 2018 31 December 2017
Harvey Holdings Limited 3,459 2,411
Qihang Import&Export Limited 157 -
Shenzhen Qianhai Qihang Supply Chain Management Co., 79 77
Ltd.
Huizhou Gaoshengda Technology Co., Ltd. 24 -
3,719 2,488
(11) Deposits from Related Parties
30 June 2018 31 December 2017
Huizhou Gaoshengda Technology Co., Ltd. 48,409 9,402
CJ Speedex Logistics Co., Ltd. 46,886 23,724
Shenzhen Thunderbird Network Media Co., Ltd. 17,471 21,920
Huizhou TCL Resource Investment Co., Ltd. 10,548 17,178
Beijing National Center for Open & Distance Education 9,163 8,809
Co., Ltd.
Shenzhen Jucai Supply Chain Technology Co., Ltd. 6,867 5,106
Shenzhen Qianhai Qihang Supply Chain Management Co., 6,729 23,616
Ltd.
Taiyang Electro-optic (Huizhou) Co., Ltd. 3,521 2,837
Shenzhen Thunderbird Smart Products Co., Ltd. 2,580 207
TV University Online Distance Education Technology Co., 779 3,167
Ltd.
Huan Tech Co., Ltd. 464 462
Shenzhen Thunderbird Information Technology Co., Ltd. 299 450
Shenzhen Thunderbird Network Technology Co. 148 776
Xinjiang Dongpeng Weichuang Equity Investment 79 -
Partnership (Limited Partnership)
153,943 117,654
These deposits are made by related parties in the Company’s subsidiary TCL Finance Co., Ltd.
Except that the deposits of the Company’s subordinates in the Financial Settlement Centre and the Centre’s
borrowings to the subordinates are interest-bearing, all the other amounts due from and to related parties bear
no interest, collateral or fixed payment dates.
146
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
VIII Commitments
1 Lease Commitments
The following table presents the minimum lease payables after the balance sheet date according to the
irrevocable operating lease contracts signed by the Company：
30 June 2018 31 December 2017
Year 1 77,254 61,451
Year 2 62,652 52,297
Year 3 46,659 43,809
Thereafter 89,203 52,515
275,768 210,072
2 Capital Commitments
30 June 2018 31 December 2017
Under contractual obligations Note
but not provided for 1 6,961,897 8,322,088
Approved by Board but not Note
under contractual obligations 2 11,207 -
6,973,104 8,322,088
Note 1. The capital commitments under contractual obligations but not provided for in the current period
primarily consisted of such commitments for construction of investment projects and external investments.
Note 2. The capital commitments approved by the Board but not under contractual obligations in the current
period primarily consisted of such commitments for CSOT’s LCD panel project.
As at 30 June 2018, except for the disclosures above, there were no other major commitments that are required
to be disclosed.
147
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
IX Contingencies
1 Guarantees Provided for External Parties
(1) The guarantee amount for associates’ bank loans, commercial drafts, letters of credit, etc. is RMB587,060,000.
As at 30 June 2018, the Company estimated that it was not likely for the aforesaid guarantees to cause a
material loss, so it did not record a provision in the financial statements for it. Except for the said
contingencies, there were no other major contingencies that are required to be disclosed as at 30 June 2018.
X Events after Balance Sheet Date
1 As per the China Securities Regulatory Commission’s Reply ZJXK [2017] No. 276 on the Approval of TCL
Corporation’s Public Offering of Corporate Bonds to Qualified Investors and TCL Corporation’s
Announcement on the Public Offering of 2018 Corporate Bonds to Qualified Investors (Phase 2), the Company
publicly issued on 16 August 2018 RMB2 billion of corporate bonds to qualified investors, with a maturity of
five years and a coupon rate of 5.30%.
Except for the aforesaid event, there were no other significant post-balance-sheet-date events that are required
to be disclosed as at the date of the authorization of the financial statements for issue.
148
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XI Other Significant Events
1 In order to further improve its incentive and governance system and attach equal importance to incentive and
constraint, the Company released on 3 March 2018 the Top 400 and Key Personnel Stock Ownership Plan and
the Global Partner Plan of TCL Corporation (Draft) (hereinafter referred to as the “Partner Plan”), as well as
the 2018 Restricted Stock Incentive Plan and the Global Innovation Partner Plan of TCL Corporation (Draft),
for key medium- and high-level employees, as well as for medium- and low-level employees, respectively. For
the first Partner Plan, the specialized incentive fund for 2018 is expected to not exceed RMB280 million. With
the subscription of a total of 34,676,444 restricted incentive shares in the Reporting Period, the Company’s
total share capital has increased from 13,514,972,063 shares to 13,549,648,507 shares.
