BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
Stock symbol: 000725, 200725 Stock name: BOE A, BOE B Announcement No.: 2018-036
BOE TECHNOLOGY GROUP CO., LTD.
ANNUAL REPORT 2017 (ABSTRACT)
Part I Important Notes
This Abstract is based on the full text of the Annual Report of BOE Technology Group Co., Ltd. (inclusive of its consolidated
subsidiaries, the “Company”, except where the context otherwise requires). In order for a full understanding of the Company’s
operating results, financial condition and future development planning, investors should carefully read the full text which has been
disclosed together with this Abstract on the media designated by the China Securities Regulatory Commission (the “CSRC”).
The Board of Directors (or the “Board”), the Supervisory Board as well as the Directors, Supervisors and senior management of the
Company hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall be jointly and severally
liable for any misrepresentations, misleading statements or material omissions in this Report.
Mr. Wang Dongsheng, the Company’s legal representative, Mr. Chen Yanshun, President of the Execution Committee (Chief
Executive Officer) of the Company, Ms. Sun Yun, the Company’s Chief Financial Officer, and Ms. Yang Xiaoping, head of the
Company’s financial department (equivalent to financial manager) hereby guarantee that the Financial Statements carried in this
Report are factual, accurate and complete.
All the Company’s Directors have attended the Board meeting for the review of this Report.
The Board has considered and approved the following dividend payout proposal for common shareholders for the Reporting Period:
based on the total shares of 34,798,398,763, a cash dividend of RMB0.50 (tax inclusive) per 10 shares would be distributed to all the
common shareholders, with no share dividend converted either from retain earnings or from capital reserves.
This Report has been prepared as per the Chinese Accounting Standards for Business Enterprises and other relevant regulations.
KPMG Huazhen LLP has issued an independent auditor’s report with unmodified unqualified opinion for the Company.
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.
Part II Company Profile
1. Stock Profile
Stock name BOE A, BOE B Stock symbol 000725, 200725
Stock exchange Shenzhen Stock Exchange
Contact information Board Secretary Securities Representative
Name Liu Hongfeng Cui Zhiyong
Office address 12 Xihuan Middle Road, Beijing 12 Xihuan Middle Road, Beijing
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
Economic-Technological Development Area, Economic-Technological Development Area,
P.R.China P.R.China
Fax 010－64366264 010－64366264
Tel. 010－64318888 ext. 010－64318888 ext.
E-mail address liuhongfeng@boe.com.cn cuizhiyong@boe.com.cn
2. Brief Introduction to Main Business Scope or Products in Reporting Period
Founded in April 1993, BOE Technology Group Co., Ltd. (BOE) has three major business divisions, namely, the display and sensor
business group (DBG), the smart systems business group (SBG) and the healthcare business group (HBG). And BOE is rapidly
transforming towards an Internet of Things (IOT) company.
A. Display and Sensor Business Group (DBG)
This business group provides, among others, TFT-LCD, AMOLED and micro display components and solutions. The display
business primarily offers display components and solutions for mobile phones, tablet PCs, laptops, displayers, TVs, VR/AR devices,
vehicles, wearable devices, industrial control, medical care, tiled display screens, etc. And the sensor business mainly provides core
thin film transistors and solutions for photoelectric sensors, gene sequencing sensors, multi-sign sensors, security sensors and
molecular antenna, among others.
B. Smart Systems Business Group (SBG)
Following the main direction of “the Internet of Things and artificial intelligence”, this business group consists of five major
sub-divisions, namely, smart manufacturing, digital arts, smart retail systems, smart vehicle-mounted systems, and smart energy
systems. The smart manufacturing sub-division mainly provides its global partners with the most competitive ODM/OEM and
customized smart manufacturing solutions of complete machines, backlight units, etc. The digital arts sub-division focuses on B2C
screen systems, providing O+O digital artwork trading platforms for customers. The smart retail systems sub-division mainly offers
electronic shelf label, commercial display, hospital-bank smart systems and solutions. And the smart vehicle-mounted systems and
smart energy systems sub-divisions mainly provide advanced vehicle-mounted and energy systems and solutions.
