TCL科技(000100) - 2019 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions This section provides essential preliminary information, including board assurances, profit distribution plans, the report's structure, and definitions of key terms 1.1 Important Notice The board, supervisory board, and senior management guarantee the annual report's truthfulness, accuracy, and completeness, disclosing the 2019 profit distribution plan - Company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the annual report, with no false records, misleading statements, or major omissions[9] - The company's 2019 profit distribution plan proposes a cash dividend of 1 yuan (tax inclusive) per 10 shares based on 13,000,372,307 shares, totaling 1.3000372307 billion yuan[9] 1.2 Table of Contents The report's clear directory structure covers key sections such as important notices, company profile, business overview, board report, and financial reports - The report's table of contents includes ten main chapters, providing structured information navigation for investors[3] 1.3 Definitions This section defines key terms and abbreviations used in the report, ensuring accurate understanding of company names, reporting periods, and major subsidiaries - "Company", "the Company", and "Group" all refer to TCL Technology Group Corporation[10] - "Pro forma basis" refers to the company's financial reports for the reporting period and the prior year, prepared by excluding the impact of reorganization business data, based on the post-reorganization consolidation scope[10] - "TCL CSOT" refers to TCL China Star Optoelectronics Technology Co., Ltd., listing major project codes such as t1 to t7[10][12] Company Profile and Key Financial Indicators This section presents the company's fundamental information, contact details, disclosure channels, registration changes, and a comprehensive overview of key financial data and indicators 2.1 Company Information This section provides the company's basic registration details, stock information, legal representative, addresses, website, email, and lists corporate honors - The company's stock abbreviation has changed to "TCL Technology", stock code 000100, listed on the Shenzhen Stock Exchange[13][14] - The company's legal representative is Li Dongsheng, with registered and office addresses at TCL Technology Building, Huifeng Third Road 17, Zhongkai High-tech Zone, Huizhou City, Guangdong Province[13] - The company has received multiple honors, including "Fortune China 500" and "Top 60 Chinese Corporate Social Responsibility Brands in 2019"[13] 2.2 Contact Person and Information This section provides the name, address, telephone, fax, and email of the company's board secretary for investor communication - The company's Board Secretary is Liao Qian, with the contact address at 19th Floor, Block B, TCL Building, Gaoxin South First Road, Science Park, Shenzhen, Guangdong Province, and email ir@tcl.com[15] 2.3 Information Disclosure and Document Availability This section specifies the company's chosen media for information disclosure, the CSRC-designated website, and the location where the annual report is available - The company's selected information disclosure media include Securities Times, China Securities Journal, Shanghai Securities News, and Securities Daily[16] - The website designated by the China Securities Regulatory Commission (CSRC) for publishing the annual report is **http://www.cninfo.com.cn**[16](index=16&type=chunk) 2.4 Registration Change Status This section outlines the company's organization code and confirms no changes in its main business or controlling shareholder since listing - There have been no applicable changes in the company's main business or controlling shareholders since its listing[17] 2.5 Other Relevant Information This section discloses information about the accounting firm, including its name and signing accountants, and details the financial advisor for continuous supervision - The accounting firm engaged by the company is Da Hua Certified Public Accountants (Special General Partnership), with signing accountants Qiu Junzhou and Jiang Xianmin[18] - The company engaged CITIC Securities Co., Ltd. as its financial advisor, with a continuous supervision period from March 1, 2019, to December 31, 2020[19] 2.6 Key Accounting Data and Financial Indicators This section presents the company's key accounting data and financial indicators for 2019, 2018, and 2017, with pro forma data reflecting major asset restructuring 2019-2017 Key Accounting Data and Financial Indicators (Report Basis) | Item | 2019 | 2018 | Change (%) | 2017 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 74,933,085,688 | 113,360,075,545 | -33.90 | 111,577,362,348 | | Net Profit (CNY) | 3,657,735,320 | 4,065,194,164 | -10.02 | 3,544,702,884 | | Net Profit Attributable to Shareholders (CNY) | 2,617,766,571 | 3,468,207,407 | -24.52 | 2,664,396,006 | | Basic EPS (CNY/share) | 0.1986 | 0.2566 | -22.60 | 0.2178 | | Net Cash Flow from Operating Activities (CNY) | 11,490,096,405 | 10,486,580,443 | 9.57 | 9,209,615,123 | | Total Assets (CNY) | 164,844,884,926 | 192,763,941,739 | -14.48 | 160,293,985,835 | | Equity Attributable to Shareholders (CNY) | 30,111,946,237 | 30,494,364,951 | -1.25 | 29,747,067,178 | 2019-2018 Key Accounting Data and Financial Indicators (Pro Forma Basis) | Item | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 57,270,940,685 | 48,240,376,808 | 18.72 | | Net Profit (CNY) | 3,564,025,084 | 3,545,237,938 | 0.53 | | Net Profit Attributable to Shareholders (CNY) | 2,617,778,635 | 3,153,044,155 | -16.98 | | Basic EPS (CNY/share) | 0.1986 | 0.2333 | -14.87 | | Diluted EPS (CNY/share) | 0.1935 | 0.2329 | -16.92 | | Weighted Average ROE (%) | 9.09 | 9.74 | -0.65 | - The company has been reorganized into a global leading intelligent technology company with semiconductor display and materials business as its core, and implemented a share repurchase plan during the reporting period, repurchasing 565,333,922 shares, accounting for 4.18% of the total share capital[22] 2.7 Differences in Accounting Data Under Domestic and International Accounting Standards This section states no differences in net profit and net assets between financial reports prepared under international/overseas and Chinese accounting standards - During the reporting period, there were no differences in net profit and net assets between financial reports disclosed under international accounting standards and Chinese accounting standards[25] 2.8 Quarterly Key Financial Indicators This section lists the company's key financial indicators for each quarter of 2019, confirming no significant discrepancies with previously disclosed reports 2019 Quarterly Key Financial Indicators | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 29,600,956,875 | 