2 According to the 2017 Final Dividend Plan approved at the general meeting on 18 May 2018, based on the
Company’s total share capital of 13,514,972,063 shares as at 27 April 2018 and the 34,676,444 granted
restricted incentive shares (together, 13,549,648,507 shares), a cash dividend of RMB1.00 (tax inclusive) per
10 shares was paid in the Reporting Period to all the shareholders, totaling RMB1,354,964,850.7.
3 As per the China Securities Regulatory Commission’s Reply ZJXK [2017] No. 276 on the Approval of TCL
Corporation’s Public Offering of Corporate Bonds to Qualified Investors and TCL Corporation’s
Announcement on the Public Offering of 2018 Corporate Bonds to Qualified Investors (Phase 1), the
Company publicly issued on 5 June 2018 RMB1 billion of corporate bonds to qualified investors, with a
maturity of five years and a coupon rate of 5.48%.
Except for the aforesaid events, there were no other other significant events that are required to be disclosed as
at 30 June 2018.
149
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent
1 Accounts Receivable
30 June 2018 31 December 2017
Allowan Allowan
Percenta ce for Allowa Percenta ce for Allow
Amount Amount
ge doubtful nce ge doubtful ance
accounts ratio accounts ratio
Within 1
year 347,661 100.00% - 0.00% 340,349 100.00% - 0.00%
As at 30 June 2018, there were no such accounts receivable from any shareholder with a 5% or greater voting
stock.
2 Other Receivables
30 June 2018 31 December 2017
Allowan Allowan
Percenta ce for Allowa Percenta ce for Allow
Amount Amount
ge doubtful nce ge doubtful ance
accounts ratio accounts ratio
Within 1
year 10,516,349 86.86% - 0.00% 8,840,984 86.97% - 0.00%
1-2 years 1,190,781 9.83% - 0.00% 1,006,354 9.90% - 0.00%
2-3 years 141,392 1.17% - 0.00% 110,185 1.08% - 0.00%
Over 3 42.31
years 259,489 2.14% 87,874 33.86% 209,295 2.05% 88,560 %
12,108,011 100.00% 87,874 0.73% 10,166,818 100.00% 88,560 0.87%
The outstanding other receivables were mostly current accounts with related parties. As at 30 June 2018, there
were no such other receivables from any shareholder with a 5% or greater voting stock.
The top five other receivables amounted to approximately RMB7,358,243,000 (31 December 2017:
RMB7,362,890), accounting for 60.77% of the total other receivables (31 December 2017: 72.42%).
150
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent (Continued)
3 Available-for-Sale Financial Assets
30 June 2018 31 December 2017
Available-for-sale equity instruments——at fair
value (1) 53,962 79,824
Available-for-sale equity instruments——at cost (2) 1,144,694 1,144,694
1,198,656 1,224,518
(1) Available-for-Sale Equity Instruments——at Fair Value
Change in fair
Cost value Ending balance
Refond Optoelectronics (SZ.300241) 40,000 13,962 53,962
(2) Available-for-Sale Equity Instruments——at Cost
The
Company’s
Investee interest 30 June 2018 31 December 2017
Huizhou TCL Magnet Products Co., Ltd. 5.00% 76 76
National Source Coding Center (Beijing) 7.52% 5,000 5,000
Shanlian Information Technology Engineering
Center Co., Ltd. 19.23% 10,000 10,000
Samsung Suzhou LCD Co., Ltd. 10.00% 625,949 625,949
Boluo County Rural Commercial Bank 6.05% 203,669 203,669
Beijing Shangyun Chuangzhan Investment
Center (Limited Partnership) 10.00% 50,000 50,000
Kunshan Wantong Kaiyuan Equity Investment
Center (Limited Partnership) 5.00% 50,000 50,000
Guokai Siyuan (Beijing) Investment Fund Co.,
Ltd. 3.95% 200,000 200,000
1,144,694 1,144,694
4 Long-Term Equity Investments
30 June 2018 31 December 2017
Impair Impair
ment ment
Gross allowan Carrying Gross allowan Carrying
amount ce amount amount ce amount
Long-term equity investments at
equity method 9,366,925 - 9,366,925 8,889,011 - 8,889,011
Of which：Associates (1) 9,345,041 - 9,345,041 8,866,421 - 8,866,421
Joint ventures (1) 21,884 - 21,884 22,590 - 22,590
Subsidiaries (2) 28,564,323 - 28,564,323 26,094,554 - 26,094,554
37,931,248 - 37,931,248 34,983,565 - 34,983,565
As at 30 June 2018, there were no significant restrictions on sale of the long-term equity investments or
collection of the investment income.