C. Healthcare Business Group (HBG)
With “Internet of Things technology and life data” as the core, this business group consists of five major sub-divisions, namely,
mobile healthcare, digital hospitals, regenerative medicine, healthcare parks and life insurance, primarily providing portable health
monitoring, online medical consulting, offline medical care, regenerative medicine and healthcare park products and solutions.
3. Key Financial Information
(1) Key Financial Information of Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
Unit: RMB
2017-over-2016
Item 2017 2016
change
Sales revenue 93,800,479,215.00 68,895,658,963.00 36.15% 48,623,732,312.00
Net income attributable to
7,567,682,493.00 1,882,571,674.00 301.99% 1,636,270,488.00
shareholders of the listed company
Net income attributable to
shareholders of the listed company
6,679,211,138.00 12,534,878.00 53,185.01% 613,814,833.00
before nonrecurring gains and
losses
Net cash flows from operating
26,266,986,015.00 10,073,287,120.00 160.76% 10,493,385,445.00
activities
Basic earnings per share
0.217 0.054 301.85% 0.046
(RMB/share)
Diluted earnings per share
0.217 0.054 301.85% 0.046
(RMB/share)
Weighted average return on equity
9.25% 2.40% 6.85% 2.13%
(%)
Change of December
Item December 31, 2017 December 31, 2016 31, 2017 over December 31, 2015
December 31, 2016
Total assets 256,108,741,849.00 205,135,011,042.00 24.85% 152,592,894,442.00
Equity attributable to
shareholders of the listed 84,809,816,377.00 78,699,988,493.00 7.76% 77,485,275,564.00
company
(2) Key Financial Information by Quarter
Unit: RMB
Item Q1 Q2 Q3 Q4
Sales revenue 21,854,974,362.00 22,750,053,633.00 24,803,328,149.00 24,392,123,071.00
Net income attributable to
2,413,015,650.00 1,889,589,950.00 2,173,061,620.00 1,092,015,273.00
shareholders of the listed company
Net income attributable to
shareholders of the listed company
2,301,442,129.00 1,716,401,980.00 1,899,046,822.00 762,320,207.00
before nonrecurring gains and
losses
Net cash flows from operating
6,216,049,821.00 4,422,541,445.00 7,852,416,022.00 7,775,978,727.00
activities
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No
4. Share Capital and Shareholder Information
(1) Numbers of Common Shareholders and Preferred Shareholders with Resumed Voting Rights as well as
Holdings of Top 10 Shareholders
Unit: share
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
Common 1,259,119 (including Common shareholders at
1,313,406 (including 1,275,197 A-share
shareholders at 1,222,422A-share holders and 36,697 month-end prior to disclosure of
holders and 38,209 B-share holders)
period-end B-share holders) this Report
Top 10 shareholders
Shareholding Pledged or frozen shares
Name of Nature of
percentage at Shares Restricted shares
shareholder shareholder Status Shares
period-end (%)
Beijing
State-owned
State-owned
Capital
juridical 11.68% 4,063,333,333 0 N/A
Operation and
person
Management
Center
Chongqing
Ezcapital
State-owned
Opto-electronics
juridical 8.12% 2,826,500,070 0 N/A
Industry
person
Investment Co.,
Ltd.
Hefei Jianxiang State-owned
Investment Co., juridical 7.71% 2,683,642,953 0 N/A
Ltd. person
Beijing
Yizhuang State-owned
Investment juridical 3.57% 1,241,423,641 0 N/A
Holdings person
Limited
Beijing BOE
State-owned
Investment &
juridical 2.36% 822,092,180 0 N/A
Development
person
Co., Ltd.
Hong Kong
Foreign
Securities
juridical 1.27% 442,527,252 0 N/A
Clearing
person
Company Ltd.
Beijing On behalf of
Electronics the
0.79% 273,735,583 0 N/A
Holdings Co., government
Ltd.
