TCL Corporation Interim Report 2018
TCL CORPORATION
TCL
集团股份有限公司
INTERIM REPORT 2018
28 August 2018
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 theCompany’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, theCompany’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.
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
TCL Corporation Interim Report 2018
Definitions
|||||
|-|-|-|-|
||Term||Definition|
|The “Company”, the “Group”, “TCL”, “TCLCorp.” or “we”||TCL Corporation and its consolidated subsidiaries, except where the contextotherwise requires||
|The “Reporting Period”||The period from 1 January 2018 to 30 June 2018||
|RMB, RMB’000||Expressed in the Chinese currency of Renminbi, expressed in thousands ofRenminbi||
|TCL Electronics||TCL Electronics Holdings Limited, a majority-owned subsidiary of theCompany 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 theCompany listed on the Stock Exchange of Hong Kong (stock code:01249.HK)||
|CDOT||China Display Optoelectronics Technology Holdings Limited, amajority-owned subsidiary of the Company listed on the Stock Exchange ofHong Kong (stock code: 00334.HK)||
|Highly||Highly Information Industry Co., Ltd., a majority-owned subsidiary of theCompany listed on the National Equities Exchange and Quotations (stockcode: 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 Companyholding 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 largestshareholder||
|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.||

TCL Corporation Interim Report 2018
|||
|-|-|
|Educational Web|TCL Educational Web Ltd.|
|TCL Capital|Xinjiang TCL Equity Investment Co., Ltd. and Ningbo TCL EquityInvestment 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 morethan 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 andAMOLED) production line of CSOT|
|t3 project|The generation 6 (or G6) LTPS• LCD/AMOLED panel production line ofCSOT|
|t4 project|The generation 6 (or G6) flexible LTPS-AMOLED panel production line ofCSOT|
|t6 project|The generation 11 (or G11) new TFT-LCD and AMOLED production line ofCSOT|
|t7 project|The generation 11 (or G11) new ultra-high-definition (UHD) TFT-LCD andAMOLED production line of CSOT|
|TCL Technology Park|TCL Technology Park (Huizhou) Co., Ltd.|
|The “Incentive Plan”|The 2018 Restricted Stock Incentive Plan and the Global Innovation PartnerPlan of TCL Corporation|
|The “Stock Ownership Plan”|The First Top 400 and Key Personnel Stock Ownership Plan and the GlobalPartner Plan of TCL Corporation|

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-TechDevelopment District, Huizhou City, Guangdong Province|

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 theCompany’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 Newsand Securities Daily|
|disclosure||
|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)|||||||

TCL Corporation Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
||Weighted average return on equity (%)|||||||
|7|Weighted average return on equity beforenon-recurring gains and losses (%)|3.27%||2.68%||Up by 0.59%||
||Net cash generated from/used in operating activities(RMB)|4,375,228,294||3,472,540,487||26.00%||
|8||||||||
||Net cash per share generated from/used in operatingactivities (RMB/share)|0.3229||0.2569||25.69%||
||||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 usingbank deposit as a pledge and deferred income (%)|64.22%||64.55%||Down by 0.33%||
||Total owners’ equity (RMB)|57,678,599,469||54,142,938,886||6.53%||
|12|Owners’ equity attributable to the listed company’sshareholders (RMB)|29,598,029,676||29,747,067,178||-0.50%||
|13|Share capital (share)|13,549,648,507||13,514,972,063||0.26%||
||Equity per share attributable to the listed company’sshareholders (RMB/share)|2.1844||2.2010||-0.75%||
|14||||||||

Note: 34,676,444 restricted shares were granted and listed in the Reporting Period, increasing theCompany’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, up38.53% 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 underChina’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.
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|525,524,829|Not applicable|
|of government subsidies given in the Company’s ordinary course|||
|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|-6,131,372|An aggregate loss of RMB6.13million on the fair-value changesof forward forex contracts and onsettled such contracts in theReporting Period|
|liabilities & investment income from disposal of trading financial|||
|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)|||
|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||

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 majorindustries—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 theGroup’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
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 forChina’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 inR&D and Product Innovation
TCL owns 26R&D centres worldwide, 4 CNAS-certified labs and close to 8,000 high-qualityR&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 specificR&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
TCL Corporation Interim Report 2018
Appliances Innovation Award in 2017, as well as the “Quantum Dot Technology Golden Award” for TCLElectronics’ 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 theR&D, design and manufacturing of key materials and components on the upstream side, and integrates display terminal products on the downstream side. ThroughR&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-sizedLTPS• 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 26R&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 ofTCL’s core competitive edges.
4. Global Brand Recognition
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, toppingChina’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 theworld’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 theworld’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.
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 of0.67%; core business revenue of RMB52.073 billion, rising1.45% compared to H1 2017; EBITDA of RMB6.743 billion, growing by13.97% from H1 2017; the net profit of RMB1.701 billion, representing a2.38% year-on-year increase; the net profit attributable to TCL shareholders of RMB1.586 billion, representing a considerable increase of53.40% compared to H1 2017; and the net profit attributable to TCL shareholders before non-recurring gains and losses of RMB993 million, a strong growth of60.43% 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, TCLElectronics’ 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.
TheGroup’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 forCSOT’s semiconductor display industry. TCL Multimedia, having renamed as TCL Electronics in the Reporting Period, serving as
TCL Corporation Interim Report 2018
the main platform for theGroup’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 forCSOT’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 toCSOT’s revenue growth in the second half of the year.
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 coveringR&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 26R&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 by37.8% year-on-year, of which the overseas sales volume went up44.4% from a year ago, generating sales revenue that accounted for46.95% of theGroup’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 theR&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 inChina’s display sector. So far, it has established theworld’s most advanced public printed display platform, and has successfully developed multiple printed display prototypes. As for QLED, a world-leadingR&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 multipleR&D centres. The Hong KongR&D Centre specializes in intelligent terminal application, as well as key image and big data technologies. TheR&D centre in the U.S. works on supporting Internet operation technologies for intelligent terminals. And the WuhanR&D Centre set up in this April concentrates on algorithms in relation to
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 theworld’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 majorindustries—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:
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 theGroup’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 theR&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
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 of7.49%. 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 theGroup’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.
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 theR&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 ofCDOT’s products declined year-on-year. For the Reporting Period, CDOT reported sales revenue of RMB1.26 billion, showing a year-on-year decrease of15.6%. However, by active investment in theR&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 ofCDOT’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 upChina’s publicR&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
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-classR&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 theR&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 theR&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 by14.2% year-on-year to RMB17.15 billion(HK$21.05 billion). The net profit attributable to the Company as the parent
TCL Corporation Interim Report 2018
increased considerably by237.5% 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 of37.8% 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 of44.4% year-on-year. TV sales volume in European market increased by73.0% year-on-year, showing strong growth in France, Spain and Poland etc. market. The sales volume in emerging markets increased by51.5% year-on-year, of which the sales volume in Brazil market grew by82.0% 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 technologyR&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 of32.1% 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.
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 theR&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 of15.2%.
(III) The Emerging Business Group
1. Platform Service Business
The Platform Service Business provides operational support for theGroup’s core business and realizes platform operation with theGroup’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 theGroup’s business development according to theGroup’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
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 itsTV+ 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 ofTCL’s electronic intelligent terminal portal.
Up to the end of the Reporting Period, the total number of activated users of theCompany’s smart
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 of70.87% 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.
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 theGroup’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 strongR&D team and technological advantages in the audio sector, Tonly Electronics greatly expanded structural products of new forms and had
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 of26.5% 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 by35.4% 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 TCLCapital’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 a4.99% interest in Bank of Shanghai (601229.SH), a
TCL Corporation Interim Report 2018
19.07% interest in 712 Corp. (603712.SH) and a20.08% 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|||||
||||||||||||Change (%)|
||||Sales revenue||As % of total||Sales revenue||As % of total|||
||||||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 ElectricAppliance Group||10,633,312,285||20.42%||9,226,969,203||17.98%||15.24%||
|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 eliminatedintercompany accounts||-1,866,059,860||Not applicable||-2,550,614,940||Not applicable||||
||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|||||
||||||||||||Change (%)|
||||Sales revenue||As % of total sales||Sales revenue||As % of total|||
||||||revenue||||sales revenue|||
|Domestic corebusiness||27,626,264,239||53.05%||28,323,153,771||55.18%||-2.46%||
|Overseas corebusiness||24,447,151,057||46.95%||23,005,160,609||44.82%||6.27%||
||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
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%|

