TCL科技：2023年第三季度报告（英文版）

Third Quarter 2023 Report of TCLTechnology Group Corporation 1 Stock Code: 000100 Stock Abbr.: TCLTECH. Announcement No.: 2023-063 TCL科技集团股份有限公司TCLTechnology Group Corporation Third Quarter 2023 Report October 27,2023 Third Quarter 2023 Report of TCLTechnology Group Corporation 2 Content Section IImportant Notices and Definitions ...................................................................................3 Section IIKey Financial Information ..............................................................................................5 Section IIIManagement Discussion and Analysis ..........................................................................7 Section IVShareholder Information ..............................................................................................11 Section VOther Significant Events ................................................................................................13 Section VIQuarterly Financial Statements ...................................................................................14 Third Quarter 2023 Report of TCLTechnology Group Corporation 3 Section IImportant Notices and Definitions The Board of Directors (or the “Board”), the Supervisory Committee, directors, supervisors and senior management of TCLTechnology Group Corporation (hereinafter referred to as the “Company”) hereby guarantee that this quarterly report is factual, accurate and complete, 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. The future plans, development strategies or other forward-looking statements mentioned in this Report shall NOT be considered as promises of the Company to investors. Therefore, investors are kindly reminded to pay attention to possible investment risks. This Report has not been audited. This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. Third Quarter 2023 Report of TCLTechnology Group Corporation 4 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 September 30,2023. The “Reporting Period”, “current period” Refers to The period from July 1,2023 to September 30,2023. TCLCSOTRefers to TCLChina Star Optoelectronics Technology Co., Ltd. TZERefers to TCLZhonghuan Renewable Energy Technology Co., Ltd., a majority-owned subsidiary of the Company listed on the Shenzhen Stock Exchange (stock code: 002129.SZ) RMBRefers to Renminbi Third Quarter 2023 Report of TCLTechnology Group Corporation 5 Section IIKey Financial Information (I) Key accounting data and financial indicators Indicate whether there is any retrospectively adjusted or restated datum in the table below Yes □ No Earnings per share in the third quarter of 2022 were adjusted due to the conversion of capital reserve into share capital during the Reporting Period Q32023 Q32022 Change Beginning of the year to the end of the reporting period Q32022 Change Before adjustment After adjustment After adjustment Before adjustment After adjustment After adjustment Revenue (RMB) 47,960,309,07941,992,680,71441,992,680,71414.21% 133,109,034,685126,514,861,842126,514,861,8425.21% Net profit attributable to the company’s shareholders (RMB) 1,270,918,405 -382,858,737 -382,858,737431.95% 1,611,411,994280,664,134280,664,134474.14% Net profits attributable to the company’s shareholders before non-recurring gains and losses (RMB) 1,107,560,913 -1,259,772,878 -1,259,772,878187.92% 507,494,073 -1,886,642,263 -1,886,642,263126.90% Net cash generated from operating activities (RMB) — — — — 16,144,013,01312,661,888,66012,661,888,66027.50% Basic earnings per share (RMB/share) 0.0686 -0.0282 -0.0257366.93% 0.08700.02070.0188362.77% Diluted earnings per share (RMB/share) 0.0677 -0.0280 -0.0255365.49% 0.08580.02050.0186361.29% Weighted average return on equity (%) 2.46% -0.99% -0.99% Increase by 3.45 percentage points YoY 3.13% 0.72% 0.72% Increase by 2.41 percentage points YoY At the end of the reporting period December 31,2022 Change Before adjustment After adjustment After adjustment Total assets (RMB) 389,212,032,795359,996,232,668359,996,232,6688.12% Owner’s equity attributable to the company’s shareholders (RMB) 52,331,472,95150,678,520,47750,678,520,4773.26% Note: The Company converted capital reserve into share capital in May 2023, at a rate of 1 share for every ten shares to all shareholders. The Company recalculated the basic earnings per share and the diluted earnings per share for FY2022 in accordance with accounting standards and other regulations.Third Quarter 2023 Report of TCLTechnology Group Corporation 6 (II) Non-recurring profit and loss items and amounts Applicable □ Not applicable Unit: RMB Item Amount in the reporting period Amount from the beginning of the