Central Huijin
State-owned
Asset
juridical 0.71% 248,305,300 0 N/A
Management
person
Co., Ltd.
National Social Other
Security Fund 0.64% 223,371,500 0 N/A
Portfolio 101
Domestic
Zhang Jianping 0.58% 201,712,697 0 N/A
natural person
1. Beijing State-owned Capital Operation and Management Center held 100% equities of Beijing
Electronics Holdings Co., Ltd.
2. Beijing Electronics Holdings Co., Ltd. held 66.25% equities of Beijing BOE Investment &
Development Co., Ltd. and was its controlling shareholder.
Related or acting-in-concert 3. After the non-public issuing of BOE in 2014, Hefei Jianxiang Investment Co., Ltd. and
parties among shareholders Chongqing Capital Photoelectricity Investment Co., Ltd., by entering into Implementation
above Protocol of Voting Right respectively, agreed to maintain all of the shares held by them
respectively unanimous with Beijing BOE Investment & Development Co., Ltd. when executing
the voting rights of the shareholders.
4. After the non-public issuing of the Company in 2014, Beijing State-owned Capital Operation
and Management Center handed over 70% of the shares directly held by it to Beijing Electronics
Holdings Co., Ltd. for management through Stock Management Protocol, and Beijing Electronics
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
Holdings Co., Ltd. gained the incidental shareholders’ rights except for disposing right and
usufruct of the shares, of which the rest 30% voting right maintained unanimous with Beijing
Electronics Holdings Co., Ltd. through the agreement according to Implementation Protocol of
Voting Right.
5. Except for relationship among the above shareholders, the Company is not aware of whether the
other top ten shareholders exist associated relationship or not, or they are persons acting in concert
or not.
Shareholders conducting Among the top 10 common shareholders, Zhang Jianping became a top 10 shareholder due to
securities margin trading (if securities margin trading. And all the 201,712,697 shares held by him in the Company were in his
any) account of collateral securities for margin trading.
Note: Beijing Economic-Technological Investment & Development Corp. has been renamed Beijing Yizhuang Investment Holdings
Limited.
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preferred shareholders in the Reporting Period.
(3) Ownership and Control Relations between Actual Controller and the Company
State-owned Assets Supervision and Administration
Commission of People’s Government of Beijing
Municipality
100%
Beijing Intelligent Kechuang Technology Beijing State-Owned Capital Operation and
Development Co., Ltd. Management Center
33.75%
100%
66.25%
Beijing BOE Investment & Development Co., Ltd. Beijing Electronics Holding Co., Ltd.
0.79% 11.68%
2.36%
BOE Technology Group Co., Ltd.
Notes: 1. Beijing Intelligent Kechuang Technology Development Co., Ltd. (Intelligent Kechuang) is used as a platform for the
Company to implement equity incentives for its core technical and managerial personnel, who are the 20 nominal shareholders of
Intelligent Kechuang. The ratios of their capital contributions to Intelligent Kechuang do not represent their actual equity percentage.
The equities of Intelligent Kechuang are jointly owned by the awardees of the Company’s equity incentive plans. The capital
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
contribution ratios of the said 20 people are as follows: Wang Dongsheng 20%, Jiang Yukun 10%, Liang Xinqing 10%, Zhao
Caiyong 6.667%, Shi Dong 6.667%, Chen Yanshun 6.667%, Song Ying 6.667%, Han Guojian 6.667%, Gong Xiaoqing 3.333%,
Wang Yanjun 3.333%, Wang Jiaheng 3.333%, Liu Xiaodong 3.333%, Ren Jianchang 1.667%, Sun Jiping 1.667%, Zhang Peng
1.667%, Wang Aizhen 1.667%, Mu Chengyuan 1.667%, Xu Yan 1.667%, Hua Yulun 1.667% and Zhong Huifeng 1.667%.