151
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
152
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent (Continued)
4 Long-Term Equity Investments (Continued)
(1) Joint Ventures and Associates
Changes in current period
Change in Investment Adjustment
Other Cash dividends
Beginning investment income/(loss) in other Impairment Other
changes or profits 30 June 2018
amount in current at equity comprehens allowance changes
in equity declared
period method ive income
LG Innotek Huizhou Co., Ltd. 81,554 - 3,402 - - (10,135) - 2,037 76,858
Huan Tech Co., Ltd. 158,042 - 561 - - - - - 158,603
TCL Nanyang Electric Appliance
(Guangzhou) Co., Ltd. 2,291 - (100) - - - - - 2,191
Tianjin 712 Communication &
Broadcasting Co., Ltd. 637,000 - 6,936 - - - - 25,751 669,687
Gaoshengda Holdings (Huizhou) Co.,
Ltd. 49,733 - 7,713 - - - - - 57,446
Huizhou Shangdian Law Firm
Waterway Construction Investment
Co., Ltd. 48,081 - (223) - - - - (47,858) -
Huizhou TCL Resource Investment
Co., Ltd. 65,532 - (9,716) - - - - - 55,816
Shenzhen Qianhai Qihang Supply
Chain Management Co., Ltd. 53,012 - 4,393 - - - - - 57,405
Bank of Shanghai Co., Ltd. 7,630,711 - 467,562 3,171 - - - - 8,101,444
153
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent (Continued)
4 Long-Term Equity Investments (Continued)
(1) Joint Ventures and Associates
Changes in current period
Investment
Adjustment Cash Impairm
Change in income/(lo Other
Beginning in other dividends ent Other
investment in ss) at changes 30 June 2018
amount comprehensiv or profits allowanc changes
current period equity in equity
e income declared e
method
Hubei Consumer Finance Company 120,343 - 5,836 - - - - - 126,179
Taiyang Electro-optic (Huizhou) Co., Ltd. 12,921 - 1,229 - - (1,163) - - 12,987
Shenzhen Changcheng Commercial
Technology Property Service Co., Ltd. 1,200 - 1,595 - - - - - 2,795
Shenzhen Jucai Supply Chain Technology
Co., Ltd. 6,000 - (541) - - - - - 5,459
Huizhou TCL Taidong Shihua Investment
Co., Ltd. 22,590 - (706) - - - - - 21,884
Canyon Circuit Technology (Huizhou)
Co., Ltd. - 16,103 2,068 - - - - 18,171
\
8,889,010 16,103 490,009 3,171 - (11,298) - 20,070 9,366,925
154
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent (Continued)
4 Long-Term Equity Investments (Continued)
(2) Subsidiaries
Voting
right Increase in Decrease in
percenta 1 January current current
ge 2018 period period 30 June 2018
TCL Industries Holdings (HK) Limited 100.00% 1,344,042 - - 1,344,042
Shenzhen China Star Optoelectronics
86.81% 18,727,299 270,005 - 18,997,304
Technology Co., Ltd.
Huizhou TCL Household Electric
100.00% 448,000 54 - 448,054
Appliance Group Co., Ltd.
TCL Commercial Information Technology
80.00% 65,000 - - 65,000
(Huizhou) Co., Ltd.
Huizhou Cool Friends Network
55.00% 273,144 - - 273,144
Technology Co., Ltd.
Koyoo Online Service Co., Ltd. 100.00% 25,469 - - 25,469
Techne Corporation 55.00% 37,954 - - 37,954
Xinjiang TCL Equity Investment Co.,
100.00% 200,000 - - 200,000
Ltd.
Huizhou TCL Environmental Resource
100.00% 300,000 - (26,987) 273,013
Co., Ltd.
Highly Information Industry Co., Ltd. 73.69% 107,296 - - 107,296
Shenzhen TCL Industrial Technology
0.00% 17,500 - (17,500) -
Research Institute, Ltd.
TCL Communication Equipment
75.00% 79,500 - - 79,500
(Huizhou) Co., Ltd.
TCL Finance Co., Ltd. 82.00% 1,256,003 47 - 1,256,050
Shenzhen TCL High-Tech Development
100.00% 20,000 16 - 20,016
Co., Ltd.
