TCL科技：2023年年度报告（英文版）

Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 1 TCL科技集团股份有限公司TCLTechnology Group Corporation ANNUALREPORT 2023 April 28,2024 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 2 Amid rapids we beat the waves and sail steadily to reach far ANNUALREPORT 2023 Chairman's Statement Amidst a tightening financial environment, intensifying geopolitical conflicts, and rapid restructuring of global supply chain, the world economy slowed down in 2023. In the wake of opportunities amid challenges, the economic restructuring brought new impetus to the transformation and upgrading of the technology industry, and the evolving global energy landscape further highlighted the importantly strategic position of the new energy industry. With the strategic goal of becoming a global leading technology conglomerate, the Company pivoted on the development of high-tech, long-cycle, and capital-intensive businesses, strengthened the leading edge of its core businesses in display and new energy photovoltaics. Under the backdrop of a complex operating environment, the Company cemented its foundation, enhanced risk management capabilities, pursued extreme cost efficiency, and drove development through technology innovation. In 2023, the Company achieved a revenue of RMB174.367 billion, up 4.69% year on year; net profits of RMB4.781 billion, up 167.37% year on year; net profit attributable to shareholders of the listed company of RMB2.215 billion, up 747.60% year on year; and net operating cash flow of RMB25.315 billion. During the Reporting Period, the sales of display at user-end market remained sluggish. On the supply side, the industry structure continued to optimize, competition tended to be benign, and the prices of major products rebounded amid stabilization. The Company's display business kept optimizing business strategies, and continued to implement the high-end strategy, with a stable growth in the market share of major products. TCLCSOT remained top 2nd globally by its market share of TV products, while its market share of e-sports monitors and LTPS tablet products ranked first globally. The t9 production line, positioned at mid-sized IT and vehicle-mounted display products, started serial production and shipments, and the proportion of OLED high-end product shipments rose quickly. During the Reporting Period, the display business achieved a revenue of RMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negative RMB7 million, with a year-on-year improvement of RMB7.618 billion, among which a net profit of RMB3.441 billion was recorded in the second half of 2023, indicating steadily improving profitability. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 3 In 2023, the global new energy photovoltaic industry and corporate development embarked on a new pattern. Affected by the capacity centrally released alongside the industrial chain, the supply and demand was unbalanced, with significant decline of product prices, and some low-efficient capacity faced the pressure of elimination. Overall, the industry structure was expected to be optimized. During the Reporting Period, TZE recorded a revenue of RMB59.146 billion, down by 11.74% year on year. Under the influence of the decreasing product price, loss from investees, provision for impairment loss and other factors, TZE reported a year-on-year decrease of 44.88% in net profit to RMB3.899 billion throughout the year. In the face of challenges, TZE maintained its strategic resolve and strengthened its competitiveness. On the one hand, it leveraged its differentiated advantages in G12, N-type silicon wafers, shingle components and intelligent manufacturing, and accelerated industry integration through technological innovation so as to pass through industrial cycles. On the other hand, TZE actively evaluated and explored the feasibility on localized manufacturing (e.g. the United States, Europe, and the Middle East) in key countries or regions around the world, and promoted the operational improvement of Maxeon to effectively use its patented technology and unique advantages in overseas markets with entry barriers. TZE continued to facilitate its efforts to develop photovoltaic business and localized manufacturing on the international arena, seized the global opportunities for the development of the new energy industry, and achieved a sustainable growth. During the Reporting Period, the Company sustained robust operations and made steady progress in other business segments. The Company has always emphasized research and development (R&D) investments in cutting-edge technologies and commercial application, with a focus on innovation to drive business transformation and upgrading. During the Reporting Period, the Company invested RMB10.309 billion in R&D, accounted for 5.91% of the Company's revenue. In 2023, the Company filed 590 new PCT applications, in total of 15,331 applications applied. Notably, the Company ranked second globally in terms of patent applications in the field of quantum dot displays. Furthermore, through continuous technological innovation, process advancements, and a strategic shift towards Industry 4.0 manufacturing, TZE has built its unique competitive edges in large-size, thin-film, and N-type silicon wafers. To implement the technology ecosystem strategy, the Company has proactively marshaled resources, made a breakthrough in key technologies and industrial production. This robust Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 4 technology ecosystem serves as a cornerstone for the Company's continued technological development. Looking ahead, with intensive integration of several promising techonologies, we will anticipate a surge of novel display applications and immersive scenarios, which will propel the growing demands in display industry. The inter-country transfer of LCD industry has gradually drawn to an end, and the competitive landscape tends to stabilize. Companies are transitioning from a scale-driven growth model to a high-quality development stage fueled by technological innovation, product upgrading, and an eco-system layout. The Company's display business aims at becoming a "world-leading provider of display solutions". To achieve this, we are implementing a comprehensive strategy that optimizes our business and product structure, strengthens our operational foundation, enhances operational excellence, differentiates our values, and drives continuous improvement in operational efficiency. As climate change and energy issues escalate into pressing global challenges, there's a growing consensus on the urgent need to accelerate the green and low-carbon transformation of the energy sector. The photovoltaic industry will remain at the bottom of the market cycle in the near to medium term, featuring severely unbalanced supply and demand, acceleration of product and technology transformation, and elimination of outdated production capacity driven by the Matthew effect. Taking "ranking No.1 in global silicon wafer market share and achieving comprehensive global leadership" as the strategic vision, the Company's new energy photovoltaic business sticks to technological innovation, expands the leading edge in advanced production capabilities, strategically strengthens a layout across the photovoltaic industry chain, and capacity building worldwide, so as to go through the cycle by relative competitiveness and achieve a sustainable growth. As a crucial pillar of the national economy, the manufacturing sector plays a key role in driving economic transformation and development. Technological manufacturing is especially vital for fostering economic transformation and upgrading, and nurturing new engines of growth. The Company remains focused on its core businesses in displays and new energy photovoltaics, unwavering in its pursuit of global leadership. With the courage of "venturing midstream and striving to win", embracing a culture of "relentless perseverance and decisive action", the Company guides its business units to solidify their competitive edges, ensuring steady progress and positioning the Company for long-term sustainable growth. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 5 Committed to creating value for shareholders, the Company has a long-standing tradition of maintaining a prudent dividend policy. Following this commitment, the Board of Directors proposes a dividend of RMB0.80 per 10 shares for 2023, sharing the Company's growth success with all shareholders. I would like to express my sincere gratitude for the trust of all our shareholders, for the support from all our partners and users, as well as for the efforts of all employees! April 28,2024 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 6 Part IImportant 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 TCLTechnology Group Corporation (hereinafter referred to as the "Company") 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. Mr. Li Dongsheng, the Chairman of the Board, Ms. Li Jian, the person-in-charge of financial affairs (Chief Financial Officer), and Ms. Jing Chunmei, the person-in-charge of the financial department, hereby guarantee that the financial statements carried in this Report are factual, accurate and complete. All the Company's directors attended the Board meeting for the review of this Report and its summary. The future plans, development strategies or other forward-looking statements mentioned in this Report and its summary shall NOT be considered as promises of the Company to investors. Therefore, investors are kindly reminded to pay attention to possible investment risks. The profit distribution plan approved by the meeting of the Board of Directors is as follows: For every 10 shares held, shareholders will receive a cash dividend of RMB0.8 (including tax) based on the total number of outstanding shares of 18,779,080,767(Any repurchased shares held by the Company upon profit distribution are exclusive of the distribution), without bonus shares or shares converted from capital reserve. This Report and its summary has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 7 Content Part IImportant Notes, Table of Contents and Definitions ....................................6 Part IICorporate Information and Key Financial Information ..........................10 Part IIIManagement Discussion and Analysis ......................................................15 Part IVCorporate Governance ...............................................................................53 Part VEnvironmental and Social Responsibility ...................................................76 Part VISignificant Events ........................................................................................85 Part VIIChanges in Shares and Information about Shareholders ....................103 Part VIIIPreferred Shares .....................................................................................112 Part IXBonds ..........................................................................................................113 Part XFinancial Report…………………………………………………………..120 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 8 Documents Available for Reference (I) The financial statements signed and stamped by the person-in-charge of the Company, the Chief Financial Officer and person-in-charge of the financial department. (II) The original of the auditor's report with the seal of the accounting firm, and signed and stamped by CPAs. (III) The originals of all company documents and announcements that were disclosed to the public during the Reporting Period. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 9 Definitions Term Refers to Definition Company, the Company, the Group Refers to TCLTechnology Group Corporation The "Reporting Period", "current period" Refers to The period from January 1,2023 to December 31,2023. TCLCSOTRefers to TCLChina Star Optoelectronics Technology Co., Ltd. TCLIndustrial Refers to TCLIndustrial Holdings Co., Ltd. TZERefers toTCLZhonghuan Renewable Energy Technology Co., Ltd., a majority-owned subsidiary of the Company listed on the Shenzhen Stock Exchange (stock code: 002129.SZ) Shenzhen CSOT Refers to Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. Wuhan CSOT Refers to Wuhan China Star Optoelectronics Technology Co., Ltd. Wuhan China Star Optoelectronics Bandaoti Refers toWuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd.Guangzhou CSOTRefers to Guangzhou China Star Optoelectronics Bandaoti Display Technology Co., Ltd. Suzhou CSOTRefers to Suzhou China Star Optoelectronics Technology Co., Ltd. Moka Technology Refers to Moka International Limited t1 Refers to The generation 8.5 (or G8.5) TFT-LCD production line of TCLCSOT t2 Refers to The generation 8.5 (or G8.5) TFT-LCD production line of TCLCSOT t3 Refers to The generation 6 (or G6) LTPS-LCD panel production line at Wuhan CSOT t4 Refers to The generation 6 (or G6) flexible LTPS-AMOLED panel production line at Wuhan CSOT Wuhan t3 production expansion project Refers to The generation 6 (or G6) of new display production line of Wuhan CSOTt6 Refers to The generation 11 (or G11) new TFT-LCD display production line at Shenzhen CSOT t7 Refers to The generation 11 (or G11) new ultra high definition display production line at Shenzhen CSOT t9 Refers to The generation 8.6 (or G8.6) new oxide display production line at Guangzhou CSOT t10 Refers to The generation 8.5 (or G8.5) TFT-LCD production line at Suzhou CSOTGWRefers to Gigawatt, power unit for solar cells,1GW = 1,000 megawatts G12 Refers to12-inch ultra-large DW-cut solar monocrystalline silicon square wafer, size: 44,096mm2, diagonal line: 295mm, side length: 210mm, with its size 80.5% larger than the conventional M2 RMBRefers to Renminbi Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 10 Part IICorporate Information and Key Financial Information I. Corporate Information Stock name TCLTECH. Stock code 000100 Stock abbreviation before change (if any) - Place of listing Shenzhen Stock Exchange Company name in Chinese TCL科技集团股份有限公司Abbr. TCL科技Company name in English (if any) TCLTechnology Group Corporation Abbr. in English (if any) TCLTECH. Legal representative Li Dongsheng Place of registration TCLTECH. Building,17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province Zip code 516001 History of changes in the Company's place of registration - Office address TCLTECH. Building,17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province Zip code 516001 Company website Email address ir@tcl.com II. Contact Information Board Secretary Name Liao Qian Office address 10/F, Tower G1, International ETown, TCLScience Park,1001 Nanshan District, Shenzhen, Guangdong Province, China Tel.0755-33311666 Email address ir@tcl.com III. Media for Information Disclosure and Place Where This Report is Lodged Stock exchange website for publication of this Report Shenzhen Stock Exchange Media name and website for publication of this ReportSecurities Times, China Securities Journal, Shanghai Securities News, Securities Daily, as well as ( Place where this Report is lodged Capital Market Department of TCLTechnology Group Corporation IV. Changes to Company Registered Information Unified Social Credit Code 91441300195971850Y Changes in main business activities of the Company since going public 1. In 2019, the Company focused on display devices by sold smart terminal businesses such as consumer electronics and household appliances and related supporting businesses. 2. In 2020, the Company acquired 100% equity of Tianjin Zhonghuan Electronic through public delisting, shaping a business structure that Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 11 focused on display, and new energy photovoltaic. Changes of controlling shareholder since incorporation Not applicable V. Other information The independent audit firm hired by the Company: Name Da Hua Certified Public Accountants (Special General Partnership) Office address Room 1101, Building 7, No.16 Xi Si Huan Zhong Road, Haidian District, Beijing Name of signing accountants Jiang Xianmin and Xiong Xin The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period Applicable □ Not applicable Name Office address Representative Period of supervision Shenwan Hongyuan Financing Services Co., Ltd. 19 Taipingqiao Avenue, Xicheng District, Beijing Ren Cheng and Mo KaiThe period from December 22,2022 to December 31, 2023. The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period: □ Applicable Not Applicable VI. Key Accounting Data and Financial Indicators Indicate whether there is any retrospectively adjusted or restated datum in the table below Yes □ No 2023 2022 2023-Over-2022 Change 2021 Before adjustment After adjustment After adjustmentBefore adjustment After adjustmentRevenue (RMB) 174,366,657,015166,552,785,829166,552,785,8294.69% 163,540,559,623163,657,700,477Net profit attributable to the company's shareholders (RMB) 2,214,935,302261,319,451261,319,451747.60% 10,057,443,52810,064,253,118Net profits attributable to the company's shareholders after non-recurring gains and losses (RMB) 1,021,080,065 -2,698,210,800 -2,698,210,800137.84% 9,437,240,9769,444,050,566Net cash generated from operating activities (RMB) 25,314,756,10518,426,376,60918,426,376,60937.38% 32,878,450,43732,878,450,437Basic earnings per share (RMB/share) 0.11950.01910.0174586.78% 0.74630.6789Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 12 Diluted earnings per share (RMB/share) 0.11790.01850.0168601.79% 0.73540.6690Weighted average return on equity (%) 4.270.520.52Increase by 3.76 percentage points YoY 26.4626.48The end of 2023 The end of 2022 Change The end of 2021 Before adjustment After adjustment After adjustmentBefore adjustment After adjustmentTotal assets (RMB) 382,859,086,727359,996,232,668 359,996,232,6686.35% 308,733,133,305308,749,696,062Owners' equity attributable to the company's shareholders (RMB) 52,921,867,08650,678,520,477 50,678,520,4774.43% 43,034,234,61143,041,044,200Reason for retrospective adjustment or restatement: 1. Shares were converted from capital reserve during the Reporting Period. The Company recalculated the basic earnings per share and diluted earnings per share in accordance with accounting standards and other regulations. 2. In accordance with the requirements of the Interpretations of Accounting Standards for Business Enterprises No.15, Interpretations of Accounting Standards for Business Enterprises No.16, and Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss (Revised in 2023), the Company has implemented the relevant provisions. These adjustments have no material impact on the Company's financial position and operating results. The net profit before or after the deduction of non-recurring gains and losses in the latest three accounting years, whichever is lower, is negative and the audit report of the latest year shows the company's ability to continue as a going concern □Yes No The net profit before or after the deduction of non-recurring gains and losses, whichever is lower, is negative □Yes No VII. Accounting Data Differences under China's Accounting Standards for Business Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Differences in Net Profit and Equity under CAS and IFRS □ Applicable Not Applicable There is no difference in net profit and net assets between the financial statements prepared in accordance with International Accounting Standards (IAS) and Chinese Accounting Standards (CAS) for the Reporting Period of the Company. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 13 2. Differences in Net Profit and Equity under CAS and Foreign Accounting Standards □ Applicable Not Applicable There is no difference in net profit and net assets between the financial statements prepared in accordance with foreign accounting standards and Chinese Accounting Standards (CAS) for the Reporting Period of the Company. 3. Reasons for Accounting Data Differences Above □ Applicable Not Applicable VIII. Major Financial Indicators by Quarter Unit: RMB Q1 Q2 Q3 Q4 Revenue 39,443,242,439 45,705,483,167 47,960,309,079 41,257,622,330 Net profit attributable to the company's shareholders -548,999,154 889,492,743 1,270,918,405 603,523,308 Net profits attributable to the company's shareholders after non-recurring gains and losses -729,931,586 129,864,746 1,107,560,913 513,585,992 Net cash generated from operating activities 4,495,356,538 5,920,811,609 5,727,844,866 9,170,743,092 Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what has been disclosed in the Company's quarterly or interim reports. □Yes No IX. Non-Recurring Gains and Losses Applicable □ Not applicable Unit: RMB Item 202320222021 Gains and losses on disposal of non-current assets (inclusive of impairment allowance write-offs) 275,255,2251,757,838,745 -184,525,551 Public subsidies charged to current profits and loss (except for public subsidies which are closely related to the Company's daily operations, comply with national policies, are granted based on determined standards, and have a continuous impact on the Company's profits or losses) 2,764,042,9051,322,782,937 699,270,673 Gains and losses on change in fair value of financial assets and financial liabilities held by the non-financial companies, other than those valid hedging activities related to the normal operating business, as well as gains and losses from the disposal of financial assets and financial liabilities -114,258,710 -127,233,837238,629,291Reversal of provision for impairment of receivables that have been individually tested for impairment 22,894,25537,745,528 -Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company's enjoyable fair value of identifiable net assets of investees when making investments - - 40,299,579Non-operating income and expenses other than the above 228,994,235758,599,650275,789,900Less: Corporate income tax 603,197,886244,386,076 93,176,105 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 14 Details of other profit and loss items that meet the definition of non-recurring profits and losses: □ Applicable Not Applicable The Company has no other profit and loss items that meet the definition of non-recurring profits and losses. Notes on non-recurring profit and loss items that which is listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss shall be used to define Recurring Gain/Loss items □ Applicable Not Applicable The Company does not have any non-recurring profit and loss items listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gain/Loss that are defined as recurring profit and loss items. Non-controlling interests (net of tax) 1,379,874,787545,816,696 356,085,235 Total 1,193,855,2372,959,530,251 620,202,552 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 15 Part IIIManagement Discussion and Analysis I. Company-related Industry Outlook During the Reporting Period In 2023, the international political and economic situation was complex and volatile, with ongoing geopolitical conflicts. The global industrial supply chain faced a restructuring, further exacerbating economic fragmentation. Meanwhile, some economies implemented tight monetary policy, which further slowed down global economy. In response to the complicated and ever-changing challenges, the Company continued to focus on the development of display business and new energy photovoltaic business, enhance the resilience of its business, and optimize its competitive edge in pursuit of high-quality sustainable development. In 2023, TCLTECH. achieved a revenue of RMB174.367 billion, up 4.69% year-on-year; net profit of RMB4.781 billion, up 167.37% year-on-year; net profit attributable to shareholders of the listed company of RMB2.215 billion, up 747.60% year-on-year; and a net operating cash flow of RMB25.315 billion. Major factors that influenced the Company's performance included: the positive turnaround of the supply-demand relationship in the display industry, the steady price appreciation of mainstream products, the Company's proactive optimization of business strategies, improving business structure, and significantly improved profitability. During the Reporting Period, the display business achieved a revenue of RMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negative RMB7 million, with a year-on-year reducing loss of RMB7.618 billion. The display business turned losses into profits in Q32023 and continued to achieve strong profitability in Q42023, which resulted in a total profit of RMB3.441 billion for H22023. Fueled by China's "Dual Carbon" strategy, demand in the new energy photovoltaic industry maintained growth. However, industry-wide supply-demand imbalances led to a decline in product pricing. Furthermore, the TZE's performance was impacted by the investee Maxeon, such as investment losses associated with the Maxeon, as well as long-term equity investments and financial assets recognized as asset impairment loss and negative fair value change, respectively. As a result, TZE reported a revenue of RMB59.146 billion for the Reporting Period, down 11.74% year-on-year; a net profit of RMB3.899 billion, reflecting a year-on-year decline of 44.88%. Leveraging technological innovation as a primary driver, the Company is poised for Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 16 building a robust portfolio of proprietary and cutting-edge technologies to ensure sustained industry leadership and drive continuous industrial upgrading. During the Reporting Period, the Company invested RMB10.309 billion in R&D, and filed 590 new PCT applications, for a total of 15,331 applications applied. The Company's display business strategically amplified R&D investments in ultra-large-sized, ultra-high-resolution, high refresh rate, and flexible display technologies. Establishing new-type display technology and application innovation as its core competitivenesses, the Company strove toward the high-end of the value chain. The Company's new energy photovoltaic business focused on groundbreaking innovation in solar cell technology with independently developed intellectual property rights, and led the industry transition towards significantly improved energy conversion efficiency through its long-term technological accumulation, ultimately securing high-quality development. The Company ensured a steady and sustainable market position by fortifying core competencies and establishing a robust operational foundation, as well as optimizing production capacity and product structure. In conjunction with stable competition structure in the display industry, leading manufacturers posses an advantage in terms of economies of scale. During the Reporting Period, the Company strategically realigned its production capacity and product structure on the basis of incremental markets and continuously increased its market share, with its TV panel shipments ranking No.2 globally, MNT panel shipments jumping to No.3 globally, and flexible OLED shipments experiencing growth in leaps and bounds. At the end of the Reporting Period, the Company's photovoltaic materials business significantly expanded its crystal wafer production capacity to 183GW, capturing a 23.4% market share of the global market. The company accounted for 60% of the large-sized (210 series) wafer external sales market,65% of the overseas wafer external sale market, and 36.4% of the N-type wafer segment, maintained No.1 in photovoltaic wafer external sales market share, and further consolidated the Company's leadership within the industry. The Company implemented a strategic approach focused on fortifying its core competencies and rectifying shortcomings, to bolster the competitive advantage of its core business segments, and increase both efficiency and effectiveness. The Company's display business capitalized on the technological capabilities of its high-gen production lines to actively drive the development of larger-sized, higher-specification display products, and to grasp the iterative Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 17 demand for IT products fueled by the IT revolution, to fill the gap in its mid-sized production capacity (e.g., the t9 production line) and product layout. To enhance its operational efficiency, the small-sized OLED business has implemented a high-end, differentiated product strategy. Relying on its advantages in leading G12 and N-type wafer technology, Industry 4.0 and flexible manufacturing processes, the Company's new energy photovoltaic business played a synergistic role across the entire photovoltaic value chain, and ultimately shored up the relative advantages in cost efficiency. Promoting globalization strategy, the Company transitioned from product export to industry capacity export, building a global industrial ecosystem. The Company's display business improved its layout in its panel module plant in India and overseas business platform, to strengthen its capacity to serve global customers and partners and satisfy the incremental needs of emerging markets worldwide. Due to the increasing complexity of the global economic and political landscape, the Company's new energy photovoltaic business prudently and steadfastly implemented its globalization strategy, where it actively evaluated and explored potential industrial projects in key global markets, such as the United States, Europe, and the Middle East. Various projects were rolled out, such as comprehensive project planning, strategic partner negotiation, and thorough feasibility studies. Concurrently, the business collaborated with strategic partners to expand its photovoltaic cell and module business in Malaysia, the Philippines, and other regions, further cementing its global competitiveness within the new energy photovoltaic sector. II. Main Businesses of the Company During the Reporting Period The Company focused on the development of the core business of displays and new energy photovoltaics and other silicon materials, and was committed to achieving the strategic goal of global leadership. TCLTECH. Display New energy photovoltaics and other silicon materialsIndustrial finance and investment Others TCLCSOT Juhua China RayMoka TechnologyZhonghuan PhotovoltaicZhonghuan AdvancedTCL Finance TCLCapitalHighly TPC Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 18 (I) Display business In 2023, the user-end demand for displays products remained sluggish globally, and it showed seasonal fluctuation. However, the trend towards larger TV panels drove display area demand, while a just-in-time (“JIT”) production strategy bacame a consensus among major enterprises, fostering healthy industry development amid an increasingly favorable competitive landscape. Large-sized panel prices exhibited a seasonal pattern with significant peak-season recovery and a slight decline in the off-season, while mid-sized panel prices stabilized at low levels and small-sized panels experienced structural price increases in the second half of the year. By leveraging its strengths in terms of scale and efficiency, TCLCSOT has consistently optimized its business and product mix, insisted on JIT production, and accelerated their business cycle. This, coupled with favorable price increases for key products, has significantly boosted operating performance. During the Reporting Period, the display business achieved a revenue of RMB83.655 billion, with a year-on-year increase of 27.26%, and a net profit of negative RMB7 million, with a year-on-year reducing loss of RMB7.618 billion while recorded a profit of RMB3.441 billion in H22023. The display business achieved a net cash flow from operating activities of RMB20.12 billion. In its large-sized products business, TCLCSOT leveraged its advantages in terms of high-gen production lines and synergy with the industry chain, and led the upgrading and high-end development of large-sized TV panels while actively developing commercial displays, such as interactive whiteboards, digital signage, and splicing screens. Capitalizing on the manufacturing efficiency and process advantages of its G8.5 and G11 high-gen production lines, TCLCSOT collaborated with strategic customers to enhance the penetration of large-sized TVs in the market and elevate the value of key segments alongside the industry chain. The Company consolidated its No.2 position in terms of global market share of TV panels.79% of the shipment area for products above 55 inches,51% of the shipment area for products above 65 inches; while 55-inch and 75-inch products ranked No.1 in the world, the market share of 65-inch products ranked No.2 globally. In commercial markets such as interactive whiteboards, digital signage, and splicing screens, the Company ranked among the top three in terms of global market share. In its medium-sized product business, TCLCSOT accelerated its capacity construction in IT and vehicle-mounted screen products, while optimizing and enhancing product competitiveness Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 19 and optimizing customer structure to create a new engine for business growth. Dedicated to mid-sized displays for IT, vehicle-mounted devices and other business, the t9 production line (phase I) is now running at full capacity, propelling the Company to being ranked third globally in terms of display shipments. In this segment, the Company occupies the largest share in the global e-sports monitors market, while its laptop and vehicle-mounted devices are on track for branded customer introductions and gradual production increases. With the steady increase in 6th-gen LTPS capacity, the Company ranks No.2 in LTPS laptop panels globally and No.1 in LTPS tablets globally; and vehicle-mounted LTPS displays rank fifth worldwide. TCLCSOT's mid-sized business increased to 21% of its revenue, making it a key driver of future growth. In the small-sized display segment, TCLCSOT is targeting the mid-to-high-end market with a portfolio of LTPS and flexible OLED production lines, driving continuous improvements in product competitiveness and market share. TCLCSOT ranked No.3 in the world in terms of LTPS mobile panel shipments from the t3 production line. The independently developed 1512 PPI Mini-led LCD-VR screens achieved start of production (SoP) and shipment. The Company's t4 flexible OLED production line has experienced a significant ramp-up in both utilization rate and shipments. This operational excellence secured the Company's position as the fourth-largest supplier of flexible OLED smartphone panels globally in Q42023. Product and customer mix have undergone structural optimization, evidenced by the introduction of several brand customers during the Reporting Period. The Company's leadership in flexible OLED technologies extends to foldable, LTPO, and Pol-Less displays, driving a continuous increase in the share of high-end products within its portfolio. During the Reporting Period, the flexible OLED business segment achieved a two-fold growth in revenue, reflecting a sustained improvement in operational performance. Looking ahead into the future, as major information carriers and interactive interfaces in the digital economy era, display industry will endure industrial value in the long run and are expected to unleash more value. In the large-sized and mid-sized segments, display technology has entered a period of slow iteration, while LCD technology will remain the mainstream technology in the long term. In recent years, global TV sales have remained stable. Fueled by the size increase of large-sized screens, display area has maintained stable growth and industry cycle fluctuations have reduced. The supply-side industry has become further concentrated, and increasingly optimized competition will drive the Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 20 balanced development of industrial supply and demand. Corporate profitability will recover with reasonable business returns under favorable circumstances. Driven by product specification upgrades such as high refresh rates and lower energy consumption, IT panels are poised for significant structural growth. Capitalizing on this trend, the company’s 8th-gen production lines specialized for IT products will leverage their cutting-edge capabilities to gradually become the main force in key markets. Flexible OLED has firmly established its dominance in the smartphone market and gradually penetrated into new application scenarios. Foldable OLED displays are poised for a new growth frontier, fueled by rapidly unleashed demand. In the meantime, there exist certain factors that pose challenges to current capacity, manufacturing, and other aspects, such as capacity loss resulting from new technologies and the yield ramp-up of new products, which will further improve industry supply and demand relationships. TCLCSOT, as a global leader in large-sized display panels, will continuously enhance its relative competitiveness and profitability; it will improve its medium-sized products portfolio, leverage the advantages of its high-generation production lines, seize the opportunities in incremental markets for high-specification products, and increase market share and revenue scale; TCLCSOT will optimize its small-sized products and customer structure, drive the high-end development of products through technological innovation, achieve business improvement in flexible OLED, and accelerate the transformation and upgrading from a large-sized display leader to leader across the full size of displays. (II) New energy photovoltaics and other silicon materials business In response to such challenges as climate change, energy security, and environmental pollution, the global energy industry is experiencing a rapid shift towards a more sustainable model, which drives the fast-growing new energy photovoltaic industry. In 2023, the global installed capacity surged by 72% year-on-year to 395GW, of which China accounted for approximately 216.9GW, while overseas markets contributed the remaining 178GW. The photovoltaic industry's compelling sustained growth prospects have spurred a wave of investment from both established players and new entrants. The influx of capital has accelerated capacity expansion across the photovoltaic industrial chain, leading to a product price downturn in major links while squeezing the profit margin of the industry as a whole. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 21 In line with prudent accounting practices, the Company recognized long-term equity investments and financial assets in connection with the investee, Maxeon, as asset impairment losses and negative fair value change, respectively. These factors, along with investment recognized under the equity method on a consolidated basis, contributed to a negative impact on TZE's fourth-quarter performance. During the Reporting Period, TZE achieved a revenue of RMB59.146 billion, with a year-on-year decrease of 11.74%, and a net profit of RMB3.899 billion, with a year-on-year decrease of 44.88%. In the photovoltaic materials business, year-on-year shipment volume surged by 68% to 114GW, capturing a leading market share of 23.4% for silicon wafers and generating RMB43.791 billion in revenue. The comprehensive gross profit margin for this business also witnessed a significant improvement of 2.8 percentage points year-on-year to 21.8%; year-on-year shipment volume for photovoltaic cells and modules grew by 29.8% year-on-year to 8.6GW, generating RMB9.309 billion in revenue. With an imbalance between demand and supply throughout the industrial chain, competition is evident within the industry from the lowest levelized cost of energy (LCOE) for photovoltaic modules to product (efficiency/power output) on the basis of integrated internal rate of return (IRR) and land-based balance-of-system (BOS) costs. Those products with higher energy conversion efficiency will become the mainstream in the industry. TZE prioritizes technological innovation, securing a leading position in G12 and N-type photovoltaic materials technology. Through continuous cost reduction and efficiency optimization, the Company is actively strengthening its comparative competitiveness. At the end of the Reporting Period, with comparative competitiveness created by technical innovation and lean manufacturing, the Company led the upgrade of large-sized, wafer, thinfilm process technologies for crystals and wafers. Metrics such as the consumption rate of silicone materials per crystalline unit, monthly crystal output per furnace, and wafer output quantities per kg are at the forefront of the industry and factor into the Company's ability to navigate industry chain fluctuations through sustainable technology and cost leadership. Leveraging its technological expertise in N-type material products, and its flexible manufacturing capabilities, aligned with the demands for the "multi-product, multi-customer, multi-process" in the N-type era, the Company is accelerating its transition to N-type materials and shingled modules. With the world's No.1 external sales market share in N-type silicon wafer and a cost lower than the second-best cost in the industry Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 22 at around RMB0.03/W, the Company is establishing a differentiated competitive edge in the industry chain for next-gen technologies. With the pursuit of autonomous and controllable energy by countries worldwide, coupled with the increasing localization of photovoltaic manufacturing and the reduction of international trade, there is a resulting degree of uncertainty in business operations. However, also present are novel strategic opportunities for enterprises with the capacity to expand into overseas markets. TZE strengthened its Industry 4.0 intelligent manufacturing capabilities, continued to impel its global presence, developing industrial projects in key countries or regions around the world. Reliant upon its long-term investment and accumulation in intelligent manufacturing, the Company has secured industry-leading levels of automation and labor productivity, resulting in a competitive advantage in localized manufacturing on a global scale. During the Reporting Period, the Company actively evaluated and pursued industrial expansion projects in key global markets, including the United States, Europe, and the Middle East. This included ongoing project planning, communication and negotiation with potential partners, and research into project implementation. The Company also prudently recognized an impairment loss on its investment in Maxeon, a company significantly impacted by a confluence of factors in its core markets, including a rapid decline in photovoltaic product prices, adjustments to photovoltaic subsidy policies, and a high interest rate. The Company is actively driving operational excellence initiatives at Maxeon, with an aim to fully capitalize on Maxeon's unique competitive advantages in its core markets and its proven technological innovation capabilities. By fostering a collaborative ecosystem between global production and distribution channels, the Company seeks to strengthen its competitive edge in the global marketplace. Looking ahead into 2024, we anticipate further optimization of the industry structure, along with sustained growth in user-end market demand for display area, which suggests a favorable industry outlook, leading to enhanced operating performance within the Company's display business. While the photovoltaic industry remains at the bottom of the cycle, the Company's new energy photovoltaic business is taking a proactive stance. By strengthening its operational resilience, the Company aims to navigate through the industry cycles with a competitive edge. By upholding the spirit of "Venturing Midstream and Striving to Win", the Company will firmly grasp the opportunities brought by transformations in the technology manufacturing industry and the global energy structure, and continue to implement the business strategies of "improving operational quality and efficiency, Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 23 enhancing strengths to shore up weaknesses, innovation-driven development as well as accelerating global expansion" in order to achieve sustainable, high-quality development and take on a leading role in the global market. III. Analysis of Core Competitiveness Since its inception in 1981, TCL has embarked on a remarkable journey spanning 42 years, marked by a series of extraordinary achievements. Navigating industry cycles with resilience, TCL has become a leading technology manufacturing conglomerate in China. Among the numerous enterprises that have emerged since China implemented its reform and opening-up policy, TCL is one of a select few large corporations that have retained its vibrancy and vigor for nearly half a century. In 2018, TCL introduced the most significant transformation in its corporate history, strategically restructuring from a diversified to a specialized business model, which entailed a clear focus on the development of high-tech, capital-intensive, and long-cycle technology industries. In line with China's strategy of transformation from a manufacturer of quantity to one of quality, the Company is committed to becoming a leading global technology conglomerate. To achieve this, it has divested its terminal business and non-core businesses, and shifted its focus to industrial upgrading and strategic expansion in upstream high-tech industries. In 2020, the Company officially changed its name to "TCLTECH.", delisting Zhonghuan Electronic in July 2020, which facilitated the Company's entry into the new energy photovoltaic and silicon materials sectors. In August 2020, the acquisition of Suzhou Samsung solidified TCLTECH.'s position and competitive edge within the display industry. As it stands, leveraging its strengths in independent innovation and self-driven development, the Company has established a business structure centered on two core industries: displays and new energy photovoltaics. With a well-defined development roadmap, efficient operations, and a distinctive corporate culture, the Company has established itself as a global leader in its core industries, and is well-poised for building its core competitiveness and sustainable development capabilities. Scale leadership: Transforming from a leader in large-sized displays to a full-size layout As a leader in the global display industry and a trailblazer in domestic display line construction, the Company leverages its strategic "Twin Star" production line layout to maximize synergies with a focus on both endogenous growth and epitaxial mergers and acquisitions, enabling the Company to Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 24 continuously expand its production capacity. With a global footprint spanning nine high-gen production lines and five module plants, the Company serves a diverse customer base across major markets. In 2023, TCLCSOT ranked No.2 globally in TV panel shipments, securing the No.1 ranking in terms of both 55-inch and 75-inch TV panels. The Company is also accelerating its full-size strategy by investing in the t9 production line, which is geared towards high-value-added IT and commercial display products in medium-sized products segment. In 2023, TCLCSOT ranked No.2 in the LTPS notebook market and No.1 in the tablet market by market share; it ranked No.3 in the global MNT display market, where it ranked No.1 in the e-sports MNT segment. TCLCSOT reported a significant surge in flexible OLED shipments during Q42023. During 2023, TCLCSOT also actively enhanced its value chain structure, increased module capacity, and further elevated its position along the value chain and in terms of profitability. TCLCSOT has passed through several industry cycles, transforming from a follower to a peer and then to a front-runner, which is not merely a testament to its continuously high-quality growth in scale but also to its unwavering strategy to technological innovation and ecosystem development in the display sector. Leading management: TCLCSOT aims to be a global leader in efficiency and traverse various cycles by comparative competitiveness While establishing its leadership in market scale, technology, and ecosystem development, TCL CSOT has consistently maintained industry-leading efficiency and profitability metrics. Since its inception in 2011, TCLCSOT has successfully navigated two significant cycles in the display industry thanks to two critical contributors - extreme cost efficiency and lean management. TCLCSOT leverages the synergy of its twin factories to optimize production line planning, maximize capacity expansion, implement end-to-end cost and expense control through lean management and extreme efficiency cost measures, establishing its competitiveness in the industry. TCLCSOT's proven risk mitigation capabilities, honed through multiple industry cycle fluctuations, will continue to propel the company's leadership position and steer its growth trajectory in the future. Strategic new frontier: Cultivating a thriving second growth curve with new energy On the basis of enterprise development and national planning for strategic emerging industries, the Company actively seeks new development pathways that are technology-intensive and capital-intensive with a long development cycle, so as to strengthen and fully utilize TCL's core competitiveness. In July 2020, the Company successfully acquired the Zhonghuan hybrid-ownership Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 25 reform project. TZE aligns perfectly with TCL's quest for new growth drivers, specializing in the research and development of new energy photovoltaics and other silicon materials. Since 2021, TZE has unlocked growth potential and accelerated business development through institutional reform, optimizing capital structure and enhancing organizational vitality. Leading in technology and ecology: Actively laying the groundwork for pan-display technologies, building a first-mover advantage through ecological leadership Relying on TCLCSOT and TZE, the Company has accelerated its vertical layout of the industrial chain and continuously improved its upstream capacity for technological innovation. The Company has strategically focused on building an ecosystem in areas such as basic materials, next-gen display materials, photovoltaic materials and critical equipment for new manufacturing processes. This is aimed at creating an ecosystem within the display market to establish a leading advantage based on next-gen display technology. TCLTECH. boasts a global network of 32 R&D centers, serving as the only "National Printing and Flexible Display Innovation Center" appointed by the Ministry of Industry and Information Technology and the sole "National New Display Technology Innovation Center" designated by the Ministry of Science and Technology, with 9 national-level enterprise open innovation platforms and 33 provincial-level innovation platforms having obtained related qualifications. Organizational and cultural assurance: Building the "Philosophy of Global Leadership" and strengthening corporate culture Four decades of unwavering commitment to "Daring, Innovation, Tenacity, Transformation, and Vision" represents TCL's most valuable intangible asset over the last 42 years, serves as the motivation to push boundaries, and acts as the continuous driving force behind its ongoing advancement toward global leadership. At the beginning of 2020, the Company resolutely set forth the strategic goal of "accelerated growth, surpassing competitors, and achieving global leadership" and released the "Philosophy of Global Leadership" to exemplify its corporate culture in its new phase. With this goal as the driving force, the Company is committed to reshaping its organizational culture to one that is characterized by ownership, accountability, and a performance-driven mindset. TCL remains dedicated to continuously upgrading, exploring, and strengthening the core values embodied by TCL's spirit of "Daring, Innovation, Tenacity, Transformation, and Vision". The Company will further strengthen the development of organizational structure and corporate culture to foster a more Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 26 dynamic and agile work environment. By making its "Philosophy of Global Leadership" the cornerstone of every TCL employee's approach, the Company strides towards sustainable growth. IV. Analysis of Core Businesses 1. Overview See "Part IIIManagement Discussion and Analysis". 2. Revenue and costs (1) Breakdown of operating revenue Unit: RMB 20232022 Change (%) Amount As % of total revenue (%) Amount As % of total revenue (%) Total revenue 174,366,657,015100% 166,552,785,829100% 4.69%By operating division Display business 83,654,743,374 47.98% 65,717,154,75239.46% 27.30%New energy photovoltaics and other silicon materials business 59,146,463,193 33.92% 67,010,157,02540.23% -11.74%Distribution business 30,109,528,571 17.27% 31,847,803,41719.12% -5.46%Other and offsets 1,455,921,877 0.83% 1,977,670,6351.19% -26.38%By product category Display devices 83,654,743,374 47.98% 65,717,154,75239.46% 27.30%New energy photovoltaics and other silicon materials 59,146,463,193 33.92% 67,010,157,02540.23% -11.74%Distribution of electronics 30,109,528,571 17.27% 31,847,803,41719.12% -5.46%Other and offsets 1,455,921,877 0.83% 1,977,670,6351.19% -26.38%By operating segment Mainland China 119,940,276,585 68.79% 119,139,823,45971.53% 0.67%Overseas (including Hong Kong) 54,426,380,430 31.21% 47,412,962,37028.47% 14.79%Distribution mode Direct sales 149,146,033,585 85.54% 140,148,331,28684.15% 6.42%Distribution 24,805,129,036 14.23% 25,652,437,92515.40% -3.30%Dealer 415,494,3930.24% 752,016,6180.45% -44.75%(2) Operating division, product category, region or sales mode contributing over 10% of the revenue or operating profit: Applicable □ Not applicable Unit: RMB Revenue Operating cost Gross profit margin Change in revenue year-Change in operating cost year-on-year Change in gross profit margin year-Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 27 on-year (%) (%) on-year (%) By operating division Display business 83,654,743,374 72,095,222,72813.82% 27.30% 10.66% 12.95%New energy photovoltaics and other silicon materials business 59,146,463,193 47,170,528,47120.25% -11.74% -13.96% 2.06%Distribution business 30,109,528,571 28,949,391,9973.85% -5.46% -5.32% -0.15%By product category Display devices 83,654,743,374 72,095,222,72813.82% 27.30% 10.66% 12.95%New energy photovoltaics and other silicon materials 59,146,463,193 47,170,528,47120.25% -11.74% -13.96% 2.06%Distribution of electronics 30,109,528,571 28,949,391,9973.85% -5.46% -5.32% -0.15%By operating segment Mainland China 119,940,276,585 103,308,185,80013.87% 0.67% -4.49% 4.66%Overseas (including Hong Kong) 54,426,380,430 45,459,410,74116.48% 14.79% 3.89% 8.77%Distribution mode Direct sales 149,146,033,585124,301,367,79716.66% 6.42% -1.62% 6.81%Distribution 24,805,129,036 24,159,455,4542.60% -3.30% -3.24% -0.07%Dealer 415,494,393 306,773,29026.17% -44.75% -49.39% 6.77%Core business data in the recent term restated according to the changed methods of measurement that occurred in the Reporting Period □ Applicable Not Applicable (3) Was revenue from product sales higher than service revenue Yes □ No Operating division Item Unit 20232022 Change (%) Display Sales 10,000 square meters 5,3044,275 24.06%Production volume 10,000 square meters 5,4204,230 28.14%Inventory 10,000 square meters 240124 93.49%Modules and finished machines Sales 10,000 sets 1,7531,299 34.99%Production volume 10,000 sets 1,7471,317 32.67%Inventory 10,000 sets 6066 -9.76%Photovoltaic silicon wafers Sales 10,000 sets 1,630,718 1,064,653 53.17%Production volume 10,000 sets 1,671,530 1,084,730 54.10%Inventory 10,000 sets 72,914 32,102 127.13%Other silicon materials Sales Million square inches 737 744 -0.96%Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 28 Production volume Million square inches 765 743 2.97%Inventory Million square inches 53 24 117.48%Energy Sales 10,000 kWh 102,019 123,105 -17.13%Production volume 10,000 kWh 102,019 123,105 -17.13%Inventory 10,000 kWh Photovoltaic modules Sales MW 7,144 6,607 8.13%Production volume MW 7,911 6,619 19.53%Inventory MW 1,407 639 119.95%Explanation of why any financial indicator in the table above registered a year-on-year change of over 30% Applicable □ Not applicable 1. The increase in inventory of display was mainly affected by the release of t9 capacity; 2. The increases in modules and finished machines and output was mainly a result of growth in business scale; 3. Photovoltaic silicon wafer sales increased by 53.17% and production increased by 54.10% compared to the previous year. Inventory increased by 127.13% compared to the previous year. This is mainly due to the Company's construction projects launching for production and the continuous improvement of advanced production capacity through technological innovation and Industry 4.0 flexible manufacturing. At the end of the year, crystal wafer production capacity reached 183GW, an increase of 31% over the beginning of the year, leading to an increase in the turnover of silicon wafer production, sales and inventory (solar silicon wafers are presented as converted to M6 products, including photovoltaic silicon rods converted from exported photovoltaic silicon rods); 4. Inventory of other silicon materials increased by 117.48% compared to the previous year mainly due to the increase in product inventory with the market downturn. In addition, as the production and sales of polished wafers and epitaxial wafers have increased, the inventory turnover rate has also increased; 5. Inventory of photovoltaic modules increased by 119.95% compared to the previous year mainly due to the severe overcapacity in the entire photovoltaic industry chain, the dire market conditions, and the slowdown in inventory turnover. In addition, as the scale of production and sales has increased, the inventory turnover rate has increased. (4) Execution progress of major sales contracts and materials purchasing contracts signed into during the Reporting Period □ Applicable Not Applicable (5) Breakdown of operating cost Operating division Unit: RMB Operating division Item 20232022 YoY Change Amount As % of total Amount As % of total Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 29 revenue revenue Display business Materials, salary, depreciation, etc. 72,095,222,72848.46% 65,148,141,621 42.88% 10.66%New energy photovoltaics and other silicon materials business Materials, salary, depreciation, etc. 47,170,528,47131.71% 54,822,913,894 36.09% -13.96%Distribution business Finished goods, etc. 28,949,391,99719.46% 30,574,483,912 20.12% -5.32%Others Materials, salary, depreciation, etc. 552,453,3460.37%1,379,949,553 0.91% -59.97%Product category Unit: RMB Product category Item 20232022 YoY Change Amount As % of total revenue Amount As % of total revenue Display devices Materials, salary, depreciation, etc. 72,095,222,72848.46% 65,148,141,621 42.88% 10.66%New energy photovoltaics and other silicon materials Materials, salary, depreciation, etc. 47,170,528,47131.71% 54,822,913,894 36.09% -13.96%Distribution of electronics Finished goods, etc. 28,949,391,99719.46% 30,574,483,912 20.12% -5.32%Others Materials, salary, depreciation, etc. 552,453,3460.37% 1,379,949,553 0.91% -59.97%(6) Were there changes in the scope of consolidated financial statements for the Reporting Period Yes □ No Compared with 2022,39 subsidiaries (24 newly incorporated and 15 acquired) are newly included in the consolidation scope of 2023; and 18 subsidiaries (12 transferred and 6 de-registered) are excluded from the consolidation scope of 2023. (7) Major changes to the business scope or product or service range in the Reporting Period □ Applicable Not Applicable (8) Major customers and suppliers Major customers Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 30 Total sales of top five customers (RMB) 51,360,607,561 Total sales of top five customers as % of total sales of the Reporting Period (%) 29.46%Total sales of related parties among top five customers as % of total sales of the Reporting Period (%) 10.09%Top five customers No. Customer name Sales revenue (RMB) As % of total sales revenue (%) 1 Customer A 17,595,352,38410.09%2 Customer B 11,982,836,7726.87%3 Customer C 10,005,174,1095.74%4 Customer D 8,108,202,8974.65%5 Customer E 3,669,041,4002.10%Total -- 51,360,607,56129.46%Other information about major customers: For sales transactions between the Company and its related parties, see provisional announcements disclosed by the Company on the designated platform for information disclosure. Major suppliers Top five suppliers No. Supplier name Purchases in the Reporting Period (RMB) As % of total purchases (%) 1 Supplier A 7,679,043,5985.51%2 Supplier B 6,838,857,5104.91%3 Supplier C 6,351,627,0114.56%4 Supplier D 4,425,255,5173.18%5 Supplier E 3,604,909,9122.59%Total -- 28,899,693,54920.75%Other information about major suppliers □ Applicable Not Applicable 3. Expenses Unit: RMB 20232022 Change (%) Main reason for change Sales expenses 2,523,687,453 1,950,527,87729.38% Administrative expenses 4,783,246,926 3,540,610,99035.10%Mainly caused by the growth in business scale, and increases in labor costs Total purchases from top five suppliers (RMB) 28,899,693,549 Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) 20.75%Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) -Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 31 Financial expenses 3,972,727,915 3,422,894,83916.06% R&D expenses 9,522,837,963 8,633,638,17110.30% 4. R&D investments Applicable □ Not applicable Main R&D project name Purpose Progress Preset goals Anticipated impact on the future development of the Company High-quality VR technology development Enhance VR image quality to achieve high PPI Develop ultra-high-resolution VR display technology with 2K*2K resolution per eye Develop high-PPI LTPOVR technology, enhancing VR display quality and reducing power consumption Leverage technological leadership to attract high-end customers, enhancing brand value and product competitiveness Development of a 14-inch 2.8K flagship tablet 14-inch 2.8K in-cell active pen eye-care large-screen tablet Realized industrial transformation The world's first 14-inch 2.8K in-cell active pen eye-care large-screen tablet Enhanced product competitiveness and industry influence Star Intelligence Large Model Expert System Empowering R&D efficiency and quality improvement through deep understanding and learning Realized industrial transformation Leveraged multi-modal large models in R&D design to empower panel development Deep engagement in business activities, accelerated the R&D process, and improved R&D efficiency and product quality Capitalized upon AI and big data for failure analysis and application simulation Utilized AI algorithms to enhance yield analysis efficiency, swiftly pinpointed defect root causes, and accelerated improvement measures Realized industrial transformation Completed system implementation and deployment, and gradual roll-out to all plants Used AI and big data algorithms to enhance yield analysis and improve manufacturing processes WQHDLTPO display technology Achieved a lower refresh rate and reduced power consumption Realized industrial transformation Achieved lower power consumption while effectively addressing visual fatigue. Enhanced brand awareness and product competitiveness in the LTPO segment AI-assisted R&D of OLED materials Reduced costs while enhancing efficiency for R&D of OLED materials with AI technologies AI-assisted R&D platform for OLED materials Identified novel, high-performance, and stable OLED materials with AI-based generation and screening Facilitated the industrialization of OLED materials Developed proprietary high-speed CSPI national standard protocols and key display materials, e.g., color filters and polarizers Achieved enhanced technological competitiveness through breakthroughs in POL material specifications, the development of material platforms, and proprietary research of membrane materials. Realized industrial transformation Breakthrough in POL specifications / development of material platforms; Proprietary R&D of POL membrane materials. Reduced cost and enhanced efficiency R&D of key technologies for N-type silicon single crystals designed Met the market requirements for technical indicators of N-type monocrystalline Promoted production process improvement and product quality consistency with Improved the quality of monocrystalline silicon, met customer needs, further improved Enhanced the core competitiveness of the company's main business Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 32 for solar cells and their applications silicon technology and strengthened the Company's core competitiveness ongoing mass production by enhancing Total Solution capabilities, participating in customer product and process design-in, and establishing IPD collaboration with N-type customers efficiency, reduced costs and achieved an increase in market share of N-type monocrystalline silicon Researched and applied granular silicon in the single crystal silicon preparation process Removed technical barriers in the use of granular silicon feedstock in single crystal pulling processes to reduce silicon costs and enhance product competitiveness Having addressed the challenges associated with granular silicon feedstock through process innovation, the Company has mastered its application method, enabling the production of higher-quality single crystal silicon rods. This method can be applied to 100% of the Company's products, placing the Company at the forefront of the industry Achieved 100% application by enhancing the quality of granular silicon feedstock and developed granular silicon application solutions Reduced silicon costs and improved product competitiveness for the Company R&D of G12 silicon wafer slicing technology Researched and developed ultra-thin solar silicon wafer cutting technology to meet the demand for thin film in the downstream market and to improve unit output Equipment upgrading and cutting process design have been completed; SoP has been realized for 130um and 120um G12 silicon wafers Achieved the 130μm thick SoP target for silicon wafers; and completed the 110μm thick technical reserve for silicon wafers Enhanced the core competitiveness of the main business Developed the 4.0 technology platform for components By successfully developing the 4.0 product and equipment platform, achieving SoP and obtaining product certification, the Company has further expanded its product portfolio to meet diverse market demands under various application scenarios The development of the 4.0 technology platform designed for components was completed on schedule, resulting in components with superior power output, efficiency, and cost-effectiveness, paving the way for their market introduction Increased our market share by successfully transitioning to N-type component products Enhanced the core competitiveness of battery packs Optimized battery graphic design Reduced silver consumption by 0.03%, increasing efficiency, and enhancing both battery efficiency and component power with the optimized positive and negative circuit The introduction of the new battery graphic design has resulted in a 0.07% increase in cell-level efficiency during large-scale trial production, while meeting component process yield requirements and achieving a 0.2% improvement in Met customers' demands, while reducing cost and improving efficiency, as well as raising market share Enhanced the core competitiveness of battery packs Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 33 component CTM R&D personnel 20232022 Change (%) Number of R&D employees 11,313 11,979 -5.56%As % of R&D employees (%) 15.04% 17.16% -2.12%Education PhD 188 231 -18.61%Master 2,131 2,442 -12.74%Bachelor's degree and others 8,994 9,306 -3.35%Age Under 30 years old 5,965 7,286 -18.13%30~40 years old 4,696 4,2809.72%Over 40 years 652 41357.87%R&D investments 20232022 Change (%) R&D investment amount (RMB) 10,308,543,52910,778,414,851 -4.36%R&D investments as % of total revenue (%) 5.91% 6.47% -0.56%Capitalization amount of R&D investments (RMB) 3,560,255,9654,287,426,803 -16.96%Capitalization amount of R&D investments as % of total revenue (%) 34.54% 39.78% -5.24%Reasons and impacts of major changes in the composition of R&D personnel of the Company □ Applicable Not Applicable Reasons for significant changes in R&D investment as % of total revenue compared with the previous year □ Applicable Not Applicable Reasons for significant changes in R&D investments capitalization and explanation of rationale □ Applicable Not Applicable 5. Cash flow Unit: RMB Item 20232022 Change (%) Sub-total of cash generated from operating activities 155,010,648,305155,632,096,991 -0.40%Sub-total of cash used in operating activities 129,695,892,200137,205,720,382 -5.47%Net cash generated from operating activities 25,314,756,10518,426,376,609 37.38%Sub-total of cash generated from investment activities 61,202,286,51551,431,426,776 19.00%Subtotal of cash used in investing 101,999,341,46698,267,398,620 3.80%Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 34 activities Net cash used in investing activities -40,797,054,951 -46,835,971,844 12.89%Sub-total of cash generated from financing activities 70,023,939,233113,655,272,732 -38.39%Subtotal of cash used in financing activities 68,232,173,83982,254,617,585 -17.05%Net cash generated from financing activities 1,791,765,39431,400,655,147 -94.29%Net increase in cash and cash equivalents -13,678,809,1313,593,919,427 -480.61%Explanation of why related data has significant changes year-on-year Applicable □ Not applicable Net cash generated from operating activities: Primarily due to the increase in scale of sales during the Reporting Period. Net cash generated from financing activities: Primarily due to the decrease in scale of financing during the Reporting Period. Explanation of the significant difference between the net cash flow generated by the Company's operating activities and the net profit of the current year during the reporting period Applicable □ Not applicable The large difference between the net cash flow generated by the Company's operations and the net profits of the current year is primarily caused by factors such as depreciation, amortization and impairment of the Company's assets during the Reporting Period. V. Analysis of Non-Core Businesses Applicable □ Not applicable Unit: RMB Amount As % of gross profit Source SustainabilityAsset impairment -4,813,965,478 -95.29% Depreciation of inventory write-off in line with the market No Non-operating income 71,284,932 1.41% No Non-operating expenses 203,779,883 4.03% No VI. Analysis of Assets and Liabilities 1. Significant changes in asset composition The end of 2023 January 1,2023 Change in percentage (%) Main reason for change Amount Total assets Percentage Amount Total assets PercentageMonetary assets 21,924,270,872 5.73% 35,378,501,2619.83% -4.10% Primarily due to the purchase of low-risk wealth management products Unit: RMBFull Text of the Annual Report 2023 of TCLTechnology Group Corporation 35 Higher proportion of overseas assets □ Applicable Not Applicable Accounts receivable 22,003,651,259 5.75% 14,051,661,4623.90% 1.85% Primarily due to the increase in sales scaleContract assets 343,907,118 0.09% 315,167,0850.09% 0.00% No significant changeInventories 18,481,754,865 4.83% 18,001,121,8555.00% -0.17% No significant change Investment property 911,679,154 0.24% 946,449,1250.26% -0.02% No significant changeLong-term equity investments 25,431,271,193 6.64% 29,256,215,8048.13% -1.49% No significant changeFixed assets 176,422,620,794 46.08% 132,477,671,84436.80% 9.28% Primarily due to construction in progress being converted into fixed assets, resulting in increase in fixed assets Construction in progress 17,000,052,457 4.44% 52,053,833,62914.46% -10.02% Primarily due to construction in progress being converted into fixed assets, resulting in decrease in construction in progress Right-of-use assets 6,386,446,373 1.67% 5,110,123,9041.42% 0.25% No significant changeShort-term borrowings 8,473,582,304 2.21% 10,215,910,9632.84% -0.62% No significant changeContract liabilities 1,899,468,140 0.50% 2,336,008,1640.65% -0.15% No significant changeLong-term borrowings 117,662,208,623 30.73% 118,603,164,83932.95% -2.21% No significant changeLease liabilities 5,737,287,693 1.50% 4,461,382,9021.24% 0.26% No significant changeFull Text of the Annual Report 2023 of TCLTechnology Group Corporation 36 2. Assets and liabilities at fair value Applicable □ Not applicable Unit: RMB Item Beginning amount Gain/loss of fair-value changes in the Reporting Period Cumulative fair-value changes recorded in equityImpairment allowances established in the Reporting PeriodAmount purchased in the Reporting PeriodAmount sold in the Reporting Period Other changes Ending amount Financial assets 1. Held-for-trading financial assets (excluding derivative financial assets) 15,632,334,714 -82,730,18436,690,131,99126,084,053,31926,155,683,203 2. Derivative financial assets 361,034,230188,835,24626,600,642 -468,462,515108,007,603 3. Receivables financing 1,103,127,764 -148,718,206954,409,558 4. Other debt investments 5. Investments in other equity instruments 439,996,263 -55,954,7561,720,000886,911386,648,418 Subtotal of financial assets 17,536,492,971106,105,062 -29,354,11436,691,851,99126,084,053,319 -616,293,81027,604,748,782 Total of the above 17,536,492,971106,105,062 -29,354,11436,691,851,99126,084,053,319 -616,293,81027,604,748,782 Financial liabilities 932,646,673 78,767,446143,869,8431,097,300,6001,942,542,301310,042,260 Other changed content None Significant changes to the measurement attributes of the major assets in the Reporting Period: □Yes No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 37 3. Restricted asset rights as at the period-end Restricted assets Carrying amount (RMB'0,000) Reason for restriction Monetary assets 34,109 Deposited in the central bank as the required reserve Monetary assets 158,637 Other monetary assets and restricted bank deposits Notes receivable 50,364 Pledge Fixed assets 9,347,914 As collateral for loan Intangible assets 396,567 As collateral for loan Held-for-trading financial assets 36,964 Pledge Construction in progress 89,559 As collateral for loan Accounts receivable 86,008 Pledge Contract assets 34,321 Pledge Investment property 974 As collateral for loan Other non-current assets due within one year 43,049 Pledge Total 10,278,465 VII. Investments Made 1. Total investment amount Applicable □ Not applicable Total investment amount in the Reporting Period (RMB) Total investment amount in the same period last year (RMB) Change (%) 38,650,552,795 52,419,386,966 -26.27%2. Major equity investments made in the Reporting Period Applicable □ Not applicable Unit: RMB100 million Name of investee Principal activity Investment method Investment amount Shareholding percentage (%) Funding source Partner Term of investment Type of products Progress as of the balance sheet date Anticipated income Investment income/loss in the Reporting Period Involvement in lawsuit(s) Date of disclosure Index to disclosed information Huizhou Dongshen Jia'an Equity Investment Partnership (Limited Partnership) Industrial investments Equity investments 15.699.94% Self-raised funds Ningbo Jia'an Venture Capital Partnership (Limited Partnership) Not applicable Not applicable Established Not applicable Not applicable Not applicable March 31, 2023 o.com.cn Total -- -- 15.6 -- -- -- -- -- -- Not applicable Not applicable -- -- -- 3. Major non-equity investments ongoing in the Reporting Period □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 38 4. Financial investments (1) Securities investments Applicable □ Not applicable Unit: RMB'0,000 Security type Stock Code Stock abbreviation Initial investment cost Accounting measurement method Beginning carrying amount Gain/loss of fair-value changes in the Reporting Period Cumulative fair-value changes recorded in equity Amount purchased in the Reporting Period Amount sold in the Reporting Period Gain/loss in the Reporting Period Ending carrying amount Accounting title Funding source Stocks 300842.SZ DKElectronic Materials, Inc. 2,430 Fair value 25,2588,4660008,46633,724 Other non-current financial assets Self-funded Stocks 688469.SHUNT 26,745 Fair value - -3,337026,7450 -3,33723,408 Other non-current financial assets Self-funded Financial bonds ZQTZ2303070002 Nanyang Commercial Bank 7,083 Measurement at amortized cost - 007,08304267,251 Debt investments Self-funded Bonds XS2560662541 LINKCBLTD 4,455 Fair value 4,791 -35901,5520 -956,064 Held-for-trading financial assets Self-funded Financial bonds 223001.IB 22 ICBCMacau Bond 01 5,000 Measurement at amortized cost 5,04400001295,044 Debt investments Self-funded Bonds USF2941JAA81 ELECTRICITE DEFRANCESA2,919 Fair value - 17105,3127303794,754 Held-for-trading financial assets Self-funded Bonds US279158AL39 ECOPETROL SA 2,421 Fair value 4,3491670004174,590 Held-for-trading financial Self-funded Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 39 assets Bonds USG5975LAA47 MELCO RESORTS FINANCE 1,328 Fair value 14505,1451,360903,832 Held-for-trading financial assets Self-funded Financial bonds ZQTZ2303090003 China Taiping Insurance Holdings Company Limited 3,541 Measurement at amortized cost - 003,54101843,613 Debt investments Self-funded U.S. Treasury bill US912797HH31 TREASURY BILL 3,453 Fair value - 2703,4530273,480 Held-for-trading financial assets Self-funded Other securities investments held at the period-end 705,553 -- 258,430393 -5,595442,236531,4568,966169,880 -- -- Total 764,929 -- 297,8745,574 -5,595495,068533,54515,653265,641 -- -- Disclosure date of the board announcement approving the securities investments March 31,2023 Disclosure date of the general meeting announcement approving the securities investments (if any) April 22,2023 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 40 (2) Investments in derivative financial instruments Applicable □ Not applicable 1) Derivative investments for hedging purposes made during the Reporting Period Applicable □ Not applicable Unit: RMB'0,000 Type of contract Beginning amount Ending amount Gain/loss status in the Reporting Period Ending contractual amount as % of the Company's ending net assets Contractual amount Transaction limit Contractual amount Transaction limit Contractual amount Transaction limit 1. Forward forex contracts 2,062,17273,4413,039,040114,095 -12,814 20.920.79 2. Interest rate swaps 384,44611,533407,68612,2312.810.08 Total 2,446,61884,9743,446,726126,326 -12,81423.730.87 Accounting policies and specific accounting principles for hedging business during the Reporting Period and a description of whether there have been significant changes from those of the previous reporting period No significant change. Description of actual profits and losses during the Reporting Period During the Reporting Period, profit from changes in the fair value of hedged items amounted to RMB137.85 million; losses from the delivery of due forward exchange contracts amounted to negative RMB450.92 million; and profit from the valuation of outstanding forward exchange contracts amounted to RMB184.93 million. Description of the hedging effect During the Reporting Period, the Company's main foreign exchange risk exposures included foreign currency asset and liability exposures arising from business activities such as outbound sales, raw materials procurement, and financing. The uncertain risks arising from the exchange rate fluctuations were effectively hedged by derivative contracts with the same purchase amounts and terms in the opposite direction. Funding source for derivative investment Self-funded. Analysis of risks and control measures associated with derivative investments held in the Reporting Period (including but not limited to market risk, 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 trends and predicting operations (including orders and capital plans), adopted forward foreign exchange contracts, options, and interest rate swaps to avoid future exchange rate and interest rate risks. As its business scale changes, the Company will adjust its 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 is related to hedging and trading activities associated with the main business operations. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 41 liquidity risk, credit risk, operational risk, legal risk, etc.) There is a market risk associated with potential losses due to fluctuations in market prices, such as underlying interest rates and exchange rates, which affects the prices of financial derivatives. 2. Liquidity risk: The derivatives business carried out by the Group is an over-the-counter transaction operated by a financial institution, and there is a risk of incurring losses due to paying fees to the bank for liquidating or selling the derivatives below the buying prices; 3. Performance risk: The Group conducts its derivative business based on rolling budgets for risk management, and there is a risk of performance failure due to deviation arising between the actual operating results and budgets; 4. Other risks: In the case of specific business operations, the failure of operational personnel to report and obtain approvals in accordance with established procedures or to accurately, promptly, and comprehensively record information related to financial derivative transactions may result in potential losses or missed trading opportunities in the derivatives business. Moreover, if the trading operator fails to fully understand the terms of transaction contracts or product information, the Group may face legal risks and transaction losses. Risk control measures: 1. Basic management principles: The Group strictly adheres to hedging principles with the primary goals of fixing costs and avoiding risks. It is necessary for the financial derivatives business to align with the variety, size, direction, and duration of spot goods, and this should not involve any speculative trading. When selecting hedging instruments, only simple financial derivatives that are closely related to the main business operations and comply with the requirements of hedge accounting should be selected while avoiding engaging in complex business activities that go beyond the established scope of operations and involve risks and pricing that are difficult to understand; 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 preemptive prevention, in-process monitoring, and post-processing. It reasonably allocates professionals for investment decision-making, business operations, and risk control as required. Personnel involved in investment are required to fully understand the risks of financial derivatives investment and strictly implement the business operations and risk management system for derivatives. Before the holding company engages in derivative business activities, the holding company must submit detailed business reports to the competent department of the Group, including information about its internal approval, main product terms, operational necessity, preparations, risk analysis, risk management strategy, fair value analysis, and accounting methods. Additionally, a special summary report of previously conducted operations should be submitted. Only after obtaining the opinion of the relevant professional departments within the Group may the holding company proceed with the operations. 3. Relevant departments should track the changes in the open market price or fair value of financial derivatives, promptly assess the risk exposure changes of invested financial derivatives, and compile reports to the board of directors on business development; 4. The financial company should actively manage and disclose in a timely manner any confirmed gains and losses as well as unrealized losses from futures and derivative transactions of listed companies. When such losses account for 10% of the audited net profit attributable to the shareholders of the listed company in the last year and exceed RMB10 million, the financial company should make timely disclosure thereof. Changes in market prices or fair value of derivative investments in the Reporting Period (fair value analysis should include the measurement method and related assumptions and parameters) With the rapid expansion of overseas sales, the Company continued to follow the above rules in the operation of forward foreign exchange contracts and interest rate swap contracts, to avoid and hedge against foreign exchange risks arising from operations and financing. During the Reporting Period, there were profits and losses of RMB137.85 million from changes in the fair value of hedged items and losses of RMB265.99 million from derivatives. The fair value of derivatives is determined by the real-time quoted price of the foreign exchange market, and is based on the difference between the contractual price and the forward exchange rate quoted immediately on the foreign exchange market on the balance sheet date. Legal matters involved (if applicable) Not applicable Disclosure date of the board announcement approving the derivative investments (if any) March 31,2023 Disclosure date of the general meeting announcement approving April 22,2023 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 42 the derivative investments (if any) Opinion of independent directors on derivative investments and risk control From January to December 2023, the financial derivatives transactions entered into by the Company were closely connected to the daily operational needs of the Company, and the risks therefrom were controllable. Such transactions conformed to the development needs of the Company, and the requirements of related laws and regulations. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 43 2) Derivative investments for speculative purposes made during the Reporting Period □ Applicable Not Applicable There were no derivative investments for speculative purposes made by the Company during the Reporting Period. 5. Use of the capital raised Applicable □ Not applicable (1) General information about the use of raised funds Applicable □ Not applicable Unit: RMB'0,000 Year of raising Method of raising Total amount raised Net amount raised Used in the current period Total amount usedTotal amount of changed-purpose funds during the Reporting Period Total amount of changed-purpose funds Total amount of changed-purpose funds as a % of total amount raised Total proceeds that have not been used Purpose and location of the unused amountAmount left idle for over two years 2022 Non-public offering of shares 959,695.94947,469.47244.99947,714.46Not applicableNot applicable Not applicable 0 Not applicable 0Total -- 959,695.94947,469.47244.99947,714.46Not applicableNot applicable Not applicable 0 -- 0Use of the capital raised According to the Approval for the Non-Public Issue of Shares by TCLTechnology Group Co., Ltd. (Zheng Jian Xu Ke [2022] No.1658) issued by the China Securities Regulatory Commission, the Company issued 2,806,128,484 shares in a non-public manner, raising a total of RMB9,596,959,415.28 in 2022. After deducting issuance-related expenses, the actual available proceeds were RMB9,474,694,686.16. On December 6,2022, the Company received the proceeds from the aforementioned share issue, which was confirmed by Da Hua CPAs (Special General Partnership) in its capital verification report of "Da Hua Yan Zi [2022] No.000709". As of December 31,2023, the Company utilized the proceeds of RMB9,477,144,603.75 (including net interest income of RMB2,449,917.59), in which RMB9,000,000,000.00 was used to repay the funds raised for the investment in previous projects, while the remaining amount was used to supplement the working capital. As of the date of this report issuance, the Company has successfully completed the closure procedures for the special account designated for the funds raised through this private placement. (2) Promised use of raised funds Applicable □ Not applicable Unit: RMB'0,000 Promised project funded with raised funds and investment with excess Whether the project changed or not (including Total promised investment amount with raised funds Adjusted total investment amount (1) Investment in the Reporting Period Cumulative investment amount at the period-end (2) Investment progress as at the period-end (3)=(2)/(1Date when the project is ready for its intended Benefits derived in the Reporting Whether it met the anticipated benefits Whether there were significant changes to the project Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 44 funds raised partial changes) ) use Period or not feasibility or not Promised projects 1. Generation 8.6 oxide display device production line project No 900,000.00900,000.000900,000.00100.00% 24 months from the commencement date of the project Not applicable Not applicable No 2. Additional working capital No 47,469.4747,469.47244.9947,714.46100.52% Not applicableNot applicable Not applicable No Subtotal of promised projects -- 947,469.47947,469.47244.99947,714.46 -- -- Not applicable -- -- Excess funds raised No excess funds raised Description of delayed progress and reasons for failure to achieve the planned progress and anticipated income (including the reasons for selecting "Not applicable" for "Whether anticipated benefits were met or not") Not applicable, no income estimate is made for the item Description of major changes in project feasibility Not applicable Amount, purpose, and use progress of excess funds raised Not applicable Change in location of the project with raised funds Not applicable Change in the project implementation method Not applicable Advance investments in On December 12,2022, the Proposal on Using Raised Funds to Swap Self-raised Funds Previously Invested in Projects that should be Funded with Raised Funds was approved at the 26th Meeting of the Company's 7th Board of Directors. As such, the raised funds were Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 45 promised projects funded with raised funds and subsequent swaps agreed to be swapped with the advance investments of self-raised funds in projects that should be funded with raised funds. The total swap amount was RMB9 billion. Temporary addition of idle raised funds to supplement working capital Not applicable Amount and reason for surplus raised funds during project implementation Not applicable Unused raised fund purpose and allocation Not applicable Issues or other situations regarding the use and disclosure of raised funds Not applicable (3) Change of the raised fund projects □ Applicable Not Applicable No such cases in the Reporting Period. VIII. Sale of Major Assets and Equity Investments 1. Sale of major assets Applicable □ Not applicable Transaction counterpart Assets sold Announcement date Transaction price (in RMB0'000) Net profit contributed by the asset to the listed company from the beginning of the period to the Impact of sale on the Company (Note 3) Percentage of the net profit from the sale of the asset contributed to the listed company to the total net Pricing principles for the sale of the assetWhether this was an affiliated-party transaction Relationship with the affiliated party (if it is a affiliated-party transaction) Whether all titles of the asset have been fully transferred Whether all debts of the asset have been fully transferred Has the project been implemented as planned and on schedule If not, provide the reasons and the measureDate of disclosure Index to disclosed information Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 46 date of the sale (in RMB0'000) profit s taken by the Company Beijing E-Town Urban Renewal Co., Ltd. Idle properties in No.2 courtyard, Bolin Road, Beijing Economic-Technological Development Area December 28, 2023 25,269Not applicable Reduced operational costs while enhancing operational efficiency, which aligns with the development interests of the Company Not applicable Based on the negotiated evaluation price No Not applicable Not applicable Not applicable Yes December 28, 2023 info.com.cn 2. Sale of major equity investments □ Applicable Not Applicable IX. Principal Subsidiaries and Joint Stock Companies Applicable □ Not applicable Principal subsidiaries and joint stock companies with an over 10% effect on the Company's net profit: Unit: RMB0'000 Acquisition and disposal of subsidiaries in the Reporting Period Applicable □ Not applicable Company name How subsidiaries were obtained or disposed of in the Reporting Period Effects on overall operations and operating performanceLumetech North America Corporation Newly incorporated No significant effect Company name Company type Principal activity Registered capital Total assets Net assets Revenue Operating profit Net profitTCLChina Star Optoelectronics Technology Co., Ltd. Subsidiary Display RMB33.08 billion 20,893,6687,409,1147,207,779 -90,039 -48,056 TCLZhonghuan Renewable Energy Technology Co., Ltd. SubsidiaryNew energy photovoltaics and other silicon materials business RMB4.04 billion 12,506,3046,023,7115,914,646 456,547389,889 Highly Information Industry Co., Ltd. SubsidiaryDistribution business RMB0.42 billion 726,655143,4043,010,953 5,2434,320 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 47 Suzhou Zhonghuan Photovoltaic Materials Co., Ltd. Newly incorporated No significant effect Ningxia Huanou New Energy Technology Co., Ltd. Newly incorporated No significant effect Ningxia Zhonghuan Industrial Park Management Co., Ltd. Newly incorporated No significant effect Guangzhou TCLIndustrial Research Institute Co., Ltd. Newly incorporated No significant effect Huizhou Dongshen Jia'an Equity Investment Partnership (Limited Partnership) Newly incorporated No significant effect Ningbo Dongshen Zhixuan Equity Investment Partnership (Limited Partnership) Newly incorporated No significant effect Huansheng Photovoltaic (Guangdong) Co., Ltd. Newly incorporated No significant effect Xuzhou Huanneng New Energy Co., Ltd. Newly incorporated No significant effect Lingwu Xuzhao New Energy Co., Ltd. Newly incorporated No significant effect Ningxia Zhonghuan Yuelanshan Hotel Management Co., Ltd. Newly incorporated No significant effect Zhangjiakou Shengming New Energy Co., Ltd. Newly incorporated No significant effect Xi'an Maituo Technology Co., Ltd. Newly incorporated No significant effect Xi'an Shengtai Technology Co., Ltd. Newly incorporated No significant effect Xi'an Shengke Sunpie Technology Co., Ltd. Newly incorporated No significant effect Urumqi Sunpie Fengshagn Trading Co., Ltd. Newly incorporated No significant effect Urumqi Sunpie Zhixing Trading Co., Ltd. Newly incorporated No significant effect Foshan Sunpiestore Technology Co., Ltd. Newly incorporated No significant effect Zhuhai Sunpiestore Technology Co., Ltd. Newly incorporated No significant effect Ningxia Hongyuan New Energy Co., Ltd. Newly incorporated No significant effect Ningxia Shengyao New Energy Co., Ltd. Newly incorporated No significant effect Lingwu Shangyuan New Energy Co., Ltd. Newly incorporated No significant effect Xiamen Dili Hongxin Equity Investment Partnership (Limited Partnership) Newly incorporated No significant effect Xi'an Shengbo Sunpie Technology Co., Ltd. Newly incorporated No significant effect Xinxin Bandaoti Technology Co., Ltd. Acquisition No significant effect Jiangsu Mingjing Bandaoti Technology Co., Ltd. Acquisition No significant effect Jiangsu Lixin Bandaoti Technology Co., Ltd. Acquisition No significant effect Xuzhou Xinjing Bandaoti Technology Co., Ltd. Acquisition No significant effect Jiangsu Huasheng Bandaoti Materials Co., Ltd. Acquisition No significant effect Hong Kong NExcel Electronic Technology Co., Ltd. Acquisition No significant effect Singapore NExcel Electronic Technology Pte. Acquisition No significant effect Xuzhou Jingrui Bandaoti Equipment Technology Co., Ltd. Acquisition No significant effect Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 48 Meixin (Xuzhou) Silicon Material Technology Co., Ltd. Acquisition No significant effect Suzhou Huaxin Environmental Technology Co., Ltd. Acquisition No significant effect Inner Mongolia TCLPhotoelectric Technology Co., Ltd. Acquisition No significant effect TCLFinancial Technology (Shenzhen) Co., Ltd. Acquisition No significant effect Techigh Circuit Technology (Huizhou) Co., Ltd. Acquisition No significant effect Techigh Circuit Technology (Zhuhai) Co., Ltd. Acquisition No significant effect Tairui (Hong Kong) Limited Acquisition No significant effect Yixing Huanxing New Energy Co., Ltd. Transferred No significant effect Tianjin Binhai Huanneng New Energy Co., Ltd. Transferred No significant effect Dushan Anju Photovoltaic Technology Co., Ltd. Transferred No significant effect Shangyi Shengxin New Energy Development Co., Ltd. Transferred No significant effect Gengma Huanxing New Energy Co., Ltd. Transferred No significant effect Guyuan Shengju New Energy Co., Ltd. Transferred No significant effect Zhangjiakou Shengyuan New Energy Co., Ltd. Transferred No significant effect Qinhuangdao Tianhui Solar Energy Co., Ltd. Transferred No significant effect Tianjin Zhonghuan Hengda Technology Co., Ltd. Transferred No significant effect Tianjin Yingtuo Computer Control Technology Co., Ltd. Transferred No significant effect Shangyi Shengyao New Energy Development Co., Ltd. Transferred No significant effect Guangdong TCLNew Technology Co., Ltd. Transferred No significant effect Tianjin Huanhai Real Estate Development Co., Ltd. De-registered No significant effect TCLLighting (Wuhan) Co., Ltd. De-registered No significant effect Inner Mongolia Huanneng Resources Development Co., Ltd. De-registered No significant effect Inner Mongolia Zhonghuan Electronic Materials Co., Ltd. De-registered No significant effect Meixin (Xuzhou) Silicon Material Technology Co., Ltd. De-registered No significant effect Inner Mongolia Zhonghuan Energy Development Center (Limited Partnership) De-registered No significant effect Explanation of Principal Subsidiaries and Joint Stock Companies None X. Structured Bodies Controlled by the Company □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 49 XI. Prospects As a high-tech manufacturer with a presence in multiple sectors, TCL accelerates its development by grasping strategic opportunities made available via China's high-quality economic development. With ample strategic resources, enhanced organizational efficiency, and presence in high-growth, high-potential industries, TCL embraces its 42nd year of development at a new historical starting point with a promising future. With a strategic focus on displays and new energy photovoltaics, TCL is building core assets in the global technology industry Following the spin-off of its consumer-end business in 2019 and repositioning as a global technology industry group, the Company has built its long-term competitive advantage through a focus on the core elements and critical growth drivers within the display and technology industries, in a combination of endogenous growth and epitaxial mergers and acquisitions. As one of the leading players in the global display sector, the Company has seized industry growth opportunities by continuously refining its technology, and expanding its product portfolio across a full spectrum of sizes. With these efforts, the Company has established a global competitive edge. Concurrently, the Company is actively expanding into the new energy photovoltaic industry through the acquisition of TZE, aiming to establish a new growth pathway for the technology industry in the next decade. Since 2021, TZE has unlocked growth potential and accelerated business development through institutional reform, optimizing capital structure and enhancing organizational vitality. With both TCLCSOT and TZE flourishing, the Company has entered a new phase driven by two business engines, establishing a foundation for long-term profitability that transcends industry cycles, enabling it to unlock long-term growth opportunities even amidst macroeconomic fluctuations. Effectively implementing major strategic initiatives to achieve the goals of 2024's strategic planning Building on the successes of the 2023 strategic plan, the Company's overall efforts this year will maintain the momentum of continuous improvement and ambitious growth through a key focus on solidifying our foundation and overcoming challenges to achieve breakthroughs. The Company will implement a business strategy guided by global leadership, prioritizing the enhancement of its Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 50 competitiveness, and driving high-quality development. By meticulously executing key tasks, the Company will ensure the successful realization of its strategic goals. Standing on the solid foundation forged over 42 years, TCL aims to become a global leader. It will pool its efforts, being guided by science and technology and driven by innovation, to continue to ramp up, catch up, and achieve high-quality development and future-proof its success. XII. Communications with the Investment Community such as Research, Inquiries, and Interviews Applicable □ Not applicable Time of reception Time Location Time Manner of communication Type of communication party Communication party Primary focus of discussion and materials provided Index to main information communicated March 31, 2023 Futian Shangri-La Hotel, Shenzhen Onsite + Video conferencing Institution EFunds, China Southern Fund, Harvest Fund, Dacheng Fund, and others Performance and operations of TCL TECH. for 2022 Log Sheet No.2023-001 on Investor Relations Activities dated March 31, 2023 disclosed by the Company at on April 4,2023. May 8, 2023 Conference Room of TCL TECH. in Shenzhen Video conferencing Institution EFunds, Aegon-Industrial Fund, Perseverance Asset Management, China Life, Taikang Asset Management, and others Performance and operations of TCL TECH. for Q12023 Log Sheet No.2023-002 on Investor Relations Activities dated May 8, 2023 disclosed by the Company at on May 10,2023. August 30,2023 Conference Room of TCL TECH. in Shenzhen Video conferencing Institution Perseverance Asset Management, E Funds, China Southern Fund, CIBFund, Dacheng Fund, Loyal Valley Capital, and others 2023 interim performance and operations of TCL TECH. Log Sheet No.2023-003 on Investor Relations Activities dated August 30, 2023 disclosed by the Company at on September 1,2023. October 30,2023 Conference Room of TCL TECH. in Shenzhen Video conferencing Institution Perseverance Asset Management, Foresight Fund, EFunds, Huaxia Fund, Loyal Valley Capital, and others Performance and operations of TCL TECH. for Q32023 Log Sheet No.2023-004 on Investor Relations Activities dated October 30,2023 disclosed by the Company at on October 31,2023. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 51 January - December 2023 The Company's office Investor hotline (telephone) Individuals, institutions, etc. Individuals, institutions, etc.Contents and public information, etc., disclosed by the Company - January - December 2023 The Company's office irm.cninfo.com.cn Individuals, institutions, etc. Individuals, institutions, etc.Contents and public information, etc., disclosed by the Company irm.cninfo.com.cn Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 52 XIII. Implementation of the "Joint Improvement of Quality and Investment Return" Action Plan Whether the Company has disclosed the "Joint Improvement of Quality and Investment Returns" Action Plan. Yes □ No In line with the national emphasis on enhancing the quality and investment value of listed companies, the Company has developed the "Joint Improvement of Quality and Investment Returns" Action Plan, which is based upon in-depth research on industry trends and careful consideration of our future business trajectory. For a comprehensive overview, please refer to the Announcement on "Implementing the 'Joint Improvement of Quality and Investment Returns' Action Plan" disclosed on February 28,2024. Recognizing the unwavering support of our investors, the Company remains committed to its "investor-centric" approach, ensuring compliant and prudent operations while safeguarding investor interests. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 53 Part IVCorporate Governance I. General information of Corporate Governance Since listed, in accordance with the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies, Rules Governing the Listing of Shares on Shenzhen Stock Exchange and the Self-regulatory Guidelines of Shenzhen Stock Exchange for Listed Companies No.1 - Standardized Operation of Listed Companies on the Main Board and other relevant laws and regulations, the Company has continued to improved its governance structure and further standardized its operations to comply with the requirements of related laws and regulations. During the Reporting Period, the Company pushed ahead with its corporate governance work in many aspects. At present, the Company has established an organizational structure in line with the Company's business scale and operation and management, reasonably set up departments and posts, scientifically plan responsibilities and duties and build an internal control system that enables employees to performs their duties, assumes their responsibilities, work and supervise each other. In strict accordance with the provisions and requirements of the Company Law, the Securities Law, the Articles of Associations, the Rules of Procedure for General Meeting of Shareholders, and other laws, regulations and rules, the Company standardizes the procedures for the convening, participation and voting of the general meeting, combines in-person and online voting, provides convenience for all shareholders to exercise their rights, and ensure all shareholders, especially small and mid-size shareholders to fully exercise their rights; the board of director sets up four dedicated committees: audit committee, nomination committee and remuneration and appraisal committee to provide suggestions to the board of directors and ensure the board meetings and decision-making in a professional and efficient manner. The board of supervisors perform their duties diligently and conscientiously by attending general meetings, observing board meetings, regularly inspecting the Company's legal operations and financial status, and issuing supervisory board opinions, to effectively supervises the company's major matters, related transactions, financial status, and the performance of directors and executives, safeguarding the legitimate rights and interests of the company and its shareholders. The supervisors investigate issues at various sites, take the initiative to put forward management suggestions, which effectively improve the internal governance of the Company. The Company has continuously improved its information disclosure management and investor relations management through innovative management system. By providing regular specialized training based on the latest regulatory rules, the Company promptly informs directors, supervisors and senior management of supervisory Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 54 focuses, to strengthen self-discipline among the management team, and fulfill their duties with diligence. The Company effectively safeguards the interests of all shareholders, particularly minority shareholders, and strengthens the management's self-discipline capacity, make them diligently perform their duties, and effectively safeguards the interests of all shareholders, especially small and medium-sized shareholders. The Company has successively launched employee stock incentive plans with the participation of middle and senior managers and excellent employees, further improving corporate performance and continuous improvement of its value. The Company is devoted to public charitable undertakings and actively participates in social public charitable donations. Thanks to these measures, the Company takes a lead in corporate governance in the industry. Currently, there is no difference between the actual status of the Company's corporate governance structure and the standard documents on the corporate governance for listed companies published by China Securities Regulatory Commission. The names of the policies are published on . Details on the amendments to the policies in three years before the Reporting Period are as follows: Year of amendment of rules 2020 The Articles of Association of TCLTechnology Group Corporation The Rules of Procedure for the Board of Directors of TCLTechnology Group Corporation The Rules of Procedure for the Supervisory Committee of TCLTechnology Group Corporation The Rules of Procedure for the General Meeting of TCLTechnology Group Corporation The Rules Governing the Guarantees Provided for External Parties of TCLTechnology Group Corporation The Internal Control Rules for Investment in Derivative Financial Instruments of TCLTechnology Group Corporation The Rules Governing Securities Investment of TCLTechnology Group Corporation The Rules Governing the Use of Raised Funds of TCLTechnology Group Corporation 2021 The Articles of Association of TCLTechnology Group Corporation The Rules of Procedure for the Board of Directors of TCLTechnology Group Corporation 2022 The Articles of Association of TCLTechnology Group Corporation The Rules Governing Information Disclosure of TCLTechnology Group Corporation The Rules Governing the Registration of Information Insiders of TCLTechnology Group CorporationThe following rules are revised during the Reporting Period and relevant rules are disclosed on : of rules Revised The Internal Audit Charter of TCLTechnology Group Corporation (March 2023) The Rules Governing Securities Investment of TCLTechnology Group Corporation (March 2023) The Internal Control Rules for Investment in Derivative Financial Instruments of TCLTechnology Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 55 Group Corporation (March 2023) The Articles of Association of TCLTechnology Group Corporation (May 2023) Risk Management Plan for Financial Transactions Between TCLTechnology Group Financial Co., Ltd. and its Related Parties (August 2023) Is there any material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies □Yes No There is no material incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies. II. The Company's Independence from Its Controlling Shareholder in Business, Personnel, Asset, Organization and Financial Affairs □ Applicable Not Applicable III. Horizontal Competition □ Applicable Not Applicable IV. Annual and Extraordinary General Meetings Convened during the Reporting Period 1. General Meetings Convened during the Reporting Period Meeting Type Investor participation ratio Date of the meeting Date of disclosure Resolutions of the meeting The First Extraordinary General Meeting of 2023 Extraordinary general meeting 15.03% January 9,2023 January 10,2023 All proposals were adopted. Please refer to the Notice on the First Extraordinary General Meeting of 2023 disclosed on on January 10, 2023 (Notice No.: 2023-001) The 2022 Annual General Meeting Annual general meeting 16.42% April 21,2023 April 22,2023 All proposals were adopted. Please refer to the Notice on Resolutions of the 2022 Annual General Meeting disclosed on on April 22,2023 (Notice No.: 2023-029) The Second Extraordinary General Meeting of 2023 Extraordinary general meeting 15.57% June 16,2023 June 17,2023 All proposals were adopted. Please refer to the Notice on the Second Extraordinary General Meeting of 2023 disclosed on on June 17,2023 (Notice No.: 2023-046) The Third Extraordinary General Meeting of 2023 Extraordinary general meeting 16.28% September 15,2023 September 16,2023All proposals were adopted. Please refer to the Notice on the 3rd Extraordinary General Meeting of 2023 disclosed on on September 16, 2023 (Notice No.: 2023-057) 2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting Rights □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 56 V. Performance of Duty by Independent Directors in the Reporting Period 1. General information Note: 1. The Company will hold a general meeting on May 24,2024, to deliberate on matters related to the change of directorship. 2. The increase in the number of shares held by Mr. Li Dongsheng, Mr. Wang Cheng, Mr. Liao Qian, Mr. Zhao Jun, Mr. Mao Name Position Position Status Gender Age Start of tenure End of tenure Number of shares held at the beginning of the year Increase of shares during the reporting period Decrease of shares during the reporting period Other increase/decrease (share) Number of shares held at the end of the year Reason for change Li Dongsheng Chairman Incumbent Male 66 April 19, 2002 May 23, 2024814,061,096 - - 83,097,357897,158,453See the note belowCEOJune 20,2005 Liang Weihua Vice Charmian of the Board Incumbent Male 42 November 13,2020May 23, 2024 - - - - - None Wang Cheng Director Incumbent Male 49 January 9, 2023 May 23, 2024157,661 - - 175,522333,183See the note belowCOOAugust 9,2021 Shen Haoping Director Incumbent Male 61 November 13,2020 May 23, 2024 - - - - - None Senior Vice President November 14,2020Liao Qian Director Incumbent Male 43 September 1,2017 May 23, 2024481,306 - - 807,7691,289,075See the note belowBoard Secretary April 23, 2014 Senior Vice President August 27, 2020 Zhao Jun Director Incumbent Male 51 January 9, 2023 May 23, 2024200,482 - - 742,372942,854See the note belowSenior Vice President December 23,2022Lin Feng Director Incumbent Male 38 April 29,2022 May 23, 2024 - - - - - None Gan Yong Independent director Incumbent Male 76 November 13,2020May 23, 2024 - - - - - None Chen Shiyi Independent director Incumbent Male 67 November 13,2020May 23, 2024 - - - - - None Wan Liangyong Independent director Incumbent Male 44 November 13,2020May 23, 2024 - - - - - None Liu Xunci Independent director Incumbent Male 65 September 1,2017 May 23, 2024 - - - - - None Zheng Tao Chairman of the Supervisory Committee Incumbent Male 53 September 15,2023May 23, 2024 - - - - - None Qiu Haiyan Supervisor Incumbent Female 49 September 1,2014 May 23, 2024 - - - - - None Mao Tianxiang Employee Supervisor Incumbent Male 43 September 1,2017 May 23, 2024229,583 - - 336,992566,575See the note belowLi Jian CFOIncumbent Female 51 August 9,2021 May 23, 2024294,513 - - 674,108968,621See the note belowYan Xiaolin Senior Vice President Incumbent Male 57 September 1,2014 May 23, 20241,303,302 - - 1,038,9632,342,265See the note belowCTODecember 6,2012 He Zhuohui Former Chairman of the Supervisory Committee Former Male 58 September 2,2015September 14,2023 - - - - - None Total -- -- -- -- -- -- 816,727,943 - - 86,873,083903,601,026 -- Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 57 Tianxiang, Ms. Li Jian, and Mr. Yan Xiaolin during the Reporting Period was due to the Company's shares converted from capital reserve, as well as the non-transactional transfer of shares (which are attributable to the participants of the Phase IIIGlobal Partnership Plan and the Employee Shareholding Plan) to their securities accounts. During the reporting period, any resignation of directors and supervisors and dismissal of senior managers during their term of office Yes □ No On August 29,2023, the 22nd meeting of the 7th Supervisory Board of the Company reviewed and passed the "Proposal on Filling the Vacancy of Non-Employee Representative Supervisor of the 7th Supervisory Committee", as Mr. He Zhuohui, Chairman of the Supervisory Committee, submitted a written resignation report to the Supervisory Board due to work changes, requesting to resign from his positions as supervisor and chairman of the Supervisory Committee. He will no longer hold any positions in the Company after his resignation, and his resignation will take effect after the election of new supervisors by the Company's general meeting. On September 15,2023, the Company held its third extraordinary general meeting for the year 2023, reviewed and passed the "Proposal on Filling the Vacancy of Non-Employee Representative Supervisor of the 7th Supervisory Committee". Mr. He Zhuohui resigned as the supervisor of the Company and Chairman of the Supervisory Committee from September 15,2023. Change of Directors, Supervisors and Senior Management Applicable □ Not applicable 2. Positions Professional background, major work experience and current post held in the Company of incumbent director, supervisor and senior manager Mr. Li Dongsheng, the founder of TCL who currently serves as TCLTECH’s Chairman, CEO and non-independent director; Mr. Li has held a number of prestigious positions: Vice Chairman of the China Chamber of International Commerce, First President of the China Manufacturing Innovation Alliance, Honorary President of South China University of Technology Education Development Foundation, Vice President of Alumni Association Name Office title Type of change Date of change Reason for change Wang Cheng Director Elected January 9,2023 Election at a general meeting Zhao Jun Director Elected January 9,2023 Election at a general meeting Zheng Tao Supervisor and Chairman of the Supervisory Committee Elected September 15,2023 Election at a general meeting and appointment by the Supervisory Committee He Zhuohui Former Supervisor and Chairman of the Supervisory Committee Former September 14,2023 Change as a result of personal job arrangement Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 58 South China University of Technology and Visiting Professor in Wuhan University. Mr. Liang Weihua, Vice Chairman of TCLTECH. He was born in March 1981. He holds a master's degree and graduated from the Economics and Management School of Wuhan University with the MBA degree in December 2012. From July 2003 to December 2010, he worked as Assistant Manager of Enterprise Management Department and Administration Department of Huizhou Investment Management Company. From December 2010 to December 2011, he took the post of Executive Deputy General Manager of Huidong County Hongyuan Water Supply Co., Ltd. From December 2011 to June 2016, he served as the General Manager of Huidong County Hongyuan Water Supply Co., Ltd. From June 2016 to June 2021, he took office as Deputy General Manager of Huizhou Investment Holding Co., Ltd. (and also served as a director of the company since August 2016). From March 2017 to March 2022, he has been a director of Huizhou Financing Guarantee Co., Ltd.; from March 2017 to January 2023, he concurrently served as a director of Utrust Inclusive Finance (Huizhou) Financing Guarantee Co., Ltd. From April 2017, he was a director at Truly (Huizhou) Smart Display Limited. Since October 2019, he has been Chairman and General Manager of Huizhou New Materials Industry Park Investment and Construction Co., Ltd. Since November 2020, he has held office as Vice Chairman of TCLTechnology Group Corporation and its consolidated subsidiaries, except where the context otherwise requires. He became Chairman and General Manager of Huizhou Innovative Investment Co., Ltd. in November 2020. Mr. Wang Cheng, COO of TCLTECH. Born in 1974, MBA, EMBA from the University of Texas at Arlington. Since joined TCL in 1997 and successively served in multiple management positions at TCL multimedia overseas business, human resources director and senior vice president of TCLGroup. He once worked as the CEO of TCLElectronics from October 2017 to August 2021, and CEO of TCLIndustrial Holdings from January 2019 to August 2021. From August 2021, he was appointed as COO of TCLTECH. Mr. Shen Haoping, Non-independent Director and Senior Vice President of TCLTECH. Born in 1962, he holds a bachelor's degree. At present, he serves as Vic Chairman and General Manager of TCLZhonghuan Renewable Energy Technology Co., Ltd (“TZE”) and General Manager of Tianjin Zhonghuan Electronics and Information Group Co., Ltd. He was ranked as one of the best CEOs by Forbes China in 2022. Mr. Shen has many years of experience in the design and manufacturing of photovoltaic mono silicon materials. He has presided over several key large-scale R&D projects, and led TZE to win the top industry honors such as China patent excellence award, China innovation-oriented enterprise and Forbes China potential enterprise. Under Mr. Shen’s leadership, TZE has built a world-leading photovoltaic silicon ingot and wafer R&D, manufacturing and sales organization. Mr. Liao Qian, Non-independent Director, Senior Vice President, and Secretary of the Board of Directors of Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 59 TCLTECH. He obtained a Master’s Degree and holds the Occupational Qualification Certificate of the People’s Republic of China for Law. From August 2006 to February 2014, he worked at Guotai Junan International Holdings Co., Ltd. and was engaged in the investment banking business in Hong Kong and Mainland China. Joining TCL Corporation in March 2014, he is in charge of strategic planning, strategic investment and matters in relation to domestic and overseas capital markets. He is also Chairman of Highly Information Industry Co.,Ltd, Tonly Technology Co., Ltd. and CDOT (0334.HK); Vice Chairman of the Board of Tianjin Qiyier Communication & Broadcasting Co., Ltd. and Director of TCLZhonghuan Renewable Energy Technology Co., Ltd (002129.SZ). Mr. Zhao Jun, Non-independent Director and Senior Vice President of TCLTECH. He was born in Xianyang City, Shaanxi Province in November 1972. He graduated from Northwestern Polytechnical University with a master's degree of engineering in polymer materials. After graduation, he served as vice president at Tianma Micro-Electronics Group, and currently serves as Senior Vice President of TCLTech and CEO of TCLCSOT. From April 1997 to January 2018, he worked with Tianma Micro-Electronics Group, successively serving as a pre-process engineer, deputy manager of the quality department, director of manufacturing and quality, deputy general manager, assistant president, and general manager and vice president of the procurement center and quality center. From May 2018 to October 2019, he joined Wuhan China Star Optoelectronics Technology Co., Ltd. as general manager and director. From October 2019 to February 2021, he served as Vice President of TCLTech, Senior Vice President of TCLCSOT, General Manager of TCLCSOTLarge Size Business Group and General Manager of TVBusiness Department. From February 2021 to December 2022, he served as Chief Operating Officer of TCLCSOT and presided over the overall work of the CSOT. Since December 2022, he has served as Senior Vice President of TCL Tech and CEO of TCLCSOT. Mr. Lin Feng, Non-independent Director of TCLTECH. He graduated from Central South University of Economics and Law in 2011 with a master’s degree in management science and engineering. From February 2013 to May 2016, he served as project director and deputy director of the Industrial Investment Department of Hubei Science & Technology Investment Group Co., Ltd.; from May 2016 to May 2018, he served as deputy general manager of Wuhan Optics Valley Industrial Investment Co., Ltd.; since May 2018, he has been appointed as general manager of Wuhan Optics Valley Industrial Investment Co., Ltd. Mr. Gan Yong, Independent director of TCLTECH. He is a Professor Senior Engineer, metallurgist and materials scientist and doctoral supervisor. He serves as President of the Chinese Society for Metals (CSM). Mr. Chen Shiyi, Independent director of TCLTECH. He was born of Han ethnicity in Tiantai, Zhejiang in October 1956. He started to work in July 1987. His titles include doctor of science, doctoral supervisor, academician Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 60 of the Chinese Academy of Sciences (CAS) and the World Academy of Sciences (TWAS). Currently, he is president of the Eastern Institute for Advanced Study, a member of the 10th National Committee of the China Association for Science and Technology, vice chairman of the 2nd Council of the China Engineering Education Accreditation Association, vice chairman of the 11th Council of the Chinese Society of Theoretical and Applied Mechanics. Mr. Wan Liangyong, Independent director of TCLTECH. Currently, he is a professor and a doctoral supervisor at the School of Business Administration of South China University of Technology, and director of the Accounting Development Research Center. He is also a council member of the Accounting Society of China (ASC), and independent director of multiple companies. Mr. Liu Xunci, Independent director of TCLTECH. He was born in Longhui County, Hunan Province, and was awarded a master's degree. With the Professorial , he is recognized as a High-level Management Talent in Huizhou City. In September 1976, he became an educated urban young man working in the countryside after graduation from high school. In 1983, he started to work upon graduation. He was an associate professor, professor, and teaching supervisor. He is now a member in the teaching supervisory panel. Mr. Zheng Tao, Chairman of the Supervisory Committee of TCLTECH. Currently serving as the Chairman of the Board and the Supervisor of Huizhou Investment Development Co., Ltd. From September 2011 to September 2017, served as the General Manager of Huizhou Golden Leaf Comprehensive Trade Development Co., Ltd.; from September 2017 to June 2023, held the positions of Chairman and General Manager of Huizhou Golden Leaf Comprehensive Trade Development Limited Liability Company; since July 2022, concurrently serving as a Director of Huizhou Industrial Investment Development Fund Co., Ltd.; and since June 2023, has been the Chairman (Legal Representative) and Director of Huizhou Investment Development Co., Ltd. Ms. Qiu Haiyan, Supervisor of TCLTECH. Born in December 1975, She obtained her Bachelor's Degree from the Central Radio & TVUniversity in 2011. From July 1995 to March 1998, she served as a finance officer in Huizhou Zongli Real Estate Company; from March 1998 to July 2002, she served as a finance officer at Huizhou Trust Investment Company; from July 2002 till now, she serves as accountant, deputy manager and manager of the Finance Department in Huizhou Investment Holding Co., Ltd.; from August 2008 to October 2023, she served as director of Huizhou Investment Holding and Asset Management Co., Ltd.; from June 2009 to February 2013, she concurrently served as supervisor at Huizhou Fairway Investment and Construction Co., Ltd.; from March 2014 to March 2022, she concurrently served as an employee director of Huizhou Investment Development Co., Ltd.; since April 2014, she has concurrently served as a Supervisor of the Fifth, Sixth, and Seventh Supervisory Committees of the Company; and from July 2022 to October 2023, she has concurrently served as a director of Huizhou Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 61 Industrial Investment Development Master Fund Co., Ltd.; since July 2023, she has been the CFO at Huizhou Investment and Development Co., Ltd. Mr. Mao Tianxiang, Employee Supervisor of TCLTECH. Mr. Mao is also Assistant President and Head of the Audit and Supervision Department of TCLTech. He was born in January 1980 and graduated with a bachelor degree in July 2003. From July 2003 to June 2005, he served as Secretary at China Telecom Guangxi Guilin Company; from July 2005 to November 2007, he served as Supervisor of PR and Communications in the Strategic OEMBusiness Division and Officer in the President’s Office in the Company; since September 2014, he has worked in TCLTech Group and was Acting General Manager of the Electronic Devices Business Department of Techne Group, General Manager of TCLResource Investment, Chief Auditor of TCLCSOT, etc. Since 2019, he has successively been a Supervisor of Tianjin Qiyier Communication & Broadcasting Co., Ltd. the Chairman of the Supervisory Committee of Highly Information Industry Co., Ltd., and the Chief Supervisor of TCLFinancial Co., Ltd. Since October 2020, he has been Chairman of the Supervisory Committee of TCLZhonghuan Renewable Energy Technology Co., Ltd (002129.SZ); since November 2020, he has been Chairman of the Supervisory Committee of Tianjin Printronics Circuit Corporation (002134.SZ); since December 2020, he has been Assistant President, Head of the Audit and Supervision Department of TCLTech Group. Ms. Li Jian, CFO of TCLTECH. Born in 1972, she has an MBA from MIT. Joined TCL in 2004, successively serving as the capital director of TCLMultimedia Technology Holding Co., Ltd., the deputy general manager and general manager of TCLGroup Finance Co., Ltd., and now serves as the chairman of TCLTechnology Group Finance Co., Ltd. From August 2021, she is appointed as CFO of TCLTECH. Mr. Yan Xiaolin, CTO and Senior Vice President of TCLTECH. Also serves as Dean of the Wuhan TCL Industrial Technology Research Institute, Ltd.; Director of TCLCSOT, and Chief Scientist of TCLCSOT; Chairman of Guangdong Juhua Printed Display Technology Co., Ltd., Chairman of TCLMicrochip Technology (Guangdong) Co., Ltd., Chairman of Xiamen Extremely PQDisplay Technology Co., Ltd., Chairman of the IEC Technical Committee on Electronic Display Devices, Vice Chairman and President of Asia of the Organic Printing Electronics Society, and Fellow of the Society for Information Display (SID). Positions held at the shareholding entity Applicable □ Not applicable Name Name of shareholding entity Office title at the shareholding entity Start of tenure End of tenure Any pay received from the shareholding entity Li Dongsheng Ningbo Jiutian Liancheng Representative August 2014 Incumbent No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 62 Equity Investment Partnership (Limited Partnership) appointed by the executive partner Lin Feng Wuhan Optics Valley Industrial Investment Co., Ltd.Chairman and general manager May 2018 Incumbent Yes Zheng Tao Huizhou Investment Holding Co., Ltd. Chairman July 2023 Incumbent No Huizhou Investment Development Co., Ltd. Chairman June 2023 Incumbent Yes Qiu Haiyan Huizhou Investment Holding Co., Ltd. Workers' Director February 2014 Incumbent Yes Notes to positions held at the shareholding entity Not applicable Positions held at other entities Applicable □ Not applicable Name Name of other entities Office title at other entities Start of tenure End of tenure Pay received from other entities Li Dongsheng TCLIndustrial Holdings Co., Ltd. Chairman September 2018 Incumbent Yes Tencent Holdings Limited Independent and non-executive director April 2004 Incumbent Yes Liang Weihua Huizhou New Material Industrial Park Investment and Construction Co., Ltd Chairman and general manager October 2019 Incumbent No Huizhou Innovation Investment Co., Ltd Chairman and general manager November 2020 Incumbent No Huizhou Guoyou Capital Investment Group Co., Ltd Deputy General Manager June 2021 Incumbent Yes Wang Cheng TCLMicrochip Technology (Guangdong) Co., Ltd. Director May 2021 Incumbent No Liao Qian Tianjin Qiyier Communication & Broadcasting Co., Ltd. Vice Charmian of the Board June 2019 Incumbent No Lin Feng Hubei Xiaomi Changjiang Industrial Investment Fund Management Co., Ltd. Supervisor October 2017 Incumbent No Wuhan Optical Valley Fiberhome Investment Fund Management Co., Ltd. Director August 2018 Incumbent No Wuhan Weineng Battery Assets Co., Ltd. Director August 2021 Incumbent No Gan Yong The Chinese Society for Metals President May 2017 Incumbent Yes Chen Shiyi Eastern Institute for Advanced Study President August 2022 Incumbent Yes Wan Liangyong URTRUSTInsurance Co., Ltd. Independent director February 2020 Incumbent Yes Guangdong Goworld Co., Ltd Independent director October 2021 Incumbent Yes Zheng Tao Huizhou Guoyou Asset Management Co., Ltd. Chairman June 2023 Incumbent No Mao Tianxiang Tianjin Qiyier Communication & Broadcasting Co., Ltd. Supervisor June 2019 Incumbent No Li Jian Bank of Shanghai Co., Ltd. Director January 2022 Incumbent No Yan Xiaolin TCLMicrochip Technology (Guangdong) Co., Ltd. Chairman May 2021 Incumbent No Notes to positions held at other entities Other major jobs or concurrently held jobs and resume Punishments imposed in recent three years by the securities regulator on the incumbent directors, supervisors and senior Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 63 management as well as those who left in the Reporting Period: Applicable □ Not applicable For details, please refer to the relevant announcements disclosed by the Company on the designated information disclosure media on October 29,2022 and January 20,2023. 3. Remuneration of Directors, Supervisors and Senior Management Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior management: (I) Decision-making procedure The allowances for directors and supervisors of the Company were reviewed and approved by the Company at the second extraordinary general meeting in 2008 and the fourth extraordinary general meeting in 2011. The remuneration for senior executives is subject to the Company's remuneration rules. (II) Determination basis and actual payment 1. Remuneration or allowance criteria for directors The remuneration of executive directors: As the Company pays remuneration to executive directors, it shall not pay additional allowances to them. The remuneration is determined as per the Company's remuneration management rules. The allowances of non-executive directors: RMB160,000/year (tax inclusive): The allowances of independent non-executive directors: The allowance for each independent non-executive director is RMB160,000/year (tax inclusive), and the allowance for the convener of the Audit Committee is RMB200,000/year (tax inclusive). The Company shall bear the travel expenses arising from the independent directors attending the Company's board and general meetings, as well as other expenses arising from non-executive directors and independent directors' exercising their functions and powers as per the Company's Articles of Association. 2. Remuneration or allowance criteria for supervisors The allowance for the Chairman of the Supervisory Committee is RMB160,000/year (tax inclusive); The allowance for the shareholder supervisor is RMB100,000/year (tax inclusive); And as the Company pays remuneration to the employee supervisor, it shall not pay additional allowances to him/her. The Company shall bear the travel expense arising from the shareholder supervisors attending the Company's Supervisory Committee meetings, general meetings and board meetings (as a non-voting delegate), as well as other expenses arising from his/her exercising his/her functions and powers as per the Company's Articles of Association. 3. Remuneration criteria for senior management The remuneration of senior management is determined as per the Company's Articles of Association and remuneration Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 64 management rules. Remuneration of directors, supervisors and senior management for the Reporting Period Unit: RMB'0,000 Name Position Gender Age Position Status Total before-tax remuneration from the Company Remuneration from any related party or not Li Dongsheng Chairman, CEOMale 66 Incumbent 1,241.97 Yes Liang Weihua Vice Charmian of the Board Male 42 Incumbent 0 Yes Wang Cheng Director, COOMale 49 Incumbent 970.24 No Zhao Jun Director, Senior Vice President Male 51 Incumbent 915.53 No Shen Haoping Director, Senior Vice President Male 61 Incumbent Note No Liao Qian Director, Board Secretary and Senior Vice President Male 43 Incumbent 908.33 No Lin Feng Director Male 38 Incumbent 0 Yes Gan Yong Independent director Male 76 Incumbent 0 No Chen Shiyi Independent director Male 67 Incumbent 30.13 No Wan Liangyong Independent director Male 44 Incumbent 20.00 No Liu Xunci Independent director Male 65 Incumbent 16.00 No Zheng Tao Chairman of the Supervisory Committee Male 53 Incumbent 4.00 Yes Qiu Haiyan Supervisor Female 49 Incumbent 10.00 Yes Mao Tianxiang Employee Supervisor Male 43 Incumbent 227.32 No Li Jian CFOFemale 51 Incumbent 854.69 No Yan Xiaolin Senior Vice President, CTOMale 57 Incumbent 895.17 No He Zhuohui Former Chairman of the Supervisory Committee Male 58 Former 12.00 Yes Total -- -- -- -- 6,105.38 Note: 1. The above amounts include fixed salaries, allowances, and performance bonuses received from the Company by the directors, supervisors, and senior executives of the Company during their terms of office. 2. As at the end of the Reporting Period, non-executive director Mr. Liang Weihua and independent director Mr. Gan Yong had not received their respective allowances of RMB501.3 thousand (before tax); the compensation for Mr. Chen Shiyi, an independent director listed above, includes a portion that was not received in previous years and was distributed in this Reporting Period; non-executive director Mr. Lin Feng gave up the allowance; Director Shen Haoping received a compensation from TZE. The specific data are subject to the announcements of TZE. 3. In 2023, the Company took out liability insurances for all its directors, supervisors, and senior executives, with a total premium of RMB421.8 thousand per year. The participation of the directors, supervisors, and senior executives in the Company's employee stock ownership plan is detailed in the relevant announcements issued by the Company. Other Information □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 65 VI. Performance of Duty by Directors in the Reporting Period 1. Board of Directors During the Reporting Period Meeting Date of the meeting Date of disclosure Resolutions of the meeting The 28th meeting of the 7th Board of Directors January 19,2023 January 20, 2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 28th Meeting of the 7th Board of Directors disclosed on on January 20,2023 (Notice No.: 2023-004) The 29th meeting of the 7th Board of Directors March 30, 2023 March 31, 2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 29th Meeting of the 7th Board of Directors disclosed on on March 31,2023 (Notice No.: 2023-011) The 30th meeting of the 7th Board of Directors April 27, 2023 April 28, 2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 30th Meeting of the 7th Board of Directors disclosed on on April 28,2023 (Notice No.: 2023-032) The 31st meeting of the 7th Board of Directors May 15, 2023 May 17, 2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 31st Meeting of the 7th Board of Directors disclosed on on May 17,2023 (Notice No.: 2023-035) The 32nd meeting of the 7th Board of Directors May 31, 2023 June 1,2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 32nd Meeting of the 7th Board of Directors disclosed on on June 1,2023 (Notice No.: 2023-039) The 33rd meeting of the 7th Board of Directors August 29, 2023 August 30, 2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 33rd Meeting of the 7th Board of Directors disclosed on on August 30,2023 (Notice No.: 2023-051) The 34th meeting of the 7th Board of Directors September 28,2023 September 29,2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 34th Meeting of the 7th Board of Directors disclosed on on September 29,2023 (Notice No.: 2023-059) The 35th meeting of the 7th Board of Directors October 27,2023 - Passed the Proposal on the Text of the Company's Third Quarter 2023 Report. The 36th meeting of the 7th Board of Directors November 28,2023 November 29,2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 36th Meeting of the 7th Board of Directors disclosed on on November 29,2023 (Notice No.: 2023-066) The 37th meeting of the 7th Board of December 27,2023 December 28,2023 All proposals were adopted. Please refer to the Notice on Resolutions adopted at the 37th Meeting of the 7th Board of Directors disclosed on on December 28,2023 (Notice No.: 2023-070) Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 66 2. Attendance of Independent Directors at Board Meetings and General Meetings Attendance of directors at board meetings and general meetings Director Total number of board meetings the director eligible to attend Board meetings attended on site Board meetings attended by way of telecommunication Board meetings attended through a proxy Board meetings the director failed to attend The director failed to attend two consecutive board meetings or not General meetings attended Li Dongsheng 1019 - - No 1Liang Weihua 1028 - - No 3Wang Cheng 1028 - - No -Shen Haoping 1019 - - No -Liao Qian 1028 - - No 1Zhao Jun 1019 - - No -Lin Feng 1028 - - No 3Gan Yong 1019 - - No -Chen Shiyi 10 - No -Wan Liangyong 1019 - - No 2Liu Xunci 1028 - - No 4Explanation for absence from the Board meetings in person for two consecutive times: None 3. Objections Raised by Directors on Matters of the Company Whether directors raised objections on matters of the Company □Yes No No such cases in the Reporting Period. 4. Other information about the Performance of Duty by Directors Whether directors adopted the proposals of the Company Yes □ No Explanation for the proposal adopted by directors or not During the reporting period, the directors of the Company diligently performed their duties and obligations in accordance with the provisions of the Company Law, the Securities Law, the Listing Rules of Shenzhen Stock Exchange, the Articles of Association, the Rules of Procedure of the Board of Directors and other laws, regulations and rules, and put forward valuable professional opinions on the internal control and daily operation decision-making of the Company, which effectively improved the standard operation and scientific decision-making of the Company. The independent directors of the Company performed their duties independently and impartially in strict accordance with the Measures for the Administration of Independent Directors of Listed Companies and relevant laws and regulations, and issued independent and impartial opinions on major matters such as the Company's repurchase proposal, annual profit distribution, capital reserve transferred into share capital and annual daily affiliated transaction forecast, effectively safeguarded the legitimate rights and interests of investors, especially small and medium-sized investors. Directors Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 67 VII. Performance of Duties by Dedicated Committees During the Reporting Period Name Members Meetings convenedDate of the meeting Meeting agenda Important opinions and proposals raised Other duties performed Objection matters Audit Committee Wan Liangyong, Chen Shiyi, Wang Cheng 4 February 16,2023 1.2022 Audit Plan for Financial Statements of TCLTechnology Group Corporation; 2.2022 Internal Control Plan of TCLTechnology Group Corporation. The audit committee carried out its work in strict accordance with the Company Law, the regulatory rules of the CSRC, the Articles of Association and the Rules of Procedure of the Board of Directors. Upon thorough communication and discussion, all proposals were unanimously adopted - None March 30, 2023 1. Proposal on the 2022 Annual Financial Report of the Company; 2. Proposal on the Summary Report of the Audit Committee under the Board Regarding the 2022 Annual Audit Carried out by Da Hua Certified Public Accountants (Special General Partnership); 3. Proposal on Renewing the Engagement of the Accounting Firm. - None August 29,2023 1. Text of the Company's 2023 Interim Report and Its Summary - None October 27,2023 1. Text of the Company's Third Quarter 2023 - None Remuneration and Appraisal Committee Gan Yong, Wan Liangyong, Liu Xunci, Wang Cheng 2 March 30, 2023 1. Proposal on the Remuneration of the Directors, Supervisors, and Senior Executives in 2022 All proposals were adopted upon deliberation. - None May 31, 2023 1. Proposal on the TCL TECH.2021-2023 Employee Stock Ownership Plan (Phase III) (Draft); 2. Proposal on the TCL TECH.2021-2023 Employee Stock Ownership Plan (Phase III) and the Management Measures. All proposals were adopted upon deliberation. - None Strategy Committee Li Dongsheng, Liang Weihua, Wang Cheng, Liao Qian, Shen Haoping, 1 March 30,2023 1. Proposal on the 2022 Environmental, Social and Governance Report All proposals were adopted upon deliberation. - None Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 68 Zhao Jun, Chen Shiyi VIII. Performance of Duty by the Supervisory Committee Indicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period. □Yes No The Supervisory Committee raised no objections in the Reporting Period. IX. Employees 1. Number, Functions and Educational Backgrounds of Employees Number of in-services of the Company as the parent 379 Number of in-services of the Company of major subsidiaries 74,838 Total number of in-services of the Company at the end of period 75,217 Total number of paid employees in the Reporting Period 75,217 Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions 762 Functions Function Employees Production 51,686 Sales 1,974 Technical 11,313 Financial 706 Administrative 469 Management 2,141 Others 6,928 Total 75,217 Educational backgrounds Educational background Employees PhD 243 Master 3,788 Bachelor's degree 14,393 Junior college and others 4,097 Total 22,521Note : The "educational backgrounds" section excludes overseas employees and front-line operators. 2. Employee Remuneration Policy The Company implements the remuneration management on a basis of the principle of "job-determined responsibilities and salary, and pay for performance" Fixed income is determined based on position assessment, variable income is determined based on performance appraisal and a remuneration distribution mechanism oriented by position and performance is established inside the Company. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 69 3. Employee Training Plans On September 10,2000, the Training Department of TCLHeadquarters changed to TCLTraining Institute. The Institute was officially established. On August 16,2005, TCLTraining Institute changed its name to TCLLeadership Development Institute, which focused on training of management talent and development of leadership. In 2015, the institute was upgraded to TCLUniversity. In 2021, TCLUniversity was incorporated into the Group Organization Department and renamed the Learning and Development Group, focusing on business application and building talent pipeline for the organization. In 2023, to strengthen the accumulation of management experience and support strategic development, TCLUniversity was re-established with a professional operation mechanism, positioned at carrying forward corporate culture, accumulating the experience and empowering talents, so as to contribute to the Company's continued business success. In 2023, the Company continuously optimized and upgraded the "Elite" development program, to build a talent pool of general managers and directors with strategic thinking and comprehensive operating capabilities. In order to facilitate the transformation and upgrade of the supply chain, the Company established the "Supply Chain Elite" initiative, to train supply chain experts with both business acumen and the ability to solve problems across diverse functional areas. In support of strategic implementation, the Company also conducted three specialized training and frontline exercises. In resource development, the Company places great emphasis on building a training resource system in support of talent development in all enterprises under the Group. Industry executives, outstanding management representatives, and business backbone personnel actively participated in course development, contributing a wealth of internal TCL experience and case studies. TCLUniversity will continue to build a more comprehensive training system, develop a program with the characteristics of TCL, and build a management and professional talent pool that meets the strategic requirements of the Company. TCLUniversity is committed to increasing the talent pool (i.e.1:2 managers: talents), both quantitatively and qualitatively, and gradually transforming the talent structure from a pyramid shape to a spindle. 