Stock Code: 200725 Stock Name: BOE-B Announcement No. 2019-050
BOE TECHNOLOGY GROUP CO., LTD.
INTERIM REPORT 2019 (SUMMARY)Part I Important NotesThis Summary is based on the full text of the 2019 Interim Report of BOE Technology Group Co., Ltd. (together with itsconsolidated subsidiaries, the “Company”, except where the context otherwise requires). In order for a full understanding of theCompany’s operating results, financial condition and future development plans, investors should carefully read the aforesaid full text,which has been disclosed together with this Summary on the media designated by the China Securities Regulatory Commission (the“CSRC”).The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management ofthe Company hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall bejointly and severally liable for any misrepresentations, misleading statements or material omissions therein.Mr. Chen Yanshun, the Company’s legal representative, Mr. Liu Xiaodong, President, Ms. Sun Yun, Chief Financial Officer, and Ms.Yang Xiaoping, head of the financial department (equivalent to financial manager) hereby guarantee that the Financial Statementscarried in this Report are factual, accurate and complete.
| Name | Office title | Reason for not attending the meeting in person | Proxy entrusted to attend the meeting |
| Pan Jinfeng | Director | Due to work | Li Yantao |
| Wang Chenyang | Director | Due to work | Li Yantao |
| Li Xuan | Independent director | Due to work | Hu Xiaolin |
Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved interim cash and/or stock dividend plan for ordinary shareholders:
□ Applicable √ Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.Board-approved interim cash and/or stock dividend plan for preferred shareholders:
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese versions shall prevail.
Part II Key Corporate Information
1. Stock Profile
| Stock name | BOE-A, BOE-B | Stock code | 000725, 200725 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Previous stock name (if any) | N/A | ||
| Contact information | Board Secretary | Securities Representative | |
| Name | Liu Hongfeng | Huang Rong | |
| Office address | 12 Xihuan Middle Road, Beijing Economic-Technological Development Area, P.R.China | 12 Xihuan Middle Road, Beijing Economic-Technological Development Area, P.R.China | |
| Tel. | 010－64318888 ext. | 010－64318888 ext. | |
| E-mail address | liuhongfeng@boe.com.cn | huangrong@boe.com.cn | |
2. Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
Reasons for the retrospective restatements:
Changes to the accounting policies.
| Item | H1 2019 | H1 2018 | Change (%) | |
| Before | Restated | Restated | ||
| Operating revenue (RMB) | 55,039,208,687.00 | 43,473,904,966.00 | 43,473,904,966.00 | 26.60% |
| Net profit attributable to the listed company’s shareholders (RMB) | 1,668,448,449.00 | 2,975,206,500.00 | 2,975,206,500.00 | -43.92% |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 651,490,434.00 | 978,868,759.00 | 1,503,020,477.00 | -56.65% |
| Net cash generated from/used in operating activities (RMB) | 11,594,984,349.00 | 11,439,605,846.00 | 11,581,507,174.00 | 0.12% |
| Basic earnings per share (RMB/share) | 0.048 | 0.085 | 0.085 | -43.53% |
| Diluted earnings per share (RMB/share) | 0.048 | 0.085 | 0.085 | -43.53% |
| Weighted average return on equity (%) | 1.92% | 3.45% | 3.45% | -1.53% |
| Item | 30 June 2019 | 31 December 2018 | Change (%) | |
| Before | Restated | Restated | ||
| Total assets (RMB) | 317,061,830,609.00 | 304,028,491,385.00 | 304,028,491,385.00 | 4.29% |
| Equity attributable to the listed company’s shareholders (RMB) | 86,523,347,828.00 | 85,856,748,703.00 | 85,856,748,703.00 | 0.78% |
In the 2018 Annual Report, the net profit attributable to the listed company’s shareholders before exceptional gains and losses wasrestated according to the audit results. According to the interpretations of the regulatory document CK [2018] No.15, governmentsubsidies received, whether related to assets or income, shall be presented as cash generated from operating activities” in the cashflow statements.
