TCL 科技集团股份有限公司 TCL Technology Group Corporation FIRST QUARTERLY REPORT 2021 27 April 2021 1 TCL Technology Group Corporation First Quarterly Report 2021 Part I Important Notes, Table of Contents and Definitions The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of TCL Technology Group Corporation (hereinafter referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and 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 all the Company’s supervisors have attended the meeting of the Supervisory Committee for the review of this Report Mr. Li Dongsheng, the Chairman of the Board, Ms. Du Juan, the person-in-charge of financial affairs (Chief Financial Officer), and Mr. Xi Wenbo, the person-in-charge of the financial department, hereby guarantee that the financial statements carried in this Report are factual, accurate and complete. This Report 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 Technology Group Corporation First Quarterly Report 2021 Table of Contents Part I Important Notes, Table of Contents and Definitions ......................................................... 2 Part II Key Corporate Information ............................................................................................. 4 Part III Directors’ Report ............................................................................................................. 9 Part IV Significant Events .......................................................................................................... 17 Part V Financial Statements ....................................................................................................... 26 3 TCL Technology Group Corporation First Quarterly Report 2021 Part II Key Corporate Information I Key Financial Information Indicate whether there is any retrospectively restated datum in the table below. □ Yes ■ No Q1 2021 Q1 2020 Change (%) Revenue (RMB) 32,143,561,563 13,742,129,162 133.91% Net profit attributable to the company’s 2,403,729,935 408,125,802 488.97% shareholders (RMB) Net profit attributable to the company’s shareholders before non-recurring gains 2,123,056,041 -109,881,642 2032.13% and losses (RMB) Net cash generated from/used in operating 8,003,201,979 2,299,183,493 248.09% activities (RMB) Basic earnings per share (RMB/share) 0.1781 0.0316 463.61% Diluted earnings per share (RMB/share) 0.1713 0.0302 467.22% Weighted average return on equity (%) 7.07% 1.35% 5.72% 31 March 2021 31 December 2020 Change (%) Total assets (RMB) 274,693,487,644 257,908,278,887 6.51% Owners’ equity attributable to the 35,224,374,002 34,107,795,454 3.27% company’s shareholders (RMB) The total share capital at the end of the last trading session before the disclosure of this Report: Total share capital at the end of the last trading session before the 14,030,788,362 disclosure of this Report (share) Fully diluted earnings per share based on the latest total share 0.1713 capital above (RMB/share) Non-recurring gains and losses: Unit: RMB Item Q1 2021 Note Gain or loss on disposal of non-current assets (inclusive of -14,935,921 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 of 302,185,840 Not applicable business at fixed quotas or amounts as per the government’s uniform standards) 4 TCL Technology Group Corporation First Quarterly Report 2021 Gain or loss on fair-value changes in held-for-trading and derivative financial assets and liabilities & investment income from disposal of held-for-trading and derivative financial assets and 25,600,678 Not applicable liabilities and other debt investments (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) Non-operating income and expense other than the above 113,649,860 Not applicable Less: Corporate income tax 73,184,923 Not applicable Non-controlling interests (net of tax) 72,641,640 Not applicable Total 280,673,894 -- Explanation of why the Company reclassifies as recurrent a non-recurring gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss Items: □ Applicable ■ Not applicable II Total Number of Shareholders and Holdings of Top 10 Shareholders at the End of the Reporting Period 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preference shareholders Number of ordinary shareholders at 570,474 with resumed voting rights at the - the period-end period-end (if any) Top 10 shareholders Name of Nature of Shareholding Restricted shares Shares in pledge or frozen Total shares held shareholder shareholder percentage held Status Shares Li Dongsheng Put in pledge by Domestic natural 144,000,000 and his Li Dongsheng person/general 8.26% 1,158,599,393 610,181,602 acting-in-concert Put in pledge by legal person 344,899,521 party Jiutian Liancheng Huizhou State-owned legal Investment 5.30% 743,139,840 - - - person Holding Co., Ltd. Wuhan Optics Valley Industrial State-owned legal 3.65% 511,508,951 511,508,951 - - Investment Co., person Ltd. Hong Kong Foreign legal 3.26% 457,850,083 - - - Securities person 5 TCL Technology Group Corporation First Quarterly Report 2021 Clearing Company Ltd. China Securities Finance Domestic general 2.66% 373,231,553 - - - Corporation legal person Limited Tibet Tianfeng Enterprise Domestic general 1.76% 247,284,337 - - - Management Co., legal person Ltd. Domestic natural Fang Deji 1.47% 206,130,576 person Zhejiang Yiwu Tanzhen Investment Management Partnership Fund, wealth (Limited management 1.03% 145,169,128 Partnership)- product, etc. Loyal Valley (Tanzhen) Value China Exclusive Private Securities Investment Fund National Social Fund, wealth Security management 0.93% 129,785,014 - - - Fund-Portfolio product, etc. 601 CITIC Securities -CITIC Bank- CITIC Securities Fund, wealth Dividend Value management 0.58% 80,906,050 - - - One-Year Mixed product, etc. Collective Asset Management Plan Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares held at the period-end Type Shares Huizhou Investment Holding Co., RMB-denominate 743,139,840 743,139,840 Ltd. d ordinary stock Li Dongsheng and his 548,417,791 RMB-denominate 548,417,791 6 TCL Technology Group Corporation First Quarterly Report 2021 acting-in-concert party d ordinary stock Hong Kong Securities Clearing RMB-denominate 457,850,083 457,850,083 Company Ltd. d ordinary stock China Securities Finance RMB-denominate 373,231,553 373,231,553 Corporation Limited d ordinary stock Tibet Tianfeng Enterprise RMB-denominate 247,284,337 247,284,337 Management Co., Ltd. d ordinary stock RMB-denominate Fang Deji 206,130,576 206,130,576 d ordinary stock Zhejiang Yiwu Tanzhen Investment Management Partnership (Limited RMB-denominate Partnership)-Loyal Valley 145,169,128 145,169,128 d ordinary stock (Tanzhen) Value China Exclusive Private Securities Investment Fund National Social Security RMB-denominate 129,785,014 129,785,014 Fund-Portfolio 601 d ordinary stock CITIC Securities-CITIC Bank- CITIC Securities Dividend Value RMB-denominate 80,906,050 80,906,050 One-Year Mixed Collective Asset d ordinary stock Management Plan Bank of Communications Co., Ltd. RMB-denominate -China Southern Growth Pioneer 77,368,741 77,368,741 d ordinary stock Mixed Securities Investment Fund Being acting-in-concert parties upon the signing of the Agreement on Acting in Concert, Mr. Related or acting-in-concert parties Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited among the shareholders above Partnership) (hereinafter referred to as “Jiutian Liancheng”) are the biggest shareholder of the Company with a total of 1,158.5994 million shares. Shareholders Fang Deji and Zhejiang Yiwu Tanzhen Investment Management Partnership Top 10 shareholders involved in (Limited Partnership)-Loyal Valley (Tanzhen) Value China Exclusive Private Securities securities margin trading (if any) Investment Fund held shares in the Company in margin accounts. Note: The top 10 shareholders in the table above do not include “The Securities Account of TCL Technology Group Corporation for Repurchases”. As of the end of the Reporting Period, there were 484,206,763 shares in the account. Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period. □ Yes ■ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable ■ Not applicable 7 TCL Technology Group Corporation First Quarterly Report 2021 Part III Directors’ Report I. Overview In the Reporting Period, the rollout of the COVID-19 vaccine and the implementation of relaxed policies contributed to the recovery of the global economy. However, the adjustment of relations among major countries continued to disturb the trade order, increasing the instability of the industrial chain, and accelerating the differentiation and restructuring of the global economic pattern. The manufacturing, as a source of China's economic competitiveness and comparative competitive advantage, will usher in a new stage of development. In the face of the challenges and opportunities, the Company continued its efforts in line with the spirit of “Ramping up, Catching up and Going all out to be A Global Leader”, the requirements of the "9205" strategic development plan and the operating strategy of “improving operating quality and profitability, consolidating advantages and improving disadvantages, accelerating global layout, and driving development via innovation” to promote the two core businesses, namely the semi-conductor display business and the semi-conductor photovoltaic and semi-conductor materials business, to be global leading industries. In the first quarter of 2021, the Company recorded a revenue of RMB32.144 billion, up by 133.91% year-on-year; a net profit of RMB3.236 billion, up by 10.96 times year-on-year; a net profit attributable to the Company’s shareholders of RMB2.404 billion, up by 488.97% year-on-year. TCL CSOT and Zhonghuan Semiconductor had great performance in these two core industries. The semi-conductor display industry had constant improvement in the competition pattern and the supply and demand relationship, resulting in the price rise; the new production line is raising its mass production, and the scale effect and market position are increasing, product portfolio in high-end market and medium-size products is expanded. TCL CSOT recorded a net profit of RMB2.396 billion, up by RMB2.57 billion year-on-year and by 29.12% quarter-on-quarter, including a quarter-on-quarter net profit increase of 52.96% from large-size products, achieving continuously leading efficiency and profitability. The main raw materials in the photovoltaic industry continued to increase in price, and the competition pattern tends to be more complex. 8 TCL Technology Group Corporation First Quarterly Report 2021 Zhonghuan Semiconductor redefined its corporate development strategy, and reduced the costs, increased the capacity of existing equipment, improved product quality and consistency, and reduced raw material consumption per unit of product through technological innovation and improved manufacturing process. The total capacity of photovoltaic monocrystalline silicon product reached 60GW two months ahead of schedule, the market competitiveness, market share and profitability improved month by month. With continued global semiconductor shortage, Zhonghuan Semiconductor had accelerated growth in the business of raw materials used for power semiconductor products. The 8-12-inch large silicon wafers project ramped up smoothly, with a revenue increase of c. 80% year-on-year. Zhonghuan Semiconductor achieved a net profit of RMB743 million, up by 100.0% year-over-year. Looking into the rest of 2021, TCL CSOT and Zhonghuan Semiconductor will continue to grow robustly. Phase I of the t7 production line in Shenzhen will reach design capacity this year. 60% shares of Suzhou China Star Optoelectronics (t10) and 100% shares of Suzhou China Star Display (M10) were acquired, which will contribute to revenue of the Company from the second quarter of 2021; Moka International Limited will be included in the consolidated statements of the Company from the second quarter of 2021; t9 production line in Guangzhou will be a new driving force in medium-size field as the Board of Directors has approved it. Zhonghuan Semiconductor accelerated construction of phase V monocrystalline silicon project in Inner Mongolia, and Zhonghuan Phase VI 50GW(G12) project in Yinchuan, Ningxia Province was commenced as planned. In a new round of pattern reshaping driven by technological innovation, industrial ecosystem and ultimate efficiency in the PV industry, Zhonghuan Semiconductor stands out thanks to its accumulated technological advantages. Through the G12 platform and overlapped-cell products’ technological strength, the ecological resources of the fast-growing industrial alliance, and the first layout of advantageous production capacity, Zhonghuan Semiconductor is confident to complete the Double Operating Profit Plan in 2021. TCL Tech. will seize the golden period of global economic pattern adjustment and China's manufacturing development, and march forward to be a global industry leader with a stronger driving force for development! 9 TCL Technology Group Corporation First Quarterly Report 2021 II. Core Business Analysis The business structure of the Company primarily consists of the semi-conductor display business, the semi-conductor photovoltaic and semi-conductor materials business, the industrial finance and investment business, as well as the other businesses. The Company will continue to optimize its business structure and further focus its resources on the development of the two core businesses, and achieve the strategic goal of global leadership in the two core businesses, namely the semi-conductor display and the semi-conductor photovoltaic and semi-conductor materials. (I) Semi-conductor display business The supply-demand relationship in the semi-conductor display industry was improved, industry consolidation was accelerated, product prices continued to rise, and the overall profitability of the industry was enhanced. TCL CSOT continued to adhere to established strategies and operating strategy, held the business bottom line of maximizing cost efficiency, continuously improved management capabilities and control systems to consolidate the global industry leadership in terms of efficiency and profitability. In the Reporting Period, TCL CSOT recorded a product sales area of 8.344 million square meters, up by 17.5% year-on-year; a revenue of RMB17.373 billion, up by 90.0% year-on-year; and a net profit of RMB2.396 billion, up by RMB2.57 billion year-on-year or by 29.12% compared with Q4 2020. The large-size panel business expanded its scale advantage, further promoted its market position and maintained leading efficiency and profitability in the world. t1, t2 and t6 plants continued to operate at full capacity for strong sales. The t7 plant raised production as scheduled. The shipment of large-size products reached 7.9453 million square meters, up by 15.5% 10 TCL Technology Group Corporation First Quarterly Report 2021 year-on-year. 12.8133 million pieces were shipped with a year-on-year increase of 7.57%. Sales revenue was RMB12.072 billion, rising by 94.9% year-on-year. Globally, the Company rose to second place in the ranking of market share in TV panels. Besides, it was ranked first regarding the market share in 55-inch products, second in 32-inch, 65-inch and 75-inch products. The shipment of interactive whiteboards jumped to the top across the world. Market shares in commercial displays, such as rail transit products and splicing screen, climbed swiftly. For the small-size panel business, close attention was paid to enhancement of technical capacity and optimization of product and customer structures. In terms of the t3 LTPS production line, technical capacity was continuously enhanced, product structure was diversified, and cooperation with strategic customers was deepened; the shipment of LTPS mobile panels took fourth place globally, the shipment of LTPS notebook panels was ranked second in the world, with continuous robust growth. The t4 production line of flexible AMOLED displays produced at full capacity in Phase I. The flexible foldable screens grew due to the volume spike of new types launched by brand customers. Breakthroughs in new customers will be made further as equipment for Phases II and III are being moved in. In the Reporting Period, due to the significant increase in fixed costs driven by the expansion of new production lines and seasonal factors, the performance of small-size panel business slightly declined quarter on quarter, and the Company actively improved its operational benefits through product structure optimization and maximizing cost reduction. In the Reporting Period, the shipment of t3 and t4 reached 398,700 square meters, up by 81.2% year-on-year; 25.8972 million pieces were shipped with a year-on-year increase of 55.1%. The revenue from the small-size panel business amounted to RMB5.30 billion, increasing by 79.8% year-on-year. The medium-sized panel business had fast improved comprehensive competitiveness and became a new driving force for the growth of TCL CSOT. To grasp the market opportunities brought by emerging application scenarios and demand of performance upgrade, and to enhance TCL CSOT's market share and competitive advantage in medium-sized displays, the Company rapidly implemented its medium-sized panel business strategy and completed its reserve in technology, product and customer, and as a result, successfully introduced multiple world famous brands of high-end notebooks, tablets and vehicle displays. Based on the existing products, R&D 11 TCL Technology Group Corporation First Quarterly Report 2021 and customer base, the 8.6 generation oxide semiconductor new display device production line (t9 plant) project was quickly built to expand capacity for the medium-sized product market and customers, further diversified the e-sports displays, high-end notebooks, tablets, and vehicle displays and commercial displays. The Company accelerated the upgrade from a global leader in large-size display industry to a global leader in full-size display industry by leveraging its advantages in low-power consumption, high refresh rate, wide color gamut and other technological areas. Looking into the future, the long-term prospects of the semi-conductor display industry are promising, TCL CSOT continued growth in scale and strengthened its efficiency advantages. The concentration of LCD industry is improved and leading enterprises have developed a significant industry barrier. TCL CSOT’s market