year to the end of the reporting period Gains and losses on disposal of non-current assets (inclusive of impairment allowance write-offs) -13,604,021308,149,421 Government subsidies charged to current profits and loss (except for government subsidies closely related to the Company’s normal business which comply with national policies and regulations and are enjoyed on an ongoing basis according to certain standard quotas or quantities) 735,377,8972,002,636,876 The profits or losses generated from changes in fair value arising from held-for-trading financial assets and held-for-trading financial liabilities, as well as return on investment from the disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets, except for the effective hedging business related to the Company’s normal business operation. -69,031,849 -111,771,947 Reversal of provision for impairment of receivables that have been individually tested for impairment 10,904,23713,404,237 Non-operating income and expenses other than the above -4,429,556702,991,099 Less: Corporate income tax 166,912,976531,434,692 Non-controlling interests (net of tax) 328,946,2401,280,057,073 Total 163,357,4921,103,917,921 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. (III) Changes of key accounting data and financial indicators and reasons therefor Applicable □ Not applicable Unit: RMB Balance Sheet items Ending balance Beginning balance Increase / decrease ratio (%) Reason for change Held-for-trading financial assets 17,015,862,28812,703,507,48233.9 Mainly caused by an increase in wealth management products Accounts receivable 25,259,972,51114,051,661,46279.8 Mainly caused by an expansion of sales, an increase in accounts receivables Cash Flow Statement items Current balance Prior balance Increase / decrease ratio (%) Reason for change Net cash generated from financing activities 7,657,735,02524,068,689,896 -68.2 Mainly caused by a decrease in financing activities Third Quarter 2023 Report of TCLTechnology Group Corporation 7 Section IIIManagement Discussion and Analysis The global economic growth rate slowed down this year, being influenced by such factors as intensifying geopolitical tensions, stubbornly high inflation, and tightening policies adopted by certain economies to address inflation. In the face of such a complex and challenging external environment, the Company focused on two core industries of display and new energy photovoltaic, so as to strengthen operational resilience and optimize business strategies in pursuit of sustainable and high-quality development. From January to September 2023, the Company achieved an operating revenue of RMB133.1 billion, up 5.2% year on year; net profits of RMB5.57 billion, up 185% year on year; net profit attributable to shareholders of the listed company of RMB1.61 billion, up 474% year on year; and net operating cash flow of RMB16.14 billion. As the international relocation of display production capacity gradually drew to an end, the competitive landscape of display industry had leveled out. The industry had returned to a stage of orderly development based on reasonable business returns, and enterprises continuously optimized their business strategies to promote the gradual recovery of the industry. During the Reporting Period, display industry enjoyed a stable supply and demand relationship, large-sized display products drove the area of demand increase steady and the prices of mainstream products, such as TV panels, again rose to the range of profitability. The Company continued to upscale its products, and further optimized its business structure. In the third quarter, the display business recorded a revenue of RMB25.68 billion, net profit of RMB1.82 billion, accompanied by vastly improved profitability. With the structural transformation of global energy, the Company’s new energy photovoltaic business continued to consolidate its leading advantages in both technologies and intelligent manufacturing, improved its synergistic role in congruence with the industry chain, pro-actively expanded its global presence, and achieved robust growth in both scale and performance of production and sales. During the Reporting Period, TZE registered an operating revenue of RMB48.65 billion and net profit of RMB6.58 billion, up 19.9% year on year. Display Business During the Reporting Period, the end-user demand for display maintained stability amid fluctuation, manifested a trend of seasonal improvement, while the popularity of larger-sized TVs Third Quarter 2023 Report of TCLTechnology Group Corporation 8 continued to drive growth in demand areas. The ever-improving supply-side landscape had further galvanized