2. When the Company completed a private offering of shares in 2014, Beijing State-Owned Capital Operation and Management
Center transferred its 70% stake directly held in the Company to Beijing Electronics Holding Co., Ltd. for managing through a
Shares Management Agreement, and Beijing Electronics Holding Co., Ltd. obtained the shareholder’s rights other than the disposal
and earnings rights attached to the 70% stake; and Beijing State-Owned Capital Operation and Management Center agreed in a
Voting Rights Exercise Agreement to align itself with Beijing Electronics Holding Co., Ltd. when exercising its voting rights of the
remaining 30% stake directly held by it in the Company.
5. Corporate Bonds
Does the Company have any corporate bonds publicly offered and listed on the stock exchange, which were undue before the date of
this Report’s approval or were due but could not be redeemed in full?
Yes.
(1) Bond Profile
Balance
Bond name Abbr. Bond symbol Due date Interest rate
(RMB’0,000)
2016 Public offering of the
corporation bonds for the
qualified investors of BOE 16BOE01 112358 March 21, 2021 1,000,000 3.15%
Technology Group Co., Ltd.
(Phase I)
Interest and principal payments On March 21, 2018, the Company completed the 2017 annual interest payout for the qualified
during Reporting Period investors of its 2016 corporate bonds.
(2) Latest Rating and Rating Change
On Jun. 24, 2016, United Ratings issued the Tracking Rating Report of the 2016 Corporate Bonds Credit Rating of BOE Technology
Group Co., Ltd., with the issuers’ main body credit rating of AAA and AAA of the credit rating of the current corporate bonds. On
Jun. 25, 2016, the tracking rating report of the current bonds by the United Rating will be disclosed on www.szse.cn and
www.unitedratings.com.cn with the public disclosure date of www.szse.cn not later than that of other trading places, media or other
places.
On Jun. 23, 2017, United Ratings issued the Tracking Rating Report of the 2017Corporate Bonds Credit Rating of BOE Technology
Group Co., Ltd., with the issuers’ main body credit rating of AAA and AAA of the credit rating of the current corporate bonds. On
Jun. 24, 2017, the tracking rating report of the current bonds by the United Rating will be disclosed on www.szse.cn and
www.unitedratings.com.cn with the public disclosure date of www.szse.cn not later than that of other trading places, media or other
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
places.
Before Jun. 24, 2018, United Ratings will issue the Tracking Rating Report of the 2018 Corporate Bonds Credit Rating of BOE
Technology Group Co., Ltd. The Company will disclose the tracking rating analysis report on www.szse.cn in time. And please
investors pay attention to it.
(3) Selected Financial Information of the Company for Past Two Years
Item 2017 2016 Change
Liabilities-to-assets ratio 59.28% 55.14% 4.14%
Total-liabilities-to-EBITDA
15.92% 13.18% 2.74%
ratio
Times interest earned 3.89 1.93 101.55%
Part III Company Performance Discussion and Analysis
1. Business Review for Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
2017, the global economy experienced a strong recovery, with faster-than-expected growth in trade; and China’s economy was
developing steadily and healthily with remarkable results produced in its supply-side reform. Regarding the semiconductor display
industry, it saw slower growth in the traditional LCD market, but faster growth in new markets such as VR/AR, commercial display,
industrial control and vehicle-mounted systems, as well as wider application of AMOLED in mobile phones and wearable equipment,
providing new impetuses for growth in the industry, as well as great market opportunities for the Company. Additionally, the rising
Internet of Things industry driven by the fast development of AI and big data technologies, an expanding smart terminal range of the
Internet of Things incurred by new technologies and applications, as well as a fast growing comprehensive healthcare industry
boosted by the integration of information technology and life technology, all created favorable opportunities for the Company’s
innovation and transformation.
In 2017, the ending year for its “Iron Sword” strategy, the Company united as one man and forged ahead, actively seizing market
opportunities and dealing with various challenges. For the year, the Company recorded sales revenue of RMB93.8 billion, up
approximately 36.15% compared to 2016, and recorded net income of RMB 7.568 billion, surging around 301.99% year over year,
hitting a record high in the Company’s history and laying a solid foundation for the Company’s next “Wooden Sword” strategy.