3. Shareholders and Their Holdings as at 30 June 2019
Unit: share
| Number of ordinary | 1,499,878 (including 1,460,087 A-shareholders and 39,791 B-shareholders) |
| shareholders | ||||||
| Top 10 shareholders | ||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Number of shares | Restricted shares | Shares in pledge or frozen | |
| Status | Shares | |||||
| Beijing State-owned Capital Operation and Management Center | State-owned legal person | 11.68% | 4,063,333,333 | 0 | N/A | 0 |
| Chongqing Ezcapital Opto-electronics Industry Investment Co., Ltd. | State-owned legal person | 7.60% | 2,643,863,541 | 0 | N/A | 0 |
| Hefei Jianxiang Investment Co., Ltd. | State-owned legal person | 7.21% | 2,510,142,953 | 0 | N/A | 0 |
| Beijing Yizhuang Investment Holdings Co., Ltd | State-owned legal person | 3.48% | 1,210,724,041 | 0 | N/A | 0 |
| Beijing BOE Investment & Development Co., Ltd. | State-owned legal person | 2.36% | 822,092,180 | 0 | N/A | 0 |
| Hong Kong Securities Clearing Company Ltd. | Foreign legal person | 1.25% | 434,248,350 | 0 | N/A | 0 |
| Beijing Electronics Holdings Co., Ltd. | State-owned legal person | 0.79% | 273,735,583 | 0 | N/A | 0 |
| Central Huijin Assets Management Co., Ltd | State-owned legal person | 0.71% | 248,305,300 | 0 | N/A | 0 |
| China Securities Finance Corporation Limited | Domestic non-state-owned legal person | 0.38% | 132,480,249 | 0 | N/A | 0 |
| Xiamen Hengxing Group Co., Ltd. | Domestic non-state-owned legal person | 0.37% | 128,825,078 | 0 | N/A | 0 |
| Related or acting-in-concert parties among the shareholders above | 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. 3. After the non-public issuing of BOE in 2014, Hefei Jianxiang Investment Co., Ltd. and Chongqing Ezcapital Opto-electronics Industry Investment Co., Ltd, by entering into Implementation 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 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 the above relationships, the Company does not know any other related party or acting-in-concert party among the top 10 shareholders. | |||||
| Shareholders involved in securities margin trading (if any) | The holdings of Beijing Yizhuang Investment Holdings Co., Ltd. in the Company decreased by 30,699,600 shares due to refinancing securities lending. Xiamen Hengxing Group Co., Ltd. holds 8,406,498 shares in the Company in its account of collaterial securities for margin trading. | |||||
4. Change of the Controlling Shareholder or the Actual Controller in the Reporting PeriodChange of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
The controlling shareholder remained the same in the Reporting Period.Change of the actual controller in the Reporting Period:
□ Applicable √ Not applicable
The actual controller remained the same in the Reporting Period.
5. Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preferred shareholders in the Reporting Period.
6. Corporate bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Part III Operating Performance Discussion and Analysis
1. Business Overview of the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?No.The first half of 2019 saw complicated and changeable global political and economic conditions. Global economic growth sloweddown under mounting downward pressure. In terms of the semi-conductor display industry, the massive and quick release ofproduction capacity of advanced-generation products, weak market demand and severe oversupply led to decreasing panel prices anda considerable drop in profitability. Under the double pressures of the China-U.S. trade friction and an industry though, the Companywas faced with extremely severe challenges in its operations. On the other hand, in view of good market opportunities for innovativedisplay application, sensors, smart IoT and smart medicine and engineering, the Company carried on with its IoT transformationstrategy. From an overall perspective, the Company achieved stable growth in operating revenue against market pressure and ashrinking market size in the first half of 2019. For this period, the Company recorded operating revenue of approximately RMB55billion, up by around 27% year-on-year.
(1) The Company’s Market Position was Steadily Improved.
The shipment of complete display panels was ranking the first place in the world, and the shipping area was accordingly increasingon a year-on-year basis; five major products of smart phone LCD, table PCs display screen, laptop display screen, displayer displayscreen and TV display screen continued to make their shipping quantity rank the first place in the world. Meanwhile, the shippingquantity and shipping area of innovation application products increased largely. Nevertheless, the market share of ESL and wearableproducts ranked first in the world and the splicing products the second. The sales of various high value-added products featuring HD,
touch control, narrow frame and Borderless/65"+ and the internal shipping occupancy largely increased.The first AMOLED (flexible) production in the Mainland of China - Chengdu 6
thgeneration of AMOLED (flexible) production linerealized steady improvement of yield and supply for first-tire brand manufacturers, and the shipping quantity in the first half of theyear exceeded ten million pieces; the Mianyang 6th AMOLED (flexible) production line was applied for the mass production; theflexible OLED smart phone’s market occupancy was largely improved; the first TFT-LCD Production Line of the highest generationin the world-- the 10.5
th
Generation BOE Hefei TFT-LCD Production Line realized the production in a full capacity.As for the smart factory 1 upgrade project of the Intelligent Manufacturing Service BG, various devices were moved in, and theywould be put into service as scheduled; Smart factory 2 large-size flexible automation equipment was manufactured as scheduled.New breakthrough was made in developing the smart manufacturing service complete machine market. The finished TV salesachieved on the domestic market realized a year-on-year increase of 60%, and 32’’ and 43’’ low-cost non-frame series of productswere developed; the mass production of non-frame full-display series of products was fully initiated; finished MNT products weresuccessfully developed and the full series of 21.5"-32"Gaming products were put into mass production. As a result, the shippingquantity geared to the finished display strategy clients increased on a year-on-year basis.The operating revenue and the outpatient visits achieved by OASIS International Hospital increased accordingly, and the medicalsatisfaction was further improved. In March, Hefei Hospital was completely open for service, and the outpatient visits exceeded30,000 with its medical insurance coverage spreading to Hefei City and four subordinated counties and one district. The MobileHealthcare IoT Platform BG put 15 peripheral products on the market for sale including smart watch, body fat calculator and bloodpressure meter etc.. In the first half of the year, the APP registered users realized a month-on-month increase of over 220%.