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||||||||

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 subsidiaryin the central bank as the requiredreserve||0.53%||Restricted||
|Monetary capital||211,673,211||Other monetary capital||0.12%||Restricted||
|Accountsreceivable||12,942,671||Factored or put in pledge for loans||0.01%||In pledge||
|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
TCL Corporation Interim Report 2018
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||The|||||Invest||||||
||||||||||||Return|||Index to|
||Core|||Compa|||||ment||||||
||||Amoun||||Term|||Projectedearnings|on|Any||disclose|
||busines|Way of||ny’s|Fundin|Joint||Type of|progres||||Disclosu||
||||t of||||of||||investm|legal||d|
|Investee|s scope|investm||interest|g|investo||invest|s as at||||re date||
||||investm||||invest||||ent in|matter||informa|
||of|ent||in|source|r||ment|balanc||||(if any)||
||||ent||||ment||||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|
||||investm|ment|ng|e|e|ed inReportin|Reportin|s in|carrying|||
|type|code|name|||carrying|changes|changes|||Reportin||ing title|source|
||||ent cost|method|amount|in|charged|g Period|g Period|g Period|amount|||
|||||||Reportin|to|||||||
|||||||g Period|equity|||||||
|--|--|--|--|--|--|--|--|--|--|--|--|--|--|
|Other securities||||||||||||||
|investments held at|||--|--|--|--|--|--|--|--|--|--|--|
|period-end||||||||||||||
|Total|||--|--|--|--|--|--|--|--|--|--|--|

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|

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|

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||||
|||Contractualamount||Actualamount|Contractualamount||Actualamount|||Contractualamount||Actualamount|
||||||||||Period||||
|1. Forward forexcontracts||20,369,370||697,160|28,845,060||997,700|-6,130||50.01||1.73|
|2. Interest rateswaps||4,168,820||83,380|5,074,930||182,700|||8.80||0.32|
|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|||

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 over10% effect on theCompany’s net profit:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Core||Total assets||||Net profit|
||Relationship with the||Registered|||Operating|Operating||
|Name|||||Net assets||||
|||busines|||||||
|||||||||attributable|
||Company||capital|||revenue|profit||
|||s|||||||
|||||||||to the parent|
|TCLElectronicsHoldingsLimited (as a|Wholly/majority-owned subsidiary|ColourTVs|HK$1.748billion|19,710,602,338|8,366,920,055|17,300,342,594|626,344,363|467,957,675|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|consolidatedgroup)|||||||||
|ShenzhenChina StarOptoelectronicsTechnologyCo., Ltd. (as aconsolidatedgroup)|Wholly/majority-owned subsidiary|LCDpanels|RMB18.342 billion|102,085,490,546|44,679,557,404|12,192,597,373|1,254,203,778|1,218,006,033|
|Bank ofShanghai Co.,Ltd.|Minority-ownedsubsidiary|Financialservices|RMB7.8billion|1,918,725,038,000|153,177,717,000|19,749,818,000|9,929,881,000|9,371,747,000|

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
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.
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 theCompany’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||||

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:
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 over50% of a limited liabilitycompany’s total capital or over50% of a joint stockcompany’s total share capital; or, despite the ownership of less than50% of a limited liabilitycompany’s total capital or less than50% of a joint stockcompany’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 liabilitycompany’s total capital or the joint stockcompany’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 theCompany’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 (an11.07% stake). The biggest shareholder is not involved in any unsatisfied court judgments, large-amount overdue liabilities or the like.
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.|