While improving the core competitiveness of the new display and sensor business including TFT-LCD and AMOLED, the Company
has also enhanced the core competitiveness of its smart manufacturing service, digital art, smart retail, smart vehicle-mounted
systems and smart energy systems, and made trans-boundary innovations through combining the semiconductor display, AI, sensor
technology and other electronic information technologies with the medicine and life science and technology. In 2017, the Company
applied for 8678 new patents, and invention patents occupied 85%. The Company’s available patents have exceeded 60,000 in total,
ranking among the best in the world. The Company has applied for over 3000 patents overseas, including the U.S.A., Europe, Japan
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
and Korea etc. According to relevant America patent data, BOE’s United States Patents Granted ranked 21st in 2017 from 40th in
2016, and the number of United States Patents granted reached 1,413 with a year-on-year increase of 62%. In fact, BOE has become
one of IFI TOP50 with the highest increase rate in two consecutive years. According to the 2017 Global International Patent
Application (PCT) Report issued by WIPO, BOE owned 1,818 patent applications and ranked 7th in the world. The business
operation situation of various business divisions is described as follows:
(I) The display and sensor business group (DBG)
In 2017, the market occupancy of five traditional display devices maintained its leading status. The shipment of smart phone LCD,
tablet PC display screen and notebook display screen all ranked first in the world, and that of the display screen and TV Sets display
screen second; the OLED business made a breakthrough; the 6th generation Chengdu Flexible OLED Production Line realized the
mass production and delivery in October; the pile foundation of the 6th generation Mianyang Flexible OLED Production Line was
also completed in October, and 50% of the main structure was completed in the year; the 10.5th generation Hefei TFT-LCD
Production Line was put into production and corresponding products were delivered to the customers in December; the 8.5th
generation Fuzhou TFT-LCD Production Line realized its mass production and delivery in February and fulfilled the planned
objective of making profits in the year when it’s put into production. Meanwhile, the sensor business also made some progress. For
example, X-ray achieved corresponding scale and was on the market; gene sequencing devices were shipped to various brand clients,
and the sample preparation of molecular antennas, multi-sign sensors and security sensors was completed. Therefore, it has
continuously strengthened its ability in developing clients, and added 9 first suppliers throughout the year. The Company will seek
development through making innovations, encourage the technical and product innovations and gradually improve the overall yield.
(II) The smart systems business group (SBG)
The market occupancy of smart manufacturing service TV ranked 4th and that of MNT 4th in the world. Meanwhile, various
innovative BU (Business Unit) including Wearable Devices Unit and ESL (Electronic Shelf Label) Unit also made some progress.
Hefei Smart Manufacturing Factory realized its mass production and delivery in January, and the structure of Chongqing Factory was
completed 43 days ahead of schedule; many famous brand clients were also developed; the prototype development of the wide-angle
double imaging vehicle-mounted head-up display was completed, and the smart rear-view mirror technology platform was also
developed; the client authentication of Chengdu Vehicle-mounted Systems Base was finished, and many famous automobile brands
were successfully introduced; ESL made concerted effort with Ali and Jingdong etc. to establish the new retail ecosystem; iBank
succeeded in developing 5 clients and independently worked out the integrated solutions for two smart banks and realized the
delivery; the smart retail business layout was further improved; the painted screen won the IFA Product Technology Innovation
Award; various new products were launched including 21.5- inch products and 49-inch products, and the production line was
diversified.
(III) The healthcare business group (HBG)
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
The main structure of Hefei Digital Hospital was completed in September, and Chengdu Digital Hospital signed the framework
agreement and established the project company; the mobile healthcare product MTX (non-invasive multi-parameter detector) was
sold on the market; COG (non-invasive comprehensive glucose meter) passed the authentication of CFDA (China Food and Drug
Administration); for the CTC Screening Project, the glass-based colloid structure micro-fluidic chip was prepared and completed; the
diagnostic model for the non-invasive blood pressure detection and skin cancer screening project was successfully established; the
regenerative medicine cell laboratory was initiated and put into service, and 3 kinds of cell membrane samples were well prepared.