14,180,656,860 | 15,036,052,357 | 16,115,419,596 | | Net Profit (CNY) | 1,006,077,530 | 1,730,985,146 | 750,351,631 | 170,321,013 | | Net Profit Attributable to Shareholders (CNY) | 779,088,389 | 1,313,260,303 | 484,981,289 | 40,436,590 | | Net Cash Flow from Operating Activities (CNY) | 2,243,903,241 | 3,906,918,581 | 1,458,452,367 | 3,880,822,216 | - The above financial indicators or their aggregated totals do not have significant differences from the relevant financial indicators in the company's disclosed quarterly and semi-annual reports[26] 2.9 Non-Recurring Gains and Losses Items and Amounts This section lists the company's non-recurring gains and losses items and amounts for 2019, 2018, and 2017, including asset disposal gains/losses and government grants 2019-2017 Non-Recurring Gains and Losses Items and Amounts | Item | 2019 Amount (CNY) | 2018 Amount (CNY) | 2017 Amount (CNY) | | :--- | :--- | :--- | :--- | | Non-current asset disposal gains/losses | 1,419,020,969 | -58,305,452 | 420,543,530 | | Government grants recognized in current profit/loss | 1,170,648,526 | 1,377,064,570 | 1,159,442,050 | | Fair value changes and investment income from trading financial assets/liabilities | 186,339,457 | 162,729,226 | -207,276,526 | | Other non-operating income and expenses | 77,285,628 | 871,846,769 | 504,575,138 | | Less: Income tax impact | 165,397,982 | 191,940,974 | 310,502,820 | | Minority interest impact (after tax) | 305,249,348 | 280,578,104 | 284,951,831 | | Total | 2,382,647,250 | 1,880,816,035 | 1,473,746,678 | Company Business Overview This section outlines TCL Technology's core business segments, including semiconductor display and materials, industrial finance and investment, aiming to be a global leader in smart technology 3.1 Main Businesses Engaged by the Company During the Reporting Period TCL Technology's main businesses include semiconductor display and materials, industrial finance and investment, positioning the company as a global leader in high-tech strategic emerging industries - The company's main businesses cover three major segments: semiconductor display and materials, industrial finance and investment, and other businesses[29] - The company's strategic positioning is to be a global leading intelligent technology company, focusing on developing high-tech strategic emerging industries, and supporting industrial development through industrial finance[29] 3.2 Significant Changes in Major Assets This section explains significant changes in the company's major assets during the reporting period, particularly reasons for changes in fixed assets and intangible assets - The increase in fixed assets is primarily due to the transfer of t2, t3, t4, and t6 lines from construction in progress to fixed assets[30] - The decrease in intangible assets is primarily due to the stripping of businesses through asset restructuring[30] 3.3 Core Competitiveness Analysis This section details TCL Technology's post-restructuring, technology-centric business direction, highlighting its core competencies in scale, efficiency, R&D, and customer relations - The company completed asset restructuring, divested terminal businesses, clarified its technology-centric business direction, and renamed itself "TCL Technology"[32] - TCL CSOT's production capacity grew rapidly, with large-size panels ranking first in 55-inch TV panel shipments and third in 65-inch, placing its comprehensive competitiveness among the global display panel industry's top tier[33] - R&D investment reached 5.46 billion yuan in 2019, submitting 2,752 PCT international patent applications, totaling 11,261, ranking second globally in quantum dot patents[34] - The company pioneered new technologies and materials, owning a national-level innovation center in printed OLED, with Huarei Optoelectronics OLED materials mass-supplied, and QLED blue light material performance leading globally[35] - Industrial finance and venture capital businesses contribute stable profits, balancing market cycle fluctuations in the semiconductor display industry[36] - Established strong strategic partnerships with leading brands like Samsung, TCL Electronics, and Xiaomi, with large-size panels ranking first in supply to the top six domestic TV manufacturers[37] - The company continuously improves its governance structure, enhances organizational team vitality, and promotes its core values of "Accountability, Innovation, and Excellence"[38][39] Board of Directors' Report The Board of Directors' report outlines the challenging 2019 semiconductor display industry, the company's strategic shift to high-tech industries through restructuring, and its achievements in growth, efficiency, and innovation 4.1 Overview The Board of Directors' report outlines the challenging 2019 global semiconductor display industry, the company's strategic shift to high-tech industries, and its achievements in growth, efficiency, and innovation - In 2019, the global semiconductor display industry faced immense profitability pressure; the company completed major asset restructuring, focusing on high-tech strategic emerging industries such as semiconductor display and materials[40] 2019 Financial Performance (Pro Forma Basis) | Indicator | Amount (CNY billion) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Operating Revenue | 57.27 | 18.7 | | Profit | 3.56 | 0.53 | | Net Profit Attributable to Shareholders | 2.62 | -17.0 | - The company's management efficiency continuously improved, with net profit per capita increasing from 38,600 yuan to 74,000 yuan, the asset-liability ratio decreasing from 68.4% to 61.3%, and operating cash net inflow of 11.49 billion yuan[41] - In terms of technological innovation, the world's first Mini LED on Glass "Xingyao Screen" was launched, AMOLED foldable screens were mass-produced and shipped, and breakthroughs were made in new display and material fields[41] - R&D investment in 2019 was 5.46 billion yuan, with 2,752 PCT international patent applications submitted, totaling 11,261[41] - Production capacity grew rapidly, with the t6 G11 production line reaching full capacity ahead of schedule, the t3 G6 LTPS production line expanding to 50K/month, the t4 G6 flexible OLED production line's first phase mass-producing and shipping foldable screen products, and the t7 G11 production line progressing smoothly[42] - Industrial finance and investment businesses achieved a profit of 999 million yuan, and asset restructuring generated a gain of 1.15 billion yuan, providing stable performance support for the group[42][43] - The company will aim for global leadership, overcome the impact of the epidemic, expand market share, and achieve a significant increase in full-year revenue[44] 4.2 Main Business Operations This section details TCL Technology's semiconductor display and materials business and