the healthy development of the industry, and catalyzed the uptick in prices of large-sized panels at the beginning of this March. The prices of small and medium-sized panels gradually stabilized. Driven by downstream new product launches and stockpiling, small-sized panels suffered from structural capacity shortages in the third quarter which led to product price increases. TCLCSOT maintained healthy inventory through flexible production scheduling strategies, expedited operational turnover, and consistently improved its business and product structure. Rising product prices also evidenced the improvement of quarter-on-quarter operational performance. In the first three quarters of 2023, the display business achieved an revenue of RMB61.2 billion, up by 17.5% year on year, including revenue of RMB25.68 billion in the third quarter, represented an increase of 73.0% year on year, or 25.8% quarter on quarter; and achieved net profit of RMB1.82 billion, turned losses into gains in the third quarter and resulted in both YoY and QoQ growth. In large-sized segment, TCLCSOT had taken full advantages of the high-generation production lines, and led the industry by its large-sized panels. TCLCSOT consolidated its top 2 position in the global market share of TV panels. TCLCSOT’s proportion of shipping area of TV products with sizes of 55 inches and above had increased to 79%, while the market share of 55-inch and 75-inch products ranked first in the world, the market share of 65-inch products ranked second in the world. In commercial markets such as interactive whiteboards, digital signage, and splicing screens, TCL CSOT ranked among the top three in terms of global market share. In its medium-sized products business, the t9 production line successfully achieved a capacity increase, with expanding market share, and the Company continued to optimize the layout of its product and customer structure. The Company’s shipment of monitors jumped to a ranking of third in the world, with e-sports monitors occupied the largest percentage of market share worldwide. Products for laptops and vehicle-mounted devices were introduced to major brands worldwide at an accelerated rate. In its small-sized products business, the Company consolidated its competitiveness through technological innovation. The Company ranked among the top three in the world in terms of LTPS mobile panel shipments. The G6 LTPS production line was expanded as planned to meet demands for multi-purpose products. The utilization of the t4 flexible OLED production line was significantly improved, with increasing shares of high-end products. In the third quarter, the Company ascended to fourth place globally in terms of market share for flexible OLED. Third Quarter 2023 Report of TCLTechnology Group Corporation 9 Looking ahead into the fourth quarter, with further improvements in the competitive landscape and new development trends based on reasonable business returns, the display industry will maintain supply-demand balance as well as developing in a long-term, orderly, and healthy manner. The prices of large-sized display products are subject to a moderate degree of seasonal variation. The prices of medium-sized products have stabilized, while small-sized products see a higher utilization rate and rising prices in certain areas because of demands for new products. The Company is confident that its display business will continue to operate steady in the fourth quarter. New Energy Photovoltaics Business In the first three quarters of 2023, the photovoltaics industry witnessed intensifying competition in key sectors, drove prices downward throughout the industrial chain. Be that as it may, the economic viability of photovoltaic power generation improved, impelled a steady increase in installation capacity at the terminal end. The photovoltaic industry would return to technological innovation and manufacturing prowess in terms of core competitiveness. TZE gave full play to its rights of defining, benchmarking, and pricing through the improvement of technologies and manufacturing, consolidated its leading position in the market and achieved steady performance growth. During the Reporting Period, TZE registered an operating revenue of RMB48.65 billion and net profit of RMB6.58 billion, up 19.9% year on year. The production capacity of G12 and N-type photovoltaic materials continued to increase. TZE enhanced the layout of TOPCON cells and shingled modules, and strengthened its differentiated competitiveness. During the Reporting Period, the Company’s production and sales of photovoltaic materials rose by 68% year on year, with G12 silicon wafers occupied the largest