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|||

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||||||||||

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||||||||||

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|||||

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Active IndustriesInternational Limited|Associate|Otherreceivable|161,795|-|76,121|85,674|Currentaccount|For operatingpurposes|
|Good Vision Limited|Associate|Accountreceivable|5,454|-|5,454|0|For sellingproducts|For operatingpurposes|
|Good Vision Limited|Associate|Otherreceivable|-|6,525|6,512|13|For sellingproducts|For operatingpurposes|
|Harvey HoldingsLimited|Associate|Accountreceivable|44|-|44|-|Currentaccount|For operatingpurposes|
|Harvey HoldingsLimited|Associate|Interestreceivable|2,411|1,217|170|3,459|Currentaccount|For operatingpurposes|
|Harvey HoldingsLimited|Associate|Otherreceivable|42,353|66|7,495|34,924|Currentaccount|For operatingpurposes|
|Kaios TechnologiesInc|Associate|Otherreceivable|43,988|7,857|8,149|43,696|Currentaccount|For operatingpurposes|
|T2MobileInternational Limited|Jointventure|Accountreceivable|15,365|-|6,492|8,873|Currentaccount|For operatingpurposes|
|T2MobileInternational Limited|Jointventure|Otherreceivable|-|7|1|6|Dividenddistribution|For operatingpurposes|
|TCL Sun, Inc.|Jointventure|Accountreceivable|73,999|13,046|-|87,045|For sellingproducts|For operatingpurposes|
|TCL ZhiyiTechnology HuizhouCo., Ltd.|Jointventure|Accountreceivable|6,764|8,647|11,899|3,512|For sellingproducts|For operatingpurposes|
|TCTMobile-TelefonesLTDA|Associate’ssubsidiary|Accountreceivable|-|17,964|17,964|-|For sellingproducts|For operatingpurposes|
|Beijing NationalCenter for Open &Distance EducationCo., Ltd.|Jointventure’ssubsidiary|Accountreceivable|98|7,674|7,270|502|For sellingproducts|For operatingpurposes|
|Beijing WeMedMedical EquipmentCo., Ltd.|Associate|Otherreceivable|3,777|-|3,777|-|For sellingproducts|For operatingpurposes|
|Wealthy Way GroupLimited|Associate|Otherreceivable|-|-|-|-|Currentaccount|For operatingpurposes|
|Guangdong RegencyOptics-ElectronCorp.|Associate|Otherreceivable|184|10|57|137|Currentaccount|For operatingpurposes|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Huan Tech Co., Ltd.|Associate|Otherreceivable|3|-|-|3|Currentaccount|For operatingpurposes|
|Huan Tech Co., Ltd.|Associate|Accountreceivable|566|18|584|-|For sellingproducts|For operatingpurposes|
|Honpe Technology(Shenzhen) Co., Ltd.|Associate’ssubsidiary|Otherreceivable|-|8|-|8|Currentaccount|For operatingpurposes|
|Honpe Technology(Shenzhen) Co., Ltd.|Associate’ssubsidiary|Prepayment|1,057|-|1,057|-|Currentaccount|For operatingpurposes|
|Hubei ChangjiangHezhi EquityInvestment FundManagement Co.,Ltd.|Associate|Accountreceivable|-|70||70|For sellingproducts|For operatingpurposes|
|Huizhou TCL RealEstate DevelopmentCo., Ltd.|Associate’ssubsidiary|Accountreceivable|242|80|-|322|For sellingproducts|For operatingpurposes|
|Huizhou GaoshengdaTechnology Co., Ltd.|Associate’ssubsidiary|Interestreceivable|-|25|-|24|Currentaccount|For operatingpurposes|
|Huizhou ShenghuaIndustrial Co., Ltd.|Associate’ssubsidiary|Accountreceivable|-|792|792|-|Currentaccount|For operatingpurposes|
|LG Innotek HuizhouCo., Ltd.|Associate|Accountreceivable|10,705|-|10,705|-|For sellingproducts|For operatingpurposes|
|LE SHI ZHI XINElectronic &Technology Co., Ltd.|Keysubsidiary’s minorityshareholder|Accountreceivable|-|9,812|9,812|-|For sellingproducts|For operatingpurposes|
|LE SHI ZHI XINElectronic &Technology Co., Ltd.|Keysubsidiary’s minorityshareholder|Prepayment|2,128|-|1,856|272|For sellingproducts|For operatingpurposes|
|LE SHI ZHI XINElectronic &Technology Co., Ltd.|Keysubsidiary’s minorityshareholder|Notereceivable|607|2,319|607|2,319|For sellingproducts|For operatingpurposes|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|LE SHI ZHI XINElectronic &Technology Co., Ltd.|Keysubsidiary’s minorityshareholder|Otherreceivable|800|-|-|800|Currentaccount|For operatingpurposes|
|Nanjing ZijinChuangdongInvestmentPartnership (LimitedPartnership)|Associate|Otherreceivable|-|296|-|296|Currentaccount|For operatingpurposes|
|QihangImport&ExportLimited|Associate’ssubsidiary|Accountreceivable|162,963|305,799|385,727|83,034|For sellingproducts|For operatingpurposes|
|QihangImport&ExportLimited|Associate’ssubsidiary|Otherreceivable|-|205,873|-|205,873|Currentaccount|For operatingpurposes|
|QihangImport&ExportLimited|Associate’ssubsidiary|Interestreceivable|-|157|-|157|Currentaccount|For operatingpurposes|
|Saipwell TCLElectronics IndustrialTechnology Co., Ltd.|Associate|Otherreceivable|-|331,442|-|331,442|Currentaccount|For operatingpurposes|
|Saipwell TCLElectronics IndustrialTechnology Co., Ltd.|Associate|Dividendreceivable|88|1|-|89|Dividenddistribution|For operatingpurposes|
|Saipwell TCLElectronics IndustrialTechnology Co., Ltd.|Associate|Accountreceivable|167,674|75,100|-|242,773|Currentaccount|For operatingpurposes|
|T2 Mobile(Shanghai) Limited|Associate’ssubsidiary|Otherreceivable|3,676|-|3,676|-|Currentaccount|For operatingpurposes|
|T2 Mobile(Shanghai) Limited|Associate’ssubsidiary|Prepayment|1,784|-|1,784|-|Currentaccount|For operatingpurposes|
|T2 Mobile(Shanghai) Limited|Associate’ssubsidiary|Accountreceivable|404|3,426|-|3830|Currentaccount|For operatingpurposes|
|ShanghaiChuangxiang VentureCapital Partnership(Limited Partnership)|Associate|Otherreceivable|2,180|-|2,180|-|Currentaccount|For operatingpurposes|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Shenzhen JucaiSupply ChainTechnology Co., Ltd.|Associate|Otherreceivable|-|1,280|-|1,280|Currentaccount|For operatingpurposes|
|Shenzhen JucaiSupply ChainTechnology Co., Ltd.|Associate|Prepayment|-|492|-|492|Currentaccount|For operatingpurposes|
|Shenzhen QianhaiQihang Supply ChainManagement Co.,Ltd.|Associate|Accountreceivable|299,867|497,368|403,942|393,293|For sellingproducts|For operatingpurposes|
|Shenzhen QianhaiQihang Supply ChainManagement Co.,Ltd.|Associate|Otherreceivable|49,500|115|27,498|22,117|Currentaccount|For operatingpurposes|
|Shenzhen QianhaiQihang Supply ChainManagement Co.,Ltd.|Associate|Prepayment|22,693|1,789|-|24,482|Currentaccount|For operatingpurposes|
|Shenzhen QianhaiQihang Supply ChainManagement Co.,Ltd.|Associate|Interestreceivable|77|2|-|79|Currentaccount|For operatingpurposes|
|Shenzhen JiutianMatrix InvestmentManagement Co.,Ltd.|Associate|Otherreceivable|-|1|-|1|Currentaccount|For operatingpurposes|
|ShenzhenThunderbirdNetwork Media Co.,Ltd.|Associate’ssubsidiary|Otherreceivable|695|129|194|630|For sellingproducts|For operatingpurposes|
|ShenzhenThunderbirdNetwork Media Co.,Ltd.|Associate’ssubsidiary|Accountreceivable|70|347|70|347|For sellingproducts|For operatingpurposes|
|ShenzhenThunderbirdNetwork TechnologyCo.|Associate|Otherreceivable|545|188|733|-|For sellingproducts|For operatingpurposes|
|ShenzhenThunderbirdInformation|Associate’ssubsidiary|Otherreceivable|762|6|462|306|For sellingproducts|For operatingpurposes|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Technology Co., Ltd.|||||||||
|ShenzhenThunderbird SmartProducts Co., Ltd.|Associate’ssubsidiary|Otherreceivable|36|40|-|76|For sellingproducts|For operatingpurposes|
|ShenzhenThunderbird SmartProducts Co., Ltd.|Associate’ssubsidiary|Accountreceivable|3,810|13,647|-|17,457|Currentaccount|For operatingpurposes|
|Shenzhen YishengKangyun TechnologyDevelopment Co.,Ltd.|Associate’ssubsidiary|Otherreceivable|-|67|67|-|Currentaccount|For operatingpurposes|
|CJ Speedex LogisticsCo., Ltd.|Jointventure|Prepayment|1,760|39,093|-|40,853|Currentaccount|For operatingpurposes|
|CJ Speedex LogisticsCo., Ltd.|Jointventure|Accountreceivable|-|2,284|2,284|-|Currentaccount|For operatingpurposes|
|Taiyang Electro-optic(Huizhou) Co., Ltd.|Associate|Dividendreceivable|-|1,163|-|1,163|Dividenddistribution|For operatingpurposes|
|Tianjin 712Communication &Broadcasting Co.,Ltd.|Associate|Dividendreceivable|-|4,417|-|4,417|Currentaccount|For operatingpurposes|
|Tianjin 712Communication &Broadcasting Co.,Ltd.|Associate|Otherreceivable|6|-|-|6|Currentaccount|For operatingpurposes|
|Urumqi DongpengChuangdong EquityInvestmentManagementPartnership (LimitedPartnership)|Associate|Accountreceivable|-|17|-|17|Currentaccount|For operatingpurposes|
|Wuhan LeshengTimes Trading Co.,Ltd.|Associate’ssubsidiary|Prepayment|-|8,052|-|8,052|Currentaccount|For operatingpurposes|
|Tibet DongweiInvestmentManagement Center(Limited Partnership)|Associate|Accountreceivable|-|2|-|2|Currentaccount|For operatingpurposes|
|Xinjiang DongpengWeichuang Equity|Associate|Dividendreceivable|11,015|-|9,611|1,404|For sellingproducts|For operatingpurposes|