share and competitive advantage will continue to improve significantly over the next 12 quarters as the takeover of t10 plant is completed, the t7 plant continues its capacity ramp-up, phases II and III of the t4 plant are accelerated, and construction of t9 plant starts. The Company will continuously optimize product and revenue structures, implement strategic layout of high-end products, and enhance the scale and overall competitiveness of full-size products to drive its sustainable and quality progress. (II) Semi-conductor photovoltaic and semi-conductor materials The year 2021 marks the start of ownership reform of Zhonghuan Semiconductor. The company updated the "9205" development strategic plan, which clarifies the overall goal of "global leading strategy for new energy materials and catching up strategy for semiconductor materials", and accelerated the renewal of opeartions and improved organizational vitality, optimized industrial layout, consolidated advantages and improved disadvantages, and improved operating quality and profitability. In the Reporting Period, Zhonghuan Semiconductor accelerated the enhancement of G12 product technology and overlapped-cell modules technology barriers and industrialization process, expand the leading edge of silicon wafer for power semiconductor products, and accelerate the increase of the production capacity of silicon wafer for IC products. It recorded a revenue of RMB7.46 billion, up by 65.23% year-on-year; a net profit of RMB743 12 TCL Technology Group Corporation First Quarterly Report 2021 million, up by 100.0% year-on-year. In terms of semi-conductor photovoltaic, Zhonghuan Semiconductor grasped the golden opportunity of industry development and accelerated the expansion from technology leadership to advanced capacity scale leadership and industrial chain ecology leadership. Focusing on the development and integration of two platform-level technologies, namely G12 large-size silicon wafers and high-efficiency overlapped-cell modules, and leveraging Industry 4.0 and lean intelligent manufacturing, the company took advantage of product and technology to enhance industrial competitiveness. In terms of photovoltaic materials, the company's G12 monocrystalline silicon and silicon wafers in the Reporting Period gradually highlighted its technical advantages, product sales and earnings grew month by month, and the company's advanced production capacity entered a period of rapid growth. Phase V crystal production capacity in Inner Mongolia's is climbing as scheduled; following the start of operation of the DW-cut ultra-thin silicon wafer project in Tianjin, for the Inner Mongolia Zhonghuan Solar Phase II 25GW(G12) wafer project, the first batch of process equipment arrived at the plant, and commissioning was completed at the end of February, and this project is expected to start production in April 2021 and reach design capacity within the year; the construction of the 50GW(G12) intelligent factory project launched in Yinchuan started. In addition, through a new round of technical reform and manufacturing methods improvement, Zhonghuan Semiconductor economically increased the theoretical unit capacity of existing equipment and the actual capacity during the Reporting Period, which jointly facilitated the total monocrystalline PV silicon capacity to be more than 60GW 2 months ahead of the original plan and effectively reduced the unit investment cost of the company's advanced capacity. Moreover, the technical reform and manufacturing methods improvement have effectively improved product quality and consistency, reduced raw material consumption per unit of product, and continuously reduced operating costs. As a result, profits on the manufacturing side increased by more than RMB155 million in the first quarter, absorbing to some extent the impact of the price increase of raw and auxiliary material during the Reporting Period. Relevant technological innovation and the continued application of Industry 4.0 in the company's operation scenarios and business processes will bring sustained contributions to the production and sales scale and operating 13 TCL Technology Group Corporation First Quarterly Report 2021 results in the PV materials segment throughout the year. In terms of photovoltaic cells and modules, Zhonghuan Semiconductor continuously performed R&D of module technology for the overlapped-cell 3.0 production line and PERC3.0 cell technology, collaborated with domestically leading G12 PERC cell manufacturers in investing resources for new technology R&D to improve the cost performance of overlapped-cell module products and achieve the differentiating competitiveness of the final products. The capacity turned 5GW/year at the end of the Reporting Period. In the Reporting Period, based on the intellectual property rights and R&D capacities of MAXEON in IBC cells and components and overlapped-cell modules, the company further built up its manufacturing system of cells and components as well as surface and distributed power stations worldwide and improved overseas industrial layout and global supply chain system. In terms of semi-conductor materials business, Zhonghuan Semi-conductor strengthened product technology development and industrial capacity building, and improved product structure to meet the differentiating needs of strategic customers. In the Reporting Period, benefiting from the inadequate supply in global and Chinese semiconductor markets and the improvement of its competitiveness, Zhonghuan Semiconductor increased revenue from silicon wafers by c. 80% year-on-year. Dominated by 5-inch, 6-inch and 8-inch silicon wafers for power semiconductor products, the segment growth accelerated, it was at a leading position and had brand recognition in the domestic market in terms of production and sales scale, product diversity, product quality and product certification speed; the production and sales scale of the dominant 8-inch and 12-inch silicon wafers for IC products grew fast, and verification of strategic customers at home and abroad accelerated. The 8-12-inch large silicon wafer project for integrated circuits in Yixing, Jiangsu Province is raising capacity smoothly and a short supply situation has occurred, laying the market foundation for continued capacity release in 2021. By actively expanding global marketing and service capabilities, actively building market channel networks in Europe, Japan, Taiwan and other regions where the semiconductor businesses cluster, creating technical support platforms, and strengthening global system service capabilities, Zhonghuan Semiconductor achieved 30% overseas sales of materials business in the first quarter of 2021. 14 TCL Technology Group Corporation First Quarterly Report 2021 Looking into the rest of 2021, Zhonghuan Semiconductor will increase investment and asset restructuring of Inner Mongolia base, Tianjin base and Jiangsu base of Zhonghuan Advanced, orderly promote the coverage of the company’s products for power semiconductors chips and integrated circuit chips of all kind; As the company maintains the domestic and global leadership of Zhonghuan Advanced in power semi-conductor chips of all kinds, it will further improve service capability for customers with the advanced production process and to raise further the market share in this area. (III) Industrial Finance and Investment Business TCL Capital seeks investment opportunities in key fields of high-tech industries, including new display, semi-conductor industry chain, as well as key materials and process equipment. These investments took a balanced approach to promote technology development and derive economic benefits. By the end of the Reporting Period, the AUM of TCL Capital exceeded RMB9 billion, and 114 projects were invested cumulatively. Currently, it holds the stake of CATL, DKEM, Cambricon, Newtouch Software, Petro-king Oilfield, ZJBC, HyUnion Holding and other listed companies; as for Admiralty Harbour Capital, the investment banking and asset management business grew steadily and it has issued and underwritten 9 bonds and 2 debt management projects. China Innovative focused on industrial chain investment opportunities related to the Company’s two core businesses, and has invested in more than 110 listed companies cumulatively with a steady growth in performance. In the Reporting Period, the finance team focused on the funding needs of the Company’s key projects, strengthened the active management of liquidity and currency risk, and gradually satisfied financial needs of business globalization to support the core businesses of the Company to achieve global leadership. 