2. Significant Changes in Main Business Scope in Reporting Period
□ Yes √ No
3. Product Categories Contributing over 10% of Main Business Revenue or Income
√ Applicable □ Not applicable
Unit: RMB
YoY change in
Gross margin YoY change in YoY change in
Product category Sales revenue Operating income gross margin
percentage sales revenue operating income
percentage
Display and
sensor business 82,636,085,228.00 9,888,952,936.00 25.00% 35.01% 830.81% 8.04%
group (DBG)
Smart systems
business group 18,134,719,119.00 -71,042,542.00 8.47% 45.04% -145.02% -0.06%
(SBG)
4. Business Seasonality to which Special Attention should Be Paid
□ Yes √ No
5. Material YoY Changes in Sales Revenue, Cost of Sales and Net Income Attributable to Common
Shareholders or Their Composition
□ Applicable √ Not applicable
6. Possibility of Listing Suspension or Termination
□ Applicable √ Not applicable
7. Matters Related to Financial Reporting
(1) YoY Changes in Accounting Policies, Accounting Estimates or Measurement Methods
√ Applicable □ Not applicable
The MOF issued the Accounting Standards for Business Enterprises No. 42—Non-current Assets and Disposal Groups Held for Sale
and Discontinued Operations (ASBE 42) and the revised Accounting Standards for Business Enterprises No. 16 - Government Grants
(ASBE 16 (2017)) in April and May 2017 respectively. The effective date of ASBE 42 and ASBE 16 (2017) are 28 May and 12 June
BOE Technology Group Co., Ltd. Annual Report 2017 (Abstract)
2017.
In addition, the MOF issued the Notice on Issuing the Revised Formats of Financial Statements for General Enterprises (Caikuai
[2017] No.30) in December 2017. The Company has prepared its financial statements for the year ended 31 December 2017 in
accordance with the Notice.
Impacts of the adoption of the above accounting standards and regulations are as follows:
(i) Held for sale and discontinued operations
The adoption of this standard has no significant impact on the Group's financial position and operating performance.
(ii) Government grants
In accordance with ASBE 16 (2017), the Company has reviewed the government grants on 1 January 2017 and updated
corresponding accounting policies using prospective application method. The accounting treatment and disclosure requirements for
government grants in 2016 are still subject to relevant enterprise accounting standards before the issuance of ASBE 16 (2017).
Impacts of the adoption of this standard are as follows:
- Certain government grants related to assets were changed from deferred income to write off the book value of related assets;
- Certain government grants related to income are included in the income statement, and changed from non-operating income to
other income or used to write off related cost based on the nature of economic businesses in respect of those related to daily activities
of the Company, or included in non-operating income and expense in respect of those not related to daily activities of the Company.
(iii) Gains from disposal of assets
The Company has prepared its financial statements for the year ended 31 December 2017 in accordance with Caikuai [2017] No.30.
Comparative figures have been adjusted retrospectively. The adoption of Caikuai [2017] No.30 has no material effect on the financial
position and operating performance of the Company.
According to this standard, the Company has added a separate line item “Gains from asset disposals” in the income statement to
present gains or losses arising from disposals of those classified as non-current assets (excluding financial instruments, long-term
equity investments and investment property) or disposal groups, and gains or losses arising from disposals of those not classified as
fixed assets, construction in progress and intangible assets. The above gains or losses were previously presented in “Non-operating
income” or “Non-operating expenses”.
(2) Retrospective Restatements due to Correction of Material Accounting Errors in Reporting Period
□ Applicable √ Not applicable
No such cases.
(3) YoY Changes in Scope of Consolidated Financial Statements
√ Applicable □ Not applicable
During 2017, the Company incorporated 1 new subsidiaries:Kunming BOE Display Technology Co., Ltd.,.
Chairman of the Board: Wang Dongsheng
Date of the Board’s approval of this Report: April 20, 2018