TCL Corporation Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|InvestmentPartnership (LimitedPartnership)|||||||||
|Xinjiang DongpengWeichuang EquityInvestmentPartnership (LimitedPartnership)|Associate|Otherreceivable|40,300|-|40,300|-|Currentaccount|For operatingpurposes|
|Xionghua InvestmentCo., Ltd.|Associate’ssubsidiary|Otherreceivable|17|-|17|-|Currentaccount|For operatingpurposes|
|Total|||1,142,259|1,568,730|1,055,364|1,655,625|||

5. Other Major Related-Party Transactions
No such cases in the Reporting Period.
XIII Occupation of theCompany’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.
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|

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|

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|||||||||

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.,|||||||||

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|

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.
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|1|of physical|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|

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
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
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|

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||

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.
TCL Corporation Interim Report 2018
XVII Significant Events of Subsidiaries
||||
|-|-|-|
|Title of current announcement|Disclosure date|Disclosure website|
|Voluntary Announcement on the Result ofSubsidiary TCL Multimedia’s Rights Issue|||
||18 January 2018|http://www.cninfo.com.cn|
|Reminder of the IPO Shares ofMinority-Owned Subsidiary 712 Corp.Beginning Public Trading|||
||26 February 2018|http://www.cninfo.com.cn|
|Announcement on the Establishment of aStrategic Investment Fund|||
||23 March 2018|http://www.cninfo.com.cn|
|Voluntary Announcement on SubsidiaryThunderbird Technology Bringing in aStrategic Investment from JD.com|||
||2 May 2018|http://www.cninfo.com.cn|
|Announcement on the Construction of the G11New UHD Display Production Line|||
||22 May 2018|http://www.cninfo.com.cn|
|Voluntary Announcement on the Acquisitionby TCL Multimedia of an Interest in TCLCommercial Information Technology(Huizhou) Co., Ltd.|||
||1 June 2018|http://www.cninfo.com.cn|

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%|

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 theCompany’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|||||||

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|a pproved 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|||||||||

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||||||
|HubeiChangjiangHezhi HanyiEquityInvestmentFundPartnership(LimitedPartnership)|Domesticnon-state-ownedlegal person||7.82|1,059,950,333|||1,059,849,533|100,800|||
||||||||||In pledge|687,420,000|
|HuizhouInvestmentHolding Co.,Ltd.|Domesticstate-owned legalperson||6.48|878,419,747||||878,419,747|||
|Li Dongsheng|Domestic naturalperson||4.71|638,273,688|||478,705,266|159,568,422|||
||||||||||In pledge|528,234,787|
|Beijing ZiguangInvestment Co.,Ltd.|Domesticstate-owned legalperson||3.58|484,468,900||||484,468,900|||
|XinjiangDongxingHuarui EquityInvestmentPartnership(LimitedPartnership)|Domesticnon-state-ownedlegal person||3.34|452,660,287||||452,660,287|||
||||||||||In pledge|452,660,287|
|Xinjiang Jiutian|Domestic||3.02|408,899,5||||408,899,52|In pledge|408,899,521|

TCL Corporation Interim Report 2018
||||||
|-|-|-|-|-|
|LianchengEquityInvestmentPartnership(LimitedPartnership)|non-state-ownedlegal person||21|1|
|CDBInnovationCapital Co.,Ltd.|Domesticstate-owned legalperson|2.37|320,685,219|320,685,219|
|GuangdongGuangxinHoldings GroupLtd.|Domesticstate-owned legalperson|2.34|316,834,683|316,834,683|
|China SecuritiesFinanceCorporationLimited|Domesticnon-state-ownedlegal person|2.31|313,481,602|313,481,602|
|BOSC Asset－SPD Bank－BOSC AssetWealth AssetManagementPlan No. 10|Domesticnon-state-ownedlegal person|2.22|301,447,437|301,447,437|
|||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.|||

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.,Ltd.|878,419,747|RMB-denominate||
||||878,419,747|
|||d ordinary stock||
|Beijing Ziguang Investment Co.,Ltd.|484,468,900|RMB-denominate||
||||484,468,900|
|||d ordinary stock||
|Xinjiang Dongxing Huarui EquityInvestment Partnership (LimitedPartnership)|452,660,287|||
|||RMB-denominate||
||||452,660,287|
|||d ordinary stock||
|Xinjiang Jiutian Liancheng EquityInvestment Partnership (LimitedPartnership)|408,899,521|||
|||RMB-denominate||
||||408,899,521|
|||d ordinary stock||
|CDB Innovation Capital Co., Ltd.|320,685,219|RMB-denominate||
||||320,685,219|
|||d ordinary stock||
|Guangdong Guangxin HoldingsGroup Ltd.|316,834,683|RMB-denominate||
||||316,834,683|
|||d ordinary stock||
|China Securities FinanceCorporation Limited|313,481,602|RMB-denominate||
||||313,481,602|
|||d ordinary stock||
|BOSC Asset－SPD Bank－ BOSCAsset Wealth Asset ManagementPlan No. 10|301,447,437|||
|||RMB-denominate||
||||301,447,437|
|||d ordinary stock||
|Central Huijin Asset ManagementCo., Ltd.|206,456,500|RMB-denominate||
||||206,456,500|
|||d ordinary stock||
|Li Dongsheng|159,568,422|RMB-denominate||
||||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)||||