15 TCL Technology Group Corporation First Quarterly Report 2021 Part IV Significant Events I Major Changes of Main Items in Financial Statements and Financial Indicators within the Reporting Period, as well as the Reasons for the Changes Unit: RMB Balance sheet items 31 March 2021 31 December 2020 Change (%) Reasons for the Changes Decrease in derivatives Derivative financial assets 219,179,859 453,578,245 -51.7 investments Notes receivable 1,052,967,190 595,685,338 76.8 Increase in revenue Increase in prepayments to Prepayments 1,824,063,319 1,355,653,454 34.6 suppliers Increase in receivables in Other receivables 8,465,195,129 2,793,640,153 203.0 relation to investments Increase in borrowings Borrowings from central received by TCL Tech 668,442,302 469,834,291 42.3 bank Finance Co., Ltd. from the central bank Held-for-trading financial Increase in financial 1,368,835,184 527,901,041 159.3 liabilities products Derivative financial Decrease in derivatives 174,841,937 384,903,731 -54.6 liabilities investments Taxes and levies payable 979,478,482 670,058,792 46.2 Increase in earnings Effect of the new accounting Long-term payables 565,351,943 1,280,299,665 -55.8 standard governing leases Other comprehensive Foreign currency translation -297,310,404 -145,573,093 -104.2 income differences Income statement items Q1 2021 Q1 2020 Change (%) Reasons for the Changes Increase in revenue and Revenue 32,143,561,563 13,742,129,162 133.9 consolidation of Zhonghuan Electronics Increase in revenue and Cost of sales 25,383,357,989 12,743,745,923 99.2 consolidation of Zhonghuan Electronics Increase in earnings and Taxes and levies 106,853,638 38,902,775 174.7 consolidation of Zhonghuan Electronics Increase in revenue and Selling expense 330,230,062 159,592,940 106.9 consolidation of Zhonghuan Electronics 16 TCL Technology Group Corporation First Quarterly Report 2021 Increase in business and Administrative expense 763,004,335 321,790,541 137.1 consolidation of Zhonghuan Electronics Increase in R&D investments and R&D expense 1,540,240,528 837,453,524 83.9 consolidation of Zhonghuan Electronics Increase in financings and Finance costs 740,010,321 384,913,273 92.3 consolidation of Zhonghuan Electronics Decrease in government Other income 343,452,869 620,518,501 -44.7 subsidies Gain on changes in fair Changes in the fair value of -292,943,771 -205,634,246 -42.5 value derivatives Increase in impairment loss Credit impairment loss -31,736,912 -7,478,551 324.4 on loans and advances to ( “-” for loss) customers Increase in operating profit Income tax expense 487,257,128 25,846,940 1,785.2 and consolidation of Zhonghuan Electronics Increase in net profit and Net profit attributable to 831,927,064 -137,547,929 704.8 consolidation of Zhonghuan non-controlling interests Electronics Cash flow statement items Q1 2021 Q1 2020 Change (%) Reasons for the Changes Net cash generated Increase in revenue and from/used in operating 8,003,201,979 2,299,183,493 248.1 consolidation of Zhonghuan activities Electronics Loan repayment and Net cash generated increase in the interest in from/used in financing 2,657,860,614 7,670,463,871 -65.3 Zhonghuan Semiconductor activities in the Reporting Period II Progress, Influence and Solutions with regard to Significant Events Summary of the significant event Disclosure date Index to the related announcement Announcement on the Completion of the Non-Deal Transfer under the Third Global 22 January 2021 Partner Plan http://www.cninfo.com Voluntary Announcement on the Increase 4 February 2021 in the Interest in Tianjin Printronics Circuit 17 TCL Technology Group Corporation First Quarterly Report 2021 Corporation Announcement on the Progress on the Acquisition of a 60% Interest in Samsung Suzhou LCD Co. Ltd. and the 100% 8 February 2021 Interest in Samsung Display Suzhou Co., Ltd. Voluntary Announcement on the Increase in the Interest in Tianjin Printronics Circuit 17 March 2021 Corporation Voluntary Announcement on the Increase in the Interest in Tianjin Zhonghuan 18 March 2021 Semiconductor Co., Ltd. Progress of any share repurchase: □ Applicable ■ Not applicable Progress on reducing the repurchased shares by means of centralized bidding: □ Applicable ■ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Parties, Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the Reporting Period □ Applicable ■ Not applicable IV Financial Investments 1. Securities Investments Unit: RMB’0,000 Gain/loss Cumulati Measu on ve Purchased Gain/los Secu Initial remen Beginning fair-value fair-valu Sold in the Ending Fundin Securit Security in the s in the Account rity investment t carrying changes in e Reporting carrying g y type name Reporting Reportin ing title code cost metho amount the changes Period amount source Period g Period d Reporting recorded Period in equity Bank’s Sea Gull Held-for wealth Not Collective Fair -trading Self-fu manage appli Capital 20,000 - 260 - 20,000 - 260 20,260 value financia nded ment cable Trust Plan l assets product No. 2 Convert Not Convertible Fair Held-for Self-fu 115,077 - - - 115,077 103,005 1,046 12,072 ible appli bonds of value -trading nded 18 TCL Technology Group Corporation First Quarterly Report 2021 bonds cable Bank of financia Shanghai l assets Investm ents in 0860 Fair other Self-fu Stock Apollo 24,336 17,847 - -12,801 - - - 11,637 .HK value equity nded instrum ents Tier 2 Not 20 China Amort Debt Self-fu capital appli CITIC 10,000 ized 10,148 - - - - 95 10,244 investm nded debt cable Bank Tier 2 cost ents Yuanheng Asset FOF Single Held-for Not manage Asset Fair -trading Self-fu appli 10,000 10,040 89 - - - 89 10,129 ment Manageme value financia nded cable plan nt Plan No. l assets 1 USG Held-for 9T27 Vedanta Fair -trading Self-fu Bonds 8,337 - -213 - 8,337 - -213 8,251 HA Resources value financia nded D62 l assets XS2 Held-for 2939 Easy Tactic Fair -trading Self-fu Bonds 7,890 - 272 - 7,890 - 272 8,221 1828 Ltd value financia nded 5 l assets USG Held-for Vedanta 9328 Fair -trading Self-fu Bonds Resources 7,541 - 45 - 7,541 - 302 7,641 DA value financia nded Ltd M23 l assets US7 Held-for 1654 Petroleos Fair -trading Self-fu Bonds 6,677 7,019 -165 - - - 46 6,902 QCG Mexicanos value financia nded 55 l assets XS1 Held-for 6426 Softbank Fair -trading Self-fu Bonds 6,969 6,704 41 - - - 265 6,793 8667 Group Corp value financia nded 6 l assets Other securities investments held at the 585,818 -- 499,197 -19,391 6,841 112,409 333,493 1,321 305,524 - -- period-end Total 802,646 -- 550,954 -19,060 -549 271,254 436,498 3,484 407,673 -- -- Disclosure date of the board announcement 12 December 2020 approving the securities 19 TCL Technology Group Corporation First Quarterly Report 2021 investments Disclosure date of the general meeting announcement 29 December 2020 approving the securities investments (if any) 2. Investments in Derivative Financial Instruments Funding source Mostly foreign-currency revenue Legal matters involved (if Not applicable applicable) Disclosure date of the board announcement approving the 28 April 2018 derivative investments (if any) In order to effectively manage the exchange and interest rate risks of foreign currency assets, liabilities and cash flows, the Company, after fully analyzing the market trend and predicting the operation (including orders and capital plans), adopts forward foreign exchange contracts, options and interest rate swaps to avoid future exchange rate and interest rate risks. As its business scale changes subsequently, the Company will adjust the exchange rate risk management strategy according to the actual market conditions and business plans. Risk analysis: 1. Market risk: the financial derivatives business carried out by the Group belongs to hedging and trading business related to main business operations, and there is a market risk of loss due to the Analysis of risks and control fluctuation of underlying interest and exchange rates, which lead to the fluctuation of prices of measures associated with financial derivatives; derivative investments held in 2. Liquidity risk: the derivatives business carried out by the Group is an over-the-counter Reporting Period (including but transaction operated by a financial institution, and there is a risk of loss due to paying fees to the not limited to market risk, bank for the operations of evening up or selling the derivatives below the buying prices; liquidity risk, credit risk, operational risk, legal risk, etc.) 3. Performance risk: the Group conducts the derivative business based on rolling budgets for risk management, and there is a risk of performance failure due to deviation between the actual operating results and budgets; 4. Other risks: in the case of specific business operations, if the operator fails to finish the prescribed procedures for report or approval, or fails to record the financial derivative business information accurately, timely and completely, it may result in loss of derivative business or trading opportunities. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or product information, the Group will face the legal risks and transaction losses therefrom. Measures taken for risk control: 20 TCL Technology Group Corporation First Quarterly Report 2021 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 the Changes in market prices or fair operation of forward foreign exchange contracts, interest rate swap contracts and futures contracts value of derivative investments in to avoid and hedge foreign exchange risks arising from operation and financing. It saw a net gain Reporting Period (fair value of RMB91.02 million for the Reporting Period. The fair value of derivatives is determined by analysis should include real-time quoted price of the foreign exchange market, based on the difference between the measurement method and related contractual price and the forward exchange rate quoted immediately in the foreign exchange assumptions and parameters) market on the balance sheet date. Major changes in accounting policies and specific accounting principles adopted for derivative No significant change investments in Reporting Period compared to last reporting period Opinion of independent directors In view of the fact that certain raw materials of the core business of the Company are purchased on derivative investments and overseas, a wide range of settlement currencies is involved. The Company reduces exchange risk control losses and locks transaction costs by reasonable financial derivatives, which helps to reduce risk 21 TCL Technology Group Corporation First Quarterly Report 2021 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 financial derivatives transactions carried out by the Company in Q1 2021 are closely related to the daily operation needs of the Company with controllable risks. The business is in line with the interests of minority shareholders of the company and the relevant laws and regulations. Positions of derivative investments at the period-end: Unit: RMB’0,000 Ending contractual amount 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 contracts 1,931,617 59,359 1,627,130 54,962 17.75 0.60 2. Interest rate swaps 758,846 22,765 764,242 22,927 9,102 8.34 0.25 3. Currency swaps 310,520 15,526 98,570 4,928 1.08 0.05 Total 3,000,983 97,650 2,489,942 82,818 9,102 27.17 0.90 V Progress of Projects Financed with Raised Funds In 2020, the Company carried out a program of asset purchase via share and convertible corporate bonds offering and cash payment and matching funds raising, with the total raised funds amounting to RMB2.6 billion. The raised funds would be used to pay the cash consideration for the acquisition of a 39.95% interest held by Wuhan Industrial Investment in Wuhan CSOT, repay debt and supplement the working capital. As of 10 March 2021, the raised funds had been used up. For further information, please refer to the Announcement on Using up of the Funds Raised via Share and Convertible Corporate Bonds Offering for Asset Purchase and Raising the Matching Funds disclosed by the Company on the media designated for information disclosure. VI Operating Performance Forecast for H1 2021 Warning of a forecast loss on or a forecast significant year-on-year change in the net profit of H1 2021, as well as explanation of why: 22 TCL Technology Group Corporation First Quarterly Report 2021 □ Applicable ■ Not applicable VII Significant Contracts Arising from the Company’s Ordinary Course of Business □ Applicable ■ Not applicable VIII Cash Entrusted for Wealth Management Unit: RMB’0,000 Type Funding source Amount Undue amount Unrecovered overdue amount Bank’s wealth Self-funded 200,033.30 33.30 - management product Securities firm’s wealth Self-funded 26,000.00 16,000.00 - management product Trust plan Self-funded 20,000.00 20,000.00 - Other Self-funded 185,557.43 52,552.23 - Total 431,590.73 88,585.53 - High-risk wealth management transactions with a significant single amount, low liquidity and no principal protection: □ Applicable ■ Not applicable Situation where the principal is expectedly irrecoverable or an impairment may be incurred: □ Applicable ■ Not applicable IX Irregularities in the Provision of Guarantees □ Applicable ■ Not applicable X Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes □ Applicable ■ Not applicable XI Communications with the Investment Community such as Researches, Inquiries and Interviews Received during the Reporting Period Main Type of Index to main Way of Communication discussions and Date Place communication information communication party materials party communicated provided JPMorgan, Inquired about Log Sheet No. The Ritz-Carlton By visit and Morgan Stanley, the 2020 2021-001 on Investor 11 March 2021 Beijing Institution phone Foresight Fund performance and Relations Activities Financial Street Management development disclosed by the 23 TCL Technology Group Corporation First Quarterly Report 2021 Company, planning of TCL Company on TruValue Asset Tech. http://www.cninfo.com. Management, cn dated 15 March China Life 2021 Pension Company Limited, Tianhong Asset Management, Dajia Asset Management, Taikang Asset Management, TianAn Life, etc. 24 TCL Technology Group Corporation First Quarterly Report 2021 Part V Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by TCL Technology Group Corporation Unit: RMB Item 31 March 2021 31 December 2020 Current assets: Monetary assets 21,866,755,914.00 21,708,904,743.00 Settlement reserve Loans to other banks and financial institutions Held-for-trading financial assets 3,802,869,673.00 5,300,045,879.00 Derivative financial assets 219,179,859.00 453,578,245.00 Notes receivable 1,052,967,190.00 595,685,338.00 Accounts receivable 15,672,609,886.00 12,557,614,486.00 Receivables financing 1,608,178,118.00 2,176,743,646.00 Prepayments 1,824,063,319.00 1,355,653,454.00 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 8,465,195,129.00 2,793,640,153.00 Including: Interest receivable Dividends receivable Financial assets purchased under resale agreements Inventories 8,882,549,680.00 8,834,957,692.00 Contract assets 199,410,288.00 183,650,278.00 Assets held for sale 256,938,591.00 360,935,948.00 Current portion of non-current assets 63,050,115.00 Other current assets 8,952,314,761.00 9,367,055,433.00 Total current assets 72,866,082,523.00 65,688,465,295.00 25 TCL Technology Group Corporation First Quarterly Report 2021 Non-current assets: Loans and advances to customers 997,789,579.00 981,876,228.00 Debt investments 119,904,974.00 119,349,896.00 Other debt investments 154,543,851.00 152,062,601.00 Long-term receivables 699,379,064.00 778,889,309.00 Long-term equity investments 24,340,787,935.00 24,047,036,004.00 Investments in other equity 1,267,383,678.00 1,333,675,630.00 instruments Other non-current financial assets 3,014,285,378.00 3,055,595,097.00 Investment property 1,708,552,761.00 1,664,201,130.00 Fixed assets 94,224,678,564.00 92,829,901,894.00 Construction in progress 36,900,616,376.00 31,508,310,783.00 Productive living assets Oil and gas assets Right-of-use assets 1,836,520,444.00 Intangible assets 11,559,900,467.00 10,054,045,032.00 Development costs 1,664,984,199.00 2,103,994,558.00 Goodwill 6,943,264,794.00 6,943,264,794.00 Long-term prepaid expense 2,380,306,309.00 2,536,670,015.00 Deferred income tax assets 1,387,256,553.00 1,578,087,991.00 Other non-current assets 12,627,250,195.00 12,532,852,630.00 Total non-current assets 201,827,405,121.00 192,219,813,592.00 Total assets 274,693,487,644.00 257,908,278,887.00 Current liabilities: Short-term borrowings 13,915,672,147.00 12,263,713,979.00 Borrowings from the central bank 668,442,302.00 469,834,291.00 Loans from other banks and financial institutions Held-for-trading financial liabilities 1,368,835,184.00 527,901,041.00 Derivative financial liabilities 174,841,937.00 384,903,731.00 Notes payable 6,053,247,077.00 4,725,611,752.00 Accounts payable 20,590,854,151.00 16,468,931,544.00 Advances from customers 62,773,331.00 78,597,459.00 Contract liabilities 2,113,158,334.00 2,004,004,181.00 Financial assets sold under 50,080,208.00 50,080,208.00 26 TCL Technology Group Corporation First Quarterly Report 2021 repurchase agreements Customer deposits and deposits from 3,583,649,744.00 2,850,138,744.00 other banks and financial institutions Payables for acting trading of securities Payables for underwriting of securities Employee benefits payable 1,769,080,325.00 1,856,664,146.00 Taxes and levies payable 979,478,482.00 670,058,792.00 Other payables 17,390,694,070.00 14,869,433,359.00 Including: Interest payable Dividends payable 1,293,099.00 1,293,097.00 Fees and commissions payable Reinsurance payables Liabilities directly associated with assets held for sale Current portion of non-current 12,468,897,969.00 13,429,669,611.00 liabilities Other current liabilities 336,370,951.00 366,970,706.00 Total current liabilities 81,526,076,212.00 71,016,513,544.00 Non-current liabilities: Insurance contract reserve Long-term borrowings 78,353,685,147.00 73,589,403,308.00 Bonds payable 18,094,160,624.00 18,040,772,610.00 Including: Preference shares Perpetual bonds Lease liabilities 903,293,868.00 Long-term payables 565,351,943.00 1,280,299,665.00 Long-term employee benefits 27,669,191.00 27,857,583.00 payable Provisions Deferred income 1,208,873,737.00 1,509,867,357.00 Deferred income tax liabilities 2,364,772,001.00 2,386,496,733.00 Other non-current liabilities Total non-current liabilities 101,517,806,511.00 96,834,697,256.00 Total liabilities 183,043,882,723.00 167,851,210,800.00 27 TCL Technology Group Corporation First Quarterly Report 2021 Owners’ equity: Share capital 14,030,788,362.00 14,030,788,362.00 Other equity instruments 230,240,606.00 230,240,606.00 Including: Preference shares Perpetual bonds Capital reserves 4,201,713,830.00 5,442,384,608.00 Less: Treasury stock 1,799,696,760.00 1,913,028,859.00 Other comprehensive income -297,310,404.00 -145,573,093.00 Specific reserve 309,346.00 211,932.00 Surplus reserves 2,452,892,102.00 2,452,892,102.00 General reserve 360,767.00 385,534.00 Retained earnings 