share of the global market, while N-type silicon wafers also secured pole position in terms of market share of sales. The Company led the upgrade of large-sized, thin-slice, thin-line process technologies for crystals and wafers. The Company excelled in metrics such as the monthly crystal output per furnace, volume of wafer output per kg, and significantly enhanced its leadership position in terms of cost management. To improve industrial synergy, the Company built a demonstration production line for G12 cells with annual output of 2GW in the Jiangsu province, and invested in and constructed an intelligent 25GW N-type TOPCON plant for solar power cells, expedited the development of shingled module projects. By virtue of the capability of the Industry 4.0 technology in flexible manufacturing and the Third Quarter 2023 Report of TCLTechnology Group Corporation 10 strategic partnership with the international community, TZE accelerated to deploy a layout in the global commercial market. Having relied on long-term investment and development in smart manufacturing over the years, the Company had applied Industry 4.0 flexible manufacturing in various industries, created autonomously coordinated and highly efficient dark factories, which enabled the Company to achieve industry-leading productivity, with a competitive advantage in localized manufacturing on a global scale. The Company signed the Joint Development Agreement with Vision Industries Company, with a view to jointly investing in and establishing a photovoltaic crystal and wafer factory in Saudi Arabia with a designed capacity of 20GW in its first phase. Given to Maxeon's intellectual properties and technology advantages in IBC cell-modules and shingled modules, the Company and Maxeon had achieved mutually reinforced and coordinated development in terms of production and channels globally. These efforts will further accelerate the future growth of the Company’s overseas business. Looking ahead to the future, the display industry has entered a new phase of development amid a reshaped competitive landscape. By continuously developing its capabilities in response to demand fluctuations, the Company is expecting consistently improving returns on its display business. TZE will continue to take advantage of its leading position in terms of G12 and N-type strategic products, intensify the synergistic expansion of modules and cells, and actively expand its international business. Under such a backdrop, the Company's new energy photovoltaic business will experience robust growth. The Company will seize opportunities from manufacturing upgrades and global clean energy transformation, continue to implement its business strategy of “improving operational quality and efficiency, enhancing strengths to shore up weaknesses, innovation-driven development as well as accelerating global expansion” to achieve sustainable and high-quality development, and turn itself into a global leader. Third Quarter 2023 Report of TCLTechnology Group Corporation 11 Section IVShareholder Information (I) Table of the total number of ordinary shareholders and the number of preferred shareholders with resumed voting rights as well as the shareholdings of the top 10 shareholders Unit: Share Total number of ordinary shareholders by the end of the reporting period 622,787 Total number of preferred shareholders with resumed voting rights by the end of the reporting period (if any) 0 Shareholdings of top 10 shareholders of ordinary shares Name of shareholder Nature of shareholder Shareholding percentage (%) Number of shares held Number of restricted shares held Shares in pledge, marked or frozen Status Shares Li Dongsheng and his acting-in-concert party Domestic individual/ Domestic general legal entity 6.73% 1,264,053,189672,868,839 Put in pledge by Li Dongsheng 100,320,000 Put in pledge by Jiutian Liancheng 308,057,743 Hong Kong Securities Clearing Company Ltd. Foreign legal entity 5.67% 1,065,125,357 Huizhou Investment Holding Co., Ltd. State-owned legal entity 4.35% 817,453,824 Wuhan Optics Valley Industrial Investment Co., Ltd. State-owned legal entity 2.83% 532,003,016 Pledge 149,000,000 China Securities Finance Corporation Limited Domestic general legal entity 2.19% 410,554,710 CITICSecurities Co., Ltd. State-owned legal entity 1.48% 277,627,874 Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund Fund, wealth management product, etc. 1.21% 226,736,512 Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF Fund, wealth management product, etc. 0.96% 179,627,610 China Foreign Economy and Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hong Yuan Collective Fund Trust Scheme