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.
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)|||||
|LiDongsheng||Chairman of theBoardandCEO||Incumbent||Male||60||2017-9-1||2020-8-31||638,273,688||-||-||-||638,273,688||
|Liu Bin||ViceChairman of theBoard||Incumbent||Male||48||2017-9-1||2020-8-31||0||-||-||-||0||
|He Jinlei||ViceChairman of theBoard||Incumbent||Male||44||2017-9-1||2020-8-31||0||-||-||-||0||
|BoLianming||DirectorandCOO||Incumbent||Male||54||2017-9-1||2020-8-31||4,058,801||-||-||-||4,058,801||
|HuangXubin||DirectorandCFO||Incumbent||Male||52||2017-9-1||2020-8-31||3,383,380||-||-||-||3,383,380||
|HuangWei||Director||Incumbent||Male||55||2017-9-1||2020-8-31||0||-||-||-||0||
|LiaoQian||DirectorandBoardSecretary||Incumbent||Male||37||2017-9-1||2020-8-31||0||-||-||-||0||
|WuXiaohui||Director||Incumbent||Female||46||2017-9-1||2020-8-31||0||-||-||-||0||

TCL Corporation Interim Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Yan Yan|IndependentDirector|Incumbent|Male|61|2017-9-1|2020-8-31|0|-|-|-|0|
|Lu Xin|IndependentDirector|Incumbent|Female|55|2017-9-1|2020-8-31|0|-|-|-|0|
|ZhouGuofu|IndependentDirector|Incumbent|Male|54|2017-9-1|2020-8-31|0|-|-|-|0|
|LiuXunci|IndependentDirector|Incumbent|Male|59|2017-9-1|2020-8-31|0|-|-|-|0|
|HeZhuohui|Chairman of theSupervisoryCommittee|Incumbent|Male|52|2017-9-1|2020-8-31|0|-|-|-|0|
|MaoTianxiang|EmployeeSupervisor|Incumbent|Male|37|2017-9-1|2020-8-31|0|-|-|-|0|
|QiuHaiyan|Supervisor|Incumbent|Female|43|2017-9-1|2020-8-31|0|-|-|-|0|

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||||

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|

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,|||||

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 TCLCorporation’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 TCLCorporation’s Corporate Bonds Publicly
TCL Corporation Interim Report 2018
Offered in 2016 to Qualified Investors (Phase 1 and 2) and the Follow-up Rating Report (2018) on TCLCorporation’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 theCompany’s bonds during the Reporting Period. The capital for principal repayment and interest payment for theCompany’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 forBondholders’ 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.
TheCompany’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 theCompany’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.
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 over30% 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|
||13TCL-MTN1||RMB500million||2013-1-18||5 years||6.05%||Repaid in full on time||
|1|||||||||||||
||15TCL-MTN001||RMB500million||2015-4-2||5 years||5.50%||The interest for theperiod from 2 April2017 to 1 April 2018was paid on 2 April2018||
|2|||||||||||||

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
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 theCompany’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
TCL Corporation Interim Report 2018
Part IX Financial Statements
I IndependentAuditor’s Report
The interim financial statements are unaudited by an independent auditor.
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. Consolidated 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 inShareholders’ Equity of
13-14 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
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:
||
|-|
|848,778|