16,405,076,153.00 14,009,494,262.00 Total equity attributable to owners of 35,224,374,002.00 34,107,795,454.00 the Company as the parent Non-controlling interests 56,425,230,919.00 55,949,272,633.00 Total owners’ equity 91,649,604,921.00 90,057,068,087.00 Total liabilities and owners’ equity 274,693,487,644.00 257,908,278,887.00 Legal representative: Li Dongsheng Person-in-charge of financial affairs: Du Juan Person-in-charge of the financial department: Xi Wenbo 2. Balance Sheet of the Company as the Parent Unit: RMB Item 31 March 2021 31 December 2020 Current assets: Monetary assets 4,673,557,233.00 2,208,790,335.00 Held-for-trading financial assets 494,026,692.00 1,221,656,698.00 Derivative financial assets 2,850,000.00 Notes receivable 6,000,000.00 6,000,000.00 Accounts receivable 242,732,754.00 175,787,300.00 Receivables financing Prepayments 6,814,091.00 97,962,630.00 Other receivables 25,785,861,592.00 25,555,923,615.00 Including: Interest receivable Dividends receivable Inventories 889,550.00 5,997,388.00 28 TCL Technology Group Corporation First Quarterly Report 2021 Contract assets Assets held for sale Current portion of non-current assets Other current assets 2,332,646.00 2,332,646.00 Total current assets 31,215,064,558.00 29,274,450,612.00 Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity investments 65,369,362,149.00 65,094,459,376.00 Investments in other equity 15,000,000.00 15,000,000.00 instruments Other non-current financial assets 1,275,592,020.00 1,145,021,734.00 Investment property 87,699,827.00 88,686,986.00 Fixed assets 46,296,612.00 46,011,508.00 Construction in progress 5,957,827.00 11,440,567.00 Productive living assets Oil and gas assets Right-of-use assets 469,533,606.00 Intangible assets 53,510,468.00 42,310,680.00 Development costs Goodwill Long-term prepaid expense 32,119,285.00 469,424,698.00 Deferred income tax assets 2,866.00 6,709.00 Other non-current assets Total non-current assets 67,355,074,660.00 66,912,362,258.00 Total assets 98,570,139,218.00 96,186,812,870.00 Current liabilities: Short-term borrowings 4,583,581,361.00 3,670,230,653.00 Held-for-trading financial liabilities Derivative financial liabilities 16,513,000.00 Notes payable Accounts payable 242,589,681.00 129,703,459.00 Advances from customers 626,347.00 29 TCL Technology Group Corporation First Quarterly Report 2021 Contract liabilities 1,871,994.00 Employee benefits payable 204,396,873.00 220,510,234.00 Taxes and levies payable 7,914,959.00 26,070,786.00 Other payables 27,194,760,921.00 26,377,023,713.00 Including: Interest payable Dividends payable 1,292,429.00 1,292,429.00 Liabilities directly associated with assets held for sale Current portion of non-current 5,216,364,309.00 6,141,029,463.00 liabilities Other current liabilities 1,323,541.00 315,970.00 Total current liabilities 37,451,557,992.00 36,583,269,272.00 Non-current liabilities: Long-term borrowings 13,353,000,000.00 12,087,500,000.00 Bonds payable 14,130,272,528.00 14,092,345,084.00 Including: Preference shares Perpetual bonds Lease liabilities 22,890,284.00 Long-term payables Long-term employee benefits 21,801,770.00 21,991,372.00 payable Provisions Deferred income 41,864,052.00 42,651,822.00 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 27,569,828,634.00 26,244,488,278.00 Total liabilities 65,021,386,626.00 62,827,757,550.00 Owners’ equity: Share capital 14,030,788,362.00 14,030,788,362.00 Other equity instruments 230,240,606.00 230,240,606.00 Including: Preference shares Perpetual bonds Capital reserves 9,847,091,192.00 9,846,835,060.00 Less: Treasury stock 1,799,696,760.00 1,913,028,859.00 Other comprehensive income 141,998,219.00 141,998,219.00 30 TCL Technology Group Corporation First Quarterly Report 2021 Specific reserve Surplus reserves 2,250,827,663.00 2,250,827,663.00 Retained earnings 8,847,503,310.00 8,771,394,269.00 Total owners’ equity 33,548,752,592.00 33,359,055,320.00 Total liabilities and owners’ equity 98,570,139,218.00 96,186,812,870.00 3. Consolidated Income Statement Unit: RMB Item Q1 2021 Q1 2020 1. Total revenues 32,173,945,858.00 13,789,536,228.00 Including: Revenue 32,143,561,563.00 13,742,129,162.00 Interest income 30,384,295.00 47,407,066.00 Insurance premium income Fee and commission income 2. Costs and expenses 28,868,451,833.00 14,493,594,692.00 Including: Cost of sales 25,383,357,989.00 12,743,745,923.00 Interest expense 4,754,960.00 7,195,716.00 Fee and commission expense Surrenders Net insurance claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and levies 106,853,638.00 38,902,775.00 Selling expense 330,230,062.00 159,592,940.00 Administrative expense 763,004,335.00 321,790,541.00 R&D expense 1,540,240,528.00 837,453,524.00 Finance costs 740,010,321.00 384,913,273.00 Including: Interest 966,852,847.00 553,121,614.00 expense Interest 103,593,808.00 162,367,782.00 income 31 TCL Technology Group Corporation First Quarterly Report 2021 Add: Other income 343,452,869.00 620,518,501.00 Return on investment (“-” for loss) 493,372,758.00 694,268,712.00 Including: Share of profit or loss 149,003,152.00 300,625,432.00 of joint ventures and associates Income from the derecognition of financial assets at amortized cost Exchange gain (“-” for loss) -14,384.00 182,919.00 Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” -292,943,771.00 -205,634,246.00 for loss) Credit impairment loss (“-” for -31,736,912.00 -7,478,551.00 loss) Asset impairment loss (“-” for loss) -301,118,508.00 -232,590,984.00 Asset disposal income (“-” for 159,503.00 6,658.00 loss) 3. Operating profit (“-” for loss) 3,516,665,580.00 165,214,545.00 Add: Non-operating income 210,942,953.00 141,925,394.00 Less: Non-operating expense 4,694,406.00 10,715,126.00 4. Gross profit (“-” for loss) 3,722,914,127.00 296,424,813.00 Less: Income tax expense 487,257,128.00 25,846,940.00 5. Net profit (“-” for net loss) 3,235,656,999.00 270,577,873.00 5.1 By operating continuity 5.1.1 Net profit from continuing 3,235,656,999.00 270,577,873.00 operations (“-” for net loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to 2,403,729,935.00 408,125,802.00 owners of the Company as the parent 5.2.1 Net profit attributable to 831,927,064.00 -137,547,929.00 non-controlling interests 6. Other comprehensive income, net of -180,087,886.00 -201,191,608.00 tax Attributable to owners of the Company -151,737,311.00 -135,977,236.00 as the parent 6.1 Items that will not be -65,621,285.00 -24,540,407.00 reclassified to profit or loss 32 TCL Technology Group Corporation First Quarterly Report 2021 6.1.1 Changes caused by remeasurements on defined benefit schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of -65,621,285.00 -24,540,407.00 investments in other equity instruments 6.1.4 Changes in the fair value arising from changes in own credit risk 6.1.5 Other 6.2 Items that will be reclassified to -86,116,026.00 -111,436,829.00 profit or loss 6.2.1 Other comprehensive income that will be reclassified to profit 11,868.00 8,800,657.00 or loss under the equity method 6.2.2 Changes in the fair value of other debt investments 6.2.3 Other comprehensive income arising from the reclassification of financial assets 6.2.4 Credit impairment allowance for other debt investments 6.2.5 Reserve for cash flow -75,069,636.00 -31,380,198.00 hedges 6.2.6 Differences arising from the translation of foreign -11,058,258.00 -88,857,288.00 currency-denominated financial statements 6.2.7 Other Attributable to non-controlling -28,350,575.00 -65,214,372.00 interests 7. Total comprehensive income 3,055,569,113.00 69,386,265.00 Attributable to owners of the Company 2,251,992,624.00 272,148,566.00 as the parent Attributable to non-controlling 803,576,489.00 -202,762,301.00 interests 8. Earnings per share 8.1 Basic earnings per share 0.1781 0.0316 8.2 Diluted earnings per share 0.1713 0.0302 Legal representative: Li Dongsheng Person-in-charge of financial affairs: Du Juan 33 TCL Technology Group Corporation First Quarterly Report 2021 Person-in-charge of the financial department: Xi Wenbo 4. Income Statement of the Company as the Parent Unit: RMB Item Q1 2021 Q1 2020 1. Revenue 307,619,705.00 277,992,615.00 Less: Cost of sales 229,164,379.00 186,288,369.00 Taxes and levies 3,547,225.00 884,082.00 Selling expense 4,863,172.00 5,539,685.00 Administrative expense 71,791,383.00 44,402,485.00 R&D expense 32,899,759.00 22,086,746.00 Finance costs 401,851,331.00 269,483,384.00 Including: Interest expense 583,166,671.00 403,477,889.00 Interest income 205,588,588.00 134,103,744.00 Add: Other income 1,756,844.00 4,807,000.00 Return on investment (“-” for 294,992,985.00 899,034,332.00 loss) Including: Share of profit or 270,571,871.00 265,646,202.00 loss of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” 9,486,419.00 81,456,431.00 for loss) Credit impairment loss (“-” for 15,695.00 995.00 loss) Asset impairment loss (“-” for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) -130,245,601.00 734,606,622.00 Add: Non-operating income 206,621,894.00 139,294,872.00 Less: Non-operating expense 251,617.00 7,636.00 3. Gross profit (“-” for loss) 76,124,676.00 873,893,858.00 Less: Income tax expense 3,843.00 34 TCL Technology Group Corporation First Quarterly Report 2021 4. Net profit (“-” for net