Fund, wealth management product, etc. 0.90% 168,599,830 China Securities Co., Ltd. - Tianhong CSIPhotovoltaic Industry ETF Fund, wealth management product, etc. 0.75% 141,775,320 Shareholdings of top 10 non-restricted ordinary shareholders Name of shareholder Number of non-restricted ordinary shares held at the end of reporting period Share type and quantity Type Quantity Hong Kong Securities Clearing Company Ltd.1,065,125,357 RMB-denominated ordinary shares 1,065,125,357 Huizhou Investment Holding Co., Ltd.817,453,824 RMB-denominated ordinary shares 817,453,824 Li Dongsheng and his acting-in-concert party 591,184,350 RMB-denominated ordinary shares 591,184,350 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 CITICSecurities Co., Ltd.277,627,874 RMB-denominated ordinary shares 277,627,874 Perseverance Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No.2 Zhixin Fund 226,736,512 RMB-denominated ordinary shares 226,736,512 Third Quarter 2023 Report of TCLTechnology Group Corporation 12 Bank of China Limited - Huatai-Pinebridge CSI Photovoltaic Industry ETF 179,627,610 RMB-denominated ordinary shares 179,627,610 China Foreign Economy and Trade Trust Co., Ltd. - Foreign trade trust - Gaoyi Xiaofeng Hong Yuan Collective Fund Trust Scheme 168,599,830 RMB-denominated ordinary shares 168,599,830 China Securities Co., Ltd. - Tianhong CSIPhotovoltaic Industry ETF 141,775,320 RMB-denominated ordinary shares 141,775,320 Note on the above shareholders’ associations or concerted actions Mr. Li Dongsheng, one of the top 10 shareholders, 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. The Company is not aware of any affiliation or concerted action among the other aforementioned shareholders. Explanation on the top 10 ordinary shareholders participating in securities margin trading (if any) At the end of the reporting period: 1. Mr. Li Dongsheng and his acting-in-concert party, Huizhou Investment Holding Co., Ltd., and Wuhan Optics Valley Industrial Investment Co., Ltd. did not participate in refinancing business. In addition, the Company is not aware of any other shareholder engaging in refinancing business. 2. The top 10 shareholders indicated above did not hold any stock of the Company via any margin accounts. (II) Total number of preferred shareholders and shareholdings of the top 10 preferred shareholders □ Applicable Not applicable Third Quarter 2023 Report of TCLTechnology Group Corporation 13 Section VOther Significant Events 1. Derivative investment for hedging purposes during the reporting period Unit: RMB'0,000 Type of contract Beginning amount Ending amount Profit or Loss During 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 2,062,17273,4413,385,069129,988 -3,892 23.320.90 2. Interest rate swaps 384,44611,533148,8514,4661.030.03 Total 2,446,61884,9743,533,920134,454 -3,89224.340.93 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 change in fair value of hedged items was RMB285.31 million; profit/loss arising from delivery of maturing forward exchange contracts was -RMB453.60 million; and profit/loss arising from valuation of effective forward exchange contracts was RMB129.37 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. 2. Other Significant Events During the Reporting Period □ Applicable Not Applicable Third Quarter 2023 Report of TCLTechnology Group Corporation 14 Section VIQuarterly Financial Statements (I) Financial statements 1. Consolidated Balance Sheet Prepared by: TCLTechnology Group Corporation Unit: RMB Item September 30,2023 January 01,2023 Current assets: Monetary assets 29,555,316,954 35,378,501,261 Settlement reserves Funds on loan Held-for-trading financial assets 17,015,862,288 12,703,507,482 Derivative financial assets 173,048,603 361,034,230 Notes receivable 440,791,529 512,848,988 Accounts receivable 25,259,972,511 14,051,661,462 Receivables financing 1,199,510,501 1,103,127,764 Prepayments 3,919,752,013 3,593,856,572 Premiums receivable Reinsurance accounts receivable Reinsurance contract provisions receivable Other receivables 4,257,727,145 4,033,248,387 Of which: Interests receivable Dividends receivable 1,226,086 Financial assets purchased under sale-back agreement Inventories 19,764,196,521 18,001,121,855 Contract assets 221,243,875 315,167,085 Held-for-sale assets Non-current assets due within one year Other current assets 5,998,663,756 5,438,935,717 Total current assets 107,806,085,696 95,493,010,803 Non-current assets: Loans and advances to customers Debt investments 528,993,993 741,703,137 Other debt investments Long-term receivables 616,420,554 631,372,701 Long-term equity investments 30,456,209,044 29,256,215,804 Investments in other equity