 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 6,372,511R&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 Head for financial Head of the financial
Legal
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.
TCL Corporation
Consolidated Balance Sheet (Continued)
(In thousands of RMB)
Liabilities andshareholders’ 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 Totalshareholders’ equity 57,678,597 54,142,936 Total liabilities andshareholders’ equity 169,916,845 160,293,984 Head for financial Head of the financial
Legal
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.
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
1,033,845 parent 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
(472,949) 795,472 be reclassified to profit or loss
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 Head for financial Head of the financial
Legal
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.
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.
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
130,330 (147,361) equivalents
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.
TCL Corporation
Consolidated Statement of Changes inShareholders’ 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
13,514,972 5,940,471 - 219,272 1,494,300 361 8,577,688 24,395,872 54,142,936 year
3. Increase/decrease in the period 34,677 94,094 (63,458 (445,324) - - 230,974 3,684,697 3,535,660 )
3.1 Total comprehensive income - - - (445,324) - - 1,585,939 87,278 1,227,893 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
34,677 28,781 - - - - 4,068,026 4,068,026 shareholders )
3.2.2 Share-based payments
included inshareholders’ equity - - - - - - - - - 3.2.3 Other - 65,313 - - - - - - 65,313 3.3 Profit distribution - - - - - - (470,606) (1,354,965) (1,825,571) 3.3.1 Appropriation to surplus
reserves - - - - - - - - - 3.3.2 Appropriation to shareholders - - - - - - (548,993) (1,354,965) (1,903,958) 3.3.3 Other - - - - - - - 78,387 78,387 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 FinancialAffairs： 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.
TCL Corporation
Consolidated Statement of Changes inShareholders’ 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
1,301,290 2,732,710 - - - - - 1,059,447 5,093,447 shareholders
3.2.2 Share-based payments
- - - - - - - - - included inshareholders’ 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 FinancialAffairs： 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.
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 Head for financial Head of the financial
Legal
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.
TCL Corporation
Balance Sheet of the Company as the Parent (Continued)
(In thousands of RMB)
Liabilities andshareholders’ 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) Totalshareholders’ equity 28,395,527 27,384,617 Total liabilities andshareholders’ equity 69,324,483 56,525,458 Head for financial Head of the financial
Legal
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.
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 Head for financial Head of the financial
Legal
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.
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.
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
8,245,170 6,088,956 activities
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
1,253,732 (448,814) activities
4. Effect of foreign exchange rate changes on cash
(34,911) 1,236 and cash equivalents
5. Net increase in cash and cash equivalents 2,861,828 (2,112,626) Add: Cash and cash equivalents, beginning of the
1,056,211 4,906,046 period
6. Cash and cash equivalents, end of the period 8 2,793,420 3,918,039
Head for financial Head of the financial
Legal
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.
TCL Corporation
Statement of Changes inShareholders’ Equity of the Company as the Parent
(In thousands of RMB)
H1 2018
Share Capital Treasury
Other
Surplus Retained
Total 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 FinancialAffairs： 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.
TCL Corporation
Statement of Changes inShareholders’ Equity of the Company as the Parent (Continued)
(In thousands of RMB)
Year 2017
Share Capital Treasury
Other
Surplus Retained
Total 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 FinancialAffairs： 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.
TCL Corporation
Notes 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 thePeople’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 than10%. 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 theCompany’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.
TCL Corporation
Notes 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 ofRMB’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. .
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 inshareholders’ 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 than50% of its initial investment cost (including50%) 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 than20% (including20%) but has not yet reached50%, 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.
TCL Corporation
Notes 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 ofbankrupt’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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 theCompany’s long-term equity investments in its subsidiaries, and theGroup’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 theCompany’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 ofshareholders’ 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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;
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 is0-3% 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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, theCompany’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.
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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, theR&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.
TCL Corporation
Notes 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 inshareholders’ 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.
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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, theR&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:
TCL Corporation
Notes 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, theGroup’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.
TCL Corporation
Notes 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, theCompany’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 of17%, 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.
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 atbank－ 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 monetarycapital－ 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
TCL Corporation
Notes 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 ofUse：
30 June 2018 31 December 2017 TCLFinance’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 theCompany’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, theCompany’s monetary capital abroad equaled RMB4,124,824,000 (31 December 2017: RMB2,429,037,000), which were all owned by theCompany’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 theCompany’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 theCompany’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 a5% or greater voting stock. The notes receivable from related parties amounted to RMB2,319,000 (31 December 2017: RMB607,000).
TCL Corporation
Notes 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 AccountsReceivable：
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 15,002,89095.90% 50,6150.34% 14,537,23396.07% 46,1770.32% 1-2 years 465,568 2.98% 235,61150.61% 426,154 2.82% 178,72741.94% 2-3 years 71,551 0.46% 64,97590.81% 65,432 0.43% 59,21490.50% Over 3 years 104,634 0.66% 100,80196.34% 102,671 0.68% 100,14997.54% 15,644,643100.00% 452,0022.89% 15,131,490100.00% 384,2672.54% (2) Accounts Receivable byCategory：
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 12,340,86378.88% 295,8352.40% 12,388,084 294,5732.38%%
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
3,303,78021.12% 156,1674.73% 2,743,406 89,6943.27% receivable %
100.00
15,644,643100.00% 452,0022.89% 15,131,490 % 384,2672.54%
An account receivable that is individually significant refers to an account receivable with an individual amount
TCL Corporation
Notes 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 overUS$500,000 (inclusive).
TCL Corporation
Notes 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 for5.38% 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 a5% or greater voting stock.
(5) Top Five Accounts Receivable on 30 June2018：
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 theCompany’s subsidiaries and banks. According to the agreements, because theCompany’s subsidiaries retained partial risk in connection with the factored accounts receivable (the risk ofcustomers’ non-payment or untimely payment), the Company reflected the factored accounts receivable and the bank borrowings obtained therefrom in the balance sheet.
TCL Corporation
Notes 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 ofPrepayments：
30 June 2018 31 December 2017 Within 1 year 1,093,650 910,215 (2) Top Five Prepayments on 30 June2018：
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 for6.78% of the total prepayments (31 December 2017:3.23%). And there were no prepayments to any shareholder with a5% 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 for5.71% of the total interest receivable (31 December 2017:4.64%). And there was no interest receivable from any shareholder with a5% 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
TCL Corporation
Notes 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 OtherReceivables：
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% 96,04540.22% 2-3 years 185,410 3.91% 132,893 71.68% 329,263 7.67% 193,65658.81% Over 3
years 211,384 4.46% 187,138 88.53% 164,760 3.85% 125,98876.47% 4,742,21 4,290,70
4100.00% 448,894 9.47% 9100.00% 437,11810.19% (2) Other Receivables byCategory：
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% 401,30211.98% 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
TCL Corporation
Notes 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
4,742,214100.00% 448,894 9.47% 4,290,709 100.00% 437,118 10.19% The balance of theCompany’s other receivables primarily consisted of export tax rebates receivable, government subsidies receivable, security deposits in external entities, etc.
TCL Corporation
Notes 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 OtherReceivables：
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 for15.34% 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 a5% or greater voting stock.
(5) Top Five Other Receivables on 30 June2018：
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.
TCL Corporation
Notes 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 byCategory：
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 ValuationAllowances：
Revers Newly
Establish ed in Written off deconsol Exchange
1 January 30 June ed in the the in the idated adjustment
2018 2018 period 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
TCL Corporation
Notes 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 andcreditor’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 equityinstruments——at fair value (1)
1,004,975 1,159,166 Available-for-sale equityinstruments——at cost (2)
2,214,715 2,042,889 3,219,690 3,202,055
TCL Corporation
Notes 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 EquityInstruments——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.PhoneTrade&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
TCL Corporation
Notes 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 EquityInstruments——at Cost
TheCompany’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
TCL Corporation
Notes 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 EquityInstruments——at Cost
TheCompany’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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 TheCompany’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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 (316) - - - (224) 53,627 Partnership)
Yixing Jiangnan Tianyuan Venture Capital
62,471 (12,746) 15,889 (21,073) - (15,013) - 11 29,539 Company (Limited Partnership)
Beijing A Dynamic Investment Consulting Co.,
517 - 125 - - - - - 642 Ltd.
Shanghai Gen Auspicious Investment