loss) 76,120,833.00 873,893,858.00 4.1 Net profit from continuing 76,120,833.00 873,893,858.00 operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes caused by remeasurements on defined benefit schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of investments in other equity instruments 5.1.4 Changes in the fair value arising from changes in own credit risk 5.1.5 Other 5.2 Items that will be reclassified to profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of other debt investments 5.2.3 Other comprehensive income arising from the reclassification of financial assets 5.2.4 Credit impairment allowance for other debt investments 5.2.5 Reserve for cash flow hedges 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements 5.2.7 Other 6. Total comprehensive income 76,120,833.00 873,893,858.00 7. Earnings per share 7.1 Basic earnings per share 35 TCL Technology Group Corporation First Quarterly Report 2021 7.2 Diluted earnings per share 5. Consolidated Cash Flow Statement Unit: RMB Item Q1 2021 Q1 2020 1. Cash flows from operating activities: Proceeds from sale of commodities 27,034,723,608.00 14,850,100,323.00 and rendering of services Net increase in customer deposits and deposits from other banks and financial 733,511,000.00 -465,489,884.00 institutions Net increase in borrowings from the 198,608,011.00 168,685,969.00 central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Interest, fees and commissions 30,384,295.00 47,407,066.00 received Net increase in loans from other banks and financial institutions Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax and levy rebates 1,394,337,857.00 608,001,845.00 Cash generated from other operating 1,171,334,830.00 467,981,716.00 activities Subtotal of cash generated from 30,562,899,601.00 15,676,687,035.00 operating activities Payments for commodities and 17,145,704,624.00 11,369,283,220.00 services Net increase in loans and advances to 1,013,946,603.00 -1,555,006,243.00 customers Net increase in deposits in the central bank and other banks and financial 68,720,062.00 -202,132,448.00 institutions Payments for claims on original 36 TCL Technology Group Corporation First Quarterly Report 2021 insurance contracts Net increase in loans to other banks and financial institutions Interest, fees and commissions paid Policy dividends paid Cash paid to and for employees 2,018,238,456.00 1,589,132,206.00 Taxes and levies paid 582,590,307.00 844,676,500.00 Cash used in other operating 1,730,497,570.00 1,331,550,307.00 activities Subtotal of cash used in operating 22,559,697,622.00 13,377,503,542.00 activities Net cash generated from/used in 8,003,201,979.00 2,299,183,493.00 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 6,373,430,027.00 4,618,844,632.00 Return on investment 125,899,457.00 76,434,103.00 Net proceeds from the disposal of fixed assets, intangible assets and other 18,531,879.00 23,052.00 long-lived assets Net proceeds from the disposal of 197,487,161.00 subsidiaries and other business units Cash generated from other investing 6,368,912.00 activities Subtotal of cash generated from 6,524,230,275.00 4,892,788,948.00 investing activities Payments for the acquisition of fixed assets, intangible assets and other 7,543,249,643.00 4,982,864,051.00 long-lived assets Payments for investments 9,287,433,997.00 9,033,187,658.00 Net increase in pledged loans granted Net payments for the acquisition of subsidiaries and other business units Cash used in other investing 50,133,413.00 activities Subtotal of cash used in investing 16,880,817,053.00 14,016,051,709.00 activities Net cash generated from/used in -10,356,586,778.00 -9,123,262,761.00 investing activities 3. Cash flows from financing activities: Capital contributions received 94,900,000.00 2,260,200,000.00 37 TCL Technology Group Corporation First Quarterly Report 2021 Including: Capital contributions by 94,900,000.00 2,260,200,000.00 non-controlling interests to subsidiaries Borrowings received 16,219,912,408.00 13,646,741,209.00 Cash generated from other financing 151,949,228.00 activities Subtotal of cash generated from 16,466,761,636.00 15,906,941,209.00 financing activities Repayment of borrowings 10,706,121,604.00 7,266,785,974.00 Interest and dividends paid 1,209,556,374.00 640,411,211.00 Including: Dividends paid by 23,055,560.00 26,392,667.00 subsidiaries to non-controlling interests Cash used in other financing 1,893,223,044.00 329,280,153.00 activities Subtotal of cash used in financing 13,808,901,022.00 8,236,477,338.00 activities Net cash generated from/used in 2,657,860,614.00 7,670,463,871.00 financing activities 4. Effect of foreign exchange rates 57,381,895.00 -26,758,509.00 changes on cash and cash equivalents 5. Net increase in cash and cash 361,857,710.00 819,626,094.00 equivalents Add: Cash and cash equivalents, 18,208,416,780.00 17,637,742,929.00 beginning of the period 6. Cash and cash equivalents, end of the 18,570,274,490.00 18,457,369,023.00 period 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item Q1 2021 Q1 2020 1. Cash flows from operating activities: Proceeds from sale of commodities 332,453,923.00 189,757,308.00 and rendering of services Tax and levy rebates Cash generated from other operating 1,412,864,320.00 8,341,488,901.00 activities Subtotal of cash generated from 1,745,318,243.00 8,531,246,209.00 operating activities Payments for commodities and 229,201,172.00 185,587,256.00 services Cash paid to and for employees 52,067,664.00 56,588,057.00 38 TCL Technology Group Corporation First Quarterly Report 2021 Taxes and levies paid 30,416,907.00 8,220,063.00 Cash used in other operating 458,037,058.00 316,261,198.00 activities Subtotal of cash used in operating 769,722,801.00 566,656,574.00 activities Net cash generated from/used in 975,595,442.00 7,964,589,635.00 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 1,937,957,138.00 1,365,307,500.00 Return on investment 45,986,638.00 11,669,831.00 Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 1,983,943,776.00 1,376,977,331.00 investing activities Payments for the acquisition of fixed assets, intangible assets and other 12,604,273.00 5,391,188.00 long-lived assets Payments for investments 1,376,585,400.00 1,969,900,000.00 Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 1,389,189,673.00 1,975,291,188.00 activities Net cash generated from/used in 594,754,103.00 -598,313,857.00 investing activities 3. Cash flows from financing activities: Capital contributions received Borrowings received 6,549,800,000.00 8,612,000,000.00 Cash generated from other financing activities Subtotal of cash generated from 6,549,800,000.00 8,612,000,000.00 financing activities Repayment of borrowings 5,326,842,000.00 4,272,903,033.00 Interest and dividends paid 317,432,328.00 168,428,437.00 Cash used in other financing 13,813,143.00 1,332,082.00 39 TCL Technology Group Corporation First Quarterly Report 2021 activities Subtotal of cash used in financing 5,658,087,471.00 4,442,663,552.00 activities Net cash generated from/used in 891,712,529.00 4,169,336,448.00 financing activities 4. Effect of foreign exchange rates -18,184,949.00 -3,131,768.00 changes on cash and cash equivalents 5. Net increase in cash and cash 2,443,877,125.00 11,532,480,458.00 equivalents Add: Cash and cash equivalents, 2,196,283,414.00 3,941,090,221.00 beginning of the period 6. Cash and cash equivalents, end of the 4,640,160,539.00 15,473,570,679.00 period II Adjustments to the Financial Statements 1. Adjustments to the Financial Statements at the Beginning of the First Execution Year (2021) of the New Accounting Standard Governing Leases The Company is required to fill the table below if it first adopted the new accounting standard governing leases in 2021, unless there is no need to adjust the financial statements at the beginning of the year. √ Applicable □ Not applicable Indicate whether the financial statements at the beginning of the year were adjusted. √ Yes □ No Consolidated balance sheet: Unit: RMB Item 31 December 2020 1 January 2021 Adjustment Current assets: Monetary assets 21,708,904,743.00 21,708,904,743.00 Settlement reserve Loans to other banks and financial institutions Held-for-trading financial 5,300,045,879.00 5,300,045,879.00 assets Derivative financial assets 453,578,245.00 453,578,245.00 Notes receivable 595,685,338.00 595,685,338.00 Accounts receivable 12,557,614,486.00 12,557,614,486.00 Receivables financing 2,176,743,646.00 2,176,743,646.00 Prepayments 1,355,653,454.00 1,355,653,454.00 40 TCL Technology Group Corporation First Quarterly Report 2021 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 2,793,640,153.00 2,793,640,153.00 Including: Interest receivable Dividends receivable Financial assets purchased under resale agreements Inventories 8,834,957,692.00 8,834,957,692.00 Contract assets 183,650,278.00 183,650,278.00 Assets held for sale 360,935,948.00 360,935,948.00 Current portion of non-current assets Other current assets 9,367,055,433.00 9,367,055,433.00 Total current assets 65,688,465,295.00 65,688,465,295.00 Non-current assets: Loans and advances to 981,876,228.00 981,876,228.00 customers Debt investments 119,349,896.00 119,349,896.00 Other debt investments 152,062,601.00 152,062,601.00 Long-term receivables 