instruments 396,036,493 439,996,263 Other non-current financial assets 4,481,682,741 2,928,827,232 Investment property 887,185,942 946,449,125 Fixed assets 153,896,990,033 132,477,671,844 Construction in progress 37,572,331,212 52,053,833,629 Productive biological assets Oil and gas assets Right-of-use assets 6,159,717,031 5,110,123,904 Intangible assets 18,081,584,593 16,783,930,537 Development costs 2,428,635,648 3,179,207,056 Goodwill 10,385,265,330 9,161,852,161 Long-term deferred expenses 3,350,854,184 2,744,208,125 Deferred income tax assets 2,574,282,379 1,753,887,430 Other non-current assets 9,589,757,922 6,293,942,917 Third Quarter 2023 Report of TCLTechnology Group Corporation 15 Total non-current assets 281,405,947,099 264,503,221,865 Total assets 389,212,032,795 359,996,232,668 Current liabilities: Short-term borrowings 10,134,151,406 10,215,910,963 Borrowings from the Central Bank 715,606,494 777,676,330 Borrowed funds Held-for-trading financial liabilities 764,455,192 861,911,768 Derivative financial liabilities 218,790,559 70,734,905 Notes payable 3,068,249,954 6,365,659,580 Accounts payable 32,018,005,100 26,381,911,940 Advances from customers 685,922 1,402,178 Contract liabilities 2,507,095,482 2,336,008,164 Financial assets sold under repurchase agreements Customer deposits and deposits from other banks and financial institutions 203,141,843 603,423,212 Funds for brokering securities transaction Funds for brokering securities underwriting Employee salaries payable 2,610,934,481 2,376,932,722 Taxes and levies payable 1,229,479,209 1,215,591,227 Other payables 22,611,884,909 24,190,353,350 Of which: Interests payable Dividends payable 55,083,448 40,010,329 Service charges and commissions payable Reinsurance accounts payable Held-for-sale liabilities Non-current liabilities due within one year 13,262,490,063 10,957,320,562 Other current liabilities 1,554,607,747 1,185,847,619 Total current liabilities 90,899,578,361 87,540,684,520 Non-current liabilities: Insurance contract provisions Long-term borrowings 130,504,280,714 118,603,164,839 Bonds payable 9,579,298,359 12,006,850,805 Of which: Preferred shares Perpetual bonds Lease liabilities 5,533,381,892 4,461,382,902 Long-term payables 3,202,300,378 887,762,713 Long-term employee compensation payable 47,304,888 472,538,409 Estimated liabilities 114,747,324 97,521,975 Deferred income 2,298,308,610 2,468,144,649 Deferred income tax liabilities 1,862,112,771 1,319,428,442 Other non-current liabilities Total non-current liabilities 153,141,734,936 140,316,794,734 Total liabilities 244,041,313,297 227,857,479,254 Owner's equity: Capital share 18,779,080,767 17,071,891,607 Other equity instruments Of which: Preferred shares Perpetual bonds Capital reserves 10,945,727,155 12,522,792,596 Less: Treasury share 1,119,036,126 1,314,581,308 Other comprehensive income -1,094,921,020 -811,821,600 Specific reserves 2,301,029 2,301,029 Surplus reserves 3,712,272,814 3,712,272,814 General risk reserve 8,933,515 8,933,515 Retained earnings 21,097,114,817 19,486,731,824 Total equity attributable to the owners of the parent company 52,331,472,951 50,678,520,477 Non-controlling interests 92,839,246,547 81,460,232,937 Third Quarter 2023 Report of TCLTechnology Group Corporation 16 Total owner's equity 145,170,719,498 132,138,753,414 Total liabilities and owner's equity 389,212,032,795 359,996,232,668 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei 2. Consolidated Income Statement from the Beginning of the Year to the End of the Reporting Period Unit: RMB Item Amount incurred in the current period Amount incurred in the previous period I. Total revenue 133,165,997,183 126,575,669,585 Including: operating revenue 133,109,034,685 126,514,861,842 Interest income 56,962,498 60,807,743 Earned premiums Service charge and commission income II. Total costs 129,007,796,700 128,949,175,733 Of which: Operating cost 113,643,241,301 114,950,650,732 Interest expenditures 14,379,206 18,341,537 Service charge and commission expenditures Surrender value Net claims payment Net insurance liability provisions accrued Policy dividend expenditures Reinsurance expenses Taxes and levies 603,630,830 450,506,832 Sales expenses 1,831,309,694 1,456,590,197 Administrative expenses 3,044,021,757 2,739,873,088 R&D expenses 7,201,406,325 6,862,053,578 Financial expenses 2,669,807,587 2,471,159,769 Including: Interest expenses 3,731,262,986 3,156,169,091 Interest income 857,965,962 574,239,059 Plus: Other income 1,762,418,772 2,527,046,371 Return on investment (losses are indicated by "-") 2,442,260,295 2,945,923,073 Of which: Share of profit or loss of joint ventures and associates 