Huizhou TCL Hongchuang Technology
100.00% 5,000 - - 5,000
Co., Ltd.
Huizhou TCL International Hotels
100.00% 49,993 - - 49,993
Limited
Guangzhou TCL Science and
100.00% 230,000 - - 230,000
Technology Development Co., Ltd.
Xi’an TCL Industrial Technology
100.00% 150,000 15 - 150,015
Research Institute Co., Ltd.
TCL Home Appliances (Hefei) Co.,
100.00% 300,000 379 - 300,379
Ltd.
Huizhou TCL Light Electrical
100.00% 40,037 30,000 - 70,037
Appliances Co., Ltd.
Huarui (Huizhou) Co., Ltd. 67.10% 51,000 16,105 - 67,105
Shenzhen TCL Real Estate Co., Ltd. 0.00% 212,958 - (212,958) -
Huizhou Taichuang Investment
0.00% 50,000 - (50,000) -
Development Co., Ltd.
Guangzhou Xitian Technology
50.00% 15,000 - - 15,000
Information Co., Ltd.
Guangzhou Yunsheng Tianji Technology
50.00% 150,000 - - 150,000
Co., Ltd.
TCL Culture Media (Shenzhen) Co., Ltd. 100.00% 263,414 90,000 - 353,414
TCL Finance Holdings Group 400,023
100.00% 285,000 - 685,023
(Guangzhou) Co., Ltd.
Guangzhou TCL Internet Microcredit Co., 100.00% 200,000 300,008 - 500,008
155
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Ltd.
Shenzhen HAWK Internet Co., Ltd. 100.00% 350,000 - - 350,000
HAWK Digital Entertainment Technology
100.00% 50,000 - - 50,000
(Shenzhen) Co., Ltd.
TCL Intelligent Industry (Huizhou) Co.,
100.00% 59,000 - - 59,000
Ltd.
Huizhou Zhongkai TCL Zhirong
80.00% 135,624 270,020 - 405,644
Technology Microcredit Co., Ltd.
156
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
Long-Term Equity Investments
4
(Continued)
(2) Subsidiaries
Voting
right Increase in Decrease
percenta current in current
ge 1 January 2018 period period 30 June 2018
Shenzhen HAWK Cloud Information
Technology Co., Ltd. 100.00% 20,000 - - 20,000
TCL Technology Park (Huizhou) Co., Ltd. 100.00% 285,324 180,000 - 465,324
TCL Technology Park Co., Ltd. 100.00% 150,000 1,212,958 - 1,362,958
Huizhou Sailuote Communication Co.,
Ltd. 67.00% 82,500 - - 82,500
TCL Medical Radiological Technology
(Beijing) Co., Ltd. 100.00% 58,497 - - 58,497
Equity incentives of subsidiaries - 7,584 - 7,584
26,094,554 2,777,214 (307,445) 28,564,323
For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note V.
157
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
XII Notes to Financial Statements of the Company as Parent (Continued)
5 Operating Revenue and Cost of Sales
H1 2018 H1 2017
Operating Cost of sales Operating Cost of sales
revenue revenue
Core business 608,360 602,601 431,801 425,298
Non-core business 419,737 329,814 189,546 89,162
1,028,097 932,415 621,347 514,460
6 Investment Income
H1 2018 H1 2017
Investment income from disposal of wealth management instruments 233,615 147,846
Dividends from subsidiaries 1,944,633 208,787
Share of profit of associates for current period 490,715 290,877
Share of profit of joint ventures for current period (706) (1,196)
Investment income from holding available-for-sale financial assets 8,761 9,240
Net income from disposal of long-term investments (50,546) 3,000
2,626,472 658,554
As at 30 June 2018, there were no significant restrictions on the collection of the investment income.
7 Contingent Liabilities
The following table presents the contingent liabilities with no provisions in the financial statements as at 30 June
2018：
30 June 2018 31 December 2017
Guarantees for commercial drafts and letters of guarantee of
subsidiaries 28,147,300 13,870,451
Guarantees for bank loans of subsidiaries 17,279,120 11,580,724
Guarantees for bank loans and commercial drafts of joint ventures
and associates 587,060 667,610
As at 30 June 2018, the Company estimated that the guarantees above were not likely to cause a material loss.
XIII Comparative Data
Certain comparative data have been reclassified to comply with the presentation of the current period.
