意见反馈 手机随时随地看行情

公司公告

TCL 集团:2018年半年度报告(英文版)2018-09-28  

						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