288 - (191) - - - - - 97 Management Co., Ltd.
TCL Corporation
Notes 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 (2,620) - - - - 34,113 Partnership (Limited Partnership)
TCL Corporation
Notes 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) 9 - - - - 43,024 (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) 15,737 - - - - 789,161 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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 profit/loss using change in or profits increases/dec 30 June 2018 g amount investment in comprehensiv allowanc
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
TCL Corporation
Notes 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 JinkeGroup’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.
TCL Corporation
Notes 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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 currentperiod：
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 ofCSOT’s T2 and T3 manufacturing bases and the Hefei manufacturing base that had been completed and put into use.
TCL Corporation
Notes 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
Investment
Reclassified to investment
as% of
Increase in to fixed assets property in
budget
1 January current in current current
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
TCL Corporation
Notes 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
Grossamount：
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 fromR&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 Accumulatedamortization：
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 Impairmentallowances：
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.
TCL Corporation
Notes 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
TheGroup’sR&D expense is listed asfollows：
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
TCL Corporation
Notes 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 theCompany’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”) to100% with a capital ofHK$10,690,000. As such, the difference between the accumulated investment of TCL Overseas Holdings Limited in TCL Vietnam (corresponding to a100% interest) and theowner’s equity of TCL Vietnam attributable to TCL Overseas Holdings Limited on the settlement date (equal to RMB1,947,000) was recorded in theCompany’s goodwill.
TCL Corporation
Notes 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 ofHK$29,872,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a51.82% interest) and theowner’s equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB11,419,000) was recorded in theCompany’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 ofHK$30,608,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a55.15% interest) and theshareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB-5,409,000) was recorded in theCompany’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 theCompany’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited), TCL Electronics offered, at the price ofHK$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 a53.86% interest) and theshareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB39,130,000) was recorded in theCompany’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 ofHK$76,719,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a54.15% interest) and theshareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB28,017,000) was recorded in theCompany’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 ofHK$62,304,820. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a54.51% interest) and theshareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB8,952,000) was recorded in theCompany’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 ofHK$126,814,000. As such, the difference between the accumulated investment of TCL Industries Holdings (HK) Limited in TCL Electronics (corresponding to a54.83% interest) and theshareholders’ equity of TCL Electronics attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB36,259,000) was recorded in theCompany’s goodwill.
Note TCL Industries Holdings (HK) Limited, a wholly-owned subsidiary of the Company, acquired in 2004 a57.4% 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 a57.4% interest) and theshareholders’ equity of TCL Communication attributable to TCL Industries Holdings (HK) Limited on the settlement date (equal to RMB316,893,000) was recorded in theCompany’s goodwill. An impairment allowance of RMB194,551,000 had been established on this goodwill item for 2017.
TCL Corporation
Notes 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 theCompany’s subsidiary TCL Industries Holdings (HK) Limited, 9. acquired in July 2007 a combined61.46% interest in JRD Communication Inc. (hereinafter referred to as “JRDC”) from the other shareholders, with a total consideration ofUS$39,313,000 (equivalent to approximately RMB296,584,000). As such, the difference between the accumulated investment of TCL Communication in JRDC (corresponding to a100% 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 theCompany’s goodwill.
TCL Corporation
Notes 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 a51.82% 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 a51.82% 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 theCompany’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 the100% 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 a100% 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 theCompany’s goodwill.
Note TCL Communication, a subsidiary of theCompany’s wholly-owned subsidiary TCL Industries Holdings (HK) 12 Limited, acquired in May 2011 the100% 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 a100% 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 theCompany’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 theCompany’s wholly-owned subsidiary TCL Industries Holdings (HK) Limited), acquired in May 2014 a21% 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 a70% 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 theCompany’s goodwill. An impairment allowance of RMB12,065,000 had been established on this goodwill item for 2017.
Note Tonly Electronics, a subsidiary of theCompany’s wholly-owned subsidiary TCL Industries Holdings (HK) 14 Limited, acquired in September 2015 the100% 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 a100% 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 theCompany’s goodwill.
Note Prosper Wide Limited and TCL Communication Technology Holdings Limited, subsidiaries of theCompany’s 15 wholly-owned subsidiary TCL Industries Holdings (HK) Limited, acquired in September 2015 a40% interest and a19.99% 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 of59.99%) 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 theCompany’s goodwill. An impairment allowance of RMB50,729,000 had been established on this goodwill item for 2017.
TCL Corporation
Notes 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 a60% 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 a60% 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 theCompany’s goodwill.
Note On 30 June 2018, the Company tested asset groups inclusive of goodwill for impairment.
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)
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
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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).
TCL Corporation
Notes 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 theCompany’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 for0.44% of the total notes payable (31 December 2017:0.70%). There were no notes payable to any shareholder with a5% 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 approximately2.26% 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 for1.42% 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 a5% or greater voting stock.
TCL Corporation
Notes 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 for0.28% of the total advances from customers (31 December 2017:0.02%). There were no advances from any shareholder with a5% 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.
：
TCL Corporation
Notes 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
TCL Corporation
Notes 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 348,806 183,676R&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 for3.35% 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 a5% 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.
TCL Corporation
Notes 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-TermBorrowings：
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.
TCL Corporation
Notes 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 Ofwhich：Current portion of long-term borrowings (2,759,804) (4,930,778) 28,766,500 20,283,381 The maturities of theCompany’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 theCompany’s interest in TCL Industries Holdings (HK) Limited as the collateral.
Top Five Long-TermBorrowings：
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
TCL Corporation
Notes 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
TCL Corporation
Notes 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%
TCL Corporation
Notes 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, theCompany’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.
TCL Corporation
Notes 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 perChina’s Company Law, Articles of Association for Companies, accounting standards, the Company and several of its subsidiaries shall appropriate10% of net profits as statutory surplus reserves until the reserve amount reaches50% 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 than25% 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 appropriated1% 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
TCL Corporation
Notes 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 for16.44% and17.44% of the core business revenue.
TCL Corporation
Notes 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 theCompany’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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 2017R&D subsidies
890,017 360,113 VAT rebates on software
162,378 261,727 1,052,395 621,840
TCL Corporation
Notes 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 4,440Including：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 10,345Including：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.
TCL Corporation
Notes 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)
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 1,661,319Add：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 cashequivalents：
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.
TCL Corporation
Notes 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 TheCompany’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
TCL Corporation
Notes 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)
TCL Corporation
Notes 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
Huizhou TCL Canyon Circuit Petro AP (Hong
Investment Tairui (Hong TCT Mobile -
Subsidiary Hyperpower Technology Kong) Company
Development Co., Kong) Limited Telefones LTDA
Batteries Inc. (Huizhou) Co., Ltd. Limited
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 theCompany’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
TCL Corporation
Notes 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 TheCompany’s How Place of Nature of
Investee capital (in RMB interest subsidiary registration business
yuan) Direct Indirect w as obtained TCL Industries Holdings (HK) Limited Hong Kong Investment HKD 100% - Incorporated holdings 1,578,942,506
TCL Electronics Holdings Limited Cayman Investment HKD - 5 2.46% Incorporated Islands holdings 2,333,388,113
Guangzhou Digital Lehua Technology Co., Guangzhou M anufacturing 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 - 9 8.51% 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
TCL Corporation
Notes 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 TheCompany’s How Place of Nature of
Investee capital (in RMB interest subsidiary registration business
yuan) Direct Indirect w as 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 RMB86.81% - 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
TCL Corporation
Notes 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)
TheCompany’s How Place of Nature of Registered capital
Investee interest subsidiary registration business (in RMB yuan)
Direct Indirect w as 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 RMB100% - 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