158
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
I Weighted Average Return on Equity (ROE) and Earnings per Share (EPS)
Item Net profit Weighted EPS (RMB yuan)
for average Basic EPS Diluted EPS
Reporting ROE
Period
Net profit attributable to ordinary
1,585,939 5.22% 0.1173 0.1172
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company before
non-recurring gains and losses 993,438 3.27% 0.0734 0.0734
ROE and EPS are calculated according to the Compilation Rules No. 9 for Information Disclosure of
Companies Offering Securities to the Public——Calculation and Disclosure of Return on Equity and Earnings
per Share (revised in 2010) issued by the China Securities Regulatory Commission.
EPS is calculated based on the weighted average outstanding ordinary shares of the Company.
Of which：non-recurring gains and losses
H1 2018 H1 2017
Gain or loss on disposal of non-current assets (inclusive of impairment
19,855
allowance write-offs) 17,143
Government subsidies charged to current profit or loss (exclusive of
government subsidies given in the Company’s ordinary course of 526,340
525,525
business at fixed quotas or amounts as per 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
- 82,582
Company’s 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 (50,041)
(6,131)
assets and liabilities and available-for-sale financial assets (exclusive
of effective portion of hedges that arise in the Company’s ordinary
course of business)
Non-operating income and expense other than above 303,187 (18,512)
Income tax effects (158,562) (59,945)
Non-controlling interests effects (88,661) (85,650)
Non-recurring gains and losses attributable to ordinary shareholders of
592,501 414,629
the Company as parent
Non-recurring gains and losses are recognized according to the Explanatory Announcement No. 1 on
Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gains and
Losses (2008) (CSRC Document [2008] No. 43).
AI-1
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
II Schedules of Asset Impairment Allowances
1 Consolidated Schedules of Asset Impairment Allowances
Increases in current
Decreases in current period
period
Newly Newly
Establishe consolidat deconsoli 30 June 2018
d in ed ReversedWritten off in dated Exchange
1 January current subsidiarie in current current subsidiari adjustme
Item 2018 period s period period es nts Total
1. Allowances for doubtful
accounts 821,385 140,505 - (30,554) (16,242) (10,840) (3,358) (60,994) 900,896
Including：Accounts receivable 384,267 124,916 - (29,439) (14,527) (10,268) (2,947) (57,181) 452,002
Other receivables 437,118 15,589 - (1,115) (1,715) (572) (411) (3,813) 448,894
2. Inventory valuation allowances 706,825 566,973 - (97,543) (346,271) (36,674) 316 (480,172) 793,626
3. Impairment allowances for
available-for-sale financial assets 148,117 4,299 - - (27,742) (28,288) (870) (56,900) 95,516
4. Impairment allowances for
Long-term equity investments 139,582 - - - - - - - 139,582
5. Impairment allowances for
fixed assets 612,761 47,065 - - (16) (336,152) (37,191) (373,359) 286,467
6. Impairment allowances for
intangible assets 45,664 - - - - - (8,912) (8,912) 36,752
7. Impairment allowances for
goodwill 257,344 - - - - - - - 257,344
8. Allowances for doubtful
accounts in rediscounting 10,342 3,773 - - - - - - 14,115
business of TCL Finance Co., Ltd.
2,742,020 762,615 - (128,097) (390,271) (411,954) (50,015) (980,337) 2,524,298
AI-2
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
2 Schedules of Asset Impairment Allowances of the Company as Parent
Decreases in current period
Increases in
1 January 2018 Reversed in Written off in
Item current period Total 30 June 2018
current period current period
Allowances for doubtful
accounts 88,560 920 - (1,606) (1,606) 87,874
Including：Other receivables 88,560 920 - (1,606) (1,606) 87,874
AI-3
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
III Analysis of Changes in Financial Statement Data
1 Analysis of Changes in Data of Consolidated Financial Statements
Compared with the carrying amount as at 31 December 2017, the Group’s monetary capital as at 30
June 2018 declined by RMB9,846,889,000 (or approximately -36%), primarily driven by higher cash
payments for investments.
Compared with the carrying amount as at 31 December 2017, the Group’s other current assets as at 30
June 2018 rose by RMB8,057,866,000 (or approximately 69%), primarily driven by new wealth
management instruments.
Compared with the carrying amount as at 31 December 2017, the Group’s loans and advances to
customers as at 30 June 2018 rose by RMB293,645,000 (or approximately 53%), primarily driven by a
rise in the loans and advances to customers.
Compared with the carrying amount as at 31 December 2017, the Group’s investment property as at 30
June 2018 rose by RMB693,680,000 (or approximately 81%), primarily driven by new investment
property.