（2）The Innovation and Transformation Business was orderly carried out.
The occupancy of various medical imaging products exceeded 70% on various client sides; products were steadily delivered tooverseas customers; customized products were successfully certified. In terms of Flow Cell Gene Detection Products, the massproduction and delivery work were realized. The double-curved LCD smart dimming window was launched to the world and it’s putinto service of Beijing-Xiong'an High-speed Train; samples of the fingerprint identification capacitance-type product were sent to 7door lock clients. Meanwhile, the smart finance obtained more than 1000 branch transformation orders; in the first half of the year,over 330 branches were successfully transformed in total; in addition, the smart political education business independently developedthe 75” 8K broadcasting system, and for digital exhibitions, the benchmarking project—The Palace Museum Hall of MoralCultivation Digital Exhibition was successfully implemented.In April, the new iGallery M2 was launched on the market, and the R&D of the new iGallery S3 and new children’s picture bookreader R1 proceeded as scheduled; the product’s transactions increased over 100% on a year-on-year basis; the APP newly-addedregistered users saw a year-on-year increase of 27%. In the first half of the year, the operating revenue of smart retails achieved ayear-on-year increase of about 50%; the service-oriented transformation made great progress, and the mode of “retails=service” wasimplemented among particular clients.The Mobile Healthcare IoT Platform BG put 15 peripheral products on the market for sale including smart watch, body fat calculatorand blood pressure meter etc.. In the first half of the year, the APP registered users and the monthly active users increasedsignificantly.In term of OMO, the operating revenue and the sales volume all achieved corresponding increase; in the first half of the year, 51
urban partners were developed in total.
(3) The Technological Innovative Ability was continuously improved.
The number of patent applications remained its rapid growth trend. In the first half of the year, there were 4872 new patentapplications, of which, patent for invention occupied over 90% and overseas patents exceeded 35%. Meanwhile, flexible OLED,sensor, AI, big data and other significant patents exceeded 2500. 2953 new patent licenses were added, of which, American patentlicenses exceeded 1200. Accordingly, certain progress was also made in the R&D of various transformation technologies related tothe sensors, AI and the big data and the medicine-industry integration. In respect of the technical standard, 25 external technicalstandards were formulated and revised in the first half of the year. In particular, the “see-through display” IEC International Standardwas officially issued.2. Matters Related to Financial Reporting
2. Matters Related to Financial Reporting
(1) Changes to Accounting Policies, Accounting Estimates or Measurement Methods Compared to the LastAccounting Period
√ Applicable □ Not applicable
The Group has adopted since 2019 the following revised versions of accounting standards for business enterprises which were issuedby the Ministry of Finance in recent years.A. The Accounting Standard No. 22 for Business Enterprises—Recognition and Measurement of Financial Instruments (Revised),the Accounting Standard No. 23 for Business Enterprises—Transfer of Financial Assets (Revised), the Accounting Standard No. 24for Business Enterprises—Hedge Accounting (Revised), and the Accounting Standard No. 37 for Business Enterprises—Presentationof Financial Instruments (Revised) (together, the “New Accounting Standards Governing Financial Instruments”)B. The Notice on Revising and Issuing the Format of Financial Statements of General Enterprises in 2019 (CK [2019] No.6)C. The Accounting Standard No. 7 for Business Enterprises—Exchange of Non-Monetary Assets (Revised) (CK [2019] No.8)D. The Accounting Standard No. 12 for Business Enterprises—Debt Restructuring (Revised) (CK [2019] No.9)In accordance with the revised accounting standards and notice above, the Group has adjusted its accounting policies and thepresentation of its financial statements, which does not have a material impact on its financial condition and operating results.
(2) Retrospective Restatements due to the Correction of Material Accounting Errors in the ReportingPeriod
□ Applicable √ Not applicable
No such cases.
(3) Changes to the Scope of Consolidated Financial Statements Compared to the Last Accounting Period
√ Applicable □ Not applicable
The Company incorporated a subsidiary, Fuzhou BOE Display Technology Co., Ltd., during the Reporting Period with an interest of
65.77%.
Chairman of the Board (signature): Mr. Chen Yanshun
Date of the Board’s approval of this Report: 23
rd
August 2019