778,889,309.00 778,889,309.00 Long-term equity 24,047,036,004.00 24,047,036,004.00 investments Investments in other equity 1,333,675,630.00 1,333,675,630.00 instruments Other non-current financial 3,055,595,097.00 3,055,595,097.00 assets Investment property 1,664,201,130.00 1,664,201,130.00 Fixed assets 92,829,901,894.00 91,515,595,994.00 -1,314,305,900.00 Construction in progress 31,508,310,783.00 31,508,310,783.00 Productive living assets Oil and gas assets Right-of-use assets 1,856,862,180.00 1,856,862,180.00 41 TCL Technology Group Corporation First Quarterly Report 2021 Intangible assets 10,054,045,032.00 10,054,045,032.00 Development costs 2,103,994,558.00 2,103,994,558.00 Goodwill 6,943,264,794.00 6,943,264,794.00 Long-term prepaid 2,536,670,015.00 2,099,368,428.00 -437,301,587.00 expense Deferred income tax assets 1,578,087,991.00 1,578,087,991.00 Other non-current assets 12,532,852,630.00 12,532,852,630.00 Total non-current assets 192,219,813,592.00 192,325,068,285.00 105,254,693.00 Total assets 257,908,278,887.00 258,013,533,580.00 105,254,693.00 Current liabilities: Short-term borrowings 12,263,713,979.00 12,263,713,979.00 Borrowings from the 469,834,291.00 469,834,291.00 central bank Loans from other banks and financial institutions Held-for-trading financial 527,901,041.00 527,901,041.00 liabilities Derivative financial 384,903,731.00 384,903,731.00 liabilities Notes payable 4,725,611,752.00 4,725,611,752.00 Accounts payable 16,468,931,544.00 16,468,931,544.00 Advances from customers 78,597,459.00 78,597,459.00 Contract liabilities 2,004,004,181.00 2,004,004,181.00 Financial assets sold under 50,080,208.00 50,080,208.00 repurchase agreements Customer deposits and deposits from other banks 2,850,138,744.00 2,850,138,744.00 and financial institutions Payables for acting trading of securities Payables for underwriting of securities Employee benefits payable 1,856,664,146.00 1,856,664,146.00 Taxes and levies payable 670,058,792.00 670,058,792.00 Other payables 14,869,433,359.00 14,869,433,359.00 Including: Interest payable 42 TCL Technology Group Corporation First Quarterly Report 2021 Dividends 1,293,097.00 1,293,097.00 payable Fees and commissions payable Reinsurance payables Liabilities directly associated with assets held for sale Current portion of 13,429,669,611.00 13,449,071,421.00 19,401,810.00 non-current liabilities Other current liabilities 366,970,706.00 366,970,706.00 Total current liabilities 71,016,513,544.00 71,035,915,354.00 19,401,810.00 Non-current liabilities: Insurance contract reserve Long-term borrowings 73,589,403,308.00 73,589,403,308.00 Bonds payable 18,040,772,610.00 18,040,772,610.00 Including: Preference shares Perpetual bonds Lease liabilities 912,550,980.00 912,550,980.00 Long-term payables 1,280,299,665.00 453,601,568.00 -826,698,097.00 Long-term employee 27,857,583.00 27,857,583.00 benefits payable Provisions Deferred income 1,509,867,357.00 1,509,867,357.00 Deferred income tax 2,386,496,733.00 2,386,496,733.00 liabilities Other non-current liabilities Total non-current liabilities 96,834,697,256.00 96,920,550,139.00 85,852,883.00 Total liabilities 167,851,210,800.00 167,956,465,493.00 105,254,693.00 Owners’ equity: Share capital 14,030,788,362.00 14,030,788,362.00 Other equity instruments 230,240,606.00 230,240,606.00 Including: Preference shares 43 TCL Technology Group Corporation First Quarterly Report 2021 Perpetual bonds Capital reserves 5,442,384,608.00 5,442,384,608.00 Less: Treasury stock 1,913,028,859.00 1,913,028,859.00 Other comprehensive -145,573,093.00 -145,573,093.00 income Specific reserve 211,932.00 211,932.00 Surplus reserves 2,452,892,102.00 2,452,892,102.00 General reserve 385,534.00 385,534.00 Retained earnings 14,009,494,262.00 14,009,494,262.00 Total equity attributable to owners of the Company as 34,107,795,454.00 34,107,795,454.00 the parent Non-controlling interests 55,949,272,633.00 55,949,272,633.00 Total owners’ equity 90,057,068,087.00 90,057,068,087.00 Total liabilities and owners’ 257,908,278,887.00 258,013,533,580.00 105,254,693.00 equity Balance sheet of the Company as the parent: Unit: RMB Item 31 December 2020 1 January 2021 Adjustment Current assets: Monetary assets 2,208,790,335.00 2,208,790,335.00 Held-for-trading financial 1,221,656,698.00 1,221,656,698.00 assets Derivative financial assets Notes receivable 6,000,000.00 6,000,000.00 Accounts receivable 175,787,300.00 175,787,300.00 Receivables financing Prepayments 97,962,630.00 97,962,630.00 Other receivables 25,555,923,615.00 25,555,923,615.00 Including: Interest receivable Dividends receivable Inventories 5,997,388.00 5,997,388.00 44 TCL Technology Group Corporation First Quarterly Report 2021 Contract assets Assets held for sale Current portion of non-current assets Other current assets 2,332,646.00 2,332,646.00 Total current assets 29,274,450,612.00 29,274,450,612.00 Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity 65,094,459,376.00 65,094,459,376.00 investments Investments in other equity 15,000,000.00 15,000,000.00 instruments Other non-current financial 1,145,021,734.00 1,145,021,734.00 assets Investment property 88,686,986.00 88,686,986.00 Fixed assets 46,011,508.00 46,011,508.00 Construction in progress 11,440,567.00 11,440,567.00 Productive living assets Oil and gas assets Right-of-use assets 467,914,882.00 467,914,882.00 Intangible assets 42,310,680.00 42,310,680.00 Development costs Goodwill Long-term prepaid 469,424,698.00 32,123,111.00 -437,301,587.00 expense Deferred income tax assets 6,709.00 6,709.00 Other non-current assets Total non-current assets 66,912,362,258.00 66,942,975,553.00 30,613,295.00 Total assets 96,186,812,870.00 96,217,426,165.00 30,613,295.00 Current liabilities: Short-term borrowings 3,670,230,653.00 3,670,230,653.00 Held-for-trading financial liabilities Derivative financial 16,513,000.00 16,513,000.00 45 TCL Technology Group Corporation First Quarterly Report 2021 liabilities Notes payable Accounts payable 129,703,459.00 129,703,459.00 Advances from customers Contract liabilities 1,871,994.00 1,871,994.00 Employee benefits payable 220,510,234.00 220,510,234.00 Taxes and levies payable 26,070,786.00 26,070,786.00 Other payables 26,377,023,713.00 26,377,023,713.00 Including: Interest payable Dividends 1,292,429.00 1,292,429.00 payable Liabilities directly associated with assets held for sale Current portion of 6,141,029,463.00 6,150,305,562.00 9,276,099.00 non-current liabilities Other current liabilities 315,970.00 315,970.00 Total current liabilities 36,583,269,272.00 36,592,545,371.00 9,276,099.00 Non-current liabilities: Long-term borrowings 12,087,500,000.00 12,087,500,000.00 Bonds payable 14,092,345,084.00 14,092,345,084.00 Including: Preference shares Perpetual bonds Lease liabilities 21,337,196.00 21,337,196.00 Long-term payables Long-term employee 21,991,372.00 21,991,372.00 benefits payable Provisions Deferred income 42,651,822.00 42,651,822.00 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 26,244,488,278.00 26,265,825,474.00 21,337,196.00 46 TCL Technology Group Corporation First Quarterly Report 2021 Total liabilities 62,827,757,550.00 62,858,370,845.00 30,613,295.00 Owners’ equity: Share capital 14,030,788,362.00 14,030,788,362.00 Other equity instruments 230,240,606.00 230,240,606.00 Including: Preference shares Perpetual bonds Capital reserves 9,846,835,060.00 9,846,835,060.00 Less: Treasury stock 1,913,028,859.00 1,913,028,859.00 Other comprehensive 141,998,219.00 141,998,219.00 income Specific reserve Surplus reserves 2,250,827,663.00 2,250,827,663.00 Retained earnings 8,771,394,269.00 8,771,394,269.00 Total owners’ equity 33,359,055,320.00 33,359,055,320.00 Total liabilities and owners’ 96,186,812,870.00 96,217,426,165.00 30,613,295.00 equity Notes to the adjustments: The Company has adopted since 1 January 2021 the Accounting Standard No. 21 for Business Enterprises-Leases revised by the Ministry of Finance in 2018. The Company adopted a simplified method of retrospective restatement. As required by the new lease standard, relevant financial statement items at the beginning of the period when the new lease standard was first adopted (1 January 2021) were adjusted according to the cumulative effects arising from the first adoption of the new lease standard, and data of the comparable periods were not adjusted. The effects of the adoption of the new lease standard on the presentation of the balance sheet items as at the beginning of the current period are as follows: Item 31 December 2020 Adjustment 1 January 2021 Fixed assets 92,829,901,894 -1,314,305,900 91,515,595,994 Right-of-use assets 1,856,862,180 1,856,862,180 Long-term prepaid expense 2,536,670,015 -437,301,587 2,099,368,428 Current portion of non-current 13,429,669,611 19,401,810 13,449,071,421 liabilities Lease liabilities 912,550,980 912,550,980 Long-term payables 1,280,299,665 -826,698,097 453,601,568 47 TCL Technology Group Corporation First Quarterly Report 2021 2. Retrospective Adjustments to the Comparative Data of Prior Periods due to the First Execution in 2021 of the New Accounting Standard Governing Leases □ Applicable √ Not applicable III Independent Auditor’s Report Indicate whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. 48