industrial finance operations, including production, sales, market share, technology, and a comprehensive analysis of company financials - TCL Technology will gradually exit other businesses based on the principle of maximizing shareholder value, focusing on achieving global leadership in semiconductor display and materials[45] TCL CSOT 2019 Key Operating Data | Indicator | Amount/Data | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Product shipment area | 22.184 million square meters | 23.8 | | Operating Revenue | 33.99 billion yuan | 22.9 | | Net Profit | 964 million yuan | -58.5 | | EBITDA | 8.68 billion yuan | - | - TCL CSOT's large-size product shipments reached 41.195 million units, a 5% year-on-year increase, with TV panel market share rising to third globally, and 55-inch product shipments ranking first globally[46] - Small and medium-size shipment area was 1.365 million square meters, a 212% year-on-year increase, with shipments of 113.978 million units, a 125% year-on-year increase[46] - TCL CSOT's t6 factory reached full capacity ahead of schedule, the t3 factory expanded to 50K/month, the t4 flexible AMOLED factory's first phase mass-produced and shipped foldable screen products, and the t7 factory progressed as planned[47][48] - TCL Capital manages funds totaling 8.99 billion yuan, with 115 cumulative investment projects, holding shares in listed companies such as CATL, Defang Nano, and Will Semiconductor[51] - Zhonggang Capital achieved profitability in its first year of operation, completing 12 bond issuance and underwriting projects[51] 2019 Operating Revenue Composition (by Industry) | Industry | Amount (CNY) | Proportion of Operating Revenue | 2018 Amount (CNY) | Proportion of Operating Revenue | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | TCL CSOT | 33,993,533,865 | 45.37% | 27,666,368,029 | 24.41% | 22.87 | | Hanlinhui | 20,835,617,478 | 27.81% | 16,566,992,566 | 14.61% | 25.77 | | Other and Eliminations | 20,103,934,345 | Not applicable | 69,126,714,950 | Not applicable | Not applicable | | Total Operating Revenue | 74,933,085,688 | 100.00% | 113,360,075,545 | 100.00% | -33.90 | - 2019 operating revenue (pro forma basis) was 57.27 billion yuan, a year-on-year increase of 18.72%[52] 2019 Major Expense Changes | Item | 2019 (CNY) | 2018 (CNY) | Year-on-Year Change (%) | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 2,857,488,890 | 8,887,021,380 | -67.85 | Primarily due to asset restructuring | | Administrative Expenses | 1,895,087,528 | 4,299,610,008 | -55.92 | Primarily due to asset restructuring | | Financial Expenses | 1,248,800,752 | 973,260,519 | 28.31 | Primarily due to increased financing scale | | R&D Expenses | 3,396,804,603 | 4,677,578,988 | -27.38 | Primarily due to asset restructuring | - R&D investment in 2019 amounted to 5.464 billion yuan, accounting for 7.29% of operating revenue, with 6,155 R&D personnel[63][64] 2019 Cash Flow Key Data | Item | 2019 (CNY) | 2018 (CNY) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Net cash flow from operating activities | 11,490,096,405 | 10,486,580,443 | 9.57 | | Net cash flow from investing activities | -31,731,708,886 | -28,230,541,927 | 12.40 | | Net cash flow from financing activities | 11,950,806,031 | 20,039,822,089 | -40.36 | | Net increase in cash and cash equivalents | -8,064,640,553 | 2,421,213,397 | -433.08 | 4.3 Non-Core Business Analysis This section states that there was no non-core business analysis during the reporting period 4.4 Asset and Liability Status This section analyzes the company's asset and liability composition and significant changes at the end of 2019, particularly those from asset restructuring, and discloses restricted assets 2019 Year-End Significant Changes in Asset Composition | Item | 2019 Year-End Amount (CNY) | Proportion of Total Assets | 2019 Year-Beginning Amount (CNY) | Proportion of Total Assets | Change in Proportion | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 18,648,184,663 | 11.31% | 26,801,342,532 | 13.89% | -2.58% | Primarily due to asset restructuring | | Accounts Receivable | 8,340,353,992 | 5.06% | 13,647,564,194 | 7.07% | -2.01% | Primarily due to asset restructuring | | Inventories | 5,677,963,123 | 3.44% | 19,887,971,677 | 10.31% | -6.87% | Primarily due to asset restructuring | | Fixed Assets | 45,459,070,330 | 27.58% | 35,983,131,306 | 18.64% | 8.94% | Primarily due to transfer of t2, t3, t4, and t6 lines from construction in progress to fixed assets | | Long-term Borrowings | 38,512,059,200 | 23.36% | 36,864,922,669 | 19.10% | 4.26% | - | - As of the end of the reporting period, total restricted assets amounted to 41.80912 billion yuan, accounting for 25.36% of total assets, primarily including 36.57178 billion yuan in fixed asset mortgage loans[70] 4.5 Investment Status This section discloses the company's total investments in 2019, significant equity investments, detailed information on securities and derivative investments, and the use of raised funds 2019 Investment Amount | Indicator | Amount (CNY) | | :--- | :--- | | Investment amount for the reporting period | 21,060,912,197 | | Investment amount for the same period last year | 12,577,112,494 | | Change (%) | 67.45% | - Chairman Li Dongsheng and his concerted parties increased their holdings by 168 million shares, totaling 514 million yuan, becoming the company's largest shareholder[71] 2019 Securities Investment Status (Year-End Book Value) | Security Type | Year-End Book Value (CNY ten thousand) | | :--- | :--- | | Wealth Management | 61,609.4 | | Other Securities Investments | 36,137.6 | | Total | 97,747.0 | - The company's derivative investments are primarily for hedging to mitigate exchange rate and interest rate risks, resulting in a loss of 6.35 million yuan during the reporting period[75][78] - 4 billion yuan raised from public issuance of corporate bonds in 2019 has been fully used to supplement working capital and repay debt[79] 4.6 Significant Asset and Equity Disposals This section discloses the company's major asset restructuring completed in 2019, involving the sale of smart terminal and related businesses, and subsequent equity disposals of non-core businesses - The company completed the major asset restructuring in April 2019, selling equity in TCL Industries (Hong Kong) and 8 other subsidiaries to TCL Industries for 4.76 billion yuan[81] - The company further sold 71% equity in Huizhou Environmental Protection (275 million yuan) to TCL Industries and 100% equity in Haoke Internet (200 million yuan) to TCL Electronics (Huizhou) Co., Ltd. to focus on its main business[81] 4.7 Analysis of Major Holding and Associate Companies This section analyzes the company's major holding subsidiaries and associate companies significantly impacting net profit, detailing their business nature and financial