Compared with the carrying amount as at 31 December 2017, the Group’s construction in progress as
at 30 June 2018 rose by RMB8,150,845,000 (or approximately 55%), primarily driven by a rise in the
investments in the t3 LCD panel and G11 production lines.
Compared with the carrying amount as at 31 December 2017, the Group’s other non-current assets as at
30 June 2018 rose by RMB4,713,923,000 (or approximately 139%), primarily driven by a rise in the
prepayments for equipment.
Compared with the carrying amount as at 31 December 2017, the Group’s taxes payable as at 30 June
2018 declined by RMB392,042,000 (or approximately -31%), primarily driven by a decline in the
corporate income taxes.
AI-4
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
III Analysis of Changes in Financial Statement Data
1 Analysis of Changes in Data of Consolidated Financial Statements
Compared with the carrying amount as at 31 December 2017, the Group’s short-term commercial
papers payable as at 30 June 2018 rose by RMB2,000,000,000 (or 100%), primarily driven by new
short-term commercial papers.
Compared with the carrying amount as at 31 December 2017, the Group’s other current liabilities as at
30 June 2018 declined by RMB2,563,071,000 (or approximately -42%), primarily driven by a decline
in the financial assets sold under repurchase agreements.
Compared with the carrying amount as at 31 December 2017, the Group’s long-term borrowings as at
30 June 2018 rose by RMB8,483,119,000 (or approximately 42%), primarily driven by new
borrowings.
Compared with the carrying amount for H1 2017, the Group’s other comprehensive income for H1
2018 declined by RMB445,324,000 (or approximately -203%), primarily driven by a decline in the
differences arising from the translation of foreign currency-denominated financial statements.
Compared with the carrying amount for H1 2017, the Group’s finance costs for H1 2018 declined by
RMB369,921,000 (or approximately -46%), primarily driven by a decline in the exchange loss.
Compared with the carrying amount for H1 2017, the Group’s asset impairment loss for H1 2018 rose
by RMB452,575,000 (or approximately 249%), primarily driven by the impairment loss on inventories
and fixed assets.
Compared with the carrying amount for H1 2017, the Group’s gain on changes in fair value for H1
2018 declined by RMB234,923,000 (or approximately -179%), primarily driven by a decline in the
gains on derivative financial instruments.
Compared with the carrying amount for H1 2017, the Group’s investment income for H1 2018 rose by
RMB294,713,000 (or approximately 37%), primarily driven by a rise in the investment income from
joint ventures and associates.
Compared with the carrying amount for H1 2017, the Group’s other income for H1 2018 rose by
RMB430,555,000 (or approximately 69%), primarily driven by a rise in the R&D subsidies.
AI-5
TCL Corporation
Attached: Supplementary Information to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
III Analysis of Changes in Financial Statement Data (Continued)
2 Analysis of Changes in Data of Financial Statements of the Company as Parent
Compared with the carrying amount as at 31 December 2017, the monetary capital of the Company as
the parent as at 30 June 2018 rose by RMB2,801,540,000 (or approximately 251%), primarily driven
by a rise in the deposits from subsidiaries.
Compared with the carrying amount as at 31 December 2017, the other current assets of the Company
as the parent as at 30 June 2018 rose by RMB5,317,780,000 (or approximately 168%), primarily
driven by a rise in the wealth management instruments.
Compared with the carrying amount as at 31 December 2017, the accounts payable of the Company as
the parent as at 30 June 2018 rose by RMB268,316,000 (or approximately 201%), primarily driven by
a rise in the accounts payable to subsidiaries.
Compared with the carrying amount as at 31 December 2017, the other payables of the Company as
the parent as at 30 June 2018 rose by RMB10,596,522,000 (or approximately 180%), primarily driven
by a rise in the other payables to subsidiaries.
Compared with the carrying amount as at 31 December 2017, the short-term commercial papers
payable of the Company as the parent as at 30 June 2018 rose by RMB2,000,000,000 (or 100%),
primarily driven by new short-term commercial papers.
Compared with the carrying amount as at 31 December 2017, the current portion of non-current
liabilities of the Company as the parent as at 30 June 2018 rose by RMB1,808,431,000 (or
approximately 75%), primarily driven by a rise in the current portion of corporate bonds.
TCL Corporation
28 August 2018
The financial statements and the notes thereto from page 1 to page 157, as well as the supplementary
information from page AI-1 to page AI-6, are signed by the following personnel:
Head for financial Head of the financial
Legal
affairs： department：
representative:
AI-6