TCL Corporation
Notes 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 TheCompany’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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 TheCompany’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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 TheCompany’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 RMB73.69% - 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
TCL Corporation
Notes 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 TheCompany’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
TCL Corporation
Notes 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 TheCompany’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 M anufacturin - 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 a43.04% 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 theCompany’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 theCompany’s consolidated financial statements.
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
TCL Corporation
Notes 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)
TCL Corporation
Notes 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 TheCompany’s Investee business/pla
business activities or interest ce of
not
registration
Direct Indirect Jointventures–
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 20.08% - Islands
Bank of Shanghai Co., Ltd. Shanghai Finance Yes - 4.99% Note For the Reporting Period, the Company had a4.99% 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
theCompany’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
TCL Corporation
Notes 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
theCompany’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
TCL Corporation
Notes 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 Jointventures：
Aggregated carrying amount of investments 43,512 44,422 Aggregate of following items calculated in
- proportion to theCompany’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 theCompany’s interest - - Net profit (note) 582,677 1,030,673 Other comprehensive income (note) (5,092) 12,915 Total comprehensive income 577,585 1,043,588Note： 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.
TCL Corporation
Notes 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 (or7.82%) in the Company. Mr. Li Dongsheng directly holds 638,273,700 shares (or4.71%) in the Company, and indirectly holds 408,899,500 (or3.02%) in the Company through Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Jiutian Liancheng”) and 452,660,300 shares (or3.35%) 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 (or11.10%) in the Company.
TCL Corporation
Notes 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 relatedparties：
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
TCL Corporation
Notes 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 relatedparties：
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 QihangImport&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. Jointventure’s subsidiary Majorsubsidiary’s non-controlling Le Shi Zhi Xin Electronics& Technology (Tianjin) Co., Ltd. shareholder
TCL Corporation
Notes 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.
QihangImport&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%
TCL Corporation
Notes 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% QihangImport&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 theCompany’s subsidiary TCL Electronics Holdings Limited, the transactions and accounts between them are disclosed as related-party transactions.
TCL Corporation
Notes 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 e 3
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 QihangImport&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 e 3
QihangImport&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
TCL Corporation
Notes 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. e 4 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 theCompany’s net profit, but play an important role as to theCompany’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 theCompany’s net profit, but play an important role as to theCompany’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 theCompany’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 thePeople’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 relatedparties’ 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 theCompany’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.
TCL Corporation
Notes 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 QihangImport&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
TCL Corporation
Notes 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
TCL Corporation
Notes 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.
QihangImport&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
TCL Corporation
Notes 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 QihangImport&Export Limited - 6,170 Good Vision Limited - 5,440 Elite Excellent Investments Limited - 2,076 Huixing Holdings Limited - 676
TCL Corporation
Notes 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
TCL Corporation
Notes 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
TCL Corporation
Notes 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 QihangImport&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 theCompany’s subsidiary TCL Finance Co., Ltd.
Except that the deposits of theCompany’s subordinates in the Financial Settlement Centre and theCentre’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.
TCL Corporation
Notes 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 theCompany：
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 forCSOT’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.
TCL Corporation
Notes 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 forassociates’ 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 RegulatoryCommission’s Reply ZJXK[2017] No. 276 on the Approval of TCLCorporation’s Public Offering of Corporate Bonds to Qualified Investors and TCLCorporation’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 of5.30%.
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.
TCL Corporation
Notes 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, theCompany’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 theCompany’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 RegulatoryCommission’s Reply ZJXK[2017] No. 276 on the Approval of TCLCorporation’s Public Offering of Corporate Bonds to Qualified Investors and TCLCorporation’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 of5.48%.
Except for the aforesaid events, there were no other other significant events that are required to be disclosed as at 30 June 2018.
TCL Corporation
Notes 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 347,661100.00% - 0.00% 340,349100.00% - 0.00% As at 30 June 2018, there were no such accounts receivable from any shareholder with a5% 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% 87,87433.86% 209,295 2.05% 88,560 % 12,108,011 100.00% 87,874 0.73% 10,166,818100.00% 88,5600.87% 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 a5% or greater voting stock.
The top five other receivables amounted to approximately RMB7,358,243,000 (31 December 2017: RMB7,362,890), accounting for60.77% of the total other receivables (31 December 2017:72.42%).
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)
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 equityinstruments——at fair
value (1) 53,962 79,824 Available-for-sale equityinstruments——at cost (2) 1,144,694 1,144,694 1,198,656 1,224,518 (1) Available-for-Sale EquityInstruments——at Fair Value
Change in fair
Cost value Ending balance Refond Optoelectronics (SZ.300241) 40,000 13,962 53,962 (2) Available-for-Sale EquityInstruments——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 Ofwhich：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.
TCL Corporation
Notes to Financial Statements
(For the period from 1 January 2018 to 30 June 2018)
(The amounts in tables are expressed in thousands of RMB)
TCL Corporation
Notes 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
TCL Corporation
Notes 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
TCL Corporation
Notes 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) Limited100.00% 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
100.00% 285,000 400,023 - 685,023
(Guangzhou) Co., Ltd.
Guangzhou TCL Internet Microcredit Co.,100.00% 200,000 300,008 - 500,008
TCL Corporation
Notes 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.
TCL Corporation
Notes 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 theCompany’s equity interests in the subsidiaries, see Note V.
TCL Corporation
Notes 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 June2018：
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.
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 thePublic——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.
Ofwhich：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 theCompany’s ordinary course of
525,525 526,340 business at fixed quotas or amounts as pergovernment’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
- 82,582Company’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
(6,131) (50,041) assets and liabilities and available-for-sale financial assets (exclusive
of effective portion of hedges that arise in theCompany’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 thePublic—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 Reversed Written 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) 900,896Including：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) 87,874Including：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, theGroup’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, theGroup’s other current assets as at 30 June 2018 rose by RMB8,057,866,000 (or approximately69%), primarily driven by new wealth management instruments.
Compared with the carrying amount as at 31 December 2017, theGroup’s loans and advances to customers as at 30 June 2018 rose by RMB293,645,000 (or approximately53%), primarily driven by a rise in the loans and advances to customers.
Compared with the carrying amount as at 31 December 2017, theGroup’s investment property as at 30 June 2018 rose by RMB693,680,000 (or approximately81%), primarily driven by new investment property.
Compared with the carrying amount as at 31 December 2017, theGroup’s construction in progress as at 30 June 2018 rose by RMB8,150,845,000 (or approximately55%), 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, theGroup’s other non-current assets as at 30 June 2018 rose by RMB4,713,923,000 (or approximately139%), primarily driven by a rise in the prepayments for equipment.
Compared with the carrying amount as at 31 December 2017, theGroup’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, theGroup’s short-term commercial papers payable as at 30 June 2018 rose by RMB2,000,000,000 (or100%), primarily driven by new short-term commercial papers.
Compared with the carrying amount as at 31 December 2017, theGroup’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, theGroup’s long-term borrowings as at 30 June 2018 rose by RMB8,483,119,000 (or approximately42%), primarily driven by new borrowings.
Compared with the carrying amount for H1 2017, theGroup’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, theGroup’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, theGroup’s asset impairment loss for H1 2018 rose by RMB452,575,000 (or approximately249%), primarily driven by the impairment loss on inventories and fixed assets.
Compared with the carrying amount for H1 2017, theGroup’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, theGroup’s investment income for H1 2018 rose by RMB294,713,000 (or approximately37%), primarily driven by a rise in the investment income from joint ventures and associates.
Compared with the carrying amount for H1 2017, theGroup’s other income for H1 2018 rose by RMB430,555,000 (or approximately69%), primarily driven by a rise in theR&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 approximately251%), 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 approximately168%), 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 approximately201%), 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 approximately180%), 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 (or100%), 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 approximately75%), 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