performance Major Holding and Associate Companies Financial Data | Company Name | Company Type | Main Business | Registered Capital | Total Assets (CNY) | Net Assets (CNY) | Operating Revenue (CNY) | Net Profit (CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TCL China Star Optoelectronics Technology Co., Ltd. | Subsidiary | Semiconductor display | CNY 19.823 billion | 130,582,409,307 | 55,231,216,844 | 33,993,533,865 | 964,444,373 | | Hanlinhui Information Industry Co., Ltd. | Subsidiary | Notebook distribution | CNY 133 million | 4,520,509,132 | 1,002,879,862 | 20,835,617,478 | 215,604,321 | 4.8 Structured Entities Controlled by the Company This section states that the company did not control any structured entities during the reporting period 4.9 Outlook for Company's Future Development This section outlines the company's future development strategy, emphasizing its focus on semiconductor display and materials, enhancing core competitiveness, and actively exploring new ventures - The company will continue to focus on semiconductor display and materials business, strengthen and deepen the industrial chain, and seek integration and expansion opportunities in core, high-end, and basic information electronic components[84] - 2020 is the first year of a new round of strategy implementation, which will advance the G6 AMOLED production line t4 mass production, the G11 ultra-large display t7 project construction, and actively deploy upstream and downstream industrial chains[84][85] - The company will leverage its technological, management, and capital advantages to actively open up new tracks in capital and technology-intensive strategic emerging industries, aiming to become a global leading intelligent technology company[85] 4.10 Investor Relations Activities This section records the company's investor relations activities during the reporting period, including the time, method, and types of participants in research, communication, and interview events - During the reporting period, the company conducted multiple on-site visits and telephone communications, primarily with institutional investors[86][87] - All basic information indexes for research activities are available on Juchao Information Network, and no undisclosed material information was revealed or leaked[86][88] Significant Events This section details the company's profit distribution, capital reserve conversion, commitment fulfillment, related party transactions, major contracts, social responsibility initiatives, and other significant corporate events 5.1 Ordinary Share Profit Distribution and Capital Reserve to Share Capital Conversion This section details the company's ordinary share cash dividends for the past three years, emphasizing its commitment to shareholder returns, and outlines the 2019 profit distribution plan - The company's 2019 profit distribution plan proposes a cash dividend of 1 yuan (tax inclusive) per 10 shares based on 13,000,372,307 shares, totaling 1.3000372307 billion yuan[90] - In 2019, the company implemented a share repurchase of up to 1.934 billion yuan, which was completed in early January 2020[90] Company's Cash Dividend for Ordinary Shares in the Last Three Years | Dividend Year | Cash Dividend Amount (tax inclusive, CNY) | Cash Dividend Amount as % of Net Profit Attributable to Ordinary Shareholders | Cash Dividend Amount by Other Means (e.g., share repurchase, CNY) | Cash Dividend Amount by Other Means as % of Net Profit Attributable to Ordinary Shareholders | Total Cash Dividend (incl. other means, CNY) | Total Cash Dividend (incl. other means) as % of Net Profit Attributable to Ordinary Shareholders in Consolidated Statements | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 2019 | 1,300,037,230.7 | 49.66% | 1,933,596,514.47 | 73.86% | 3,233,633,745.17 | 123.53% | | 2018 | 1,340,288,851 | 38.65% | - | - | 1,340,288,851 | 38.65% | | 2017 | 1,355,091,606.3 | 50.86% | - | - | 1,355,091,606.3 | 50.86% | 5.2 Profit Distribution and Capital Reserve to Share Capital Conversion for the Current Reporting Period This section details the company's 2019 profit distribution plan, including the per-share dividend, the share capital base for distribution, and the cash dividend amount 2019 Profit Distribution Plan | Indicator | Value | | :--- | :--- | | Dividend per 10 shares (CNY) (tax inclusive) | 1.00 | | Share capital base for distribution (shares) | 13,000,372,307 | | Cash dividend amount (CNY) (tax inclusive) | 1,300,037,230.7 | | Cash dividend amount by other means (e.g., share repurchase) (CNY) | 1,933,596,514.47 | | Total cash dividend (incl. other means) (CNY) | 3,233,633,745.17 | | Distributable profit (CNY) | 8,119,832,872 | | Total cash dividend (incl. other means) as % of total profit distribution | 100% | - No bonus shares will be issued, nor will capital reserves be converted to share capital this year[93] 5.3 Fulfillment of Commitments This section discloses the fulfillment status of commitments made by the company's actual controller, shareholders, related parties, and the company itself, confirming timely adherence - Li Dongsheng, Jiutian Liancheng, and Dongxing Huarui's commitments to avoid horizontal competition, reduce and regulate related party transactions, and maintain the independence of the listed company were all fulfilled during the reporting period[94][95][96] - Xingyu Enterprise Co., Ltd. and others committed not to transfer the shares subscribed in this offering within thirty-six months from December 25, 2017[97] - The company committed not to engage in TV manufacturing, assembly, or distribution businesses, and has fulfilled its commitment on time[98] 5.4 Non-Operating Funds Occupied by Controlling Shareholder and Related Parties This section states that no non-operating funds were occupied by the controlling shareholder or its related parties from the listed company during the reporting period 5.5 Board of Directors, Supervisory Board, and Independent Directors' Statement on "Non-Standard Audit Report" This section states that the accounting firm did not issue a non-standard audit report during the reporting period 5.6 Explanation of Changes in Accounting Policies, Estimates, and Methods Compared to Prior Year's Financial Report This section indicates that changes in accounting policies, estimates, and methods are detailed in the relevant notes within the financial report - Specific details can be found in "Section 10 Financial Report, III. Significant Accounting Policies and Estimates, 36. Changes in Major Accounting Policies and Estimates" of this report[99] 5.7 Explanation of Major Accounting Error Corrections Requiring Retrospective Restatement During the Reporting Period This section states that no major accounting error corrections requiring retrospective restatement occurred during the reporting period 