4. Labor Outsourcing □ Applicable Not Applicable X. Profit Distributions to Shareholders (in the Form of Cash and/or Stock)and Share Capital Converted from Capital Reserve Formation, implementation or adjustment of profit distribution policy, especially cash dividend policy, in the Reporting Period Applicable □ Not applicable For details, see the Shareholder Dividend Reward Plan for the Next Three Years (2023-2025) disclosed by the Company on March 31, 2023. Special explanation of cash dividend policy Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 70 In compliance with the Company's Articles of Association and resolution of general meeting Yes Specific and clear dividend standard and ratio Yes Complete decision-making procedure and mechanism Yes Independent directors faithfully performed their duties and played their due roles Yes Companies that do not distribute cash dividends shall disclose the specific reasons and the measures they intend to take to enhance investor returns in the next step: Not applicable Non-controlling interests were able to fully express their opinions and desires and their legal rights and interests were fully protected Yes In case of adjusting or changing the cash dividend policy, the conditions and procedures involved were in compliance with applicable regulations and were transparent Not applicable During the Reporting Period, the Company made profits and the parent company's profits that were eligible for profit distribution for shareholders were positive, but no cash dividend distribution plan was put forward. □ Applicable Not Applicable Final Dividend Plan and Share Capital Converted from Capital Reserve for the Reporting Period Applicable □ Not applicable Bonus issue from profit (share/10 shares) 0Cash dividend/10 shares (RMB) (tax inclusive) 0.8Bonus issue from capital reserves (share/10 shares) 0Share base (share) 18,779,080,767Cash dividends (RMB) (tax inclusive) 1,502,326,461.36Cash dividends in other forms (e.g. share repurchase) (RMB) 247,096,745.21 Total cash dividends (including those in other forms) (RMB) 1,749,423,206.57Distributable profits (RMB) 17,871,649,164 Total cash dividends (including those in other forms) as a percentage of total profits to be distributed (%) 100%Cash dividend plan Based on the Company's capital share as at April 28,2024, i.e.18,779,080,767 shares eligible to the profit distribution(in case the Company repurchases treasury shares upon equity distribution, that proportion will not be entitled to distribution), shareholders will receive a cash dividend of RMB0.8 for every 10 shares held (tax included). Details of profit distribution or capital reserve fund transfer plan In connection with the actual operations, the Company proposed a profit distribution plan that for every 10 shares held on April 28,2024, shareholders will receive a cash dividend of RMB0.8 (tax included) based on the capital shares 18,779,080,767 to be eligible for profit distribution, (in case the Company repurchases treasury shares upon equity distribution, that proportion will not be entitled to distribution) with a total distributed profit of RMB1,502,326,461.36 and the remaining undistributed profit carried forward for distribution in future years. Where any changes occur, before the implementation of the dividend plan, to the total share capital of the Company due to any convertible bonds-to-stock programs, share repurchases, exercises of equity incentives, new share issues in refinancing, etc., the dividend will be adjusted according to the principle of "adjusting the total distribution amount under the same distribution ratio", subject to the actual distribution amount. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 71 XI. Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for Employees Applicable □ Not applicable 1. Equity Incentives Equity Incentives Granted to Directors and Senior Management □ Applicable Not Applicable Appraisal of and Incentive for Senior Management During the Reporting Period, the Company conducted performance appraisal and competency and quality assessment on the managers, The Contract To Success (CTS) system was used for performance appraisal. In respect to the team led by each manager, the key factors of performance appraisal included phased strategic goals and operating goals of the current period (such as profits, cash flow, products and service quality) and key projects; the comprehensive results of each accomplished goal were considered as the main basis for motivating managers. In that way, corporate strategies were converted into internal management activities through the process of goal setting, implementation and accomplishment to direct all systems of the Company and serve the purpose of enhancing the overall efficiency of the Company. The management assessment consisted of four dimensions, included manager performance, competence, experience and quality (potential, personality and aspiration/values). An annual examination report for managers was generated through annual performance assessment, manager review and inspection, talent appraisal development center,360-degree behavior interviews or online assessment, supported by key experience, personality or management style assessment, which served as the main basis for appraising, appointing and dismissing leaders. 2. Implementation of Employee Stock Ownership Plan Applicable □ Not applicable All the valid employee stock ownership plans during the Reporting Period Name Scope of employees Number of employees Total number of shares held （share） Changes Proportion to total share capital of listed companies Funding source for implementing the plan 2021-2023 Employee Stock Ownership Plan (Phase I) The Company's middle and senior management and outstanding key staff Less than 3,60048,332,573 Not applicable 0.26% Special incentive funds provisioned by the Company 2021-2023 Employee Stock Ownership Plan (Phase II) The Company's middle and senior management and outstanding key staff Less than 3,600117,132,801 Not applicable 0.62% Special incentive funds provisioned by the Company 2021-2023 Employee Stock The Company's middle and senior Less than 3,60064,992,964Not applicable 0.35% Employees' legitimate income, Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 72 Ownership Plan (Phase III) management and outstanding key staff performance-based bonus or other distribution permitted by laws and regulations Shareholdings of Directors, Supervisors and Senior Management under the Employee Stock Ownership Plan during the Reporting Period Name Position Beginning amount in the Reporting Period Ending amount in the Reporting Period Proportion to total share capital of listed companiesLi Dongsheng Chairman, CEO About 27.07 million shares About 18.74 million shares 0.10%Wang Cheng Director, COO Zhao Jun Director, Senior Vice President Liao Qian Director, Board Secretary and Senior Vice President Yan Xiaolin Senior Vice President, CTO Li Jian CFO Mao Tianxiang Employee Supervisor Changes of asset management institutions during the Reporting Period □ Applicable Not Applicable Changes of equity caused by the holder's disposal share during the Reporting Period □ Applicable Not Applicable For details on change in shareholdings from non-trading transfer by directors, supervisors and senior managers under the ESOP, please see the "Change of Shareholdings of Directors, Supervisors and Senior Managers" in the report. Exercise of shareholder rights during the Reporting Period □ Applicable Not Applicable Other relevant information and explanations of the Employee Stock Ownership Plan during the Reporting Period. □ Applicable Not Applicable Changes of the members of Employee Stock Ownership Plan Management Committee □ Applicable Not Applicable Financial impact of Employee Stock Ownership Plan on the Company during the Reporting Period and related accounting treatment Applicable □ Not applicable The financial, accounting treatment and taxation involved in the Company's shareholding plan shall be implemented according to laws and regulations and normative documents on financial systems, accounting standards, taxation systems, etc. The holder of the shareholding plan shall pay the personal income tax generated due to the shareholding plan according to law, and can choose to sell the corresponding amount of shares to the shareholding plan to cover personal income tax. The remaining shares will be attributed to Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 73 individuals. Termination of Employee Stock Ownership Plan during the Reporting Period Applicable □ Not applicable Based on the agreements under the Phase IIIGlobal Partner Program (Draft), the shares attributable to employees have been fully vested, sold and transferred to employees at the end of the reporting period. In March 2024, shares attributed to the Company in the scheme of the current period were sold. 3. Other Employee Incentives □ Applicable Not Applicable XII. Construction and Implementation of Internal Control System During the Reporting Period 1. Construction and Implementation of Internal Control System In accordance with the provisions of internal control standard system, the Company establishes, improves and effectively implements internal controls, reasonably ensures the legal compliance of business management, asset security, authenticity and integrity of financial statements and relevant information, improves business efficiency and effectiveness, and promotes the realization of development strategy. 2. Material Internal Control Weaknesses Identified in the Reporting Period □Yes No XIII. Management and Control of Subsidiaries by the Company During the Reporting Period □ Applicable Not Applicable XIV. Internal Control Evaluation Report or Independent Auditor's Report on Internal Controls 1. Internal Control Evaluation Report Disclosure date of the internal control self-evaluation report April 30,2024 Index to the disclosed internal control self-evaluation report Evaluated entities combined assets as a percentage of consolidated total assets 98%Evaluated entities combined revenue as a percentage of consolidated revenue 98%Identification standards for internal control weaknesses Category Weaknesses in internal controls over financial reporting Weaknesses in internal controls not related to financial reporting Nature standard Material weaknesses: (1) an invalid control environment; (2) fraud of Material weaknesses: (1) material violations of the country's laws or Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 74 directors, supervisors and senior management; (3) any material misstatement of financial reporting of the current period which is identified by the registered accountants but which the Company failed to report; and (4) invalid internal control supervision by the Audit Committee and the internal audit organ. Serious weaknesses: A single weakness or a group of weaknesses which are less serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious regulations in the Company's operating activities; (2) any material decision-making error that is caused by an irrational decision-making procedure and causes material property loss to the Company; (3) a massive loss of the key managerial or technical personnel; and (4) frequent negative news coverage that causes great concern for the regulatory administration and a material long-lasting impact on the Company's brand and reputation. Serious weaknesses: A single weakness or a group of weaknesses which are less serious than a material weakness but could still cause deviation from the control objectives Common weaknesses: Other internal control weaknesses that are neither material nor serious Quantitative standard Material weaknesses: misstatements ≥5% of profit before tax; Serious weaknesses: 3% of profit before tax ≤misstatements <5% of profit before tax; Common weaknesses: misstatements <3% of profit before tax Not applicable Number of material weaknesses in internal controls over financial reporting NoneNumber of material weaknesses in internal controls not related to financial reporting NoneNumber of serious weaknesses in internal controls over financial reporting NoneNumber of serious weaknesses in internal controls not related to financial reporting None2. Independent Auditor's Report on Internal Controls Applicable □ Not applicable Opinion paragraph in the independent auditor's report on internal controls In our opinion, TCLTechnology Group Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31,2023, based on the Basic Rules on Enterprise Internal Controls and other applicable rules. Independent auditor's report on internal controls disclosed or not The Internal Control Audit Report of TCLTechnology Group Corporation disclosed at dated April 30,2024 Disclosure date April 30,2024 Index to such report disclosed Type of the auditor's opinion Unmodified opinions Material weaknesses in internal controls not related to financial reporting No Indicate whether any modified opinion is expressed in the independent auditor's report on the Company's internal controls. □Yes No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 75 Indicate whether the independent auditor's report on the Company's internal controls is consistent with the internal control self-evaluation report issued by the Company's Board. Yes □ No XV. Ad-hoc self-inspection and rectification for corporate governance of listed companies Not applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 76 Part VEnvironmental and Social Responsibility I. Major Environmental Issues Whether the listed company and its subsidiaries are major polluters announced by the environmental protection department Yes □ No Industrial Discharge Standards, and Details on Pollutant Discharge from Production and Operation Name of the Company or subsidiary Key pollutants and types of specific pollutants Major pollutants Way of discharge Number of discharge outletsDistribution of discharge outlets Discharge intensity Governing discharge standards Total discharge Approved total discharge Excessive discharge Suzhou China Star Optoelectronics Technology Co., Ltd. Waste water pollutants COD Continuously discharged to CSOT Environmental Technology Wastewater Treatment Plant 2 Within Suzhou CSOT Sewage Treatment Plant 86.92mg/L 500mg/L 106.37t 129.6t None 10.67mg/L 100mg/L 22.73t 449.82t None Ammonia nitrogen 11.15mg/L 6mg/L 3.34t 22.68t None Suzhou China Star Optoelectronics Display Co., Ltd. Waste water pollutants COD Continuously discharged to Suzhou Industrial Park First Sewage Treatment Plant 1 South gate of the plant area 15.539mg/L 500mg/L 2.7694t 96.335t None Ammonia nitrogen 10.316mg/L 45mg/L 0.0349t 5.65t None TCLChina Star Optoelectronics Technology Co., Ltd. Waste water pollutants COD Discharged to Guangming Sewage Plant 1 North of the plant area 153mg/L 260mg/L 105.694t 2071.12t None COD Discharge to Maozhou River 1 Artificial wetland 15mg/L 30mg/L 52.108t 174.89t None Waste gas pollutants Nitrogen oxides Discharged to the atmosphere in an organized manner 50 Plant roof 1.5mg/Nm3120mg/Nm35.57t None None Shenzhen China Star Optoelectronics Display Technology Co., Ltd. Waste water pollutants COD Discharged to Guangming Sewage Plant 2 Southeast corner of the plant 42mg/L 110mg/L 252.725t 1077.8t None Waste gas pollutants Nitrogen oxides Discharged to the atmosphere in an organized manner 10 Plant roof 4.4mg/Nm3120mg/Nm321.31t 38.86t None Wuhan China Star Optoelectronics Technology Co., Ltd. (t3) Waste water pollutants COD Continuous discharge 1 t3 Northwest corner of the plant 8.52mg/L 400mg/L 88.62t 315.78t None Ammonia nitrogen 10.165mg/L 30mg/L 0.83t 31.579t None Waste gas pollutants Nitrogen oxides Continuous discharge 2 t3 Northwest 89.5 mg/m3150 mg/m32.43t 10.17t None Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 77 Name of the Company or subsidiary Key pollutants and types of specific pollutants Major pollutants Way of discharge Number of discharge outletsDistribution of discharge outlets Discharge intensity Governing discharge standards Total discharge Approved total discharge Excessive discharge corner of the plant Wuhan China Star Optoelectronics Technology Co., Ltd. (t5) Waste water pollutants COD Continuous discharge 1 t5 Northeastern corner of the plant 8.3233mg/L 400mg/L 12.31t 524.56t None Ammonia nitrogen 1 0.2767mg/L 30mg/L 0.41t 52.456t None Wuhan China Star Optoelectronics Display Technology Co., Ltd. (t4) Waste water pollutants COD Continuous discharge 1 t4 Northwest corner of the plant 8.52mg/L 400mg/L 353.566125t 570.8t None Ammonia nitrogen 10.165mg/L 30mg/L 1.31t 57.1t None Waste gas pollutants Nitrogen oxides Continuous discharge 2 t4 Northwest corner of the plant Not inspected 150 mg/m3 / 2.021t None TianJin Zhonghuan Advanced Material&Technology Co., Ltd. Waste water pollutants Chemical oxygen requirement Organized 1 General discharge outlet As per emission standard DB12/356- 2018 Comprehensive Sewage Discharge Standard 160.84t 411.02t None Ammonia nitrogen Organized 1 General discharge outlet DB12/356- 2018 Comprehensive Sewage Discharge Standard 6.53t 22.17t None Tianjin Huan'Ou Material&Technology Co., Ltd. Waste water pollutants Chemical oxygen requirement Organized 1 General discharge outlet As per emission standard DB12/356- 2018 Comprehensive Sewage Discharge Standard 3.47t 42.19t None Ammonia nitrogen Organized 1 General discharge outlet 0.03t 2.14t None Total nitrogen Organized 1 General discharge outlet 1.779t 2.7t None Tianjin Huanzhi New Energy Technology Co., Ltd. Waste water pollutants Chemical oxygen requirement Organized 1 General discharge outlet As per emission standard DB12/599- 2015 Discharge Standard of Pollutants for Municipal Wastewater Treatment Plant 9.05t 20.08t None Total phosphorus Organized 1 General discharge outlet 0.02t 0.45t None Ammonia nitrogen Organized 1 General discharge outlet 0.09t 1.43t None Total nitrogen Organized 1 General discharge outlet 0.70t 8.78t None Tianjin Huanou New Energy Waste water pollutants Chemical oxygen Organized 1 General discharge As per emission GB 39731- 2020 12.68t 147.21t None Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 78 Name of the Company or subsidiary Key pollutants and types of specific pollutants Major pollutants Way of discharge Number of discharge outletsDistribution of discharge outlets Discharge intensity Governing discharge standards Total discharge Approved total discharge Excessive discharge Technology Co., Ltd requirement outlet standard Discharge Standard of Water Pollutants for Electronic Industry DB12/356- 2018 Comprehensive Sewage Discharge Standard Total phosphorus Organized 1 General discharge outlet 0.04t 2.19t None Ammonia nitrogen Organized 1 General discharge outlet 0.08t 15.11t None Total nitrogen Organized 1 General discharge outlet 4.75t 15.92t None Inner Mongolia Zhonghuan Solar Material Co., Ltd. Waste gas pollutants Particulate matter, nitrogen oxides, VOCs, fluoride Not organizing MultipleRooftops of plants and production workshops As per emission standard Integrated Emission Standard of Air Pollutants GB16297- 1996 Not exceeding Standard None Waste water pollutants COD, ammonia nitrogen, other specific pollutants (total phosphorus, pH, suspended solids, BOD5, fluoride) Organized 1 General discharge outlet As per emission standard GB8978- 1996 Comprehensive Sewage Discharge Standard Not exceeding Standard None Zhonghuan Advanced Bandaoti Technology Co., Ltd. Waste water pollutants Total phosphorus Discharged to collective industrial sewage treatment plant 2 DW001DW003 As per emission standard GB/T 31962 Water Quality Standard for Sewage Discharged into Urban Sewers GB8978- 1996 Comprehensive Sewage Discharge Standard 0.14t 1.39t None Total nitrogen Discharged to collective industrial sewage treatment plant 2 DW001DW003 9.86t 151.48t None COD Discharged to collective industrial sewage treatment plant 2 DW001DW003 62.56t 1815.79t None Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 79 Name of the Company or subsidiary Key pollutants and types of specific pollutants Major pollutants Way of discharge Number of discharge outletsDistribution of discharge outlets Discharge intensity Governing discharge standards Total discharge Approved total discharge Excessive discharge Ammonia nitrogen Discharged to collective industrial sewage treatment plant 2 DW001DW003 0.11t 134.69t None Huansheng Solar (Jiangsu) Co., Ltd. Waste water pollutants Chemical oxygen requirement Organized 1 General discharge outlet Discharged according to the standard GB 30484- 2013 Discharge Standard for Battery Industry Pollutants 11.43t 44.41t None Flouride Organized 1 General discharge outlet 1.24t 1.64t None Ammonia nitrogen Organized 1 General discharge outlet 0.002t 0.06t None Total nitrogen Organized 1 General discharge outlet 0.15t 0.2t None Total phosphorus Organized 1 General discharge outlet 0.004t 0.006t None Wuxi Zhonghuan Applied Materials Co., Ltd. Waste water pollutants Chemical oxygen requirement Discharged to urban sewage treatment plant 1 General discharge outlet Discharged according to the standard GB39731- 2020 Discharge Standard of Water Pollutants for Electronic Industry 52.73t 72.72t None Ammonia nitrogen Discharged to urban sewage treatment plant 1 General discharge outlet 0.19t 1.1t None Total nitrogen Discharged to urban sewage treatment plant 1 General discharge outlet 4.32t 6.91t None Total phosphorus Discharged to urban sewage treatment plant 1 General discharge outlet 0.36t 0.55t None Disposing of pollutants During the Reporting Period, the pollutants generated by the Company and its subsidiaries were discharged in accordance with the requirements of the pollutant discharge permit after treated by corresponding pollutant treatment facilities. All kinds of pollutant treatment facilities were in normal operation, and there were no incidents of notification or punishment received from government environmental supervision agencies. The discharge and disposal of waste water, waste gas, solid waste, and plant boundary noise generated in the operating process complied with the laws and regulations of the country and the place where the operation was located. The Company's waste water 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 with oil separation and septic treatment; industrial waste water enters different treatment systems according to its characteristics, and is discharged after physical, chemical and biochemical treatment. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 80 The air pollutants produced by the Company are mainly process waste gas in the production process. For different types of waste gases, the Company has constructed corresponding waste gas treatment systems, such as a waste gas stripping system, acidic waste gas treatment system, alkaline waste gas treatment system, organic waste gas treatment system, waste gas treatment system for waste water treatment station, etc. For the collection of waste gases through pipelines to the corresponding waste gas 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 the Company 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 recycled and disposed of by a resource recycling manufacturer after being classified in the plant area; domestic garbage is handed over by qualified units to a domestic garbage landfill for sanitary landfill. All of the above disposals have been carried out according to laws and regulations. The factory noises generated by the Company come from the mechanical noises of production and power equipment, including refrigerators, cooling towers, air compressors, fans, various 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. The monitoring results show that the Company's factory noise emissions can stably reach the standards. Environmental Self-Monitoring Program The Company implements on-line monitoring of various pollutants based on the environmental impact assessment approval and pollution discharge permit, clarifies monitoring indicators, execution standards and their limits, conducts quarterly testing of various pollution factors such as waste water/waste gas/underground water/plant boundary noise, and develops a self-monitoring plan based on the Company's own situation, as well as regularly employing qualified third party to test various pollution factors with the reports kept on file. In addition to self-monitoring, the local environmental protection department also infrequently supervises the environmental testing to ensure that emissions meet standards. Emergency Response Plan for Environmental Incidents The Company regularly carries out environmental risk assessment and emergency material survey, prepares an Emergency Response Plan for Environmental Incidents and submits it to the local environmental protection department for recordation after being reviewed by experts. The Company regularly delivers employee training on emergency plans and carries out emergency drills for environmental emergencies to ensure timely and accurate response to environmental pollution emergencies. The Plan shall be subject to changes in line with the actual situation and changes of various companies under the Group in a timely manner, and shall be prepared again in case of major changes or after every 3 years. Relevant information on investments in environmental governance and protection and payments of environmental protection taxes The Company pays the environmental protection taxes every quarter by the Financial Department, and the investments in environmental protection are calculated on an annual basis. Measures taken to reduce its carbon emissions and their effects during the Reporting Period Applicable □ Not applicable To address the challenge of global climate change and actively respond to the national strategic requirements of "emission peak" Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 81 and "carbon neutrality", the Company officially issued a Carbon Neutrality White Paper on the GPC 2023 on July 6,2023, and unveiled the TCLGreen, an action plan for carbon neutrality, making a "3050" pledge to achieve emission peak by 2030 and carbon neutrality by 2050. To deliver this commitment, TCLTECH. established an ad-hoc climate change response team, developed well-defined carbon reduction pathway and greenhouse gas management strategies, and continuously increased the use of renewable energy and the overall energy efficiency. TCLTechnology Group managed its overall greenhouse gas emissions from five aspects: supervision of carbon accounting, carbon reduction management, carbon asset pooling, carbon trading services and carbon finance support. In addition, the Company also carried out the ISO 14064 Greenhouse Gas Accounting and Verification through third-party agencies, completed 2023 carbon verification and developed relevant improvement measures, as well as conducted annual self-evaluation to ensure the targets achieved. In terms of energy management, a sound energy management system has been established for the main subsidiaries of TCLTECH., with multiple measures to proactively tap into the technology alternatives to reduce energy consumption. The Company also passed the ISO50001 certification. The units of TCLCSOT have implemented measures to reduce energy consumptions by process-based energy savings, energy conservation management and parameters optimization. In 2023, the Company carried out 638 energy conservation projects, saving 499 million kWh, and reducing carbon emission of 28.46 tons. Besides, TZE took an active stance to develop energy conservation technologies to enhance its capabilities in saving energy and water in a full scale. In 2023, the Company carried out 57 water conservation projects, saving 65 million kWh and saving 11.0759 million m3 of water. Companies under TCLTECH. continue to develop and utilize renewable energy. TCLCSOT maximized its rollout of the rooftop PV. At the end of the Reporting Period, TCLCSOT has self-built capacity of 123.79MW generating a total of 100,486.33Mwh, and purchased 42.45 million kWh green power certificate in 2023. TZE has set "100% renewable electricity" as its commitment to sustainable development and a long-term goal for production and operation electricity consumption. In 2023, it achieved 100% coverage of distributed photovoltaic power generation systems on rooftops of its plants. It plans to build photovoltaic power stations with a total capacity of over 4GW by 2027 to directly supply its plants in Inner Mongolia and Ningxia, and to build a green manufacturing system featuring high efficiency, cleanness, low carbon, and circulation, and to set a benchmark of zero-carbon plants worldwide. TCLTechnology prioritizes the R&D of clean technologies and the manufacturing of environmentally friendly, low-carbon products. These initiatives are considered a critical pillar for achieving sustainable development and a key strategic focus for the Company's overall operations. The Company continuously updates green product design and production technologies, and promotes energy transformation. Ten display panels manufactured by TCLCSOT have been awarded the title of "Green Design Product" selected on the Ministry of Industry and Information Technology's "Green Manufacturing List", and TCLCSOTShenzhen has been recognized as a "National Demonstration Enterprise for Green Design of Industrial Products". TZE's G12 and shingle solar panels have both been Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 82 certified for their carbon footprint by authoritative institutions, offering customers products that are both high-performing and low-carbon. Based on life cycle assessments, TZE's annual photovoltaic product shipments contribute significantly to a clean energy future. These products are estimated to generate over 4 trillion kWh of clean electricity throughout their life cycle, which translates to a reduction of approximately 2 billion tons of carbon dioxide equivalent emissions, which aligns with the Company's commitment to "zero-carbon energy" and drives carbon neutrality across the value chain ecosystem. In December 2023, TCL attended the Blue Zone Finance Event of the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) and delivered a keynote speech. TCL shared its corporate strategies in response to climate change and its practical experiences in achieving sustainable development. The Company joined hands with global enterprises to engage in climate action, exploring green financial solutions to address climate change and biodiversity crises in a collaborative manner. Other environment information that should be publicly disclosed None II. Social Responsibility TCLTECH. actively responds to national calls and focuses on four major areas (i.e. science and technology, education, culture, and targeted relief), continuously strengthens investment in public charitable undertakings, integrates public charitable resources, and contributes to promoting social equity, consolidating and expanding achievements of poverty alleviation and, and achieving rural revitalization and common prosperity. Leveraging its industrial strengths and resources, the Company has launched a series of initiatives, including "TCLPhotovoltaic Low-Carbon Campus," "TCLSmart Classroom," "A.I. Homecoming," and "Little Music+." Upholding the development concept of "dual-carbon", the TCLCharity Foundation has partnered with TZE to spearhead the "TCLPhotovoltaic Low-Carbon Campus" program since 2022. In 2023, the foundation implemented a multifaceted photovoltaic initiative to promote sustainable development and education in Inner Mongolia, including donating photovoltaic rooftop power generation systems and their associated 25-year electricity generation income to nine schools in Hohhot and Linger County. A pilot project was also established at Hohhot No.1 Middle School through a social value investment approach. Building on this foundation of rural and urban deployments, the project expands its reach to encompass diverse scenarios. It further aims to foster photovoltaic environmental education and establish a systematic new model for photovoltaic-assisted education, and advance the deep integration of science and technology with public welfare undertakings. To facilitate the integration between technologies and public wellness and empower education equality with technologies, TCL Charity Foundation establishes TCLSmart Classrooms in urban and rural schools, including smart instructional equipment and software, to build multimedia smart classrooms, tailored and simultaneous classrooms between "urban and rural areas". In 2023, TCL Smart Classrooms successfully implemented at several schools, including Shenzhen Nanshan No.2 Foreign Language School (Group) Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 83 Hyde School, Chiwan School, and Guangxi Guilin Longsheng Experiment Middle School, benefiting over 5,800 students. In 2019, TCLCharity Foundation cooperated with the TCLIndustrial Research Institute to launch the "A.I. Home" project, developed and designed the "Eagle Storytelling Machine", and delivered the "Eagle Story Club" campaign in rural schools, bringing together children from rural schools, to improve their wellbeing and help them with growing up. In 2023, the Foundation distributed over 300 customized "Eagle Storytelling Machines" to left-behind children and migrant children; the sixth batches of pilot schools were selected for the "Eagle Story Club" project. A total of 34 schools from 16 provinces including Xinjiang, Tibet, Guizhou, were selected as the "Eagle Story Club" pilot schools, and a total of 173 story boxes, accumulating the number to 293, were distributed, benefiting more than 26,000 students. To address the shortage of high-quality music education resources for children, TCLCharity Foundation and the Education Foundation of the Beijing Central Conservatory of Music launched the "Little Music++" project, developed and designed the "Little Snow Music Machine", and carried out "Little Snow Music Class" in the rural schools to introduce both Chinese and international famous music works and appreciation to children who lack music resources and motivate kids to develop positive and optimistic characters. In 2023, the sixth batches of pilot schools were selected for the "Little Snow Music Class" project. A total of 35 schools from 15 provinces including Ningxia, Guangxi, Henan, were selected as the "Little Snow Music Class" pilot schools, and a total of 179 music boxes were distributed, benefiting more than 9,000 students. Demonstrating a steadfast commitment to the educational development, the TCLCharity Foundation implemented a novel, pyramid-structured university donation program at the South China University of Technology in 2022, which ensures long-term, sustainable support for institutions of higher learning. Expanding its reach in 2023, the foundation established partnerships with six prestigious Chinese universities. Through these collaborations, the TCLCharity Foundation provided funding for nine TCLScience and Technology Innovation Fund projects, awarded five TCLYoung Scholar fellowships, and supported 198 students through the Huameng Scholarship program. III. Consolidating and Extending the Achievements of Poverty Alleviation and Pushing Forward Rural Revitalisation To promote the development of rural education, TCLCharity Foundation continues to implement the "TCLHope Project Candlelight Award Plan" to recruit and encourage rural teachers to stay in their jobs and contribute to rural education. The project solicited excellent teachers across the country. Each of the winners received a personal award worth RMB9,500, including a cash reward and 7-day offline "Candlelight Class" training. The 9th "TCLHope Project Candlelight Prize Program", held in 2023, recognized 400 excellent rural teachers who were selected from counties that serve as the key counties in the National Rural Revitalization, the targeted support counties of the Communist Youth League Central Committee, and the pairing support areas of Shenzhen. Since its implementation in 2013, this project has been successfully implemented for nine sessions, with project applicants Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 84 from 523 counties in 23 provinces across the country. More than 3400 outstanding rural teachers from 3000 schools have won the awards. A total investment of over RMB46 million has been made in this project. In addition, TCLCharity Foundation continued to launch projects such as targeted assistance and community charity. It supported, consolidated and expanded the poverty alleviation achievements, built harmonious urban and rural communities, and contributed to social equity and harmonious development. With a focus on rural communities, the Company supported rural development through financial donations. It has carried out donation activities in targeted poverty alleviation villages in Guizhou, Ningxia, and Huizhou. The Company promoted rural revitalization through cultural co-creation, and developed the "TCL Chen Xiangbo Aesthetic Education Space" in No.325 village, Xunwu County, Jiangxi Province, to carry out various cultural and artistic activities in the immersive space so as to improve the cultural and artistic literacy of local residents. Also, rural public charitable projects were implemented, such as "Rural Elderly Photography Activities" and "TCLVolunteer Public Education Trip to Tibetan Areas of Qinghai Keba", to push the progress of cultural and ethical development in rural areas from multiple dimensions. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 85 Part VISignificant Events I. Fulfillment of Commitments 1. Commitments of the Company's Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Overdue at the Period-End Applicable □ Not applicable Commitment Promisor Type of commitment Details of commitment Date of commitment making Term of commitment Fulfillment Commitments made in refinancing Li Dongsheng About horizontal competition, related-party transaction and capital occupation 1) I shall avoid horizontal competition between the companies, enterprises or other business organizations that I own, control, control with others, have significant influence on and the Company with its subsidiaries; and 2) I shall reduce and control transactions of related parties between the companies, enterprises or other business organizations that I own, control, control with others, or have significant influence on and the Company with its subsidiaries. August 30, 2013 During the tenure of the Company's director, supervisor or senior management In continuous performance Citic Securities Company Limited, Nuode Asset Management Co., Ltd., Guotai Junan Securities Co., Ltd., Everbright Securities Company Limited, UBSAG, Caitong Fund Management Co., Ltd., GFSecurities Co., Ltd., Haitong Securities Co., Ltd., Perseverance Asset Management Partnership (Limited Partnership) - About restriction on sales of shares The shares of TCLTECH subscribed shall not be transferred within 6 months from the date of listing. December 5, 2022 6 months from the date of listing of the new shares (the issue date of restricted shares is June 26, 2023) Fulfilled Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 86 Gaoyi Xiaofeng No.2 Zhixin Fund, China Life Asset Management Co., Ltd. - China Life Asset Management - Bank of China - China Life Asset - PIPE2020 Insurance Asset Management Product, China Southern Asset Management Co., Ltd., Shen Ruijin, Dacheng Fund Management Co., Ltd., Golden Eagle Asset Management Co., Ltd., Huaxia Life Insurance Co., Ltd., Taikang Asset Management Co., Ltd. - Taikang Life Insurance Co., Ltd. - Unit Link - Industry Configuration, Guang Dong Zheng Yuan Private Fund Investment Management Co., Ltd. - Zhengyuan Saturday Private Equity Investment Fund, Bank of Communications Schroder Fund Management Co., Ltd., Foresight Fund Co., Ltd. Commitments made in selling major assets The largest shareholder of the listed company and person acting in concert (Mr. Li Dongsheng and Jiutian Liancheng) About avoiding horizontal competition 1. Before and after this transaction, there was no horizontal competition between me/this partnership and the enterprises controlled by me/this partnership and TCLGroup and the main businesses of its affiliated enterprises. 2. After this transaction, I/this partnership will take active measures to avoid any business or activity that competes or may constitute competition with the main business of TCLGroup and its affiliated enterprises, and will urge the enterprises controlled by me/this partnership to avoid any business or activity that competes or may constitute competition with the main business of TCLGroup and its affiliated enterprises. 3. If I/this partnership and the enterprises controlled by me/this partnership obtain the opportunity to engage in new business, which December 7, 2018 During the period of being the largest shareholder of the Company In continuous performance Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 87 constitutes or may constitute horizontal competition with the main business of TCLGroup and its affiliated enterprises. I/this partnership will, when it is possible, try my/our best to make this business opportunity available to TCLGroup or its affiliated enterprises in the first place based on reasonable and fair terms and conditions. 4. If the business of mine/this partnership and the enterprises controlled by me/this partnership coincides or may constitute horizontal competition with TCLGroup's business due to my/this partnership's investment demand or TCLGroup's business development, I/this partnership and the enterprises controlled by me/this partnership agree to solve the resulting horizontal competition within a specific time limit since as it is determined. 5. During the period of being the largest shareholder of TCLGroup, the aforementioned commitment is unconditional and irrevocable. If I/this partnership violate the aforementioned commitments, I/this partnership will make comprehensive, timely and full joint and several compensation for the losses to TCLGroup caused thereby. The largest shareholder of the listed company and person acting in concert (Mr. Li Dongsheng and Jiutian Liancheng) Commitments on reducing and regulating related party transactions 1. I/this partnership will minimize the related party transactions between me/this partnership and the enterprises controlled by me/this partnership and TCLGroup and its affiliated enterprises. 2. For inevitable or reasonable related party transactions, I/this partnership and the enterprises controlled by me/this partnership and TCLGroup and its affiliated enterprises will conduct them according to fair market December 7, 2018 During the period of being the largest shareholder of the Company In continuous performance Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 88 principles and normal commercial conditions, so as to ensure the fairness of the related party transaction price, and will perform the decision-making procedures for related party transactions according to the law, to ensure that the related party transactions will not be used to illegally transfer TCLGroup's funds or to damage the legitimate rights and interests of TCLGroup and its shareholders. 3. I/this partnership and the enterprises controlled by me/this partnership will not ask TCLGroup and its affiliated enterprises to give more favorable conditions than those that can be offered to an independent third party in any fair market transaction. 4. During the period of being the largest shareholder of TCLGroup, the aforementioned commitment is unconditional and irrevocable. If I/this partnership violate the aforementioned commitments, I/this partnership will make comprehensive, timely and full joint and several compensation for the losses to TCLGroup caused thereby. The largest shareholder of the listed company and person acting in concert (Mr. Li Dongsheng and Jiutian Liancheng) Commitments on maintaining the independence of listed companies After this transaction, I/this partnership will continue to exercise shareholder's rights according to laws, regulations and the Articles of Association of TCLGroup, and maintain the independence of TCL Group in terms of assets, personnel, finance, business and institutions. I/this partnership will ensure: (I) The independence of TCLGroup personnel. I/this partnership promise(s) to maintain personnel independence with TCLGroup. TCLGroup's senior management, including the general manager, deputy general manager, December 7, 2018 During the period of being the largest shareholder of the Company In continuous performance Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 89 chief financial officer, and secretary of the board of directors, shall not hold positions other than directors and supervisors in my/this partnership's subordinate wholly-owned, controlled or other enterprises with actual control (hereinafter referred to as "subordinate enterprises"), and shall not be paid in my/this partnership's subordinate enterprises. The financial personnel of TCLGroup shall not work part-time in my/this partnership's subordinate enterprises. (II) The independence and integrity of TCLGroup's assets. 1. The independence and integrity of TCLGroup's assets. 2. TCLGroup does not have any funds or assets occupied by me/this partnership and my/this partnership's subordinate enterprises. (III) The financial independence of TCLGroup. 1. TCLGroup establishes an independent financial department and an independent financial accounting system. 2. TCLGroup has a standardized and independent financial accounting system. 3. TCLGroup opens an independent bank account and does not share a bank account with me/this partnership.4. The financial personnel of TCL Group shall not work part-time in my/this partnership's subordinate enterprises. 5. TCLGroup can make independent financial decisions, and I/this partnership shall not interfere with the use of TCLGroup's funds. (IV) The institutional independence of TCLCorporation. 1. TCLGroup has an independent and complete organization which can operate independently. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 90 2. TCLGroup's office and premises for production and operations are separated from my subordinate enterprises/this partnership. 3. The Board of Directors, Board of Supervisors and various functional departments of TCLGroup operate independently, and have no subordinate relationship with this partnership's functional departments. (V) The business independence of TCLGroup. 1. I/this partnership promise(s) to maintain the business independence of TCLGroup after this transaction. 2. TCLGroup has the assets, personnel, qualifications and ability to independently carry out business activities, and has the ability to operate independently in the market. If TCLGroup suffers losses due to the violation of commitments under the letter of commitment by me/this partnership or my/this partnership's subordinate enterprises, I/this partnership will bear the corresponding compensation liability according to the law. Fulfilled on time Yes Specific reasons for failing to fulfill commitments on time and plans for next steps Not applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 91 2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still within the forecast period, explain why the forecast has been reached for the Reporting Period. Applicable □ Not applicable Name of asset or project with an earnings forecast Forecast start time Forecast end time Current forecast performance (RMB'0,000)Current actual performance (RMB'0,000)Reasons for not reaching the forecastDate of original forecast disclosure Index to original forecast disclosure Moka International Limited January 1,2021 December 31,202328,76556,756Not applicable December 12,2020 Announcement on the Acquisition of the 100% Equity Interests of Moka International Limited & the Related-Party Transactions (2020-166) Commitments Made by the Company's Shareholders and Counterparties on the Annual Operating Performance of the Report Applicable □ Not applicable According to the Assets Valuation Report for TCLTechnology Group Corp. To Acquire the 100% Equity Interests of Moka International Limited, the net profit (hereinafter referred to as "net profit") of Moka International Limited (hereinafter referred to as "the target company") in the audited consolidated statements in 2021,2022 and 2023 (hereinafter referred to as "performance commitment period") is expected to be not less than RMB224.43 million, RMB246.07 million, and RMB287.65 million respectively.Therefore, TCLIndustries Holdings (HK) Limited (hereinafter referred to as the "Transferor") commits that the cumulative net profit of the target company during the performance commitment period is not less than RMB760 million (hereinafter referred to as the "committed net profit"). TCLTechnology Investments Limited (hereinafter referred to as the "Transferee", a wholly-owned subsidiary of the Company) shall, within 4 months after the end of the performance commitment period, hire an accounting firm approved by the Transferor to conduct a special audit on the achievement of the target company's committed net profit throughout the performance commitment period, and issue a special audit report. After auditing, if the net profit actually achieved by the target company during the performance commitment period fails to reach the committed net profit, the Transferee shall notify the Transferor in writing within 10 working days after the issue of the special audit report agreed herein. The Transferor shall compensate the Transferee in cash within 3 months after receiving the written notice from the Transferee. The amount of compensation payable by the Transferor for the current period = (committed net profit - achieved net profit) ÷ committed net profit × the price of this equity transfer. Both parties further confirm that the accumulative amount compensated by the Transferor during the performance commitment period shall not exceed the total amount of consideration obtained by the Transferor in this equity transfer. After auditing, if the net profit actually achieved by the target company exceeds the committed net profit during the performance commitment period, both parties agree to take 50% of the excess Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 92 amount as the transferor's excess performance reward (the maximum amount of excess performance reward shall not exceed 20% of the equity transfer price), and the Transferee shall pay this excess performance reward to the Transferor in cash within 3 months after the issuance of the special audit report. On April 28,2024, the Company held its 39th meeting of the 7th Board of Directors and approved the "Proposal on the 2021-2023 Performance of Moka International Limited". For more details, please refer to the relevant announcements disclosed on the same day as this annual report. Achievement of Performance Commitment and Its Influence on Goodwill Impairment Tests According to the special audit report issued by Da Hua Certified Public Accountants (Special General Partnership), the target company Moka International Limited realized a net profit of RMB402.42 million, RMB510.99 million and RMB567.56 million in 2021,2022 and 2023 (performance commitment periods), respectively, which exceeded the estimated amount in the Asset Evaluation Report of the TCLTechnology Group Corporation to buy 100% Equity Interests of Moka International Limited. There was no sign of goodwill impairment, so it is not necessary to make provision for goodwill impairment. II. Occupation of the Company, Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes □ Applicable Not Applicable No such cases in the Reporting Period. III. Irregularities in the Provision of Guarantees □ Applicable Not Applicable No such cases in the Reporting Period. IV. Explanations Given by the Board of Directors Regarding the Latest Independent Auditor's "Modified Opinion" on the Financial Statements □ Applicable Not Applicable V. Explanations Given by the Board of Directors, the Supervisory Committee, and Independent Directors (If Any) Regarding the Independent Auditor's "Modified Opinion" on the Financial Statements of the Reporting Period □ Applicable Not Applicable VI. YoYChanges to the Accounting Policies and Estimates or Correction of Material Accounting Errors Applicable □ Not applicable According to the relevant provisions of the Explanatory Announcement on Information Disclosure by Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 93 Companies Offering Securities to the Public No.1 - Non-Recurring Profits and Losses (2023 Revision), any public subsidies that are closely related to the Company's day-to-day operations, comply with national policies, are granted based on established standards, and create a lasting impact on the Company's profit or loss, should be classified as recurring profit or loss. The change did not have any material impact on the Company's financial position and operation results. In accordance with the Interpretation No.15 of the Accounting Standards for Business Enterprises issued by the Ministry of Finance, the Company implemented related requirements and retroactively adjusted relevant items of the financial statements during the comparable periods. Such change in accounting policies has no material impact on the Company's financial position and operating results. VII. YoYChanges to the Scope of the Consolidated Financial Statements Applicable □ Not applicable Compared with 2022,39 subsidiaries (24 newly incorporated and 15 acquired) are newly included in the consolidation scope of 2023; and 18 subsidiaries (12 transferred and 6 de-registered) are excluded from the consolidation scope of 2023. VIII. Engagement and Disengagement of Independent Auditor Current independent auditor: Name of the domestic independent auditor Da Hua Certified Public Accountants (Special General Partnership) The Company's payment to the domestic independent auditor (RMB'0,000) 427.1 How many consecutive years the domestic independent auditor has provided audit services for the Company 16 years Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor's report Jiang Xianmin and Xiong Xin How many consecutive years the certified public accountants have provided audit services for the Company 5 years,2 year Name of the foreign independent auditor (if any) Not applicable The Company's payment to the foreign independent auditor (RMB'0,000) (if any) Not applicable How many consecutive years the foreign independent auditor has provided audit services for the Company (if any) Not applicable Names of the certified public accountants from the foreign independent auditor writing signatures on the auditor's report (if any) Not applicable How many consecutive years the certified public accountants have provided audit services for the Company (if any) Not applicable Indicate whether the independent auditor was changed for the Reporting Period. □Yes No Indicate whether the independent auditor was changed during the Audit Period. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 94 □Yes No Independent auditor, financial advisor or sponsor hired for the audit of internal control: Applicable □ Not applicable During the Reporting Period, the Company hired Da Hua Certified Public Accountants (Special General Partnership) to conduct an internal control audit, with an audit cost of RMB500,000. IX. Delisting Faced After the Disclosure of the Annual Report □ Applicable Not Applicable X. Insolvency and Reorganization □ Applicable Not Applicable No such cases in the Reporting Period. XI. Significant Lawsuits and Arbitrations: □ Applicable Not Applicable No such cases in the Reporting Period. XII. Punishments and Rectifications □ Applicable Not Applicable No significant punishments or rectifications in the Reporting Period. XIII. Credit Quality of the Company as well as its Controlling Shareholder and Actual Controller □ Applicable Not Applicable XIV. Major Related-Party Transactions 1 Continuing Related-Party Transactions □ Applicable Not Applicable During the Reporting Period, the Company's daily related-party transactions is found in the related announcements disclosed on . 2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments □ Applicable Not Applicable During the Reporting Period, there is no related-party transactions regarding purchase or disposal of assets or equity investments. 3. Related-Party Transactions Regarding Joint Investments in Third Parties □ Applicable Not Applicable No related-party transactions regarding significant joint investments in third parties which occurred during the Company's Reporting Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 95 Period. 4. Amounts Due to and from Related Parties Applicable □ Not applicable Indicate whether there were any amounts due to and from related parties for non-operating purposes. Yes □ No Amounts receivable due to related parties Related parties Relationship with the Company Source Capital occupation for non-operating purposes or not Beginning balance (RMB'0,000) Amount of new grants in current period (RMB'0,000) Amount of recovered grants in current period (RMB'0,000) Coupon rate Interest in current period (RMB'0,000) Ending balance (RMB'0,000) TCL Industrial Holdings Co., Ltd. Related corporation Sale of equity investments No 47,040047,040 - - 0The Influence of Amounts Due to Related Parties on the Company's Operating Results and Financial Status The Company sold equity of Chongqing Zhongxin Rongxin to TCLIndustries Holdings Inc. in order to further optimize its business structure and focus resources on the development of its primary high-tech business in line with the public policy guidance and in accordance with the needs of the Company's announced financing projects. According to the agreement signed by both parties, TCL Industries Holdings Inc. shall pay 51% of the equity transfer price to the Company before June 30, 2022. The remaining equity transfer price will be paid before June 30,2023. Refer to the Announcement on the Disposal of Equity Interests in Partnership Enterprise and the Related-Party Transactions disclosed by the Company on dated June 27,2022. 5. Transactions with Related Finance Companies □ Applicable Not Applicable 6. Transactions Between the Financial Company Controlled by the Company and Related Companies Applicable □ Not applicable Deposits: Related parties Relationship with the Company Daily deposit ceiling (RMB0'000) Range of interest Beginning balance (RMB'0,000)Amount incurred in the current period Ending balance (RMB'0,000)Total deposit amount in current period (RMB0'000)Total withdrawal amount in current period (RMB0'000) Subsidiary of TCL Industries Related corporation 250,000.000.8%-1.15% 34,186.21,193,727.71,227,883.630.3Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 96 Holdings Co., Ltd. Loans: Related parties Relationship with the Company Loan limit (RMB'0,000) Range of interest Beginning balance (RMB'0,000)Amount incurred in the current period Ending balance (RMB'0,000)Total loan amount in current period (RMB0'000)Total repayment amount in current period (RMB0'000) Subsidiary of TCL Industries Holdings Co., Ltd. Related corporation 250,000.00 - - - - - Credit or other financial business: Related parties Relationship with the Company Business type Total Ending balance (RMB'0,000) Subsidiary of TCL Industries Holdings Co., Ltd. Related corporation Credit granting (bill discount) The balance of comprehensive credit on any day shall not exceed RMB2.5 billion (including loans, notes discounting, and notes acceptance) 86,998.51Subsidiary of TCL Industries Holdings Co., Ltd. Related corporation Credit granting (bill acceptance) 35,675.187. Other Major Related-Party Transactions Applicable □ Not applicable of announcement Date of interim disclosure Website for disclosure Announcement on External Investments and Related-party Transactions of the Subsidiary - TZE May 17,2023 Announcement on the Related-party Transactions with Shenzhen Jucai Supply Chain Technology Co., Ltd. in 2023 March 31,2023 Announcement on the Expected Daily Related-Party Transactions for 2023 March 31,2023 Announcement on Reducing the Limit of Financial Services Provided by TCLTechnology Group Finance Co., Ltd. to Related Parties and Renewing the Financial Services Agreement for Related-party Transactions March 31,2023 Announcement on the Launch of Accounts Receivable Factoring and the Related-party Transaction March 31,2023 Report on the Execution of Daily Related-Party Transactions in 2022 March 31,2023 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 97 XV. Major Contracts and Execution Thereof 1. Entrustment, Contracting and Leases (1) Entrustment □ Applicable Not Applicable (2) Contracting □ Applicable Not Applicable (3) Leases □ Applicable Not Applicable 2. Major Guarantees Applicable □ Not applicable Unit: RMB'0,000 Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)Obligor Disclosure date of the guarantee line announcement Line of guarantee Actual occurrence date Actual guarantee amount Type of guarantee Collateral (if any) Counterguarantee (if any) Term of guarantee Expired or not Guarantee for related parties or not TCLIndustries Holdings (HK) Limited April 28,2022514,629 - -Joint liability guarantee / Counter guarantee provided by TCL Industrial Holding Co., Ltd. - Yes Yes TCLAir-Conditioner (Zhongshan) Co., Ltd. April 28,202280,991 March 31,20211,969Joint liability guarantee / 78-134 days No Yes TCLKing Electrical Appliances (Huizhou) Co., Ltd. April 28,2022327,138 August 29,20197,332 Joint liability guarantee / 241 days No Yes Tonly Technology Co., Ltd. April 28,202239,496 November 4,2021315 Joint liability guarantee / 311 days No Yes TCLKing Electrical Appliances (Chengdu) Co., Ltd. April 28,202251,653 - - Joint liability guarantee / - Yes - Huizhou TCLMobile Communication Co., Ltd. April 28,2022212,507 - -Joint liability guarantee / - Yes - TCLMobile Communication (HK) Company Limited April 28,202229,225 - - Joint liability guarantee / - Yes - TCLHome Appliances (Hefei) Co., Ltd. April 28,202268,280 - -Joint liability guarantee / - Yes - TCLHome Appliances (Zhongshan) Co., Ltd. April 28,20224,929 - -Joint liability guarantee / - Yes - TCLAir Conditioner (Wuhan) Co., Ltd. April 28,202213,480 - -Joint liability guarantee / - Yes - Zhongshan TCL Refrigeration Equipment April 28,202231,749 - -Joint liability guarantee / - Yes - Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 98 Co., Ltd. Guangdong TCLSmart Heating & Ventilation Equipment Co., Ltd. April 28,20222,522 - - Joint liability guarantee / - Yes - TCLHome Appliances (Huizhou) Co., Ltd. April 28,202210,000 - -Joint liability guarantee / - Yes - TCLAir-Conditioner (Jiujiang) Co., Ltd. April 28,20225,488 - -Joint liability guarantee / - Yes - TCLVery Lighting Technology (Huizhou) Co., Ltd. April 28,20221,034 - - Joint liability guarantee / - Yes - SHIFENDAOJIAOnline Service Co., Ltd. April 28,202277 - -Joint liability guarantee / - Yes - Guangzhou TCLScience and Technology Development Co., Ltd. April 28,202284,700 - - Joint liability guarantee / - Yes - Techigh Circuit Technology (Huizhou) Co., Ltd. April 28,2022499 - - Joint liability guarantee / - Yes - Huizhou Zhongkai TCL Zhirong Technology Microcredit Co., Ltd. May 22,202145,500 - - Joint liability guarantee / With counter- guarantee - Yes - Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. April 22,202335,000 April 28,202023,055.92 Joint liability guarantee Guarantee in proportion to shareholding percentage 8 years No No Huizhou Yunxin Technology Co., Ltd. April 22,202315,000 - - Joint liability guarantee With counter- guarantee - Yes - Qihang Import&Export Limited April 22,20236,000 - - Joint liability guarantee With counter- guarantee - Yes - Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. April 22,202340,000 - - Joint liability guarantee With counter- guarantee - Yes - Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. April 22,2023110,000 March 1,202348,048 Joint liability guarantee With counter- guarantee 58-268 days No No Qihang International Import and Export Co., Ltd. April 22,202350,000 - - Joint liability guarantee / With counter- guarantee - Yes - Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. April 22,202340,000 May 22,202323,320 Joint liability guarantee / Guarantee in proportion to shareholding percentage 6.4 years No No Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. April 22,2023180,000 June 15,2023132,000 Joint liability guarantee / Guarantee in proportion to shareholding percentage 5.5 years No No Total approved line for such guarantees in Reporting Period (A1) 476,000 Total actual amount of such guarantees in Reporting Period (A2) 242,817 Total approved line for such guarantees at the end of the Reporting Period (A3) 1,999,897.00 Total actual balance of such guarantees at end of Reporting Period (A4) 236,040 Guarantees provided by the Company as the parent for its subsidiariesObligor Disclosure date of the guarantee line announcement Line of guarantee Actual occurrence date Actual guarantee amount Type of guarantee Collateral (if any) Counterguarantee (if any) Term of guarantee Expired or not Guarantee for related parties or not TCLMOKA INTERNATIONAL LIMITED April 22,2023176,000 June 12,202317,793 Joint liability guarantee / / 152 days-2.4 years No No TCLTechnology Investments Limited April 22,2023400,000 July 14,2020212,481 Joint liability guarantee / / 1.5 years No No TCLChina Star Optoelectronics Technology Co., Ltd. April 22,20231,580,000 December 22,20221,613,759 Joint liability guarantee / / 112 days-9.0 years No No TCLTechnology Park (Huizhou) Co., Ltd. April 22,202397,000 - - Joint liability guarantee / / - Yes - TCLTechnology Group April 22,202390,000 August 31,202270,000 Joint liability / / 3.7 years No No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 99 (Tianjin) Co., Ltd.* guarantee TCLTechnology Group Finance Co., Ltd. April 22,2023200,000 - - Joint liability guarantee / / - Yes No Beijing Hecheng Nuoxin Technology Co., Ltd. April 22,202310,000 September 2,202210,000 Joint liability guarantee / / 246 days No No Beijing Lingyun Data Technology Co., Ltd. April 22,2023128,000 April 21,202352,497 Joint liability guarantee / / 112-238 days No No Beijing Sunpiestore Technology Co., Ltd. April 22,2023145,000 September 2,2022120,000 Joint liability guarantee / / 246 days No No Guangdong Juhua Printed Display Technology Co., Ltd. April 22,20235,000 - - Joint liability guarantee / / - Yes - Guangzhou China Star Optoelectronics Bandaoti Display Technology Co., Ltd. April 22,20231,750,000 March 7,2022994,615 Joint liability guarantee / / 1 day-6.2 years No No Highly (Tianjin) E-Commerce Co., Ltd. April 22,20235,000 April 21,20233,971 Joint liability guarantee / / 112 days No No Highly (Tianjin) Technology Co., Ltd. April 22,2023115,000 April 21,202396,245 Joint liability guarantee / / 112 days No No Highly Information Industry Co., Ltd. April 22,2023554,000 May 18,2022328,280 Joint liability guarantee / / 19 days-1.5 years No No Huizhou China Star Optoelectronics Technology Co., Ltd. April 22,20231,150,000 March 23,2021511,809 Joint liability guarantee / / 68 days-5.2 years No No Huizhou Moka Technology Development Co., Ltd. April 22,202355,000 - - Joint liability guarantee / / - Yes - Moka Technology (Guangdong) Co., Ltd. April 22,2023700,000 April 21,2023129,463 Joint liability guarantee / / 112 days-5.2 years No No Qingdao Blue Business Consulting Co., Ltd. April 22,20235,000 June 19,2023389 Joint liability guarantee / / 49-237 days No No Shaanxi Titi Electronic Technology Co., Ltd. April 22,202310,000 September 2,202210,000 Joint liability guarantee / / 246 days No No Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. April 22,20231,300,000 April 28,20181,065,799 Joint liability guarantee / / 112 days-5.5 years No No Suzhou China Star Optoelectronics Technology Co., Ltd. April 22,2023100,000 - - Joint liability guarantee / / - Yes - Suzhou China Star Optoelectronics Display Co., Ltd. April 22,2023265,000 August 30,202250,959 Joint liability guarantee / / 8.4 years No No Tianjin Printronics Circuit Corporation April 22,2023100,000 September 9,20226,254 Joint liability guarantee / / 6.7 years No No Tianjin TiTi Yunchuang Technology Co., Ltd. April 22,20235,000 September 2,20225,000 Joint liability guarantee / / 246 days No No Tianjin WanfangNuoxin Technology Co., Ltd. April 22,20235,000 September 2,20225,000 Joint liability guarantee / / 246 days No No Tianjin Xincheng Pilot Technology Co., Ltd. April 22,20235,000 September 2,20225,000 Joint liability guarantee / / 246 days No No China Display Optoelectronics Technology (Huizhou) Co., Ltd. April 22,2023150,000 April 21,202313,160 Joint liability guarantee / / 6-112 days No No Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. April 22,20231,600,000 December 22,2017908,268 Joint liability guarantee / / 12 days-4.2 years No No Wuhan China Star Optoelectronics Technology Co., Ltd. April 22,20231,600,000 June 29,20211,048,026 Joint liability guarantee / / 2 days-6.7 years No No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 100 Chongqing Blue Business Consulting Co., Ltd. April 22,20231,000 - - Joint liability guarantee / / - Yes - China Star Optoelectronics International (HK) Limited April 22,2023100,000 - - Joint liability guarantee / / - Yes - Total approved line for such guarantees in Reporting Period (B1) 12,406,000 Total actual amount of such guarantees in Reporting Period (B2) 3,873,168 Total approved line for such guarantees at the end of the Reporting Period (B3) 12,406,000 Total actual balance of such guarantees at end of Reporting Period (B4) 7,278,769 Guarantees provided between subsidiaries Obligor Disclosure date of the guarantee line announcement Line of guarantee Actual occurrence date Actual guarantee amount Type of guarantee Collateral (if any) Counterguarantee (if any) Term of guarantee Expired or not Guarantee for related parties or not Otog Banner Huanju New Energy Co., Ltd. June 24,201715,276 August 30,201715,276Joint liability guarantee / / 3.7 years No No Huhehaote Huanju New Energy Development Co., Ltd.* November 26,20149,529 December 11,20159,529 Joint liability guarantee / / 287 days No No Huansheng Solar (Jiangsu) Co., Ltd. March 22,202136,000 April 1,202136,000 Joint liability guarantee / / 2 years No No Huansheng New Energy (Jiangsu) Co., Ltd. May 26,2022155,000 September 30, 2022109,834 Joint liability guarantee / / 3.8-7.5 years No No Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. March 22,2021 May 26,2022542,492 April 30,2021423,382Joint liability guarantee / / 4.3-5.5 years No No Ningxia Zhonghuan Solar Material Co., Ltd. January 23,2022748,000 May 30,2022600,000 Joint liability guarantee / / 5.4 years No No Tianjin Huanou New Energy Technology Co., Ltd September 27,2022115,000 September 28,202244,728 Joint liability guarantee / / 5.7 years No No Tianjin Huanzhi New Energy Technology Co., Ltd. January 21,2021 May 26,202259,703 August 2,202138,603 Joint liability guarantee / / 3.8-4.0 years No No Wuxi Zhonghuan Applied Materials Co., Ltd. May 26,2022190,000 June 30,202299,089 Joint liability guarantee / / 5.5 years No No Zhonghuan Energy (Inner Mongolia) Co., Ltd. June 24,201710,120 July 21,201710,120 Joint liability guarantee / / 8.6 years No No Zhonghuan Hong Kong Holding Limited May 26,202250,000 July 15,202250,000 Joint liability guarantee / / 228 days No No Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. April 22,20232,612,500 November 5,20212,351,300 Joint liability guarantee / / 4.4 years No No PANELOPTODISPLAY TECHNOLOGY PRIVATELIMITED April 22,202335,000 April 28,202210,000 Joint liability guarantee / / 3.5 years No No TCLMOKA INTERNATIONAL LIMITED April 22,2023214,500 April 27,202317,746 Joint liability guarantee / / 2.5 years No No Total approved line for such guarantees in Reporting Period (C1) 2,862,000 Total actual amount of such guarantees in Reporting Period (C2) 219,030 Total approved line for such guarantees at the end of the Reporting Period (C3) 4,793,121 Total actual balance of such guarantees at end of Reporting Period (C4) 3,815,607 Total guarantee amount (total of the three kinds of guarantees above)Total guarantee line approved in the Reporting Period (A1+B1+C1) 15,744,000 Total actual guarantee amount in the Reporting Period (A2+B2+C2) 4,335,016 Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) 19,199,018 Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) 11,330,416 Total actual guarantee amount (A4+B4+C4) as % of the Company's net assets 214.10% Of which: Balance of guarantees provided for shareholders, the actual controller and their related parties (D) 9,616 Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) 1,638,911 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 101 Amount by which the total guarantee amount exceeds 50% of the Company's net assets (F) 11,330,151 Total of the three above amounts (D+E+F) 11,330,151 Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees - Guarantees provided in breach of prescribed procedures - Note: (1) The guarantee period in the above table is the occurrence period of the principal debt. The actual guarantee is valid for two or three years from the expiration date of the principal debt, which is subject to the single contract. (2) During the Reporting Period, the Company adjusts the guarantee limit to its controlling subsidiaries based on their demands. The details are outlined as follows: The guarantee limit amounting to RMB 900 million offered to TCLChina Star Optoelectronics Technology Co., Ltd. was transferred to TCLTechnology Group (Tianjin) Co., Limited, another controlling subsidiary. The Company has performed internal review procedures for the above-mentioned guarantee transfers. It's found that they did not violate the legal provisions on listed companies, and complied with the relevant requirements of the Proposal on Providing Guarantees for Subsidiaries in 2023 reviewed and approved at the 2022 Annual General Meeting held on April 21,2023. (3) In the table above, Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd., a subsidiary controlled by the Company, was jointly guaranteed by the Company and its subsidiary TCLChina Star Optoelectronics Technology Co., Ltd. in an external syndicated loan, in which the Company provided certain percentage of guarantee, while TCLChina Star Optoelectronics Technology Co., Ltd. provided full guarantee. (4) As at the end of the Reporting Period, the debt portion under joint guarantee amounted to RMB21.25217 billion. The joint guarantee has been filled in the "Company's Guarantee for Subsidiaries" and "Guarantee Among Subsidiaries", respectively. In the "guarantee among subsidiaries", the guaranteed entity and Huhehaote Huanju New Energy Development Co., Ltd. were provided with the guarantee under joint and several liability by TCLTechnology Group (Tianjin) Co., Ltd. and TCLZhonghuan Renewable Energy Technology Co., Ltd. both of which were subsidiaries. As at the end of the Reporting Period, the debt portion under joint guarantee amounted to RMB95.29 million. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 102 3. Entrusted Cash Asset Management (1) Cash Entrusted for Wealth Management Applicable □ Not applicable Overview of cash entrusted for wealth management during the Reporting Period Unit: RMB'0,000 Type Funding source Amount Undue amount Unrecovered overdue amount Impairment allowance for unrecovered overdue amount of wealth management products Bank's wealth management product Self-funded 1,119,219.00941,269.0000Securities firm's wealth management product Self-funded 392,957.43313,146.2500Trust plan Self-funded 326,836.67246,836.6700Other Self-funded 74,040.0570,640.0500Total 1,913,053.151,571,891.9700High-risk wealth management transactions with a significant single amount liquidity: □ Applicable Not Applicable Situation in which the Company fails to recover its principal for entrusted wealth management products, or other situations that may result in impairment □ Applicable Not Applicable (2) Loan Entrusted for Wealth Management □ Applicable Not Applicable During the Reporting Period, the Company did not have any entrusted loans. 4. Other Major Contracts □ Applicable Not Applicable XVI. Other Significant Events □ Applicable Not Applicable XVII. Significant Events of Subsidiaries □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 103 Part VIIChanges in Shares and Information about Shareholders I. Changes in Shares 1. Changes in shares Unit: Share Before change Increase/decrease in the Reporting Period (+/-) After change Shares Percentage New issues Bonus shares Shares converted from capital reserve Others Subtotal Shares PercentageI. Restricted Shares 3,420,220,96720.03% 00342,022,097 -3,081,703,851 -2,739,681,754680,539,2133.62%1. Shares held by state-owned legal entities 877,192,9815.14% 0087,719,297 -964,912,278 -877,192,98100.00%2. Shares held by other domestic investors 908,951,9565.33% 0090,895,196 -320,533,070 -229,637,874679,314,0823.62%Among which: Shares held by domestic legal entities 187,134,5021.10% 0018,713,450 -205,847,952 -187,134,50200.00%Shares held by domestic individuals 721,817,4544.23% 0072,181,746 -114,685,118 -42,503,372679,314,0823.62%3. Shares held by foreign investors 197,538,1861.15% 0019,753,819 -216,066,874 -196,313,0551,225,1310.007%Among which: Shares held by foreign legal entities 196,783,6251.15% 0019,678,363 -216,461,988 -196,783,62500.00%Shares held by foreign individual 754,5610.004% 0075,456395,114470,5701,225,1310.007%4. Fund, wealth management product, etc. 1,436,537,8448.41% 00143,653,785 -1,580,191,629 -1,436,537,84400.00%II. Non-restricted shares 13,651,670,64079.97% 001,365,167,0633,081,703,8514,446,870,91418,098,541,55496.38%1. RMB-denominated ordinary shares 13,651,670,64079.97% 001,365,167,0633,081,703,8514,446,870,91418,098,541,55496.38%III. Total shares 17,071,891,607100.00% 001,707,189,16001,707,189,16018,779,080,767100.00%Reasons for changes in shares Applicable □ Not applicable 1. On April 26,2023, the Company disclosed the Implementation Announcement on the 2022 Annual Equity Distribution, and after the completion of the capital reserve conversion, the total share capital of the Company increased from 17,071,891,607 shares to 18,779,080,767 shares. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 104 2. On June 19,2023, the Company disclosed the "Suggestive Announcement on Releasing from the Restriction on Non-publicly Offered Shares and Listing for Circulation". The non-publicly offered restricted shares were released from restriction and listed for circulation on June 26,2023. 3. During the Reporting Period, locked-up shares held by senior management increased by 66,446,730 shares, as non-restricted shares decreased by the same amount. Approval of changes in shares □ Applicable Not Applicable Transfer of share ownership □ Applicable Not Applicable Effects of changes in shares on the basic earnings per share, diluted earnings per share, Net asset per share attributable to the Company's ordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively Applicable □ Not applicable Item January - December 2023 Basic earnings per share (RMB/share) 0.1195Diluted earnings per share (RMB/share) 0.1179Item December 31,2023 Net asset per share attributable to ordinary shareholders of the Company (RMB) 2.8 Other information that the Company considers necessary or is required by the securities regulatory authorities to be disclosed □ Applicable Not Applicable 2. Changes in Restricted Shares Applicable □ Not applicable Unit: Share Name of shareholder Number of restricted shares at period-begin Number of increased restricted shares of the period Number of released restricted shares of the period Number of restricted shares at period-end Reason for restriction Date of restriction release CITICSecurities Co., Ltd. 280,701,75428,070,175308,771,9290The shares were within the lockup period of non-public offering (shares of the Company subscribed by investors in non-public offering shall not be transferred within 6 months from the date of listing) June 26,2023 Guotai Junan Securities Co., Ltd. 228,070,17522,807,017250,877,1920Everbright Securities Company Limited 204,678,36220,467,836225,146,1980UBSAG 196,783,62519,678,363216,461,9880GFSecurities Co., Ltd. 187,134,50218,713,450205,847,9520Haitong Securities Co., Ltd. 163,742,69016,374,269180,116,9590Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 105 Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund 131,578,94713,157,895144,736,8420China Life Asset Management - Bank of China - China Life Asset - PIPE2020 Insurance Asset Management Product 116,959,06411,695,906128,654,9700Shen Ruijin 108,479,53210,847,953119,327,4850Huaxia Life Insurance Co., Ltd. - Self-owned funds 87,719,2988,771,93096,491,2280Other shareholders participating in the non-public offering of the Company 1,100,280,535110,028,0541,210,308,5890Others 614,092,48366,446,7300680,539,213Locked-up shares of senior management Not applicable Total 3,420,220,967347,059,5783,086,741,332680,539,213 -- -- II. Issuance and Listing of Securities 1. Issuance of Securities (Preferred Shares Exclusive) in the Reporting Period □ Applicable Not Applicable 2. Changes in the Total Number of Shares, Shareholder Structure, and the Structure of Assets and Liabilities Applicable □ Not applicable For Changes in the total number of shares and shareholder structure, see "I. Changes in Shares" in this part. 3. Existing Staff-Held Shares □ Applicable Not Applicable III. Shareholders and Actual Controller 1. Total Number of Shareholders and Their Shareholdings Unit: Share Total number of 600,087 Number of 578,652 Total number 0 Number of preferred 0Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 106 ordinary shareholders by the end of the reporting period ordinary shareholders at the month-end prior to the disclosure of this Report of preferred shareholders with resumed voting rights by the end of the reporting period shareholders with resumed voting rights at the month-end prior to the disclosure of this Report Shareholders with 5% or above, and shareholdings of top 10 shareholders of ordinary shares (excluding the lending of shares under refinancing Name of shareholder Nature of shareholder Shareholding percentage (%) Number of shares held at the period-endIncrease/decrease during the Reporting Period Number of restricted shares held Number of non-restricted ordinary shares held Shares in pledge, marked or frozen Status Number Li Dongsheng Domestic individual/Domestic general legal entity 6.73% 1,264,053,189104,968,170672,868,839591,184,350 Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) Pledge 293,668,015Hong Kong Securities Clearing Company Ltd. Foreign legal entity 5.53% 1,037,612,543649,114,0661,037,612,543 Huizhou Investment Holding Co., Ltd. Municipal legal entity 4.35% 817,453,82495,313,984817,453,824 Wuhan Optics Valley Industrial Investment Co., Ltd. Provincial legal entity 2.83% 532,003,016403,690,620532,003,016 Pledge 249,000,000China Securities Finance Corporation Limited Domestic general legal entity 2.19% 410,554,71037,323,157410,554,710 Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund Fund, wealth management product, etc. 1.21% 226,736,51295,157,565226,736,512 CITIC Securities Co., Ltd. Financial Institution 1.20% 225,726,798 -61,957,556225,726,798 Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF Fund, wealth management product, etc. 1.09% 204,079,760204,079,760204,079,760 China Foreign Economy and Trade Trust Co., Fund, wealth managemen0.90% 168,599,830168,599,830168,599,830 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 107 Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hongyuan Collective Fund Trust Scheme t product, etc. Strategic investor or general legal entity becoming top-10 ordinary shareholders due to private placement of new shares Not applicable Note on the above shareholders' associations or concerted actions Among the top 10 shareholders, Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action. Mr. Li Dongsheng holds 897,158,453 shares and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) holds 366,894,736 shares, representing 1,264,053,189 shares in total and becoming the largest shareholder of the Company. Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights Not applicable Explanation on repurchase accounts among top 10 shareholders Not applicable Shareholdings of top 10 non-restricted ordinary shareholders Name of shareholder Number of non-restricted ordinary shares held at the end of the reporting period Type of shares Type Quantity Hong Kong Securities Clearing Company Ltd. 1,037,612,543 RMB-denominated ordinary shares 1,037,612,543 Huizhou Investment Holding Co., Ltd. 817,453,824 RMB-denominated ordinary shares 817,453,824 Li Dongsheng 591,184,350 RMB-denominated ordinary shares 591,184,350Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) Wuhan Optics Valley Industrial Investment Co., Ltd. 532,003,016 RMB-denominated ordinary shares 532,003,016 China Securities Finance Corporation Limited 410,554,710 RMB-denominated ordinary shares 410,554,710 Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund 226,736,512 RMB-denominated ordinary shares 226,736,512 CITICSecurities Co., Ltd. 225,726,798 RMB-denominated ordinary shares 225,726,798 Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF 204,079,760 RMB-denominated ordinary shares 204,079,760 China Foreign Economy and 168,599,830 RMB- 168,599,830 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 108 Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hongyuan Collective Fund Trust Scheme denominated ordinary shares Related or acting-in-concert parties among top 10 non-restricted outstanding shareholders, as well as between top 10 non-restricted outstanding shareholders and top 10 shareholders Among the top 10 shareholders with non-restricted shares, Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action. Mr. Li Dongsheng holds 224,289,614 non-restricted shares and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) holds 366,894,736 non-restricted shares, representing 591,184,350 non-restricted shares in total and becoming the largest shareholder of the Company. Explanation for the top 10 ordinary shareholders participating in securities margin trading Not applicable Top 10 shareholders participating in the lending of shares under the refinancing business Applicable □ Not applicable Unit: Share Top 10 shareholders participating in the lending of shares under the refinancing business Name of shareholder (full name) Shares in the ordinary account and credit account at the beginning of the period Shares lent under refinancing at the beginning of the period that have not been returned Shares in the ordinary account and credit account at the end of the period Shares lent under refinancing at the end of the period that have not been returned Total number Proportion to total share capital Total number Proportion to total share capital Total number Proportion to total share capital Total number Proportion to total share capital Huizhou Investment Holding Co., Ltd. 722,139,8404.23% 21,000,0000.12% 817,453,8244.35% 00%Wuhan Optics Valley Industrial Investment Co., Ltd. 128,312,3960.75% 430,240,0002.52% 532,003,0162.83% 00%Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF Unknown (note) Unknown (note) 00% 204,079,7601.09% 1,602,8000.01%Note: The regular shareholder data provided by the China Securities Depository and Clearing Corporation Limited does not contain this information. Changes in the top 10 shareholders compared with the previous period Applicable □ Not applicable Unit: Share Changes in the top 10 shareholders compared with the end of previous period Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 109 Name of shareholder (full name) Addition/exit during the Reporting Period Number of shares lent under refinancing at the end of the period that have not been returned Number of shares held in the ordinary account, credit account and lending through refinancing that have not been returned at the end of the period Total number Proportion to total share capital Total number Proportion to total share capital Wuhan Optics Valley Industrial Investment Co., Ltd. Addition 00% 532,003,0162.83%Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund Addition 00% 226,736,5121.21%Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF Addition 1,602,8000.01% 205,682,5601.09%China Foreign Economy and Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hong Yuan Collective Fund Trust Scheme Addition 00% 168,599,8300.90%Guotai Junan Securities Co., Ltd. Exit 00% 8,794,0610.05%Everbright Securities Company Limited Exit 00% 10,414,9150.06%UBSAGExit 00% 62,073,7170.33%GFSecurities Co., Ltd. Exit 00% 53,191,5660.28%Haitong Securities Co., Ltd. Exit Unknown (note) Unknown (note) Unknown (note) Unknown (note) Note: The regular shareholder data provided by the China Securities Depository and Clearing Corporation Limited does not contain this information. Indicate 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. □Yes No 2. The Company's Controlling Shareholders Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding 1,264,053,189 shares in total and becoming the largest shareholder of the Company. As per related provisions of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liability company's total capital or over 50% of a joint stock company's total share capital; or, despite the ownership of less than 50% Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 110 of a limited liability company's total capital or less than 50% of a joint stock company's total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to their interest in the limited liability company's total capital or the joint stock company's total number of shares. According to the provisions above, the Company has no controlling shareholder or actual controller. Change of the controlling shareholder in the Reporting Period □ Applicable Not Applicable 3. Actual Controller and Its Acting-in-Concert Parties Explanation of The Company's Absence of Actual Controller The "actual controller" refers to an entity which is not a shareholder of a company but actually controls the company behaviors through investment relationship, agreement or other arrangements. According to the definition above, the Company has no actual controller. Whether there is any shareholder holding more than 10% of the shares at the ultimate control level of the Company □Yes No Change of the actual controller in the Reporting Period □ Applicable Not Applicable The actual controller controls the Company through trust or other asset management methods □ Applicable Not Applicable 4. The cumulative number of shares pledged by the Company's controlling shareholder or the largest shareholder and its acting-in-concert parties account for 80% of their shareholdings in the Company □ Applicable Not Applicable 5. Other corporate shareholders with a holding percentage over 10% □ Applicable Not Applicable 6. Limits on shareholding reduction of the Company's controlling shareholder, actual controller, reorganizer and other commitment entities □ Applicable Not Applicable IV. Specific Implementation of Share Repurchase During the Reporting Period Progress on any share repurchase Applicable □ Not applicable Disclosure time of the plan Number of shares to be repurchasedProportion to total share capital Proposed repurchase amount Proposed repurchase period Purpose of share repurchase Number of repurchased shares Proportion of repurchased Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 111 (shares) shares to the underlying shares involved in the equity incentive plan June 1, 2023 With a total repurchase amount of RMB220 million to 250 million at a repurchase price of no more than RMB5.78 per share (inclusive), it is estimated that the number of shares that can be repurchased will be approximately 43.2526 million shares based on the upper limit of the total repurchase amount and the upper limit of the share repurchase price Based on the approximately 43.2526 million of shares that can be repurchased, the proportion of the repurchased shares to the Company's total share capital approximately equals to 0.23% The total amount of repurchase shall be no less than RMB220 million (inclusive) and no more than RMB250 million (inclusive) Within 12 months after the 32nd Meeting of the Company's 7th Board of Directors deliberates and approves this share repurchase plan For employee stock ownership plans or equity incentives 64,992,964 -November 29,2023 With a total repurchase amount of RMB400 million to 600 million at a repurchase price of no more than RMB6.04 per share (inclusive), it is estimated that the number of shares that can be repurchased will be approximately 99.3377 million shares based on the upper limit of the total repurchase amount and the upper limit of the share repurchase price Based on the approximately 99.3377 million of shares that can be repurchased, the proportion of the repurchased shares to the Company's total share capital approximately equals to 0.53% The total amount of repurchase shall be no less than RMB400 million (inclusive) and no more than RMB600 million (inclusive) Within 12 months after the 36th Meeting of the Company's 7th Board of Directors deliberates and approves this share repurchase plan For employee stock ownership plans or equity incentives 0 -Progress on reducing the repurchased shares by means of centralized bidding □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 112 Part VIIIPreferred Shares □ Applicable Not Applicable During the reporting period, the Company did not have preferred shares. Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 113 Part IXBonds I. Enterprise Bonds □ Applicable Not Applicable No enterprise bonds in the Reporting Period. II. Corporate Bonds Applicable □ Not applicable 1. General Information on Corporate Bonds Unit: RMB'0,000 Bond name Abbr. Bond code Date of issuanceValue date MaturityOutstanding balance Coupon rate Way of principal repayment and interest payment Place of trading TCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Phase 3) 19TCL03112983.SZ October 17, 2019 October 21, 2019 October 21,202444,0002.95% Interest payable annually and principal repayable in full upon maturity Shenzhen Stock ExchangeTCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Phase 2) 19TCL02112938.SZJuly 19,2019 July 23, 2019 July 23, 2024100,0003.05% Interest payable annually and principal repayable in full upon maturity Shenzhen Stock ExchangeTCL Corporation Corporate Bonds Publicly Offered in 2019 to Qualified Investors (Phase 1) 19TCL01112905.SZMay 17,2019 May 20, 2019 May 20, 2024100,0003.15% Interest payable annually and principal repayable in full upon maturity Shenzhen Stock ExchangeInvestor eligibility (if any) For qualified investors / for professional investors; not applicable for foreign bondsApplicable trading mechanism Match to trade, click to trade, inquire to trade, bid to trade, negotiate to trade; not applicable for foreign bonds Risk of termination of listing and trading (if any) and countermeasures No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 114 Overdue bonds □ Applicable Not Applicable 2. Triggering and implementation of issuer or investor option clauses and investor protection clauses □ Applicable Not Applicable 3. Intermediary Organizations Name of bond project Name of intermediary organization Office address Name of signing accountants Contact of intermediary organization Tel. 19TCL01, 19TCL02, 19TCL03 CITICSecurities Co., Ltd. Citic Office Tower, 48 Liangmaqiao Road, Chaoyang District, Beijing - Yang Fang, Deng Xiaoqiang, Chen Donghui, Zhou Junren 010 -60833575 19TCL01, 19TCL02, 19TCL03 Guotai Junan Securities Co., Ltd. 33F, One Museum Place,669 Xinzha Road, Shanghai - Sun Miaoyue, Wu Lei, Li Hongyu, Wen Xiao, Liu Xuanhua 021-38031979 19TCL01, 19TCL02, 19TCL03 China Development Bank Securities Co., Ltd. F1-8, CDB Building,29 Fuchengmen Outer Avenue, Xicheng District, Beijing - Zhao Zhipeng 010 -88300907 19TCL01, 19TCL02, 19TCL03 TFSecurities Co., Ltd. 21F, No.2, Tianfeng Building, No.217 Zhongbei Road, Wuchang District, Wuhan City - Liu Yipei 027-87618889 19TCL01, 19TCL02, 19TCL03 Shenwan Hongyuan Securities Co., Ltd. 45F, Century Commercial Plaza, No.989 Changle Road, Xuhui District, Shanghai - Yang Shangjun, Ouyang Wenjian, Cao Peixian 0755-2399694919TCL01, 19TCL02, 19TCL03 Beijing Jia Yuan Law Offices F408, Yuanyang Building ,158 Fuxingmen Inner Avenue, Beijing - Wen Liangjuan, Wang Ying 010 -66413377 19TCL01, 19TCL02, 19TCL03 Da Hua Certified Public Accountants (Special General Partnership) Room 1101, Building 7, No.16 Xi Si Huan Zhong Road, Haidian District, Beijing Li Bingxin, Zhang Yuan yuan, Yang Chunxiang Jiang Xianmin 0755 -8290073419TCL01, 19TCL02, 19TCL03 China Chengxin International Credit Rating Co., Ltd. Building 5, Galaxy SOHO, No.2 Nanzhugan Hutong, Chaoyangmen Inner Avenue, Dongcheng District, Beijing - Jia Xiaoqi, Guo Ziyue 010 -66428877 Whether the above organizations were changed during the Reporting Period □Yes No Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 115 4. Use of the Capital Raised Unit: RMB'0,000 Name of bond project Total Amount of Raised Funds Used Amount UnusedAmountOperation of special fund-raising account (if any) Rectification of illegal use of raised funds (if any) Whether consistent with the purpose, usage plan and other agreements promised in the prospectus 19TCL03200,000200,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 19TCL02100,000100,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 19TCL01100,000100,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent The raised funds were used for construction projects □ Applicable Not Applicable The Company changed the usage of above funds raised from bonds during the Reporting Period □ Applicable Not Applicable 5. Adjustments of credit rating results during the Reporting Period □ Applicable Not Applicable 6. The implementation and changes of guarantees, debt repayment plans and other safeguard measures regarding debt repayment during the Reporting Period, and their impact on bond investor equity □ Applicable Not Applicable III. Debt Financing Instruments of Non-Financial Enterprises Applicable □ Not applicable 1. General information of debt financing instruments of non-financial enterprises Unit: RMB'0,000 Bond name Abbr. Bond code Date of issuance Value date Maturity Outstanding balance Coupon rate Way of principal repayment and interest paymentPlace of trading 2023 Mid-Term 23TCLGroup 1023801 Februa Februa Februa 150,0004.10% Interest Inter-Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 116 Notes of TCL Technology Group Corporation (Phase 1) (Sci-Tech Innovation Notes) MTN001 (Sci-Tech Innovation Notes) 51 ry 3, 2023 ry 7, 2023 ry 7, 2026 payable annually and principal repayable in full upon maturitybank market 2022 Mid-Term Notes of TCL Technology Group Corporation (Phase 3) (Sci-Tech Innovation Notes) 22TCLGroup MTN003 (Sci-Tech Innovation Notes) 1022814 74 July 4, 2022 July 6, 2022 July 6, 2025200,0003.45% Interest payable annually and principal repayable in full upon maturityInter-bank market 2022 Mid-Term Green Notes of TCLTechnology Group Corporation (Phase 2) 22TCLGroup GN002 1322800 40 April 25, 2022 April 27, 2022 April 27, 2025 150,0003.30% Interest payable annually and principal repayable in full upon maturityInter-bank market 2022 Mid-Term Notes of TCL Technology Group Corporation (Phase 1) 22TCLGroup MTN001 1022800 89 January 12, 2022 January 14, 2022 January 14, 2025 200,0003.45% Interest payable annually and principal repayable in full upon maturityInter-bank market 2021 Mid-Term Notes of TCL Technology Group Corporation (Phase 1) (High-Growth Bonds) 21TCLGroup MTN001 (High-Growth Bonds) 1021009 66 May 10, 2021 May 12, 2021 May 12, 2024 200,0004.15% Interest payable annually and principal repayable in full upon maturityInter-bank market Investor eligibility (if any) Mid-term notes are issued to institutional investors in the national interbank bond market (excluding those prohibited from purchasing by national laws and regulations) Applicable trading mechanism Transaction inquiry, request for quotation and click-to-buy Risk of termination of listing and trading (if any) and countermeasures No Overdue bonds Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 117 □ Applicable Not Applicable 2. Triggering and implementation of issuer or investor option clauses and investor protection clauses □ Applicable Not Applicable 3. Intermediary Organizations Name of bond project Name of intermediary organization Office addressName of signing accountants Contact of intermediary organization Tel. 21TCLGroup MTN001 (High-Growth Bonds), 22TCLGroup GN002, 22TCLGroup MTN003 (Sci-Tech Innovation Notes) Industrial and Commercial Bank of ChinaNo.55 Fuxingmennei Avenue, Xicheng District, Beijing City - Wu Siyi 010-81012556 22TCLGroup MTN001, 23TCLGroup MTN001 (Sci-Tech Innovation Notes) Agricultural Bank of ChinaNo.69 Jianguomenei Avenue Dongcheng District, Beijing City - Liu Zhaoying 010- 85109688 21TCLGroup MTN001 (High-Growth Bonds), 22TCLGroup MTN003 (Sci-Tech Innovation Notes), 23TCLGroup MTN001 (Sci-Tech Innovation Notes) China Construction Bank Corporation No.25 Jinrong Avenue Xicheng District, Beijing City - Zhou Peng 010 -67596478 22TCLGroup MTN001 Bank of China Limited No.1 Fuxingmennei Avenue Beijing City - Zhang Shun 010-66595482 22TCLGroup GN002 Shanghai Pudong Development Bank Co., Ltd.No.12 Zhongshan East 1st Road, Shanghai - Li Yansun 021-31884090 21TCLGroup MTN001 (High-Growth Bonds), 22TCLGroup MTN001,22TCLGroup GN002,22TCLGroup MTN003 (Sci-Tech Innovation Notes), 23TCLGroup MTN001 (Sci-Tech Innovation Notes) China Chengxin International Credit Rating Co., Ltd. Building 5, Galaxy SOHO, No.2 Nanzhugan Hutong, Chaoyangmen Inner Avenue, Dongcheng District, Beijing- Jia Xiaoqi, Guo Ziyue 010 - 66428877 21TCLGroup MTN001 (High-Growth Bonds), 22TCLGroup MTN001,22TCLGroup GN002,22TCLGroup MTN003 (Sci-Tech Innovation Notes), 23TCLGroup MTN001 (Sci-Tech Innovation Notes) Da Hua Certified Public Accountants (Special General Partnership) Room 1101, Building 7, No. 16 Xi Si Huan Zhong Road, Haidian District, BeijingQiu Junzhou, Jiang Xianmin, Xiong Xin Jiang Xianmin 0755 - 82900734 21TCLGroup MTN001 (High-Growth Bonds), 22TCLGroup MTN001,22TCLGroup GN002,22TCLGroup MTN003 (Sci-Tech Innovation Notes), 23TCLGroup MTN001 (Sci-Beijing Jia Yuan Law Offices F408, Yuanyang Building ,158 Fuxingmen Inner Avenue, - Wen Liangjuan, Wang Ying 010 - 66413377 Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 118 Tech Innovation Notes) Beijing Whether the above organizations were changed during the Reporting Period □Yes No 4. Use of the Capital Raised Unit: RMB'0,000 Name of bond project Total amount of raised funds Amount spent Unused amountOperation of special fund-raising account (if any) Rectification of illegal use of raised funds (if any) Whether consistent with the purpose, usage plan and other agreements promised in the prospectus 23TCLGroup MTN001 (Sci-Tech Innovation Notes) 150,000150,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 22TCLGroup MTN003 (Sci-Tech Innovation Notes) 200,000200,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 22TCLGroup GN002150,000150,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 22TCLGroup MTN001200,000200,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent 21TCLGroup MTN001 (High-Growth Bonds) 200,000200,0000Set up a fund-raising account to ensure that the funds raised are earmarked for special purposes None Consistent The raised funds were used for construction projects □ Applicable Not Applicable The Company changed the usage of above funds raised from bonds during the Reporting Period □ Applicable Not Applicable 5. Adjustments of credit rating results during the Reporting Period □ Applicable Not Applicable 6. The implementation and changes of guarantees, debt repayment plans and other safeguard measures regarding debt repayment during the Reporting Period, and their impact on bond investor equity □ Applicable Not Applicable Full Text of the Annual Report 2023 of TCLTechnology Group Corporation 119 IV. Convertible Corporate Bonds □ Applicable Not Applicable During the reporting period, the Company did not have convertible corporate bonds. V. Consolidated loss of the Reporting Period Exceeding 10% of Net Assets of the last year-end □ Applicable Not Applicable VI. Overdue Interest-bearing Debts Other Than Bonds at Period End □ Applicable Not Applicable VII. Any Violation of Rules and Regulations During the Reporting Period □Yes No VIII. Key Accounting Data and Financial Indicators of the Company for the past two years as at the end of the Reporting Period Item End of the Reporting Period December 31,2022 Change Current ratio 1.031.09 -5.50%Debt/asset ratio 62.1% 63.3% -1.23%Quick ratio 0.750.78 -3.85%20232022 Change Net profit after deducting non-recurring gains and losses (RMB0'000) 220,705 -171,729228.52%Debt to EBITDA ratio 15.0% 12.1% 2.9%Interest coverage ratio 1.80 0.9295.65%Cash coverage ratio 5.55 4.3228.67%EBITDA coverage ratio 6.36 5.1723.02%Debt repayment ratio 100% 100% 0.00Interest payment ratio 100% 100% 0.00TCLTechnology Group Corporation Auditor’s Report DHSZ [2024] No.0011018521 Da Hua Certified Public Accountants (Special General Partnership) Da Hua Certified Public Accountants (Special General Partnership) TCLTechnology Group Corporation Auditor’s Report and Financial Statements (January 1,2023 to December 31,2023) Content Page I. Auditor’s Report 1-8 II. Audited Financial Statements Consolidated Balance Sheet 1-2 Consolidated Income Statement 3 Consolidated Cash Flow Statement 4-5 Consolidated Statement of Changes in Shareholders’ Equity 6-7 Balance Sheet of the Parent Company 8-9 Income Statement of the Parent Company 10 Cash Flow Statement of the Parent Company 11-12 Statement of Changes in Shareholder Equity of the Parent Company 13-14 Notes to Financial Statements 15-178 Da Hua Certified Public Accountants (Special General Partnership) Floor 12, Building 7, No.16 Xi Si Huan Zhong Road, Haidian District, Beijing [100039] Phone: 86 (10) 58350011 Fax: 86 (10) 58350006 Auditor’s Report DHSZ [2024] No.0011018521 To all Shareholders of TCLTechnology Group Corporation: I. Opinion We have audited the financial statements of TCLTechnology Group Corporation (the “Company”), which include the consolidated and parent’s balance sheets as at December 31,2023, the consolidated and parent’s statements on income, statements on cash flows and statements on changes in shareholders’ equity for the year then ended, as well as the notes to these financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and parent’s financial position of the Company as at December 31,2023, and the consolidated and parent’s operations results and cash flows the year then ended in accordance with the Accounting Standards for Business Enterprises. II. Basis for Opinion We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.Auditor’s Report DHSZ [2024] No.0011018521 III. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. And key audit matters identified in our audit are summarized as follows: Revenue recognition Please refer to the accounting policies as stated in 38. “Revenue recognition” under Note III to the financial statements and 57. “Revenue” under Note V to the financial statements. Key Audit Matters Audit response The Company’s revenue for the current period was approximately RMB174.4 billion, an increase of about RMB7.8 billion from the revenue of RMB166.6 billion for the previous period. As operating revenue is one of the Company’s key operating indicators with the inherent risk of the management manipulating the revenue recognition time point for the purpose of achieving a specific objective or expectation, and the revenue recognition for the current period has a material influence on the financial statements, we have identified revenue recognition as a key audit matter. The important audit procedures we carried out in respect to revenue recognition include: understand and assess whether the management's design and operation of key internal controls in respect to revenue recognition are effective; understand and assess whether the management's selection and implementation of the policies related to revenue recognition complied with the Accounting Standards for Business Enterprises; select samples of recorded transactions with revenue for the year and examined relevant supporting documents involved during the transaction process, including outbound delivery orders, customer receipt records, sale invoices, customs declarations, bills of lading and fund receipt proofs; select samples of the recorded transactions with revenue around the balance sheet date and examined outbound delivery orders and other supporting documents to assess whether the revenue has been recorded for the appropriate accounting period; obtain the Company's sale list for the year and carried out analytic review procedures on the operating revenue to determine how reasonable changes in the revenue and gross profit margin for the current period were; conduct confirmation procedures with key accounts and inquired about the sales amount and the account receivable balance incurred for the current period; examine whether the information in connection with revenue was duly presented and disclosed in the financial statements. Based on the audit work executed, we believe that the Company's recognition of revenue complies with relevant requirements of the Accounting Standards for Business Enterprises. Auditor’s Report DHSZ [2024] No.0011018521 III. Key Audit Matters (continued) Measurement of fixed assets and construction in progress Please refer to the accounting policies as stated in 26. "Fixed assets" and 27. "Construction in progress" under Note III to the financial statements and 20. "Fixed assets" and 21. "Construction in progress" under Note V to the financial statements.Key Audit Matters Audit response As at December 31,2023, the total amount of fixed assets and construction in progress presented in the Company’s consolidated financial statements was RMB193.4 billion, accounting for 50.52% of the total assets. The fixed assets and construction in progress mainly included machinery and equipment and buildings required for display products, new energy photovoltaic products and materials. Matters such as the eligibility of assets for capitalization, the point of time at which construction in progress is transferred to fixed assets and depreciation is provisioned, and the useful life and residual value of the respective fixed assets involve management's judgment, so we identified the measurement of fixed assets and construction in progress as key audit matters. The important audit procedures we carried out in respect to the measurement of fixed assets and construction in progress include: understand and evaluate the effectiveness of the design of internal controls related to fixed assets and construction in progress, and test the effectiveness of the implementation of key controls; obtain a list of new assets in the current period, and carry out a spot check of procurement contracts, payment documents, invoices and acceptance slips for large-value assets; obtain the new settlement statements for construction in the current period, examine them against the amounts recorded in the books, and review the accuracy and completeness of the entries; discuss with the management and judge the accuracy of the point of time when the construction in progress is transferred to fixed assets and the reasonableness of the expected useful life of fixed assets; inspect the construction-in-progress site when approaching the balance sheet date, understanding and evaluate the progress of the work and checking it against the entries in the book; obtain the ownership certificate of fixed assets and the company inventory sheet, and conduct on-site checks of important assets; obtain the statement of depreciation provision for fixed assets and recalculating whether the depreciation has been provisioned accurately; examine that the information in connection with fixed assets and construction in progress has been duly presented and disclosed in the financial statements.Based on the audit work executed, we believe that the Company measured the fixed assets and construction in progress in accordance with relevant requirements of the Accounting Standards for Business Enterprises.Auditor’s Report DHSZ [2024] No.0011018521 III. Key Audit Matters (continued) Related parties Please refer to “XI. Related parties and related transactions”under the notes to the financial statements. Key Audit Matters Audit response In 2023, the Company’s routine related transactions amounted to about RMB36.1 billion, representing an increase of about 19.94% from the previous period. The integrity of the disclosure of related parties and related transactions, the authenticity of related transactions and the fairness of transaction prices will pose an important impact on the fair presence of the financial statements. Therefore, we identify the related balance and transactions as key matters in this audit. The important audit procedures we carried out in respect to related transactions include: Examine and evaluate the internal controls adopted by management for identifying and disclosing the relationships between related parties and related transactions, and review the effectiveness of the design and implementation of the internal controls; Acquire the statements of management on the integrity of the relationships between related parties and related transactions, etc., as well as the list of relationships between related parties provided by the management, and examined this with the information acquired from other public channels; Examine the customers, suppliers and other stakeholders that deal with the Company to identify whether there were any omissions for the related parties. acquire the resolutions of the board of directors and the general meeting in connection with related transactions, examine the decision-making authority and procedures of the related transactions, judged the legality and compliance of the related transactions, and determine whether they had been properly authorized and approved; compare the prices for selling goods to the related parties with those of similar products sold to unrelated parties to determine the fairness of the prices of related transactions; acquire the incurred amount and balance details of related transactions, and examine the financial vouchers corresponding to the transactions and the attached contracts or orders, dispatch notes, statements, invoices and bank documents for the selected specific samples; and conduct confirmation procedures for the incurred amounts and balances of the related transactions with important related parties. Based on audit procedures conducted, we are of the opinion that management has made reasonable disclosure on the completeness of related party relationship, authenticity of related transactions and faireness of consideration. Auditor’s Report DHSZ [2024] No.0011018521 IV. Other Information The Company’s management is responsible for the other information. Other information comprises all of the information included in the Company’s 2023 Annual Report, but does cover the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover other information and we do not express any form of assurance or conclusions thereon. In connection with our audit on the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement for other information, we are required to report that fact. We have nothing to report in this regard. V. Responsibilities of Management and Those Charged with Governance for Financial Statements The Company's management is responsible for the preparation of the financial statements that provide a fair view in accordance with the Accounting Standards for Business Enterprises, and for designing, implementing and maintaining such internal controls as the management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concerns and using the going concerns as a basis of accounting unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. VI. Auditor's Responsibilities for Audit of Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that states our opinions. Auditor’s Report DHSZ [2024] No.0011018521 Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the China Independent Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the China Independent Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1．Identifying and assessing the risks of material misstatements in financial statements, and whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overriding of internal controls. 2．Obtaining an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate to the circumstances. 3．Evaluating the appropriateness of accounting policies used and determine how reasonable accounting estimates and related disclosures made by the management are. 4．Concluding on the appropriateness of the management's use of the going concern assumption of accounting and, based on the audit evidence obtained, drawing a conclusion on whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by the China Independent Auditing Standards to draw users' attention in our auditor's report on the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5．Evaluating the overall presentation, structure and content of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that maintains fair presentation. Auditor’s Report DHSZ [2024] No.0011018521 6．Obtaining sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for directing, supervising and performing the Company audits and undertaking full responsibility for audit opinions. We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any noteworthy deficiencies in internal controls that we identify during our audit. We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated with them on all relationships and other matters that may reasonably be thought to bear an impact on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the financial statements of the current period and these therefore constitute the key audit matters. We describe these matters in our auditor's report unless law or regulation precluded public disclosure about the matters or when, in extremely rare circumstances, we determined that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interests of such communication. (There is no text below this page) (There is no text on this page, which is used for the signature and seal of Auditor’s Report DHSZ [2024] No.0011018521) Da Hua Certified Public Accountants (Special General Partnership) Chinese CPA: Beijing China (Engagement Partner) Jiang XianminChinese CPA: Xiong Xin April 28,2024 TCLTechnology Group Corporation Consolidated Balance Sheet ___________(RMB’000)_____________ 1 Note VDecember 31,2023 January 1,2023 Current assets Monetary assets 121,924,271 35,378,501Held-for-trading financial assets 223,184,117 12,703,507Derivative financial assets 3108,008 361,034Notes receivable 4615,392 512,849Accounts receivable 522,003,651 14,051,661Receivables financing 6954,410 1,103,128Prepayments 72,946,288 3,593,857Other receivables 85,706,855 4,033,248Inventories 918,481,755 18,001,122Contract assets 10343,907 315,167Held-for-sale assets 11162,416 -Non-current assets due within one year 12580,695 -Other current assets 135,286,534 5,438,936Total current assets 102,298,299 95,493,010Non-current assets Debt investments 14122,349741,703Long-term receivables 15720,281631,373Long-term equity investments 1625,431,271 29,256,216Investments in other equity instruments 17386,648 439,996Other non-current financial assets 182,971,566 2,928,827Investment property 19911,679 946,449Fixed assets 20176,422,621 132,477,672Construction in progress 2117,000,052 52,053,834Right-of-use assets 226,386,446 5,110,124Intangible assets 2318,419,544 16,783,931Development costs 242,541,493 3,179,207Goodwill 2510,516,742 9,161,852Long-term deferred expenses 263,402,689 2,744,208Deferred income tax assets 272,246,222 1,753,887Other non-current assets 2813,081,184 6,293,943Total non-current assets 280,560,787 264,503,222Total assets 382,859,086 359,996,232Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Consolidated Balance Sheet (Continued) ___________(RMB’000)_____________ 2 Liabilities and shareholders' equity: Note VDecember 31,2023 January 1,2023Current liabilities Short-term borrowings 298,473,582 10,215,911Borrowings from the Central Bank 30995,010 777,676Customer deposits and deposits from other banks and financial institutions 31270,929 603,423Held-for-trading financial liabilities 32251,451 861,912Derivative financial liabilities 3358,591 70,735Notes payable 345,610,802 6,365,660Accounts payable 3529,402,493 26,381,912Advances from customers 36678 1,402Contract liabilities 371,899,468 2,336,008Employee compensation payable 383,034,497 2,376,933Taxes and levies payable 39861,342 1,215,591Other payables 4022,171,402 24,190,352Non-current liabilities due within one year 4124,631,659 10,957,321Other current liabilities 421,563,245 1,185,848Total current liabilities 99,225,14987,540,684Non-current liabilities Long-term borrowings 43117,662,209 118,603,165Bonds payable 449,113,848 12,006,851Lease liabilities 455,737,288 4,461,383Long-term payables 462,739,444 887,763Long-term employee compensation payable 3829,645 472,538Deferred income 471,540,648 2,468,145Deferred income tax liabilities 271,427,487 1,319,428Estimated liabilities 48117,395 97,522Total non-current liabilities 138,367,964 140,316,795Total liabilities 237,593,113 227,857,479Share capital 4918,779,081 17,071,892Capital reserves 5010,752,055 12,522,793Less: Treasury share 511,094,943 1,314,581Other comprehensive income 52 (945,798) (811,822)Surplus reserves 533,874,006 3,712,273Specific reserves 5411,343 2,301General risk reserve 558,934 8,934Retained earnings 5621,537,188 19,486,730Total equity attributable to shareholders of the parent company 52,921,866 50,678,520Non-controlling interests 92,344,107 81,460,233Total shareholders’ equity 145,265,973 132,138,753Total liabilities and shareholders' equity 382,859,086 359,996,232Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Consolidated Income Statement ___________(RMB’000)_____________ 3 Note V 2023 2022I. Total revenue 174,446,172166,632,146Including: Operating revenue 57174,366,657166,552,786Interest income 5879,51579,360Less: Operating cost 57148,767,597151,925,489Interest expenditures 5819,36223,530Taxes and levies 59801,938640,302Sales expenses 602,523,6871,950,528Administrative expenses 614,783,2473,540,611R&D expenses 629,522,8388,633,638Financial expenses 633,972,7283,422,895Including: Interest expenses 4,922,1204,468,008Interest income 939,719723,665Plus: Other income 643,538,2592,917,794Return on investment 652,591,8774,731,394Including: Return on investment in joint ventures and associates 1,363,6612,898,739Exchange gain 5851617,914Gain on changes in fair value 6627,338 (139,244)Credit impairment loss 67 (173,065) (37,653)Asset impairment loss 68 (4,813,965) (3,486,523)Asset disposal income 69 (41,416) (79,825)II. Operating profit 5,184,319419,010Plus: Non-operating income 7071,285790,112Less: Non-operating expenses 71203,780152,071III. Gross profit 5,051,8241,057,051Less: Income tax expenses 72271,040 (731,008)IV. Net profit 4,780,7841,788,059(I) Classification by business continuity 1. Net profit from continuing operations 4,780,7841,788,0592. Net profit from discontinued operations - -(II) Classification by ownership 1. Net profit attributable to the owners of the parent company 2,214,934261,3192. Net profit attributable to non-controlling interests 2,565,8501,526,740V. Other comprehensive income, net of tax 52 (189,220) (327,034)(I) Other comprehensive income that cannot be subsequently reclassified into profit or loss (48,773) (18,149)(II) Other comprehensive income that may be subsequently reclassified into profit or loss upon satisfaction of prescribed conditions (140,447) (308,885)VI. Total comprehensive income 4,591,5641,461,025Total comprehensive income attributable to the shareholders of the parent company 2,080,958 (141,056)Total comprehensive income attributable to non-controlling interests 2,510,6061,602,081VII. Earnings per share 73 (I) Basic earnings per share (RMB yuan) 0.11950.0174(II) Diluted earnings per share (RMB yuan) 0.11790.0168Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Consolidated Cash Flow Statement ___________(RMB’000)_____________ 4 Note V 2023 2022I. Cash flow from operating activities: Proceeds from sale of commodities and rendering of services 139,948,369137,297,835 Net increase/(decrease) in deposits from customers, banks and other financial institutions (332,494) (62,633) Net increase/(decrease) in borrowings from the Central Bank 217,333 (659,386) Cash received from interest, handling charge and commission 79,51579,360 Tax and levy rebates 8,198,66711,020,947 Cash generated from other operating activities 746,899,258 7,955,973 Sub-total of cash generated from operating activities 155,010,648 155,632,096 Payments for commodities and services (104,274,934) (113,465,399) Net (increase)/decrease in loans and advances to customers (210,100) 558,603 Net (increase)/decrease in deposits with the Central Bank, banks and other financial institutions (19,240) 36,327 Cash paid to and for employees (12,223,510) (10,696,682) Taxes and levies paid (4,194,531) (3,916,226) Cash used in other operating activities 75 (8,773,577) (9,722,343) Sub-total of cash used in operating activities (129,695,892) (137,205,720) Net cash generated from operating activities 8025,314,75618,426,376 II. Net cash generated from investment activities: Proceeds from disinvestments 55,718,288 48,642,124 Proceeds from return on investments 2,188,1351,100,618 Net proceeds from disposal of fixed assets, intangible assets and other long-term assets 140,30585,502 Net proceeds from disposal of subsidiaries and other business units 80 1,566,3561,432,795 Cash generated from other investing activities 761,589,202170,387 Sub-total of cash generated from investment activities 61,202,28651,431,426 Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets (29,574,296) (40,762,787) Payments for investments (71,131,067) (56,242,405) Net payments for acquiring subsidiaries and other business units 80 (370,928) (50,133) Cash used in other investing activities 77 (923,051) (1,212,074) Subtotal of cash used in investing activities (101,999,342) (98,267,399) Net cash used in investing activities (40,797,056) (46,835,973) Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements.TCLTechnology Group Corporation Consolidated Cash Flow Statement (Continued) ___________(RMB’000)_____________ 5 Note V 2023 2022III. Cash flow generated from financing activities: Capital contributions received 3,182,627 17,981,473 Including: Net capital contributions by non-controlling interests to subsidiaries 3,182,627 8,509,514 Borrowings raised 61,391,001 87,581,519 Net cash received from bonds issue 1,500,000 7,820,000 Cash generated from other financing activities 783,950,311 272,281 Sub-total of cash generated from financing activities 70,023,939 113,655,273 Cash paid for debt repayment (53,877,371) (66,503,750) Cash paid for dividend and profit distribution or repayment of interests (6,317,209) (9,640,363) Including: Dividends and profit paid by subsidiaries to minority shareholders (423,710) (1,691,435) Cash used in other financing activities 79 (8,037,595) (6,110,504) Subtotal of cash used in financing activities (68,232,175) (82,254,617) Net cash generated from financing activities 1,791,764 31,400,656 IV. Effect of exchange rate changes on cash and cash equivalents 11,727 602,860 V. Net increase in cash and cash equivalents (13,678,809) 3,593,919 Add: Opening balance of cash and cash equivalents 33,675,624 30,081,705 VI. Ending balance of cash and cash equivalents 8019,996,815 33,675,624 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Consolidated Statement of Changes in Shareholders’ Equity ___________(RMB’000)_____________ 6 2023 Equity attributable to shareholders of the parent company Share capital Other equity instrumentsCapital reservesTreasury shareSpecial ReservesOther comprehensive incomeSurplus reservesGeneral risk reserveUndistributed profitNon-controlling interestsShareholder equity Total I. Balance at the end of the prior year 17,071,892 - 12,522,793 (1,314,581) 2,301 (811,822) 3,712,2738,93419,486,73081,460,233132,138,753 Add: Change in accounting policies - - - - - - - - - - - II. Balance at the beginning of the period 17,071,892 - 12,522,793 (1,314,581) 2,301 (811,822) 3,712,2738,93419,486,73081,460,233132,138,753 III. Movement of the period 1,707,189 - (1,770,738) 219,6389,042 (133,976) 161,733 - 2,050,45810,883,87413,127,220 (I) Total comprehensive income - - - - - (136,719) - - 2,214,9342,510,6064,588,821 (II) Capital contributed and reduced by shareholders - - (131,061) 219,638 - - - - - 8,791,1758,879,752 1. Capital contributed by shareholders - - - - - - - - - 8,815,9298,815,929 2. Share-based payments included in owners' equity - - 242,757466,809 - - - - - 336,1181,045,684 3. Amount of bond issuance included in owners' equity - - - - - - - - - - - 4. Others - - (373,818) (247,171) - - - - - (360,872) (981,861) (III) Profit distribution - - - - 9,042 - 161,733 - (161,733) (417,907) (408,865) 1. Appropriation of surplus reserves - - - - - - 161,733 - (161,733) - - 2. Appropriation of general risk reserve - - - - 32,220 - - - - 76,587108,807 3. Appropriation to shareholders - - - - - - - - - (437,951) (437,951) 4. Others - - - - (23,178) - - - - (56,543) (79,721) (IV) Internal transfer of owner's equity 1,707,189 - (1,707,189) - - 2,743 - - (2,743) - - 1. Capitalization of capital reserves into capital (or share capital) 1,707,189 - (1,707,189) - - - - - - - - 2. Other comprehensive income transferred into retained earnings - - - - - 2,743 - - (2,743) - - (V) Others - - 67,512 - - - - - - - 67,512 IV. Balance as at the end of the period 18,779,081 - 10,752,055 (1,094,943) 11,343 (945,798) 3,874,0068,93421,537,18892,344,107145,265,973 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Consolidated Statement of Changes in Shareholders’ Equity (Continued) ___________(RMB’000)_____________ 7 2022 Equity attributable to shareholders of the parent company Share capital Other equity instrumentsCapital reservesTreasury shareSpecial ReservesOther comprehensive incomeSurplus reservesGeneral risk reserveUndistributed profitNon-controlling interestsShareholder equity Total I. Balance at the end of the prior year 14,030,642 200,3346,079,267 (1,885,557) 1,549 (409,447) 2,550,1738,93422,458,34076,611,057119,645,292 Add: Change in accounting policies - - - - - - - - 6,8099,75316,562 II. Balance at the beginning of the period 14,030,642 200,3346,079,267 (1,885,557) 1,549 (409,447) 2,550,1738,93422,465,14976,620,810119,661,854 III. Movement of the period 3,041,250 (200,334) 6,443,526570,976752 (402,375) 1,162,100 - (2,978,420) 4,839,42312,476,897 (I) Total comprehensive income - - - - - (415,837) - - 261,3191,602,0811,447,564 (II) Capital contributed and reduced by shareholders 3,041,250 (200,334) 7,822,900570,976 - - - - - 8,109,94819,344,740 1. Capital contributed by shareholders 3,041,250 - 6,668,566 - - - - - - 8,109,94817,819,764 2. Share-based payments included in owners' equity - - 26,55976,664 - - - - - - 103,223 3. Amount of bond issuance included in owners' equity (200,334) 1,127,775997,083 - - - - - - 1,924,524 4. Others - - - (502,771) - - - - - - (502,771) (III) Profit distribution - - - 1,162,100 - (3,212,103) (2,962,104) (5,011,355) 1. Appropriation of surplus reserves - - - - - - 1,162,100 - (1,162,100) (381,108) (381,108) 2. Appropriation of general risk reserve - - - - - - - 752 3. Appropriation to shareholders - - - - - - - - (2,050,003) (2,580,996) (4,630,999) 4. Others - - - - - - - - - - - (IV) Internal transfer of owner's equity - - - - - 13,461 - - (13,461) - - 1. Other comprehensive income transferred into retained earnings - - - - - 13,461 - - (13,461) - - (V) Others - - (1,379,374) - - - - - (14,174) (1,910,502) (3,304,050) IV. Balance as at the end of the period 17,071,892 - 12,522,793 (1,314,581) 2,301 (811,822) 3,712,2738,93419,486,73081,460,233132,138,753 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements.TCLTechnology Group Corporation Balance Sheet of the Company ___________(RMB’000)_____________ 8 assets Note XVIIDecember 31,2023 January 1,2023Current assets Monetary assets 2,646,890 17,821,922Held-for-trading financial assets 14,178,884 5,936,208Derivative financial assets 66 15,578Accounts receivable 1350,788 353,812Prepayments 9,241 3,693Other receivables 219,614,272 4,961,948Inventories - 5,380Other current assets 1,629 34,838Total current assets 36,801,770 29,133,379Non-current assets Long-term receivables - 1,935,365Long-term equity investments 379,664,992 76,360,371Investments in other equity instruments 4 - 5,000Other non-current financial assets 5644,300 431,023Investment property 77,364 81,034Fixed assets 34,806 32,223Construction in progress - -Right-of-use assets 435,915 428,575Intangible assets 96,319 109,605Long-term deferred expenses 33,005 24,069Deferred income tax assets 7 7Total non-current assets 80,986,708 79,407,272Total assets 117,788,478 108,540,651Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing ChunmeiThe attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Balance Sheet of the Parent Company (Continued) ___________(RMB’000)_____________ 9 Liabilities and shareholders' equity: Note XVIIDecember 31, January 1,2023 Current liabilities Short-term borrowings 2,124,045 1,900,169Accounts payable 202,691 140,563Contract liabilities 6,750 308Employee compensation payable 184,320 178,097Taxes and levies payable 12,415 63,908Other payables 26,818,710 22,036,683Non-current liabilities due within one year 6,167,442 5,605,919Other current liabilities 3,656 2,430Total current liabilities 35,520,029 29,928,077 Non-current liabilities Long-term borrowings 19,963,555 15,280,955Bonds payable 6,992,012 9,922,133Lease liabilities 20,816 748Long-term employee compensation payable 26,215 84,188Deferred income 53,147 53,638Total non-current liabilities 27,055,745 25,341,662 Total liabilities 62,575,774 55,269,739Share capital 18,779,081 17,071,892Capital reserves 16,127,030 17,715,533Less: Treasury share 1,094,943 1,314,581Other comprehensive income (142,055) (128,195)Surplus reserves 3,671,942 3,510,209Retained earnings 17,871,649 16,416,054Total shareholders’ equity 55,212,704 53,270,912 Total liabilities and shareholders' equity 117,788,478 108,540,651Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing ChunmeiThe attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Income Statement of the Company ___________(RMB’000)_____________ 10 Note XVII 2023 2022 I. Operating revenue 61,719,960 1,593,213Less: Operating cost 61,197,154 1,162,807Taxes and levies 15,213 14,531Sales expenses 32,997 54,059Administrative expenses 496,759 323,594R&D expenses 95,705 171,276Financial expenses 1,126,842 1,282,688Including: Interest expenses 1,581,566 2,252,721Interest income 346,028 771,483Plus: Other income 11,680 8,705Return on investment 72,360,797 12,483,556Of which: Share of profit or loss of joint ventures and associates 7 1,213,417 1,308,061Gain on changes in fair value 492,641 (24,134)Credit impairment loss (1,192) (266)Asset disposal income 1,065 1,540II. Operating profit 1,620,281 11,053,659Plus: Non-operating income 3,372 575,077Less: Non-operating expenses 6,325 7,737III. Gross profit 1,617,328 11,620,999Less: Income tax expenses - - IV. Net profit 1,617,328 11,620,999V. Other comprehensive income (13,860) (16,001)VI. Total comprehensive income 1,603,468 11,604,998Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing ChunmeiThe attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Cash Flow Statement of the Company ___________(RMB’000)_____________ 11 Note XVII 2023 2022 I. Cash flow from operating activities: Proceeds from sale of commodities and rendering of services 1,540,380 1,357,318 Tax and levy rebates 408 1,781 Cash generated from other operating activities 1,065,410 1,029,029 Sub-total of cash generated from operating activities 2,606,198 2,388,128 Payments for commodities and services (884,951) (1,054,192) Cash paid to and for employees (179,035) (215,412) Taxes and levies paid (175,341) (205,575) Cash used in other operating activities (9,420,940) (12,757,279) Sub-total of cash used in operating activities (10,660,267) (14,232,458) Net cash generated from operating activities 8 (8,054,069) (11,844,330) II. Cash flow from investing activities: Proceeds from disinvestments 17,561,714 14,882,100 Proceeds from return on investments 1,359,286 10,461,727 Net proceeds from disposal of fixed assets, intangible assets and other long-term assets - 24 Sub-total of cash generated from investment activities 18,921,000 25,343,851 Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets (13,483) (39,001) Payments for investments (27,016,746) (17,545,211) Cash used in other investing activities - - Subtotal of cash used in investing activities (27,030,229) (17,584,212) Net cash used in investing activities (8,109,229) 7,759,639 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Cash Flow Statement of the Company (Continued) ___________(RMB’000)_____________ 12 Note XVII 2023 2022III. Cash flow generated from financing activities: Capital contributions received - 9,471,959Borrowings raised 18,920,000 23,388,555Net cash received from bonds issue 1,500,000 7,820,000Cash generated from other financing activities 205,647 991,657Sub-total of cash generated from financing activities 20,625,647 41,672,171Cash paid for debt repayment (17,827,419) (26,733,600)Cash paid for distribution of dividends and profits or repayment of interests (1,284,988) (3,195,747)Cash used in other financing activities (276,715) (562,962)Subtotal of cash used in financing activities (19,389,122) (30,492,309)Net cash generated from financing activities 1,236,525 11,179,862IV. Effect of exchange rate changes on cash and cash equivalents (1,382) 73,720V. Net increase in cash and cash equivalents (14,928,155) 7,168,891Add: Opening balance of cash and cash equivalents 17,570,270 10,401,379VI. Ending balance of cash and cash equivalents 92,642,115 17,570,270Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing ChunmeiThe attached notes to the financial statements form an integral part of the financial statements. TCLTechnology Group Corporation Statement of Changes in Shareholders’ Equity of the Company ___________(RMB’000)_____________ 13 2023 Share capitalOther equity instrumentsCapital reservesTreasury share Other comprehensive incomeSurplus reservesRetained earningsTotal shareholders’ equity I. Balance at the end of the prior year 17,071,892 - 17,715,533 (1,314,581) (128,195) 3,510,20916,416,05453,270,912 Add: Change in accounting policies - - - - - - - - II. Balance at the beginning of the period 17,071,892 - 17,715,533 (1,314,581) (128,195) 3,510,20916,416,05453,270,912 III. Movement of the period 1,707,189 - (1,588,503) 219,638 (13,860) 161,7331,455,5951,941,792 (I) Total comprehensive income - - - - (13,860) - 1,617,3281,603,468 (II) Capital contributed and reduced by shareholders - - 108,217219,638 - - - 327,855 1. Capital contributed by owners - - - - - - - - 2. Capital contributed by holders of other equity instruments - - - - - - - - 3. Share-based payments included in owners' equity - - 108,217466,809 - - - 575,026 4. Amount of bond issue included in owners' equity - - - - - - - - 5. Others - - - (247,171) - - - (247,171) (III) Profit distribution - - - - - 161,733 (161,733) - 1. Appropriation of surplus reserves - - - - - 161,733 (161,733) - 2. Appropriation to shareholders - - - - - - - - 3. Others - - - - - - - - (IV) Internal transfer of owner's equity 1,707,189 - (1,707,189) - - - - - 1. Capitalization of capital reserves into capital (or share capital) 1,707,189 - (1,707,189) - - - - - (V) Others - - 10,469 - - - - 10,469 IV. Balance as at the end of the period 18,779,081 - 16,127,030 (1,094,943) (142,055) 3,671,94217,871,64955,212,704 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements.TCLTechnology Group Corporation Statement of Changes in Shareholder Equity of the Company (Continued) ___________(RMB’000)_____________ 14 2022 Share capital Other equity instrumentsCapital reservesTreasury share Other comprehensive incomeSurplus reserves Retained earningsTotal shareholders’ equity I. Balance at the end of the prior year 14,030,642200,3349,900,679 (1,885,557) (112,194) 2,348,1098,021,32932,503,342 Add: Change in accounting policies - - - - - - - - II. Balance at the beginning of the period 14,030,642200,3349,900,679 (1,885,557) (112,194) 2,348,1098,021,32932,503,342 III. Movement of the period 3,041,250 (200,334) 7,810,865570,976 (16,001) 1,162,1008,394,72520,763,581 (I) Total comprehensive income - - - - (16,001) - 11,620,99911,604,998 (II) Capital contributed and reduced by shareholders 3,041,250 (200,334) 7,823,531570,976 - - - 11,235,423 1. Capital contributed by owners 3,041,250 - 6,668,566 - - - - 9,709,816 2. Capital contributed by holders of other equity instruments - - - - - - - - 3. Share-based payments included in owners' equity - - 27,19076,664 - - - 103,854 4. Amount of bond issue included in owners' equity - (200,334) 1,127,775997,083 - - - 1,924,524 5. Others - - - (502,771) - - - (502,771) (III) Profit distribution - - (12,666) - - 1,162,100 (3,212,103) (2,062,669) 1. Appropriation of surplus reserves - - - - - 1,162,100 (1,162,100) - 2. Appropriation to shareholders - - - - - - (2,050,003) (2,050,003) 3. Others - - (12,666) - - - - (12,666) (IV) Others - - 3,989 - - - (14,171) (10,182) IV. Balance as at the end of the period 17,071,892 - 17,715,533 (1,314,581) (128,195) 3,510,20916,416,05453,270,912 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei The attached notes to the financial statements form an integral part of the financial statements.TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 15 IGeneral information TCLTechnology Group Corporation (hereinafter referred to as “the Company”) is a limited liability company established in Huizhou on July 17,1997. It was changed to a limited liability company as a whole in 2002 and was listed on the Shenzhen Stock Exchange in January 2004. After years of new share placements, non-public reissuances, conversion into share capital, exercise of options and repurchase and cancellation of shares, etc., the registered capital and share capital of the Company were RMB18,779,080,767 as at December 31,2023. The main business structure of the Company and its subsidiaries consists of display, new energy photovoltaic and materials, industrial finance and other businesses. The relevant information of the Company's subsidiaries is detailed in Note VIII. The registered address of the Company is: TCLTECHBuilding,17 Huifeng Third Road, Zhongkai Hi-Tech Development District, Huizhou City, Guangdong Province. Approval and issue: These financial statements were authorized for issue by the Company’s Board of Directors on April 28,2024. IIScope of consolidated financial statements As at the end of the Reporting Period, for subsidiaries included in the consolidated financial statements, please refer to Note VIII,1, (1) “Breakdown of important subsidiaries”. For the changes to the scope of the consolidated financial statements of the Reporting Period, see TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 16 IIISignificant 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 Information Disclosure and Compilation of Companies Offering Securities to the Public No.15 - General Provisions on Financial Reports” (revised in 2023) 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 Accounting Basis and Measurement Basis The Company’s accounting treatment is based on the accrual basis. Except certain financial instruments measured at fair value, the financial statements are measured at historical cost. If an asset is impaired, provision for impairment will be made accordingly based onrelevant rules. 4 Statement of compliance with corporate accounting standards The financial statements are in compliance with the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the financial position, operating results, cash flow and other relevant information of the Company during the Reporting Period. 5 Accounting period The Company adopts the calendar year as an accounting period, and its fiscal year is from January 1 to December 31 of the Gregorian calendar. 6 Operations cycle An operations cycle refers to a period from the purchase of assets by an enterprise for processing to the realization of cash or cash equivalents. The Company takes a 12 months’ period as an operations cycle and take the operating cycle as the criteria for liquidity classification of assets and liabilities. 7 Functional currency for bookkeeping The Company uses RMB as its functional currency. Its overseas subsidiaries use the currencies of the main economic environment in which they operate as their respective functional currencies and their financial statements are converted into RMB and presented in RMB thousands unless otherwise specified. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 17 IIISignificant accounting policies and accounting estimates (continued) 8 Method and selection basis for determining importance criteria Item Importance criteria The recovery, reversal and actual write-off of bad debt provisions for important receivables with bad debt provisions accrued on an individual basis The amount of an individual item is greater than RMB50 million. Important construction in progress The ending carrying amount of an individual item exceeds RMB10 billion. Important non-wholly-owned subsidiaries The total asset of non-wholly-owned subsidiaries exceeds 10% of that of the Group or the total revenue of non-wholly-owned subsidiaries exceeds 10% of that of the Group. Important joint ventures or associates The carrying amount of long-term equity investments in a single investee exceeds 5% of the total asset of the Group. Important prepayments, contract liabilities, accounts payable and other payables are aged for more than 1 year The amount of an individual item exceeds 0.5% of the total asset of the Group. Important capitalized research and development projects The cumulative expenditure of an individual project exceeds 0.5% of the total asset of the Group. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 18 IIISignificant accounting policies and accounting estimates (continued) 9 Accounting treatments for business combinations involving enterprises under and not under 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 they are accounted for collectively; (c) The occurrence of a transaction depends on the occurrence of at least one of the other transactions;(d) A transaction is uneconomical individually, but is economical when considered collectively with other transactions. (2) Business combinations involving enterprises under common control A combination of enterprises that are ultimately controlled by the same party or parties before and after the combination on a non-temporary basis constitutes a business combination under common control. Assets and liabilities acquired by the Company in business combination are measured at the carrying amounts of assets and liabilities of the acquired party in the consolidated financial statements of the ultimate controlling party as at the date of combination (including the goodwill resulting from the acquisition of the acquired party by the ultimate controlling party). The difference between the carrying amount of net assets acquired in the combination and that of the consideration paid for the combination (or the total par value of shares issued) is used to adjust the share capital premium in the capital reserve, and when the share capital 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 estimated liabilities or assets, the difference between the amounts of the estimated liabilities or assets and the settlement amount of subsequent contingent consideration is used to adjust the capital reserve (capital premium or share capital premium), and when the capital reserve is insufficient, it is used to adjust the retained earnings. For a business combination 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 investments and the carrying amount of long-term equity investments before the combination plus the carrying amount of the newly paid considerations 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 the owner’s equity other than net profit or loss, other comprehensive income or profit distribution of net assets of the invested company recognized as equity are not subject to accounting, and will be transferred to the current profit and loss until disposal of the investment. (3) Business combination not under common control A combination of enterprises that are not ultimately controlled by the same party or parties before and after the combination constitutes a business combination not under common control. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 19 IIISignificant accounting policies and accounting estimates (continued) 9 Accounting treatments for business combinations involving enterprises under and not under common control (continued) (3) Business combination not under common control (continued) Assets paid and liabilities incurred or assumed by 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 their carrying amount is recognized in profit or loss. The difference between the higher combination cost and lower share in the fair value of net identifiable assets of the acquired party gained in the combination is recognized as goodwill. If the combination cost is lower than the share in the fair value of net identifiable assets of the acquired party gained in the combination, the fair values of the identifiable assets, liabilities and contingent liabilities of the acquired party gained and the measurement of the combination cost are first reviewed; and if it is reviewed that the combination cost is lower than the share in the fair value of net identifiable assets of the acquired party gained in the combination, the difference between the lower combination cost and higher share in the fair value of net identifiable assets of the acquired party gained in the combination is included in current profits and losses. In the case where a business combination not under common control is realized through multiple exchanges and transactions, if it is a package transaction, each transaction will be accounted for as a transaction for acquiring control; in the case it is not a package transaction, if the equity investment held before the date of combination is accounted for using equity method, the sum of the carrying amount of equity investments of the acquired party held before the date of acquisition, plus the new investment cost on the date of acquisition will be recognized as the initial cost of the investment; the remaining comprehensive income recognized in equity investments using equity method before the date of acquisition will be recorded, when the investment is disposed of on the same basis as those the investee adopted directly to dispose of 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 carrying amount of the original equity, and the accumulated fair value changes originally included in other comprehensive income should be transferred to return on investment for the current period of the combination date. (4) Expenses incurred from combination The agency fees paid for audits, legal services, assessments and consultations and other directly related expenses incurred in the business combination are recognized in profit or loss during 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; TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 20 IIISignificant accounting policies and accounting estimates (continued) 10 Methods for judging control and preparing consolidated financial statements (1) Criteria for judging control 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. The Company judges whether it controls the investee based on comprehensive consideration of all relevant facts and circumstances. Once any change in relevant facts and circumstances causes the relevant elements involved in the definition of control to be changed, the Company will conduct a reassessment. The relevant facts and circumstances mainly include: ① The purpose for which the investee is established; ② The relevant activities of the investee and how to make decisions on such activities; ③ Whether the rights enjoyed by the investor enable it to currently lead the relevant activities of the investee; ④ Whether the investor is entitled to variable returns by participating in the relevant activities of the investee; ⑤ Whether the investor has the ability to exercise its power over the investee to affect the amount of return; ⑥ The relationship between the investor and other parties. (2) Consolidation scope 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) are included into the consolidated financial statements. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 21 IIISignificant accounting policies and accounting estimates (continued) 10 Methods for judging control and preparing consolidated financial statements (continued) (3) Consolidation procedure The Company prepares the consolidated financial statements based on the financial statements of itself and its subsidiaries and other relevant information. The Company prepares the consolidated financial statements in a manner that the whole group will be treated as an accounting entity to reflect the financial position, operating results, and cash flow of the group as a whole under unified accounting policies, in accordance with the recognition, measurement and presentation requirements of relevant accounting standards for business enterprises. The accounting policies and accounting periods adopted by all subsidiaries included in the consolidated financial statements are consistent with those of the Company. If the accounting policies or accounting periods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustments will be made in accordance with the Company's accounting policies and accounting periods when preparing consolidated financial statements. The impact of intracompany transactions between the Company and its subsidiaries, and intracompany transactions between subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement and consolidated statement of changes in shareholders' equity is offset in the preparation of consolidated financial statements. Where a transaction is recognized by the Company or its subsidiaries as the transaction subject, which is different from that under the consolidated financial statement of the group, the transaction should be adjusted at the group level. If the current losses shared by the minority shareholders of a subsidiary exceed the share enjoyed by the minority shareholder in the initial owners' equity of the subsidiary, the balance will still reduce the minority interests. During the Reporting Period, if a subsidiary or business is added due to the business combination involving enterprises under common control, the opening balances of the consolidated balance sheet are adjusted; the income, expenses and profits of the subsidiary or business as 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 as from the beginning of the period of combination to the end of the Reporting Period are included in the consolidated cash flow statement, and the relevant items of the comparative statements are adjusted as if the reporting entity after the combination had existed since the time point when the ultimate controller began to control. If the Company is able to exercise control over the investee under common control due to additional investment or for other reasons, it shall be deemed that the parties participating in the combination had made adjustments based on their current state when the ultimate controller began to control. For the equity investment held before obtaining the control over the acquired party, relevant gains and losses, other comprehensive income and other changes in net assets recognized between the date of obtaining the original equity or the date when the acquiring party and the acquired party are under common control, whichever later, and the date of combination shall be used to offset the beginning retained earnings or the profits and losses of the comparative statement period. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 22 IIISignificant accounting policies and accounting estimates (continued) 10 Methods for judging control and preparing consolidated financial statements (continued) (3) Consolidation procedure (continued) 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 or business from the date of acquisition to the end of the Reporting Period are included in the consolidated income statement; the cash flow of the subsidiary or business from the date of acquisition to the end of the Reporting Period is included in the consolidated cash flow statement. If the Company is able to exercise control over the investee not under common control due to additional investment or for other reasons, the Company shall remeasure the equity, of the purchased party held before the purchase date, at its fair value as at the purchase date, and the difference between the fair value and its carrying amount shall be recognized in the return on investment of the current period. If the equity of the purchased party held before the purchase date involves other comprehensive income accounted for under the equity method and other changes in owner’s equity other than net profit and loss, other comprehensive income, and profit distribution, the relevant other comprehensive income and other changes in owner’s equity shall be converted into the return on investment of the current period of on the purchase date, except for other comprehensive income arising from the investee’s remeasurement of the changes in net liabilities or net assets of defined benefit plans. During the reporting period, if the Company disposes of a subsidiary or business, the income, expenses and profits of the subsidiary or business for the period from the beginning of the period to the disposal date are included in the consolidated income statement; and the cash flow of the subsidiary or business for the period from the beginning of the reporting period to the disposal date is included in the consolidated cash flow statement. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 23 IIISignificant accounting policies and accounting estimates (continued) 10 Methods for judging control and preparing consolidated financial statements (continued) (3) Consolidation procedure (continued) 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 based on 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 return on investment 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 owners' equity other than profit distribution, will be converted into current return on investment 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. When the equity investment in a subsidiary is disposed of step by step through multiple transactions until the loss of control, when the terms, conditions and economic influence of the transactions of the equity investment in the subsidiary conform to one or more of the following, it usually indicates that the multiple transaction items shall be accounted for as a transaction package: ① These transactions are made simultaneously or with consideration of influence on each other; ② These transactions can only achieve a complete business outcome when they are accounted for collectively; ③ The occurrence of a transaction depends on the occurrence of at least one of the other transactions; ④ A transaction is uneconomical individually, but is economical when considered collectively with other transactions. If transactions through which the equity investment in a subsidiary is disposed of until the loss of control constitute a transaction package, the Company will account for such transactions as one transaction through which the subsidiary is disposed of with the loss of control over it; provided that the difference between the price for each disposal and the share in the net asset of the subsidiary corresponding to the investment disposed of, before the loss of control, is recognized as other comprehensive income in the consolidated financial statements and is transferred to the profits and losses of period in which the loss of control occurs. When transactions through which the equity investment in a subsidiary is disposed of until the loss of control do not constitute a transaction package, such transactions shall be accounted for i) before the loss of control, in accordance with the relevant policies for partial disposal of an equity investments in a subsidiary without losing control; and ii) upon the loss of control, in accordance with the general accounting method for disposing of a subsidiary. The difference, between the long-term equity investment obtained by the Company through the purchase of minority interests and the share in the net asset of the subsidiary calculated continuously from the purchase date (or combination date) based on the new shareholding percentage, shall be used to adjust i) the share capital premium under the capital reserve in the consolidated balance sheet or ii) the retained earnings, if the share capital premium under the capital reserve is insufficient to offset,. The difference, between the disposal price obtained from the partial disposal of a long-term equity investment in a subsidiary without losing control and the share, corresponding to the long-term equity investment disposed of, in the net asset of the subsidiary calculated continuously from the purchase date or combination date, shall be used to adjust i) the share capital premium under the capital reserve in the consolidated balance sheet or ii), the retained earnings, if the share capital premium under the capital reserve is insufficient to offset. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 24 IIISignificant accounting policies and accounting estimates (continued) 11 Classification of joint arrangements and accounting treatment method for joint operations (1) Classification of joint arrangements The Company classifies a joint arrangement as a joint operation or a joint venture according to factors such as the structure and legal form of the joint arrangement, the terms agreed in the joint arrangement, other relevant facts and circumstances. Joint arrangements not reached through independent entities are classified as joint operations; joint arrangements reached through independent entities are usually classified as joint ventures; however, a joint arrangement that is indicated by conclusive evidence of meeting any of the following conditions and meeting the provisions of relevant laws and regulations is classified as a joint operation: ① The legal form of the joint arrangement shows that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ② The contractual terms of the joint arrangement stipulates that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. ③ Other relevant facts and circumstances show that the parties have rights to the assets, and obligations for the liabilities, relating to the arrangement. For example, the parties enjoy substantially all the output related to the joint arrangement, and the repayment of the liabilities relating to the arrangement continues relying on the support of the parties. (2) Accounting treatment for joint operation The Company shall recognize the following items in relation to interest in the joint operation, and carry out accounting treatment in accordance with the provisions of relevant accounting standards for business enterprises: ① its assets, including its share of any assets held jointly; ② its liabilities, including its share of any liabilities incurred jointly; ③ its revenue from the sale of its share of the output arising from the joint operations; ④ its share of the revenue from the sale of the output by the joint operations; and ⑤ its expenses, including its share of any expenses incurred jointly. If investing or selling assets (except those that constitute a business), etc., into or to the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the joint operation. The Company will recognize in full the asset impairment loss arising if the assets invested or sold are impaired in compliance with the Accounting Standards for Business Enterprises No.8 - Asset Impairment, etc. If purchasing assets (except those that constitute a business), etc., from the joint operation, the Company shall only recognize the part of the profit and loss arising from the transaction attributable to other participants in the joint operation, before the assets, etc., are sold to a third party by the Company. The Company will recognize its share of the asset impairment loss arising if the assets purchased are impaired in compliance with the Accounting Standards for Business Enterprises No.8 - Asset Impairment, etc. The Company does not enjoy joint control over the joint operations. If the Company has rights to the assets, and obligations for the liabilities, relating to the joint operation, it shall still be accounted for by the above principles; otherwise, it shall be accounted for by the relevant accounting standards for business enterprises. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 25 IIISignificant accounting policies and accounting estimates (continued) 12 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 cash 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. 13 Foreign currency business and translation of foreign currency statements (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 at fair value through other comprehensive income, 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 “Retained earnings” item, are translated at the spot exchange rate at the time of occurrence of the 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 overseas operation listed in other comprehensive income in the balance sheet are transferred from the other comprehensive income to the profit and loss. When the disposal of a portion of the equity investment or otherwise causes a decrease in the proportion of equity held in the overseas operation without losing of control over the overseas operation, the translation differences in the foreign currency statements related to the part of the overseas operation disposed of will be attributed to minority interests, rather than to the profit and loss. When the overseas operation disposed of is a portion of the equity of an associate or joint venture, the translation difference of the foreign statements related to the overseas operation should be transferred to the profit or loss for the period in proportion to the disposal of the overseas operation. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 26 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments When the Company becomes a party to a financial instrument, it recognizes a financial asset or liability. The effective interest method refers to the method of calculating the amortized cost of financial assets or liabilities and allocating interest income or interest expenses into each accounting period. The effective interest rate refers to the interest rate used to discount the estimated future cash flow of a financial asset or financial liability during its expected duration to the book balance of the financial asset or the amortized cost of the financial liability. When determining the effective interest rate, the expected cash flow is estimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment, extension, call options or other similar options), but the expected credit loss is not considered. The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the repaid principal from the initial recognition amount of the financial asset or financial liability, adding or subtracting the difference between the initial recognition amount and the maturity amount by using the effective interest method, and then deducting the accumulated accrued loss reserve (only applicable to financial assets). (1) Classification and measurement of financial assets According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial assets, the Company divides the financial assets into the following three categories: (a) Financial assets at amortized cost. (b) Financial assets at fair value through other comprehensive income. (c) Financial assets at fair value through profit or loss. Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider financing components for no more than one year, the initial measurement shall be made at the transaction price. For financial assets at fair value through profit or loss, transaction expenses are directly recognized in the current profit and loss. For other financial assets, transaction expenses are included in the initial recognition amount. Subsequent measurement of financial assets depends on their classification. All related financial assets affected will be reclassified when and only when the Company changes its business model of managing financial assets. (a) Financial assets classified as those measured at amortized cost The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial asset is to collect the contractual cash flow, then the Company classifies the financial asset as measured at amortized cost. Financial assets of the Company that are classified as those measured at amortized cost include monetary assets, notes receivable, accounts receivable, other receivables, long-term receivables, debt investments, etc. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 27 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (1) Classification and measurement of financial assets (continued) (a) Financial assets classified as those measured at amortized cost (continued) The Company recognizes interest income from such financial assets with the effective interest method, and carries out subsequent measurement at amortized cost. Gains or losses arising from impairment or derecognition or modification are included in current profit and loss. The Company calculates and determines the interest income based on the book balance of financial assets multiplied by the effective interest rate except for the following circumstances: ① For purchased or originated credit-impaired financial assets, the Company calculates and determines their interest income at the amortized cost of the financial assets and the credit-adjusted effective interest rate since the initial recognition. ② For financial assets not credit-impaired at the time of being purchased or originated but in the subsequent period, the Company calculates and determines their interest income at the amortized cost and the effective interest rate of the financial assets in the subsequent period. If the financial instrument is no longer credit-impaired due to the improvement of its credit risk in the subsequent period, the Company calculates and determines the interest income by multiplying the effective interest rate by the book balance of the financial asset.(b) Financial assets classified as those measured at fair value through other comprehensive income The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest on the amount of outstanding principal, and the business model for managing the financial assets is both to collect contractual cash flow and for its sale, then the Company classifies the financial assets as measured at fair value through other comprehensive income. The Company recognizes interest income from such financial assets with the effective interest method. Except that the interest income, impairment loss and exchange difference are recognized as the current profit and loss, other changes in fair value are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the current profit and loss. Notes and accounts receivable at fair value through other comprehensive income are reported as receivables financing, and such other financial assets are reported as other debt investments. Among them, other debt investments maturing within one year from the balance sheet date are reported as the current portion of non-current assets, and other debt investments maturing within one year are reported as other current assets. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 28 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (1) Classification and measurement of financial assets (continued) (c) Financial assets designated as measured at fair value through other comprehensive incomeAt the time of initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets at fair value through other comprehensive income on the basis of individual financial assets. Changes in the fair value of such financial assets are included in other comprehensive income without allowance for impairment. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred out and included in the retained earnings. During the investment period when the Company holds the equity instrument, the dividend income is recognized and included in the current profit and loss when the Company's right to receive dividends has been established, the economic benefits related to dividends are likely to flow into the Company, and the amount of dividends can be measured reliably. The Company reports such financial assets under the item of investments in other equity instruments. An investment in equity instruments is a financial asset at fair value through profit or loss when it is obtained mainly for recent sale, or is part of the identifiable portfolio of financial assets centrally managed when initially recognized and objective evidence exists for a short-term profit model in the near future, or is a derivative (except for derivatives defined as financial guarantee contracts and designated as effective hedging instruments). (d) Financial assets classified as those measured at fair value through profit or loss If failing to be classified as those measured at amortized cost or at fair value through other comprehensive income, or not designated as measured at fair value through other comprehensive income, financial assets are all classified as those measured at fair value through profit or loss. The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 29 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (1) Classification and measurement of financial assets (continued) (e) Financial assets designated as measured at fair value through profit or loss At the time of initial recognition, the Company may irrevocably designate financial assets as measured at fair value through profit or loss on the basis of individual financial assets in order to eliminate or significantly reduce accounting mismatches. If the mixed contract contains one or more embedded derivative instruments and its main contract is not any financial asset as above, the Company may designate the whole of the mixed contract as a financial instrument at fair value through profit or loss. Except under the following circumstances: ① Embedded derivatives do not significantly change the cash flow of mixed contracts. ② When determining initially whether similar mixed contracts need to be split, it is substantially clear that embedded derivatives contained in them should not be split without analysis. If the prepayment right embedded in a loan allows the holder to prepay the loan at an amount close to the amortized cost, the prepayment right does not need to be split. The Company carries out subsequent measurement of such financial assets at fair value, and includes gains or losses arising from changes in fair value as well as dividends and interest income associated with such financial assets into current profits and losses. The Company reports such financial assets as held-for-trading financial assets and other non-current financial assets according to their liquidity. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 30 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (2) Classification and measurement of financial liabilities The Company classifies a financial instrument or its components into financial liabilities or equity instruments upon initial recognition according to the contract terms of and the economic substance reflected by the financial instrument issued, rather than only in legal form, in combination with the definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair value through profit or loss, or other financial liabilities, or derivatives designated as effective hedging instruments. Financial liabilities are measured at fair value upon initial recognition. For financial liabilities at fair value through profit or loss, relevant transaction expenses are directly included in current profits and losses; for other categories of financial liabilities, relevant transaction expenses are included in the initial recognition amount. Subsequent measurement of financial liabilities depends on their classification: (a) Financial liabilities at fair value through profit or loss Such financial liabilities include held-for-trading financial liabilities (including derivatives falling under financial liabilities) and financial liabilities designated as measured at fair value upon initial recognition and through profit or loss. A financial liability is a held-for-trading financial liability if it is mainly undertaken for recent sale or repurchase, or is part of the identifiable portfolio of financial instruments centrally managed, and there is objective evidence that the enterprise has recently employed a short-term profit model, or is a derivative instrument, except derivatives designated as effective hedging instruments and derivatives conforming to financial guarantee contracts. Held-for-trading financial liabilities (including derivatives falling under financial liabilities) are subsequently measured at fair value. All changes in fair values except for hedging accounting are included in current profits and losses. The Company irrevocably designates financial liabilities as measured at fair value through profit or loss at the time of initial recognition in order to provide more relevant accounting information, provided: ① Such financial liabilities can eliminate or significantly reduce accounting mismatches. ② The financial liability portfolio or the portfolio of financial assets and liabilities is managed and evaluated for performance on the basis of fair value according to the enterprise risk management or investment strategy stated in the official written documents, and is reported to key management personnel within the enterprise on this basis. The Company subsequently measures such financial liabilities at fair value. Apart from changes in fair value that are brought about by changes in the Company’s own credit risk and included in other comprehensive income, other changes in fair value are included in current profits and losses. Unless including such changes in other comprehensive income will cause or expand accounting mismatch in profit or loss, the Company will include all changes in fair value (including the amount affected by changes in its own credit risk) in current profits and losses. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 31 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (2) Classification and measurement of financial liabilities (continued) (b) Other financial liabilities The Company classifies financial liabilities except for the following items as measured at amortized cost. Such financial liabilities are recognized by the effective interest method and subsequently measured at amortized cost. Gains or losses arising from derecognition or amortization are included in the current profits and losses: ① Financial liabilities at fair value through profit or loss. ② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets. ③ Financial guarantee contracts that do not fall under the first two categories hereof, and loan commitments that do not fall under category (1) hereof and lend at a below-market interest rate.Financial guarantee contracts refer to contracts that require the issuer to pay a specific amount to the contract holder who has suffered losses when a specific debtor fails to pay the debt in accordance with the original or modified terms of the debt instrument. Financial guarantee contracts that are not financial liabilities designated as measured at fair value through profit or loss are measured after initial recognition according to the loss reserve amount and of the initial recognition amount, less the accumulated amortization amount during the guarantee period, whichever is higher. (3) Derecognition of financial assets and liabilities (a) Financial asset are derecognized, i.e. written off from its account and balance sheet if any of the following conditions is met: ① The contractual right to receive cash flow from the financial asset is terminated; or ② The financial asset has been transferred, which meets the requirements for derecognition of financial assets. (b) Conditions for derecognition of financial liabilities If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability (or part thereof) is derecognized. The existing financial liability is derecognized with a new one recognized, and the difference between the carrying amount and the consideration paid (including transferred non-cash assets or assumed liabilities) is included in the current profits and losses, if an agreement is signed between the Company and the lender to replace the existing financial liability by assuming a new one, and the contract terms of these two financial liabilities are substantially different, or the contract terms of the existing financial liability (or part thereof) are substantially modified.If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall be distributed according to the proportion of the fair value of the continuing recognition portion and the derecognition portion to the overall fair value on the repurchase date. The difference between the carrying amount allocated to the derecognized portion and the consideration paid (including transferred non-cash assets or liabilities assumed) shall be included in the current profits and losses. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 32 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (4) Recognition basis and measurement method of financial asset transferWhen a financial asset is transferred, the Company evaluates the risks and rewards retained of the financial asset ownership: (a) If almost all the risks and rewards of the financial asset ownership are transferred, such financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities. (b) If risks and rewards of the financial asset ownership are substantially retained, such financial asset shall continue to be recognized. (c) In circumstances where the Company neither transfers nor retains risks and rewards of the financial asset ownership substantially (i.e. circumstances other than ① and ② of this article), based on whether it retains control over such financial asset, ① the financial asset shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities if such control is not retained; or ② the relevant financial asset shall continue to be recognized to the extent that it continues to be involved in the transferred financial asset, and the relevant liabilities shall be recognized accordingly if such control is retained. The extent that it continues to be involved in the transferred financial asset refers to the extent the Company bears the risks or rewards on changes in the value of the transferred financial asset. When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the principle of substance over form shall be adopted. The Company divides the transfer of financial assets into overall transfer and partial transfer. (a) If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profits and losses: ① The carrying amount of the transferred financial asset on the date of derecognition. ② The sum of the consideration received for the transfer of financial assets and the amount of the respective derecognized portion of the accumulated changes in fair value originally included in other comprehensive income directly (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). (b) If the financial asset is partially transferred and the transferred part meets the conditions for derecognition, the carrying amount of the financial asset before transfer shall be allocated between the derecognition portion and the continuing recognition portion (in this case, the retained service asset shall be regarded as the continuing recognition part of the financial asset) according to the respective relative fair values on the transfer date, and the difference between the following two amounts shall be included in the current profits and losses: ① The carrying amount of the derecognized portion on the derecognition date. ② The sum of the consideration received for the derecognized portion and the amount of the corresponding derecognized portion of the accumulated changes in fair value originally included in other comprehensive income (the financial assets involved in the transfer are financial assets at fair value through other comprehensive income). TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 33 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (4) Recognition basis and measurement method of financial asset transfer (continued) If the transfer of a financial asset does not meet the conditions for derecognition, the financial asset shall continue to be recognized and the consideration received shall be recognized as a financial liability. (5) Determination of fair value of financial assets and liabilities The fair value of a financial asset or liability with an active market shall be determined by the quoted price in the active market, unless the financial asset has a sell-off period for the asset itself. For the financial assets restricted for the assets themselves, the compensation amount demanded by market participants due to the risk of not being able to sell the financial assets on the open market within the specified period shall be deducted from the quoted price in the active market. Quoted prices in the active market includes those for related assets or liabilities that can be easily and regularly obtained from exchanges, dealers, brokers, industry groups, pricing or regulatory agencies, and can represent actual and recurring market transactions on the basis of fair trade. Financial assets initially acquired or derived or financial liabilities assumed shall be determined on the basis of market transaction price. The fair value of financial assets or liabilities without an active market shall be determined by valuation techniques. At the time of valuation, the Company adopts valuation techniques that are applicable under the current circumstances and are supported by sufficient available data and other information, selects input values consistent with the characteristics of relevant assets or liabilities considered by market participants in the transactions thereof, and gives priority to the use of relevant observable input values whenever possible. If the relevant observable input value cannot be obtained or be feasibly obtained, the unobservable input value shall be used. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 34 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (6) Impairment of financial instruments Based on the expected credit loss, the Company conducts impairment accounting of financial assets classified as those measured at amortized cost, financial assets classified as those measured at fair value through other comprehensive income and financial guarantee contracts and recognizes loss reserves. Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchased or originated financial assets of the Company shall be discounted at the credit-adjusted effective interest rate of such financial assets. For receivables arising from transactions regulated by the income criteria, the Company uses the simplified measurement method to measure the loss reserve according to the amount equivalent to the expected credit loss during the entire duration. For credit-impaired purchased or originated financial assets, only the accumulated changes in the expected credit losses during the entire duration since the initial recognition are recognized as loss reserves on the balance sheet date. On each balance sheet date, the amount of change in the expected credit loss during the entire duration is included in the current gains and losses as impairment losses or gains. Even if the expected credit loss during the entire duration on the balance sheet date is less than that reflected in the estimated cash flow upon initial recognition, the favorable change in the expected credit loss is recognized as impairment gains. In addition to other financial assets adopting the above simplified measurement method and other than the credit-impaired purchased or originated ones, the Company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial recognition, measures its loss reserves and recognizes the expected credit loss and its changes respectively according to the following circumstances on each balance sheet date: (a) If the credit risk of the financial instrument has not increased significantly since its initial recognition, it is in the first stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss over the next 12 months, and the interest income shall be calculated according to the book balance and the effective interest rate. (b) If the credit risk of the financial instrument has increased significantly since initial recognition but no credit impairment has occurred, it is in the second stage, and its loss reserve shall be measured according to an amount equivalent to its expected credit loss throughout its life, and the interest income shall be calculated according to the book balance and the effective interest rate. (c) If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and the Company shall measure its loss reserve according to an amount equivalent to its expected credit loss throughout its life, and calculate the interest income at the amortized cost and the effective interest rate. The increase or reversed amount of the credit loss reserve for financial instruments shall be included in the current profits and losses as impairment losses or gains. Except for financial assets classified as those measured at fair value through other comprehensive income, the credit loss reserve will offset the carrying amount of the financial assets. For any of financial assets classified as those measured at fair value through other comprehensive income, the Company recognizes its credit loss reserve in other comprehensive income without reducing its carrying amount presented in the balance sheet. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 35 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (6) Impairment of financial instruments (continued) In the previous accounting period, the Company has measured the loss reserve, the amount equivalent to the expected credit loss of the financial instruments throughout its life. However, on the balance sheet date of the current period, the financial instrument no longer conforms to the situation of significant increase in credit risk since initial confirmation; on the balance sheet date of the current period, the Company has measured the loss reserve of the financial instruments, the amount equivalent to the expected credit loss in the next 12 months, and the reversed amount of the loss reserve thus formed is included in the current profit and loss as impairment profit. (a) Significant increase in credit risk In order to determine whether the credit risk of financial instruments has increased significantly since the initial recognition, the Company uses the available reasonable and based forward-looking information and compares the risk of default of financial instruments on the balance sheet date with the risk of default on the initial confirmation date. When the Company applies provisions on depreciation of financial instruments to financial guarantee contracts, the initial recognition date shall be regarded as the date when the Company becomes a party to make irrevocable commitments. For the assessment of whether the credit risk has increased significantly, the Company will consider the following factors: ① According to whether the actual or expected debtor's operations results have changed significantly; ② Whether the regulatory, economic or technological environment of the debtor has undergone significant adverse changes; ③ Whether the following items have changed significantly: the value of collateral as debt mortgage, or the guarantee provided by a third party, or the quality of credit enhancement; these changes will reduce the debtor’s economic motivation to repay the loan within the time limit stipulated in the contract and could impact the probability of default; ④ Whether the debtor's expected performance and repayment behavior have changed significantly; ⑤ Whether the Company's credit management methods for financial instruments have changed, etc. If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by the Company, the Company assumes that the credit risk of the financial instrument has not increased significantly since the initial recognition. The financial instrument will be deemed to have lower credit risk under the following circumstances: the default risk of the financial instrument is lower; the borrower has a strong capacity to fulfill its contractual cash flow obligations in a short time; furthermore, even if there are adverse changes in the economic situation and operating environment for a long period of time, it may not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 36 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (6) Impairment of financial instruments (continued) (b) Financial assets with depreciation of creditIf one or more events have adverse effects on the expected future cash flow of a financial asset, the financial asset will become a financial asset that has suffered credit impairment. The following observable information can be regarded as evidence of credit impairment of financial assets: ① The issuer or debtor is in serious financial difficulty;② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.;③ The creditor gives concessions to the debtor due to economic or contractual considerations related to the debtor's financial difficulties; the concessions will not be made under any other circumstances;④ There is a great possibility of bankruptcy or other financial restructuring of the debtor; ⑤ The issuer or debtor has financial difficulties, resulting in the disappearance of the active market for the financial assets; ⑥ Purchasing or generation of a financial asset with a large discount, which reflects the fact of credit loss. Credit impairment of financial assets may not be caused by separately identifiable events, but may be caused by the combined effect of multiple events. (c) Determination of expected credit lossThe expected credit losses of financial instruments is assessed individually and collectively. During the assessment of the expected credit losses, the Company will take into account reasonable and reliable information about past events, the current situation and future economic situation forecast. The Company divides financial instruments into different combinations on the basis of common credit risk characteristics. Common credit risk characteristics adopted by the Company include: financial instrument type, credit risk rating, aging combination, overdue aging combination, contract settlement cycle, debtor's industry, etc. To understand the individual evaluation criteria and combined credit risk characteristics of relevant financial instruments, please refer to the accounting policies of relevant financial instruments for details. The Company adopts the following methods to determine the expected credit losses of relevant financial instruments: ① In terms of financial assets, credit loss is equivalent to the present value of the difference between the contract cash flow that the Company shall receive and the expected cash flow. ② In terms of the financial guarantee contract, credit loss is equal to the expected amount of payment made by the Company to the holder of the contract for credit loss incurred, less the present value of the difference between the amount expected to be collected from the holder of the contract, the debtor or any other party. ③ If, on the balance sheet date, a financial asset has suffered credit impairment, but one does not purchase or generate a financial asset that has suffered credit impairment, the credit loss is equivalent to the difference between the book balance of the financial asset and the present value of the estimated future cash flow discounted at the original actual interest rate. Factors reflected in the Company's method of predicting credit losses by quantitative finance tools include: unbiased probability weighted average amount determined by evaluating a series of possible results; time value of money; reasonable and reliable information about past events, current situation and future economic situation forecast that can be obtained on the balance sheet date without unnecessary extra costs or efforts. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 37 IIISignificant accounting policies and accounting estimates (continued) 14 Financial instruments (continued) (6) Impairment of financial instruments (continued) (d) Write-off of financial assets If the Company cannot reasonably expect the contract cash flow of the financial asset to be fully or partially recovered, the book balance of the financial asset will be written off directly. This write-off constitutes the derecognition of relevant financial assets. (7) Offset of financial assets and financial liabilitiesIn the balance sheet, financial assets and financial liabilities are shown separately without offsetting each other. However, if the following conditions are met at the same time, the net amount after offset will be listed in the balance sheet: (a) The Company has the legal right, which is currently enforceable, to offset the confirmed amount; (b) The Company plans to settle on a net basis, or realize the financial assets and settle the financial liabilities at the same time. 15 Notes receivable For the determination method and accounting treatment method of the Company's expected credit loss on notes receivable, please refer to 14(6) of note IIIImpairment of financial instruments. If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of a single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide notes receivable into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. 16 Accounts receivable For the determination method and accounting treatment method of the Company's expected credit loss on accounts receivable, please refer to 14(6) of note IIIImpairment of financial instruments. As for the accounts receivable, if there is objective evidence that the Company will not be able to recover the money according to the original terms of the accounts receivable, the Company will separately determine its credit loss. If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of single instrument, the Company will divide the accounts receivable into several combinations according to the credit risk characteristics, and calculate the expected credit loss on the basis of the combinations (with reference to the experience of historical credit loss, and in combination with the current situation with the judgment of future economic situation) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 38 IIISignificant accounting policies and accounting estimates (continued) 17 Receivables financing Accounts receivable classified as those measured at fair value through other comprehensive income, with a maturity of i) less than one year (including one year) from the initial recognition date, are listed as receivables financing; or ii) more than one year from the initial recognition date, are listed as other debt investments. For the relevant accounting policies, please refer to 14(6) of note IIIImpairment of financial instruments. 18 Other receivables For the determination method and accounting treatment method of the Company's expected credit loss of other receivables, please refer to 14(6) of note IIIImpairment of financial instruments. For other receivables for which there is objective evidence that the Company will not be able to recover the amount according to the original terms of the receivables, the Company will separately determine its credit loss. If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situation, divide other receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. 19 Inventories (1) Classification of inventories Inventories refer to, among other things, finished products or goods held by the Company for sale in its daily activities, work in progress in production, materials and supplies consumed in the production or provision of labor services. Inventories mainly include but are not limited to raw materials, work in progress, finished products, and turnover materials.(2) Valuation method for inventories shipped in transit When acquired, inventory is initially measured at cost, including purchase costs, processing costs, and other costs. Inventories are shipped in transit by weighted average method. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 39 IIISignificant accounting policies and accounting estimates (continued) 19 Inventories (continued) (3) Basis for determining the net realizable value of inventories and accrual method for inventory valuation allowance After conducting a comprehensive counting at the end of the period, inventory valuation allowance shall be accrued or adjusted based on whichever lower of the cost and net realizable value of the inventory. For inventories of goods directly used for sale, such as finished goods, merchandise inventories and materials for sale, in the normal production and operations process, the net realizable value is determined by the amount of the estimated Sales expenses 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 operations process, the net realizable value is determined by the amount of the estimated selling expenses of finished products produced less the estimated cost 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, which is difficult to measure separately from other items, thus inventory valuation allowance is accrued and 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 The Company's turnover materials are amortized by the one-time amortization method. 20 Contract assets A contract asset shall be recognized if the Company has transferred the goods to the customer and has the right to receive a consideration depending on other factors than the passage of time. The right of the Company to unconditionally receive the considerations from customers (i.e., only depending on the passage of time) is listed independently as receivables. For the determination method and accounting treatment method of the Company’s expected credit loss on contract assets, please refer to 14(6) of note IIIImpairment of financial instruments. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 40 IIISignificant accounting policies and accounting estimates (continued) 21 Held-for-sale non-current assets or disposal groups (1) Criteria for classification as being held for sale The Company recognizes non-current assets or disposal groups that meet both of the following conditions as components held for sale: ① they can be sold immediately under the current status according to the practice of selling such assets or disposal groups in similar transactions; ② The sale is likely to occur, that is, the Company has made a resolution on the sale plan, obtained the approval from the regulatory authorities (if applicable), and obtained a confirmed purchase commitment that the sale is expected to be completed in one year. The confirmed purchase commitment refers to a legally binding purchase agreement concluded by and between the Company and another party, which contains important terms such as transaction price, time and sufficiently severe penalty for breach of contract, so that there will be little possibility of major adjustments to or cancellation of the agreement. (2) Accounting treatment for held-for-sale assets The Company shall not depreciate or amortize non-current assets or disposal groups held for sale. If the carrying amount is higher than the amount of fair value net of selling expenses, the former shall be written down to the latter. The amount written down shall be recognized as asset impairment loss and included in the current profit and loss, and the impairment allowance for assets held for sale shall be accrued at the same time. The non-current asset or disposal group classified as being held for sale on the date of acquisition shall be initially measured at whichever initially measured amount is lower under the assumption that it is not classified as being held for sale and the amount of fair value net of selling expenses. The above principles are applicable to all non-current assets, except investment real estate subsequently measured by the fair value model, biological assets measured by the amount of fair value net of selling expenses, assets formed by employee compensation, deferred income tax assets, financial assets regulated by the relevant accounting standards of financial instruments, and rights arising from insurance contracts regulated by the relevant accounting standards of insurance contracts. 22 Debt Investments For the determination method and accounting treatment methods of the Company’s expected credit loss of debt investments, please refer to 14(6) “Impairment of financial instruments” under Note III. 23 Long-term receivables For the determination method and accounting treatment method of the Company's expected credit loss on long-term receivables, please refer to 14(6) of note IIIImpairment of financial instruments.If sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level of single instrument, the Company will refer to the experience of historical credit loss, combine the current situation and judgment on future economic situations, divide long receivables into several combinations according to the characteristics of credit risk, and calculate expected credit loss on the basis of combinations. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 41 IIISignificant accounting policies and accounting estimates (continued) 24 Long-term equity investments (1) Recognition of initial investment cost (a) Long-term equity investment formed by business combination For details on accounting policies, please refer to Note (III),9 accounting treatments for business combinations involving enterprises under and not under common control. (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. For long-term equity investment acquired by issuing equity securities, the fair value of equity securities issued is recognized as initial investment cost; the transaction costs arising from issuing or acquiring the own equity instruments of the acquiring party will be offset from the equity in directly attributable transactions. 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 that indicates that the fair value of assets received is more reliable. For non-monetary assets that do not satisfy the above condition, the carrying amount 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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 42 IIISignificant accounting policies and accounting estimates (continued) 24 Long-term equity investments (continued) (2) Subsequent measurement and recognition of profit and loss (a) Cost method The long-term equity investment by which the Company exercises control over the investee is accounted for by the cost method and measured at the initial investment cost. When the long-term equity investment is added or recovered, its cost should be adjusted thereby. In addition to the actual payment or the cash dividends or profits included in the consideration that have been declared but not yet paid when acquiring the investment, the Company recognizes the investment income for the period the investee's cash dividends or profits attributable to the Company will be recorded in gains from investment for the period.(b) Equity method The long-term equity investments made by the Company in affiliates and joint ventures are accounted for using the equity method. Among them, the portion ofequity investments in affiliates, held indirectly through venture capital, mutual funds, trusts, or similar entities, including investment-linked insurance funds, are measured at fair value through profit or loss. The difference between the higher initial cost of the long-term equity investment 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 higher fair value share of identifiable net assets of the investee enjoyed at the time of conducting the investment is included in the current profits and losses. After the Company acquires a long-term equity investment, the investment income and other comprehensive income should be recognized respectively based on the Company's share in the net profit and loss and other comprehensive income realized by the investee, and the carrying amount of the long-term equity investment should be adjusted accordingly; the Company's share in the profits or cash dividends declared by the investee should be calculated, and the carrying amount of the long-term equity investment should be reduced accordingly; the carrying amount of the long-term equity investment should be adjusted based on changes in owners' equity of the investee other than net profit and loss, other comprehensive income, and profit distribution, and included in owners' equity. Before the Company recognizes its share in the net profit and loss of the investee, the net profit of the investee is adjusted based on the fair value of the identifiable assets of the investee as at the acquisition of the investment. Any unrealized profit and loss from internal transactions between the Company and its affiliates or joint ventures attributed to the Company based on the Company's, will be offset, and the investment profit and loss is recognized thereon. When the Company recognizes its share in the losses incurred by the investee, the Company should, firstly, offset the carrying amount of the long-term equity investment. Then, if the carrying amount of the long-term equity investment is insufficient for the offset, the investment loss is continued to be recognized, and the carrying amount of long-term receivable items is offset, subject to other carrying amount of the long-term equity constitutes the net investment in the investee. Finally, after the above-mentioned treatment, if the Company still bears additional obligations in accordance with the investment contract or agreement, the provision 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 recognized liabilities and recover other long-term equity that substantially constitutes net investment of the investee and the carrying amount of the long-term equity, and then recover the recognition of the profit as return on investment. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 43 IIISignificant accounting policies and accounting estimates (continued) 24 Long-term equity investments (continued) (3) Conversion accounting treatment of long-term equity investments (a) Accounting treatment for the transfer from fair value measurement to equity method For an equity investment, originally held by the Company without control, joint control or significant impact on the investee that is accounted for based on the financial instrument recognition and measurement standards, if as a result of additional investment or otherwise, the equity investment enables the Company to exercise significant impact on or joint control (rather than control) over the investee, the sum of the fair value of the originally held equity investment determined under the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and the new investment cost should be deemed as the initial cost of the investment accounted for using equity method.The difference between the lower initial investment cost accounted for using equity method and the higher share of the fair value of the identifiable net assets of the investee as at the date of the additional investment calculated based on the new shareholding percentage after the additional investment is made, shall be used to adjust the carrying amount of the long-term equity investment and included in the non-operating income for the period. (b) Transfer from fair value measurement or equity method to cost method For an equity investment, originally held by the Company without control, joint control or significant impact on the investee that is accounted for based on the financial instrument recognition and measurement standards, or a long-term equity investment originally held by the Company in an affiliate or joint venture, if as a result additional investment or for other reasons, the investment enables the Company to exercise control over an investee that is not under the common control with Company, the sum of the carrying amount of the originally held equity investment and the new investment cost should be should be the initial cost of the investment accounted for using cost method in preparation of the individual financial statements of the Company. The remaining comprehensive income recognized in the equity investments using equity method before the date of acquisition is accounted for, when the investment is disposed of, on the same basis as those the investee adopted directly to dispose of the underlying assets or liabilities. If the equity investment held before the acquisition date is subject to the accounting treatment under the relevant provisions of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments, the cumulative changes in fair value originally included in other comprehensive income should be transferred to the profit or loss for the period when the investment is accounted for using cost method. (c) Transfer from equity method to fair value measurement If the Company loses joint control or significant impact on the investee due to the disposal of part of the equity investment or otherwise, the equity remaining after the disposal should be accounted for under the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments, and the difference between the fair value and carrying amount as at the date of losing the joint control or significant impact should be included in the profit or loss for the period. Other comprehensive income recognized for the original equity investment accounted for using equity method should be accounted for on the same basis as the direct disposal of the underlying assets or liabilities by the investee when the equity method is terminated. (d) Transfer from cost method to equity method Where the Company loses control over the investee due to the disposal of part of the equity investment or otherwise, if the equity remaining after the disposal by which the Company can exercise joint control or significant impact on the investee in preparation of the individual financial statements of the Company, the investment will be accounted for using equity method, and such remaining equity will be adjusted as if it were accounted for using equity method from the time when it is acquired. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 44 IIISignificant accounting policies and accounting estimates (continued) 24 Long-term equity investments (continued) (3) Conversion accounting treatment of long-term equity investments (continued) (e) Transfer from cost method to fair value measurement If the Company loses control over the investee due to the disposal of part of the equity investment or otherwise, the equity remaining after the disposal by which the Company cannot exercise joint control or significant impact on the investee should be accounted for based on the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments, in preparation of the individual financial statements of the Company, and the difference between the fair value and carrying amount as at the date of losing the control should be included in profit or loss. (4) Disposal of long-term equity investments When a long-term equity investment is disposed of, the difference between the carrying amount of the long-term equity investment and the actual acquisition price shall be included in the profit or loss for the period. For a long-term equity investment accounted for using equity method, when the investment is disposed of, the part originally included in other comprehensive income should be accounted for in the corresponding proportion and on the same basis as the direct disposal of the underlying assets or liabilities by the investee. 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 when they are accounted for collectively; (c) The occurrence of a transaction depends on the occurrence of at least one of the other transactions; (d) A transaction is uneconomical individually, but is economical when considered collectively 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 carrying amount. 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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 45 IIISignificant accounting policies and accounting estimates (continued) 24 Long-term equity investments (continued) (4) Disposal of long-term equity investments (continued) (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 shareholding 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 Company 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 carrying amount 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; (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. (5) Criteria for judgment of joint control and significant impact If the Company exerts joint control over an arrangement with other participants in accordance with the relevant agreement, and decision on activities that has significant impact on the return of the arrangement requires the unanimous consent of the participants sharing the control, the Company and other participants will be deemed to have joint control over the arrangement - a joint venture arrangement. If a joint venture arrangement is entered into through an independent entity, and the Company has right over the net assets of the independent entity based on the relevant agreements, the independent entity shall be deemed as a joint venture and accounted for using equity method. If based on the relevant agreement, the Company does not have rights to the net assets of the individual entity, the individual entity shall be deemed as a joint operation, and the items related to the share of interests in the joint operation should be recognized and accounted for in accordance with the provisions of relevant Accounting Standards for Business Enterprises. Significant impact means the investor’s power to participate in the decision-making of the financial and operating policies of the investee, but by which the investor cannot control or commonly control together with other parties the formulation of the policies. Significant impact on the investee will be determined based on one or more of the cases with reference to all facts and conditions: 1) Assigning a representative to the board of directors or similar authority of the investee; 2) Participating in formulation of the financial and operational policies of the investee; 3) Entering into a significant transaction with the investee; 4) Assigning an officer to the investee; or 5) Providing key technical information to the investee. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 46 IIISignificant accounting policies and accounting estimates (continued) 25 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. An investment property of the Company will be recorded at its cost that comprises i) in case of a purchased investment property, the purchase price, relevant taxes and other expenses directly attributable to the asset; or ii) in case of a self-constructed investment property, the necessary expenses incurred before the asset is constructed to reach its intended serviceable state. 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 are used. When the purpose of an investment property is changed to self-use, the Company shall convert the investment property into a fixed asset or intangible asset from the date of change. When the purpose of a self-used property is changed to earning rent or capital appreciation, the Company will convert the fixed asset or intangible asset into an investment property from the date of change. When such a conversion occurs, the carrying amount before the conversion shall be used as the recorded value after the conversion. When an investment property is disposed of, or when it permanently withdraws from use and no economic benefit is expected to be obtained from the disposal of it, the investment property shall be derecognized. The disposal income from the sale, transfer, scrapping or damage of an investment property, net of its carrying amount and related taxes and fees, is recognized in the profits and losses of the current period. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 47 IIISignificant accounting policies and accounting estimates (continued) 26 Fixed assets (1) Recognition criteria for fixed assets Fixed assets mean 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. Fixed assets are depreciated by the straight-line method. The depreciation rate of various fixed assets is determined according to the estimated service life and estimated residual value (the estimated residual value is 0-10% of the original value). The depreciation rate of classified fixed assets is as follows: Asset Category Estimated Service Life Annual Depreciation Rate Houses and buildings 20-50 years 1.90%-5%Machinery equipment 5-10 years 9.5%-20%Office and electronic equipment 2-5 years 22.22%-50%Transportation equipment 3-5 years 19.00%-33.33%Power stations 20-25 years 3.80%-4.75%Others 4-5 years 19.00%-31.67% 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 Company 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. The methods for impairment testing and accrual of impairment provisions of fixed assets are detailed in 31 “Long-term Asset Impairment” under Note III. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 48 IIISignificant accounting policies and accounting estimates (continued) 27 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. The methods for impairment testing and accrual of impairment provisions of construction in progress are detailed in 31 “Long-term Asset Impairment” under Note III. 28 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 and other assets that require a substantial period of acquisition, construction or production activities to get ready for the intended use or sale status. Borrowing costs become capitalized when: (1) The asset expenditure has occurred, including expenditure incurred in the form of cash payments, transfer of non-cash assets, or assuming interest-bearing debts for the purpose of acquisition, construction or production of assets that are eligible for capitalization; (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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 49 IIISignificant accounting policies and accounting estimates (continued) 29 Right-of-use assets The Company initially measures right-of-use assets at cost. Such cost includes: (1) The initial measurement amount of lease liabilities; (2) Lease payments made on or before the commencement date of the lease term (if a lease incentive exists, net of the amount related to the lease incentive already taken); (3) Initial direct costs incurred by the Company; (4) Costs expected to be incurred by the Company to disassemble and remove the leased asset(s), restore the premises where the leased asset(s) is/are located, or restore the leased asset(s) to the condition agreed upon under the terms of the lease (excluding costs incurred to produce inventory). After the commencement date of the lease term, the Company uses the cost model for subsequent measurement of right-of-use assets. If it is reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over its/their remaining service life. If it is not reasonably certain that ownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciates the leased asset(s) over the lease term or the remaining service life of the leased asset(s), whichever is shorter. Right-of-use assets for which impairment reserves have been accrued are depreciated in future periods at their carrying amount net of impairment reserves, with reference to the above principles. In accordance with the provisions of Accounting Standards for Business Enterprises No.8 - Asset Impairment, the Company determines whether right-of-use assets have been impaired and accounts for the recognized impairment losses, as detailed in 31 “Long-term Asset Impairment” under Note III. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 50 IIISignificant accounting policies and accounting estimates (continued) 30 Intangible assets Intangible assets refer to the identifiable non-monetary assets, owned or controlled by the Company, without physical form, including land use rights, intellectual property rights, and non-patented technologies, etc. Intangible assets are recorded at the actual cost at the time of acquisition. The service life of intangible assets is 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 years Land use rights The shorter of the years of the land use rights and the operating years of the Company Patents and non-patent technologies 10 years or the shorter of service life, beneficiary years and legally valid years Others Beneficiary 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. The methods for impairment testing and accrual of impairment provisions of intangible assets are detailed in 31 “Long-term Asset Impairment” under Note III. If an intangible asset is foreseen as unable 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 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 are 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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 51 IIISignificant accounting policies and accounting estimates (continued) 31 Impairment of long-lived assets The Company determines whether there is any sign of possible impairment of the long-term assets on the balance sheet date. If there is any sign of impairment in a long-term asset, the Company estimates the recoverable amount thereof based on the individual asset. If it is difficult to estimate the recoverable amount of the individual asset, the recoverable amount of the asset is determined based on the asset group to which the asset belongs. The recoverable amount of an asset is determined based on the net amount of fair value of the asset less the disposal expenses, or the present value of estimated future cash flows of the asset, whichever is higher. If the measurement results of the recoverable amount indicate that the recoverable amount of the long-term investment is lower than its carrying amount, the carrying amount of the long-term investment is written off to the recoverable amount, and the amount written by is recognized as asset impairment losses, which is included in the profit and loss, while provision for asset impairment is made. Once the asset impairment loss is confirmed, it cannot be reversed in the future accounting period. After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired assets will be adjusted accordingly in the future periods, so that the adjusted carrying amount of the asset (deducting the expected net residual value) will be systematically amortized over the remaining service life of the asset. 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. In the impairment test of goodwill, the carrying amount of goodwill is apportioned to the asset group or asset group portfolio expected to benefit from the synergy of the business combination. When impairment tests are conducted on underlying asset groups or asset group portfolios that contain goodwill, impairment tests will be first conducted on the asset groups or asset group portfolios that do not contain goodwill, provided there is any sign of impairment in the asset groups or asset group portfolios related to the goodwill, and the recoverable amount will be calculated, and compared with the relevant carrying amount to recognize the corresponding impairment loss. Further impairment tests will be conducted on asset groups or asset group portfolios that contain goodwill, by comparing the carrying amount of such underlying asset groups or asset group portfolios (including the part of the carrying amount of the allocated goodwill) with their recoverable amount. If the recoverable amount of the underlying asset group or asset group portfolio is lower than its carrying amount, the impairment loss shall be recognized for goodwill. 32 Long-term deferred expenses Long-term deferred expenses refer to various expenses that the Company has paid, should be amortized over the current and future periods, 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. 33 Contract liabilities The Company recognizes as contract liabilities the part of the obligation to transfer the goods to the customer due to received or receivable consideration from the customer. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 52 IIISignificant accounting policies and accounting estimates (continued) 34 Employee benefits Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. (a) Short-term employee benefits Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, and short-term paid absences. The employee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at their fair value. (b) Post-employment benefits The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the Reporting Period, the Company’s defined contribution plans mainly include basic pensions and unemployment insurance. (c) Termination benefits If the Company terminates the labor relationship with an employee before the labor contract expires, or offers compensation for encouraging the employee to accept the redundancies voluntarily, the liabilities arising from compensation for the termination of labor relations with the employee is determined, and also included in the current profit and loss, at the time when the Company 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. For other long-term employee benefits that meet the conditions of a defined contribution plan, the amount to be contributed shall be recognized as a liability during the accounting period when the employee provides services to the Company, and shall be included in profit or loss for the period or the underlying asset costs. For long-term employee benefits other than those mentioned above, on the balance sheet date, the benefit obligations arising from the defined benefit plan shall be attributed to the periods during which the employee provides services, and shall be included in profit or loss for the period or the underlying asset costs. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 53 IIISignificant accounting policies and accounting estimates (continued) 35 Estimated liabilities (1) Recognition standards for estimated liabilities An obligation related to product quality assurance, loss contracts, restructuring and other contingencies shall be recognized as provision, if i) it is a current obligation of the Company, ii) the fulfillment of this obligation is likely to result in an outflow of economic benefits, and iii) the amount of this obligation can be reliably measured. (2) Measurement methods for estimated liabilities The estimated liabilities 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 estimates are handled as follows: In case 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 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 estimated liabilities 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 carrying amount of the estimated liabilities. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 54 IIISignificant accounting policies and accounting estimates (continued) 36 Lease liabilities The Company initially measures lease liabilities at the present value of the lease payments outstanding on the commencement date of the lease term. When calculating the present value of lease payments, the Company uses the interest rate implicit in lease as the rate of discount. If the implicit interest rate of the lease cannot be determined, the incremental loan interest rate of the Company shall be used as the discount rate. Lease payments include: (a) The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; (b) Variable lease payments that depend on indexation or ratio; (c) The exercise price of the purchase option, when applicable, if the Company is reasonably certain that the option will be exercised; (d) The amount required to be paid to exercise the option to terminate the lease if the lease term reflects that the Company will exercise the option to terminate the lease; (e) The estimated amount payable based on the secured residual value provided by the Company. The Company calculates the interest expenses of lease liabilities for each period within the lease term at a fixed rate of discount and includes them in profit or loss for the current period or cost of the related assets. Variable lease payments that are not included in the measurement of lease liabilities should be included in profit or loss for the current period or cost of the related assets when they are actually incurred. 37 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 are made to the identified related costs or expenses or total owners' equity after the vesting date. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 55 IIISignificant accounting policies and accounting estimates (continued) 38 Revenue recognition (1) General principles applied to revenue recognition The Company shall recognize the revenue according to the transaction price assigned to the performance obligation when any due performance obligation is fulfilled (namely when the client obtains the control over relevant commodities or services). Performance Obligation means that, under the contract, the Company promises to transfer commodities or services that can be clearly distinguished to the client. “Obtain the control over relevant commodities or services” refers to the ability to completely dominate the use of commodities and obtain almost all economic benefits. From the contract’s effectiveness date, the Company shall evaluate the contract, recognize each single performance obligation included and determine whether each performance obligation is fulfilled within a certain period or at a time point. When any of the following conditions is met, for performance obligation to be fulfilled within a certain period, the Company shall recognize corresponding revenue within the period as scheduled: (a) While fulfilling the due obligation in the Company, the client obtains and consumes the resulting economic benefit; (b) The client is able to control the commodities under construction during the Company’s fulfillment; (c) Commodities generated from the Company’s fulfillment possess irreplaceable purpose and the Company has the right to charge all fulfilled performance obligations within the whole contract period; otherwise, the Company shall recognize corresponding revenue when the client obtains the control over relevant commodities or services. For any performance obligation with a certain period, the Company shall apply the output method/input method to determine the appropriate fulfillment schedule based on the specific nature of commodities and services. The output method is to determine the fulfillment schedule according to the value of commodities transferred to the client (while the input method is to determine the fulfillment schedule according to the Company’s input to fulfill the performance obligation). If the fulfillment schedule cannot be reasonably determined and the Company’s costs are predicted to be compensated, corresponding revenue shall be recognized based on the specific cost amount until the fulfillment schedule could be reasonably determined. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 56 IIISignificant accounting policies and accounting estimates (continued) 38 Revenue recognition (continued) (2) Specific revenue recognition method (a) Product sales contract According to the contract terms, for the selling of products subject to performance obligation fulfillment conditions at a time point and other products, the Company shall recognize the realization of sales revenues when the client obtains the control over relevant commodities or services according to the delivery condition agreed in the sales contract upon signed by the client after commodities are received. (b) Technical service contract If revenues are recognized within a certain period based on the technical service contract, corresponding revenues shall be recognized according to the performance schedule. (c) Royalty income Accounted for according to the time and method of charging as stipulated in the relevant contract or agreement. (d) Revenue from photovoltaic power stations a. Centralized power stations: Power stations are combined to the grid. The revenue is recognized based on the documents on power supply provided by the business departments of the Company, after the duration of continuous and trouble-free operation specified by the electric power company is met. b. Distributed power stations: Power stations are combined to the grid. The revenue is recognized based on the documents on settlement provided by the business departments of the Company. (3) Principles of handling revenues from specific transactions (a) For the contract containing the sales return article: When the client obtains the control over relevant commodities, corresponding revenue shall be recognized according to the consideration amount (excluding the amount predicted to be returned due to sales return) predicted to be duly charged from transferring commodities to the client, and corresponding liabilities shall be recognized based on the amount predicted to be returned due to sales return. Meanwhile, when commodities are sold, the balance through deducting the predicted cost for taking back commodities from the carrying amount of commodities predicted to be returned (including the impairment of value of returned commodities) shall be accounted for under “Returned Commodities Cost Receivable”. (b) For the contract containing the quality assurance article: it’s required to evaluate whether the quality assurance involves any separable service except for the promise (to the client) that commodities conform to established standards. If the Company provides additional service, it shall be deemed as a single performance obligation and subject to the accounting treatment according to relevant revenue criteria provisions; otherwise, the quality assurance liability shall be subject to the accounting treatment according to the accounting criteria provisions on Contingency. (c) For the sales contract containing the client’s additional purchase option: the Company shall evaluate whether the option provides the client with any significant right. If any, it shall be deemed as a single performance obligation and the transaction price shall be apportioned to the performance obligation, and corresponding revenues shall be recognized when the client executes the purchase option right and obtains the control over relevant commodities in the future or when the option becomes invalid. If the separable selling price applied to the client’s additional purchase option right cannot be directly observed, it’s required to comprehensively consider the difference in discounts between the client’s execution of option right and the client’s non-execution of option right and analyze the possibility for the client to execute the option right and other relevant information. Then, corresponding reasonable estimate shall be made. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 57 IIISignificant accounting policies and accounting estimates (continued) 38 Revenue recognition (continued) (3) Principles of handling revenues from specific transactions (continued) (d) The contract licensing the IP right to the client: It’s required to evaluate whether the IP right license constitutes any single performance obligation; if any, it is necessary to determine whether the performance obligation fulfillment is fulfilled within a certain period or at a time point. If any IP right license is granted to the client and royalties are charged based on the client’s actual sales or usage, corresponding revenues shall be recognized at a later time between the following dates: the day when the client’s subsequent selling or usage occurs; the day when the Company fulfills relevant performance obligations. (e) Major responsible person and agent: Based on whether the Company has control over the goods or service before transferring it to the customer, it is determined whether the Company is the major responsible person or an agent in the transactions. If the Company is able to control the goods or service before transferring it to the customer, the Company shall be deemed as major responsible person and the revenue shall be recognized at the total amount of the consideration received or receivable; otherwise the Company shall be deemed as an agent and the revenue shall be recognized at the amount of the commission or handling fee to which it expects to be entitled. The amount of the commission or handling fee is determined by deducting the amount payable to other relevant parties from the total amount of consideration received or receivable. 39 Contract costs (1) Contract performance cost For the cost resulting from performing the contract which is not included in other ASBE except the revenue standards and meets the following conditions, the Company shall recognize it as an asset：(a) The cost is directly related to a current or predicted contract, including the direct labor, direct material and manufacturing expenses (or similar expenses), the cost borne by the client and other costs resulting from the contract; (b) The cost adds various resources that can be applied by the Company to fulfill due performance obligations; and (c) The cost is predicted to be recovered. The asset shall be presented and reported in inventory or other non-current assets, which depends on whether the amortization period exceeds a normal operating cycle during the initial recognition. (2) Contract acquisition cost If the increment cost resulting from the Company’s acquisition of contract is predicted to be recovered, it shall be recognized as an asset as the contract acquisition cost. Increment Cost refers to the cost which only results from the contract acquisition, like the sales commission. If the amortization period is less than one year, it shall be included in current profit and loss. (3) Contract cost amortization The asset related to the contract cost shall, by adopting the same basis for the recognition of commodities or services revenues related to the asset, be amortized during the period of fulfilling the performance obligation or according to the fulfillment schedule and be included into current profit and loss. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 58 IIISignificant accounting policies and accounting estimates (continued) 39 Contract costs (continued) (4) Impairment of contract costs For the asset related to the contract cost as mentioned above, if the carrying amount is higher than the difference between the residual consideration predicted to be obtained from the Company’s transfer of commodities related to the asset and the cost to be incurred due to such transfer, depreciation reserves shall be calculated and withdrawn for the surplus which shall also be recognized as the asset impairment loss. After the impairment allowances is established, if changes in depreciation factors during previous periods have made the above difference higher than the asset’s carrying amount, it shall be restituted to previously established asset impairment allowances and included in current profit and loss. However, the carrying amount of restituted assets shall not exceed the carrying amount of the asset on the date of restitution without establishing impairment allowances. 40 Public grants (1) Type of change Public grants are transfers of monetary or non-monetary assets from the public body to the Group at nil consideration. According to the grants targets stipulated in the relevant policies documents, public grants are classified into public grants related to assets and public grants related to income. (2) Recognition of public grants If a public grant is a monetary asset, it is measured at the amount received or receivable. If a public grant 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). Public grants measured at nominal amounts are recognized directly in the current profits and losses. (3) Accounting treatment Public grants related to assets offset the carrying amount of the underlying assets. If the public grants 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; public grants used to compensate costs or losses incurred by the enterprise are directly included in the current profits or losses or offset related costs. For public grants related to the day-to-day activities of the enterprise, the R&D and VAT-related subsidies and the taxation, or operation-based incentive public subsidies are included in other income; other public grants are written off against related costs based on the substance of economic activities. Public grants 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 public 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 public finance department directly appropriates the interest grant funds to the Company, the grants offset the related borrowing costs. In case that a recognized public grant is required to be returned, the carrying amount of the asset is adjusted if the carrying amount 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; and in case of other circumstances, it is directly included in the current profit and loss. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 59 IIISignificant accounting policies and accounting estimates (continued) 41 Deferred income tax assets and deferred income tax liabilities Deferred income tax assets and deferred income tax liabilities shall be recognized based on the difference (temporary difference) between the tax basis and carrying amount of the underlying assets or liabilities. On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured based on the tax rate applicable during the period when it is expected to recover the assets or pay off the liabilities. (1) Basis for recognition of deferred income tax assets The Company recognizes deferred income tax assets arising from deductible temporary differences to the extent that it is likely to acquire taxable income that can be used to offset the deductible temporary differences, deductible losses that can be carried forward to future years and tax credits. However, deferred income tax assets arising from the initial recognition of assets or liabilities in a transaction with all the following characteristics shall not be recognized: (1) the transaction is not a business combination; and (2) the occurrence of the transaction does not affect accounting profits or taxable income or deductible losses. For a deductible temporary difference related to investments in affiliates, the corresponding deferred income tax asset will be recognized if the following criteria are met simultaneously: the temporary difference is likely to be reversed in the foreseeable future and it is likely to obtain taxable income that can be used to offset the deductible temporary difference in the future. (2) Basis for recognition of deferred income tax liabilities The Company recognizes the taxable temporary differences that should be paid but not paid for the current and previous periods as deferred income tax liabilities. But deferred tax liabilities do not include: (a) Temporary differences arising from the initial recognition of goodwill; (b) Temporary differences arising from transactions or events that are not formed by a business combination and do not affect accounting profits or taxable income (or deductible losses) upon their occurrence; (c) For taxable temporary differences related to investments in subsidiaries and associates, 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. (3) Deferred income tax assets and liabilities are presented on a net basis after, provided the following conditions are met: (a) An enterprise has the legal right to settle current income tax assets and liabilities on a net basis; (b) Deferred income tax assets and liabilities relate to income taxes levied by the same taxing authority on either the same taxable entity or different taxable entities which intend to either settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are reversed. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 60 IIISignificant accounting policies and accounting estimates (continued) 42 Leases From the effectiveness date of a contract, the Company assesses whether the contract is a lease or includes any lease. If a party to the contract transfers the right allowing the control over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract is a lease or includes a lease. (1) Lease contract split If a contract contains multiple single leases at the same time, the Company will split the contract, and conduct accounting treatment of each single lease respectively. If a contract contains both lease and non-lease parts at the same time, the Company will split the lease and non-lease parts, conduct accounting treatment of the lease part in accordance with the accounting standards governing leases, and conduct accounting treatment of the non-lease part in accordance with other applicable corporate accounting standards. (2) Lease contract combination With regard to two or multiple contracts containing leases concluded by the Company with the same counterparty or its related parties at the same or a similar time, when any of the following conditions is met, the contracts are combined into one contract for accounting treatment: (a) Two or multiple contracts are concluded based on an overall business purpose and constitute a package deal, and if they are not considered as a whole, the overall business purpose cannot be understood. (b) The consideration amount of one contract among the two or multiple contracts depends on the pricing or performance of other contracts. (c) The rights to use assets transferred by the two or multiple contracts constitute one single lease. (3) Accounting treatment with the Company as lessee On the commencement date of the lease term, the Company recognises the right-of-use assets and lease liabilities for the lease, unless it is a simplified short-term lease or low-value asset lease. (a) Short-term leases and low-value asset leases A short-term lease refers to a lease that does not include a purchase option and whose lease term does not exceed 12 months. A low-value asset lease refers to a lease where the value will be low when a single leased asset is a new asset. The Company does not recognize the right-of-use assets or lease liabilities for the following short-term leases and low-value asset leases. In each period within the lease term, the relevant lease payments are included in cost of the related assets or profit or loss for the current period on a straightline basis or according to other systemic and reasonable methods. Item Simplified leased asset type Short-term lease A lease whose lease term does not exceed 12 months from the commencement date of the lease term Low-value asset lease An asset lease with a value of less than RMB40,000 or its foreign currency equivalents TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 61 IIISignificant accounting policies and accounting estimates (continued) 42 Leases (continued) (3) Accounting treatment with the Company as lessee (continued) The Company recognises the right-of-use assets and lease liabilities for short-term leases and low-value asset leases other than those mentioned above. (b) The accounting policies for right-of-use assets and lease liabilities are detailed in Note III,29 and Note III,36. (4) Accounting treatment with the Company as lessor (a) Lease classification: The Company classifies leases into finance leases and operating leases at the inception of leases. A finance lease refers to a lease where almost all the risks and rewards, related to the ownership of the leased asset(s), are substantially transferred, regardless of whether the ownership is transferred eventually. An operating lease refers to all leases other than finance leases. Usually, the Company classifies a lease that meets any one or more of the following conditions as a finance lease: 1) Upon expiry of the lease term, the ownership of the leased asset(s) is transferred to the lessee. 2) The lessee has the option to purchase the leased assets. As the agreed purchase price is low enough compared with the fair value of the leased asset(s) at the time the option is expected to be exercised, it can be reasonably determined at the inception of the lease that the lessee will exercise the option. 3) Although the ownership of the asset(s) is not transferred, the lease term accounts for the majority of the service life of the leased asset(s). 4) At the inception of the lease, the present value of the lease payments receivable is almost equal to the fair value of the leased asset(s). 5) The leased asset(s) is/are special in nature and can be only used by the lessee, unless there is a large alteration. The Company may also classify a lease that falls under any one or more of the following circumstances as a finance lease: 1) If the lessee cancels the lease, losses to the lessor caused by the cancellation will be borne by the lessee.2) Gains or losses arising from fluctuations in the fair value of the residual value of the leased asset(s) are borne by the lessee. 3) The lessee is able to renew the lease with a rental far lower than the market level to the next term. (b) Accounting treatment of finance leases On the commencement date of the lease term, the Company recognises the finance lease receivables for the finance lease and derecognises the leased asset(s) of the finance lease. In the initial measurement of finance lease receivables, the sum of the unsecured residual value and the present value of the lease payments receivable not yet received on the commencement date of the lease term discounted at the interest rate implicit in lease is the entry value of the finance lease receivables. Lease payments receivable include: 1) The amount of fixed payments, net of amounts related to lease incentives, and the amount of substantive fixed payments; 2) Variable lease payments that depend on indexation or ratios; 3) The exercise price of the purchase option, when applicable, if it is reasonably certain that the lessee will exercise the purchase option; 4) The amount required to be paid by the lessee to exercise the option to terminate the lease if the lease term reflects that the lessee will exercise the option to terminate the lease; 5) Secured residual value provided to the lessor by the lessee, a party related to the lessee, or an independent third party that has the financial ability to perform the security provision obligation. The received variable lease payments that are not included in the measurement of the net investment in the lease are included in profit or loss for the current period when they are actually incurred. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 62 IIISignificant accounting policies and accounting estimates (continued) 42 Leases (continued) (4) Accounting treatment with the Company as lessor (continued) (c) Accounting treatment of operating leases For each period of the lease term, the Company adopts the straight-line method or other systematic and reasonable methods to recognize the lease receipts of the operating lease as rental income; the Company capitalizes the initial direct expenses incurred in connection with the operating lease, amortizes them over the lease term on the same basis as that for the recognition of the rental income, and includes them in the current profit and loss by stage; the Company includes the variable lease payments, obtained in connection with the operating lease that are not included in the lease receipts, in the current profit and loss when actually incurred. (5) Sale and leaseback (a) The Company as seller and lessee If the asset transfer in a sale and leaseback transaction is a sale, the Company will measure the right-of-use assets formed by the sale and leaseback based on the portion of the original asset’s carrying amount that is related to the use right acquired by the leaseback, and recognize related gains or losses only for the right transferred to the lessor. If the fair value of the sales consideration is different from the fair value of the asset, or if the lessor does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the prepaid rent, or the amount above the market price as the additional financing provided by the lessor to the lessee; at the same time, the relevant sales gains or losses will be adjusted based on the fair value. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will continue to recognise the transferred asset and at the same time recognise a financial liability equivalent to the transfer income. (b) The Company as buyer and lessor If the asset transfer in a sale and leaseback transaction is a sale, the Company will conduct corresponding accounting treatment for asset purchase and apply the accounting standards governing leases to the accounting treatment of the asset lease. If the fair value of the sales consideration is different from the fair value of the asset, or if the Company does not charge the rent at the market price, the Company will conduct accounting treatment with the sales consideration amount below the market price as the pre-collected rent, or the amount above the market price as the additional financing provided by the Company to the lessee; at the same time, the rental receipt will be adjusted based on the market price. If the asset transfer in a sale and leaseback transaction is not a sale, the Company will recognise a financial asset equivalent to the transfer income. 43 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. Enterprises that are solely controlled by the state and do not have any other related party relationship shall not be deemed as related parties. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 63 IIISignificant accounting policies and accounting estimates (continued) 44 Discontinued operations The Company will recognize a component that meets one of the following conditions, has been disposed of or classified as being held for sale, and can be separately identified, as a component of discontinued operation: (1) This component represents an independent main business or a separate main operation region. (2) This component is part of a related plan to dispose of an independent main business or a separate main operation region. (3) This component is a subsidiary acquired for the sole purpose of 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. In the balance sheet, the Company presents, independently from other assets, the held-for-sale non-current assets or assets in held-for-sale disposal groups, and presents, independently from other liabilities, the liabilities in held-for-sale disposal groups. The held-for-sale non-current assets or assets in held-for-sale disposal groups and the liabilities in held-for-sale disposal groups shall not offset each other, but shall be presented as current assets and current liabilities respectively. In the income statement, the Company presents the profits and losses from going concern and the profits and losses from discontinued operations. For the discontinued operations reported in the current period, the Company represents in the financial statements for the current period, the information, previously presented as the profits and losses from going concern, as the profits and losses from discontinued operations for the comparable accounting period. If the discontinued operations are no longer eligible for being classified as held-for-sale categories, the Company will represent in the financial statements for the current period, the information, previously presented as the profits and losses from discontinued operations, as the profits and losses from going concern for the comparable accounting period. 45 Hedge Accounting Hedge is classified as fair value hedge, cash flow hedge or net foreign investment hedge based on the hedging relationship. (1) A hedging relationship qualifies for hedge accounting only if all of the following criteria are met: (a) The hedging relationship consists only of eligible hedging instruments and eligible hedged items. (b) At the inception of the hedging relationship, there is formal designation of hedging instruments and hedged items, and documentation of the hedging relationship and the Company’s risk management strategies and objectives for undertaking the hedge have been prepared. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 64 IIISignificant accounting policies and accounting estimates (continued) 45 Hedge Accounting (continued) (1) A hedging relationship qualifies for hedge accounting only if all of the following criteria are met (continued) (c) The hedging relationship meets the hedge effectiveness requirements. The hedging relationship meets the hedge effectiveness requirements only if all of the following criteria are met: 1) There is an economic relationship between the hedged item and the hedging instrument. This economic relationship causes opposite changes in the value of the hedging instrument and the hedged item in face of the identical hedged risk. 2) The effect of credit risk does not dominate the value changes that result from that economic relationship. 3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item. However, that designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument that would create hedge ineffectiveness that could result in an accounting outcome that would be inconsistent with the purpose of hedge accounting. (2) Fair value hedge accounting (a) Gain or loss on the hedging instrument shall be recognised in profit or loss. If the hedging instrument hedges a non-trading equity instrument (or a component thereof) that the Company has elected to be measured at fair value through other comprehensive income, the hedging gain or loss generated by the hedging instrument shall be recognized in other comprehensive income. (b) Gain or loss generated by the hedged item due to the hedged risk exposure shall be recognized in profit or loss, and shall adjust the carrying amount of the recognized hedged item that is not measured at fair value. If the hedged item is a financial asset (or a component thereof) measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognized in profit or loss, and wll not be required for adjustment since the carrying amount has been measured at fair value. However, if the hedged item is a non-trading equity instrument (or a component thereof) that the Company has elected to be measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognized in other comprehensive income, and will not be required for adjustment, since the carrying amount has been measured at fair value. When a hedged item represents a defined commitment that has not been unrecognized (or a component thereof), the cumulative change in the fair value of the hedged item subsequent to its designation caused by the hedge relationship is recognized as an asset or a liability with a corresponding gain or loss recognized in profit or loss. When a defined commitment is made to acquire an asset or assume a liability, the initial carrying amount of the asset or the liability is adjusted to include the cumulative change in the fair value of the hedged item that has been recognized. (c) If the hedged item is a financial instrument (or a component thereof) measured at amortized cost, the adjustment made to the carrying amount of the hedged item shall be amortized based on the effective interest rate recalculated on the amortization commencement date, and recognized in the profit or loss. This amortization can commence from the adjustment date, but not later than the time when the hedging gain or loss adjustment is made for the termination of the hedged item. If the hedged item is a financial asset (or a component thereof) measured at fair value through other comprehensive income, the cumulative recognized hedging gain or loss shall be amortized in the same manner and recognized in the profit or loss, but the carrying amount of the financial asset (or a component thereof) shall not be adjusted. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 65 IIISignificant accounting policies and accounting estimates (continued) 45 Hedge Accounting (continued) (3) Accounting treatment of cash flow hedges (a) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge (i.e., the portion that is offset by the change in the cash flow hedge reserve) shall be recognized in other comprehensive income. The amount of cash flow hedging reserves shall be determined based on the lower of the absolute amount of the following two items: 1) The cumulative gain or loss on the hedging instrument since the commencement of the hedge;2) The cumulative change in the present value of expected future cash flows of the hedged item since the commencement of the hedge. The amount of cash flow hedging reserves recognized in other comprehensive income for each period is the change in cash flow hedging reserves for the period. (b) The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge (i.e., other gain or loss after deducting that recognized in other comprehensive income) shall be recognized in profit or loss. (c) The amount that has been accumulated in the cash flow hedge reserve shall be accounted for as follows: 1) if any hedged item as an expected transaction, and the expected transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or a non-financial liability becomes a defined commitment for which fair value hedge accounting treatment is applied, the Company shall remove that amount from the cash flow hedge reserve previously recognized in other comprehensive income and include it in the initial cost of the asset or the liability. 2) for cash flow hedges other than those covered by 1), that amount from the cash flow hedge reserve previously recognized in other comprehensive income shall be reclassified from the cash flow hedge reserve to profit or loss in the same period or the period during which the hedged expected future cash flows affect profit or loss. 3) however, if that amount from the cash flow hedge reserve previously recognized in other comprehensive income is a loss and the Company expects that all or a portion of that loss will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered from other comprehensive income to profit or loss. (4) Hedges of a net investment in a foreign operation Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment shall be accounted for similarly to cash flow hedges: (a) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be recognized in other comprehensive income. When disposing of all or part of the foreign operation, the gain or loss on the hedging instrument recognized in other comprehensive income shall be correspondingly transferred out and recognized in the profit or loss. (b) The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge shall be recognized in the profit or loss. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 66 IIISignificant accounting policies and accounting estimates (continued) 45 Hedge Accounting (continued) (5) Termination of hedge accounting Hedge accounting will be terminated if one of the following situations occurs: (a) The hedging relationship no longer meets the risk management objectives due to changes in risk management objectives. (b) The hedging instrument has expired or been sold, or the contract has been terminated or has been exercised. (c) The economic relationship no longer exists between the hedged item and the hedging instrument, or the effect of credit risk start to dominate the value changes that result from that economic relationship. (d) The hedging relationship no longer meets other conditions for applying hedging accounting stipulated in this standard. In case that the rebalancing of the hedging relationship is applied, the Company shall first consider the rebalancing of the hedging relationship, and then evaluate whether the hedging relationship meets the conditions for applying hedging accounting stipulated in this standard. Termination of hedge accounting may affect the whole or a portion of the hedging relationship, and when only a portion thereof is affected, hedge accounting remain applicable to the remaining unaffected portion. (6) Fair value selection of credit risk exposure When credit derivative instruments measured at fair value through profit or loss are used to manage the credit risk exposure of a financial instrument (or a component thereof), the financial instrument (or a component thereof) can be designated as a financial instrument measured at fair value through profit or loss during its initial recognition, subsequent measurement, or when not yet recognized, with written records made simultaneously, provided that the following criteria are met: (a) The subject (such as the borrower or the loan commitment holder) of the credit risk exposure of the financial instrument is consistent with the subject involved in the credit derivative; (b) The reimbursement level of the financial instrument is consistent with that of the instrument required to be delivered under the terms of the credit derivative. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 67 IIISignificant accounting policies and accounting estimates (continued) 46 Changes to major accounting policies and estimates (1) Change of accounting policies Impact of the adoption of the Interpretation to Accounting Standards for Business Enterprises No.16 on the Company On December 13,2022, the Ministry of Finance (“MOF”) issued the Interpretation No.16 of the Accounting Standards for Business Enterprises (CK [2022] No.31, hereinafter referred to as the “Interpretation No.16”), clarifying “Accounting treatment that the deferred income taxes associated with assets and liabilities arising from a single transaction is not subject to the initial recognition exemption”. The Interpretation No.16 is effective from January 1,2023, which allows voluntarily early adoption. The Company implemented accounting treatment related to such matter this year, and the implementation of the Interpretation No.16 had no significant impact on the consolidation and the Company’s financial statements. (2) Changes to accounting estimates No significant change occurred to the major accounting estimates in the Reporting Period. 47 Correction of previous accounting errors No previous accounting errors were identified and corrected in the Reporting Period. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 68 IVTaxes 1 Value-added tax In the Reporting Period, output tax was calculated at 3%,5%,6%,9% or 13% of the taxable income of general taxpayers and the value added-tax was paid based on the difference after deducting the allowance deduction of input tax in the current period. The value added-tax payment for the Company’s directly exported goods is executed in accordance with the regulations of “Exemption, Offset and Refund”. The tax refund rate is 0%-13%. 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 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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 69 IVTaxes (continued) 5 Corporate income tax The corporate income tax rate for the Company was 15% in the current period. According to Article 28 of the Enterprise Income Tax Law of the People's Republic of China, a reduced corporate income tax rate of 15% is applied to important high-tech enterprises that the public supports. According to the relevant provisions of the Announcement on the Preferential Income Tax Policies for Small and Micro Enterprises and Self-employed Businesses (Announcement No.6 [2023] of the Ministry of Finance and the State Taxation Administration) and the Announcement of the Ministry of Finance and the State Taxation Administration on Tax Policies for Further Supporting the Development of Small and Micro Enterprises and Self-employed Businesses (Announcement No.12 [2023] of the Ministry of Finance and the State Taxation Administration), issued by the Ministry of Finance and the State Taxation Administration in 2023, from January 1,2023 to December 31,2027, the annual taxable income of small and low-profit enterprises not exceeding RMB1 million will be included in the taxable income at a reduced rate of 25%, and the enterprise income tax will be paid at the rate of 20%. Except for the following subsidiaries entitling to preferential tax treatment and the overseas subsidies that adopt local applicable tax rate, other entities under the Company are subject to the applicable tax rate of 25%, or the preferential tax rate for small and micro enterprises. Subsidiaries entitled to tax preferences: Company Name Preferential tax rate Reason TCLChina Star Optoelectronics Technology Co., Ltd.15.00% High-tech enterprise Wuhan China Star Optoelectronics Technology Co., Ltd.15.00% High-tech enterprise Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd.15.00% High-tech enterprise Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd.15.00% High-tech enterprise Suzhou China Star Optoelectronics Technology Co., Ltd. 15.00% High-tech enterprise Huizhou Kedate Smart Display Technology Co., Ltd.15.00% High-tech enterprise China Display Optoelectronics Technology (Huizhou) Co., Ltd.15.00% High-tech enterprise Shenzhen Qianhai Maojia Software Technology Co., Ltd.15.00% High-tech enterprise Qingdao Blue Business Consulting Co., Ltd.15.00% High-tech enterprise Tianjin Huanbo Science and Technology Co., Ltd.15.00% High-tech enterprise Tianjin Printronics Circuit Corporation 15.00% High-tech enterprise Techigh Circuit Technology (Huizhou) Co., Ltd.15.00% High-tech enterprise Shenzhen TCLHigh-Tech Development Co., Ltd.15.00% High-tech enterprise TCLFinancial Technology (Shenzhen) Co., Ltd.15.00% High-tech enterprise Suzhou China Star Environmental Protection Technology Co., Ltd.15.00%Corporate income tax is levied at a reduced rate of 15% on eligible third-party enterprises, engaged in pollution prevention and control Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd.15.00% High-tech enterprise Tianjin Zhonghuan Advanced Material&Technology Co., Ltd.15.00% High-tech enterprise Inner Mongolia Zhonghuan Solar Material Co., Ltd.15.00% High-tech enterprise Inner Mongolia Zhonghuan Advanced Bandaoti Material Co., Ltd.15.00%High-tech enterprise, encouraged business in West China TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 70 IVTaxes (continued) 5 Corporate income tax (continued) Company Name Preferential tax rate Reason Wuxi Zhonghuan Applied Materials Co., Ltd.15.00% High-tech enterprise Inner Mongolia Zhonghuan Crystal Materials Co., Ltd.15.00%High-tech enterprise, encouraged business in West China Tianjin Huanzhi New Energy Technology Co., Ltd.15.00% High-tech enterprise Huansheng New Energy (Jiangsu) Co., Ltd.15.00% High-tech enterprise Xuzhou Jingrui Bandaoti Equipment Technology Co., Ltd.15.00% High-tech enterprise Tianjin Huanou New Energy Technology Co., Ltd 15.00% High-tech enterprise Huansheng New Energy (Tianjin) Co., Ltd.15.00% High-tech enterprise Ningxia Zhonghuan Solar Material Co., Ltd.15.00% Encouraged business in West China Ningxia Zhonghuan New Energy Co., Ltd.15.00% Encouraged business in West China Dushan Anju Photovoltaic Technology Co., Ltd.15.00%Encouraged business in West China Otog Banner Huanju New Energy Co., Ltd.15.00% Encouraged business in West China Sonid Left Banner Huanxin New Energy Co., Ltd.15.00%Encouraged business in West China Ningxia Huanou New Energy Technology Co., Ltd.15.00%Encouraged business in West China Inner Mongolia TCLPhotoelectric Technology Co., Ltd.15.00%Encouraged business in West China Shaanxi Huanshuo Green New Energy Co., Ltd.15.00%Encouraged business in West China Zhonghuan Advanced Bandaoti Technology Co., Ltd.12.50%A high-tech enterprise and an enterprise engaged in integrated circuit materials Yixing Huanxing New Energy Co., Ltd.12.50% Public-supported public infrastructure project Tianjin Binhai Huanneng New Energy Co., Ltd.12.50%Public-supported public infrastructure project Qinhuangdao Tianhui Solar Energy Co., Ltd.12.50%Public-supported public infrastructure project Guyuan Shengju New Energy Co., Ltd.12.50% Public-supported public infrastructure project Zhangjiakou Shengyuan New Energy Co., Ltd.12.50%Public-supported public infrastructure project TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 71 IVTaxes (continued) 5 Corporate income tax (continued) Company Name Preferential tax rate Reason Phase III project of Hohhot Huanju New Energy Development Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Ongniud Banner Guangrun New Energy Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Tuquan Guanghuan New Energy Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Inner Mongolia New Huanyu Yangguang New Energy Technology Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Gengma Huanxing New Energy Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Dangxiong Youhao New Energy Development Co., Ltd.7.50%Public-supported infrastructure project, encouraged business in West China Ningxia Huanneng New Energy Co., Ltd. Tax-freePublic-supported infrastructure project, encouraged business in West China Shangyi Shengyao New Energy Development Co., Ltd. Tax-freePublic-supported public infrastructure project Shaanxi Runhuan Tianyu Technology Co., Ltd. Tax-freePublic-supported infrastructure project, encouraged business in West China Hohhot Shuguang New Energy Co., Ltd. Tax-freePublic-supported public infrastructure project, encouraged business in West China Tianjin Binhai New Area Huanju New Energy Co., Ltd. Tax-freePublic-supported public infrastructure project TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 72 VNotes to Consolidated Financial Statements 1 Monetary assets December 31,2023 January 1,2023 Cash on hand 583 480Bank deposits 19,807,150 33,161,505Deposits with the central bank 397,191 381,137Other monetary assets 1,719,347 1,835,379 21,924,271 35,378,501Note Monetary assets with restricted use rights December 31,2023 January 1,2023TCLTECHFinance's statutory reserve deposits with the central bank 341,091 321,852Other restricted monetary assets 1,586,365 1,381,025 1,927,456 1,702,877 On December 31,2023, the Company’s bank deposits of RMB341,091,000 (December 31,2022: RMB321,852,000) were statutory deposit reserves deposited with the Central Bank by TCL Technology Group Finance Co., Ltd., a subsidiary of the Company. On December 31,2023, the Company’s monetary assets offshore amounted to RMB1,533,937,000 (December 31,2022: RMB2,230,135,000), all of which were owned by the overseas subsidiaries of the Company. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 73 VNotes to Consolidated Financial Statements (Continued) 2 Held-for-trading financial assets December 31,2023 January 1,2023 Financial assets classified as those measured at fair value through profit or loss 23,184,117 12,703,507Including: Debt instrument investments 23,131,691 12,483,274Equity instrument investments 52,426 220,233 23,184,117 12,703,5073 Derivative financial assets December 31,2023 January 1,2023 Foreign exchange forwards and foreign exchange swaps 73,645 206,398Interest rate swaps 34,363 154,636 108,008 361,0344 Notes receivable (1) Notes receivable by category December 31,2023 January 1,2023 Bank acceptance notes 615,059 512,767Trade acceptance notes 333 82 615,392 512,849TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 74 VNotes to Consolidated Financial Statements (Continued) 4 Notes receivable (continued) (2) Presentation of provision for bad debts on notes receivable by category December 31,2023 January 1,2023 Gross amount Allowance Carrying amountGross amount Allowance Carrying amountAmount Ratio (%) Amount Percentage Amount Ratio (%) Amount Percentage Notes receivable for which the allowance for doubtful accounts were established on the grouping basis 615,392100% - - 615,392512,849100% - - 512,849Including: low-risk portfolio 615,05999.95% - - 615,059512,76799.98% - - 512,767By aging analysis 3330.05% - - 333820.02% - - 82 615,392100% - - 615,392512,849100% - - 512,849 (3) As at December 31,2023, notes receivable in pledge were RMB499,930,000. (4) As at December 31,2023, endorsed or discounted notes receivable that were outstanding and derecognized amounted to RMB391,566,000 and endorsed or discounted notes receivable that were outstanding and not derecognized amounted to RMB9,923,000. 5 Accounts receivable December 31,2023 January 1,2023 Accounts receivable 22,362,875 14,505,731Less: allowance for doubtful accounts 359,224 454,070 22,003,651 14,051,661TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 75 VNotes to Consolidated Financial Statements (Continued) 5 Accounts receivable (continued) (1) Accounts receivable as at December 31,2023 are classified as follows by how the doubtful debts were provisioned: December 31,2023 Gross amount Allowance Lifetime ECL rate Gross amountAccounts receivable for which the related allowances for doubtful accounts were established on the individual basis 234,41786.58% 202,962Of which: Accounts receivable 234,41786.58% 202,962 Accounts receivable for which the related lowances for doubtful accounts were stablished on the grouping basis 22,128,4580.71% 156,262Of which: Group 1: by aging analysis 16,628,5900.39% 65,631Group 2: by tariff 870,2340.01% 61Group 3: by photovoltaics 3,742,0462.06% 77,006Group 4: other silicon materials 887,5881.53% 13,564 22,362,875 359,224(2) The aging of accounts receivable is analysed as follows: December 31,2023 January 1,2023 Amount Ratio (%) Amount Ratio (%) Within 1 year 21,061,05994.18% 13,254,66091.37%1 to 2 years 489,0842.19% 350,7022.42%2 to 3 years 193,2560.86% 339,0782.34%Over 3 years 619,4762.77% 561,2913.87% 22,362,875100% 14,505,731100%TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 76 VNotes to Consolidated Financial Statements (Continued) 5 Accounts receivable (continued) (3) Allowances for doubtful accounts receivable are analysed as follows: December 31,2023 Beginning amount 454,070New subsidiary 2,182Accrued in current period 36,362Reversal of current period (91,224)Write-off of current period (42,199)Reduced subsidiary (372)Exchange adjustment 405 Ending amount 359,224(4) On December 31,2023, the accounts receivable of the top five balances are as follows: December 31,2023 January 1,2023 Total amount owed by the top five 10,129,405 5,422,959 Proportion of total accounts receivable 45.30% 37.38%(5) Accounts receivable derecognized due to transfer of financial assets Item Methods of transfer of financial assetsAmount derecognized for the periodGain or loss on derecognitionAccounts receivable Discounting and factoring 7,223,995 (47,893)6 Receivables financing December 31,2023 January 1,2023 Notes receivable financing 954,410 1,103,128 954,410 1,103,128Note As at December 31,2023, endorsed or discounted notes receivable that were outstanding and derecognized amounted to RMB16,096,035,000 and endorsed or discounted notes receivable that were outstanding and not derecognized amounted to RMB23,880,000. As of December 31,2023, the Company believes that financing for the receivables it held did not have significant credit risks and will not cause significant losses due to default. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 77 VNotes to Consolidated Financial Statements (Continued) 7 Prepayments (1) Prepayments are analyzed as follows: December 31,2023 January 1,2023 Within 1 year 2,798,957 3,586,2081-2 years 138,561 5,5562-3 years 7,423 1,530Over 3 years 1,347 563 2,946,288 3,593,857(2) As of December 31,2023, the prepayments of the top five balances are as follows: December 31,2023 January 1,2023 Total amount owed by the top five 1,790,548 2,655,698 As % of total prepayments 60.77% 73.90%8 Other receivables December 31,2023 January 1,2023 Dividends receivable 1,381,490 1,226Other receivables 4,325,365 4,032,022 5,706,855 4,033,248(1) Dividends receivable December 31,2023 January 1,2023 Others 1,398,536 1,226Less: allowance for doubtful accounts 17,046 -1,381,490 1,226TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 78 VNotes to Consolidated Financial Statements (Continued) 8 Other receivables (continued) (1) Dividends receivable (continued) (a) Presentation of provision for bad debts on dividends receivable by category December 31,2023 January 1,2023 Category Gross amount Allowance Carryingamount Gross amount Allowance CarryingamountAmount Ratio (%) Amount Percentage AmountRatio (%) Amount Percentage Allowances for bad debts accrued on an individual basis 1,398,536100% 17,0461.22% 1,381,4901,226100% - - 1,2261,398,536100% 17,0461.22% 1,381,4901,226100% - - 1,226(2) Other receivables December 31,2023 January 1,2023 Other receivables 4,691,1494,259,495Less: allowance for doubtful accounts 365,784227,4734,325,3654,032,022 (a) Nature of other receivables is analyzed as follows: December 31,2023 January 1,2023 Subsidy receivables 2,342,5351,868,634Equity transfer receivables 618,7521,073,246Security and deposits 497,819479,269Others 866,259610,873 4,325,3654,032,022TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 79 VNotes to Consolidated Financial Statements (Continued) 8 Other receivables (continued) (2) Other receivables (continued) (b) Presentation of provision for bad debts on other receivables by category December 31,2023 January 1,2023 Category Gross amount Allowance Carrying amountGross amount Allowance Carrying amountAmount Ratio (%) AmountPercentage AmountRatio (%) Amount Percentage Allowances for bad debts accrued on an individual basis 426,0849.08% 293,60068.91% 132,484177,3514.16% 160,74090.63% 16,611Provisions for bad debts accrued on a portfolio basis 4,265,06590.92% 72,1841.69% 4,192,8814,082,14495.84% 66,7331.63% 4,015,4114,691,149100% 365,7847.80% 4,325,3654,259,495100% 227,4735.34% 4,032,022Among other receivables for which provisions for bad debts are accrued on an individual basis, important other receivables are RMB234,837,000, and the balance of the provisions for bad debts correspondingly accrued is RMB211,353,000. (c) Allowance for doubtful other receivables is analyzed as follows: 12-monthECLLifetime ECL (credit not impaired)Lifetime ECL (credit impaired) TotalJanuary 1,202368,114134,78624,573 227,473Transfer into the stage 3 (8,019) (105,368) 113,387 -Return to the stage 1127 (29) (98) -Current accrual 13,657 - 204,386 218,043Increase of new subsidiaries 794 - - 794Reversal of current period (12,279) - (135) (12,414)Write-off of current period - (424) (67,616) (68,040)Decrease due to disposal of subsidiaries (61) - - (61)Exchange adjustment (11) - - (11)December 31,202362,32228,965274,497 365,784Among the amount written off in the current period, single other receivables with significance were written off by RMB52,122,000. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 80 VNotes to Consolidated Financial Statements (Continued) 8 Other receivables (continued) (d) The aging of other receivables is analyzed as follows: December 31,2023 January 1,2023 Carrying amount Ratio (%) Carrying amount Ratio (%)Within 1 year 3,192,63568.05% 3,209,877 75.35%1 to 2 years 785,69016.75% 417,448 9.80%2 to 3 years 371,4647.92% 258,284 6.07%Over 3 years 341,3607.28% 373,886 8.78% 4,691,149100% 4,259,495 100%(e) As of December 31,2023, the other receivables of the top five balances are as follows: December 31,2023 January 1,2023Total amount owed by the top five 3,006,544 2,324,850As % of total other receivables 64.09% 54.58%(f) On December 31,2023, there was no transfer of other receivables that did not conform to the conditions for derecognition in the balance of this account; no transaction arrangement for asset securitization with other receivables as the subject asset; and no financial instrument that was the subject of securitization and did not conform to the conditions for derecognition. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 81 VNotes to Consolidated Financial Statements (Continued) 9 Inventories (1) Inventories are classified as follows: December 31,2023 January 1,2023 Carrying balance Provision for depreciation of inventories / provision for impairment of contract performance costsCarryingamountCarryingbalanceProvision for depreciation of inventories / provision for impairment of contract performance costs Carrying amountRaw materials 6,605,273 636,5875,968,6865,604,506979,845 4,624,661Work in progress 3,656,706 659,0732,997,6333,674,059421,558 3,252,501Finished Goods 10,640,524 1,536,2919,104,23311,512,5971,705,750 9,806,847Turnover materials 412,583 1,380411,203318,2911,178 317,11321,315,086 2,833,33118,481,75521,109,4533,108,331 18,001,122As of December 31,2023, the Company had no inventory for liabilities guarantee. (2) Provision for depreciation of inventories / provision for impairment of contract performance January 1, 2023 Amount of increase in the current period Amount of decrease in the current period December 31,2023Accrued in current period OthersReversal of current period Write-off of current period Others Raw materials 979,845 886,49580,523 (494,111) (813,741) (2,424) 636,587Work in progress 421,558 893,20350,030 (117,074) (588,911) 267 659,073Finished Goods 1,705,750 2,804,06931,144 (324,392) (2,679,109) (1,171) 1,536,291Turnover materials 1,178 222 - (20) - - 1,3803,108,331 4,583,989161,697 (935,597) (4,081,761) (3,328) 2,833,331TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 82 VNotes to Consolidated Financial Statements (Continued) 10 Contract assets (1) Contract assets are classified as follows: December 31,2023 January 1,2023 Carrying balance Allowance for doubtful accountsCarrying amountCarrying balanceAllowance for doubtful accounts Carrying amountElectricity charges receivable 362,058 18,151343,907327,54312,376 315,167(2) Valuation allowances for contract assets are analyzed as follows: January 1, 2023 CurrentAccrualCurrent Reversalor write-offOther increases and decreases December 31,2023Electricity charges 12,376 11,493 (2,936) (2,782) 18,15111 Held-for-sale assets Item Ending balance Impairment allowanceEnding carrying amount Fair value Estimated disposal cost Estimated disposal period Assets for sale 162,416 - 162,416252,69414,264 Within 1 year assets 162,416 - 162,416252,69414,264 12 Non-current assets due within one year December 31,2023 January 1,2023 Other non-current assets due within one year 461,179 -Debt investments due within one year 119,516 - 580,695 -TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 83 VNotes to Consolidated Financial Statements (Continued) 13. Other current assets December 31,2023 January 1,2023 Short-term debt investments 28,563 939,864VAT to be deducted, to be certified, etc.4,244,948 3,775,842Loans and advances to customers 845,764 640,917Others 167,259 82,313 5,286,534 5,438,93614 Debt Investments December 31,2023 January 1,2023 Treasury bonds and corporate bonds 122,349 741,703TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 84 VNotes to Consolidated Financial Statements (Continued) 15 Long-term receivables December 31,2023 January 1,2023 Discount rate Gross amount Allowance Carrying amount Gross amount Allowance Carrying amount Finance lease 720,281 - 720,281631,373 - 631,373 8.115% Including: Unrealized financing income (518,000) - (518,000) (781,934) - (781,934) 720,281 - 720,281631,373 - 631,373 16 Long-term equity investments December 31,2023 January 1,2023 Gross amount Impairment allowanceCarrying amountGross amountImpairment allowance Carrying amountAssociates (1) 26,404,102 1,452,98524,951,11729,065,027329,479 28,735,548Joint ventures (2) 529,657 49,503480,154570,17149,503 520,66826,933,759 1,502,48825,431,27129,635,198378,982 29,256,216As of December 31,2023, the Company made impairment allowances for long-term equity investments in investees with poor management and insolvent assets. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 85 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (1) Associates Increase or decrease in current period Name of investee January 1,2023Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustment Other equity changesDeclaredCash dividends or profitAccruedImpairment allowanceOther increases and decreasesDecember 31, 2023 Bank of Shanghai Co., Ltd.12,809,374 - 1,251,665 (7,708) - (327,157) - - 13,726,174 China Innovative Capital Management Limited 944,392 - 25,698 - - - - 210970,300 LGElectronics (Huizhou) Co., Ltd.89,772 - 13,438 - - - (13,400) - - - 89,810 Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd. 27,358 (40,000) (1,144) 1,635 - - - 12,151 - Shenzhen Jucai Supply Chain Technology Co., Ltd.15,273 - 4,3672 - - - - - - 19,642 Shenzhen Tixiang Business Management Technology Co., Ltd. 1,147 - - - - - 121,375 TCLAir Conditioner (Wuhan) Co., Ltd.40,610 - - - - - - - - 40,982 TCLFinance (Hong Kong) Co., Limited 109,943 - 1,153 - - - - - - - - - 111,096 Urumqi TCLEquity Investment Management Co., Ltd. 1,090 - (3) - - - - - - - - - 1,087 Hubei Changjiang Hezhi Equity Investment Fund Partnership (Limited Partnership) 1,413,073 (236,822) (16,932) - - - - - - - - 1,159,319 Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) 365,51144,17745,027 (1) - (29,243) - - 425,471 Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) 126,213 (8,668) 31,573 - - - - - - - - - 149,118 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 86 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (1) Associates (continued) Increase or decrease in current period Name of investee January 1,2023Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustmentOther equity changesDeclaredCash dividends or profit distribution declaredProvision for impairmentOther increases and decreasesDecember 31, 2023 Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) 372,687 (19,173) (42,773) - - (35,798) - - 274,943 Wuxi TCLAisikai Bandaoti Industry Investment Fund Partnership (Limited Partnership) 310,930 (5,061) (27,116) - - - - - - 278,753 Wuxi TCLVenture Capital Partnership (Limited Partnership) 36,850 - (34) 26 - - - - - - 36,842 Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) 23,342 - 8,841 - - - - - - - - 32,183 Shanghai Gen Auspicious Venture Capital Partnership (Limited Partnership) 15,057 - 3301,448 - (1,069) - - 15,766 Nanjing Zijin ADynamic Investment Partnership (Limited Partnership) 19,726 (321) 1,4552 - - - - - 20,862 Huizhou Kaichuang Venture Investment Partnership (Limited Partnership) 8,695 - (12) 220 - - - - - 8,903 Beijing ADynamic Venture Capital Center (Limited Partnership) 7,636 - (3,498) - - - - - - 4,138 Yixing Jiangnan Tianyuan Venture Capital Company (Limited Partnership) 4,820 - (611) 3 - - - - - 4,212 Shenzhen Chuangdong New Industry Investment Fund Enterprise (Limited Partnership) 2,338 - (3) - - - - - - 2,335 Hubei Changjiang Hezhi Equity Investment Fund Management Co., Ltd. 11,553 - 1,574 - - (3,000) - - - 10,127 Huizhou Kaimeng Angel Investment Partnership (Limited Partnership) 2,543 - (53) - - - - - - 2,490 Ningbo Jiutian Matrix Investment Management Co., Ltd.2,5976,800455 - - - - - - - - 9,852 Urumqi Qixinda Equity Investment Management Co., Ltd.4,502 - - - - - - - 5,375 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 87 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (1) Associates (continued) Increase or decrease in current period Name of investee January 1,2023Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustment Other equity changesDeclaredCash dividends or profit distribution declaredAccruedImpairment allowanceOther increases and decreasesDecember 31,2023 Urumqi TCLCreate Dynamic Equity Investment Management Co., Ltd. 759 - (1) - - - - - 758 Beijing ADynamic Investment Consulting Co., Ltd. 467 - (4) - - - - - 463 Shanghai Gen Auspicious Investment Management Co., Ltd. 2,511 - (23) - - (1,753) - - 735 Nanjing ADynamic Equity Investment Fund Management Co., Ltd. 279 - (2) - - - - - 277 Wuxi TCLMedical Imaging Technology Co., Ltd.25,837 (644) (7,341) - - - - 15318,005 Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. 880,249 - (19,476) - - (3,700) - - 857,073 TCLVentures Fund L.P.29,018 (19,698) 1,562 - - 3,656 - (14,538) - Getech Ltd.83,660 - (1,560) (5) - - - - - 82,095 Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) 502,444328,43059,337 - - - (19,937) - - 870,274 Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) 167,809 - 13,024 - - - - - - - 180,833 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 88 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (1) Associates (continued) Increase or decrease in current period Name of investee January 1,2023Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustment Other equity changesDeclaredCash dividends or profit distribution declaredAccruedImpairment allowanceOther increases and decreasesDecember 31, 2023 Shenzhen Xinhuoyicheng Recreational and Sports Industry Co., Ltd. 1,388 - (112) - - - - - - - - 1,276 JOLEDIncorporation 159,302 - (17,043) - - - - (134,687) (7,572) - Sichuan Shengtian New Energy Development Co., Ltd. 508,492 - 32,440 - - - (9,128) - - - 531,804 SunPower Systems International Limited 28,345 - 1,861 - - - - - - - 30,206 Zhonghuan Aineng (Beijing) Technology Co., Ltd.4,118 - (1,625) - - - - - - - 2,493 Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. 