1,205,559,646 2,162,708,733 Income from derecognition of financial assets measured at amortised costs Exchange gains (losses are indicated by "-") -57,583 17,243,641 Gain on net exposure hedging (losses are indicated by "-") Gain on changes in fair value (losses are indicated by "-") 372,289,148 174,313,519 Credit impairment losses (losses are indicated by "-") -106,792,302 -21,497,079 Asset impairment losses (losses are indicated by "-") -2,432,074,536 -2,147,817,307 Income from asset disposal (losses are indicated by "-") -23,258,312 -24,703,658 III. Operating profit (losses are indicated by "-") 6,172,985,965 1,097,002,412 Plus: Non-operating income 61,847,094 613,528,624 Third Quarter 2023 Report of TCLTechnology Group Corporation 17 Less: Non-operating expenses 158,935,459 97,681,058 IV. Gross profit (gross loss is indicated by "-") 6,075,897,600 1,612,849,978 Less: Income tax expenses 507,453,577 -339,091,631 V. Net profits (net losses are indicated by "-") 5,568,444,023 1,951,941,609 (I) Classification by business continuity 1. Net profits from continuing operations (net losses are indicated by "-") 5,568,444,023 1,951,941,609 2. Net profits from discontinued operations (net losses are indicated by "-") (II) Classification by ownership 1. Net profit attributable to the owners of the parent company (net loss is indicated by "-") 1,611,411,994 280,664,134 2. Net profit attributable to non-controlling interests (net loss is indicated by "-") 3,957,032,029 1,671,277,475 VI. Other comprehensive income, net of tax -350,450,809 -600,216,587 Other comprehensive income attributable to the owners of the parent company, net of tax -283,099,420 -657,794,348 (I) Other comprehensive income that will not be reclassified to profit or loss -42,627,164 -38,664,611 1. Changes arising from remeasurement of defined benefit plans 2. Other comprehensive income that cannot be subsequently reclassified into profits and losses under the equity method 5,512,131 387,914 3. Changes in fair value of investments in other equity instruments -48,139,295 -39,052,525 4. Changes in fair value of the enterprise's own credit risks 5. Others (II) Other comprehensive income that may subsequently reclassified into profit and losses -240,472,256 -619,129,737 1. Other comprehensive income that can be transferred to profits and losses under the equity method 29,601,657 4,527,850 2. Changes in fair value of other debt investments 3. Amount of financial assets reclassified into other comprehensive income 4. Provisions for credit impairment of other debt investments 5. Reserves for cash flow hedging -202,298,071 -178,024,905 6. Conversion differences in foreign currency financial statements -67,775,842 -445,632,682 7. Others - Other net comprehensive income attributable to minority interests, net of tax -67,351,389 57,577,761 VII. Total comprehensive income 5,217,993,214 1,351,725,022 (I) Total comprehensive income attributable to the owners of the parent company 1,328,312,574 -377,130,214 (II) Total comprehensive income attributable to minority shareholders 3,889,680,640 1,728,855,236 VIII. Earnings per share: (I) Basic earnings per share 0.0870 0.0188 (II) Diluted earnings per share 0.0858 0.0186 Legal representative: Li Dongsheng Person-in-charge of Financial affairs: Li Jian Person-in-charge of the Financial Department: Jing Chunmei 3. Consolidated Cash Flow Statement from the Beginning of the Year to the End of the Reporting Period Unit: RMB Item Amount incurred in the current period Amount incurred in the previous period I. Net cash generated from operating activities: Third Quarter 2023 Report of TCLTechnology Group Corporation 18 Proceeds from sale of commodities and rendering of services 101,241,792,349 100,750,626,818 Net increase of deposits from customers, banks and other financial institutions -400,281,369 89,255,314 Net increase of borrowings from the Central Bank -62,069,836 -615,194,941 Net increase of borrowings from other financial institutions Cash received from collecting premiums for original insurance contracts Net cash received for reinsurance business Net increase of deposits and investments of policyholders Cash received from interest, service charges and commissions 56,962,498 60,807,743 Net increase of borrowed funds from banks and other financial institutions Net increase of repurchase business funds Net cash received from brokering securities transaction Tax and levy rebates 6,897,140,163 9,008,513,808 Cash generated from other operating activities 6,549,758,540 6,499,913,125 Sub-total of cash generated from operating activities 114,283,302,345 115,793,921,867 Payments for commodities and services 77,969,681,520 