5.8 Explanation of Changes in Consolidation Scope Compared to Prior Year's Financial Report This section explains that the company's consolidation scope changed in 2019 due to asset restructuring, with smart terminal and related businesses officially deconsolidated - The asset restructuring was completed in April 2019, with smart terminal and related businesses officially deconsolidated, leading to a change in the consolidation scope[100] 5.9 Appointment and Dismissal of Accounting Firm This section discloses information about the currently appointed accounting firm, confirming no change during the reporting period Current Accounting Firm Information | Indicator | Content | | :--- | :--- | | Name of domestic accounting firm | Da Hua Certified Public Accountants (Special General Partnership) | | Remuneration of domestic accounting firm (CNY ten thousand) | 316 | | Years of continuous audit service by domestic accounting firm | 12 | | Names of certified public accountants from domestic accounting firm | Qiu Junzhou, Jiang Xianmin | | Years of continuous audit service by certified public accountants from domestic accounting firm | 1 year, 1 year | - The company did not change its accounting firm during the reporting period[101] 5.10 Suspension and Termination of Listing After Annual Report Disclosure This section states that the company did not face suspension or termination of listing after the annual report disclosure 5.11 Bankruptcy and Reorganization Matters This section states that no bankruptcy or reorganization matters occurred during the reporting period 5.12 Major Litigation and Arbitration Matters This section states that no major litigation or arbitration matters occurred during the reporting period 5.13 Penalties and Rectification Status This section states that no penalties or rectification situations occurred during the reporting period 5.14 Integrity Status of the Company, Controlling Shareholder, and Actual Controller This section states that the company, its controlling shareholder, and actual controller maintained good integrity during the reporting period, with no significant dishonest acts 5.15 Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures This section details the company's equity incentive and employee stock ownership plans implemented during the reporting period, including vesting, establishment, and adjustments - The company's performance target for the first global partner plan (net profit attributable to parent company shareholders in 2018 not less than 15% growth compared to 2017) was achieved, with approximately 47.49 million shares vested[104] - The second global partner plan acquired 33.3919 million shares held in the company's dedicated repurchase securities account through non-trading transfer, with a lock-up period from October 12, 2019, to October 11, 2020[105][106] - The repurchase price for the 2018 restricted stock incentive plan was adjusted to 1.63 yuan per share, and 21,209,788 restricted shares were repurchased and cancelled[107][108] - The 2019 restricted stock incentive plan (Second Global Shared Prosperity Plan) granted 3.8756 million restricted shares to 122 incentive recipients, which were listed on June 26, 2019[108][109] 5.16 Significant Related Party Transactions This section discloses significant related party transactions during the reporting period, including ordinary transactions, financial service agreements, and equity investments - The company disclosed multiple ordinary related party transactions, equity acquisitions/disposals, and equity investment fund contributions with TCL Industries Holdings, TCL Group Finance Co., Ltd., and other related parties[112] 5.17 Major Contracts and Their Performance This section details the company's major contract performance during the reporting period, including custody, contracting, leasing, significant guarantees, and entrusted cash asset management 2019 Year-End Company Guarantee Total | Indicator | Amount (CNY ten thousand) | | :--- | :--- | | Total actual guarantee balance at end of reporting period | 5,008,937 | | Total actual guarantee as % of company's net assets | 166% | | Guarantee balance for shareholders, actual controllers, and related parties | 1,816,016.79 | | Debt guarantee balance for guaranteed parties with asset-liability ratio exceeding 70% (direct or indirect) | 2,284,430.79 | | Amount of total guarantee exceeding 50% of net assets | 3,503,339.28 | | Total of the above three guarantee amounts | 7,603,786.86 | 2019 Wealth Management Overview | Specific Type | Wealth Management Amount (CNY ten thousand) | Unmatured Balance (CNY ten thousand) | | :--- | :--- | :--- | | Bank Wealth Management | 770,029 | 145,424 | | Brokerage Wealth Management Products | 95,000 | 95,000 | | Trust Plans | 150,000 | 40,000 | | Other Categories | 91,751 | 26,944 | | Total | 1,101,751 | 307,368 | 2019 Entrusted Loan Overview | Indicator | Value (CNY ten thousand) | | :--- | :--- | | Total entrusted loans occurred | 0 | | Unmatured balance | 711.09 | | Overdue and unrecovered amount | 0 | 5.18 Social Responsibility This section details the company's social responsibility efforts, including targeted poverty alleviation plans, annual achievements, and environmental protection, showcasing its commitment to public welfare - The company actively responded to the national poverty alleviation strategy, investing over 34 million yuan in education poverty alleviation through the "TCL Hope Project Candlelight Award Program"[124] - In 2019, the "TCL Hope Project Candlelight Award Program" recognized 402 outstanding rural teachers and expanded the coverage of "Candlelight Micro-loans"[125] 2019 Targeted Poverty Alleviation Achievements | Indicator | Unit | Quantity/Status | | :--- | :--- | :--- | | Funds | CNY ten thousand | 779.298 | | Investment in improving education resources in impoverished areas | CNY ten thousand | 360 | | Investment in poverty alleviation public welfare funds | CNY ten thousand | 409.298 | - The company and its subsidiaries had no major environmental pollution incidents, establishing an advanced sewage management system to ensure compliance with regulations for wastewater, exhaust gas, solid waste, and factory boundary noise emissions and disposal[129][130] 5.19 Explanation of Other Significant Matters This section discloses the company's significant investments in overseas and domestic equity investment funds during the reporting period, aimed at enhancing insights into cutting-edge technologies - The company, through its controlled subsidiary Li Rong Development Limited, invested 25 million USD in the US venture capital fund Sierra Ventures XII, L.P.