136,682 - (357) - - - - - - - 136,325 Hunan Guoxin Bandaoti Technology Co., Ltd.9,825 - - - - - - 9,889 Maxeon Solar Technologies, Ltd.1,620,417290,027 (338,643) - - - - (1,013,423) 64,390622,768 Xinjiang Goens Energy Technology Co., Ltd. (Note) 3,919,465 (1,123,330) 557,009 - - - (3,353,144) - - - Ruihuan (Inner Mongolia) Solar Power Co., Ltd. - (12,000) - - - - - 12,000 - Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) 657,61538,51036,561 - - - (4,986) - - 727,700 Zhonghuan Feilang (Tianjin) Technology Co., Ltd.5,125 (2,000) 1,142 - - - - - - 4,267 Ningbo Zhongxin Venture Capital Partnership (Limited Partnership) 144,968 (698) (1,959) - - - - - - 142,311 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 89 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (1) Associates (continued) Increase or decrease in current period Name of investee January 1,2023Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustment Other equity changesDeclaredCash dividends or profit distribution declaredAccruedImpairment allowanceOther increases and decreasesDecember 31,2023 TCLHuanxin Bandaoti (Tianjin) Co., Ltd.393,94689,460 (52,272) - - - - - - - - 431,134 Inner Mongolia Shengou Electromechanical Engineering Co., Ltd.1,012 - - - - - - - 1,487 Inner Mongolia Huanye Material Co., Ltd.6,163 - 1,059 - - - - - - - - 7,222 Shenzhen Shutuo Technology Co., Ltd.38,202 - 2,409 - - - - - - - (1,364) 39,247 Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd.69,540 - (42,523) (44) 1,164 - - - 28,137 Wuhan Guochuangke Optoelectronic Equipment Co., Ltd.25,910 (7,202) 498 - - - - - - - 30,69549,901 Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.3,936 - 6,455 - - - - - - - - 10,391 Purplevine Holdings Limited 1,629 - (1,398) - - - - - - - 10,16410,395 Xinxin Bandaoti Technology Co., Ltd.1,798,784 - (34,120) - - - - - - - (1,764,664) - Inner Mongolia Xinhua Bandaoti Technology Co., Ltd.117,886440,000 (9,984) - - - - - - - 1,237549,139 Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd.127,8471,668,000 (50,230) - - - - - - - - 1,745,617 Shanghai Feilihua Shichuang Technology Co., Ltd.41,054 - 2,035 - - - - - - - 6,70349,792 Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. - - 3,628 - - - - - 8,78712,415 Xi’an Simovi New Material Co., Ltd. - 30,000334 - - - - - 53930,873 Guangdong TCLNew Technology Co., Ltd. - 1,767 - - - - - - 1,767 Hubei Consumer Finance Co., Ltd.166,077 - 13,332 - - - - - 179,409 Tianjin Qiyier Communication & Broadcasting Co., Ltd.287,755 (58,722) 13,694 - - (2,548) - (56,696) 183,483 28,735,5481,402,8321,463,104 (4,422) 1,164 (3,801,207) (1,148,110) (1,697,792) 24,951,117 Note: Xinjiang Xiexin New Energy Materials Technology Co., Ltd. was renamed as Xinjiang Goens Energy Technology Co., Ltd. in May 2023. Note: Xinxin Bandaoti Technology Co., Ltd. was acquired by Zhonghuan Advanced Bandaoti Technology Co., Ltd., a subsidiary of the Company, in February 2023 and became a subsidiary of the Company. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 90 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (2) Joint ventures Increase or decrease in current period Name of investee January 1,2023 Increase/decrease in investment in current periodInvestment gains and losses recognized by equity methodOther comprehensive income adjustment Other equitychangesDeclaredCash dividends or profit distribution declaredAccruedImpairment allowanceOther increases and decreasesDecember 31,2023 Zhangjiakou Qixin Equity Investment Fund Partnership 86,975 - (22,184) - - (13,105) - - 51,686 Tianjin Huanyan Technology Co., Ltd.140,793 - (810) - - - - - 139,983 TCLHuizhou City, Kai Enterprise Management Limited 1,347 - - - - 1,359 Huizhou TCLHuman Resources Service Co., Ltd.6,274 - 2,656 - - - - - 8,930 TCLMicrochip Technology (Guangdong) Co., Ltd.285,27960,000 (79,117) - 12,034 - - - 278,196 520,66860,000 (99,443) - 12,034 (13,105) - - 480,154 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 91 VNotes to Consolidated Financial Statements (Continued) 16 Long-term equity investments (continued) (3) Impairment allowances for long-term equity investments January 1,2023 Increase in the periodDecrease in the periodOther changesDecember 31,2023 Note Pride Telecom Limited 1,624 - - (210) 1,414 Note 1Huaxia CPV (Inner Mongolia) Power Co., Ltd. 49,503 - - - 49,503 Note 1JOLED Incorporation 318,604134,687 - (15,143) 438,148 Note 2Maxeon Solar Technologies, Ltd. - 1,013,423 - - 1,013,423 Note 3Ruihuan (Inner Mongolia) Solar Power Co., Ltd. 9,251 - (9,251) - - 378,9821,148,110 (9,251) (15,353) 1,502,488 Note 1 Provisions for impairment were accrued for the long-term equity investments in these investees at recoverable amounts because continuous operations loss occurred to these investees with poor management. Note 2 This company has made an application to the Tokyo District Court for initiating a bankruptcy reorganization procedure named “civil regeneration”, and the Company has fully accrued provisions for impairment of long-term equity investments at their carrying amount. Note 3 This company’s products were mainly affected by such factors of the market location as the economy, policies and prices, and its performance did not meet expectations. Since H22023, its stock price has began to decline significantly. With reference to the market price of this company’s stock (calculated at its closing price on NASDAQ as at December 29,2023), the Company recognized a recoverable amount of RMB622,768,000 net of disposal costs and accrued A provision for impairment of RMB1,013,423,000 for long-term equity investments. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 92 VNotes to Consolidated Financial Statements (Continued) 17 Investments in other equity instruments December 31,2023 January 1,2023 Stocks 17,127 66,706Equity of unlisted companies 369,521 373,290 386,648 439,996Item name Confirmed Dividend income recognized AccumulatedProfits Accumulatedlosses Amount of other comprehensive income transferred to retained earnings Reasons designated as measured at fair value and whose changes are included in other comprehensive income Stocks - 3,243 (193,481)- Being held long term for strategic purposes Equity of unlisted companies - 10,561 (25,959)- Being held long term for strategic purposes Total - 13,804 (219,440) - 18 Other non-current financial assets December 31,2023 January 1,2023 Equity investments 2,770,2512,928,827Debt investments 201,315 - 2,971,5662,928,827TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 93 VNotes to Consolidated Financial Statements (Continued) 19 Investment property Houses and buildingsLand use rights TotalGross amount: January 1,2023 1,067,479 205,633 1,273,112 Increase 109,86315,961 125,824Reclassified from fixed assets and intangible assets 109,86315,961 125,824Decreases (55,862) (1,918) (57,780)Reclassified to fixed assets and intangible assets (50,022) - (50,022)Other decreases (5,840) (1,918) (7,758)December 31,2023 1,121,480219,676 1,341,156Accumulated depreciation and amortization: January 1,2023 235,474 38,402 273,876 Increase 91,2586,388 97,646Accrued in current period 22,9254,511 27,436Reclassified from fixed assets and intangible assets 68,3331,877 70,210Decreases (9,899) (37) (9,936)Reclassified to fixed assets and intangible assets (9,372) - (9,372) Other decreases (527) (37) (564)December 31,2023 316,83344,753 361,586 Investment property, net: December 31,2023 804,647174,923 979,570January 1,2023 832,005167,231 999,236 Impairment allowance: January 1,2023 52,787 - 52,787 Increase 15,104 - 15,104Increase in the period 15,104 - 15,104Decreases - - -Decrease in the period - - -December 31,2023 67,891 - 67,891 Investment property, net: December 31,2023 736,756174,923 911,679January 1,2023 779,218167,231 946,449 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 94 VNotes to Consolidated Financial Statements (Continued) 20 Fixed assets Houses and buildings Machinery equipmentOffice and electronic equipmentTransportation equipmentPower stations Others TotalGross amount: January 1, 2023 44,979,606 174,755,648 2,737,234 261,094 2,361,429 27,226 225,122,237 Increase 10,408,101 60,125,440600,01951,401119,609 8,972 71,313,542Acquisition and other 111,974 880,705120,98831,6891,000 4,422 1,150,778New subsidiary 1,771,267 3,259,42812,9732,618 - - 5,046,286Reclassified from investment property 50,022 - - - - - 50,022Reclassified from construction in progress 8,474,838 55,985,307466,05817,094118,609 4,550 65,066,456Decreases (443,133) (6,668,274) (81,971) (6,171) (135,438) (9,032) (7,344,019)Written down with public grants (3,846) (1,281,698) (790) - - - (1,286,334)Reclassified to investment property (109,863) - - - - - (109,863)Other decreases (329,424) (5,386,576) (81,181) (6,171) (135,438) (9,032) (5,947,822)Exchange adjustment 10,072 (2,214) 1,526343 - 771 10,498December 31,202354,954,646 228,210,6003,256,808306,6672,345,600 27,937 289,102,258Accumulated depreciation: January 1, 20237,827,013 80,699,683 1,726,432 165,109 514,036 15,930 90,948,203 Increase 1,987,325 19,623,572297,11842,07484,502 4,762 22,039,353Accrual 1,851,730 18,753,835287,12440,81284,502 4,762 21,022,765New subsidiary 126,223 239,0539,9941,262 - - 376,532Reclassified from investment property 9,372 - - - - - 9,372Other increases - 630,684 - - - - 630,684Decreases (149,952) (1,680,893) (56,278) (4,043) (18,972) (5,799) (1,915,937)Reclassified to investment property (68,333) - - - - - (68,333)Other decreases (81,619) (1,680,893) (56,278) (4,043) (18,972) (5,799) (1,847,604)Exchange adjustment 1,146 501722245 - 286 2,900December 31,20239,665,532 98,642,8631,967,994203,385579,566 15,179 111,074,519Fixed assets, net: December 31,202345,289,114 129,567,7371,288,814103,2821,766,034 12,758 178,027,739January 1, 202337,152,593 94,055,9651,010,80295,9851,847,393 11,296 134,174,034TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 95 VNotes to Consolidated Financial Statements (Continued) 20 Fixed assets (continued) Houses and buildings Machinery equipmentOffice and electronic equipmentTransportation equipmentPower stations Others TotalImpairment allowance: January 1, 2023766,317 832,17335,29011162,059 412 1,696,362Accrued in current period - 3,407 - - - - 3,407Write-off of current period (4,602) (74,865) (80) - - - (79,547)Other transfers out (15,104) - - - - - (15,104)December 31,2023746,611 760,71535,21011162,059 412 1,605,118Fixed assets, carrying amount: December 31,202344,542,503 128,807,0221,253,604103,1711,703,975 12,346 176,422,621January 1, 2023 36,386,276 93,223,792 975,512 95,874 1,785,334 10,884 132,477,672 Please refer to Item 82 of Note V for information on fixed asset pledge. As at December 31,2023, the gross amount of the fixed assets that were fully depreciated and still in use was RMB50,139,955,000. Fixed assets with pending ownership certificates at the end of the current period: Carrying amount Expected time of obtaining ownership certificateHouses and buildings (Note) 18,258,415Expected to be completed in 2024Note As at December 31,2023, the fixed assets with pending ownership certificates of the Company were mainly the buildings and constructions of CSOT’s t3, t5 and t9 manufacturing bases, as well as the buildings and constructions of Inner Mongolia Zhonghuan Crystal Material Co., Ltd., Tianjin Zhonghuan Advanced Material&Technology Co., Ltd. and Tianjin Huanhai Industrial Park Co., Ltd. 21 Construction in progress (1) Schedule of construction in progress December 31,2023 January 1,2023Construction in progress 17,013,179 52,063,442 Less: Impairment allowance 13,127 9,608 17,000,05252,053,834TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 96 V Notes to Consolidated Financial Statements (Continued) 21 Construction in progress (continued) (2) Changes to construction in progress Project name Budget January 1,2023 Increase in the period Transfer-in in current period Fixed assets Other movements December 31,2023 Accumulated investment in the project as % of budget Project progress Cumulative capitalized interest Including: capitalized interest in current period Interest capitalizat ion rate for current period Funding source t9 production line of LCD panel 31,500,000 10,383,892 3,368,415 (13,098,442) (290,227) 363,63874.77% Under construction 274,494130,1083.68%Proprietary funds, proceeds from share offering and loans Large-diameter bandaoti silicon wafers for integrated circuit 5,410,520 1,630,505 2,069,243 (259,497) (452,287) 2,987,96479.36% Under construction 5,3264,6883.35%Self-funded and financed funds 50GW (G12) solar-grade monocrystalline silicon material smart factory project 10,979,740 3,667,153 3,153,523 (5,798,298) (96,391) 925,98696.83% Under construction 152,09659,9972.26%Self-funded and financed funds Smart factory with an annual output of 35GW high-purity solar ultra-thin monocrystalline silicon 3,650,050 - 1,325,407 (332,793) - 992,61436.31% Under construction 3,8703,8702.90%Self-funded and financed funds Bandaoti silicon wafers for integrated circuit 10,500,000 - 2,278,929 (744,148) (351,462) 1,183,31962.01% Under construction 385,7736416.15%Self-funded and financed funds Production line of 8-12-inch bandaoti silicon wafers for integrated circuit 5,707,172 1,130,031 620,597 (457,989) (33,164) 1,259,47587.46% Under construction 20,62819,0953.35%Self-funded and financed funds Others Not applicable 35,242,253 19,586,151 (44,375,289) (1,166,060) 9,287,055 52,053,834 32,402,265 (65,066,456) (2,389,591) 17,000,052 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 97 VNotes to Consolidated Financial Statements (Continued) 22 Right-of-use assets Houses and buildings Transportation equipmentMachinery equipmentLand use rights Total Gross amount: January 1,20234,293,1241,4301,110,462134,541 5,539,557 Increase 1,732,859750366,69943,265 2,143,573 New subsidiary 35,402 - 212,139 - 247,541 Leased in 1,192,877750 - 43,265 1,236,892 Other increases 504,580 - 154,560 - 659,140 Decreases (70,742) (302) (280,790) (55,039) (406,873) Reduced subsidiary - - (241,052) (55,039) (296,091) Reduction due to contract revision (9,122) - - - (9,122) Other decreases (61,620) (302) (39,738) - (101,660) Exchange adjustment 8,54317 - - 8,560 December 31,20235,963,7841,8951,196,371122,767 7,284,817 Accumulated depreciation: January 1,2023227,403912189,88611,232 429,433 Increase 395,404630158,91116,240 571,185 New subsidiary 13,212 - 32,082 - 45,294 Accrual 382,192630126,82916,240 525,891 Decreases (49,711) (302) (50,065) (3,304) (103,382) Other decreases (49,711) (302) (50,065) (3,304) (103,382) Exchange adjustment 1,1314 - - 1,135 December 31,2023574,2271,244298,73224,168 898,371 Right-of-use assets, carrying amount: December 31,20235,389,557651897,63998,599 6,386,446 January 1,20234,065,721518920,576123,309 5,110,124 Impairment allowance: January 1,2023 - - - - - December 31,2023 - - - - - Right-of-use assets, carrying amount December 31,20235,389,557651897,63998,599 6,386,446 January 1,2023 4,065,721 518 920,576 123,309 5,110,124 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 98 VNotes to Consolidated Financial Statements (Continued) 23 Intangible assets Land use rights Non-patent technologies /patents Others Total Gross amount: January 1,20239,216,25711,350,4771,995,65022,562,384 Increase 308,0482,561,245952,2363,821,529 New subsidiary 306,180405,374170,486882,040 Purchase 1,868284,256162,447448,571 Reclassified from investment property - - - - Reclassified from development costs - 1,871,615 - 1,871,615 Others - - 619,303619,303 Decreases (138,422) (100,663) (16,359) (255,444) Sale and disposal (43,966) (14,625) (7,786) (66,377) Reclassified to investment property (15,961) - - (15,961) Reduced subsidiary (3,144) - (426) (3,570) Other decreases (75,351) (86,038) (8,147) (169,536) Exchange adjustment - 1,4964651,961 December 31,20239,385,88313,812,5552,931,99226,130,430 Accumulated amortization: January 1,20231,018,4073,685,498926,4325,630,337 Increase 280,1791,406,581318,1582,004,918 Accrual 264,5411,382,848259,9561,907,345 New subsidiary 15,63823,73358,20297,573 Decreases (18,739) (39,779) (12,343) (70,861) Sale and disposal (3,842) (5,913) (6,900) (16,655) Reclassified to investment property (1,877) - - (1,877) Reduced subsidiary (157) - (426) (583) Other decreases (12,863) (33,866) (5,017) (51,746) Exchange adjustment - (2,484) 269 (2,215) December 31,20231,279,8475,049,8161,232,5167,562,179 Intangible assets, net： December 31,20238,106,0368,762,7391,699,47618,568,251 January 1,20238,197,8507,664,9791,069,21816,932,047 Impairment allowance: January 1,202323,562113,40611,148148,116 Accrual - - - - Exchange adjustment 591 December 31,202323,562113,99711,148148,707 Intangible assets, carrying amount: December 31,20238,082,4748,648,7421,688,32818,419,544 January 1,20238,174,2887,551,5731,058,07016,783,931 As at December 31,2023, the total carrying amount of land use rights for which the title certificate has not been registered properly was RMB12,745,000. Please refer to Item 82 of Note V for information on collateralized intangible assets. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 99 VNotes to Consolidated Financial Statements (Continued) 24 Development costs Development expenditures are presented as follows: December 31,2023 January 1,2023 Display 1,455,1102,172,507 New energy photovoltaic & materials 1,086,3831,006,700 2,541,4933,179,207 25 Goodwill (1) Gross amount of goodwill Name of investee or item incurring goodwill January 1, 2023 Increase in the period Decrease in the period December 31,2023 TCLMedical Radiological Technology (Beijing) Co., Ltd. Note 128,967 - - 28,967 Qingdao Blue Business Consulting Co., Ltd. Note 22,452 - - 2,452 Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. Note 3214,683 - - 214,683 TCLTechnology Group (Tianjin) Co., Ltd. Note 46,726,130 - - 6,726,130 Moka International Limited Note 51,728,973 - - 1,728,973 Suzhou China Star Optoelectronics Technology Co., Ltd. Note 6486,603 - - 486,603 Huizhou Kedate Smart Display Technology Co., Ltd. Note 73,011 - - 3,011 Suzhou China Star Environmental Protection Technology Co., Ltd. Note 8- 43,408 - 43,408 Xinxin Bandaoti Technology Co., Ltd. Note 9 - 1,180,005 - 1,180,005 Techigh Circuit Technology (Huizhou) Co., Ltd. Note 10 - 131,477 - 131,477 9,190,8191,354,890 - 10,545,709 (2) Goodwill impairment allowance Name of investee January 1, 2023Increase in the periodDecrease in the period December 31, 2023 TCLMedical Radiological Technology (Beijing) Co., Ltd.28,967 - - 28,967 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 100 VNotes to Consolidated Financial Statements (Continued) 25 Goodwill (continued) (2) Goodwill impairment allowance (continued) Note 1 In 2010, the Company acquired a 51.82% interest in TCLMedical Radiological Technology (Beijing) Co., Ltd. (hereinafter referred to as “TCLMedical Radiological Technology”) with capital of RMB 52,319,000. Thus, the difference between the accumulated investment of the Company in TCL Medical Radiological Technology (corresponding to 51.82% equity) and the fair value of the net identifiable assets of TCLMedical Radiological Technology attributable to the Company on the settlement date (equal to RMB28,967,000) was recorded in the Company's goodwill. An impairment allowance of RMB 28,967,000 had been made on such goodwill in 2018. Note 2 In October 2016, Highly Information Industry Co., Ltd., a subsidiary of the Company, acquired 60% interest in Qingdao Blue Business Consulting Co., Ltd. (hereinafter referred to as “Blue Business Consulting”) with consideration of RMB 10,000,000. Thus, the difference between the accumulated investment of Highly Information Industry Co., Ltd. in Blue Business Consulting (corresponding to a 60% interest) and the fair value of the net identifiable assets of Blue Business Consulting attributable to Highly Information Industry Co., Ltd. on the settlement date (equivalent to RMB2,452,000) was recorded in this item. Note 3 Tianjin Huan’Ou Bandaoti Material&Technology Co., Ltd. is a subsidiary of TCLTechnology Group (Tianjin) Co., Ltd., which the Company has acquired in a business combination not involving entities under common control. Note 4 The Company completed its acquisition of 100% stake in TCLTechnology Group (Tianjin) Co., Ltd. (former name: Tianjin Zhonghuan Electronic Information Group Co., Ltd.) on October 1,2020 with a cash consideration of RMB12,500,000,000. At the date of acquisition, the Group obtained the effective control of TCLTechnology Group (Tianjin) Co., Ltd., and included such company into the consolidated financial statements. On the date of transaction, the difference between the accumulated investment of the Company in TCLTechnology Group (Tianjin) Co., Ltd. (corresponding to the 100% equity) and the fair value of the net identifiable assets of TCLTechnology Group (Tianjin) Co., Ltd. attributable to the Company on the settlement date (equal to RMB6,726,130,000) was recorded in this item. The goodwill mainly consists of 2 asset groups: the new energy photovoltaic and other silicon materials and the Tianjin Printronics Circuit Corp. Note 5 In April 2021, the Company acquired 100% interest in Moka International Limited with a cash consideration of RMB2,800,000,000. Thus, the difference between the accumulated investment of the Company in Moka International Limited (corresponding to the 100% equity) and the fair value of the net identifiable assets of Moka International Limited attributable to the Company on the settlement date (equal to RMB1,728,973,000) was recorded in this item. Note 6 In April 2021, the Company acquired 60% interest in Suzhou China Star Optoelectronics Technology Co., Ltd. (formerly known as “Samsung Suzhou LCDCo. Ltd.”) with a cash consideration of RMB4,757,727,000. The difference between the accumulated investment of the Company in Suzhou China Star Optoelectronics Technology Co., Ltd. (corresponding to the total 70% equity) and the fair value of the identifiable net assets of Suzhou China Star Optoelectronics Technology Co., Ltd. attributable to the Company on the settlement date (equivalent to RMB486,603,000) was recorded in this item. Note 7 In August 2022, the Company acquired in 100% interest in Huizhou Kedate Smart Display Technology Co., Ltd. with a cash consideration of RMB51,000,000. As such, the difference between the investment of the Company in Huizhou Kedate Smart Display Technology Co., Ltd. (corresponding to the 100% equity) and the fair value of the net identifiable assets of Huizhou Kedate Smart Display Technology Co., Ltd. attributable to the Company on the settlement date (equal to RMB3,011,000) was recorded in this item. Note 8 Suzhou China Star Optoelectronics Technology Co., Ltd., a subsidiary of the Company, completed the acquisition of 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. in May 2023 at a cash consideration of RMB344,942,000. As at the date of this transaction, the difference (RMB43,408,000) between the investment amount i.e. the 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. held by Suzhou China Star Optoelectronics Technology Co., Ltd. and the fair value of the identifiable net assets of the equity was recorded in this item. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 101 VNotes to Consolidated Financial Statements (Continued) 25 Goodwill (continued) (2) Goodwill impairment allowance (continued) Note 9 Zhonghuan Advanced Bandaoti Technology Co., Ltd., formerly Zhonghuan Advanced Bandaoti Material Co., Ltd., a subsidiary of the Company, completed the acquisition of 100% equity of Xinxin Bandaoti Technology Co., Ltd. in February,2023 at a consideration of RMB7,399,683,000 by issuing equity securities. As at the date of this transaction, the difference (RMB1,180,005,000) between the investment amount i.e. the 100% equity of Xinxin Bandaoti Technology Co., Ltd. held by Zhonghuan Advanced Bandaoti Technology Co., Ltd. and the fair value of the identifiable net assets of the equity was recorded in this item. Note 10 Tianjin Printronics Circuit Corporation, a subsidiary of the Company, completed the acquisition of the equity of and increased investment in Techigh Circuit Technology (Huizhou) Co., Ltd. in October 2023 at a consideration of RMB423,103,000 in cash. As at the date of this transaction, the difference (RMB131,477,000) between the investment amount i.e. the 51% equity of Techigh Circuit Technology (Huizhou) Co., Ltd. held by the Company and the fair value of the identifiable net assets of the equity are recognized in this item. (3) Goodwill impairment test As at December 31,2023, the recoverable amounts of the asset group of Blue Business Consulting business, asset group of new energy photovoltaic and material, asset group of Moka International Limited, asset group of Huizhou Kedate Smart Display Technology Co., Ltd., asset group of Suzhou China Star Optoelectronics Technology Co., Ltd., asset group of Suzhou China Star Environmental Protection Technology Co., Ltd., asset group of Xinxin Bandaoti Technology Co., Ltd., and asset group of Techigh Circuit Technology (Huizhou) Co., Ltd., including goodwill, were calculated using the expected discounted future cash flow method based on the budget approved by the management (for a budget period of 5 to 10 years). The estimated perpetual annual growth rate was adopted to calculate the future cash flow exceeding the budget period. The perpetual annual growth rate (primarily 0% - 3%) adopted by the management was consistent with predicted data on the industry. The management determines the revenue growth rate and determines the EBITDA (mainly 2.62%-29.10%) based on historical experience and forecasts of market development, combined with the Company’s future development strategic plan and adopt a discount rate (mainly 11.35%-14.19%) that reflects specific risks of the relevant asset groups. The recoverable amount of the Tianjin Printronics Circuit Corp asset group is determined based on the higher of the present value of the estimated future cash flows of the asset or the fair value less costs of disposal. After the management analyzed the recoverable amount of each asset group based on these assumptions, no provision for impairment was required for the goodwill of any of the above asset groups as of December 31,2023. 26 Long-term deferred expenses January 1, 2023Increase in the periodAmortization in the period Others December 31,2023 Improvement expense on leased fixed assets 1,441,265425,924 (265,966) (67) 1,601,156 Others 1,302,9432,381,820 (1,882,719) (511) 1,801,533 2,744,2082,807,744 (2,148,685) (578) 3,402,689 VNotes to Consolidated Financial Statements (Continued) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 102 27 Deferred income tax assets and deferred income tax liabilities (1) Un-offset deferred income tax assets December 31,2023 January 1,2023 Deductible temporary differenceDeferred income tax assetsDeductible temporary differenceDeferred income tax assets Deductible losses 24,627,5804,048,12819,383,933 3,055,974 Asset impairment allowances 3,817,375629,4824,132,996 785,212 Provisions 831,604130,466559,584 91,408 Changes in fair value 143,30222,17015,398 2,792 Lease liabilities 4,309,382486,276195,722 29,358 Others 2,423,324469,3821,924,357 200,865 36,152,5675,785,90426,211,990 4,165,609 (2) Un-offset deferred income tax liabilities December 31,2023January 1,2023 Taxable temporary differencesDeferred taxliabilitiesTaxable temporary differencesDeferred income tax liabilities Accelerated depreciation of fixed assets 15,603,1882,606,51813,198,261 2,046,374 One-off tax deduction for fixed assets 7,829,9221,172,2856,818,647 1,021,284 Increase in value of assets as assessed in business combination not involving entities under common control 2,841,620529,7691,627,106 378,993 Changes in fair value 301,79370,908331,292 71,725 Right-of-use assets 4,083,249472,4631,139 171 Others 522,095115,226951,687 212,603 31,181,8674,967,16922,928,132 3,731,150 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 103 VNotes to Consolidated Financial Statements (Continued) 27 Deferred income tax assets and deferred income tax liabilities (continued) (3) There were no deferred income tax assets or liabilities presented on a net basis after offsetting Item Amount subject to mutual offset of deferred income tax assets against liabilities at the end of the periodClosing balance of deferred income tax assets or liabilities after offset Deferred income tax assets (3,539,682) 2,246,222 Deferred income tax liabilities (3,539,682) 1,427,487 Item Amount subject to mutual offset of deferred income tax assets against liabilities at the beginning of the periodOpening balance of deferred income tax assets or liabilities after offset Deferred income tax assets (2,411,722) 1,753,887 Deferred income tax liabilities (2,411,722) 1,319,428 (4) Unrecognized deferred income tax assets December 31,2023 January 1,2023 Deductible temporary difference 1,712,962306,669 Deductible losses 13,284,65810,302,065 14,997,62010,608,734 (5) Deductible losses in respect of unrecognized deferred income tax assets will expire in the following years: December 31,2023 January 1,2023 2022 - 268,388 2023 581472,917 2024 129,992472,157 2025 286,860440,443 2026 952,9251,242,203 2027 onwards 11,914,3007,405,957 13,284,65810,302,065 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 104 VNotes to Consolidated Financial Statements (Continued) 28 Other non-current assets December 31,2023 January 1,2023 Gross amount Impairment allowanceCarrying amountGross amountImpairment allowance Carrying amount Other 13,081,184 - 13,081,1846,293,943 - 6,293,943 13,081,184 - 13,081,1846,293,943 - 6,293,943Note Other non-current assets mainly include prepayments for engineering equipment, payments for land use rights, etc. 29 Short-term borrowings December 31,2023 January 1,2023 Unsecured borrowings 8,437,47810,214,632Borrowings secured by pledge 19,076 -Interest payable 17,0281,279 8,473,58210,215,911 As at December 31,2023, the Company’s short-term pledged loans were equivalent to RMB19,076,000, pledged with held-for-trading financial assets equivalent to RMB21,143,000. As of December 31,2023, the Company does not have any short-term borrowings that have expired and have not been repaid. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 105 VNotes to Consolidated Financial Statements (Continued) 30 Borrowings from the Central Bank As at December 31,2023, the balance of the borrowings of TCLTechnology Group Finance Co., Ltd. (a subsidiary of the Company) from the Central Bank was RMB995,010,000 (December 31,2022: RMB777,676,000). 31 Customer deposits and deposits from banks and other financial institutions December 31,2023 January 1,2023 Customer deposits and deposits from other banks and financial institutions 270,929603,423 Customer deposits and deposits from banks and other financial institutions are the deposits of related and nonrelated enterprises absorbed by TCLTechnology Group Finance Co., Ltd., a subsidiary of the Company, within the business scope approved by the regulatory authority. 32 Held-for-trading financial liabilities December 31,2023 January 1, 2023 Financial liabilities measured at fair value through profit or loss.251,451 861,912 33 Derivative financial liabilities December 31,2023 January 1,2023 Derivative financial liabilities 58,59170,735 34 Notes payable December 31,2023 January 1,2023 Bank acceptance notes 5,518,1135,731,632 Trade acceptance notes 92,689634,028 5,610,8026,365,660 As of December 31,2023, the Company had no notes payable that were due but not paid. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 106 VNotes to Consolidated Financial Statements (Continued) 35 Accounts payable December 31,2023 January 1,2023 Amounts due to suppliers 29,402,493 26,381,912 As of December 31,2023, there were no significant accounts payable aged over one year. 36 Advances from customers December 31,2023 January 1,2023 Advances from customers 6781,402 As of December 31,2023, the Company had no significant accounts receivable aged over one year.37 Contract liabilities December 31,2023 January 1,2023 Advances from customers 1,899,4682,336,008 As at December 31,2023, the Company had no significant contract liability aged over one year. 38 Employee benefits payable and long-term employee benefits payable (1) Employee compensation payable December 31,2023 January 1,2023Short-term employee benefits payable 3,016,7082,341,429Defined contribution plans payable 14,59926,353Dismissal benefits payable 3,1909,151 3,034,4972,376,933TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 107 VNotes to Consolidated Financial Statements (Continued) 38 Employee compensation payable and long-term employee compensation payable (continued) (1) Employee benefits payable (continued) (a) Short-term employee benefits presented January 1,2023Increase in the periodDecrease in the period December 31,2023Wages, bonuses, allowances and subsidies 2,034,23810,940,235 (10,065,459) 2,909,014Employee services and benefits - 459,819 (459,819) -Social insurance benefits 38,105377,454 (382,854) 32,705Including: medical insurance premium 36,751344,899 (349,642) 32,008Employment injury insurance premiums 69519,295 (19,311) 679Maternity insurance 65913,260 (13,901) 18Housing fund 27,917376,200 (385,390) 18,727Trade union funds and staff education funds 49,418209,842 (204,139) 55,121Others 191,75135,609 (226,219) 1,141 2,341,42912,399,159 (11,723,880) 3,016,708(b) Defined contribution plans January 1,2023Increase in the period Decrease in the period December 31,2023Basic pension insurance 25,381755,073 (766,244) 14,210Unemployment insurance 97222,945 (23,528) 389 26,353778,018 (789,772) 14,599(2) Long-term employee compensation payable December 31,2023 January 1,2023 Supplementary pension insurance 23,276 25,101Other long-term benefits 6,369 447,437 29,645 472,538TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 108 VNotes to Consolidated Financial Statements (Continued) 39 Taxes and levies payable December 31,2023 January 1,2023 Corporate income tax 406,607 731,839Value-added tax 112,854 211,873Individual income tax 31,238 42,611Urban maintenance and construction tax 72,993 60,858Education surcharges 52,134 43,495Others 185,516 124,915 861,342 1,215,591Please refer to Note IV for the standards for provisions for taxes and the applicable tax rates. 40 Other payables December 31,2023 January 1,2023 Dividends payable 54,251 40,010Other payables 22,117,151 24,150,342 22,171,402 24,190,352(1) Dividends payable December 31,2023 January 1,2023Other non-controlling interests 54,251 40,010 54,251 40,010(2) Other payables December 31,2023 January 1,2023 Payables for engineering equipment 16,886,446 19,130,372Unpaid expenses 2,653,858 2,195,904Security and deposits 396,797 353,207Others 2,180,050 2,470,85922,117,151 24,150,342TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 109 41 Non-current liabilities due within one year December 31,2023January 1,2023Long-term borrowings due within one year (Note 1) 4318,603,703 4,341,300Bonds payable due within one year (Note 2) 444,436,729 5,170,383Lease liabilities due within one year 45520,010 295,010Long-term payables due within one year 377,513 179,127Interest payable due within one year 391,958 552,181Long-term employee compensation payable due within one year 301,746 419,32024,631,659 10,957,321Note 1 The interest rates of the Company’s long-term borrowing due within one year ranged from 2.3% to 4.8% in the current period (2022: from 2.7% to 5.91%). Note 2 The Company's bonds payable due within one year are mainly as follows: ① Corporate bond 19TCL 01: Issued in May 2019, with a term of 5 years, the closing balance as at December,31 of RMB999,932,000. ② Medium-term note 21TCLGroup MTN001 (high-growth bond): Issued in May 2021, with a term of 3 years, the closing balance as at December,31 of RMB1,999,418,000. ③ Corporate bond 19TCL 02: Issued in July 2019, with a term of 5 years, the closing balance as at December,31 of RMB998,749,000. ④ Corporate bond 19TCL 03: Issued in October 2019, with a term of 5 years, the closing balance as at December,31 of RMB438,630,000. 42 Other current liabilities December 31,2023 January 1,2023 After-sales service expense (note) 1,311,853 844,293Output tax to be transferred 202,571 175,626Others 48,821 165,929 1,563,245 1,185,848Note After-sales service expense expected to occur within 1 year is presented in other current liabilities.VNotes to Consolidated Financial Statements (Continued) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 110 VNotes to Consolidated Financial Statements (Continued) 43 Long-term borrowings December 31,2023 January 1,2023Borrowings secured by collateral 39,851,294 42,317,366Borrowings secured by pledge 5,595,835 6,675,371Unsecured borrowings 90,818,783 73,951,728 136,265,912 122,944,465 Including: long-term loans due within one year (18,603,703) (4,341,300) 117,662,209 118,603,165The maturities of the Company's long-term borrowings vary from 2023 to 2043. As at December 31,2023, the long-term borrowings secured by collateral were equivalent to RMB39,851,294,000 (December 31,2022: RMB42,317,366,000), which were secured by the collaterals of the land use right, houses and buildings, machinery and equipment of about RMB97,095,652,000 (December 31,2022: RMB110,182,749,000); the long-term pledged borrowings were equivalent to RMB5,595,835,000 (December 31,2022: RMB6,675,371,000), which were pledged by the collaterals of the 60% equity in Suzhou China Star Optoelectronics Technology Co., Ltd.,100% equity in Suzhou China Star Optoelectronics Display Co., Ltd. and accounts receivable and contract assets of about RMB505,109,000 (December 31,2022: RMB757,751,000). The interest rates of the Company’s long-term borrowing ranged from 2.30% to 7.79% in the current period (2022: from 2.40% to 7.75%). 44 Bonds payable December 31,2023 January 1,2023 Corporate bonds 2,121,837 4,518,438MTN 6,992,011 7,488,413 9,113,848 12,006,851TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 111 VNotes to Consolidated Financial Statements (Continued) 44 Bonds payable (continued) (1) Movements in bonds payable Bond name Par value Issue date Maturity Issued amount January 1, 2023 Issued in current period Accrued interest as per par value Amortization of premium or discountRepaid in current periodOthers (note) December 31, 2023 19TCL011,000,000 May 20,201951,000,0001,000,264 - 31,500 (109) - (1,000,155) - 19TCL021,000,000 July 23,201951,000,000996,522 - 30,5001,104 - (997,626) - 19TCL032,000,000 October 21,201952,000,000436,934 - 12,9801,268 - (438,202) - TCLTEC11,957,483 July 14,202051,957,4832,084,718 - 39,8406,507 - 30,6122,121,837 21TCLGroup MTN001 (High-Growth Bonds) 2,000,000May 10, 202132,000,0001,997,821 - 82,809525 - (1,998,346) - 22TCLGroup MTN0012,000,000 January 14,202232,000,0001,997,392 - 68,8411,148 - - 1,998,540 22TCLGroup GN0021,500,000 April 27,202231,500,0001,497,217 - 49,3861,198 - - 1,498,415 22TCLGroup MTN003 (Science and Technology Notes) 2,000,000 July 6,202232,000,0001,995,983 - 68,8411,597 - - 1,997,580 23TCLGroup MTN001 (Science and Technology Notes) 1,500,000February 7, 202331,500,000 - 1,500,00055,124 (2,524) - - 1,497,476 Total 14,957,483 —— —— 14,957,48312,006,8511,500,000439,82110,714 - (4,403,717) 9,113,848 Note Others are bonds payable within one year which are reclassified to non-current liabilities due within one year and exchange adjustment. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 112 VNotes to Consolidated Financial Statements (Continued) 45 Lease liabilities December 31,2023 January 1,2023 Total lease liabilities 6,257,298 4,756,393 Less: Current portion of lease liabilities 520,010 295,010 Total 5,737,288 4,461,38346 Long-term payables December 31,2023 January 1,2023 Finance lease 2,739,444 887,76347 Deferred income January 1,2023 Increase in the periodDecrease in the period December 31,2023Public grants 2,468,1457,380,522 (8,308,019) 1,540,648 2,468,1457,380,522 (8,308,019) 1,540,648Items involving public grants January 1, 2023 New grants in current periodAmount recorded in other income in current periodAmount used to offset costs and expenses in current periodOther changes (note) December 31,2023Public grants related to assets 953,042 1,012,020 (3,196) (174,754) (1,545,932) 241,180Public grants related to income 1,515,103 6,368,502 (2,904,735) (3,375,689) (303,713) 1,299,4682,468,145 7,380,522 (2,907,931) (3,550,443) (1,849,645) 1,540,648Note "Other changes" were deferred income offset by the carrying amounts of relevant assets. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 113 VNotes to Consolidated Financial Statements (Continued) 48 Estimated liabilities December 31,2023 January 1,2023After-sales service fee of products 55,426 27,105Pending litigation 61,969 70,379Onerous contract - 38117,395 97,522TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 114 VNotes to Consolidated Financial Statements (Continued) 49 Share capital January 1,2023 Increase or decrease in current period December 31,2023 Amount Ratio (%) New issuesShares converted from capital reserve Others Subtotal Amount Ratio (%) I. Restricted Shares 3,420,22020.03% - 342,022 (3,081,704) (2,739,682) 680,5383.62% II. Non-restricted shares 13,651,67279.97% - 1,365,167 3,081,7044,446,87118,098,54396.38% III. Total shares 17,071,892100% - 1,707,189 - 1,707,18918,779,081100% As at December 31,2023, the Company's total share capital was 18,779,081,000 shares. Note 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 the Company 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. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 115 VNotes to Consolidated Financial Statements (Continued) 50 Capital reserves January 1,2023Increase in the periodDecrease in the period December 31,2023Share capital premium 12,437,990423,212 (2,371,931) 10,489,271Other capital reserves 84,803182,935 (4,954) 262,784 12,522,793606,147 (2,376,885) 10,752,055 51 Treasury share January 1,2023Increase in the periodDecrease in the period December 31,2023Treasury share 1,314,581247,171 (466,809) 1,094,943Increase in the period is mainly stock repurchases for the employee stock ownership plan or the equity incentives of the Company. On May 31,2023, the 32nd meeting of the Seven-term Board of Directors was held to deliberate and approve the Proposal on the Repurchase of Certain Shares from the Social Public in 2023. The Company will repurchase its own shares via centralized bidding, and the Company’s shares repurchased will be used for the employee stock ownership plans or equity incentives. As of December 31,2023, the total number of shares repurchased was 64,993,000 shares at the total consideration of RMB247,171,000. Decrease in the year is mainly caused by the non-trading transfer and sale of the employee portion of the employee stock ownership plan. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 116 VNotes to Consolidated Financial Statements (Continued) 52 Other comprehensive income (1) Other comprehensive income items, income tax effects and reclassifications to profit or loss 20232022 I. Items that cannot be reclassified to profit or loss subsequently 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 8,024 (3,568)Share of the period 5,281 (3,568)Previous other comprehensive income reclassified to retained earnings for current period 2,743 -2. Changes in fair value of other equity instruments (56,797) (14,581)Current gain/(loss) (55,956) (19,688)Previous other comprehensive income reclassified to retained earnings for current period - 16,811Income tax effects recorded in other comprehensive income (841) (11,704) II. Items that will be reclassified to profit or loss subsequently 1. Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method (12,446) (13,936)Share of the period (12,446) (13,936)Income tax effects recorded in other comprehensive income - -2. Changes in fair value of financial assets recorded in other comprehensive income - -Current gain/(loss) - - 3. Cash flow hedges (109,900) 91,730Current gain/(loss) (117,269) 163,220Previous other comprehensive income reclassified to profit for current period (7,580) (58,996)Income tax effects recorded in other comprehensive income 14,949 (12,494) 4. Differences arising from translation of foreign currency financial statements of overseas operations (18,101) (386,679)5. Net income arising from disposal of overseas operations through profit or loss - - (189,220) (327,034)TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 117 VNotes to Consolidated Financial Statements (Continued) 52 Other comprehensive income (continued) (2) Changes in other comprehensive income items Equity attributable to shareholders of the parent company Change of accounting policies Share of other comprehensive income of investees that will be reclassified to profit or loss under equity methodGain/loss on changes in fair value of financial assetsGain/(Loss) on changes in cash flow hedgesDifferences arising from translation of foreign currency-denominated financial statementsFair value changes of other equity instrumentsFair value changes of other debt instrumentsOther comprehensive income transferred to retained earnings SubtotalNon-controlling interestsTotal other comprehensive income January 1,2022334,95046,888 (350,569) 62,546 (239,179) (141,290) - (122,793) (409,447) 899 (408,548) Movement of 2022 - (17,501) - 15,615 (397,531) (16,420) - 13,462 (402,375) 75,341 (327,034) January 1,2023334,95029,387 (350,569) 78,161 (636,710) (157,710) - (109,331) (811,822) 76,240 (735,582) Movement of 2023 - (4,422) - (49,418) (24,180) (58,699) - 2,743 (133,976) (55,244) (189,220) December 31,2023334,95024,965 (350,569) 28,743 (660,890) (216,409) - (106,588) (945,798) 20,996 (924,802) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 118 VNotes to Consolidated Financial Statements (Continued) 53 Surplus reserves January 1,2023Increase in the periodDecrease in the period December 31,2023 Statutory surplus reserves 3,529,403161,733 - 3,691,136Discretionary surplus reserves 182,870 - - 182,8703,712,273161,733 - 3,874,006As per China's Company Law, Articles of Association for Companies, accounting standards, the Company and several of its subsidiaries shall appropriate 10% of net profits as statutory surplus reserves until the reserve amount reaches 50% of the registered capital. According to the aforesaid laws and regulations, part of the statutory surplus reserves can be converted into share capital of the Company, and the remaining amount shall not be lower than 25% of the registered capital. After the appropriation to the statutory surplus reserves, the Company may appropriate the discretionary surplus reserves. Upon approval, the discretionary surplus reserves can be used to make up the previous loss or increase the share capital. 54 Specific reserves January 1,2023Appropriation in the periodDecrease in the period December 31,2023 Production safety reserve 2,30132,220 (23,178) 11,34355 General risk reserve January 1,2023Appropriation in the periodDecrease in the period December 31,2023 General risk reserve 8,934 - - 8,934 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 TCLTechnology Group Corporation, the Company's subsidiary - TCLTechnology Group Corporation - appropriated 1% of its net profit as general risk reserve in the previous years. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 119 VNotes to Consolidated Financial Statements (Continued) 56 Retained earnings 2023 2022Beginning retained earnings 19,486,730 22,458,340Change of accounting policies - 6,810Net profit for current period 2,214,934 261,319Decrease in the period (164,476) (3,239,739)Including: Appropriation of surplus reserves (161,733) (1,162,100)Distributed to ordinary shareholders as dividends - (2,050,003)Others (2,743) (27,636) Retained earnings at the end of the period 21,537,188 19,486,73057 Operating income and operating costs 20232022 Revenue Operating cost Revenue Operating cost Core business 168,869,605144,899,893162,197,543 148,928,769Non-core business 5,497,0523,867,7044,355,243 2,996,720 174,366,657148,767,597166,552,786 151,925,489(1) Business by operating segment Revenue Operating cost Gross profit 2023 2022202320222023 2022 Domestic sales 119,940,278 119,139,823103,308,186108,166,26916,632,092 10,973,554Foreign sales 54,426,379 47,412,96345,459,41143,759,2208,966,968 3,653,743174,366,657 166,552,786148,767,597151,925,48925,599,060 14,627,297 (2) The total revenue from the sales to the top five customers was RMB51,360,608,000 and RMB50,092,171,000 respectively for 2023 and 2022, accounting for 29.5% and 30.1% of the revenue.TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 120 VNotes to Consolidated Financial Statements (Continued) 57 Revenue and operating costs (continued) (3) Revenue and costs generated from the Company's trial sales are as follows: 2023 2022 Revenue 1,447,163739,823Operating cost 1,139,976721,12658 Interest income/expense and exchange gain 2023 2022 Interest income 79,51579,360Interest expenditures 19,36223,530Exchange gain/(loss) 51617,914 The interest income, interest expense and exchange gain/(loss) above occurred with the Company's subsidiary TCLTechnology Group Finance Co., Ltd., which are presented separately herein as required for a financial enterprise. 59 Taxes and levies 2023 2022Property tax 406,693 265,880Stamp tax 224,364 218,367Urban maintenance and construction tax 74,151 68,890Education surcharges 36,420 35,730Land use tax 34,477 30,732Others 25,833 20,703 801,938 640,302 The applicable tax and levy standards are detailed in Note IV. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 121 VNotes to Consolidated Financial Statements (Continued) 60 Sales expenses 2023 2022 Employee salaries and benefits 668,705 601,948After-sales service expense 841,951 400,771Promotional and marketing expenses 272,074 298,422Others 740,957 649,387 2,523,687 1,950,52861 General and administrative expense 2023 2022Employee salaries and benefits 2,014,617 1,337,491Depreciation and amortization expenses 777,394 792,780Expenses for hiring intermediaries 445,436 401,832Digital development expenses 225,051 315,537Others 1,320,749 692,971 4,783,247 3,540,61162 R&D expenses 2023 2022 Depreciation and amortization expenses 4,132,169 2,983,043 Material expenses 1,979,550 2,940,584 Employee salaries and benefits 2,108,597 1,767,546 Others 1,302,522 942,465 9,522,838 8,633,63863 Financial expenses 2023 2022 Interest expenditures 4,922,120 4,468,008Interest income (939,719) (723,665)Exchange loss / (gain) (137,852) (447,876)Others 128,179 126,428 3,972,728 3,422,895TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 122 VNotes to Consolidated Financial Statements (Continued) 64 Other income 2023 2022 R&D subsidies 2,536,169 2,454,585VAT rebates on software 50,605 44,280Over-deduction in taxable amount for VAT 408,348 1,381Others 543,137 417,548 3,538,259 2,917,79465 Return on investment 2023 2022Gain on disposal of debt instruments at fair value through profit or loss 38,850 238,803Gain on disposal of equity instruments at fair value through profit or loss 51,291 (15,097)Gain on holding of equity instruments at fair value through profit or loss 116,577 18,758 Gain on holding of debt instruments at fair value through profit or loss 366,008 69,748 Share of net income of associates 1,463,104 2,958,218Share of net income of joint ventures (99,443) (59,479)Net income from disposal of long-term equity investments (51,685) 1,823,568Return on investment generated from the disposal of equity in coal resource companies699,071 -Others 8,104 (303,125) 2,591,877 4,731,39466 Gain on changes in fair value 2023 2022 Held-for-trading financial assets (82,730) (257,067)Derivative financial assets 188,835 23,437Held-for-trading financial liabilities (73,859) (1,678)Derivative financial liabilities (4,908) 96,064 27,338 (139,244)TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 123 VNotes to Consolidated Financial Statements (Continued) 67 Credit impairment loss 2023 2022 Loss on uncollectible accounts receivable 54,862 (44,955)Loss on uncollectible other receivables (222,675) (6,172)Other financial assets (5,252) 13,474 (173,065) (37,653)68 Asset impairment loss 2023 2022 Inventory valuation loss (3,648,392) (3,083,928)Impairment loss on long-term equity investments (1,148,110) (319,981)Others (17,463) (82,614) (4,813,965) (3,486,523)69 Asset disposal income 2023 2022 Income/(loss) from disposal of fixed assets (42,660) (71,718)Others 1,244 (8,107) (41,416) (79,825)70 Non-operating income 20232022 Amount through current non-recurring gains and lossesGains on retired or damaged non-current assets 220117 220Public grants and others 71,065789,995 71,065 71,285790,112 71,285TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 124 VNotes to Consolidated Financial Statements (Continued) 71 Non-operating expense 20232022Amount through current non-recurring gains and lossesLosses on retired or damaged non-current assets 56,60319,37756,603Donation 58,14470,22258,144Others 89,03362,47289,033203,780152,071203,78072 Income tax expenses (1) Table of income tax expenses 2023 2022 Current income tax expense 817,257 734,639Deferred income tax expense (546,217) (1,465,647) 271,040 (731,008)(2) Accounting profit and income tax adjustment process 2023 2022 Gross profit 5,051,824 1,057,051Income tax expense calculated at statutory/applicable tax rate 757,774 158,558Impact of different tax rates applied to subsidiaries 302,867 383,590Impact of adjusting income tax in previous periods (227,744) (12,613)Impact of non-taxable income (953,093) (704,581)Impact of non-deductible costs, expenses and losses 68,559 107,325Impact of the use of deductible losses on deferred income tax assets that were not recognized in the previous periods (213,931) (576,264)Impact of unrecognized deferred income tax assets of deductible temporary differences or deductible losses in the current period 677,201 730,522Others (140,593) (817,545) Income tax expense 271,040 (731,008)TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 125 VNotes to Consolidated Financial Statements (Continued) 73 Earnings per share (1) Basic earnings per share 20232022 Net profit attributable to shareholders of the parent company 2,214,934 261,319Weighted average outstanding ordinary shares (in thousand shares) 18,533,341 15,054,601Basic earnings per share (RMB yuan) 0.1195 0.0174(2) Diluted earnings per share 20232022 Net profit attributable to shareholders of the parent company 2,214,934 261,319Diluted weighted average outstanding ordinary shares (in thousand shares) 18,779,081 15,558,525Diluted earnings per share (RMB yuan) 0.1179 0.016874 Cash generated from other operating activities Other cash received from operating activities in the consolidated cash flow statement was RMB6,899,258,000 (year-on-year: RMB7,955,973,000), which primarily consisted of current payments received, public grants and special appropriation, etc. 75 Cash used in other operating activities Other cash paid for other operating activities in the consolidated cash flow statement was RMB8,773,577,000 (year-on-year: RMB9,722,343,000), which primarily consisted of various expenses and current payments, etc. 76 Cash generated from other investing activities Other cash received from investing activities in the consolidated cash flow statement was RMB1,589,202,000 (year-on-year: RMB170,387,000), which primarily consisted of net cash received from subsidiaries and the receipt of project bid bonds, etc. 77 Cash used in other investing activities Other cash paid for investing activities in the consolidated cash flow statement was RMB923,051,000 (year-on-year: RMB1,212,074,000), which primarily consisted of the refund of project bid bonds and payments for foreign exchange forward delivery. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 126 VNotes to Consolidated Financial Statements (Continued) 78 Cash generated from other financing activities Other cash received from financing activities in the consolidated cash flow statement was RMB3,950,311,000 (year-on-year: RMB272,281,000), which primarily consisted of finance lease payments received, and deposits, etc. 79 Cash used in other financing activities Other cash paid for financing activities in the consolidated cash flow statement was RMB8,037,595,000 (year-on-year: RMB6,110,504,000), primarily consisted of the payments for the repurchase of minority interests in subsidiaries, repurchase of the Company’s shares, and financial lease payments, etc. 80 Supplementary information for the cash flow statement (1) Reconciliation of net profit to net cash generated from/used in operating activities 2023 2022 Net profit 4,780,784 1,788,059Add: Asset impairment allowance 4,987,030 3,524,176Depreciation of fixed assets 21,034,479 19,290,088Depreciation of right-of-use assets 525,891 322,032Amortization of intangible assets 1,879,947 1,473,104Amortization of long-term prepaid expense 2,148,685 1,613,307Loss/(Gain) on disposal of fixed assets, intangible assets and other long-term assets 41,416 79,825Loss/(Gain) on retired or damaged fixed assets 56,383 19,260Loss/(Gain) on changes in fair value (27,338) 139,244Financial expenses 4,803,114 4,025,748Return on investment (2,591,877) (4,731,394)Decrease/(Increase) in deferred income tax assets (492,335) 399,459Increase/(Decrease) in deferred income tax liabilities 108,059 (1,839,558)Decrease/(Increase) in inventory (4,129,025) (4,643,791)Decrease/(Increase) in operating receivables (7,629,570) 4,576,161Increase/(Decrease) in operating payables (906,091) (7,139,434)Others 725,204 (469,910) Net cash generated from operating activities 25,314,756 18,426,376TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 127 VNotes to Consolidated Financial Statements (Continued) 80 Supplementary information for the cash flow statement (continued) (2) Net cash payments for acquisition of subsidiaries in the current period 2023 2022Payments of cash and cash equivalents made in current period due to business combinations incurred in current period 571,830 51,000Less: cash and cash equivalents held by subsidiary on acquisition date 85,844 867Add: Payments of cash and cash equivalents made in current period due to business combinations incurred in previous periods - -Net cash payments for acquisition of subsidiaries 485,986 50,133 (3) Net cash proceeds from disposal of subsidiaries in the current period 2023 2022 Cash or cash equivalents received in current period due to disposal of subsidiary in current period 366,568 174,803Less: cash and cash equivalents held by subsidiary on the date when the Company’s control over the subsidiary ceased 17,454 2,298Add: Cash or cash equivalents received in current period due to disposal of subsidiaries in prior periods 10,848 1,260,290Net proceeds from the disposal of subsidiaries 359,962 1,432,795 (4) Breakdown of cash and cash equivalents December 31,2023 January 1,2023I. Cash 19,996,815 33,675,624Including: Cash on hand 583 480Bank deposits available for payment on demand 19,807,150 32,696,213Other monetary assets available for payment on demand 132,982 919,646Deposits with the central bank available for payment 56,100 59,285II. Cash equivalents - - III. Ending balance of cash and cash equivalents 19,996,815 33,675,624TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 128 VNotes to Consolidated Financial Statements (Continued) 81 Net changes in cash and cash equivalents 20232022 Ending cash and cash equivalents 19,996,815 33,675,624Less: Cash at the beginning of the year 33,675,624 30,081,705 Net increase in cash and cash equivalents (13,678,809) 3,593,919 Analysis of ending cash and cash equivalents: Monetary assets at the end of the period 21,924,271 35,378,501Less: Non-cash equivalents at the end of the period (note) 1,927,456 1,702,877 Ending cash and cash equivalents 19,996,815 33,675,624 Note: The closing non-cash equivalents primarily included interest receivable on bank deposits, the statutory reserve deposits placed by TCLTechnology Group Finance Co., Ltd. in the central bank and other monetary assets, detailed in Annex V,1. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 129 VNotes to Consolidated Financial Statements (Continued) 82 Assets with restricted ownership or use rights December 31,2023 Reason for restriction Gross carrying amountCarrying amount Monetary assets 341,091341,091 Deposited in the central bank as the required reserve Monetary assets 1,586,3651,586,365 Other monetary funds and restricted bank deposits Notes receivable 503,636503,636 Pledge Fixed assets 119,355,89193,479,143 As collateral for loan Intangible assets 4,595,3203,965,665 As collateral for loan Held-for-trading financial assets 369,642369,642 Pledge Construction in progress 895,589895,589 As collateral for loan Accounts receivable 860,084860,084 Pledge Contract assets 361,312343,205 Pledge Investment property 9,9099,738 As collateral for loan Other non-current assets due within one year 430,493430,493 Pledge 129,309,332102,784,651 83 Foreign currency monetary items December 31,2023 Foreign currency balance Conversion rate RMB balanceMonetary assets Including: USD 603,0227.08274,271,024HKD 126,8890.9064115,012EUR 6,5827.846951,648JPY 2,596,5540.0501130,087SGD 8455.37504,542INR 3,123,1150.0850265,465 Accounts receivable Including: USD 948,093 7.08276,715,058HKD 470 0.9064426INR 4,593,5100.0850390,448EUR 3197.84692,503JPY 13,2000.0501661TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 130 VNotes to Consolidated Financial Statements (Continued) 83 Foreign currency monetary items (continued) December 31,2023 Foreign currency balance Conversion rate RMB balanceAccounts payable Including: USD 525,0827.08273,718,998HKD 330,4060.9064299,480EUR 7,8137.846961,308JPY 12,634,9610.0501633,012INR 581,4890.085049,427 Other receivables Including: USD 14,016 7.082799,271HKD 15,539 0.906414,085EUR 1,5907.846912,477JPY 83,383 0.05014,177PLN 865 1.80791,564INR 70,348 0.08505,980KRW 102,590 0.0055564MXN 20,8490.41758,704SGD 925.3750495 Other payables Including: USD 602,878 7.08274,270,004HKD 417,938 0.9064378,819JPY 16,867,145 0.0501845,044INR 651,058 0.085055,340PLN 28 1.807951KRW 309,677 0.00551,701MXN 24,202 0.417510,104EUR 169 7.84691,326TWD 2660.230761 Short-term borrowings Including: USD 2,6937.082719,074 Long-term borrowings Including: USD 91,4487.0827647,699TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 131 VNotes to Consolidated Financial Statements (Continued) 84 Leases (1) The Company acting as a lessee In 2023, short-term lease rents, low-value asset rents and income obtained from subleasing right-of-use assets, for which the Group, acting as a lessee, chose simplified accounting, were not significant. (2) The Company acting as a lessor ① Operating leases where the Company acts as a lessor Item Rental income Including: Income related to variable lease payments not included in lease receipts Houses and buildings 294,156 -Machinery equipment 7,848 -Total 302,004 -② Finance leases where the Company acts as a lessor Item Sales gains and losses Financing income Income related to variable lease payments not included in net lease investment Finance lease - 62,878 -Total - 62,878 -Annual undiscounted lease receipts for the next five years Item Annual undiscounted lease receipts Ending amount Beginning amount Year 195,51888,974Year 288,03188,543Year 386,91088,031Year 486,91086,910Year 586,91086,910Total undiscounted lease receipts after five years 904,691991,602TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 132 VI R&D expenses 1 Presentation by nature of expenses Item Amount incurred in the current period Amount incurred in the previous period Material costs 3,855,668 4,945,218Labor costs 2,951,412 2,559,974Depreciations and amortizations 2,323,024 2,030,079Others 1,178,440 1,243,144Total 10,308,544 10,778,415Including: Expensed R&D expenses 6,748,2886,490,988 Capitalized R&D expenses 3,560,256 4,287,4272 Development expenses of R&D projects eligible for capitalization Item Balance at the beginning of the period Increase in the period Decrease in the period Ending balance Internal development costs OthersRecognized as intangible assets Included in profits and losses Others Display 2,172,507 2,837,141 - (1,228,183) (404,696) (1,921,659) 1,455,110New energy photovoltaic & materials 1,006,700 723,115 - (643,432) - - 1,086,383 Total 3,179,207 3,560,256 - (1,871,615) (404,696) (1,921,659) 2,541,493 3. The Company had no significant outsourced projects under research. VII Changes to the Consolidation Scope 1 Newly consolidated entities for current period Name of investee Reason for change Registered capital (RMB) Contribution ratio Lumetech North America Corporation Newly incorporated USD10,000,000100.00%Suzhou Zhonghuan Photovoltaic Materials Co., Ltd. Newly incorporated RMB50,000,000100.00%Ningxia Huanou New Energy Technology Co., Ltd. Newly incorporated RMB1,250,000,000100.00%Xinxin Bandaoti Technology Co., Ltd. Acquisition RMB6,513,000,000100.00%Jiangsu Mingjing Bandaoti Technology Co., Ltd. Acquisition RMB120,000,000100.00%Jiangsu Lixin Bandaoti Technology Co., Ltd. Acquisition RMB4,210,000,000100.00%TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 133 VIIChanges to Consolidation Scope (continued)1 Newly consolidated entities for current period (continued) Name of investee Reason for change Registered capital (RMB) Contribution ratio Xuzhou Xinjing Bandaoti Technology Co., Ltd. Acquisition RMB4,210,000,000100.00%Jiangsu Huasheng Bandaoti Materials Co., Ltd. Acquisition RMB200,000,000100.00%Hong Kong NExcel Electronic Technology Co., Ltd. Acquisition USD5,000,000100.00%Singapore NExcel Electronic Technology Co., Ltd. Acquisition SGD100,000100.00%Xuzhou Jingrui Bandaoti Equipment Technology Co., Ltd. Acquisition RMB150,000,000100.00%Meixin (Xuzhou) Silicon Material Technology Co., Ltd. Acquisition RMB22,000,000100.00%Ningxia Zhonghuan Industrial Park Management Co., Ltd. Newly incorporated RMB10,000,000100.00%Guangzhou TCLIndustrial Research Institute Co., Ltd. Newly incorporated RMB20,000,000100.00%Suzhou China Star Environmental Protection Technology Co., Ltd. Acquisition RMB100,000,000100.00%Huizhou Dongshen Jia'an Equity Investment Partnership (Limited Partnership) Newly incorporated RMB1,561,000,00099.94%Inner Mongolia TCLPhotoelectric Technology Co., Ltd. Acquisition RMB200,000,000100.00%Ningbo Dongshen Zhixuan Equity Investment Partnership (Limited hi )Newly incorporated RMB551,000,00090.74%TCLFinancial Technology (Shenzhen) Co., Ltd. Acquisition RMB5,000,000100.00%Huansheng Photovoltaic (Guangdong) Co., Ltd. Newly incorporated RMB10,000,000100.00%Xuzhou Huanneng New Energy Co., Ltd. Newly incorporated RMB1,000,000100.00%Lingwu Xuzhao New Energy Co., Ltd. Newly incorporatedRMB1,000,000100.00%TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 134 VIIChanges to Consolidation Scope (continued) 1 Newly consolidated entities for current period (continued) Name of investee Reason for changeRegistered capital (RMB) Contribution ratio Techigh Circuit Technology (Huizhou) Co., Ltd. Acquisition RMB146,938,77651.00%Techigh Circuit Technology (Zhuhai) Co., Ltd. Acquisition RMB100,000,000100.00%Tairui (Hong Kong) Limited Acquisition HKD100,000100.00%Ningxia Zhonghuan Yuelanshan Hotel Management Co., Ltd. Newly incorporated RMB1,000,000100.00%Zhangjiakou Shengming New Energy Co., Ltd. Newly incorporated RMB1,000,000100.00%Xiamen Dili Hongxin Venture Capital Partnership Enterprise (Limited Partnership) Newly incorporated RMB131,000,00095.80%Xi'an Maituo Sunpie Technology Co., Ltd. Newly incorporated RMB300,000100.00%Xi'an Shengtai Sunpie Technology Co., Ltd. Newly incorporated RMB300,000100.00%Xi’an Shengke Sunpie Technology Co., Ltd. Newly incorporated RMB300,000100.00%Urumqi Sunpie Fengshang Trading Co., Ltd. Newly incorporated RMB500,000100.00%Urumqi Sunpie Zhixing Trading Co., Ltd. Newly incorporated RMB500,000100.00%Foshan Sunpiestore Technology Co., Ltd. Newly incorporated RMB100,000100.00%Zhuhai Sunpiestore Technology Co., Ltd. Newly incorporated RMB100,000100.00%Ningxia Hongyuan New Energy Co., Ltd. Newly incorporated RMB1,000,000100.00%Ningxia Shengyao New Energy Co., Ltd. Newly incorporated RMB1,000,000100.00%Lingwu Shangyuan New Energy Co., Ltd.Newly incorporated RMB1,000,000100.00%Xi’an Shengbo Sunpie Technology Co., Ltd. Newly incorporated RMB300,000100.00%TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 135 VIIChanges to Consolidation Scope (continued) 1 Newly consolidated entities for current period (continued) Note: Business combinations not under the common control occurred in the current period (1) Acquisition of shares of Suzhou China Star Environmental Protection Technology Co., Ltd. ① The cost of acquisition and goodwill were recognized as follows: On May 31,2023 (the “Acquisition Date”), the Group acquired 100% equity of Suzhou China Star Environmental Protection Technology Co., Ltd. at a cash consideration of RMB344,942,000, and included such company into the scope of consolidation. Cash consideration 344,942Less: Share of fair value of identifiable net assets acquired 301,534 Goodwill amount 43,408 ② Assets and liabilities of the acquired party as at the acquisition date are presented as follows: Fair value at acquisition date Carrying amount as at the acquisition date Total assets 358,206175,775Total liabilities 56,67229,307Net assets 301,534146,468Less: non-controlling interests - -Net assets acquired 301,534146,468③ Jiangsu Tiandi Heng’an Real Estate Land Asset Appraisal Co., Ltd. has appraised the information above using the income method, and issued an asset appraisal report (TDHA [2022] ZPZNo.1065), with an appraised value of RMB344,942,000. (2) Acquisition of shares in TCLInternet Technology (Shenzhen) Co., Ltd. ① The cost of acquisition and goodwill were recognized as follows: On June 30,2023 (the “Acquisition Date”), the Group acquired 100% equity of TCLInternet Technology (Shenzhen) Co., Ltd. with a cash consideration of RMB15,036,000, and included such company into the scope of consolidation. Cash consideration 15,036Less: Share of fair value of identifiable net assets acquired 15,036Difference of lower goodwill / merger cost and higher share of fair value of identifiable net assets acquired -② Assets and liabilities of the acquired party as at the acquisition date are presented as follows: Item Fair value at acquisition date Carrying amount as at the acquisition date Total assets 61,03456,435Total liabilities 45,99845,998Net assets 15,036 10,437 Less: non-controlling interests - -Net assets acquired 15,03610,437TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 136 (3) Acquisition of shares in Xinxin Bandaoti Technology Co., Ltd. ① The cost of acquisition and goodwill were recognized as follows: On February 28,2023 (the “Acquisition Date”), the Group acquired 100% equity of Xinxin Bandaoti Technology Co., Ltd. by issuing equity securities, and included such company into the scope of consolidation. Fair value of equity securities issued 7,399,683 Less: Share of fair value of identifiable net assets acquired 6,219,678 Goodwill amount 1,180,005 ② Assets and liabilities of the acquired party as at the acquisition date are presented as follows: Item Fair value at acquisition date Carrying amount as at the acquisition date Total assets 8,320,6727,752,700 Total liabilities 2,100,9942,313,890 Net assets 6,219,6785,438,810 Less: non-controlling interests - -Net assets acquired 6,219,6785,438,810 (4) Acquisition of shares in Inner Mongolia TCLPhotoelectric Technology Co., Ltd. ① The cost of acquisition and goodwill were recognized as follows: On May 1,2023 (the “Acquisition Date”), the Group acquired 100% equity of Inner Mongolia TCL Photoelectric Technology Co., Ltd. at a cash consideration of RMB119,039,000, and included such company into the scope of consolidation. Cash consideration 119,039 Less: Share of fair value of identifiable net assets acquired 119,039Difference of lower goodwill / merger cost and higher share of fair value of identifiable net assets acquired -② Assets and liabilities of the acquired party as at the acquisition date are presented as follows: Item Fair value at acquisition date Carrying amount as at the acquisition date Total assets 213,871194,735 Total liabilities 94,832 94,832 Net assets 119,039 99,903 Less: non-controlling interests - -Net assets acquired 119,03999,903 VIIChanges to Consolidation Scope (continued) 1 Newly consolidated entities for current period (continued) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 137 (5) Acquisition of the equity of Techigh Circuit Technology (Huizhou) Co., Ltd. ① The cost of acquisition and goodwill were recognized as follows: On October 31,2023 (the “Acquisition Date”), the Group acquired 51% equity of Techigh Circuit Technology (Huizhou) Co., Ltd. with a cash consideration of RMB423,103,000, and included the acquisition of the equity of such company into the scope of consolidation. Cash consideration 423,103Less: Share of fair value of identifiable net assets acquired 291,626Difference of lower goodwill / merger cost and higher share of fair value of identifiable net assets acquired 131,477② Assets and liabilities of the acquired party as at the acquisition date are presented as follows: Item Fair value at acquisition date Carrying amount as at the acquisition date Total assets 591,880 531,819 Total liabilities 270,888 270,907 Net assets 320,992 260,913 Less: non-controlling interests 157,286127,847Net assets acquired (note) 163,706 133,066 Note: The net asset obtained does not include amounts that have not been contributed. ③ SHENZHENCHINAUNITEDASSETSAPPRAISALGROUPCO., LTD. has evaluated the information above using the asset-based method, and issued an asset appraisal report (SCUPBZi [2024] No.20), with an appraised value of RMB320,992,000. 