83,453,908,540 Net increase of loans and advances to customers -20,126,492 40,873,048 Net increase of deposits with the Central Bank, banks and other financial institutions -94,966,195 55,082,779 Cash paid for claims for original insurance contracts Net increase of funds on loan Cash paid for interest, service charges and commissions Cash paid for policy dividends Cash paid to and for employees 8,675,722,473 8,563,502,480 Taxes and levies paid 3,042,877,731 2,472,457,316 Cash used in other operating activities 8,566,100,295 8,546,209,044 Sub-total of cash used in operating activities 98,139,289,332 103,132,033,207 Net cash generated from operating activities 16,144,013,013 12,661,888,660 II. Net cash generated from investment activities: Proceeds from disinvestments 36,407,981,056 36,317,483,105 Proceeds from return on investments 1,443,449,707 1,015,752,094 Net proceeds from disposal of fixed assets, intangible assets and other long-term assets 157,900,475 82,138,786 Net proceeds from disposal of subsidiaries and other business units Cash generated from other investing activities 1,675,476,985 107,866,294 Sub-total of cash generated from investment activities 39,684,808,223 37,523,240,279 Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets 22,058,677,309 31,453,416,391 Payments for investments 46,043,068,029 44,706,020,240 Net increase of pledged loans Net payments for acquiring subsidiaries and other business units 342,527,176 50,133,077 Cash used in other investing activities 679,513,856 657,451,880 Subtotal of cash used in investing activities 69,123,786,370 76,867,021,588 Net cash used in investing activities -29,438,978,147 -39,343,781,309 III. Net cash generated from financing activities: Capital contributions received 3,227,627,076 8,440,501,173 Of which: Net capital contributions by non-controlling interests to subsidiaries 3,227,627,076 8,440,501,173 Borrowings raised 59,814,243,560 73,945,824,297 Cash generated from other financing activities 3,288,722,855 46,000,000 Sub-total of cash generated from financing activities 66,330,593,491 82,432,325,470 Cash paid for debt repayment 46,877,621,540 46,000,724,997 Third Quarter 2023 Report of TCLTechnology Group Corporation 19 Cash paid for distribution of dividends and profits or the repayment of interest 5,260,345,180 7,638,841,951 Of which: Dividends and profits distributed by subsidiaries to minority shareholders 334,580,641 1,667,403,525 Cash used in other financing activities 6,534,891,746 4,724,068,626 Subtotal of cash used in financing activities 58,672,858,466 58,363,635,574 Net cash generated from financing activities 7,657,735,025 24,068,689,896 IV. Effect of exchange rate changes on cash and cash equivalents 72,098,972 616,824,475 V. Net increase in cash and cash equivalents -5,565,131,137 -1,996,378,278 Plus: Beginning balance of cash and cash equivalents 33,675,624,291 30,081,704,864 VI. Ending balance of cash and cash equivalents 28,110,493,154 28,085,326,586 (II) Adjustments to financial statement items at the beginning of the year of the first implementation of the new accounting standards which have been implemented since 2023 □ Applicable Not Applicable (III) Auditor’s Report Whether the Third Quarter Report has been audited or not □Yes No The Company’s Third Quarter Report has not yet been audited. TCLTechnology Group Corporation Board of Directors October 27,2023 Section IImportant Notices and Definitions Section IIKey Financial Information (I) Key accounting data and financial indicators (II) Non-recurring profit and loss items and amounts (III) Changes of key accounting data and financial indicators and reasons therefor Section IIIManagement Discussion and Analysis Section IVShareholder Information (I) Table of the total number of ordinary shareholders and the number of preferred shareholders with resumed voting rights as well as the shareholdings of the top 10 shareholders (II) Total number of preferred shareholders and shareholdings of the top 10 preferred shareholders Section VOther Significant Events 1. Derivative investment for hedging purposes during the reporting period 2. Other Significant Events During the Reporting Period Section VIQuarterly Financial Statements (I) Financial statements 1. Consolidated Balance Sheet 2. Consolidated Income Statement from the Beginning of the Year to the End of the Reporting Period 3. Consolidated Cash Flow Statement from the Beginning of the Year to the End of the Reporting Period (II) Adjustments to financial statement items at the beginning of the year of the first implementation of the new accounting standards which have been implemented since 2023 (III) Auditor’s Report