[133] - The company participated in establishing Chongqing Zhongxin Rongxin Investment Center (Limited Partnership), with a target size of 2.31 billion yuan, and the company committed 1.5 billion yuan[133] - The company participated in establishing Guangdong Rongchuang Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership), with a target size of 3 billion yuan, and the company committed 750 million yuan for the first phase[134] 5.20 Significant Matters of Company Subsidiaries This section discloses significant matters concerning the company's subsidiaries during the reporting period, including increased capital contributions and renaming - The Shenzhen Industrial Development Fund increased its capital contribution to the project company for the G11 new display device production line[135] - Subsidiary TCL China Star Optoelectronics Technology Co., Ltd. was renamed on November 4, 2019[136] Share Changes and Shareholder Information This section provides a comprehensive overview of the company's share capital changes, including restricted and unrestricted shares, reasons for variations, and details of major shareholders and their holdings 6.1 Share Change Status This section details the company's total share capital and structural changes during the reporting period, explaining the reasons for these changes and the progress of share repurchases 2019 Share Change Status | Item | Quantity Before Change (shares) | Proportion | Increase/Decrease (＋，－) Other | Subtotal | Quantity After Change (shares) | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 1,825,653,291 | 13.47% | -957,888,311 | -957,888,311 | 867,764,980 | 6.41% | | II. Unrestricted Shares | 11,723,995,216 | 86.53% | 936,678,523 | 936,678,523 | 12,660,673,739 | 93.59% | | III. Total Shares | 13,549,648,507 | 100.00% | -21,209,788 | -21,209,788 | 13,528,438,719 | 100.00% | - Share changes were primarily due to the lifting of restrictions on some shares issued for asset acquisition in 2017, the lifting of restrictions on the 2018 restricted stock incentive plan, the granting of the 2019 restricted stock incentive plan, Mr. Li Dongsheng's increased shareholding, and the repurchase and cancellation of 2018 restricted shares[139] - As of January 10, 2020, the company had cumulatively repurchased 565,333,922 shares, accounting for 4.18% of the total share capital, with a total transaction amount of 1.934 billion yuan[140] 6.2 Restricted Share Change Status This section lists the initial, released, added, and ending numbers of restricted shares for each shareholder during the reporting period, along with reasons and release dates 2019 Restricted Share Change Status | Shareholder Name | Initial Restricted Shares | Shares Released This Period | Shares Added This Period | Year-End Restricted Shares | Reason for Restriction | Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hubei Yangtze River Hezhi Hanyi Equity Investment Partnership (Limited Partnership) | 1,059,849,533 | 1,059,849,533 | - | - | Restricted after IPO | 2019-1-4 | | Xingyu Enterprise Co., Ltd. | 90,532,347 | - | - | 90,532,347 | Restricted after IPO | 2020-12-25 | | 2018 Restricted Stock Incentive Plan | 34,676,444 | 27,859,492 | - | 6,780,952 | Equity incentive restricted shares | 2020-5-16 | | 2019 Restricted Stock Incentive Plan | - | - | 3,875,613 | 3,875,613 | Equity incentive restricted shares | 2020-5-10 | | Total | 1,825,653,291 | 1,087,709,025 | 129,856,714 | 867,764,980 | -- | -- | 6.3 Securities Issuance and Listing Status This section discloses the company's securities issuance and listing during the reporting period, primarily corporate bond issuance, and explains the reasons for changes in total share capital 2019 Corporate Bond Issuance Status | Name of Stock and Derivative Securities | Issuance Date | Issuance Price (or Interest Rate) | Issuance Quantity | Listing Date | Approved Listing Quantity | | :--- | :--- | :--- | :--- | :--- | :--- | | Corporate Bond | 2019-5-20 | 4.33% | 10,000,000 | 2019-06-06 | 10,000,000 | | Corporate Bond | 2019-7-23 | 4.30% | 10,000,000 | 2019-08-06 | 10,000,000 | | Corporate Bond | 2019-10-21 | 4.20% | 20,000,000 | 2019-10-29 | 20,000,000 | - Changes in the company's total share capital were mainly influenced by factors such as the lifting of restrictions on restricted shares, the granting and repurchase/cancellation of restricted stock incentive plans[144] 6.4 Shareholder and Actual Controller Information This section details the company's shareholder count and shareholding at the end of the reporting period, clarifying that the company has no controlling shareholder or actual controller Shareholding of Shareholders Holding 5% or More or Top 10 Shareholders at Year-End | Shareholder Name | Shareholder Nature | Shareholding Proportion (%) | Year-End Shareholding Quantity | Restricted Shares Held | Unrestricted Shares Held | Pledge or Freeze Status Share Status | Quantity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Li Dongsheng and his concerted parties | Domestic natural person/General legal entity | 9.03 | 1,221,748,009 | 609,636,366 | 612,111,643 | Li Dongsheng pledged | 541,620,000 | | Huizhou Investment Holdings Co., Ltd. | State-owned legal entity | 6.48 | 878,419,747 | - | 878,419,747 | - | - | | Tibet Tianfeng Enterprise Management Co., Ltd. | Domestic general legal entity | 3.89 | 526,095,642 | - | 526,095,642 | - | - | | China Securities Finance Corporation Limited | Domestic general legal entity | 2.76 | 373,231,553 | - | 373,231,553 | - | - | | Hong Kong Securities Clearing Company Limited | Overseas legal entity | 2.61 | 353,489,854 | - | 353,489,854 | - | - | - The company has no controlling shareholder or actual controller; Mr. Li Dongsheng and Xinjiang Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became concerted parties by signing a "Concerted Action Agreement", holding a combined 1.221748009 billion shares, making them the company's largest shareholder[152][154] Directors, Supervisors, Senior Management, and Employees This section provides details on the shareholding changes, appointments, remuneration, and employment structure of the company's directors, supervisors, senior management, and overall workforce 7.1 Shareholding Changes of Directors, Supervisors, and Senior Management This section discloses the shareholding changes of the company's directors, supervisors, and senior management during the reporting period, including initial holdings, shares increased/decreased, and ending holdings 2019 Shareholding Changes of Directors, Supervisors, and Senior Management | Name | Position | Initial Shareholding (shares) | Shares Increased This Period (shares) | Shares Decreased This Period (shares) | Year-End Shareholding (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | Li Dongsheng | Chairman, CEO | 644,873,688 | 167,974,800 | - | 812,848,488 | | Yan Xiaolin | Senior Vice President, CTO | 599,500 | - | - | 599,500 | | Huang Xubin | Director, CFO | 3,383,380 | - | 845,000 | 2,538,380 | | Total | -- | 648,856,568 | 167,974,800 | 845,000 | 815,986,368 | 7.2 Changes in Company Directors, Supervisors, and Senior Management This section lists the changes in the company's directors, supervisors, and senior management during the reporting period, including the names, positions, dates of change, and reasons for departure 2019 Changes in Directors, Supervisors, and Senior Management | Name | Position Held | Type | Date | Reason | | :--- | :--- | :--- | :--- | :--- | | Wang Cheng | Senior Vice President | Resignation | January 10, 2019 | Transferred to TCL Industries due to company restructuring, following the principle of "personnel follows assets" | | Huang Xubin | Director, CFO | Resignation | January 10, 2019 | Personal and family reasons | | He Jinlei | Director, Vice Chairman | Resignation | May 21, 2019 | Personal work change | | Wu Xiaohui | Director | Resignation | August 7, 2019 | No longer serving in shareholder unit due to work transfer | | Huang Wei | Director, Senior Vice President | Resignation | December 13, 2019 | Transferred to the counterparty of this transaction due to business adjustment | 7.3 Appointment Status This section provides detailed personal resumes and appointment histories of the company's current directors, supervisors, and senior management, confirming no penalties from securities regulatory agencies - Mr. Li Dongsheng is the founder of TCL Technology Group, currently serving as Chairman and CEO, leading TCL to establish a global business structure and receiving numerous honors[158][159] - Ms. Du Juan currently serves as the company's Chief Operating Officer (COO) and Chief Financial Officer (CFO), also serving as Group CFO since January 2019[160] - Mr. Kim Woo Shik currently serves as the company's Senior Vice President, CEO and Director of TCL China Star Optoelectronics Technology Co., Ltd., possessing extensive experience in the semiconductor display field[161] - The company's current and departed directors, supervisors, and senior management during the reporting period have not been penalized by securities regulatory agencies in the past three years[173] 7.4 Remuneration of Directors, Supervisors, and Senior Management This section discloses the decision-making process and basis for determining the remuneration of the company's directors, supervisors, and senior management, and the total pre-tax remuneration received - The allowances for the company's directors and supervisors are approved by the general meeting of shareholders, and the remuneration for senior management is determined according to the company's remuneration management system[174] - Independent non-executive directors receive an allowance of 160,000 yuan (tax inclusive) per year, and the convener of the audit committee receives an allowance of 200,000 yuan (tax inclusive) per year[174] 2019 Total Pre-Tax Remuneration of Directors, Supervisors, and Senior Management from the Company | Name | Position | Total Pre-Tax Remuneration from Company (CNY ten thousand) | | :--- | :--- | :--- | | Li Dongsheng | Chairman, CEO | 678.51 | | Du Juan | Director, COO & CFO | 343.59 | | Kim Woo Shik | Director, Senior Vice President | 875.35 | | Total | -- | 2963.91 | 7.5 Company Employee Information This section details the company's employee numbers, professional composition, education levels, compensation policies, and training programs, reflecting its investment and management in human resources 2019 Year-End Employee Count and Professional Composition | Indicator | Quantity (persons) | | :--- | :--- | | Total number of active employees | 35,379 | | Production personnel | 23,865 | | Sales personnel | 1,430 | | R&D technical personnel | 6,155 | | Financial personnel | 340 | | Administrative personnel | 323 | | Management personnel | 1,141 | | Other | 2,125 | 2019 Year-End Employee Education Level | Education Level Category | Quantity (persons) | | :--- | :--- | | Doctorate | 260 | | Master's | 2,234 | | Bachelor's | 7,138 | | Associate Degree | 1,506 | | High School/Vocational High School/Technical Secondary School/Secondary Vocational School | 260 | | Junior High School and below | 6 | | Total | 11,404 | - The company implements a basic principle of remuneration management: "position-based responsibility, responsibility-based salary, and performance-based compensation"[178] - TCL University continuously conducts talent development programs, such as the "Elite Eagle" program, to adapt to the group's strategic transformation and promote performance improvement[179] Corporate Governance This section outlines the company's corporate governance framework since its listing, emphasizing its organizational structure, internal control system, compliance with regulations, and commitment to protecting minority shareholder interests 8.1 Basic Status of Corporate Governance This section outlines the company's corporate governance efforts since its listing, emphasizing its established organizational structure, internal control system, and continuous improvement to protect minority shareholder interests - The company has established an organizational structure that meets its business scale and operational management needs, adhering to the principle of separation of incompatible duties, with a complete internal audit and internal control system[182] - The company's major shareholder's stake did not reach 30%, but the cumulative voting system was adopted for the election of directors and supervisors, effectively protecting the voting rights of minority shareholders[182] - The company strictly adheres to the requirements of the Company Law, Securities Law, and Guidelines for Corporate Governance of Listed Companies to continuously improve its corporate governance structure[182] - In 2019, the company revised its Articles of Association and other existing systems to further optimize corporate governance[186] 8.2 Company's Independence from Controlling Shareholder in Business, Personnel, Assets, Organization, and Finance This section states that the company is independent of its controlling shareholder in terms of business, personnel, assets, organization, and finance 8.3 Horizontal Competition This section states that there was no horizontal competition during the reporting period 8.4 Information on Annual and Extraordinary General Meetings Held During the Reporting Period This section lists the company's annual and extraordinary general meetings held during the reporting period, including the session, type, investor participation rate, and dates 2019 Shareholder Meetings | Session | Meeting Type | Investor Participation Rate | Date Held | Disclosure Date | Disclosure Index | | :--- | :--- | :--- | :--- | :--- | :--- | | First Extraordinary General Meeting of 2019 | On-site meeting combined with online voting | 47.17% | January 7, 2019 | January 8, 2019 | Juchao Information Network | | 2018 Annual General Meeting | On-site meeting combined with online voting | 33.37% | April 9, 2019 | April 10, 2019 | Juchao Information Network | | Third Extraordinary General Meeting of 2019 | On-site meeting combined with online voting | 33.33% | May 8, 2019 | May 9, 2019 | Juchao Information Network | 8.5 Performance of Duties by Independent Directors During the Reporting Period This section details the attendance of independent directors at board and shareholder meetings, emphasizing their diligent performance and independent, fair opinions on company matters 2019 Independent Directors' Attendance at Board and Shareholder Meetings | Independent Director Name | Number of Board Meetings to Attend This Period | Number of On-site Board Meetings Attended | Number of Board Meetings Attended by Communication | Number of Board Meetings Attended by Proxy | Number of Board Meetings Absent | Number of Shareholder Meetings Attended | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Lu Xin | 9 | 2 | 7 | 0 | 0 | 2 | | Zhou Guofu | 9 | 2 | 7 | 0 | 0 | 0 | | Yan Yan | 9 | 0 | 9 | 0 | 0 | 0 | | Liu Xun Ci | 9 | 3 | 6 | 0 | 0 | 6 | - During the reporting period, independent directors raised no objections to company matters[191] - Independent directors diligently provided valuable suggestions for improving company systems and daily operational decisions, and issued independent and fair opinions, in strict accordance with laws, regulations, and the company's articles of association[191] 8.6 Performance of Duties by Board's Special Committees During the Reporting Period This section describes the performance of duties by the Board's Audit, Nomination, and Remuneration and Assessment Committees during the reporting period, including meetings held and matters reviewed - The Audit Committee held 4 meetings during the annual report audit period, reviewing audit plans and financial statements, and fully communicating with the annual audit accountants, concluding that the audit work was diligent and responsible[193][194] - The Nomination Committee held 1 meeting, reviewing the proposal for director nominations[195] - The Remuneration and Assessment Committee held 1 meeting, reviewing proposals such as the 2019 restricted stock incentive plan[195][196] 8.7 Supervisory Board Work Status This section discloses the Supervisory Board's oversight activities during the reporting period, including meetings held, proposals reviewed, and resolutions passed, confirming no objections to supervised matters - The Supervisory Board found no risks in the company's oversight activities during the reporting period[196] - The Supervisory Board held a total of 6 meetings, reviewing important proposals such as the annual report, profit distribution, changes in accounting policies, and equity incentive plans[197][198][199] - The Supervisory Board had no objections to the supervised matters during the reporting period[199] 8.8 Assessment and Incentive of Senior Management This section explains that the company implemented an assessment system for senior management combining performance evaluation and competency assessment, using KPI systems for evaluation and incentives - The company implements a performance assessment and competency evaluation for its management personnel, with performance assessment using a KPI system focusing on strategic transformation phase goals and current operating indicators[200][201] - Cadre evaluation includes four dimensions: performance, competency, experience, and quality, serving as the primary basis for cadre evaluation and appointments[201] 8.9 Internal Control Status This section discloses the company's internal control self-assessment report, including defect identification standards and evaluation results, confirming no significant internal control deficiencies were found - No specific significant internal control deficiencies were found during the reporting period[202] Internal Control Defect Identification Standards | Category | Financial Reporting | Non-Financial Reporting | | :--- | :--- | :--- | | Qualitative Standards (Significant Deficiencies) | Ineffective company control environment; fraud by directors, supervisors, or senior management; certified public accountant discovers material misstatement in current financial report that internal control failed to detect; ineffective supervision by audit committee and internal audit function | Company's operating activities seriously violate national laws and regulations; unscientific decision-making process leading to major decision errors; significant loss of key management or technical talent; frequent negative news or reports causing high concern from regulatory authorities | | Quantitative Standards (Significant Deficiencies) | Misstatement ≥ 5% of total profit | Not applicable | - The number of significant deficiencies in financial and non-financial reports was zero[203] 8.10 Internal Control Audit Report This section discloses the internal control audit report's opinion, confirming that the company maintained effective internal controls over financial reporting, and the audit opinion aligns with the board's self-assessment - As of December 31, 2019, the company maintained effective internal controls over financial reporting in all material aspects in accordance with the Basic Standard for Enterprise Internal Control and relevant regulations[204] - The internal control audit report's opinion type is standard, and it is consistent with the Board of Directors' self-assessment report opinion[204] Corporate Bond Related Information This section provides comprehensive details on the company's issued corporate bonds, including basic information, trustee and credit rating agencies, use of raised funds, credit ratings, and repayment measures 9.1 Corporate Bond Basic Information This section details the basic information of the company's issued corporate bonds, including names, codes, interest commencement dates, maturity dates, outstanding balances, and repayment methods Corporate Bond Basic Information (Partial) | Bond Name | Bond Abbreviation | Bond Code | Interest Commencement Date | Maturity Date | Bond Balance (CNY ten thousand) | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TCL Group Co., Ltd. 2016 Publicly Issued Corporate Bonds to Qualified Investors (Tranche 1) (Type 2) | 16TCL02 | 112353 | March 16, 2016 | March 16, 2021 | 150,000 | 3.56% | | TCL Group Co., Ltd. 2017 Publicly Issued Corporate Bonds to Qualified Investors (Tranche 2) | 17TCL02 | 112542 | July 7, 2017 | July 7, 2022 | 300,000 | 4.93% | | TCL Group Co., Ltd. 2019 Publicly Issued Corporate Bonds to Qualified Investors (Tranche 3) | 19TCL03 | 112983 | October 21, 2019 | October 21, 2024 | 200,000 | 4.20% | - During the reporting period, all corporate bonds were **paid in