2 Deconsolidated entities for current period Name of investee Time of deconsolidation Reason for change Yixing Huanxing New Energy Co., Ltd. April 2023 Transferred Tianjin Binhai Huanneng New Energy Co., Ltd. April 2023 Transferred Dushan Anju Photovoltaic Technology Co., Ltd. April 2023 Transferred Shangyi Shengxin New Energy Development Co., Ltd. April 2023 Transferred Gengma Huanxing New Energy Co., Ltd. April 2023 Transferred Guyuan Shengju New Energy Co., Ltd. April 2023 Transferred Zhangjiakou Shengyuan New Energy Co., Ltd. April 2023 TransferredVIIChanges to Consolidation Scope (continued) 1 Newly consolidated entities for current period (continued) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 138 2 Deconsolidated entities for current period (continued) Name of investee Time of deconsolidation Reason for change Qinhuangdao Tianhui Solar Energy Co., Ltd. April 2023 Transferred Tianjin Huanhai Real Estate Development Co., Ltd. September 2023 De-registered Tianjin Zhonghuan Hengda Technology Co., Ltd. October 2023 Transferred TCLLighting (Wuhan) Co., Ltd. October 2023 De-registered Inner Mongolia Huanneng Resources Development Co., Ltd. October 2023 De-registered Inner Mongolia Zhonghuan Electronic Materials Co., Ltd. October 2023 De-registered Tianjin Yingtuo Computer Control Technology Co., Ltd. November 2023 TransferredMeixin (Xuzhou) Silicon Material Technology Co., Ltd. December 2023 De-registered Shangyi Shengyao New Energy Development Co., Ltd. December 2023 Transferred Inner Mongolia Zhonghuan Energy Development Center (Limited Partnership) December 2023 De-registered Guangdong TCLNew Technology Co., Ltd. December 2023 TransferredVIIChanges to Consolidation Scope (continued) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 139 VIIChanges to Consolidation Scope (continued) 3 Subsidiaries disposed in current period Name of subsidiary Yixing Huanxing New Energy Co., Ltd. Tianjin Binhai Huanneng New Energy Co., Ltd.Dushan Anju Photovoltaic Technology Co., Ltd.Shangyi Shengxin New Energy Development Co., Ltd.Price for equity interest disposal 37,71029,708 52,460 79,060 % equity interest disposed 100% 100% 99% 100%Way of equity interest disposal Sale Sale Sale SaleTime of loss of control April 2023 April 2023 April 2023 April 2023Determination basis for time of loss of control The operating risk has been transferred The operating risk has been transferredThe operating risk has been transferredThe operating risk has been transferredDifference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest 12,70525,960 (21,827) 83,248Name of subsidiary Gengma Huanxing New Energy Co., Ltd. Guyuan Shengju New Energy Co., Ltd.Zhangjiakou Shengyuan New Energy Co., Ltd.Qinhuangdao Tianhui Solar Energy Co., Ltd.Price for equity interest disposal 31,830 57,490 58,290 84,060 % equity interest disposed 99% 99% 99% 99%Way of equity interest disposal Sale Sale Sale SaleTime of loss of control April 2023 April 2023 April 2023 April 2023Determination basis for time of loss of control The operating risk has been transferred The operating risk has been transferredThe operating risk has been transferredThe operating risk has been transferredDifference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest (13,808) (9,721) (9,376) (37,954)TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 140 VIIChanges to Consolidation Scope (continued) 3 Subsidiaries disposed in current period (continued) Name of subsidiary Tianjin Zhonghuan Hengda Technology Co., Ltd. Tianjin Yingtuo Computer Control Technology Co., Ltd.Guangdong TCLNew Technology Co., Ltd. Shangyi Shengyao New Energy Development Co., Ltd.Price for equity interest disposal 2,702 4747,069 81,810% equity interest disposed 100% 100% 80% 99%Way of equity interest disposal Sale Sale Sale SaleTime of loss of control November 2023 November 2023 December 2023 December 2023Determination basis for time of loss of control The operating risk has been transferred The operating risk has been transferredThe operating risk has been transferred The operating risk has been transferredDifference between the disposal price and the Company’s share of the subsidiary’s net assets in the consolidated financial statements relevant to the disposed equity interest (512) 1,329 (2,475) 12,629TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 141 VIII Interests in Other Entities 1 Interests in subsidiaries (1) Principal subsidiaries Name of investee Place of registrationNature of business Principal place of business Shareholding ratio (%) How subsidiary was obtained Direct Indirect TCLChina Star Optoelectronics Technology Co., Ltd. ShenzhenManufacturing and sales Shenzhen 79.17% - Incorporated Shenzhen China Star Optoelectronics Bandaoti Display Technology Co., Ltd. ShenzhenManufacturing and sales Shenzhen - 54.31% Incorporated Guangzhou China Ray Optoelectronic Materials Co., Ltd. GuangzhouResearch and development Guangzhou - 100% Incorporated Wuhan China Star Optoelectronics Technology Co., Ltd. Wuhan Manufacturing and sales Wuhan - 96.67% Incorporated Wuhan China Star Optoelectronics Bandaoti Display Technology Co., Ltd. Wuhan Manufacturing and sales Wuhan - 57.14% Incorporated China Star Optoelectronics International (HK) Limited Hong Kong Sales Hong Kong - 100% Incorporated China Display Optoelectronics Technology Holdings Limited BermudaInvestment holding Bermuda - 64.20% Business combination not under common control China Display Optoelectronics Technology (Huizhou) Co., Ltd. HuizhouManufacturing and sales Huizhou - 100% Incorporated Wuhan China Display Optoelectronics Technology Co., Ltd. Wuhan Manufacturing and sales Wuhan - 100% Incorporated Suzhou China Star Optoelectronics Technology Co., Ltd. Suzhou Manufacturing and sales Suzhou - 100% Business combination not under common control Suzhou China Star Optoelectronics Display Co., Ltd. Suzhou Manufacturing and sales Suzhou - 100% Business combination not under common control Guangzhou China Star Optoelectronics BandaotiDisplay Technology Co., Ltd. GuangzhouManufacturing and sales Guangzhou - 55.00% Incorporated TCLCulture Media (Shenzhen) Co., Ltd. Shenzhen Ad planning Shenzhen 100% - Incorporated Highly Information Industry Co., Ltd. Beijing Product distribution Beijing 66.46% - Incorporated Beijing Sunpiestore Technology Co., Ltd. Beijing Sales Beijing - 53.45% Incorporated Beijing Lingyun Data Technology Co., Ltd. Beijing Sales Beijing - 60.00% Incorporated TCLTechnology Group Finance Co., Ltd. Huizhou Financial Huizhou 82.00% 18.00% Incorporated TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 142 VIIInterests in Other Entities (continued) 1 Interests in subsidiaries (Continued) (1) Composition of key subsidiaries (Continued) Name of investee Place of registrationNature of business Principal place of business Shareholding ratio (%) How subsidiary was obtained Direct Indirect Shenzhen Dongxi Jiashang Entrepreneurship Investment Co., Ltd. (Formerly Xinjiang TCL Equity Investment Co., Ltd.) ShenzhenInvestment business Shenzhen100% - Incorporated Ningbo TCLEquity Investment Ltd. Ningbo Investment business Shenzhen 100% - Incorporated TCLTechnology Park (Huizhou) Co., Ltd. Huizhou Property management Huizhou - 100% Incorporated TCLResearch America Inc. U.S. Research and development U.S. - 100% Incorporated TCLIndustrial Technology Research Institute (Hong Kong) Limited Hong KongResearch and development Hong Kong - 100% Incorporated TCLTechnology Investments Limited Hong KongInvestment business Hong Kong 100% - Incorporated TCLZhonghuan Renewable Energy Technology Co., Ltd. Tianjin Manufacturing and sales Tianjin 2.55% 27.36% Business combination not under common control Tianjin Printronics Circuit Corporation Tianjin Manufacturing and sales Tianjin - 26.86% Business combination not under common control Tianjin Huan'Ou Bandaoti Material&Technology Co., Ltd. Tianjin Manufacturing and sales Tianjin - 100% Business combination not under common control Wuxi Zhonghuan Applied Materials Co., Ltd. Wuxi Manufacturing and sales Wuxi - 98.08% Business combination not under common control Tianjin Huanzhi New Energy Technology Co., Ltd. Tianjin Manufacturing and sales Tianjin - 62.00% Business combination not under common control Inner Mongolia Zhonghuan Solar Material Co., Ltd. Inner MongoliaManufacturing and sales Inner Mongolia- 100% Business combination not under common control Tianjin Zhonghuan Advanced Material&Technology Co., Ltd. Tianjin Manufacturing and sales Tianjin - 100% Business combination not under common control Huansheng Solar (Jiangsu) Co., Ltd. Wuxi Manufacturing and sales Wuxi - 83.73% Business combination not under common control TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 143 VIIIInterests in Other Entities (Continued) 1 Interests in subsidiaries (Continued) (1) Composition of key subsidiaries (Continued) Name of investee Place of registrationNature of business Principal place of business Shareholding ratio (%) How subsidiary was obtained Direct Indirect Tianjin Huanou International Silicon Material Co., Ltd. Tianjin Procurement & sales Tianjin - 100% Business combination not under common control Zhonghuan Hong Kong Holding Limited Hong Kong Sales Hong Kong- 100% Business combination not under common control Tianjin Huanrui Electronic Technology Co., Ltd. Tianjin Procurement & sales Tianjin - 100% Business combination not under common control Inner Mongolia Zhonghuan Crystal Materials Co., Ltd. Inner MongoliaManufacturing and sales Inner Mongolia- 59.32% Business combination not under common control Inner Mongolia Zhonghuan Advanced Bandaoti Material Co., Ltd. Inner MongoliaManufacturing and sales Inner Mongolia- 100% Business combination not under common control Zhonghuan Advanced Bandaoti Technology Co., Ltd. Wuxi Manufacturing and sales Wuxi 7.35% 35.30% Business combination not under common control Moka International Limited BVI Investment holding BVI - 100% Business combination not under common control Moka Technology (Guangdong) Co., Ltd. Huizhou Manufacturing and sales Huizhou - 100% Business combination not under common control (2) Subsidiaries with substantial non-controlling interests Name of subsidiary Non-controlling shareholding ratio (%)Profit or loss attributable to non-controlling shareholders in the current periodDividends distributed to non-controlling shareholders in the current period Closing equity ofnon-controlling interestsTCLChina Star OptoelectronTechnology Co., Ltd.20.83% (443,697) - 43,769,170TCLZhonghuan Renewable EnerTechnology Co., Ltd.70.09% 2,882,278355,92547,631,075Highly Information Industry Co., Ltd.33.54% 29,50534,990552,086TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 144 VIIIInterests in Other Entities (continued) 1 Interests in subsidiaries (Continued) (2) Subsidiaries with substantial non-controlling interests (continued) The key financial information of the above subsidiaries is as follows: December 31,2023 January 1,2023 Current assets Non-current assets TotalassetsCurrentliabilitiesNon-currentliabilitiesTotalliabilitiesCurrentassetsNon-currentassetsTotalassetsCurrentliabilitiesNon-currentliabilitiesTotal liabilities TCLChina Star Optoelectronics Technology Co., Ltd. 55,759,259153,177,418208,936,67766,215,55868,629,981134,845,539 40,115,151152,441,917192,557,06845,523,24273,184,255118,707,497 TCLZhonghuan Renewable Energy Technology Co., Ltd. 34,627,47890,435,565125,063,04322,324,09542,501,83664,825,931 31,829,52376,483,400108,312,92323,020,08238,232,99961,253,081 Highly Information Industry Co., Ltd.7,086,563179,9857,266,5485,807,99024,5235,832,513 8,563,285149,3908,712,6757,191,61039,9617,231,571 2023 2022 Revenue Net profitTotal comprehensive incomeNet cash generate from/used in operating activities Revenue Net profitTotal comprehensive incomeNet cash generate from/used in operating activities TCLChina Star Optoelectronics Technology Co., Ltd.72,077,792 (480,560) (524,501) 18,507,307 56,256,417 (8,352,833) (8,445,005) 11,012,565 TCLZhonghuan Renewable Energy Technology Co., Ltd.59,146,4633,898,8923,899,0665,181,163 67,010,1577,073,0437,073,0435,056,839 Highly Information Industry Co., Ltd.30,109,52943,20043,200 (205,171) 31,847,803264,253264,253 (574,296) TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 145 VIIIInterests in Other Entities (continued) 2 Interests in joint ventures and associates (1) Basic information about principal joint ventures and associates Name of investee Principal place of business/place of registrationNature of business Strategic to the Group’s activities or not Shareholding ratio (%) Direct IndirectAssociate Bank of Shanghai Co., Ltd. Shanghai Financial Yes 5.76% -(2) Key financial information of major associates December 31,2023 January 1,2023 Bank of Shanghai Co., Ltd.Bank of Shanghai Co., Ltd.Total assets 3,085,516,4732,878,524,759 Total liabilities 2,846,467,3112,656,876,235 Non-controlling interests 470,332594,465Equity attributable to shareholders of the parent company 238,578,830221,054,059Carrying amount of investment in associate 13,726,17412,809,37420232022Bank of Shanghai Co., Ltd.Bank of Shanghai Co., Ltd. Revenue 50,564,47453,112,478Net profit attributable to the parent company 22,544,78922,280,215Dividends from associate to the Group in current period 327,157327,157(3) The Company had no significant joint ventures in the Reporting Period. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 146 IX Risks related to financial instruments The purpose of the Company’s risk management is to achieve a right balance between the risk and the benefit and maximally reduce the adverse impact of financial risks on the Company’s financial performance. Based on such purpose, the Company has established various risk management policies to recognize and analyze possible risks to be encountered by the Company, set an appropriate risk acceptable level and designed corresponding internal control procedures so as to control the Company’s risk level. In addition, the Company will regularly review these risk management policies and relevant internal control system in order to adapt to the market or handle various changes in the Company’s operating activities. Meanwhile, the Company’s internal audit department will also regularly or randomly check whether the implementation of internal control system conforms to relevant risk management policies. In fact, the Company has applied proper diversified investment and business portfolio to disperse various financial instrument risks and worked out corresponding risk management policies to reduce the risk of concentrating on one single industry, specific region or specific counterpart. The main risks arising from the Company's financial instruments are credit risk, liquidity risk, and market risk (mainly foreign exchange risk and interest rate risk). (1) Credit risk Credit risk refers to the risk of financial loss caused by any party of financial instruments to another party due to the failure in fulfilling performance obligations. The Group controls the credit risk based on the specific group classification, and credit risk mainly results from bank deposit, due from central bank, notes receivable, accounts receivable, loans and advances to customers and other receivables. The Group’s bank deposits and due from central bank are mainly deposited in stated-owned banks and other large and medium-sized listed banks. The Group considers no significant credit risk existed and no significant loss will be caused by the counterpart’s breach of contract. For notes receivable, accounts receivable, loans and advances to customers and other receivables, the Group has established relevant policies to control the credit risk exposure, and will evaluate the client’s credit qualification and determine corresponding credit period based on the client’s financial status, the possibility of obtaining guarantees from the third party, relevant credit records and other factors (like the current market situation). In the meantime, the Group will regularly monitor the client's credit records. For any client with unfavorable credit records, the Group will issue written reminders, shorten the credit period or cancel the credit period so as to keep the Group's overall credit risk controllable. As at December 31,2023, no significant guarantee or other credit enhancements held due to the debtor mortgage was found in the Group. (2) Liquidity risk Liquidity risk refers to the risk of capital shortage the Company encounters when the Company is fulfilling the obligation of settlement in the form of cash or other financial assets. Various subsidiaries under the Group shall be responsible for predicting their own cash flow. The financial department of the headquarter shall firstly summarize predictions on the cash flow of various subsidiaries and then continuously monitor the short-term and long-term fund demand at the Group's level so as to maintain sufficient cash reserves and negotiable securities that can be realized at any time; meanwhile, special efforts shall also be made to continuously monitor whether provisions stated in the loan agreement are observed and to make major financial institutions promise to provide sufficient reserve funds so as to satisfy short-term and long-term capital demand. As of December 31,2023, the Group had no liquidity risk events. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 147 IXRisks Related to Financial Instruments (continued) (3) Market risk (a) Foreign exchange risk The Group has carried out various economic activities around the world including manufacturing, selling, investment and financing etc., and corresponding interest rate fluctuation risks exist in the Group’s foreign currency assets and liabilities and future foreign currency transactions. The Group always regards "Locking the Cost and Avoiding Possible Risks" as the foreign currency risk management goal. Through the natural hedging of settlement currency, matching with the foreign currency liabilities, signing simple derivative products closely related to the owner's operation and meeting corresponding hedge accounting treatment requirements and applying other management methods, the foreign currency risk exposure can be controlled within a reasonable scope and the impact of interest rate fluctuations on the Group's overall profit and loss will be reduced. On December 31,2023, foreign-currency asset and liability items with significant exposure to exchange risk were mainly denominated in US dollars. After management, the total risk exposure of the US dollar-denominated items had a net asset exposure of USD186,459,000, equivalent to RMB1,320,635,000 based on the spot exchange rate on the balance sheet date. The differences arising from the translation of foreign currency financial statements were not included. The Group applies the following exchange rate of USD against RMB: Average exchange rate Exchange rate at period-end 2023 December 31,2023 USD/RMB 7.0558 7.0827 Provided that other risk variables remained unchanged except for the exchange rate, a 5% depreciation/appreciation in RMB as a result of the changes in the exchange rate of RMB against USD would cause an increase/decrease of RMB66,032,000 in shareholders’ equity and net profit respectively of the Group on December 31,2023. The above-mentioned sensitivity analysis is made based on the assumption that the exchange rate changes on the balance sheet date, and financial instruments held by the Group on the balance sheet date exposed to the exchange risk are re-calculated based on the changed exchange rate. The above analysis does not include differences arising from the translation of foreign currency financial statements. (b) Interest risk The Group’s interest rate risk mainly results from interest-bearing bank borrowings adopting floating interest rates, and the Group determined the proportion of fixed interest rates and floating interest rates based on the market environment and its risk tolerance. Up until December 31,2023, the Group’s liabilities with floating interest rates accounted for 66.06% of its total interest-bearing liabilities. And, the Group will continuously monitor the interest rates and make corresponding adjustments according to the specific market changes so as to avoid interest rate risk. (4) Offset of financial assets and financial liabilities As at the end of the reporting period, the amount offset between the financial assets and financial liabilities recognized under executable master netting arrangements or similar agreements was RMB11,966,787,000. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 148 X Classification of Financial Instruments and Fair Value Fair value of financial instruments and levels 1 Fair value is divided into the following levels in measurement and disclosure: Level 1 refers to the (unadjusted) quotation of the same type of assets or liabilities on the active market; and the Company mainly adopts the closing price as the value of a financial asset. Financial instruments of level 1 mainly include exchange listed stocks and bonds. Level 2 refers to the directly or indirectly observable input of a financial asset or liability that does not belong to level 1. Level 3 refers to the input of a financial asset or liability determined based on variables other than the observable market data (non-observable input). 2 Basis for determining the market value of items measured at continuous level 1 fair value The Company adopts the active market quotation as the fair value of a level 1 financial asset. 3 Items measured at continuous level 2 fair value adopt the following valuation techniques and parameters: The Company’s receivables financing was bank acceptance notes and trade acceptance notes, of which the market prices were determined based on the transfer or discounted amounts. Derivative financial assets and liabilities are multiple IRS and CCS signed between the Group and financial institutions. The Company adopts the quotations provided by the financial institution in valuation. 4 Items measured at continuous level 3 fair value adopt the following valuation techniques and parameters (nature and quantity): Other non-current financial assets measured at continuous level 3 fair value are mainly unlisted equity investments held by the Company. In measuring the fair value, the Company mainly adopts the valuation technique of comparison with listed companies, taking into account the price of similar securities and liquidity discount. Held-for-trading financial assets measured at continuous level 3 fair value are mainly wealth management products held by the Company. In valuation of the fair value, the Company adopts the method of discounting future cash flows based on the agreed expected yield rate. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 149 XClassification of Financial Instruments and Fair Value (continued) 5 Financial instruments measured in three levels of fair value Financial assets Item Level 1 Level 2 Level 3 TotalHeld-for-trading financial assets (see Note V.2) 1,111,81422,067,8084,495 23,184,117Derivative financial assets (see Note V.3) - 108,008 - 108,008Receivables financing (see Note V.6) - - 954,410 954,410Investments in other equity instruments (see Note V.17) 17,127 - 369,521 386,648Other non-current financial assets (see Note V.18) 1,520,553155,4281,295,585 2,971,566Total assets continuously measured at fair value 2,649,49422,331,2442,624,011 27,604,749Financial liabilities Item Level 1 Level 2 Level 3 TotalHeld-for-trading financial liabilities (see Note V,32) - 56,589194,862 251,451Derivative financial liabilities (see Note V,33) - 58,591 - 58,591Total liabilities continuously measured at fair value - 115,180194,862 310,042TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 150 XI Related Parties and Related-Party Transactions 1 Actual controller and its acting-in-concert parties Explanation of The Company’s Absence of Controlling Shareholders Mr. Li Dongsheng and Ningbo Jiutian Liancheng Equity Investment Partnership (Limited Partnership) became persons acting in concert by signing the Agreement on Concerted Action, holding 1,264,053,189 shares in total and becoming the largest shareholder of the Company. As per Article 216 of the Company Law, a controlling shareholder refers to a shareholder who owns over 50% of a limited liability company’s total capital or over 50% of a joint stock company’s total share capital; or, despite the ownership of less than 50% of a limited liability company’s total capital or less than 50% of a joint stock company’s total number of shares, who can still prevail in the resolution of a meeting of shareholders or a general meeting of shareholders according to the voting rights corresponding to their interest in the limited liability company’s total capital or the joint stock company’s total number of shares. According to the definition above, the Company has no controlling shareholder or actual controller. 2 Related parties that do not control or are not controlled by the Company Information about such related parties： Company Name Relationship with the Company Zhonghuan Feilang (Tianjin) Technology Co., Ltd. Joint ventureHuaxia CPV (Inner Mongolia) Power Co., Ltd. Joint ventureTianjin Huanyan Technology Co., Ltd. Joint ventureTianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) Joint ventureTCLHuanxin Bandaoti (Tianjin) Co., Ltd. Joint venture’s subsidiaryJiangsu Huanxin Bandaoti Co., Ltd. Joint venture’s subsidiaryMoxing Bandaoti (Guangdong) Co., Ltd. Joint venture’s subsidiaryMoxun Bandaoti Technology (Shanghai) Co., Ltd. Joint venture’s subsidiarySunPower Systems International Limited AssociateMAXEONSOLARTECHNOLOGIES, LTD. AssociateInner Mongolia Zhongjing Science and Technology Research I i CL dAssociateInner Mongolia Shengou Electromechanical Engineering Co., dAssociateTCLIntelligent Technology (Ningbo) Co., Ltd. AssociateAijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. AssociateZhihui Xinyuan Commercial (Huizhou) Co., Ltd. AssociateNingbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) AssociateNingbo Dongpeng Heli Equity Investment Partnership (Limited AssociateTCLFinance (Hong Kong) Co., Limited AssociateInner Mongolia Huanye Material Co., Ltd. AssociateRuihuan (Inner Mongolia) Solar Power Co., Ltd. AssociateZhonghuan Aineng (Beijing) Technology Co., Ltd. AssociateTCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 151 XIXRelated parties and related-party transactions (continued)2 The nature of related parties without control relationship (continued) Company name Relationship with the Company LGElectronics (Huizhou) Co., Ltd. AssociateWuxi TCLMedical Imaging Technology Co., Ltd. AssociateChina Innovative Capital Management Limited AssociateInner Mongolia Xinhua Bandaoti Technology Co., Ltd. AssociateInner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. AssociateJOLEDIncorporation AssociateJiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. AssociateGetech Ltd. and its subsidiaries Associate and its subsidiariesTCLAir Conditioner (Wuhan) Co., Ltd. and its subsidiaries Associate and its subsidiariesShenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries Associate and its subsidiariesShenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries Associate and its subsidiariesShenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiariesAssociate and its subsidiariesTianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries Associate and its subsidiariesPurplevine Holdings Limited and its subsidiaries Associate and its subsidiariesHuizhou TCLHuman Resources Service Co., Ltd. and its Joint ventures and its SunPower Corporation Associate’s subsidiarySunPower Phils.Manufacture Ltd Associate’s subsidiarySunPower Systems Sarl Associate’s subsidiarySunPower Malaysia Manufacturing Sdn.Bhd. Associate’s subsidiaryElite Excellent Investments Limited Associate’s subsidiaryEsteem Venture Investment Limited Associate’s subsidiaryHuixing Holdings Limited Associate’s subsidiaryMarvel Paradise Limited Associate’s subsidiaryUnion Dynamic Investment Limited Associate’s subsidiaryZijinshan Investment Co., Ltd. Associate’s subsidiaryNingxia Zhongjing New Material Technology Co., Ltd. Associate’s subsidiaryTCLIndustries Holdings Co., Ltd. and its subsidiaries Other relationshipsThunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries Other relationshipsTCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 152 XIRelated Parties and Related-Party Transactions (Continued) 3 Major related-party transactions (1) Selling raw materials and finished goods (Note 1) 2023 2022TCLIndustries Holdings Co., Ltd. and its subsidiaries 17,595,123 10,607,152SunPower Systems Sarl 1,209,116 1,912,424Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 1,208,487 1,631,738SunPower Malaysia Manufacturing Sdn.Bhd.886,746 482,562TCLHuanxin Bandaoti (Tianjin) Co., Ltd.89,680 50,095SunPower Systems International Limited 79,537 195,077Inner Mongolia Huanye Material Co., Ltd.44,321 -Zhonghuan Feilang (Tianjin) Technology Co., Ltd.8,082 5,443Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 6,208 2,658LGElectronics (Huizhou) Co., Ltd.281 -Getech Ltd. and its subsidiaries 229 4,704Purplevine Holdings Limited and its subsidiaries 75 -Tianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries 48 39MAXEONSOLARTECHNOLOGIES, LTD. - 1,691Moxing Bandaoti (Guangdong) Co., Ltd. - 44SunPower Corporation - 37Sunpower Phils.Manufacture Ltd - 1021,127,933 14,893,674 (2) Purchasing raw materials and finished products (Note 2) 2023 2022Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd.3,207,376 2,768,083Xinjiang Goens Energy Technology Co., Ltd.2,234,753 5,741,285TCLIndustries Holdings Co., Ltd. and its subsidiaries 1,978,057 1,439,403Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 1,399,132 1,235,277Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 1,255,571 766,831Inner Mongolia Huanye Material Co., Ltd.693,157 -JOLEDIncorporation 363,394 -Inner Mongolia Shengou Electromechanical Engineering Co., Ltd.311,243 228,127TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 153 XIRelated Parties and Related-Party Transactions (Continued) 3 Major related-party transactions (2) Purchasing raw materials and finished products (Note 2) (continued) Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd.161,355 178,523Jiangsu Huanxin Bandaoti Co., Ltd.150,506 -Ningxia Zhongjing New Material Technology Co., Ltd.28,697 -TCLIntelligent Technology (Ningbo) Co., Ltd.11,130 1,309Zhonghuan Feilang (Tianjin) Technology Co., Ltd.1,671 -Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd.1,416 - 11,797,458 12,358,838(3) Receiving funding (Note 3) 2023 2022Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 195,405 148,664Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 119,091 70,998Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 36,962 22,413Elite Excellent Investments Limited 8,892 8,762TCLHuanxin Bandaoti (Tianjin) Co., Ltd.7,406 8Esteem Venture Investment Limited 5,500 5,416Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) 820 34,228Huixing Holdings Limited 670 673Marvel Paradise Limited 611 612Union Dynamic Investment Limited 389 401Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.205 300,000TCLAir Conditioner (Wuhan) Co., Ltd. and its subsidiaries 98 41,862Jiangsu Huanxin Bandaoti Co., Ltd.98 42,552Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) 33 33Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries - 15,730 376,180 692,352TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 154 XIRelated Parties and Related-Party Transactions (Continued) 3 Major related-party transactions (continued) (4) Leases 2023 2022Rental income TCLIndustries Holdings Co., Ltd. and its subsidiaries 63,067 76,368Aijiexu New Electronic Display Glass 62,878 66,902Inner Mongolia Huanye Material Co., Ltd. 22,274 16,063TCLHuanxin Bandaoti (Tianjin) Co., Ltd. 3,669 4,323Zhonghuan Feilang (Tianjin) Technology Co., Ltd. 885 -Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 748 837Getech Ltd. and its subsidiaries 669 1,065Jiangsu Huanxin Bandaoti Co., Ltd. 466 -Zhihui Xinyuan Commercial (Huizhou) Co., Ltd. 400 368Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd. 144 -TCLIntelligent Technology (Ningbo) Co., Ltd. - 1 155,200 165,927 Rental expense TCLIndustries Holdings Co., Ltd. and its 60,396 62,456Huaxia CPV (Inner Mongolia) Power Co., Ltd. 10,036 5,147TCLHuanxin Bandaoti (Tianjin) Co., Ltd. 1,427 1,927Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 283 -TCLIntelligent Technology (Ningbo) Co., Ltd. 122 - 72,264 69,530(5) Rendering or receipt of services 2023 2022 Providing labour service for related parties 327,066 293,468Receipt of services 2,116,609 1,534,144TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 155 XIRelated Parties and Related-Party 3 Major related-party transactions (6) Receiving interest or paying interest (Note 3) 2023 2022 Interest received 15,619 22,837Interest paid 43,049 18,040(7) Remuneration of key management personnel (Note 4) 2023 2022 Remuneration of key management personnel 67,919 48,071(8) Other related transactions (a) In May 2023, the Group signed an equity transfer agreement with TCLAce (Huizhou) Co., Ltd., a subsidiary of TCLIndustries Holdings Co., Ltd., to acquire 100% equity of Inner Mongolia TCL Optoelectronic Technology Co., Ltd. held by TCLAce (Huizhou) Co., Ltd. at a transaction price of RMB119,039,000. (b) In June 2023, the Group signed an equity transfer agreement with TCLFinancial Holding Group (Guangzhou) Co., Ltd., a subsidiary of TCLIndustries Holdings Co., Ltd., to acquire 100% equity of TCLFinancial Technology (Shenzhen) Co., Ltd. held by TCLFinancial Holding Group (Guangzhou) Co., Ltd. at a transaction price of RMB15,036,000. (c) In June 2023, the Group signed an equity transfer agreement with Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. to transfer 40% equity of Shenzhen Qianhai Sailing Supply Chain Management Co., Ltd. to Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. at a transaction price of RMB21,940,000. (d) In October 2023, the Group signed an equity transfer agreement with TCLDigital Technology (Shenzhen) Co., Ltd., a subsidiary of TCLIndustries Holdings Co., Ltd., to acquire 20% equity of Techigh Circuit Technology (Huizhou) Co., Ltd. held by TCLDigital Technology (Shenzhen) Co., Ltd. at a transaction price of RMB101,628,000. (e) According to the terms of the Agreement by and between TCLTECHNOLOGYINVESTMENTS LIMITED and T.C.L. INDUSTRIESHOLDINGS (H.K.) LIMITED on the Transfer of the 100% Equity of Moka International Limited (“Equity Transfer Agreement”), when the net profit actually realized by Moka International Limited during the agreed performance commitment period exceeds the committed RMB760,000,000, the Company will reward the transferor with 50% of the excess profit as an additional performance bonus (the total amount of the additional bonus will not exceed 20% of the equity transfer price). During the commitment period, Moka International Limited realized a consolidated net profit of RMB1,480,966,000. According to the said Equity Transfer Agreement, the performance bonus recognized for the current period is RMB360,483,000. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 156 XIRelated Parties and Related-Party Transactions (Continued) 3 Major related-party transactions (continued) Note 1 Selling raw materials and finished products to related parties The Company sells raw materials, spare parts, auxiliary materials and finished goods to its joint ventures and associates at market prices, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit^ but play an important role as to the Company’s continued operations. Note 2 Purchasing raw materials and finished products from related parties The Company purchases raw materials and finished goods from its joint ventures and associates at prices similar to those paid to third-party suppliers, which are settled in the same way as non-related-party transactions. These related-party transactions have no material impact on the Company’s net profit^ but play an important role as to the Company’s continued operations. Note 3 Providing funding for or receiving funding from related parties and corresponding interest received or paid The Company set up a settlement center in 1997 and TCLTechnology Group Finance Co., Ltd. in 2006 (together, the “Financial Settlement Center”). The Financial Settlement Center is responsible for the financial affairs of the Company, including capital operation and allocation. The Center settles accounts with the Company’s subsidiaries, joint ventures and associates and pays the interest. It also allocates the money deposited by the subsidiaries, joint ventures and associates in it to these enterprises and charges interest. The interest income and expense between the Company and the Center are calculated according to the interest rates declared by the People’s Bank of China. The funding amount provided refers to the outstanding borrowings due from the Center to related parties, while the funding amount received means the balances of related parties’ deposits in the Center. Note 4 The remunerations of key management personnel include fixed salaries, allowances and performance bonuses received from the Company by the directors, supervisors and senior executives of the Company during their terms of office, but do not include share-based payments.Note 5 Transactions taken by TCLFinancial Technology (Shenzhen) Co., Ltd. with the Group between January and June 2023 are recorded into TCLIndustries Holdings Co., Ltd. and its subsidiaries. Note 6 The transactions between Xinjiang Goens Energy Technology Co., Ltd. and the Group in 2023 are related party transactions. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 157 XIRelated Parties and Related-Party Transactions (Continued) 4 Balances due from and to related parties (continued) (1) Accounts receivable December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 3,686,514 2,149,032Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 144,349 292,275SunPower Systems Sarl 46,943 258,443SunPower Systems International Limited 13,163 76,749TCLHuanxin Bandaoti (Tianjin) Co., Ltd.12,527 12,651Inner Mongolia Huanye Material Co., Ltd.10,095 6,398Zhonghuan Feilang (Tianjin) Technology Co., Ltd.2,500 1,522Inner Mongolia Shengou Electromechanical Engineering Co., Ltd.785 -Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries 658 -LGElectronics (Huizhou) Co., Ltd.478 -Tianjin Qiyier Communication & Broadcasting Co., Ltd. and its subsidiaries 54 44Jiangsu Huanxin Bandaoti Co., Ltd.32 -Huaxia CPV (Inner Mongolia) Power Co., Ltd.22 183SunPower Malaysia Manufacturing Sdn.Bhd.6 2Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries - 1,163Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. - 969Tianjin Huanyan Technology Co., Ltd. - 289Getech Ltd. and its subsidiaries - 281MAXEONSOLARTECHNOLOGIES, LTD. - 104 3,918,126 2,800,105TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 158 XIRelated Parties and Related-Party Transactions (Continued) 4 Balances due from and to related parties (continued) (2) Accounts payable December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 1,246,215 1,311,176Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd.1,113,639 699,954Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 284,721 272,288Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 198,697 110,703Inner Mongolia Shengou Electromechanical Engineering Co., Ltd.46,226 57,847Getech Ltd. and its subsidiaries 34,963 112,831Inner Mongolia Huanye Material Co., Ltd.31,915 25,090Ningxia Zhongjing New Material Technology Co., Ltd.26,819 -Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd.22,521 63,818Jiangsu Huanxin Bandaoti Co., Ltd.21,437 -Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 2,671 -TCLHuanxin Bandaoti (Tianjin) Co., Ltd.936 968TCLIntelligent Technology (Ningbo) Co., Ltd.244 -Zhonghuan Feilang (Tianjin) Technology Co., Ltd. - 103,031,004 2,654,685TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 159 XIRelated parties and related-party transactions (continued) 4 Balances due from and to related parties (3) Other receivables December 31,2023 January 1,2023 TCLIndustries Holdings Co., Ltd. and its subsidiaries 133,502 576,402Ningxia Zhongjing New Material Technology Co., Ltd.12,251 -Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 9,114 5,550Inner Mongolia Huanye Material Co., Ltd.8,120 4,061Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd.7,791 7,987TCLHuanxin Bandaoti (Tianjin) Co., Ltd.7,363 2,058Getech Ltd. and its subsidiaries 5,127 3,994Moxun Bandaoti Technology (Shanghai) Co., Ltd.4,265 -Zhonghuan Aineng (Beijing) Technology Co., Ltd.3,053 3,101JOLEDIncorporation 2,823 -Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 1,898 777Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd.1,629 -MAXEONSOLARTECHNOLOGIES,LTD.1,105 -Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd. 775 15Jiangsu Huanxin Bandaoti Co., Ltd.707 -LGElectronics (Huizhou) Co., Ltd.336 212Inner Mongolia Xinhua Bandaoti Technology Co., Ltd.219 -Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd.215 -Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 170 -Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.29 -Ruihuan (Inner Mongolia) Solar Power Co., Ltd. - 20,181TCLAir Conditioner (Wuhan) Co., Ltd. and its subsidiaries - 9Wuxi TCLMedical Imaging Technology Co., Ltd. - 6 200,492 624,353TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 160 XIRelated parties and related-party transactions (continued) 4 Balances due from and to related parties (4) Other payables December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 607,576 81,858Tianjin Zhonghuan Haihe Intelligent Manufacturing Fund Partnership (Limited Partnership) 428,100 428,100Getech Ltd. and its subsidiaries 112,086 166,525Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 82,487 120,677Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 77,143 35,350Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 46,151 22,462Aijiexu New Electronic Display Glass (Shenzhen) Co., d9,317 9,317Elite Excellent Investments Limited 8,892 8,762Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.5,591 5,564Esteem Venture Investment Limited 5,500 5,416Inner Mongolia Shengou Electromechanical Engineering Co., Ltd.2,796 1,444TCLHuanxin Bandaoti (Tianjin) Co., Ltd.2,575 1,924Moxun Bandaoti Technology (Shanghai) Co., Ltd.1,042 4,057Huixing Holdings Limited 670 673Marvel Paradise Limited 611 612Thunderbird Innovation Technology (Shenzhen) Co., Ltd. and its subsidiaries 401 -Union Dynamic Investment Limited 389 401Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) 273 18,762Jiangsu Huanxin Bandaoti Co., Ltd.134 -China Innovative Capital Management Limited 86 29Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) 66 66Inner Mongolia Zhongjing Science and Technology Research Institute Co., Ltd.60 55Ningxia Zhongjing New Material Technology Co., Ltd.58 -Huaxia CPV (Inner Mongolia) Power Co., Ltd.45 45TCLIntelligent Technology (Ningbo) Co., Ltd.24 75Jiangsu Jixin Bandaoti Silicon Material Research Institute Co., Ltd.20 -CJSpeedex Logistics Co., Ltd. - 102 1,392,093 912,276 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 161 XIRelated parties and related-party transactions (continued) 4 Balances due from and to related parties (continued) (5) Non-current liabilities due within one year December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 14,042 19,555 Huaxia CPV (Inner Mongolia) Power Co., Ltd.2,775 4,972 TCLHuanxin Bandaoti (Tianjin) Co., Ltd. - 957 16,817 25,484(6) Prepayments December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 46,682 75Getech Ltd. and its subsidiaries 15,695 16,890Tianjin Huanyan Technology Co., Ltd.6,466 30,438Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 399 2,862Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd.156 -Xinjiang Goens Energy Technology Co., Ltd.152 8,386Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 133 -TCLIntelligent Technology (Ningbo) Co., Ltd.44 -Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries - 2,633 69,727 61,284TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 162 XIRelated parties and related-party transactions (continued) 4 Balances due from and to related parties (continued) (7) Advances from customers December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 304 214 Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 110 -414 214 (8) Contract liabilities December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 71,842 56,969Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 1,424 148,237TCLHuanxin Bandaoti (Tianjin) Co., Ltd.67 -SunPower Corporation 46 -Inner Mongolia Huanye Material Co., Ltd.32 - 73,411 205,206(9) Lease liabilities December 31,2023 January 1,2023TCLIndustries Holdings Co., Ltd. and its subsidiaries 40,772 1,345 Huaxia CPV (Inner Mongolia) Power Co., Ltd.8,690 1,260 49,462 2,605TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 163 XIRelated parties and related-party transactions 4 Balances due from and to related parties (10) Deposits from related parties (note) December 31,2023 January 1,2023Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 195,470 148,707Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. and its subsidiaries 60,899 36,117TCLHuanxin Bandaoti (Tianjin) Co., Ltd.7,407 8Huizhou TCLHuman Resources Service Co., Ltd. and its subsidiaries 6,134 2,616Ningbo Dongpeng Weichuang Equity Investment Partnership (Limited Partnership) 547 15,722Zhihui Xinyuan Commercial (Huizhou) Co., Ltd.269 300,086TCLAir Conditioner (Wuhan) Co., Ltd. and its subsidiaries 98 41,867Jiangsu Huanxin Bandaoti Co., Ltd.98 42,553TCLIntelligent Technology (Ningbo) Co., Ltd.1 -Ningbo Dongpeng Heli Equity Investment Partnership (Limited Partnership) - -Shenzhen Tixiang Business Management Technology Co., Ltd. and its subsidiaries - 15,734270,923 603,410Note: These deposits are made by related parties in the Company’s subsidiary TCLTechnology Group Finance Co., Ltd. (11) Other non-current assets December 31,2023 January 1,2023Purplevine Holdings Limited and its subsidiaries 174,422 216,468 Getech Ltd. and its subsidiaries 4,429 3,176 Shenzhen Jucai Supply Chain Technology Co., Ltd. and its subsidiaries 297 -TCLIndustries Holdings Co., Ltd. and its subsidiaries 68 -179,217 219,644TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 164 XII Share-based payments 1 General conditions of share-based payment Total amount of each equity instrument granted by the Company in the current period 247,100Total amount of each equity instrument exercised by the Company in the current period -Total amount of the Company’s equity instruments that expired in the current period 88Range of exercise prices of the Company’s stock options outstanding and remaining contract term at the end of the period -Range of exercise prices of the Company’s other equity instruments outstanding and remaining contract term at the end of the period -(1) Employee Stock Ownership Plan (Phase II) 2021-2023 According to the Proposal on the Management Measures of the Company’s Employee Stock Ownership Plan (Phase II) 2021-2023 deliberated and adopted at the Second Extraordinary Meeting 2022, and the Proposal on the Company’s Employee Stock Purchase Plan (Phase II) 2021-2023 (Draft) adopted by the resolution of the of the 19th Meeting of the Seventh-term Board of Directors and the 14th Meeting of the Seventh-term Board of Supervisors,32.6211 million shares were granted to no more than 3,600 awardees at the price of RMB4.35/share on July 22,2022. In 2023, a total of 20,000 shares granted by the Company became void due to the awardees’ resignation. (2) Employee Stock Ownership Plan (Phase III) 2021-2023 According to the Proposal on the Management Measures of the Company’s Employee Stock Ownership Plan (Phase III) 2021-2023 deliberated and adopted at the Second Extraordinary Meeting 2023, and the Proposal on the Company’s Employee Stock Purchase Plan (Phase III) 2021-2023 (Draft) adopted by the resolution of the 32nd Meeting of the Seventh-term Board of Directors and the 21st Meeting of the Seventh-term Board of Supervisors,64.99 million shares were granted to no more than 3,600 awardees at the price of RMB3.94 on June 16,2023. The vesting arrangement of the restricted stock granted under the above incentive plan is shown in the following table: Number of times Vesting period and ratio First non-trade transfer or sale After 12 months from the date of vesting of the holder's respective quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder's respective shares to the account of the holder of the Shareholding Plan, provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation; Second non-trade transfer or sale After 24 months from the date of vesting of the holder’s corresponding quota of the underlying shares, the Shareholding Plan may decide whether to sell 50% of the shares or to transfer 50% of the holder’s corresponding shares to the account of the holder of the Shareholding Plan provided that such transfer and sales are then supported by the systems of SZSE and the Registration and Settlement Corporation. 2 Equity-settled share-based payments Method of determining the fair value of equity instruments on the date of grant The Group determined the fair value of equity instruments on the grant date based on the fair value of the shares. Basis for determining the number of exercisable equity instruments On each balance sheet date within the vesting period, the Group determines the best estimate based on the latest number of employees eligible to exercise their options, and revise the estimated number of exercisable equity instruments. Reasons for significant differences between current and previous estimates NoneAccumulated amount of equity-settled share-based payment included in capital reserve RMB134,949,000Total expense recognized for equity-settled share-based payments in the current period RMB108,217,0003 The Company has no cash-settled share-based payments. 4 The Company has no share-based payment modification or termination. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 165 XIIShare-based payments 5 Share-based payments by the controlling subsidiaries TZE and Zhonghuan Advanced (1) Stock option incentive plan (a) Changes in stock options during the year Number of stock options outstanding as at the beginning of the year 2,752Number of stock options granted by the Company in the current period -Number of stock options of the Company exercised in the current period 840Number of stock options of the Company voided in the current period -Others 646Number of stock options outstanding as at the end of the year 2,558On July 6,2021, TZE held its third extraordinary general meeting of 2021 where the Proposal for the 2021 Stock Option Incentive Plans (Draft) and Its Summary (hereinafter referred to as the “Stock Option Incentive Plans for 2021”) was deliberated and adopted. On July 9,2021, TZE held the 15th meeting of its 6th Board of Directors and the 7th meeting of its 6th Board of Supervisors, where the Proposal for Granting Stock Options to the Incentive Objects of the Stock Option Incentive Plans for 2021 was deliberated and adopted. As of December 31,2023, all Stock Option Incentive Plans for 2021 had entered the exercisable period. (2) Employee stock ownership plan (a) TZE’s employee stock ownership plan for 2021 On July 6,2021, TZE held its third extraordinary general meeting of 2021 where the Proposal for the Employee Stock Ownership Plan (Draft) and Its Summary for 2021 (hereinafter referred to as the “Employee Stock Ownership Plan for 2021”) was deliberated and adopted. In 2021, TZE repurchased a total of 9,137,521 shares by centralized bidding through the securities account opened specially for repurchasing shares, at an average repurchase price of RMB36.11 per share. Among the repurchased shares,8,975,906 shares were used for the Employee Stock Ownership Plan for 2021. (b) Employee equity incentives of Zhonghuan Advanced On February 10,2022, TZE held its first extraordinary general meeting of 2022, where the Proposal for Capital and Share Increase and Related Party Transactions of the Controlling Subsidiary Zhonghuan Advanced Bandaoti Material Co., Ltd. was deliberated and adopted. Zhonghuan Advanced Bandaoti Material Co., Ltd. (hereinafter referred to as “Zhonghuan Leading”), a subsidiary of the Company, intended to implement employee stock ownership through capital and share increase (hereinafter referred to as “Stock Ownership Plan of Zhonghuan Advanced”). In 2022 and 2023, Zhonghuan Advanced granted, in lump sum respectively,969,480,000 shares and 155,520,000 shares to the operation management team, backbone employees and persons who had made significant contributions to its business development, at a grant price of RMB1.04 per share. (c) TZE’s employee stock ownership plan for 2022 On August 30,2022, TZE held its second extraordinary general meeting of 2022 where the Proposal for the Employee Stock Ownership Plan (Draft) and Its Summary for 2022 (hereinafter referred to as the “Employee Stock Ownership Plan for 2022”) was deliberated and adopted. In 2022, TZE repurchased a total of 9,515,263 shares by centralized bidding through the securities account opened specially for repurchasing shares, at an average repurchase price of RMB41.09 per share. Among the repurchased shares,9,492,797 shares were used for the Employee Stock Ownership Plan for 2022. The remaining 161,615 shares repurchased in 2021 were also used for the Employee Stock Ownership Plan for 2022. In summary, a total of 9,654,412 shares were used for the Employee Stock Ownership Plan for 2022. The lock up period for the shares purchased for the Employee Stock Ownership Plan for 2022 is TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 166 XII Share-based payments (continued) 5 Share-based payments by the controlling subsidiaries TZE and Zhonghuan Advanced (continued) (2) Employee stock ownership plan (continued) (c) TZE’s employee stock ownership plan for 2022 (continued) the period from September 8,2022 to September 7,2023. On June 30,2023, the Management Committee for the Employee Stock Ownership Plan for 2022 determined that the grant date of stock quota under the Employee Stock Ownership Plan for 2022 should be July 1,2023, and agreed to grant a total of approximately 9,654,412 shares to employees who met the conditions of the Employee Stock Ownership Plan for 2022. As of December 31,2023, all the shares held under the Employee Stock Ownership Plan for 2022 had been granted to the holders. (d) TZE’s employee stock ownership plan for 2023 On June 8,2023, TZE held its second extraordinary general meeting of 2023 where the Proposal for the Employee Stock Ownership Plan (Draft) and Its Summary for 2023 (hereinafter referred to as the “Employee Stock Ownership Plan for 2023”) was deliberated and adopted. In the year, TZE repurchased a total of 14,381,400 shares by centralized bidding through the securities account opened specially for repurchasing shares, at an average repurchase price of RMB48.65 per share. Among the repurchased shares,14,369,514 shares were used for the Employee Stock Ownership Plan for 2023. The remaining 22,466 shares repurchased in 2022 were also used for the Employee Stock Ownership Plan for 2023. In summary, a total of 14,391,980 shares were used for the Employee Stock Ownership Plan for 2023. The lock up period for the shares acquired for the Employee Stock Ownership Plan for 2023 is from June 9,2023 to June 8,2024. As no grant date is specified in the Agreement on Granting the Employee Stock Ownership Plan for 2023 signed by and between TZE and its employees in the year, no shares had been granted under the Employee Stock Ownership Plan for 2023 as at December 31,2023. (3) Equity-settled share-based payments Method of determining the fair value of equity instruments on the date of grant The Group determined the fair value of equity instruments on the grant date based on the fair value of the shares. Basis for determining the number of exercisable equity instruments On each balance sheet date within the vesting period, the Group determines the best estimate based on the latest number of employees eligible to exercise their options, and revise the estimated number of exercisable equity instruments. Reasons for significant differences between current and previous estimates NoneAccumulated amount of equity-settled share-based payment included in capital reserve RMB500,835,000Total expense recognized for equity-settled share-based payments in the current period RMB456,400,000(4) TZE has no cash-settled share-based payments. (5) Modification or termination of TZE’s share-based payment. On August 23,2023, the Employee Stock Ownership Plan for 2021 changed share-based payments settled in cash to share-based payments settled in equity, with a decrease of expenses by RMB29,227,000 in 2023. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 167 XIIICommitments 1 Capital commitments December 31,2023 Contracted but not provisioned Note 133,203,372Approved by Board but not contracted Note 21,524,475 34,727,847Note 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 were approved by the Board but were not under contractual obligations in the current period primarily consist of new energy photovoltaic and material production projects and CSOT’s LCD panel projects. As of December 31,2023, apart from the disclosures above, there were no other major commitments that are required to be disclosed. XIV Contingencies Guarantees Provided for External Parties As at December 31,2023, the guarantee provided by the Company for the related party’s bank loans, commercial drafts, letters of credit, etc., was RMB2,360,399,000. Obligor Actual guarantee amount Type of guaranteeActual occurrence date Term of guarantee Expired or not Subsidiary of TCLIndustries Holdings Co., Ltd. 96,160 Joint liability guaranteeAugust 29, 2019 March 2, 2021 November 4, 2021 No Aijiexu New Electronic Display Glass (Shenzhen) Co., Ltd. 230,559 Joint liability guaranteeApril 28, 2020 8 years No Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd. 480,480 Joint liability guaranteeMarch 1, 2023 58 days to 1 year No Inner Mongolia Xinhua Bandaoti Technology Co., Ltd. 233,200 Joint liability guaranteeMay 22, 2023 6.4 years No Inner Mongolia Xinhuan Silicon Energy Technology Co., Ltd. 1,320,000 Joint liability guaranteeJune 15,2023 5.5 years No 2,360,399 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 168 XIV Contingencies (continued) As at December 31,2023, the amount of credit granted by the Group for the note discounting, note acceptance, and non-financing guarantees of related parties was RMB1,248,737,000. XV Events after the Balance Sheet Date 1 From January 29 to February 6,2024, TCLTECH completed the issuance of the 2024 Technology Innovation Corporate Bond (Digital Economy) (Phase I), with a value date of February 6,2024, an issuance scale of RMB1.5 billion, with a duration of 2 years and a coupon rate of 2.64%. 2 From April 8 to April 11,2024, TCLTECH completed the issuance of the 2024 Technology Innovation Corporate Bond (Digital Economy) (Phase II), with a value date of February 11,2024, an issuance scale of RMB1.5 billion, with a duration of 5 years and a coupon rate of 2.69%. 3 According to the proposal for profit distribution for 2023 deliberated and approved by the Board of Directors, the Company intends to distribute a cash dividend of RMB0.8 (tax-inclusive) to all its shareholders for every 10 shares in its total share capital consisting of 18,779,080,767 shares that were eligible for profit distribution as at April 28,2024 (if the Company repurchased treasury shares during equity distribution, such shares would not be eligible for the profit distribution), with no bonus shares given and no capital reserve converted into share capital, and with a total profit of RMB1,502,326,000 distributed. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 169 XVI Other Important Matters (I) Segment reporting 1 Basis for determining reporting segment and accounting policies According to the Company’s internal organizational structure, management requirements and internal reporting system, the Company’s business is divided into four reporting segments: the display business, the new energy photovoltaic and materials business, the distribution business and the other businesses. The Company's management regularly evaluates the operating results of these reporting segments to determine the allocation of resources and evaluate their performance. The Company’s four reporting segments are: (1) Display business: mainly includes the research and development, manufacturing and sales of display panels and display modules, as well as complete display processing. (2) New energy photovoltaic and display materials business: mainly includes the manufacture and sales of silicon materials, display devices, new energy materials, and new energy; development, and operation of high-efficiency photovoltaic power station projects.(3) Distribution business: mainly includes the sales of computers, software, tablet computers, mobile phones and other electronic products. (4) Other businesses: other businesses besides the above, including industrial finance and investment business, technology development services and patent maintenance services provided by the company, etc. Segment assets include all current assets such as tangible assets, intangible assets, other long-term assets and receivables attributable to each segment. Segment liabilities include payables, bank loans and other long-term liabilities attributable to each segment. Segment operating results refer to the income generated by each segment (including external transactions income and inter-segment transaction income), net of expenses incurred by each segment, depreciation, amortization and impairment losses of assets attributable to each segment, gains or losses from changes in fair value, return on investment, non-operating income and income tax expenses. Transfer pricing of inter-segment income is calculated on terms similar to other foreign transactions. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 170 XVIOther Important Matters (Continued) (I) Segment reporting (continued) 2 Financial information of reporting segments For the 12 months ending on December 31,2023 display business New energy photovoltaics and other silicon materials businessDistribution businessOther businesses and internally offset accounts assetsRevenue 83,654,743 59,146,46330,109,5291,455,922174,366,657Net profit (7,407) 3,898,89243,200846,0994,780,784Total assets 235,586,824 125,063,0437,266,54814,942,671382,859,086Total liabilities 159,403,780 64,825,9315,832,5137,530,889237,593,113For the 12 months ending on December 31,2022 Display and materials business New energy photovoltaics and other silicon materials businessDistribution businessOther businesses and internally offset accounts assetsRevenue 65,717,155 67,010,15731,847,8031,977,671166,552,786Net profit (7,625,065) 7,073,042264,2532,075,8291,788,059Total assets 175,429,564 108,312,9238,712,67567,541,070359,996,232Total liabilities 99,999,637 61,253,0817,231,56959,373,192227,857,479TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 171 XVII Notes to the key items presented in the financial statements of the Company 1 Accounts receivable December 31,2023 January 1,2023 Amount Ratio (%) AllowanceAccrualRatio (%) Amount Ratio (%) Allowance PercentageWithin 1 year 351,594 100% 8060.23% 353,877100% 65 0.02%2 Other receivables December 31,2023 January 1,2023 Dividends receivable - -Other receivables 19,614,272 4,961,948 19,614,272 4,961,948 (a) Nature of other receivables is analyzed as follows: December 31,2023 January 1,2023 Equity transfer receivables 610 470,628Security and deposits 2,841 1,795Others 19,610,821 4,489,525 19,614,272 4,961,948(b) Allowance for doubtful other receivables is analyzed as follows: 12-month ECL Lifetime ECL (credit not impaired) Lifetime ECL (credit impaired) Total January 1,20231,075 - 31,718 32,793Accrued in current period 532 - - 532Reversal of current period - - (82) (82)Write-off of current period - - - -December 31,20231,607 - 31,636 33,243TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 172 XVIINotes to Financial Statements of the Parent Company (Continued) 2 Other receivables (continued) (c) The aging of other receivables is analyzed as follows: December 31,2023 January 1,2023 Amount Ratio (%) Amount Ratio (%)Within 1 year 17,998,30291.61% 3,944,909 78.98%1 to 2 years 673,3213.43% 23,902 0.48%2 to 3 years 12,7760.06% 225,690 4.52%Over 3 years 963,1164.90% 800,240 16.02%19,647,515100.00% 4,994,741 100.00% The outstanding other receivables were mostly current accounts with related parties. The top five other receivables of the Company amounted to approximately RMB18,826,190,000 (December 31,2022: RMB4,008,688,000), accounting for 95.82% of the total other receivables of the Company (December 31,2022: 80.26%). 3 Long-term equity investments December 31,2023 January 1,2023 Gross amount Allowance for doubtful accountsCarrying amountGross amountImpairment allowance Carrying amountAssociates and joint ventures (1) 16,717,864 - 16,717,86417,171,275 - 17,171,275Subsidiaries (2) 62,947,128 - 62,947,12859,189,096 - 59,189,096 79,664,992 - 79,664,99276,360,371 - 76,360,371 As of December 31,2023, there are no major restrictions on the realization of investment and the remittance of return on long-term equity investments. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 173 XVIINotes to Financial Statements of the Parent Company (Continued) 3 Long-term equity investments (continued) (1) Associates and joint ventures Increase or decrease in current period December 31,2023 January 1,2023 Increase/decrease in investment in current periodInvestment gains and losses recognized by equity method Other comprehensive income adjustment Other equity changesDeclared cash dividends or profitsProvision for impairmentOther increases and decreases Bank of Shanghai Co., Ltd.12,809,374 - 1,251,665 (7,708) - (327,157) - - 13,726,174 China Innovative Capital Management Limited 944,392 - 25,698 - - - - 210970,300 LGElectronics (Huizhou) Co., Ltd.89,772 - 13,438 - - (13,400) - - 89,810 Shenzhen Qianhai Qihang Supply Chain Management Co., Ltd.27,358 (40,000) (1,144) 1,638 - - - 12,148 - Shenzhen Tixiang Business Management Technology Co., Ltd.1,147 - - - 121,375 Shenzhen Jucai Supply Chain Technology Co., Ltd.15,273 - 4,3672 - - - - 19,642 Guangdong Innovative Lingyue Intelligent Manufacturing and Information Technology Industry Equity Investment Fund Partnership (Limited Partnership) 502,444328,43059,337 - - (19,937) - - 870,274 Guangdong Utrust Emerging Industry Equity Investment Fund Partnership (Limited Partnership) 167,809 - 13,024 - - - - - 180,833 Xinxin Bandaoti Technology Co., Ltd.1,798,784 - (34,120) - - - - (1,764,664) - Shenzhen Qianhai Sailing International Supply Chain Management Co., Ltd.69,540 - (42,523) (44) 1,164 - - - 28,137 Deqing Puhua Equity Investment Fund Partnership (Limited Partnership) - 163,760 (14,642) - - - - - 149,118 Ningbo Meishan Bonded Port Qiyu Investment Management Partnership (Limited Partnership) - 44,646 (12,464) - - - - - 32,182 Huizhou TCLHuman Resources Service Co., Ltd.6,274 - 2,656 - - - - - 8,930 TCLMicrochip Technology (Guangdong) Co., Ltd.285,27960,000 (79,117) - 12,034 - - - 278,196 Others 453,829 (58,722) 27,026 - - (2,548) - (56,692) 362,893 17,171,275498,1141,213,417 (6,112) 13,198 (363,042) - (1,808,986) 16,717,864 TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 174 XVIINotes to Financial Statements of the Parent Company (Continued) 3 Long-term equity investments (continued) (2) Subsidiaries Direct shareholdingratio (%) January 1, 2023Increase in the periodDecrease in the period December 31,2023TCLChina Star Optoelectronics Technology Co., Ltd.79.17% 33,780,853268,400 - 34,049,253TCLTechnology Group Finance Co., Ltd.82.00% 1,256,003 - - 1,256,003TCLTechnology Group (Tianjin) Co., Ltd.100% 15,000,0001,200,000 - 16,200,000TCLZhonghuan Renewable Energy Technology Co., Ltd.2.55% 1,752,635177,098 - 1,929,733TCLCulture Media (Shenzhen) Co., Ltd.100% 361,414 - - 361,414Shenzhen Dongxi Jiashang Entrepreneurship Investment Co., Ltd. 100% 200,000 - - 200,000Guangdong TCLJuxiang Technology Co., Ltd. (Formerly Huizhou Sailuote Communication Co., Ltd.) 100% 110,000 - - 110,000Highly Information Industry Co., Ltd.66.46% 107,296 - - 107,296TCLCommunication Equipment (Huizhou) Co., Ltd.75.00% 79,500 - - 79,500TCLMedical Radiological Technology (Beijing) Co., Ltd.100% 58,497 - - 58,497Shenzhen TCLStrategic Equity Investment Fund Partnership (Limited Partnership) 100% 71,010 - - 71,010TCLIndustrial Technology Research Institute, Ltd. (Europe) 100% 20,000 - - 20,000Wuhan TCLIndustrial Technology Research Institute, Ltd.100% 20,000 - - 20,000Shenzhen TCLHigh-Tech Development Co., Ltd.100% 20,000 - - 20,000Beijing HAWKCloud Information Technology Co., Ltd.100% 20,000 - - 20,000Huizhou Hongsheng Science and Technology Development Co., Ltd.100% 1,000 - - 1,000Tianjin Silica Material Technology Co., Ltd.100% 2,800,000 - - 2,800,000Xiamen TCLTechnology Industrial Investment Co., Ltd.100% 211,000253,397 - 464,397TCLInternet Technology (Shenzhen) Co., Ltd.100% 15,000 - - 15,000Ningbo TCLEquity Investment Ltd.100% 300,000 - - 300,000TCLTechnology Investments Limited 100% 2,988,293 - - 2,988,293Huizhou Dongshen Jia’an Equity Investment Partnership (Limited Partnership) 99.94% - 10,000 - 10,000TCLFinancial Technology (Shenzhen) Co., Ltd.100% - 15,036 - 15,036Zhonghuan Advanced Bandaoti Technology Co., Ltd.7.35% - 1,790,312 - 1,790,312Equity incentives of subsidiaries 16,59543,789 - 60,38459,189,0963,758,032 - 62,947,128For the registered capital of subsidiaries and the Company’s equity interests in the subsidiaries, see Note VIII. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 175 XVIINotes to Financial Statements of the Parent Company (Continued) 4 Investments in other equity instruments December 31,2023 January 1,2023Equity of unlisted companies - 5,0005 Other non-current financial assets December 31,2023 January 1,2023Equity investments 442,985431,023Debt investments 201,315 - 644,300431,0236 Operating income and operating costs 20232022 Revenue Operating costRevenue Operating cost Core business 1,051,9581,049,5871,019,036 1,009,786Non-core business 668,002147,567574,177 153,021 1,719,9601,197,1541,593,213 1,162,8077 Return on investment 2023 2022Gain on disposal of debt instruments at fair value through profit or loss - 244,997Gain on disposal of equity instruments at fair value through profit or loss 298 -Profit from holding debt instruments at fair value through profit or loss 140,134 -Debt instruments at amortized cost through profit or loss - -Profit from holding equity instruments at fair value through profit or loss - 3,953Gain on disposal of derivative financial assets/liabilities 9,659 -Dividends from subsidiaries 713,047 9,340,042Share of profit of associates for current period 1,289,878 1,358,727Share of profit of joint ventures for current period (76,461) (50,667)Net income from disposal of long-term investments 284,242 1,586,504 2,360,797 12,483,556As of December 31,2023, there were no significant restrictions on the collection of return on investment. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 176 XVIINotes to Financial Statements of the Parent Company (Continued) 8 Net cash generated from operating activities Net cash used in operating activities of the Company was (RMB8,054,069,000). 9 Ending balance of cash and cash equivalents The ending balance of cash and cash equivalents of the Company was RMB2,642,115,000. 10 Contingent liabilities As of December 31,2023, the contingent liabilities not provided for in the financial report were as follows: December 31,2023 Guarantees for bank loans of subsidiaries 48,112,186 Guarantees such as trade notes, letters of credit and letters of guarantee for subsidiaries 24,675,501 Guarantees for bank loans, trade notes, letters of credit, etc. of related parties 2,360,399XVIII Comparative Figures Certain comparative data have been reclassified to comply with the presentation of the current period. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 177 IX Non-recurring profit and loss items and amount 2023 2022 Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) 275,255 1,757,839Public grants through profit or loss (exclusive of public grants closely related to the Company’s normal business operations, in compliance with national policies, enjoyed according to determined criteria, and with a continuous impact on the Company’s profits and losses) 2,764,043 1,322,783The profits or losses generated from changes in fair value arising from financial assets and financial liabilities held by non-financial enterprises and the profits or losses from the disposal of such financial assets and financial liabilities, except for the effective hedging business related to the company’s normal business operations (114,259) (127,234)Reversal of provision for impairment of receivables that have been individually tested for impairment 22,894 37,746Non-operating income and expenses other than the above 228,994 758,600Income tax (603,198) (244,386)Non-controlling interests effects (1,379,875) (545,817) Non-recurring gains and losses attributable to ordinary shareholders of the parent company 1,193,854 2,959,531According to the relevant provisions of the Interpretative Announcement No.1 on Information Disclosure by Companies Issuing Securities to the Public - Non-recurring Profits and Losses (Revised in 2023), public grants closely related to the Company’s normal business operations, in compliance with national policies, enjoyed according to determined criteria, and with a continuous impact on the Company’s profits and losses shall be presented as recurring profits and losses. The public grants presented as recurring profits and losses by the Group in 2022 include asset-related public grants of RMB150,765,000, which comply with the relevant provisions of Interpretative Announcement No.1 (Revised in 2023) and shall be presented as recurring profits and losses. This change has no significant impact on the Company’s financial position and operating results. TCLTechnology Group Corporation Notes to Financial Statements For the period from January 1 to December 31,2023 ___________(RMB’000)_____________ 178 XX Weighted Average Return on Equity (ROE) and Earnings per Share (EPS) The Company calculates the ROE and EPS as follows in accordance with the Compilation Rules No.9 for Information Disclosure of Companies Offering Securities to the Public-Calculation and Disclosure of Return on Equity and Earnings per Share (Revised in 2010) issued by the China Securities Regulatory Commission and relevant provisions of accounting standards: Item Reporting period Net profit attributable to the parent company for the reporting period Weighted average return on equity (%)Earnings per share (RMB yuan)Basic earnings per share Diluted earnings per share incomeNet profit attributable to ordinary shareholders of the Company 2,214,9344.27% 0.1195 0.1179Net profit attributable to ordinary shareholders of the Company before non-recurring gains and losses 1,021,0801.97% 0.0551 0.0544Company Name: TCLTechnology Group Corporation Date: April 28,2024 The financial statements and the notes thereto from to are signed by: Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei