BOE Technology Group Co., Ltd.
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE YEAR 1 JANUARY 2018 TO 31 DECEMBER 2018
IF THERE IS ANY CONFLICT OF MEANING BETWEEN THE CHINESE VERSION AND ENGLISH TRANSLATION, THE CHINESE VERSION WILL PREVAIL
AUDITORS’ REPORT
毕马威华振审字第1901566号 All Shareholders of BOE Technology Group Co., Ltd.:
Opinion
We have audited the accompanying financial statements of BOE Technology Group Company Limited (“BOE”), which comprise the consolidated and parentcompany’s balance sheet as at 31 December 2018, the consolidated and parentcompany’s income statement, the consolidated and parentcompany’s cash flow statement, and the consolidated and parentcompany’s statement of changes inshareholders’ equity for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and parentcompany’s financial position of BOE as at 31 December 2018, and its consolidated and parentcompany’s financial performance and cash flows of BOE for the year then ended in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of thePeople’s Republic of China.
Basis for opinion
We conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants (“CSAs”). Our responsibilities under those standards are further described in theAuditor’s Responsibilities for the Audit of the Financial Statements section of our report. . We are independent of BOE in accordance with the China Code of Ethics for Certified Public Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Page 1 of 7
AUDITOR’S REPORT (continued)
毕马威华振审字第1901566号 Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of 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.
|||
|-|-|
|Revenue recognition||
|Refer to the accounting policies set out in the notes to the financial statements “III. Significantaccounting policies and accounting estimates” 23 and “V. Notes to the consolidated financialstatements” 36.||
|The Key Audit Matter|How the matter was addressed in our audit|
|The revenue of BOE and its subsidiaries(“BOE Group”) is mainly derived from thesales of products relating to display deviceacross the domestic and overseas market.The sales contracts/orders signed betweenBOE Group and its customers (mainlyelectronic equipment manufacturers)contain various trading terms. BOE Groupjudges the transfer timing of major risks andrewards according to the trading terms, andrecognizes revenue accordingly.Depending on the trading terms, theincome is usually recognized when thegoods are delivered and received, or whenthey are received by the carrier.We identified the recognition of BOEGroup’s revenue as a key audit matterbecause revenue, as one of BOE Group’skey performance indicators, involvesvarious trading terms, and there is aninherent risk that revenue may not berecognized in a correct period.|Our audit procedures to evaluate revenuerecognition included the following: Evaluate the design and operationeffectiveness of key internal controls relatedto revenue recognition; Check key sales contracts/orders on asampling basis to identify relevant tradingterms, and evaluate whether the accountingpolicies for revenue recognition of BOEGroup meet the requirements of theEnterprise Accounting Standards; On a sampling basis and according todifferent trading terms, reconcile the revenuerecorded in the current year to relevantsupporting files such as relevant orders,shipping orders, sales invoices, customsdeclarations, delivery receipts, etc. toevaluate whether revenue is recognized inaccordance with the accounting policy ofBOE Group; On a sampling basis and according todifferent trading terms, cross check therevenue recorded before and after thebalance sheet date against relevantsupporting files such as relevant orders,shipping orders, sales invoices, customsdeclarations, delivery receipts, etc. toevaluate whether revenue is recorded in theappropriate period;|

Page 2 of 7
AUDITORS’ REPORT (continued)
毕马威华振审字第1901566号 Key Audit Matters (continued)
|||
|-|-|
|Revenue recognition||
|Refer to the accounting policies set out in the notes to the financial statements “III. Significantaccounting policies and accounting estimates” 23 and “V. Notes to the consolidated financialstatements” 36.||
|The Key Audit Matter|How the matter was addressed in our audit|
|| Select a sample based on thecharacteristics and nature of customer'stransaction, and perform certification on thebalance of accounts receivable as at thebalance sheet date and the salestransaction amount during the current year; On a sampling basis, check the written-backof revenue after the balance sheet date(including sales discounts and sales returns,etc.) with relevant supporting documents toassess whether revenue is recorded in theappropriate period; Select revenue accounting entries that meetspecific risk criteria and check relatedsupporting documents.|

Page 3 of 7
AUDITORS’ REPORT (continued)
毕马威华振审字第1901566号 Key Audit Matters (continued)
|||
|-|-|
|Book value of fixed assets and construction in progress||
|Refer to the accounting policies set out in the notes to the financial statements “III. Significantaccounting policies and accounting estimates” 14, 15 and “V. Notes to the consolidatedfinancial statements” 10, 11.||
|The Key Audit Matter|How the matter was addressed in our audit|
|BOE Group continued to invest in buildingproduction lines of display device to expandits production capacity. As at 31 December2018, the book value of fixed assets andconstruction in progress amounted to RMB184.58 billion.The judgement made by the managementon the following aspects will affect the bookvalue of fixed assets and construction inprogress, including: Determine which type of expendituresare qualified for capitalization; Determine the timing for transferringconstruction in progress to fixed assetsand making depreciation; Estimate the useful life and residualvalue of corresponding fixed assets.We identified the book value of fixed assetsand construction in progress of BOE Groupas a key audit matter because the valuationof the book value of fixed assets andconstruction in progress involves significantjudgement from the management and it isof importance to the consolidated financialstatements.|Our audit procedures to assess the book valueof fixed assets and construction in progressincluded the following: Evaluate the design and operationeffectiveness of key internal controls(including estimating useful life and residualvalues, etc.) related to the integrity,existence and accuracy of fixed assets andconstruction in progress; Check the physical status of construction inprogress and fixed assets on a samplingbasis; Check capital expenditures with relevantsupporting documents (including purchaseagreements/ orders, acceptance orders,engineering construction contracts, projectprogress reports, etc.) on a sampling basis; Assess whether the capitalizedcommissioning expenses for the current yearare in compliance with relevant capitalizationconditions; check the commissioningexpenses with relevant supportingdocuments on a sampling basis; On the basis of sampling, assess the timingfor transferring construction in progress tofixed assets, through the inspection ofcommissioning situation and the documentsfor transferring construction in progress tofixed assets; Based on our understanding of industrypractices and actual operating conditions ofassets, we evaluate the management'sestimation of the useful life and residualvalue of fixed assets.|

Page 4 of 7
AUDITORS’ REPORT (continued)
毕马威华振审字第1901566号 Other Information
BOE’s management is responsible for the other information. The other information comprises all the information included in 2018 annual report of BOE, other than the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of 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 audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for Business Enterprises, and for the design, implementation and maintenance of such internal control necessary to enable that the financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the ability of BOE to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless BOE either intends to liquidate or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of BOE.
Page 5 of 7
AUDITORS’ REPORT (continued)
毕马威华振审字第1901566号Auditor’s Responsibilities for the Audit of the 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 anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the 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 CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. 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 override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness ofmanagement’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theBOE’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause BOE to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Page 6 of 7
AUDITORS’ REPORT (continued)
毕马威华振审字第1901566号Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within BOE to express an opinion on the financial statements. We are responsible for the instruction, supervision and execution of ConchGroup’s audit, and assume full responsibility for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine 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 interest benefits of such communication.
KPMG Huazhen LLP Certified Public Accountants
Registered in thePeople’s Republic of China
Zhang Huan (Engagement Partner)
Beijing, China Liu Jingyuan
23 March 2019
Page 7 of 7
BOE Technology Group Co., Ltd.
Consolidated balance sheet as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Assets
Current assets:
Cash at bank and on hand V.1 51,481,539,711 57,128,659,576 58,152,817,223 Bills receivable and
accounts receivable V. 2 20,537,462,095 16,347,031,379 17,561,628,267 Prepayments V. 3 770,633,448 587,126,751 708,511,473 Other receivables V. 4 2,454,174,971 818,024,132 1,028,210,989 Inventories V. 5 11,985,398,172 8,957,719,381 7,833,138,532 Non-current assets due
within one year - 17,303,152 66,321,715 Other current assets V. 6 12,463,073,779 15,924,433,978 5,691,200,226 Total current assets 99,692,282,176 99,780,298,349 91,041,828,425 Non-current assets:
Available-for-sale financial
assets V. 7 734,022,359 859,899,356 622,502,556 Long-term equity
investments V. 8 2,389,166,886 6,928,854,415 1,356,111,395 Investment properties V. 9 1,283,867,651 1,296,662,205 1,192,932,896 Fixed assets V. 10 128,157,730,995 88,625,296,761 69,947,586,967 Construction in progress V. 11 56,423,354,887 50,761,250,426 33,008,248,720 Intangible assets V. 12 5,937,679,394 2,982,664,308 3,136,873,387 Goodwill V. 13 904,370,509 197,963,688 197,963,688Long‑ term deferred
expenses V. 14 360,640,853 379,829,430 344,891,227 Deferred tax assets V. 15 252,373,622 106,255,657 146,538,565 Other non-current assets V. 16 7,893,002,053 4,189,767,254 4,139,533,216 Total non-current assets 204,336,209,209 156,328,443,500 114,093,182,617 Total assets 304,028,491,385 256,108,741,849 205,135,011,042 The notes on pages 21 to 145 form part of these financial statements.
Page 1
BOE Technology Group Co., Ltd.
Consolidated balance sheet (continued) as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Liabilities andshareholders’
equity
Current liabilities
Short-term loans V. 17 5,449,954,885 3,249,736,430 4,916,965,507 Bills payable and accounts
payable V. 18 22,805,065,888 16,749,587,533 14,475,878,126 Advances from customers V. 19 1,218,934,743 781,324,522 548,942,714 Employee benefits payable V. 20 2,224,931,171 2,217,066,944 1,542,852,266 Taxes payable V. 21 970,108,298 775,621,146 656,351,894 Other payables V. 22 22,956,979,828 16,122,413,130 15,081,535,166 Non-current liabilities due
within one year V. 23 5,597,563,204 9,109,708,511 3,684,236,935 Other current liabilities V. 24 1,004,557,061 730,709,590 532,983,474 Total current liabilities 62,228,095,078 49,736,167,806 41,439,746,082 Non-current liabilities
Long-term loans V. 25 94,780,077,864 78,973,633,010 49,885,166,211 Bonds payable V. 26 10,288,666,233 9,966,467,496 9,956,719,508 Long-term payables V. 27 1,416,092,239 1,176,250,982 1,261,446,565 Provisions V. 28 16,457,010 16,457,010 16,457,010 Deferred income V. 29 2,187,558,533 2,261,955,307 2,494,122,929 Deferred tax liabilities V. 15 1,419,373,545 563,302,910 448,625,054 Other non-current liabilities V. 30 11,334,873,322 9,130,244,495 7,616,672,523 Total non-current liabilities 121,443,098,746 102,088,311,210 71,679,209,800 Total liabilities 183,671,193,824 151,824,479,016 113,118,955,882 The notes on pages 21 to 145 form part of these financial statements.
Page 2
BOE Technology Group Co., Ltd.
Consolidated balance sheet (continued) as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Liabilities andshareholders’
equity (continued)
Shareholders’ equity
Share capital V. 31 34,798,398,763 34,798,398,763 35,153,067,743 Capital reserve V. 32 38,213,100,596 38,585,515,122 39,031,357,529 Less: Treasury shares - - 314,350,824 Other comprehensive
income V. 33 (125,258,252) 150,602,933 75,718,703 Surplus reserve V. 34 1,152,626,310 889,640,475 743,139,855 Retained earnings V. 35 11,817,881,286 10,385,659,084 4,011,055,487 Total equity attributable to
shareholders of the
Company 85,856,748,703 84,809,816,377 78,699,988,493 Non-controlling interests 34,500,548,858 19,474,446,456 13,316,066,667 Totalshareholders’ equity 120,357,297,561 104,284,262,833 92,016,055,160 Total liabilities and
shareholders’ equity 304,028,491,385 256,108,741,849 205,135,011,042 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 3
BOE Technology Group Co., Ltd.
Company balance sheet as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Assets
Current assets:
Cash at bank and on
hand XIV. 1 3,829,814,050 2,990,801,501 7,649,349,412 Bills receivable and
accounts receivable XIV. 2 38,452,623 39,897,385 246,051,213 Prepayments 25,020,734 10,315,083 7,462,061 Other receivables XIV. 3 2,015,828,460 1,835,131,720 2,658,651,974 Inventories 9,289,141 12,751,847 12,069,865 Non-current assets due
within one year 450,000,000 3,648,840,000 - Other current assets XIV. 4 47,805,096 61,082,075 25,504,074 Total current assets 6,416,210,104 8,598,819,611 10,599,088,599 Non-current assets:
Available-for-sale financial
XIV. 5
assets 128,297,254 149,269,107 177,166,908 Long-term equity
XIV. 6
investments 143,499,733,485 121,193,680,391 99,918,451,449 Investment properties 290,253,475 292,544,063 164,540,581 Fixed assets 969,371,352 982,985,346 862,860,227 Construction in progress 251,314,313 274,400,649 468,494,838 Intangible assets 514,186,496 530,490,988 624,007,700Long‑ term deferred
expenses 99,701,797 112,776,691 98,745,001 Deferred tax assets XIV. 7 290,794,548 150,206,185 47,679,645 Other non-current assets 284,243,667 480,909,226 4,010,146,153 Total non-current assets 146,327,896,387 124,167,262,646 106,372,092,502 Total assets 152,744,106,491 132,766,082,257 116,971,181,101 The notes on pages 21 to 145 form part of these financial statements.
Page 4
BOE Technology Group Co., Ltd.
Company balance sheet as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Liabilities andshareholders’
equity
Current liabilities
Short-term loans 1,000,000,000 - - Bills payable and accounts
payable 35,322,286 50,152,503 34,015,337 Advances from customers 1,577,035,515 1,375,022,585 1,093,593,891 Employee benefits payable XIV. 8 201,139,261 283,000,193 169,917,103 Taxes payable 250,558,556 119,584,927 80,897,741 Other payables XIV. 9 8,209,736,090 10,032,392,970 11,079,505,355 Non-current liabilities due
within one year 2,590,000,000 4,031,840,000 100,000,000 Total current liabilities 13,863,791,708 15,891,993,178 12,557,929,427 Non-current liabilities
Long-term loans XIV. 10 26,520,000,000 23,943,000,000 18,922,400,000 Bonds payable 9,976,533,425 9,966,467,496 9,956,719,508 Deferred income XIV. 11 5,523,949,841 130,652,127 148,987,694 Other non-current liabilities 20,954,104,125 7,600,000,000 - Total non-current liabilities 62,974,587,391 41,640,119,623 29,028,107,202 Total liabilities 76,838,379,099 57,532,112,801 41,586,036,629 The notes on pages 21 to 145 form part of these financial statements.
Page 5
BOE Technology Group Co., Ltd.
Company balance sheet as at 31 December 2018
(Expressed in Renminbi Yuan)
31 December 31 December 1 January Note 2018 2017 2017 Liabilities andshareholders’
equity (continued)
Shareholders’ equity
Share capital V. 31 34,798,398,763 34,798,398,763 35,153,067,743 Capital reserve XIV. 12 37,590,966,191 37,588,541,593 38,157,600,408 Less: Treasury shares - - 314,350,824 Other comprehensive
income XIV. 13 (28,507,585) 192,097,489 152,323,461 Surplus reserve V. 34 1,152,626,310 889,640,475 743,139,855 Retained earnings XIV. 14 2,392,243,713 1,765,291,136 1,493,363,829 Totalshareholders’ equity 75,905,727,392 75,233,969,456 75,385,144,472 Total liabilities and
shareholders’ equity 152,744,106,491 132,766,082,257 116,971,181,101 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 6
BOE Technology Group Co., Ltd.
Consolidated income statement for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note 2018 2017 I. Operating income V. 36 97,108,864,935 93,800,479,215 II. Less: Operating costs V. 36 77,306,224,288 70,282,477,585 Taxes and surcharges V. 37 778,606,126 708,381,529 Selling and distribution expenses V. 38 2,891,056,969 2,591,925,798 Administrative expenses V. 39 4,959,184,197 4,068,775,945 Research and development costs V. 40 5,039,927,435 3,177,767,395 Finance expenses V. 41 3,196,695,890 1,948,024,860 Including: Interest expense 3,265,732,314 2,479,336,159 Interest income 748,004,557 665,076,391 Impairment Loss V. 42 1,239,588,763 2,229,524,682 Add: Other income V. 43 2,000,573,631 732,550,112 Investment income V. 44 306,887,579 115,602,683 Including: (Losses) / Gains from
investment in associates and joint
ventures (13,925,731) 169,034 Gains from changes in fair value V. 45 2,061,153 32,048,211 Gains/ (Losses) from disposal of
V. 46
assets 1,067,273 (69,145) III. Operating profit 4,008,170,903 9,673,733,282 Add: Non-operating income V. 47 169,429,515 180,418,858 Less: Non-operating expenses V. 47 55,310,251 113,080,601 IV.Total profit 4,122,290,167 9,741,071,539 Less: Income tax expenses V. 48 1,242,416,094 1,880,659,980 V. Net profit 2,879,874,073 7,860,411,559 Net profit attributable to shareholders of the
Company 3,435,127,975 7,567,682,493 Non-controlling interests (555,253,902) 292,729,066 The notes on pages 21 to 145 form part of these financial statements.
Page 7
BOE Technology Group Co., Ltd.
Consolidated income statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
Note 2018 2017 VI. Other comprehensive income, net of tax V. 33 (249,814,869) 44,387,083 Other comprehensive income (net of tax)
attributable to shareholders of the
Company (275,861,185) 74,884,230 Items that may be reclassified to profit or
loss
1 Share of other comprehensiveincome
of the equity-accounted investeethat
may be reclassified to profit or loss (202,998,615) 76,051,151 2 Gains or losses arising from changes in
fair value of available-for-sale
financial assets (136,009,652) 12,910,506 3 Translation differences arising from
translation of foreign currency
financial statements 63,147,082 (14,077,427) Other comprehensive income (net of tax)
attributable to non-controlling interests 26,046,316 (30,497,147) VII. Total comprehensive income for the year 2,630,059,204 7,904,798,642 Total comprehensive income attributable to
shareholders of the Company 3,159,266,790 7,642,566,723 Total comprehensive income attributable to
minority shareholders (529,207,586) 262,231,919 VIII.Earnings per share
(1) Basic earnings per share V. 49 0.10 0.22 (2) Diluted earnings per share V. 49 0.10 0.22 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 8
BOE Technology Group Co., Ltd.
Company income statement for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note 2018 2017 I. Operating income XIV. 15 4,048,349,688 2,815,561,521 II. Less: Operating costs 51,274,428 29,212,906 Taxes and surcharges XIV. 16 44,129,874 39,649,316 Selling and distribution expenses 561,601 2,224,628 Administrative expenses 744,597,442 692,418,475 Research and development
costs 1,247,889,953 1,027,250,122 Finance expenses XIV. 17 1,014,420,709 505,879,539 Including: Interest expense 1,055,792,484 556,880,963 Interest income 44,583,524 58,850,619 Add: Other income XIV. 18 995,284,363 23,513,456 Investment income XIV. 19 928,309,899 950,279,403 Including: (Losses) / Gains from
investment in associates and
joint ventures (12,001,705) 169,034 Losses from disposal of
intangible assets - (157,430) III.Operating profit 2,869,069,943 1,492,561,964 Add: Non-operating income XIV. 20 4,336,405 3,552,572 Less: Non-operating expenses XIV. 20 8,668,410 18,008,134 IV.Total profit 2,864,737,938 1,478,106,402 Less: Income tax expenses XIV. 21 234,879,588 13,100,199 V. Net profit 2,629,858,350 1,465,006,203 The notes on pages 21 to 145 form part of these financial statements.
Page 9
BOE Technology Group Co., Ltd.
Company income statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
Note 2018 2017 VI. Other comprehensive income, net of
XIV. 13
tax (220,605,074) 39,774,028 Items that may be reclassified to profit
or loss
1 Share of other
comprehensiveincome of the
equity-accounted investeethat
may be reclassified to profit or
loss (202,778,999) 76,051,151 2 Gains or losses arising from
changes in fair value of
available-for-sale financial assets (17,826,075) (36,277,123) VII. Total comprehensive income for the
year
2,409,253,276 1,504,780,231 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 10
BOE Technology Group Co., Ltd.
Consolidated cash flow statement for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note 2018 2017 I. Cash flows from operating activities:
Proceeds from sale of goods and
rendering of services 105,589,411,120 102,954,356,249 Refund of taxes 6,513,812,910 8,111,061,033 Government grants 2,195,202,400 994,782,926 Proceeds from other operating
activities 770,921,360 334,436,574 Sub-total of cash inflows 115,069,347,790 112,394,636,782 Payment for goods and services (75,700,548,251) (73,250,817,397) Payment to and for employees (9,162,421,738) (8,015,171,249) Payment of various taxes (1,619,256,288) (2,480,139,386) Payment for other operating activities (2,903,074,317) (1,921,579,095) Sub-total of cash outflows (89,385,300,594) (85,667,707,127) Net cash flow from operating
activities V. 50(1) 25,684,047,196 26,726,929,655 The notes on pages 21 to 145 form part of these financial statements.
Page 11
BOE Technology Group Co., Ltd.
Consolidated cash flow statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
Note 2018 2017 II. Cash flows from investing activities:
Proceeds from disposal of investments 59,211,537,932 29,310,620,000 Investment returns received 356,050,182 114,521,291 Net proceeds from disposal of fixed
assets, intangible assets and other
long-term assets 98,644,621 6,906,760 Net amount received from subsidiaries V. 50(2) 6,801,508,810 - Proceeds from other investing activities 1,808,988,695 3,455,877,227 Sub-total of cash inflows 68,276,730,240 32,887,925,278 Cash paid for acquisition of fixed
assets,intangible assets and other
long-term assets (54,520,544,965) (47,741,900,710) Payment for acquisition of investments (60,819,720,633) (44,667,993,985) Sub-total of cash outflows (115,340,265,598) (92,409,894,695) Net cash flow from investing activities (47,063,535,358) (59,521,969,417) III. Cash flows from financing activities:
Proceeds from investors 4,294,161,400 9,851,250,000 Including: Cash received from minority
shareholders of
subsidiaries 4,294,161,400 9,851,250,000 Proceeds from borrowings 38,368,279,407 53,106,623,454 Net amount of monetary movements
for pledging loans 176,637,743 - Proceeds from other financing activities 155,194,921 3,185,620,220 Sub-total of cash inflows 42,994,273,471 66,143,493,674 The notes on pages 21 to 145 form part of these financial statements.
Page 12
BOE Technology Group Co., Ltd.
Consolidated cash flow statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
Note 2018 2017 III. Cash flows from financing activities
(continued):
Repayments of borrowings (21,274,318,530) (18,337,522,432) Payment for dividends or interest (5,806,323,938) (3,860,122,769) Including: Dividends paid to non-
controlling
shareholders by
subsidiaries (4,319,286) (7,359,220) Net amount of monetary movements
for pledging loans - (3,435,366,588) Payment for other financing activities (347,060,613) (7,585,109,696) Sub-total of cash outflows (27,427,703,081) (33,218,121,485) Net cash flow from financing activities 15,566,570,390 32,925,372,189 IV. Effect of foreign exchange rate
changes on cash and cash
equivalents 1,250,326,709 (1,571,855,232) V. Decrease in cash and cash
equivalents V. 50(1) (4,562,591,063) (1,441,522,805) Add: Cash and cash equivalents at
the beginning of the year 47,913,287,583 49,354,810,388 VI. Cash and cash equivalents at the
end of the year V. 50(3) 43,350,696,520 47,913,287,583 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 13
BOE Technology Group Co., Ltd.
Company cash flow statement for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note 2018 2017 I. Cash flows from operating activities:
Proceeds from sale of goods and
rendering of services 4,053,318,155 2,646,300,929 Tax refund 23,508,537 - Proceeds from other operating
activities 1,705,344,020 34,989,298 Sub-total of cash inflows 5,782,170,712 2,681,290,227 Payment for goods and services (976,219,250) (538,392,970) Payment to and for employees (957,780,812) (702,175,894) Payment of various taxes (284,079,728) (127,394,546) Payment for other operating activities (102,575,476) (5,016,674,918) Sub-total of cash outflows (2,320,655,266) (6,384,638,328) Net cash flow from operating XIV. 22
activities (1) 3,461,515,446 (3,703,348,101) II. Cash flows from investing activities:
Investment returns received 506,145,151 - Cash received in return for
investment 971,599,836 1,949,256,701 Net proceeds from disposal of fixed
assets 6,384,696 773,888 Proceeds from other investing
activities 3,333,764,245 1,280,375,880 Sub-total of cash inflows 4,817,893,928 3,230,406,469 The notes on pages 21 to 145 form part of these financial statements.
Page 14
BOE Technology Group Co., Ltd.
Company cash flow statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
2018 2017 II. Cash flows from investing activities:
(continued):
Cash paid for acquisition of fixed
assets,intangible assets and other
long-term assets (295,214,844) (137,047,424) Payment for acquisition of investments (22,553,409,200) (21,200,608,757) Payment for other investing activities (257,000,000) (800,000,000) Sub-total of cash outflows (23,105,624,044) (22,137,656,181) Net cash flow from investing activities (18,287,730,116) (18,907,249,712) III. Cash flows from financing activities:
Proceeds from borrowings 11,367,000,000 9,933,000,000 Proceeds from other financing
activities 19,698,642,218 11,300,000,000 Sub-total of cash inflows 31,065,642,218 21,233,000,000 Repayments of borrowings (4,597,640,000) (980,560,000) Payment for dividends and interest (2,795,130,756) (1,562,806,447) Payment for other financing activities (8,150,000,000) (609,376,971) Sub-total of cash outflows (15,542,770,756) (3,152,743,418) Net cash flow from financing activities 15,522,871,462 18,080,256,582 The notes on pages 21 to 145 form part of these financial statements.
Page 15
BOE Technology Group Co., Ltd.
Company cash flow statement for the year ended 31 December 2018
(continued)
(Expressed in Renminbi Yuan)
Note 2018 2017 IV. Effect of foreign exchange rate
changes on cash and cash
equivalents 142,355,757 (27,557,680) V. Net Increase/(Decrease) in cash and
cash equivalents XIV. 22 (1) 839,012,549 (4,557,898,911) Add: Cash and cash equivalents at
the beginning of the year 2,990,801,501 7,548,700,412 VI. Cash and cash equivalents at the
end of the year XIV. 22 (2) 3,829,814,050 2,990,801,501 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company Dongsheng Chief Executive Chief Financial Financial stamp) Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 16
BOE Technology Group Co., Ltd.
Consolidated statement of changes inshareholders’ equity
for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Equity attributable to shareholders of the Company
Other
Less: Treasury comprehensive Non-controlling Totalshareholders’ Note Share capital Capital reserve shares income Surplus reserve Retained earnings Sub-total interests equity I. Balance at the beginning of the year 34,798,398,763 38,585,515,122 - 150,602,933 889,640,475 10,385,659,084 84,809,816,377 19,474,446,456 104,284,262,833 II. Changes in equity during the year
(1) Total comprehensive income - - - (275,861,185) - 3,435,127,975 3,159,266,790 (529,207,586) 2,630,059,204 (2)Shareholders’ contributions and
decrease of capital
1. Contribution by non-
controlling interests - - - - - - - 4,494,161,400 4,494,161,400 2. Business combinations
involving entities not
under common control - - - - - - - 11,541,782,339 11,541,782,339 3. Equity movements arising
from investment increase
in non-wholly owned
subsidiaries V. 32 - 3,754,159 - - - - 3,754,159 (3,402,793) 351,366 Appropriation of profits V. 35 - - - - 262,985,835 (262,985,835) - - - 1. Appropriation for surplus
reserve - - - - - (1,739,919,938) (1,739,919,938) (18,316,894) (1,758,236,832) 2. Distributions to shareholders
(4) Others
1. Equity changes arising from
acquisition of non-
controlling interests V. 32 - (378,593,283) - - - - (378,593,283) (458,914,064) (837,507,347) 2. Others V. 32 - 2,424,598 - - - - 2,424,598 - 2,424,598 III. Balance at the end of the year 34,798,398,763 38,213,100,596 - (125,258,252) 1,152,626,310 11,817,881,286 85,856,748,703 34,500,548,858 120,357,297,561 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company
Dongsheng Chief Executive Chief Financial Financial stamp)
Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 17
BOE Technology Group Co., Ltd.
Consolidated statement of changes inshareholders’ equity
for the year ended 31 December 2017
(Expressed in Renminbi Yuan)
Equity attributable to shareholders of the Company
Other
Less: Treasury comprehensive Non-controlling Totalshareholders’ Note Share capital Capital reserve shares income Surplus reserve Retained earnings Sub-total interests equity I. Balance at the beginning of the year 35,153,067,743 39,031,357,529 314,350,824 75,718,703 743,139,855 4,011,055,487 78,699,988,493 13,316,066,667 92,016,055,160 II. Changes in equity during the year
(1) Total comprehensive income - - - 74,884,230 - 7,567,682,493 7,642,566,723 262,231,919 7,904,798,642 (2)Shareholders’ contributions and
decrease of capital
1. Equity movements arising
from investment increase
in non-wholly owned
subsidiaries - 123,216,408 - - - - 123,216,408 5,903,507,090 6,026,723,498 2. Repurchase of treasury
shares - - 609,376,971 - - - (609,376,971) - (609,376,971) 3. Written off treasury shares (354,668,980) (569,058,815) (923,727,795) - - - - - - Appropriation of profits V. 35
1. Appropriation for surplus
reserve - - - - 146,500,620 (146,500,620) - - - 2. Distributions to shareholders - - - - - (1,046,578,276) (1,046,578,276) (7,359,220) (1,053,937,496) III. Balance at the end of the year 34,798,398,763 38,585,515,122 - 150,602,933 889,640,475 10,385,659,084 84,809,816,377 19,474,446,456 104,284,262,833 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company
Dongsheng Chief Executive Chief Financial Financial stamp)
Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 18
BOE Technology Group Co., Ltd.
Company statement of changes inshareholders’ equity
for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Other
Less: Treasury comprehensive Totalshareholders’ Share capital Capital reserve shares income Surplus reserve Retained earnings equity I. Balance at the beginning of the year 34,798,398,763 37,588,541,593 - 192,097,489 889,640,475 1,765,291,136 75,233,969,456 II. Changes in equity during the year
(1) Total comprehensive income - - - (220,605,074) - 2,629,858,350 2,409,253,276 (2) Profit appropriation
1. Appropriation for surplus
reserve - - - - 262,985,835 (262,985,835) - 2. Distributions to
shareholders - - - - - (1,739,919,938) (1,739,919,938) (3) Others - 2,424,598 - - - - 2,424,598 III. Balance at the end of the year 34,798,398,763 37,590,966,191 - (28,507,585) 1,152,626,310 2,392,243,713 75,905,727,392 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company
Dongsheng Chief Executive Chief Financial Financial stamp)
Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 19
BOE Technology Group Co., Ltd.
Company statement of changes inshareholders’ equity (continued)
for the year ended 31 December 2017
(Expressed in Renminbi Yuan)
Other
Less: Treasury comprehensive Totalshareholders’ Share capital Capital reserve shares income Surplus reserve Retained earnings equity I. Balance at the beginning of the year 35,153,067,743 38,157,600,408 314,350,824 152,323,461 743,139,855 1,493,363,829 75,385,144,472 II. Changes in equity during the year
(1) Total comprehensive income - - - 39,774,028 - 1,465,006,203 1,504,780,231 (2)Shareholders’ contributions and
decrease of capital
1. Repurchase of treasury
shares - - 609,376,971 - - - (609,376,971) 2. Written off treasury
shares (354,668,980) (569,058,815) (923,727,795) - - - - Appropriation of profits
1. Appropriation for surplus
reserve - - - - 146,500,620 (146,500,620) - 2. Distributions to
shareholders - - - - - (1,046,578,276) (1,046,578,276) III. Balance at the end of the year 34,798,398,763 37,588,541,593 - 192,097,489 889,640,475 1,765,291,136 75,233,969,456 These financial statements were approved by the Board of Directors of the Company on 23 March 2019.
Wang Chen Yanshun Sun Yun Yang Xiao Ping (Company
Dongsheng Chief Executive Chief Financial Financial stamp)
Chairman of the Officer Officer Officer
Board
(Signature and (Signature and (Signature and (Signature and
stamp) stamp) stamp) stamp)
The notes on pages 21 to 145 form part of these financial statements.
Page 20
BOE Technology Group Co., Ltd.
Notes to the financial statements
(Expressed in Renminbi Yuan unless otherwise indicated)
I. Company status
BOE Technology Group Company Limited (the “Company”) is a company limited by shares established on 9 April 1993 in Beijing, with its head office located at Beijing. The parent of the Company and theCompany’s ultimate holding company is Beijing Electronics Holdings Co., Ltd. (“Electronics Holdings”).
The Company and its subsidiaries (referred to as “the Group”) comprise three main business segments: Display device and sensor device business, Smart system business and Healthcare service business. For information about the subsidiaries of the Company, refer to Note VII. During the reporting period, the information about increases and decreases in theGroup’s subsidiaries is disclosed in Note VI.
II. Basis of preparation
The financial statements have been prepared on the going concern basis.
III. Significant accounting policies and accounting estimates
1 Statement of compliance
The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises or referred to as China Accounting Standards (“CAS”). These financial statements present truly and completely the consolidated financial position and financial position of the Company as at 31 December 2018, and the consolidated financial performance and financial performance and the consolidated cash flows and cash flows of the Company for the year then ended.
These financial statements also comply with the disclosure requirements of “Regulation on the Preparation of Information Disclosures by Companies Issuing Securities, No. 15: General Requirements for Financial Reports” as revised by the China Securities Regulatory Commission (“CSRC”) in 2014.
2 Accounting period
The accounting period is from 1 January to 31 December.
3 Operating cycle
The Company takes the period from the acquisition of assets for processing to until the ultimate realisation of cash or cash equivalents as a normal operating cycle. The operating cycle of the Company is usually less than 12 months.
Page 21
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 4 Functional currency
TheCompany’s functional currency is Renminbi and these financial statements are presented in Renminbi. Functional currency is determined by the Company and its subsidiaries on the basis of the currency in which major income and costs are denominated and settled. Some of theCompany’s subsidiaries have functional currencies that are different from theCompany’s functional currency. Their financial statements have been translated based on the accounting policy set out in Note III.8.
5 Accounting treatments for business combinations involving entities under common control and not under common control
(1) Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the capital reserve, with any excess adjusted against retained earnings. Any costs directly attributable to the combination are recognized in profit or loss when incurred. The combination date is the date on which one combining entity obtains control of other combining entities.
(2) Business combinations involving entities not under common control
A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. Where (1) the aggregate of the acquisition-date fair value of assets transferred (including theacquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (2) theacquirer’s interest in the acquisition-date fair value of theacquiree’s identifiable net assets, the difference is recognized as goodwill (see Note III.18). If (1) is less than (2), the difference is recognized in profit or loss for the current period. Acquisition-related costs are expensed when incurred. Theacquiree’s identifiable asset, liabilities and contingent liabilities, if the recognition criteria are met, are recognized by the Group at their acquisition-date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.
For a business combination involving entities not under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its acquisition-date fair value and recognizes any resulting difference between the fair value and the carrying amount as investment income for the current period. In addition, any amount recognized in other comprehensive income that may be reclassified to profit or loss, in prior reporting periods relating to the previously-held equity interest, and any other changes in theowners’ equity under equity accounting, are transferred to investment income in the period in which the acquisition occurs (see Note III.12(2)(b)).
Page 22
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 6 Consolidated financial statements
(1) General principles
The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries. Control exists when the investor has all of following: power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered. The financial position, financial performance and cash flows of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Non-controlling interests are presented separately in the consolidated balance sheet withinshareholders’ equity. Net profit or loss attributable to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item.
When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controllingshareholders’ share of the openingowners’ equity of the subsidiary, the excess is still allocated against the non-controlling interests.
When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on theCompany’s own accounting period or accounting policies. Intra- group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated when preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains, unless they represent impairment losses that are recognized in the financial statements.
(2) Subsidiaries acquired through a business combination
Where a subsidiary was acquired during the reporting period, through a business combination involving enterprises under common control, the financial statements of the subsidiary are included in the consolidated financial statements based on the carrying amounts of the assets and liabilities of the subsidiary in the financial statements of the ultimate controlling party as if the combination had occurred at the date that the ultimate controlling party first obtained control. The opening balances and the comparative figures of the consolidated financial statements are also restated.
Where a subsidiary was acquired during the reporting period, through a business combination not involving enterprises under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
(3) Disposal of subsidiaries
When the Group loses control over a subsidiary, any resulting disposal gains or losses are recognized as investment income for the current period. The remaining equity investment is
Page 23
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 re-measured at its fair value at the date when control is lost, any resulting gains or losses are also recognized as investment income for the current period.
Page 24
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 When the Group loses control of a subsidiary in multiple transactions in which it disposes of its long-term equity investment in the subsidiary in stages, the following are considered to determine whether the Group should account for the multiple transactions as a bundled transaction:
- arrangements are entered into at the same time or in contemplation of each other;
- arrangements work together to achieve an overall commercial effect;
- the occurrence of one arrangement is dependent on the occurrence of at least one other arrangement;
- one arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements.
If each of the multiple transactions does not form part of a bundled transaction, the transactions conducted before the loss of control of the subsidiary are accounted for in accordance with the accounting policy for partial disposal of equity investment in subsidiaries where control is retained (see Note III.6(4)).
If each of the multiple transactions forms part of a bundled transaction which eventually
results in the loss of control in the subsidiary, these multiple transactions are accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding proportion of thesubsidiary’s net assets
(calculated continuously from the acquisition date) in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to profit or loss when the parent eventually loses control of the subsidiary.
(4) Changes in non-controlling interests
Where the Company acquires a non-controlling interest from asubsidiary’s non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the proportion interests of thesubsidiary’s net assets being acquired or disposed and the amount of the consideration paid or received is adjusted to the capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted to retained earnings.
7 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily withdrawn on demand, and short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value.
8 Foreign currency transactions and translation of foreign currency financial statements
When the Group receives capital in foreign currencies from investors, the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are, on initial recognition, translated to Renminbi at the rates that approximate the spot exchange rates on the dates of the transactions.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date. The resulting exchange differences are generally recognized in profit or loss, unless they arise from the re-translation of the principal and interest of specific borrowings for the construction of qualifying assets (see Note III.16). Non- monetary items that are measured at historical cost in foreign currencies are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair value in foreign currencies are translated using the exchange rate at the
Page 25
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 date the fair value is determined. The resulting exchange differences are recognized in profit or loss, except for the differences arising from the re-translation of available-for-sale financial assets, which are recognized in other comprehensive income.
Assets and liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance sheet date. Equity items, excluding “retained earnings and translation differences with respect to a foreign operation in other comprehensive income”, are translated to Renminbi at the spot exchange rates at the transaction dates. Income and expenses of foreign operations are translated to Renminbi at the rates that approximate the spot exchange rates at the transaction dates. The resulting translation differences are recognized in other comprehensive income. The translation differences accumulated inshareholders’ equity with respect to a foreign operation are transferred to profit or loss in the period when the foreign operation is disposed.
9 Financial instruments
Financial instruments include cash at bank and on hand, investments in debt and equity securities other than those classified as long-term equity investments (see Note III.12), receivables, payables, loans and borrowings, debentures payable and share capital.
(1) Recognition and measurement of financial assets and financial liabilities
A financial asset or financial liability is recognized in the balance sheet when the Group becomes a party to the contractual provisions of a financial instrument.
The Group classifies financial assets and liabilities into different categories at initial recognition based on the purpose of acquiring assets or assuming liabilities: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to- maturity investments, available-for-sale financial assets and other financial liabilities.
Financial assets and financial liabilities are measured initially at fair value. For financial assets and financial liabilities at fair value through profit or loss, any related directly attributable transaction costs are charged to profit or loss; for other categories of financial assets and financial liabilities, any related directly attributable transaction costs are included in their initial costs. Subsequent to initial recognition, financial assets and liabilities are measured as follows:
- Financial assets and financial liabilities at fair value through profit or loss (including financial assets or financial liabilities held for trading)
Subsequent to initial recognition, financial assets and financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.
- Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Subsequent to initial recognition, receivables are measured at amortized cost using the effective interest method.
Page 26
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 - Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method.
- Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated upon initial recognition as available for sale and other financial assets which do not fall into any of the above categories.
Available-for-sale investments in equity instruments whose fair value cannot be measured reliably are measured at cost subsequent to initial recognition. Other available-for-sale financial assets are measured at fair value subsequent to initial recognition and changes therein are recognized in other comprehensive income, except for impairment losses and foreign exchange gains and losses from monetary financial assets which are recognized directly in profit or loss. Dividend income is recognized in profit or loss when the investee approves the dividends. Dividend income is recognized in profit or loss when the investee approves the dividends. Interest is recognized in profit or loss using the effective interest method (see Note III.23 (4)).
- Other financial liabilities
Financial liabilities other than the financial liabilities at fair value through profit or loss are classified as other financial liabilities.
Other financial liabilities include liabilities arising from financial guarantee contracts. Financial guarantees are contracts that require the Group (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the holder) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Where the Group issues a financial guarantee, subsequent to initial recognition, the guarantee is measured at the higher of the amount initially recognized less accumulated amortisation and the amount of a provision determined in accordance with the principles for contingent liabilities (see Note III.22).
Liabilities other than those arising from financial guarantee contracts are measured at amortized cost using the effective interest method.
(2) Presentation of financial assets and financial liabilities
Financial assets and financial liabilities are generally presented separately in the balance sheet, and are not offset. However, a financial asset and a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied:
- the Group currently has a legally enforceable right to set off the recognized amounts;
- the Group intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously.
Page 27
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018
Page 28
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Derecognition of financial assets and financial liabilities
A financial asset is derecognized when one of the following conditions is met:
- theCompany’s contractual rights to the cash flows from the financial asset expire;
- the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership of the financial asset; or
- the financial asset has been transferred, although the Group neither transfers nor retains substantially all of the risks and rewards of ownership of the financial asset, it does not retain control over the transferred asset.
Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the difference between the two amounts below is recognized in profit or loss:
- the carrying amount of the financial asset transferred;
- the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognized directly inshareholders’ equity.
The Group derecognizes a financial liability (or part of it) only when its contractual obligation (or part of it) is discharged or cancelled or expires.
(4) Impairment of financial assets
The carrying amounts of financial assets (other than those at fair value through profit or loss) are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists, an impairment loss is recognized.
Objective evidence that a financial asset is impaired includes but is not limited to:
(a) significant financial difficulty of the issuer or obligor;
(b) a breach of contract by the borrower, such as a default or delinquency in interest or principal payments;
(c) it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
(d) the disappearance of an active market for that financial asset because of financial difficulties faced by the issuer;
(e) significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, indicating that the cost of an investment in an equity instrument may not be recovered by the investor; (f) a significant (i.e. a decline of50%) or prolonged decline in the fair value (i.e. a decline persisting for nine months) o an investment in an equity instrument below its cost.
Page 29
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 For the calculation method of impairment of receivables, refer to Note III.10. The impairment of other financial assets is measured as follows:
- Held-to-maturity investments
Held-to-maturity investments are assessed for impairment on an individual basis as follows.
Where impairment is assessed on an individual basis, an impairment loss in respect of a held-to-maturity investment is calculated as the excess of its carrying amount over the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the original effective interest rate. Impairment losses are recognized in profit or loss.
If, after an impairment loss has been recognized on held-to-maturity investments, there is a recovery in the value of the financial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss. A reversal of an impairment loss will not result in theasset’s carrying amount exceeding what the amortized cost would have been had no impairment loss been recognized in prior years.
- Available-for-sale financial assets
Available-for-sale financial assets are assessed for impairment on an individual basis and on a collective group basis as follows. When an available-for-sale financial asset is impaired, the cumulative loss arising from a decline in fair value that has been recognized directly inshareholders’ equity is reclassified to profit or loss even though the financial asset has not been derecognized.
If, after an impairment loss has been recognized on an available-for-sale debt instrument, the fair value of the debt instrument increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. An impairment loss recognized for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss. The impairment loss on an investment in an unquoted equity instrument whose fair value cannot be reliably measured is not reversed.
(5) Equity instrument
The consideration received from the issuance of equity instruments net of transaction costs is recognized inshareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issued equity instruments are deducted fromshareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditure relating to the repurchase is recorded in the cost of the treasury shares, with the transaction recording in the share register. Treasury shares are excluded from profit distributions and are presented as a deduction undershareholders’ equity in the balance sheet.
When treasury shares are cancelled, the share capital should be reduced to the extent of the total par value of the treasury shares cancelled. Where the cost of the treasury shares cancelled exceeds the total par value, the excess is deducted from capital reserve (share premium), surplus reserve and retained earnings sequentially. If the cost of treasury shares
Page 30
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 cancelled is less than the total par value, the difference is credited to the capital reserve (share premium).
When treasury shares are disposed of, any excess of proceeds above cost is recognized in capital reserve (share premium); otherwise, the shortfall is deducted against capital reserve (share premium), surplus reserve and retained earnings sequentially.
(6) Convertible instruments
- Convertible instruments containing an equity component
Convertible instruments issued by the Group that can be converted to equity shares, where the number of shares to be issued and the value of consideration to be received at that time do not vary, are accounted for as compound financial instruments containing both liability and equity components.
The initial carrying amount of a compound financial instrument is allocated to its equity and liability components. The amount recognized in the equity is the difference between the fair value of the instrument as a whole and the separately determined fair value of the liability component (including the fair value of any embedded derivatives other than the equity component). Transaction costs that relate to the issuance of a compound financial instrument are allocated to the liability and equity components in proportion to the allocation of proceeds.
Subsequent to initial recognition, the liability component is measured at amortized cost using the effective interest method, unless it is designated upon recognition at fair value through profit or loss. The equity component is not re-measured.
If the convertible instrument is converted, the liability component, together with the equity component, is transferred to equity. If the convertible instrument is redeemed, the consideration paid for the redemption, together with the transaction costs that relate to the redemption, are allocated to the liability and equity components. The method used to allocate the consideration and transaction costs is the same as that used for issuance. After allocating the consideration and transaction costs, the difference between the allocated and carrying amounts is charged to profit and loss if it relates to the liability component or is directly recognized in equity if it relates to the equity component.
- Other convertible instruments not containing an equity component
For other convertible instruments issued by the Group which do not contain an equity component, at initial recognition, the derivative component is measured at fair value, and any excess of proceeds over the derivative component is recognized as the liability component.
The derivative component is subsequently measured at fair value, and gains or losses from the changes in the fair value are recognized in profit or loss. The liability component is subsequently carried at amortized cost using the effective interest method.
On conversion, the carrying amounts of the derivative and liability components are transferred to equity. If the instrument is redeemed, any difference between the redemption amount paid and the carrying amounts of both components is recognized in profit or loss.
Page 31
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018
Page 32
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 10 Impairment of receivables
Receivables are assessed for impairment both on an individual basis and on a collective group basis.
Where impairment is assessed on an individual basis, an impairment loss in respect of a receivable is calculated as the excess of its carrying amount over the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the original effective interest rate. Impairment losses are recognized in profit or loss. The Group recognized receivables individually greater than RMB 50,000,000 as significant and perform impairment test on an individual basis. Those receivables individually insignificant but with specific natures, i.e. legal issue or customer credit issue, are also reviewed and tested on an individual basis.
The assessment is made collectively where receivables share similar credit risk characteristics (including those not having been individually assessed as impaired), based on their historical loss experiences, and adjusted by the observable factors reflecting present economic conditions.
If, after an impairment loss has been recognized on receivables, there is a recovery in the value of the financial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss. A reversal of an impairment loss will not result in theasset’s carrying amount exceeding what the amortized cost would have been had no impairment loss been recognized in prior years.
11 Inventories
(1) Classification and cost
Inventories include raw materials, work in progress, finished goods and reusable materials. Reusable materials include low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditure incurred in bringing the inventories to their present location and condition. In addition to the purchase cost of raw materials, work in progress and finished goods include direct labour costs and an appropriate allocation of production overheads.
(2) Mesurement method of cost of inventories
Cost of inventories is calculated using the weighted average method.
Consumables including low-value consumables and packaging materials are amortized when they are used. The amortisation charge is included in the cost of the related assets or recognized in profit or loss for the current period.
Page 33
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Basis for determining the net realisable value and method for provision for obsolete inventories
At the balance sheet date, inventories are carried at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The net realisable value of materials held for use in the production is measured based on the net realisable value of the finished goods in which they will be incorporated. The net realisable value of the quantity of inventory held to satisfy sales or service contracts is measured based on the contract price. If the quantities held by the Group are more than the quantities of inventories specified in sales contracts, the net realisable value of the excess portion of inventories is measured based on general selling prices.
Any excess of the cost over the net realisable value of each category of inventories is recognized as a provision for obsolete inventories, and is recognized in profit or loss.
(4) Inventory count system
The Group maintains a perpetual inventory system.
12 Long-term equity investments
(1) Investment cost of long-term equity investments
(a) Long-term equity investments acquired through a business combination
- The initial cost of a long-term equity investment acquired through a business combination involving entities under common control is theCompany’s share of the carrying amount of thesubsidiary’s equity in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amounts of the consideration given is adjusted to the share premium in the capital reserve, with any excess adjusted to retained earnings. For a long-term equity investment in a subsidiary acquired through a business combination achieved in stages which do not form a bundled transaction and involving entities under common control, the Company determines the initial cost of the investment in accordance with the above policies. The difference between this initial cost and the sum of the carrying amount of previously- held investment and the consideration paid for the shares newly acquired is adjusted to share premium in the capital reserve, with any excess adjusted to retained earnings.
- For a long-term equity investment obtained through a business combination not involving entities under common control, the initial cost comprises the aggregate of the fair value of assets transferred, liabilities incurred or assumed, and equity securities issued by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not involving entities under common control and achieved through multiple transactions in stages which do not form a bundled transaction, the initial cost comprises the carrying amount of the previously-held equity investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
Page 34
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) Long-term equity investments acquired other than through a business combination
- A long-term equity investment acquired other than through a business combination is initially recognized at the amount of cash paid if the Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.
(2) Subsequent measurement of long-term equity investment
(a) Investments in subsidiaries
In theCompany’s separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method for subsequent measurement, unless the investment is classified as held for sale (see Note III.28). Except for cash dividends or profit distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company recognizes its share of the cash dividends or profit distributions declared by the investee as investment income for the current period.
The investments in subsidiaries are stated in the balance sheet at cost less accumulated impairment losses.
For the impairment of the investments in subsidiaries, refer to Note III.20.
In theGroup’s consolidated financial statements, investments in subsidiaries are accounted for in accordance with the policies described in Note III.6.
(b) Investment in joint ventures and associates
A joint venture is an arrangement whereby the Group and other parties have joint control (see Note III.12(3)) and rights to the net assets of the arrangement.
An associate is an entity over which the Group has significant influence (see Note III.12(3)).
A long-term equity investment in a joint venture or an associate is accounted for using the equity method for subsequent measurement, unless the investment is classified as held for sale (see Note III.28).
The accounting treatments under the equity method adopted by the Group are as follows:
- Where the initial cost of a long-term equity investment exceeds theGroup’s interest in the fair value of theinvestee’s identifiable net assets at the date of acquisition, the investment is initially recognized at cost. Where the initial investment cost is less than theGroup’s interest in the fair value of theinvestee’s identifiable net assets at the date of acquisition, the investment is initially recognized at theinvestor’s share of the fair value of theinvestee’s identifiable net assets, and the difference is recognized in profit or loss.
Page 35
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 - After the acquisition of the investment, the Group recognizes its share of theinvestee’s profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by the amount attributable to the Group. Changes in theGroup’s share of theinvestee’sshareholders’ equity, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution (“other changes inowners’ equity”), is recognized directly in theGroup’s equity, and the carrying amount of the investment is adjusted accordingly.
- In calculating its share of theinvestee’s net profits or losses, other comprehensive income and other changes inowners’ equity, the Group recognizes investment income and other comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of theinvestee’s identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of theGroup’s interest in the associates or joint ventures. Unrealised losses resulting from transactions between the Group and its associates or joint ventures are eliminated in the same way as unrealised gains but only to the extent that there is no impairment.
- The Group discontinues recognising its share of further losses of the investee after the carrying amount of the long-term equity investment and any long-term interest that in substance forms part of theGroup’s net investment in the joint venture or associate is reduced to zero, except to the extent that the Group has an obligation to assume additional losses. If the joint venture or associate subsequently reports net profits, the Group resumes recognising its share of those profits only after its share of the profits has fully covered the share of losses not recognized. For theGroup’s impairment of the investments in joint ventures and associates, refer to Note III.20. (3) Criteria for determining the existence of joint control or significant influence over an investee Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (activities with significant impact on the returns of the arrangement) require the unanimous consent of the parties sharing control. The following factors are usually considered when assessing whether the Group can exercise joint control over an investee:
Whether no single participant party is in a position to control theinvestee’s related activities unilaterally;
Whether strategic decisions relating to theinvestee’s related activities require the unanimous consent of all participant parties that sharing of control.
Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies.
Page 36
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 13 Investment properties
Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are accounted for using the cost model and stated in the balance sheet at cost less accumulated depreciation, amortisation and impairment losses. The cost of investment property, less its estimated residual value and accumulated impairment losses, is depreciated or amortized using the straight-line over its estimated useful life, unless the investment property is classified as held for sale (see Note III.28). For the impairment of the investment properties, refer to Note III.20.
The estimated useful lives, residual value rates and depreciation rates of each class of investment properties are as follows:
Estimated
useful life Residual value Depreciation (years) rate(%) rate(%) Land use rights 32 to 50 years 0.0% 2.0% -3.1% Buildings 25 to 40 years 3.0% -10.0% 2.3% -3.9% 14 Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods, supply of services, for rental or for administrative purposes with useful lives over one accounting year.
The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset to working condition for its intended use. The cost of self-constructed assets is measured in accordance with the policy set out in Note III.15.
Where the parts of an item of fixed assets have different useful lives or provide benefits to the Group in a different pattern, thus necessitating use of different depreciation rates or methods, each part is recognized as a separate fixed asset.
Any subsequent costs including the cost of replacing part of an item of fixed assets are recognized as assets when it is probable that the economic benefits associated with the costs will flow to the Group, and the carrying amount of the replaced part is derecognized. The costs of the day-to-day maintenance of fixed assets are recognized in profit or loss as incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses.
(2) Depreciation of fixed assets
The cost of a fixed asset, less its estimated residual value and accumulated impairment losses, is depreciated using the straight-line method over its estimated useful life, unless the fixed asset is classified as held for sale (see Note III.28).
Page 37
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The estimated useful lives, residual value rates and depreciation rates of each class of fixed assets are as follows:
Estimated
useful life Residual value Depreciation Class (years) rate(%) rate(%) Plant and buildings 10 to 50 years 3% -10% 1.8% -9.7% Equipment 2 to 25 years 0 -10% 3.6% -50% Others 2 to 10 years 0 -10% 9.0% -50% Useful lives, residual values and depreciation methods are reviewed at least at each year- end.
(3) For the impairment of the fixed assets, refer to Note III.20.
(4) For the recognition, measurement and depreciation of fixed assets acquired under finance leases, refer to Note III.27.
(5) Disposal of fixed assets
The carrying amount of a fixed asset is derecognized:
when the fixed asset is holding for disposal; or
when no future economic benefit is expected to be generated from its use or disposal.
Gains or losses arising from the retirement or disposal of an item of fixed asset are determined as the difference between the net disposal proceeds and the carrying amount of the item, and are recognized in profit or loss on the date of retirement or disposal.
15 Construction in progress
The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing costs (see Note III.16), and any other costs directly attributable to bringing the asset to working condition for its intended use.
A self-constructed asset is classified as construction in progress and transferred to fixed asset when it is ready for its intended use. No depreciation is provided against construction in progress.
Construction in progress is stated in the balance sheet at cost less accumulated impairment losses (see Note III.20).
16 Borrowing costs
Borrowing costs incurred directly attributable to the acquisition and construction of a qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs are recognized as financial expenses when incurred.
Page 38
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 During the capitalisation period, the amount of interest (including amortisation of any discount or premium on borrowing) to be capitalised in each accounting period is determined as follows:
- Where funds are borrowed specifically for the acquisition and construction of a qualifying asset, the amount of interest to be capitalised is the interest expense calculated using effective interest rates during the period less any interest income earned from depositing the borrowed funds or any investment income on the temporary investment of those funds before being used on the asset.
- To the extent that the Group borrows funds generally and uses them for the acquisition, construction of a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditures on the asset over the above amounts of specific borrowings. The capitalisation rate is the weighted average of the interest rates applicable to the general-purpose borrowings.
The effective interest rate is determined as the rate that exactly discounts estimated future cash flow through the expected life of the borrowing or, when appropriate, a shorter period to the initially recognized amount of the borrowings.
During the capitalisation period, exchange differences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency are capitalised as part of the cost of the qualifying asset. The exchange differences related to the principal and interest on foreign currency borrowings other than a specific-purpose borrowing are recognized as a financial expense when incurred.
The capitalisation period is the period from the date of commencement of capitalisation of borrowing costs to the date of cessation of capitalisation, excluding any period over which capitalisation is suspended. Capitalisation of borrowing costs commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities of acquisition, construction that are necessary to prepare the asset for its intended use are in progress, and ceases when the assets become ready for their intended use. When the parts of the qualifying assets acquired or constructed that are eligible for capitalisation are completed separately, and each part is available for use in other parts of the construction process or can be sold externally, and for the purpose of making the parts of the assets ready for use or necessary for the sales status, the acquisition or construction activities have been substantially completed, the Group ceases the capitalization of the borrowing costs related to the parts of the assets. Capitalisation of borrowing costs is suspended when the acquisition, construction activities are interrupted abnormally for a period of more than three months.
17 Intangible assets
Intangible assets are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see Note III.20). For an intangible asset with finite useful life, its cost estimated less residual value and accumulated impairment losses is amortized on the straight-line method over its estimated useful life, unless the intangible asset is classified as held for sale (see Note III.28).
Page 39
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The respective amortisation periods for intangible assets are as follows:
Amortisation Item period (years) Land use rights 40 to 50 years Patent and technology rights 5 to 20 years Computer software 3 to 10 years Others 5 to 20 years An intangible asset is regarded as having an indefinite useful life and is not amortized when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Group. At the balance sheet date, the Group does not have any intangible assets with indefinite useful lives.
Expenditure on an internal research and development project is classified into expenditure during the research phase and expenditure during the development phase.
Expenditure during the research phase is expensed when incurred. Expenditure during the development phase is capitalised if development costs can be measured reliably, the product or process is technically and commercially feasible, and the Group has sufficient resources and the intention to complete development. Capitalised development costs are stated in the balance sheet at cost less impairment losses (see Note III.20). Other development expenditure is recognized as an expense in the period in which it is incurred.
18 Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over theacquirer’s interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving enterprises under common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (see Note III.20). On disposal of an asset group or a set of asset groups, any attributable goodwill is written off and included in the calculation of the profit or loss on disposal.
19 Long-term deferred expenses
Long-term deferred expenses are amortized using a straight-line method within the benefit period. The respective amortisation periods for such expenses are as follows:
Amortisation Item period (years) Prepayment for public facilities construction and use 10 to 15 years Cost of operating lease assets improvement 2 to 10 years Others 2 to 10 years
Page 40
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 20 Impairment of assets other than inventories and financial assets
The carrying amounts of the following assets are reviewed at each balance sheet date based on internal and external sources of information to determine whether there is any indication of impairment:
- Fixed assets
- Construction in progress
- Intangible assets
- Investment properties measured using a cost model
- Long-term equity investments
- Goodwill
- Long-term deferred expenses, etc.
If any indication exists, the recoverable amount of the asset is estimated. In addition, the Group estimates the recoverable amounts of goodwill at each year-end, irrespective of whether there is any indication of impairment. Goodwill is allocated to each asset group or set of asset groups, which is expected to benefit from the synergies of the combination for the purpose of impairment testing.
The recoverable amount of an asset (or asset group, set of asset groups, the same below) is the higher of its fair value (see Note III.21) less costs to sell and its present value of expected future cash flows.
An asset group is composed of assets directly related to cash-generation and is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups.
The present value of expected future cash flows of an asset is determined by discounting the future cash flows, estimated to be derived from continuing use of the asset and from its ultimate disposal, to their present value using an appropriate pre-tax discount rate.
An impairment loss is recognized in profit or loss when the recoverable amount of an asset is less than its carrying amount. A provision for impairment of the asset is recognized accordingly. Impairment losses related to an asset group or a set of asset groups are allocated first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then to reduce the carrying amount of the other assets in the asset group or set of asset groups on a pro rata basis. However, such allocation would not reduce the carrying amount of an asset below the highest of its fair value less costs to sell (if measurable), its present value of expected future cash flows (if determinable) and zero.
Once an impairment loss is recognized, it is not reversed in a subsequent period.
Page 41
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 21 Fair value measurement
Unless otherwise specified, the Group measures fair value as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When measuring fair value, the Group takes into account the characteristics of the particular asset or liability (including the condition and location of the asset and restrictions, if any, on the sale or use of the asset) that market participants would consider when pricing the asset or liability at the measurement date, and uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value. Valuation techniques mainly include the market approach, the income approach and the cost approach.
22 Provisions
A provision is recognized for an obligation related to a contingency if the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows. Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where there is a continuous range of possible outcomes for the expenditure required, and each possible outcome in that range is as likely as any other, the best estimate is the mid-point of that range. In other cases, the best estimate is determined according to the following circumstances:
Where the contingency involves a single item, the best estimate is the most likely outcome. Where the contingency involves a large population of items, the best estimate is determined by weighting all possible outcomes by their associated probabilities.
The Group reviews the carrying amount of a provision at the balance sheet date and adjusts the carrying amount to the current best estimate.
23 Revenue recognition
Revenue is the gross inflow of economic benefits arising in the course of theGroup’s ordinary activities when the inflows result in increase inshareholders’ equity, other than increase relating to contributions from shareholders. Revenue is recognized in profit or loss when it is probable that the economic benefits will flow to the Group, the revenue and costs can be measured reliably and the following conditions are met:
Page 42
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (1) Sale of goods
Revenue is recognized when the general conditions stated above and the following conditions are satisfied:
- Significant risks and rewards of ownership of goods have been transferred to the buyer; - The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable under the sales contract or agreement.
The sales contracts/orders signed between the Company and its customers (mainly electronic equipment manufacturers) contain various trading terms. The Company judges the transfer timing of major risks and rewards according to the trading terms, and recognizes revenue accordingly. Depending on the trading terms, the income is usually recognized when the goods are delivered and received, or when they are received by the carrier.
(2) Rendering of services
Revenue is measured at the fair value of the consideration received or receivable under the contract or agreement.
Where the outcome of a transaction involving the rendering of services can be estimated reliably, revenue is recognized by reference to the stage of completion based on the progress of work performed.
Where the outcome cannot be estimated reliably, revenues are recognized to the extent of the costs incurred that are expected to be recoverable, and an equivalent amount is charged to profit or loss as service cost; otherwise, the costs incurred are recognized in profit or loss and no service revenue is recognized.
(3) Revenue from construction contracts
Where the outcome of a construction contract can be estimated reliably, contract revenue and contract expenses associated with the construction contract are recognized using the percentage of completion method.
The stage of completion of a contract is determined based on the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
When the outcome of a construction contract cannot be estimated reliably:
- If the contract costs can be recovered, revenue is recognized to the extent of contract costs incurred that can be recovered, and the contract costs are recognized as contract expenses when incurred;
- Otherwise, the contract costs are recognized as contract expenses immediately when incurred, and no contract revenue is recognized.
Page 43
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (4) Interest income
Interest income is recognized on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
(5) Royalties from intangible assets
Royalty income from intangible assets is determined according to the period and fee calculation method as stipulated in the relevant contracts or agreements.
24 Employee benefits
(1) Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions such as medical insurance, work injury insurance, maternity insurance and housing fund, measured at the amount incurred or accrued at the applicable benchmarks and rates, are recognized as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the cost of assets where appropriate.
(2) Post-employment benefits - defined contribution plans
Pursuant to the relevant laws and regulations of thePeople’s Republic of China, the Group participated in a defined contribution basic pension insurance plan and unemployment insurance plan in the social insurance system established and managed by government organisations, and annuity plan established by the Group in compliance with the national policy of the corporation annuity. The Group makes contributions to basic pension and unemployment insurance plans based on the applicable benchmarks and rates stipulated by the government. Annuity is accrued based on the gross salaries of the employees. Basic pension insurance contributions are recognized as part of the cost of assets or charged to profit or loss as the related services are rendered by the employees.
(3) Post-employment benefits - defined benefit plans
During the reporting period, the Group did not have defined benefit plans.
(4) Termination benefits
When the Group terminates the employment with employees before the employment contracts expire, or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding expense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Page 44
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 25 Government grants
Government grants are non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital contributions from the government in the capacity as an investor in the Group.
A government grant is recognized when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a non- monetary asset, it is measured at fair value.
Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase, construct or otherwise acquire long-term assets. Government grants related to income are grants other than those related to assets.
Those related to daily activities of the Company are included in other income or used to write off related cost based on the nature of economic businesses, or included in non-operating income and expense in respect of those not related to daily activities of the Company.
With respect to the government grants related to assets, if the Group first obtains government grants related to assets and then recognizes the long-term assets purchased and constructed, deferred income is included in profit and loss based on a reasonable and systematic approach by stages when related assets are initially depreciated or amortized; or the deferred income is written off against the carrying amount of the asset when the asset becomes ready for its intended status or intended use. If the Group obtains government grants related to the assets after relevant long-term assets are put into use, deferred income is included in profit and loss based on a reasonable and systematic approach by stages within the remaining useful life of relevant assets, or the deferred income is written off against the carrying amount of relevant asset when the grants are obtained; the assets shall be depreciated or amortized based on the carrying amount after being offset and the remaining useful life of relevant assets.
For the government grants related to income which are used to compensate for related costs or losses of the Group in the future period, it shall be recognized as deferred income, and included in profit and loss or used to offset related costs; otherwise it shall be directly included in profit and loss or used to offset related costs.
In respect of the policy-based preferential loan interest subsidy obtained by the Group, if the interest subsidy is appropriated to the lending bank which shall provide loans to the Group at the policy-based preferential interest rate, the actual loan amount is used as the entry value and relevant borrowing costs are calculated on the basis of the loan principal and the preferential interest rate. If the interest subsidy is directly appropriated to the Group, relevant borrowing costs shall be offset by corresponding interest subsidy. If borrowing costs are capitalized as part of the cost of the asset (see Note III. 16), the interest subsidy shall be used to offset relevant asset costs.
Page 45
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 26 Income tax
Current tax and deferred tax are recognized in profit or loss except to the extent that they relate to a business combination or items recognized directly in equity (including other comprehensive income).
Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable in respect of previous years.
At the balance sheet date, current tax assets and liabilities are offset only if the Group has a legally enforceable right to set them off and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Deferred income tax assets and deferred income tax liabilities are determined based on deductible temporary differences and taxable temporary differences respectively. The temporary differences are the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases, which include the deductible tax losses and tax credits carried forward to subsequent periods. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is not recognized for the temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is not recognized for taxable temporary differences arising from the initial recognition of goodwill. At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from the expected manner of recovery or settlement of the carrying amount of the assets and liabilities, using tax rates enacted at the reporting date that are expected to be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced to the extent that it is no longer probable that the related tax benefits will be utilised. Such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.
At the balance sheet date, deferred tax assets and liabilities are offset if all of the following conditions are met:
- The taxable entity has a legally enforceable right to offset current tax liabilities and assets, and
- They relate to income taxes levied by the same tax authority on either: the same taxable entity; or different taxable entities which intend either to settle the current tax liabilities and current tax assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or deferred tax assets are expected to be settled or recovered.
Page 46
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 27 Operating leases and finance leases
A lease is classified as either a finance lease or an operating lease. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of a leased asset to the lessee, irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.
(1) Operating lease charges
Rental payments under operating leases are recognized as part of the cost of another related asset or as expenses on a straight-line basis over the lease term.
(2) Assets leased out under operating leases
Fixed assets leased out under operating leases, except for investment properties (see Note III.13), are depreciated in accordance with theGroup’s depreciation policies described in Note III.14(2). Impairment losses are recognized in accordance with the accounting policy described in Note III.20. Income derived from operating leases is recognized in profit or loss using the straight-line method over the lease term. If initial direct costs incurred in respect of the assets leased out are material, the costs are initially capitalised and subsequently amortized in profit or loss over the lease term on the same basis as the lease income. Otherwise, the costs are charged to profit or loss immediately.
(3) Assets acquired under finance leases
At the commencement of the lease term, the minimum lease payments are recorded as long- term payables. The difference between the carrying amount of the leased assets and the minimum lease payments is accounted for as unrecognized finance charges. Initial direct costs attributable to a finance lease that are incurred by the Group are added to the carrying amount of the leased asset. Depreciation and impairment losses are accounted for in accordance with the accounting policies described in Notes III.14 (2) and III.20, respectively. If there is reasonable certainty that the Group will obtain ownership of a leased asset at the end of the lease term, the leased asset is depreciated over its estimated useful life. Otherwise, the leased asset is depreciated over the shorter of the lease term and its estimated useful life.
Unrecognized finance charges arising from a finance lease are recognized using an effective interest method over the lease term. The amortisation is accounted for in accordance with the principles of borrowing costs (see Note III.16).
At the balance sheet date, the long-term payables arising from finance leases, net of the unrecognized finance charges, are analysed and separately presented as long-term payables or non-current liabilities due within one year.
Page 47
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 28 Assets held for sale and discontinued operations
(1) Assets held for sale
The Group classified a non-current asset or disposal group as held for sale when the carrying amount of a non-current asset or disposal group will be recovered through a sale transaction rather than through continuing use.
A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together as a whole in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction.
A non-current asset or disposal group is accounted for as held for sale when all the following criteria are met:
- According to the customary practices of selling such asset or disposal group in similar transactions, the non-current asset or disposal group must be available for immediate sale in their present condition subject to terms that are usual and customary for sales of such assets or disposal groups;
- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and has obtained a firm purchase commitment. The sale is to be completed within one year.
Non-current assets or disposal groups held for sale are stated at the lower of carrying amount and fair value (see Note III.21) less costs to sell (except financial assets (see Note III.9) and deferred tax assets (see Note III.26)) initially and subsequently. Any excess of the carrying amount over the fair value (see Note III.21) less costs to sell is recognized as an impairment loss in profit or loss.
(2) Discontinued operations
The Group classifies a component that is separately identifiable, and the component either has been disposed of or is classified as held for sale, and satisfies one of the following conditions as a discontinued operation:
- It represents a separate major line of business or separate geographical area of operations;
- It is part of a single co-ordinated plan to dispose of a separate major line of business or separate geographical area of operations;
- It is a subsidiary acquired exclusively with a view to resale.
For the Group's discontinued operations during the current period, the profit and loss from continuing operations and the profit and loss from discontinued operations are respectively presented in the income statement, and the information previously presented as the profit and loss from continuing operations is reclassified as the profit and loss from discontinued operations in the comparable accounting period in the income statement of the comparative period.
29 Profit distributions
Dividends or profit distributions proposed in the profit appropriation plan, which will be approved after the balance sheet date, are not recognized as a liability at the balance sheet date but are disclosed in the notes separately.
Page 48
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 30 Related parties
If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties are subject to common control or joint control from another party, they are considered to be related parties. Related parties may be individuals or enterprises. Enterprises with which the Company is under common control only from the State and that have no other related party relationships are not regarded as related parties.
In addition to the related parties stated above, the Company determines related parties based on the disclosure requirements of Administrative Procedures on the Information Disclosures of Listed Companies issued by the CSRC.
31 Segment reporting
Operating segments are determined based on the structure of theGroup’s internal organisation, management requirements and internal reporting system. Two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics, and are same or similar in respect of the nature of each product and service; the nature of production processes; the type or class of customers for the products and services; the methods used to distribute the products or provide the services; the nature of the regulatory environment. Reportable segments are identified based on operating segments taking into account of materiality principle.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting. Segment accounting policies are consistent with those for the consolidated financial statements.
32 Significant accounting estimates and judgements
The preparation of financial statements requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.
Expect for accounting estimates related to depreciation and amortisation of assets such as fixed assets and intangible assets (see Note III. 14 and 17) and provision for impairment of various types of assets (see Note V. 2, 4, 5, 7, 8, 10, 11, 12, and 13, and Note XIV. 2 and 3). Other significant accounting estimates are as follows:
(i) Note V. 15– Recognition of deferred tax asset;
(ii) Note V. 24– Assurance of product quality;
(iii) Note IX.– Fair value measurements of financial instruments.
Significant judgements made by the Group in the application of accounting policies are as follows:
(i) Note V. 30– Convertible debt and equity investment with redemption provisions terms are categorised as financial liabilities; and
(ii) Note VII. 1(1)–Disclosure of significant judgements and assumptions of control and exercising significant influence over other entities.
Page 49
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018
Page 50
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 33 Changes in accounting policies
Changes in accounting policies and their reasons
The MOF issued the following interpretations and amendments of the Accounting Standards for Business Enterprises during 2017 and 2018:
-<Accounting Standards for Business Enterprise, Interpretation No. 9—— Accounting Treatment of Net Loss of Investment under EquityMethod>
-<Accounting Standards for Business Enterprise, Interpretation No. 10—— Depreciation Method Based on Income Generated by FixedAssets>
-<Accounting Standards for Business Enterprise, Interpretation No. 11—— Amortization Method Based on Income Generated by IntangibleAssets>
-<Accounting Standards for Business Enterprise, interpretation No. 12—— On the Case of Providing Key Management Personnel, whether the Provider and Client are Related Parties. (Collectively referred to “Interpretation No. 9 - 12”)
-<Notice on Revision of the Illustrative Financial Statements for2018> (Cai Kuai[2018] No. 15) and relevant interpretations.
The Group has implemented the above-mentioned interpretations and amendments of accounting standard since January 1, 2018, and adjusted the relevant contents of accounting policies.
Impacts of the adoption of the above accounting standards and regulations are as follows: (a) Interpretation No. 9 - 12
The Group's accounting policies are based on the accounting treatment of the net loss of investment under the equity method in Interpretation No.9 - 12, and the depreciation and amortization method of fixed assets and intangible assets, and the related party recognition and disclosure requirements of key management personnel services are adjusted.
The adoption of Interpretation No. 9 -12 has no material impact on the financial position and the financial result of the Group.
(b) Presentation of financial statement
The Group has prepared financial statements for the year ended 31 December 2018 in accordance with Caikuai[2018] No.15. Comparative figures have been adjusted retrospectively.
Page 51
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Impacts of related presentation adjustment are as follows:
Items affected in consolidated balance sheet and company balance sheet on 31 December 2018:
The Group
Before adjustment Adjusted amount After adjustment Bills receivable 833,268,127 (833,268,127) - Accounts receivable 15,513,763,252 (15,513,763,252) - Bills receivable and accounts
receivable - 16,347,031,379 16,347,031,379 Interest receivable 89,628,559 (89,628,559) - Other receivables 728,395,573 89,628,559 818,024,132 Bills payable 543,798,835 (543,798,835) - Accounts payable 16,205,788,698 (16,205,788,698) - Bills payable and accounts
payable - 16,749,587,533 16,749,587,533 Interest payable 847,955,186 (847,955,186) - Dividends payable 9,651,170 (9,651,170) - Other payables 15,264,806,774 857,606,356 16,122,413,130 Total -
The Company
Before adjustment Adjusted amount After adjustment Accounts receivable 39,897,385 (39,897,385) - Bills receivable and accounts
receivable - 39,897,385 39,897,385 Dividends receivable 10,404,147 (10,404,147) - Other receivables 1,824,727,573 10,404,147 1,835,131,720 Accounts payable 50,152,503 (50,152,503) - Bills payable and accounts
payable - 50,152,503 50,152,503 Interest payable 312,029,252 (312,029,252) - Dividends payable 6,451,170 (6,451,170) - Other payables 9,713,912,548 318,480,422 10,032,392,970 Total -
Page 52
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Items affected in consolidated income statement and company income statement in 2017:
The Group
Before adjustment Adjusted amount After adjustment Administrative expenses 7,246,543,340 (3,177,767,395) 4,068,775,945 Research and development costs - 3,177,767,395 3,177,767,395 Total -
The Company
Before adjustment Adjusted amount After adjustment Administrative expenses 1,719,668,597 (1,027,250,122) 692,418,475 Research and development costs - 1,027,250,122 1,027,250,122 Total -
Items affected in consolidated cash flow statement in 2017:
The Group
Before adjustment Adjusted amount After adjustment Cash inflows from operating
activities 111,934,693,142 459,943,640 112,394,636,782 Cash inflows from investing
activities 33,347,868,918 (459,943,640) 32,887,925,278 Total -
According to the relevant interpretation of Caikuai[2018] No. 15, the Group will adjust the government subsidies received related to assets from “cash inflows from investing activities” to “cash inflows from operating activities” and present.
Page 53
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 IV. Taxation
1 Main types of taxes and corresponding tax rates
Tax Name Tax basis Tax rate
Value-added tax Output VAT is calculated on product sales 6%，10%，11% (VAT) and taxable services revenue. The basis for 16%，17% VAT payable is to deduct input VAT from the
output VAT for the period
City maintenance Based on business tax and VAT paid, and 7%，5% and VAT exemption and offset for the period
construction tax
Education Based on business tax and VAT paid, and 3%，2% surcharges and VAT exemption and offset for the period
local education
surcharges
Corporate Based on taxable profits 15% -25% income tax
2 Corporate income tax
The income tax rate applicable to the Company for the year is15% (2017:15%).
Pursuant to the Corporate Income Tax Law of thePeople’s Republic of China treatment No.28, corporate income tax for key advanced and high-tech enterprises supported by the State is applicable to a preferential tax rate of15%.
On 25 October 2017, the Company renewed the High-tech Enterprise Certificate No. GR201711002584, which was entitled jointly by Beijing Municipal Science and Technology Commission, Beijing Municipal Financial Bureau, Beijing Municipal State Administration of Taxation and Beijing Municipal Local Administration of Taxation. The Company is subject to corporate income tax rate of15% since the date of certification with the valid period of three years.
The income tax rate applicable to other subsidiaries of the Group is25% other than the following subsidiaries and the overseas subsidiaries which subject to the local income tax rate.
Page 54
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The subsidiaries that are entitled to preferential tax treatments are as follows:
Preferenti
Company name al rate Reason Beijing BOE Optoelectronics Technology Co., Ltd.
(BOE OT) 15% High-tech Enterprise Chengdu BOE Optoelectronics Technology Co., Ltd
(Chengdu Optoelectronics ) 15% High-tech Enterprise Hefei BOE Optoelectronics Technology Co., Ltd.(Hefei
BOE) 15% High-tech Enterprise Beijing BOE Display Technology Co., Ltd. (BOE
Display) 15% High-tech Enterprise Hefei Xinsheng Optoelectronics Technology Co., Ltd.
(Hefei Xinsheng) 15% High-tech Enterprise Ordos Yuansheng Optoelectronics Co., Ltd. Encouraged enterprise in (Yuansheng Optoelectronics) 15% Western Regions Chongqing BOE Optoelectronics Co., Ltd. (Chongqing Encouraged enterprise in BOE) 15% Western Regions BOE (Hebei) Mobile Technology Co., Ltd. (BOE Hebei) 15% High-tech Enterprise BOE Optical Science and technology Co., Ltd (Optical
Technology) 15% High-tech Enterprise Beijing BOE CHATANI ElectronicsCo.,Ltd. (Beijing
CHATANI) 15% High-tech Enterprise Hefei BOE Display Lighting Co.,Ltd. (Hefei Display
Lighting) 15% High-tech Enterprise Chongqing BOE Display Lighting Co.,Ltd. (Chongqing
Display Lighting) 15% High-tech Enterprise BOE Semi-conductor Co., Ltd. (BOE Semiconductor) 15% High-tech Enterprise Hefei BOE Semiconductor Co.,Ltd. (Hefei
Semiconductor) 15% High-tech Enterprise Beijing BOE Special Display Technology Co., Ltd.
(Special Display) 15% High-tech Enterprise Beijing BOE Vacuum Electronics Co., Ltd. (Vacuum
Electronics) 15% High-tech Enterprise Beijing Asahi Electronic Materials Co.,Ltd. (Asahi
Materials) 15% High-tech Enterprise Beijing BOE Vacuum Technology Co., Ltd. (Vacuum
Technology) 15% High-tech Enterprise Beijing BOE Energy Technology Co., Ltd. (BOE
Energy) 15% High-tech Enterprise Beijing BOE multimedia Technology Co., Ltd. (BOE
multimedia) 15% High-tech Enterprise Fuzhou BOE Optoelectronics Technology Co., Ltd.
(Fuzhou BOE) 15% High-tech Enterprise Hefei BOE Vision-Electronic Technology Co., Ltd.
(Hefei Vision-Electronic Technology) 15% High-tech Enterprise Mianyang BOE Optoelectronics Technology Co., Ltd. Encouraged enterprise in (Mianyang BOE) 15% Western Regions BOE Intelligent Technology Co., Ltd. (Intelligent
Technology) 15% High-tech Enterprise
Page 55
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 V. Notes to the consolidated financial statements
1. Cash at bank and on hand
2018 2017
Amount in Exchange RMB / Amount in Exchange RMB / original currency rate RMB equivalents original currency rate RMB equivalents Cash on hand:
RMB 285,407 444,343 USD 1,364 6.8632 9,361 891 6.5342 5,822 HKD 56,603 0.8762 49,596 53,705 0.8359 44,892 JPY 1,668,876 0.0619 103,303 55,419 0.0579 3,209 KRW 490,686 0.0061 2,993 513,831 0.0061 3,134 Other foreign
currencies 87,145 25,364 Sub-total 537,805 526,764 Bank Deposits:
RMB 19,526,770,243 24,172,930,297 USD 3,215,270,076 6.8632 22,067,041,586 3,151,375,970 6.5342 20,591,720,863 HKD 36,614,201 0.8762 32,081,363 55,249,266 0.8359 46,182,862 JPY 15,077,127,145 0.0619 933,274,170 21,118,693,041 0.0579 1,222,772,327 KRW 1,274,695,127 0.0061 7,775,640 1,058,266,098 0.0061 6,455,423 EUR 94,362,955 7.8473 740,494,417 236,210,492 7.8023 1,842,985,129 Other foreign
currencies 32,708,963 29,713,710 Sub-total 43,340,146,382 47,912,760,611 Other monetary funds:
RMB 4,883,082,015 7,497,341,876 USD 473,193,118 6.8632 3,247,619,007 262,928,917 6.5342 1,718,030,129 HKD 11,423,973 0.8762 10,009,685 232 0.8359 194 JPY 2,339,530 0.0619 144,817 29 0.0579 2 Sub-total 8,140,855,524 9,215,372,201 Total 51,481,539,711 57,128,659,576 Including: Total overseas deposits were equivalent to RMB 5,012,219,357 (2017: RMB 3,341,984,398).
As at 31 December 2018, other monetary funds were pledged by the Group amounting to USD 305,000,000 for short-term loans, RMB142,547,192 and and USD 18,500,000 were pledged for long-term loans. The rest of other restricted monetary funds, amounting to RMB 5,768,050,799, were the deposits in commercial banks as security.
As at 31 December 2017, other monetary funds were pledged by the Group amounting to RMB1,164,000,000 and USD 60,159,875 for short-term loans, and RMB 1,207,705,322 and USD 63,000,000 were pledged for long-term loans. The rest of other restricted monetary funds, amounting to RMB 6,038,915,416, were the deposits in commercial banks as security.
Page 56
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 2 Bills receivable and accounts receivable
Note 2018 2017 Bills receivable (1) 656,781,577 833,268,127 Accounts receivable (2) 19,880,680,518 15,513,763,252 Total 20,537,462,095 16,347,031,379 (1) Bills receivable
(a) Classification of bills receivable
Item 2018 2017 Bank acceptance bills 655,081,577 824,873,475 Commercial acceptance bills 1,700,000 8,394,652 Total 656,781,577 833,268,127 All of the above bills are due within one year.
(b) Bills receivable pledged at the end of the year
As at 31 December 2018, the pledged bills of the Group amounted to RMB 6,605,869 (2017: RMB 123,826,995).
(c) Outstanding endorsed or discounted bills that have not matured at the end of the year Amount Amount not- derecognized derecognized Item at year end at year end Bank acceptance bills 32,868,462 200,669,545 Commercial acceptance bills - 1,049,000 Total 32,868,462 201,718,545 For the year ended 31 December 2018, there was no amount transferred to accounts receivable from bills receivable due to non-performance of the issuers of the Group (2017: nil).
Page 57
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Accounts receivable
(a) TheGroup’s accounts receivable by customer type:
Item 2018 2017 Amounts due from related parties 52,246 9,600,724 Amounts due from other customers 20,199,950,102 15,808,849,645 Sub-total 20,200,002,348 15,818,450,369 Less: Provision for bad and doubtful
debts 319,321,830 304,687,117 Total 19,880,680,518 15,513,763,252 (b) TheGroup’s accounts receivable by currencytype：
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents RMB 7,253,239,876 4,764,755,351 USD 1,800,476,186 6.8632 12,357,028,161 1,684,267,507 6.5342 11,005,340,743 JPY 36,523,949 0.0619 2,260,467 17,602,919 0.0579 1,019,209 Other foreign
currencies 587,473,844 47,335,066 Sub-total 20,200,002,348 15,818,450,369 Less: Provision for
bad and
doubtful
debts 319,321,830 304,687,117 Total 19,880,680,518 15,513,763,252
Page 58
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (c) The ageing analysis of accounts receivable is as follows:
2018 2017 Within 1 year (inclusive) 19,748,808,258 15,482,151,261 1 to 2 years (inclusive) 136,291,482 293,213,891 2 to 3 years (inclusive) 279,756,940 13,346,163 Over 3 years 35,145,668 29,739,054 Sub-total 20,200,002,348 15,818,450,369 Less: Provision for bad and doubtful
debts 319,321,830 304,687,117 Total 19,880,680,518 15,513,763,252 The ageing is counted starting from the date when accounts receivable are recognized.
Page 59
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (d) Accounts receivable by category
2018 2017
Provision for bad and doubtful Provision for bad and doubtful Book value debts Book balance debts
Carrying Carrying Category Amount Percentage(%) Amount Percentage(%) amounts Amount Percentage(%) Amount Percentage(%) amounts Accounts receivables that are
collectively assessed for
impairment based on credit risk
characteristics* 20,149,872,554 100% 275,864,448 1% 19,874,008,106 15,767,136,659 100% 262,640,383 2% 15,504,496,276 Individually insignificant but assessed
for impairment individually 50,129,794 0% 43,457,382 87% 6,672,412 51,313,710 0% 42,046,734 82% 9,266,976 Total 20,200,002,348 100% 319,321,830 2% 19,880,680,518 15,818,450,369 100% 304,687,117 2% 15,513,763,252Note*: This category includes accounts receivable having been individually assessed but not impaired.
The Group has no individually significant accounts receivable and individually for impairment this year (2017: nil).
Page 60
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (e) Additions and recoveries of provision for bad and doubtful debts during the year:
2018 2017 Balance at the beginning of the year 304,687,117 31,371,811 Charge during the year 5,005,871 284,705,046 Recoveries during the year 1,779,710 2,609,674 Write-offs during the year 2,475,273 2,236,524 Translation differences 13,883,825 (6,543,542) Closing balance 319,321,830 304,687,117 For the year ended 31 December 2018, the Group had no individually significant write- off or recovery of doubtful debts which had been fully or substantially made in prior years (2017: nil).
(f) Five largest accounts receivable by debtor at the end of the year
The total of five largest accounts receivable of the Group at the end of the year was RMB 8,942,759,895, representing44% of the total accounts receivable, and no provision was made for bad and doubtful debts after assessment.
3 Prepayments
(1) TheGroup’s prepayments by category:
2018 2017 Prepayment for inventory 252,434,159 122,885,896 Others 518,199,289 464,240,855 Total 770,633,448 587,126,751
Page 61
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) The ageing analysis of prepayments is as follows:
2018 2017
Percentage Percentage Ageing Amount (%) Amount (%) Within 1 year (inclusive) 721,657,321 94% 568,849,167 97% 1 to 2 years (inclusive) 46,363,026 6% 17,188,654 3% 2 to 3 years (inclusive) 2,035,569 - 606,393 - Over 3 years 577,532 - 482,537 - Total 770,633,448 100% 587,126,751 100% The ageing is counted starting from the date when prepayments are recognized.
As at 31 December 2018, the total of five largest prepayments of the Group is RMB 432,558,675, representing56% of the total prepayments.
4 Other receivables
Note 2018 2017 Interest receivable 140,597,317 89,628,559 Dividends receivable 3,711,768 - Others (1) 2,309,865,886 728,395,573 Total 2,454,174,971 818,024,132 (1) Others
(a) TheGroup’s other receivable by customer type:
Customer type 2018 2017 Amounts due from related parties 12,148 27,591,317 Amounts due from other customers 2,310,194,250 701,313,513 Sub-total 2,310,206,398 728,904,830 Less: Provision for bad and doubtful
debts 340,512 509,257 Total 2,309,865,886 728,395,573
Page 62
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) TheGroup’s other receivable by currencytype：
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents RMB 2,278,359,260 699,117,519 USD 1,511,739 6.8632 10,375,364 2,742,109 6.5342 17,917,490 JPY 35,383,000 0.0619 2,189,854 66,206,715 0.0579 3,833,367 Other foreign
currencies 19,281,920 8,036,454 Sub-total 2,310,206,398 728,904,830 Less: Provision for
bad and
doubtful
debts 340,512 509,257 Total 2,309,865,886 728,395,573 (c) The ageing analysis of theGroup’s other receivables is as follows:
2018 2017 Within 1 year (inclusive) 2,015,309,595 454,457,340 1 to 2 years (inclusive) 29,027,513 37,230,582 2 to 3 years (inclusive) 28,652,382 2,335,586 Over 3 years 237,216,908 234,881,322 Sub-total 2,310,206,398 728,904,830 Less: Provision for bad and doubtful
debts 340,512 509,257 Total 2,309,865,886 728,395,573 The ageing is counted starting from the date when other receivable are recognized.
Page 63
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (d) TheGroup’s other receivables by category
2018 2017
Provision for bad and doubtful Provision for bad and doubtful Book value debts Book balance debts
Carrying Carrying Category Amount Percentage(%) Amount Percentage(%) amounts Amount Percentage(%) Amount Percentage(%) amounts Accounts receivables that are
collectively assessed for
impairment based on credit risk
characteristics* 2,309,865,886 100% - - 2,309,865,886 728,395,573 100% - - 728,395,573 Individually insignificant but assessed
for impairment individually 340,512 0% 340,512 100% - 509,257 0% 509,257 100% - Total 2,310,206,398 100% 340,512 0% 2,309,865,886 728,904,830 100% 509,257 0% 728,395,573Note*: This category includes other receivables having been individually assessed but not impaired.
The Group has no individually significant other receivable and individually for impairment this year. As at 31 December 2018, the Group collectively assessed other receivable having been individually assessed but not impaired for impairment and did not recognize impairment loss against this amount of other receivable (2017: nil).
Page 64
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (e) Additions and recoveries of provision for bad and doubtful debts during the year
2018 2017 Balance at the beginning of the year 509,257 653,341 Charge during the year 1,273,563 111,166 Recoveries during the year - 6,350 Write-offs during the year 1,442,308 248,900 Closing balance 340,512 509,257 (f) TheGroup’s other receivables categorised by nature
Nature of other receivables 2018 2017 VAT refunds 415,687,566 179,152,619 Amount due from equity transfer 200,000,000 200,000,000 Deposits 148,893,918 154,724,906 Wealth management receivables 1,408,094,816 - Others 137,530,098 195,027,305 Sub-total 2,310,206,398 728,904,830 Less: Provision for bad and doubtful
debts 340,512 509,257 Total 2,309,865,886 728,395,573 Wealth management receivables included in other receivables, with principal and
interest amounted to RMB 1,408,094,816, was expired on 31 December 2018, and
recovered on 2 January 2019.
(g) Five largest other receivables by debtor at the end of the year
The total of five largest other receivables of the Group at the end of the year was RMB 1,886,065,008, most of which are export tax rebate receivables and receivables due from wealth management. No provision is made for bad and doubtful debts after
assessment.
Page 65
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 5 Inventories
(1) TheGroup’s inventories by category:
2018 2017
Provision for Provision for
impairment of impairment of
Book value inventories Carrying amount Book value inventories Carrying amount Raw materials 4,350,466,710 293,435,033 4,057,031,677 3,663,568,064 312,167,170 3,351,400,894 Work in progress 1,442,498,808 150,867,947 1,291,630,861 1,442,250,856 130,466,876 1,311,783,980 Finished goods 7,770,574,684 1,244,503,744 6,526,070,940 5,742,195,757 1,546,545,280 4,195,650,477 Consumables 113,493,354 2,828,660 110,664,694 99,620,537 736,507 98,884,030 Total 13,677,033,556 1,691,635,384 11,985,398,172 10,947,635,214 1,989,915,833 8,957,719,381 As at 31 December 2018, there was no amount of capitalised borrowing cost in theGroup’s closing balance of inventories (2017: nil).
As at 31 December 2018, the Group had no inventory used as collateral (2017: nil).
(2) Provision for impairment of inventories of the Group is analyzed as follows:
Reductions during the year
Balance at the
beginning of the Charge during the Balance at the year year Move Back Transferred out end of the year Raw materials 312,167,170 307,794,313 95,981,437 230,545,013 293,435,033 Work in progress 130,466,876 89,465,770 59,402,305 9,662,394 150,867,947 Finished goods 1,546,545,280 1,621,997,256 664,032,716 1,260,006,076 1,244,503,744 Consumables 736,507 2,760,542 642,836 25,553 2,828,660 Total 1,989,915,833 2,022,017,881 820,059,294 1,500,239,036 1,691,635,384 6 Other current assets
2018 2017 VAT on tax credits 4,841,165,133 4,847,422,522 Input tax to be verified or deducted 1,773,794,503 1,198,408,412 Income taxes prepaid 132,824,503 5,763,179 Wealth management product 5,534,413,566 9,791,137,808 Others 180,876,074 81,702,057 Total 12,463,073,779 15,924,433,978 As at 31 December 2018, all of the wealth management products owned by the Group are due within one year.
Page 66
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 7 Available-for-sale financial assets
(1) Available-for-sale financial assets
2018 2017
Provision for Provision for
Item Book value impairment Carrying amount Book value impairment Carrying amount Available-for-sale debt
instruments 12,866,432 - 12,866,432 14,912,146 - 14,912,146 Available-for-sale equity
instruments
- Measured at fair
value 528,735,772 150,099,655 378,636,117 662,938,045 150,099,655 512,838,390 - Measured at cost 377,015,762 34,495,952 342,519,810 332,328,820 180,000 332,148,820 Total 918,617,966 184,595,607 734,022,359 1,010,179,011 150,279,655 859,899,356 (2) Available-for-sale financial assets at fair value at the end of the year:
Available-for-sale Available-for-sale
equity instruments debt instruments Total Cost of equity instruments / amortized
cost of debt instruments 555,793,175 12,565,172 568,358,347 Fair Values 378,636,117 12,866,432 391,502,549 Accumulated fair value movements in
other comprehensive income (27,057,403) 301,260 (26,756,143) Provision for impairment (150,099,655) - (150,099,655)
Page 67
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Available-for-sale financial assets at cost at the end of the year
Book value Provision for impairment
Balance at the Balance at the Increase Balance at the Percentage of beginning of the Increase during Reductions Translation Balance at the beginning of during the Translation end of the shareholding Investee year the year during the year differences end of the year the year year differences year in investees(%) Teralane Semiconductor Inc 11,868,000 - - - 11,868,000 - - - - 7.29% Zhejiang BOE Display
Technology Co., Ltd. 321,256 - - - 321,256 - - - - 7.03% Zhejiang Qiusheng
Photoelectric Technology
Co., Ltd. 248,776 - - - 248,776 - - - - 5.09% National Engineering
Laboratory of Digital
Television (Beijing) Co.,
Ltd. 6,250,000 - - - 6,250,000 - - - - 12.50% Meta Company 32,670,951 - - 1,645,001 34,315,952 - 33,130,452 1,185,500 34,315,952 5.66% Danhua Capital, L. P. 24,503,250 - - 1,233,750 25,737,000 - - - - 5.48% Danhua Capital II, L.P. 34,304,550 26,419,000 - 2,761,050 63,484,600 - - - - 3.29% Kateeva Inc. 78,051,019 - - 3,929,905 81,980,924 - - - - 3.00% DEPICT INC. 13,068,400 - - 658,000 13,726,400 - - - - 22.20% MOOV INC. 26,244,971 - - 1,321,446 27,566,417 - - - - 7.69% ZGLUE INC. 9,801,289 - - 493,499 10,294,788 - - - - 6.00% Fabord Ltd. 910 - 910 - - - - - - - Hefei Xin Jing Yuan Electronic
Materials Co., Ltd. 3,000,000 - 3,000,000 - - - - - - - Nanosys INC 49,006,500 - - 2,467,500 51,474,000 - - - - 3.14% Ceribell INC 8,494,453 - - 427,699 8,922,152 - - - - 2.05% Baebies INC 28,709,230 - - 1,445,523 30,154,753 - - - - 9.05% Illumina Fund I,L.P. 5,605,265 4,433,785 - 451,694 10,490,744 - - - - 2.14% Others 180,000 - - - 180,000 180,000 - - 180,000
Total 332,328,820 30,852,785 3,000,910 16,835,067 377,015,762 180,000 33,130,452 1,185,500 34,495,952
Page 68
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 8 Long-term equity investments
(1) TheGroup’s long-term equity investments by category:
2018 2017 Investments in joint ventures - 2,793,732,185 Investments in associates 2,926,303,858 4,672,259,202 Sub-total 2,926,303,858 7,465,991,387 Less: Provision for impairment 537,136,972 537,136,972 - Associates 537,136,972 537,136,972 Total 2,389,166,886 6,928,854,415
Page 69
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Movements of long-term equity investments during the year are as follows:
Investment Translation
income differences of
Balance at the Newly added recognized Other foreign currency Cash dividends Acquired as
beginning of the investments under equity comprehensive Other changes financial or profit subsidiaries Balance at the Investee year during the year method income in equity statements declared during the year end of the year Joint ventures
Wuhan BOE Optoelectronics
Technology
Co., Ltd. 91,590,309 1,140,000,000 (729,793) - - - - (1,230,860,516) - Mianyang BOE
Optoelectronics
Technology
Co., Ltd. 2,698,378,093 2,400,000,000 (1,398,010) - - - - (5,096,980,083) - Beijing BOE Yiyun Science
&Technology
Co., Ltd. 3,763,783 - (3,763,783) - - - - - - Sub-total 2,793,732,185 3,540,000,000 (5,891,586) - - - - (6,327,840,599) - Associates
Beijing Nissin Electronics
Precision Component
Co., Ltd. - - (1,886,109) - 2,424,598 - - - 538,489 Beijing Nittan Electronic
Co., Ltd. 53,786,835 - 10,946,250 - - - (3,000,000) - 61,733,085 Erdos BOE Energy
Investment Co., Ltd. 907,458,312 - - - - - - - 907,458,312 Beijing Infi-Hailin Venture
Investment
Co., Ltd. 373,361 - 62,467 - - - - - 435,828 Beijing Infi-Hailin Venture
Investment
(Limited Partnership) 137,448,451 - 22,591,316 (47,702,834) - - (30,000,000) - 82,336,933 TPV Display Technology
(China)
Limited 27,190,533 - (4,189,174) - - - - - 23,001,359 Beijing Xindongneng
Investment Fund (Limited
Partnership) 1,472,249,231 150,000,000 (11,778,573) (155,295,781) - - - - 1,455,174,877 Beijing Xindongneng
Investment Management
Co., Ltd. 4,861,735 - 2,327,127 - - - (2,000,000) - 5,188,862 Shenzhen Yunyinggu
Technology Co., Ltd. 35,483,897 - (20,002,391) - - - - - 15,481,506 Beijing Xloong Technologies
Co.,Ltd. 23,981,997 - (1,372,786) - - - - - 22,609,211 New on Technology Co.Ltd. 3,708,174 - (512,473) - - (10,207) - - 3,185,494 Chongqing BOE Display
Technology Co., Ltd. 3,846,000 192,300,000 (2,808,246) 219,616 - - - (193,557,370) - Beijing Zhonglianhe Ultra HD
Collaborative Technology
Center Co., Ltd. - 3,000,000 - - - - - - 3,000,000 SES Imagotag SA Co.Ltd. 1,675,160,676 11,715,900 (1,411,455) - - 255,418 - (1,685,720,539) - Cnoga Medical Co.Ltd. 326,710,000 - - - - 16,450,000 - - 343,160,000 Hefei Xin Jing Yuan
Electronic Materials Co.,
Ltd. - 3,000,000 (98) - - - - - 2,999,902 Sub-total 4,672,259,202 360,015,900 (8,034,145) (202,778,999) 2,424,598 16,695,211 (35,000,000) (1,879,277,909) 2,926,303,858 Total 7,465,991,387 3,900,015,900 (13,925,731) (202,778,999) 2,424,598 16,695,211 (35,000,000) (8,207,118,508) 2,926,303,858 Less: Provision for
impairment 537,136,972 537,136,972 Total 6,928,854,415 2,389,166,886
Page 70
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 9 Investment properties
Land use rights Buildings Total Cost
Balance at the beginning of the
year 675,597,667 991,566,471 1,667,164,138 Additions during the year 11,837,010 20,592,374 32,429,384 Closing balance 687,434,677 1,012,158,845 1,699,593,522 Less: Accumulated depreciation or
amortization
Balance at the beginning of
the year 112,407,496 258,094,437 370,501,933 Additions during the year 14,742,206 30,481,732 45,223,938 Closing balance 127,149,702 288,576,169 415,725,871 Carrying amounts
At the end of the year 560,284,975 723,582,676 1,283,867,651 At the beginning of the year 563,190,171 733,472,034 1,296,662,205
Page 71
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 10 Fixed assets
(1) Analysis of theGroup’s fixed assets are as follows:
Item Plant& buildings Equipment Others Total Cost
Balance at the beginning of the year 26,638,824,007 111,488,454,005 2,106,778,047 140,234,056,059 Additions during the year
- Additions due to business
combinations involving entities not
under common control 8,369,526 554,286,212 11,779,221 574,434,959 - Purchases 22,048,907 490,646,142 620,686,368 1,133,381,417 - Transfer from construction in
progress 10,080,982,077 47,301,257,740 613,774,548 57,996,014,365 Disposals or written-offs during the year (663,844) (377,332,712) (102,605,476) (480,602,032) Other decreases - (6,520,201,883) - (6,520,201,883) Translation differences 133,616 22,051,939 3,112,610 25,298,165 Closing balance 36,749,694,289 152,959,161,443 3,253,525,318 192,962,381,050 Less: Accumulated depreciation
Balance at the beginning of the year 3,366,248,795 46,632,776,416 936,024,333 50,935,049,544 Charge during the year 921,469,231 11,998,277,652 620,991,543 13,540,738,426 Disposals or written-offs during the year (559,484) (242,112,475) (98,034,828) (340,706,787) Translation differences 43,483 13,925,120 2,737,927 16,706,530 Closing balance 4,287,202,025 58,402,866,713 1,461,718,975 64,151,787,713 Less: Provision for impairment
Balance at the beginning of the year 1,085,094 663,639,306 8,985,354 673,709,754 Disposals or written-offs during the year - (19,001,242) (1,846,170) (20,847,412) Balance at the end of the year 1,085,094 644,638,064 7,139,184 652,862,342 Carrying amounts
At the end of the year 32,461,407,170 93,911,656,666 1,784,667,159 128,157,730,995 At the beginning of the year 23,271,490,118 64,192,038,283 1,161,768,360 88,625,296,761 On January 16, 2018, the Company signed a debt examption agreement with Fuzhou Municipal People's Government, Fuzhou Chengtou BOE Investment Co., Ltd. and Fuzhou Construction& Investment Group Co., Ltd. for the investment framework agreement of Fuzhou 8.5th new semiconductor display device production line project. The loan exempted for the construction of Fuzhou's 8.5th generation new semiconductor display device production line project totaled RMB 6.3 billion. In accordance with the accounting policies set out in note III 25, the group has simultaneously reduced the total book value of long-term loans and related fixed assets by RMB 6.3 billion in the consolidated financial statements.
Page 72
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Fixed assets acquired under finance leases
2018 2017
Original Accumulated Provision for Carrying Original Accumulated Provision for Carrying Item book value depreciation impairment amount book value depreciation impairment amount Plant& buildings 11,291,665 4,357,005 - 6,934,660 11,291,665 4,103,316 - 7,188,349 Equipment 111,358,145 4,815,787 - 106,542,358 - - - - Total 122,649,810 9,172,792 - 113,477,018 11,291,665 4,103,316 - 7,188,349 TheGroup’s fixed assets under finance leases represented a youth apartment under finance lease for the Company, which is used for the purposes of the staff dormitory and machinery and equipment under finance leases.
(3) Fixed assets pending certificates of ownership
On 31 December 2018, fixed assets pending certificates of ownership totalled RMB 12,554,907,996 and certificates of ownership is still being processed.
11 Construction in progress
(1) Construction in progress
(a) Analysis of theGroup’s construction in progress is as follows:
2018 2017
Provision for Provision for
Item Book value impairment Carrying amount Book value impairment Carrying amount The 6th generation AMOLED project 23,065,639,272 - 23,065,639,272 - - - The 6th generation LTPS /
AMOLED project 15,759,483,392 - 15,759,483,392 19,099,729,823 - 19,099,729,823 The 10.5th generation TFT-LCD
project 5,599,769,733 - 5,599,769,733 19,778,218,499 - 19,778,218,499 Others 11,998,462,490 - 11,998,462,490 11,883,302,104 - 11,883,302,104 Total 56,423,354,887 - 56,423,354,887 50,761,250,426 - 50,761,250,426
Page 73
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) Movements of major construction in progress during the year
Additions due to
business Percentage Accumulated
combinations Transfer to of capitalized Percentage of
Balance at the involving entities Transfer to Intangible actual cost interest Interest interest
beginning of the not under Increase during fixed assets during the assets during Balance at the end to budget at the end of capitalized capitalized
Item Budget year common control the year year the year of the year (%) the year in 2018 in 2018(%) Sources of funding The 6th generation Self-raised funds AMOLED project 44,500,000,000 - 2,389,530,479 21,094,477,912 (418,369,119) - 23,065,639,27257.08% 56,276,871 56,276,871 3.88% and borrowings The 6th generation Self-raised funds LTPS / AMOLED and borrowings project 44,800,000,000 19,099,729,823 - 12,724,032,041 (16,059,831,316) (4,447,156) 15,759,483,39271.53% 382,974,096 582,748,988 4.68% The 10.5th generation Self-raised funds TFT-LCD project 42,937,000,000 19,778,218,499 - 15,109,135,590 (29,283,568,179) (4,016,177) 5,599,769,73382.86% - 424,792,676 5.06% and borrowings
Page 74
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 12 Intangible assets
(1) Intangible assets
Patent and
proprietary Computer
Land use rights technology software Others Total Original book value
Balance at the beginning
of the year 1,822,280,424 1,744,517,311 776,387,468 343,837,159 4,687,022,362 Additions during the year
- Additions due to
business
combinations
involving entities not
under common control 589,657,038 1,347,085,497 28,569 840,703,062 2,777,474,166 - Minority shareholder's
rights - 200,000,000 - - 200,000,000 - Purchases 236,594,905 - 68,627,737 42,184,921 347,407,563 - Transfer from
construction in
progress 37,170,534 - 60,291,004 - 97,461,538 Interest subsidies from
policy-related
preferential loans - (973,500) - - (973,500) Disposals during the year - - (2,963,479) (96,525) (3,060,004) Balance at the end of the
year 2,685,702,901 3,290,629,308 902,371,299 1,226,628,617 8,105,332,125 Less: Accumulated
amortisation
Balance at the beginning
of the year 178,337,119 1,024,064,866 443,322,429 58,633,640 1,704,358,054 Charge during the year 50,136,183 261,569,806 93,961,098 59,406,685 465,073,772 Disposals during the year - - (1,729,224) (49,871) (1,779,095) Balance at the end of the
year 228,473,302 1,285,634,672 535,554,303 117,990,454 2,167,652,731 Carrying amounts
At the end of the year 2,457,229,599 2,004,994,636 366,816,996 1,108,638,163 5,937,679,394 At the beginning of the
year 1,643,943,305 720,452,445 333,065,039 285,203,519 2,982,664,308 (2) Land use rights pending certificates of ownership
As at 31 December 2018, the company has land use rights pending certificates of ownership RMB 121,648,077 in total, which have been obtained on February 26 2019.
Page 75
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 13 Goodwill
(1) Changes in goodwill
Note Balance at the Additions Balance at the beginning of during the end of the
Name of investee the year year year
Original book value
Beijing Yinghe Century Co., Ltd. 42,940,434 - 42,940,434 K-Tronics (Suzhou) technology
Co., Ltd. 8,562,464 - 8,562,464 Beijing BOE Optoelectronics
Technology Co., Ltd. 4,423,876 - 4,423,876 BOE Healthcare Investment&
Management Co., Ltd. 146,460,790 - 146,460,790 SES Imagotag SA Co.Ltd. (a) - 706,406,821 706,406,821 Sub-total 202,387,564 706,406,821 908,794,385 Provision for impairment 4,423,876 - 4,423,876 Carrying amounts 197,963,688 706,406,821 904,370,509 (a) As at 6 February 2018, the Group achieving actual control of SES Imagotag SA Co. Ltd (SES). The excess of the combination cost over theGroup’s interest in the fair value ofSES’s identifiable assets and liabilities, amounting to RMB 706,406,821, was recognized as goodwill attributable to SES.
(2) Provision for impairment of goodwill
The recoverable amount of Yinghe Century, Suzhou K-Tronics, Health Investment and SES is determined based on the present value of expected future cash flows. The present value of expected future cash flows was projected based on the most recent approved five-year financial budgets of the management and a pre-tax discount rate of8.44%、6.62%、6.80% and23.01% respectively. The cash flows beyond the five-year budget period were assumed to keep stable. The key assumptions adopted in the forecasting may change. If management consider the key assumption will have negative changes, the book value of the relevant
asset group will exceed the recoverable amount.
14 Long-term deferred expenses
Balance at the
beginning of the Additions during Reductions during Balance at the end year the year the year of the year Payment for public facilities construction and
use 113,443,013 - (15,370,224) 98,072,789 Cost of operating lease assets improvement 18,931,332 13,630,236 (12,210,115) 20,351,453 Others 247,455,085 109,089,264 (114,327,738) 242,216,611 Total 379,829,430 122,719,500 (141,908,077) 360,640,853
Page 76
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 15 Deferred tax assets / deferred tax liabilities
(1) Deferred tax assets and liabilities
2018 2017
Deductible/ Deductible/
(taxable) (taxable)
temporary Deferred tax temporary Deferred tax Item differences assets / (liabilities) differences assets / (liabilities) Deferred tax assets:
Provisions for impairment losses of assets 391,727,136 69,662,802 404,563,258 72,783,228 Depreciation of fixed assets 125,811,735 22,699,045 79,460,328 11,970,733 Assessed value added by investing real
estate ini subsidiaries 142,110,808 35,527,702 147,664,660 36,916,165 Accumulated losses 230,110,593 67,447,589 48,749,683 8,043,698 Advances from customers 290,000,000 43,500,000 - - Others 219,548,492 42,572,983 34,900,387 8,725,096 Sub-total 1,399,308,764 281,410,121 715,338,316 138,438,920 Amount offset (29,036,499) (32,183,263) Balance after offset 252,373,622 106,255,657 Deferred tax liabilities:
Revaluation due to business combinations
involving entities not under common
control (2,777,250,385) (835,036,150) (1,099,980,193) (272,308,392) Depreciation of fixed assets (3,248,856,623) (517,769,740) (1,246,406,521) (213,674,259) Changes in fair value of available-for-sale
financial assets (53,218,430) (8,058,902) (145,163,930) (25,783,777) Long-term equity investments (360,863,027) (54,129,454) (360,863,027) (54,129,454) Bond interest (71,525,943) (10,728,891) (71,532,514) (10,729,877) Others (223,118,577) (22,686,907) (204,034,820) (18,860,414) Sub-total (6,734,832,985) (1,448,410,044) (3,127,981,005) (595,486,173) Amount offset 29,036,499 32,183,263 Balance after offset (1,419,373,545) (563,302,910)
Page 77
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Details of unrecognized deferred tax assets
2018 2017 Deductible temporary differences 9,073,884,112 7,974,238,271 Deductible losses 6,752,930,780 1,888,693,158 Total 15,826,814,892 9,862,931,429 As at 31 December 2018, the deductible temporary differences are mainly provisions for thesubsidiaries’ impairment of assets. Due to the uncertainty that there will be sufficient taxable income to cover these deductible differences in future periods, the deferred income tax assets were not recognized in consideration of prudence.
(3) Expiration of deductible tax losses for unrecognized deferred tax assets:
Year Note 2018 2017 2018 - 45,598,745 2019 38,076,038 47,515,768 2020 59,149,932 130,498,173 2021 52,190,671 73,876,573 2022 528,642,251 524,338,212 2023 669,677,506 67,648,332 2024 125,649,689 125,649,689 2025 512,243,532 512,977,493 2026 233,283,462 233,283,463 2027 133,672,001 127,306,710 2028 4,296,683,816 - Others (a) 103,661,882 - Total 6,752,930,780 1,888,693,158 According to the Notice of the Ministry of Finance and the State Administration of Taxation on Extending the Loss Carry-over Period of High-Tech Enterprises and High-Tech SMEs (Cai Shui[2018] No. 76), qualified enterprises in 2018, regardless of whether they are qualified from 2013 to 2017, the losses that have not been remedied from 2013 to 2017 are all allowed to be repaid after the carry-over, and the longest carry-over period is 10 years. In order to facilitate the corresponding comparison, comparative figures in 2017 are restated. (a) According to the applicable local tax laws, Loss of some overseas subsidiaries of the Group has indefinite carry-over period to deduct the future taxable income.
Page 78
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 16 Other non-current assets
2018 2017 Deferred VAT for imported equipment 3,187,164,914 1,401,435,788 Prepayment for fixed assets 2,896,176,554 2,062,240,060 VAT on tax credits 1,488,605,413 321,022,343 Prepayment for projects 155,970,966 289,231,537 Others 165,084,206 115,837,526 Total 7,893,002,053 4,189,767,254 17 Short-term loans
2018
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 110,033,961 Pledged - RMB 1,399,800,000 Credited Sub-total 1,509,833,961
Foreign currency bank loans
- USD 314,573,510 6.8632 2,158,980,914 Pledged - USD 47,369,984 6.8632 325,109,671 Collateralised - USD 139,129,343 6.8632 954,872,507 Credited - JPY 313,000,000 0.0619 19,370,631 Collateralised - JPY 7,784,950,000 0.0619 481,787,201 Credited Sub-total 3,940,120,924
Total 5,449,954,885
2017
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 350,578,748 Pledged - RMB 418,499,999 Credited Sub-total 769,078,747
Foreign currency bank loans
- USD 161,181,026 6.5342 1,053,189,061 Pledged - USD 53,679,291 6.5342 350,751,222 Credited - EUR 138,000,000 7.8023 1,076,717,400 Pledged Sub-total 2,480,657,683
Total 3,249,736,430
The interest rate of short-term loans for the Group ranged from1.28% to4.95% in 2018 (2017:0.35% to5.20%).
As at 31 December 2018, no short-term loan was past due (2017: nil).
Page 79
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 18 Bills payable and accounts payable
Note 2018 2017 Bills payable (1) 591,109,272 543,798,835 Accounts payable (2) 22,213,956,616 16,205,788,698 Total 22,805,065,888 16,749,587,533 (1) Bills payable
2018 2017 Bank acceptance bills 326,575,254 481,852,311 Commercial acceptance bills 264,534,018 61,946,524 Total 591,109,272 543,798,835 There is no due but unpaid bill payable at the end of the year. The above bills are all due within one year.
(2) Accounts payable
(a) TheGroup’s accounts payable by category are as follows:
2018 2017 Payables to related parties 30,361,810 14,532,494 Payables to third parties 22,183,594,806 16,191,256,204 Total 22,213,956,616 16,205,788,698 (b) TheGroup’s accounts payable by currency are as follows:
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents - RMB 14,305,998,594 11,174,717,229 - USD 959,572,576 6.8632 6,585,738,505 658,301,225 6.5342 4,301,456,276 - JPY 13,279,275,766 0.0619 821,987,170 11,718,379,068 0.0579 678,364,509 - Other foreign
currencies 500,232,347 51,250,684 Total 22,213,956,616 16,205,788,698 As at 31 December 2018, the Group had no individually significant accounts payable ageing more than one year.
Page 80
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 19 Advances from customers
Item 2018 2017 Advances from related parties 1,111 141,921 Advances from third parties 1,218,933,632 781,182,601 Total 1,218,934,743 781,324,522 As at 31 December 2018, the Group had no individually significant advances from customers ageing more than one year.
20 Employee benefits payable
(1) Employee benefits payable:
Balance as of Increase during Reductions during Balance as of Note January 1 2018 the year the year December 31 2018 Short-term employee benefits (2) 2,167,235,414 10,681,611,152 10,673,038,901 2,175,807,665 Post-employment benefits
- defined contribution plans (3) 34,854,644 860,558,928 861,059,727 34,353,845 Termination benefits 14,976,886 6,091,402 6,298,627 14,769,661 Total 2,217,066,944 11,548,261,482 11,540,397,255 2,224,931,171 Balance as of Increase during Reductions during Balance as of Note January 1 2017 the year the year December 31 2017 Short-term employee benefits (2) 1,497,068,752 9,211,333,761 8,541,167,099 2,167,235,414 Post-employment benefits
- defined contribution plans (3) 30,746,554 707,946,622 703,838,532 34,854,644 Termination benefits 15,036,960 5,497,883 5,557,957 14,976,886 Total 1,542,852,266 9,924,778,266 9,250,563,588 2,217,066,944 (2) Short-term employee benefits
Balance as of Increase during Reductions during Balance as of January 1 2018 the year the year December 31 2018 Salaries, bonuses and allowances 1,840,923,550 8,737,680,189 8,760,657,228 1,817,946,511 Staff welfare - 776,550,030 776,550,030 - Social insurance 33,561,796 436,106,436 438,357,908 31,310,324 Medical insurance 30,110,821 384,231,011 387,191,648 27,150,184 Work-related injury insurance 1,419,661 31,115,109 30,485,856 2,048,914 Maternity insurance 2,031,314 20,760,316 20,680,404 2,111,226 Housing fund 17,201,305 430,417,142 425,536,787 22,081,660 Labour union fee, staff andworkers’
education fee 246,372,990 242,263,166 214,158,506 274,477,650 Staff bonus and welfare fund 7,282,591 - - 7,282,591 Other short-term employee benefits 21,893,182 58,594,189 57,778,442 22,708,929 Total 2,167,235,414 10,681,611,152 10,673,038,901 2,175,807,665
Page 81
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Balance as of Increase during Reductions during Balance as of January 1 2017 the year the year December 31 2017 Salaries, bonuses and allowances 1,178,080,434 7,500,609,836 6,837,766,720 1,840,923,550 Staff welfare - 742,718,924 742,718,924 - Social insurance 66,779,153 357,701,317 390,918,674 33,561,796 Medical insurance 63,337,669 310,634,444 343,861,292 30,110,821 Work-related injury insurance 1,631,421 26,846,859 27,058,619 1,419,661 Maternity insurance 1,810,063 20,220,014 19,998,763 2,031,314 Housing fund 20,607,756 339,557,027 342,963,478 17,201,305 Labour union fee, staff andworkers’ education
fee 214,936,641 186,435,492 154,999,143 246,372,990 Staff bonus and welfare fund 7,282,591 - - 7,282,591 Other short-term employee benefits 9,382,177 84,311,165 71,800,160 21,893,182 Total 1,497,068,752 9,211,333,761 8,541,167,099 2,167,235,414 (3) Post-employment benefits - defined contribution plans
Balance as of Increase during Reductions during Balance as of January 1 2018 the year the year December 31 2018 Basic pension insurance 28,831,475 815,071,236 814,696,438 29,206,273 Unemployment insurance 1,155,250 25,252,494 25,442,851 964,893 Annuity 4,867,919 20,235,198 20,920,438 4,182,679 Total 34,854,644 860,558,928 861,059,727 34,353,845 Balance as of Increase during Reductions during Balance as of January 1 2017 the year the year December 31 2017 Basic pension insurance 24,629,016 664,045,399 659,842,940 28,831,475 Unemployment insurance 1,219,162 26,548,521 26,612,433 1,155,250 Annuity 4,898,376 17,352,702 17,383,159 4,867,919 Total 30,746,554 707,946,622 703,838,532 34,854,644 21 Taxes payable
2018 2017 Value-added tax 112,292,699 7,384,437 Corporate income tax 387,053,187 501,685,626 Individual income tax 39,659,862 41,968,486 City construction tax 205,222,860 84,932,308 Education surcharges and local education
surcharges 148,544,558 61,375,167 Others 77,335,132 78,275,122 Total 970,108,298 775,621,146
Page 82
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 22 Other payables
Note 2018 2017 Interest payable 1,016,761,921 847,955,186 Dividends payable (1) 23,648,778 9,651,170 Others (2) 21,916,569,129 15,264,806,774 Total 22,956,979,828 16,122,413,130 (1) Dividends payable
Dividends not paid this year were mainly due to dividends not yet available to non-tradable shareholders and cash dividends of non-controlling shareholders who have not paid individual subsidiaries.
(2) Others
(a) TheGroup’s other payables by category are as follows:
2018 2017 Projects and equipment 18,042,357,713 12,772,388,210 Deferred VAT for imported equipment 1,400,000,000 675,815,849 Accrued water and electricity charges
and freight 606,071,394 430,803,905 Deposits 440,792,988 380,789,096 External agency fee 53,393,714 34,108,132 Others 1,373,953,320 970,901,582 Total 21,916,569,129 15,264,806,774 TheGroup’s significant other payables aged over one year are payables of projects and equipment.
(b) TheGroup’s other payables by currency are as follows:
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents RMB 15,064,792,480 10,281,873,020 USD 724,117,103 6.8632 4,969,760,500 574,115,354 6.5342 3,751,384,540 JPY 29,183,294,045 0.0619 1,806,445,901 20,695,199,824 0.0579 1,198,039,317 Other foreign
currencies 75,570,248 33,509,897 Total 21,916,569,129 15,264,806,774
Page 83
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 23 Non-current liabilities due within one year
As at 31 December, the non-current liabilities due within one year for the Group were long- term loans and long-term payables due within one year.
2018
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 37,743,750 Pledged - RMB 1,702,180,000 Collateralised - RMB 990,000,000 Credited - USD 378,624,409 6.8632 2,598,575,044 Collateralised - EUR 3,694,262 7.8473 28,989,985 Credited - EUR 3,950,000 7.8473 30,996,836 Pledged Long-term payables 209,077,589 Collateralised Total 5,597,563,204
2017
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 2,725,000,000 Credited - RMB 915,745,064 Collateralised - RMB 1,000,000 Pledged - USD 200,000,000 6.5342 1,306,840,000 Credited - USD 609,380,700 6.5342 3,981,815,370 Collateralised Long-term payables 179,308,077 Collateralised Total 9,109,708,511
The interest rate of RMB long-term loans due within one year for the Group ranged from0% to5.88% in 2018 (2017: from0% to5.64%).
24 Other current liabilities
The other current liabilities of the Group were warranty provision. The warranty provision mainly relates to the expected after-sales repair warranty to the customers. The provision is estimated by the Management, based on historical claim experience and current actual sales outcomes.
Page 84
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 25 Long-term loans
2018
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 640,180,000 Pledged - RMB 32,190,024,533 Collateralised - RMB 660,000,000 Guaranteed - RMB 27,697,000,000 Credited - USD 5,422,274,409 6.8632 37,214,153,724 Collateralised - EUR 7,172,652 7.8473 56,285,953 Credited - EUR 218,025,000 7.8473 1,710,919,269 Pledged Less: Long-term loans due within one year 5,388,485,615
Total 94,780,077,864
2017
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 26,676,070,000 Credited - RMB 18,725,264,133 Collateralised - RMB 508,585,000 Pledged - USD 308,062,697 6.5342 2,012,943,277 Credited - USD 5,950,391,285 6.5342 38,881,046,734 Collateralised - EUR 141,000,000 7.8023 1,100,124,300 Pledged Less: Long-term loans due within one year 8,930,400,434
Total 78,973,633,010
The interest rate of RMB long-term loans for the Group ranged from0% to5.88% in 2018 (2017: from0% to6.60%).
26 Bonds payable
(1) Bonds payable
Item 2018 2017 Debentures payable 10,288,666,233 9,966,467,496 Less: Bonds payable due within one year - - Total 10,288,666,233 9,966,467,496
Page 85
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Increase and decrease of bonds payable:
Additions due to business Amortization to
Balance at the combinations involving entities not Interest recognized discounts or Translation Repayment during
Name of bond Par value Issuance date Maturity Issuance amount beginning of the year under common control based on par value premium differences the period Balance at the end of the year 16BOE01 RMB 10,000,000,000 As at 21/03/2016 5 RMB 10,000,000,000 9,966,467,496 - 315,000,000 10,065,929 - (315,000,000) 9,976,533,425 Euro PP EUR10,000,000 As at 29/12/2016 7 EUR10,000,000 - 78,035,000 2,738,890 - 435,471 (2,738,890) 78,470,471 Euro PP EUR30,000,000 As at 29/03/2017 6 EUR30,000,000 - 232,249,600 8,216,670 106,324 1,306,413 (8,216,670) 233,662,337 Total 9,966,467,496 310,284,600 325,955,560 10,172,253 1,741,884 (325,955,560) 10,288,666,233 From 21 March 2016 to 22 March 2016, with the Approval document No. 469[2016] of CSRC, the Group successfully issued a corporate bond of RMB 10 billion to qualified investors via Shenzhen Stock Exchange. The full name of the bond was Corporate Bond Issued Publicly by BOE Technology Group Co., Ltd. to Qualified Investors in 2016 (the First Phase), which referred to as 16BOE01.
The total amount of the bond in the current period is RMB 10 billion issued at a par value of RMB 100, with a maturity of 5 years from 21 March 2016 to 21 March 2021. Interest starts to accrue on 21 March 2016 and the interest payments are made annually. The company will pay out the last interest payment with the principle amount of the bond when it becomes mature. The coupon rate is3.15% which is fixed in the first 3 years, after which the company has a right to raise the rate and so are the investors to sell back the bond to the company. On 30 January 2019, the company has decided that the coupon rate remains unchanged and the investors may exercise the put option considering the market environment at the time. A number of 96,705,976 bonds were sold back to the company at a total value of RMB 9,975,221,424.40 with interests included while 3,294,024 bonds remains held by the investors. As at 20 March 2019, the company has made a payment that includes both the principles and the interests of the put-back bonds to the designated bank account of China Securities Depository and Clearing Co., Ltd Shenzhen branch (CSDC Shenzhen), the payment then went through the clearing system of CSDC Shenzhen to theinvestors’ registered reserve deposit account. As on 21 March 2019, the payments were allocated toinvestors’ account with CSDC.
SES issued two private placement bonds with a total face value of 40 million euro to institutional investors on 29 December 2016 and 29 March 2017. The coupon rate of the bonds is3.5% and the maturity date is 29 December 2023. Interest payments are made annually and the principle amount will be paid when the bonds become due.
Page 86
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 27 Long-term payables
Item Note 2018 2017 Financial lease payables (1) 1,625,169,828 1,355,559,059 Less: Financial lease payable due within
one year 209,077,589 179,308,077 Total 1,416,092,239 1,176,250,982 (1) Details of obligations under finance leases included in long-term payables
As at 31 December, the total future minimum lease payments under finance leases were as follows:
Minimum lease payments 2018 2017 Within 1 year (inclusive) 310,816,661 256,663,314 After 1 year but within 2 years (inclusive) 362,741,342 283,747,221 After 2 years but within 3 years (inclusive) 345,762,549 307,743,543 Over 3 years 1,096,208,635 825,636,817 Sub-total 2,115,529,187 1,673,790,895 Less: Unrecognized finance fees 490,359,359 318,231,836 Total 1,625,169,828 1,355,559,059 The Group leased back some of its sold machinery equipment and constructions in progress. The sales of the assets are related to the leases, and the Group basically can ensure to buy back the asset after lease term. Therefore, the Group adopts the accounting treatment of collateral loans.
28 Provisions
Name of investee 2018 2017 Pending implementation of the agreement 16,457,010 16,457,010 In 2009, the Group ceased producing several products and stopped fulfilling the purchase contract related to production. Due to the indemnity incurred accordingly, the Group accrued provisions according to reasonable estimation of loss.
Page 87
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 29 Deferred income
Balance at Government grants
the beginning of newly increased Amount included in Balance at Item the year during the year other income Other changes the end of the year Government grants
related to assets 2,028,326,953 570,687,312 (446,432,359) (232,830,923) 1,919,750,983 Related to income 233,628,354 210,252,793 (176,073,597) - 267,807,550 Total 2,261,955,307 780,940,105 (622,505,956) (232,830,923) 2,187,558,533 30 Other non-current liabilities
Item Note 2018 2017 Convertible debt (1) 4,175,131,508 3,985,192,661 Contribution of minority shareholders
with redemption provisions (2) 3,700,737,154 3,629,616,046 Deferred VAT for imported equipment 3,187,164,914 1,401,435,788 Others 271,839,746 114,000,000 Total 11,334,873,322 9,130,244,495 (1) Convertible debt
Convertible debt arise from theCompany’s capital commitment and conversion obligations to the minority shareholders of Hefei Xinsheng. In December 31 2018, the balance of the convertible debt includes principal and interest measured according to amortized cost totalled RMB 4,104,131,508 and financial liabilities based on fair value totalled RMB 71,000,000 which its fair value change is recognised in the gains from changes in fair value (Note V. 45).
(2) Contribution of minority shareholders with redemption provisions
The Contribution of minority shareholders with redemption provisions is mainly due to the redemption obligation of the company to the minority shareholders of Fuzhou BOE and BOE Smart Retail (Hong Kong) Co., Ltd. The company recognizes the above minority shareholder contribution as a financial liability which is subsequently measured at the cost of amortization. The book balance on December 31 2018 is RMB 3,700,737,154.
31 Share capital
Balance at the Balance at the end beginning of the year of the year Total shares 34,798,398,763 34,798,398,763
Page 88
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 32 Capital reserve
Other capital
Item Share premiums reserves Total Balance at the beginning of the year 37,546,517,053 1,038,998,069 38,585,515,122 Add: Equity movements arising from investment
increase in non-wholly owned
subsidiaries - 3,754,159 3,754,159 Other movements in equity of
investee - 2,424,598 2,424,598 Less:Equity changes arising from
acquisition of non-controlling
interests - 378,593,283 378,593,283 Closing balance 37,546,517,053 666,583,543 38,213,100,596 In December 2017, BOE Smart Retail (Hong Kong) Co., Ltd., a subsidiary of the Company, acquired over50.01% of SES Imagotag SA Co.Ltd. at a price of 30 Euro per share through block trading, and get control of SES Imagotag SA Co. Ltd. in February 6, 2018. The block trading triggered a comprehensive tender offer obligation for SES Imagotag SA Co. Ltd. As of March 16, 2018 (the date of completion of the tender offer), BOE Smart Retail (Hong Kong) Co., Ltd. had a total offer of 3,582,490 shares, and pay consideration of RMB 837,507,347. The acquisition of non-controlling shareholders' equity above leads to the reduction of capital reserve of RMB 378,593,283.
33 Other comprehensive income
Movements during the year
Balance at the Balance at the beginning of Less: After-tax end of the the year Previsously After-tax amount year attributable to Before-tax recognized amount attributable to attributable to shareholders amount amount Less: attributable to the non- shareholders of the parent during the transferred to Income tax the parent controlling of the parent Item company year profit or loss expenses company shareholders company Other comprehensive income that will be
reclassified to profit or loss
Including: Share of other comprehensive
income of the equity-accounted
investee that may be reclassified
to profit or loss 144,614,667 (202,778,999) 219,616 - (202,998,615) - (58,383,948) Gains or losses arising from
changes in fair value of available-
for-sale financial assets 120,396,369 (121,965,782) 38,312,453 (17,724,875) (136,009,652) (6,543,708) (15,613,283) Translation differences arising from
translation of foreign currency
financial statements (114,408,103) 95,737,106 - - 63,147,082 32,590,024 (51,261,021) Total 150,602,933 (229,007,675) 38,532,069 (17,724,875) (275,861,185) 26,046,316 (125,258,252) 34 Surplus reserve
Balance at the
beginning of the Additions during Reductions during Balance at the end Item year the year the year of the year Statutory surplus reserve 599,969,166 262,985,835 - 862,955,001 Discretion arysurplus reserve 289,671,309 - - 289,671,309 Total 889,640,475 262,985,835 - 1,152,626,310
Page 89
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 35 Retained earnings
Item 2018 2017 Retained earnings at the beginning of the
year 10,385,659,084 4,011,055,487 Add: Net profits for the year attributable to
shareholders of the Company 3,435,127,975 7,567,682,493 Less: Appropriation for statutory surplus
reserve 262,985,835 146,500,620 Dividends to ordinary shares 1,739,919,938 1,046,578,276 Retained earnings at the end of the year 11,817,881,286 10,385,659,084 According to the AnnualShareholders’ Meeting for 2017 held on 28 May 2018, the Company distributed cash dividends to all shareholders on 26 June 2018, with RMB 0.5 every 10 shares (2017: RMB 0.3) and a total dividend of RMB 1,739,919,938 (2017: RMB 1,046,578,276) distributed.
As at 31 December 2018, the consolidated retained earnings attributable to the Company included an appropriation of RMB 2,028,756,975 (2017: RMB 870,170,635) to surplus reserve made by the subsidiaries.
36 Operating income and operating costs
2018 2017
Item Income Cost Income Cost Principal activities 94,629,547,884 75,771,556,938 91,648,854,762 68,916,418,783 Other operating activities 2,479,317,051 1,534,667,350 2,151,624,453 1,366,058,802 Total 97,108,864,935 78,206,224,288 93,800,479,215 70,282,477,585 Details of operating income:
2018 2017 Operating income from principal activities
- Sale of goods 94,629,547,884 91,648,854,762 Other operating income
- Sales of raw materials 936,524,913 985,858,732 - Rental income of investment properties 1,023,141,383 878,867,829 - Others 519,650,755 286,897,892 Total 97,108,864,935 93,800,479,215 Information on income, expenses and profit of principal activities has been included in Note XIII.
Page 90
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 37 Taxes and surcharges
2018 2017 Property tax 311,354,873 237,646,244 Urban maintenance and construction tax 192,007,248 173,249,514 Education surcharges and local education
surcharges 137,643,535 124,162,574 Stamp duty 84,381,357 69,998,977 Land use tax 28,005,681 37,247,474 Others 25,213,432 66,076,746 Total 778,606,126 708,381,529 38 Selling and distribution expenses
2018 2017 Warranty provisions 1,068,015,463 1,200,437,455 Staff cost 582,456,239 536,623,384 Logistics 530,295,839 452,572,779 Others 710,289,428 402,292,180 Total 2,891,056,969 2,591,925,798 39 General and administrative expenses
2018 2017 Staff cost 2,304,932,925 1,886,440,369 Repair expense 1,155,436,163 1,076,177,465 Depreciation and amortisation 445,659,627 256,406,262 Others 1,053,155,482 849,751,849 Total 4,959,184,197 4,068,775,945 40 Research and development costs
2018 2017 Staff cost 2,337,224,942 1,256,769,303 Material expenses 888,449,869 751,707,490 Depreciation and amortisation 662,379,702 524,292,457 Others 1,151,872,922 644,998,145 Total 5,039,927,435 3,177,767,395
Page 91
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 41 Financial expenses
2018 2017 Interest expenses from loans 4,566,725,543 3,143,654,626 Less: Borrowing costs capitalised 1,300,993,229 664,318,467 Interest income from bank deposits (748,004,557) (665,076,391) Net exchange losses 544,018,382 19,922,620 Other financial expenses 134,949,751 113,842,472 Total 3,196,695,890 1,948,024,860 The interest rate per annum, at which the borrowing costs were capitalized by the Group, was3.88%~5.06% (2017:2.66%~4.74% for the year).
42 Impairment losses
2018 2017 Provision losses for bad debts 4,499,724 282,200,188 Impairment losses of inventories 1,201,958,587 1,903,973,944 Impairment losses of fixed assets - 43,350,550 Available-for-sale financial assets 33,130,452 - Total 1,239,588,763 2,229,524,682 43 Other income
2018 2017 Government grants related to
assets 514,836,515 386,080,172 Government grants related to
income 1,485,737,116 346,469,940 Total 2,000,573,631 732,550,112 The amount of government subsidies received by the Group in 2018 and directly included in other income was RMB 1,378,067,675.
Page 92
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 44 Investment income
2018 2017 Long-term equity investments gains/(loss) under
equity method (13,925,731) 169,034 Investment income from disposal of long-term equity
investment (3,948,640) - Investment income from holding available-for-sale
financial assets 11,543,726 12,671,679 Investment income from wealth management
products on maturity 313,218,224 102,761,970 Including: Reversal of other comprehensive
income 38,312,453 356,146 Total 306,887,579 115,602,683 45 Gains from changes in fair value
Item 2018 2017 Financial liabilities at fair value through profit or loss 2,061,153 32,048,211 Including: Gains from changes in fair value of
derivative financial instruments 2,061,153 32,048,211 Total 2,061,153 32,048,211 As stated in Note V.30 (1), the Group assessed the fair value of the financial liability - the acquisition duty during the current year and recognized the gains from changes in fair value amounting to RMB 2,061,153.
46 Gains/ (Losses) from disposal of assets
Amount recognized in extraordinary gain and loss Item 2018 2017 in 2018 Gains/ (Losses) from disposal of fixed
assets 1,067,273 (69,145) 1,067,273 Total 1,067,273 (69,145) 1,067,273
Page 93
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 47 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Amount recognized in extraordinary gain and loss Item 2018 2017 in 2018 Government grants 73,136,030 108,695,893 73,136,030 Others 96,293,485 71,722,965 96,293,485 Total 169,429,515 180,418,858 169,429,515 Government grants recognized in current profit or loss
Item 2018 2017 Policy incentives and others 73,136,030 108,695,893 (2) Non-operating expenses
Amount recognized in extraordinary gain and loss 2018 2017 in 2018 Donations provided 8,931,099 18,829,148 8,931,099 Losses from scrapping of non-current assets
damage 25,378,178 87,861,553 25,378,178 Others 21,000,974 6,389,900 21,000,974 Total 55,310,251 113,080,601 55,310,251
Page 94
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 48 Income tax expenses
Note 2018 2017 Current tax expense based on tax law and
regulations 1,114,931,211 1,746,755,541 Changes in deferred tax (1) 127,484,883 133,904,439 Total 1,242,416,094 1,880,659,980 (1) The analysis of changes in deferred tax assets / liabilities is set out below:
2018 2017 Origination and reversal of temporary
differences 127,484,883 133,904,439 (2) Reconciliation between income tax expense and accounting profit is as follows:
2018 2017 Profit before taxation 4,122,290,167 9,741,071,539 Expected income tax expense at tax rate of
15% 618,343,525 1,461,160,731 Add: Effect of different tax rates applied by
subsidiaries (8,605,091) (27,391,522) Effect of non-deductible costs,
expense and losses 57,787,173 43,112,436 Tax effect of weighted deduction and
tax preference (326,776,754) (167,780,559) Utilisation of prior year tax losses (42,090,199) (55,457,681) Tax effect of deductible losses of
deferred tax assets not recognized 801,853,138 160,554,413 Tax effect of deductible temporary
differences of deferred tax assets
not recognized 167,943,845 490,319,923 Recognized temporary differences of
previous years - (23,857,761) Effect of tax rates changes on
deferred tax (26,039,543) - Income tax expense 1,242,416,094 1,880,659,980
Page 95
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 According to the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology Finance and Taxation[2018] No. 99 Notice on Increasing the Pre- tax Deduction Ratio of Research and Development Expenses, in order to further encourage enterprises to increase investment in research and development, support scientific and technological innovation, enterprises actually carry out research and development activities. The research and development expenses which are not resulted in intangible assets but in the current profits and losses, are deducted on the basis of the regulations truthfully. Besides, during January 1, 2018 and December 31 2020, extra deduction will be added to the research and development expenses before taxation according to75% of the actual amount. 49 Basic earnings per share and diluted earnings per share
Basic earnings per share is calculated as dividing consolidated net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding. The Group does not have any potential dilutive ordinary shares for the listed years.
2018 2017 Consolidated net profit attributable to ordinary
shareholders of the Company 3,435,127,975 7,567,682,493 Weighted average number of ordinary shares
outstanding (share) 34,798,398,763 34,888,807,218 Basic earnings per share (RMB / share) 0.10 0.22 Weighted average number of ordinary shares is calculated as follows:
2018 2017 Issued ordinary shares at the beginning of the year 34,798,398,763 35,020,526,918 Weighted average effect of shares repurchased - (131,719,700) Weighted average number of ordinary shares at 31
December 34,798,398,763 34,888,807,218
Page 96
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 50 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
2018 2017 (a) Reconciliation of net profit to cash flows from
operating activities:
Net profit 2,879,874,073 7,860,411,559 Add: Impairment loss 1,239,588,763 2,229,524,682 Depreciation of fixed assets and
investment property 13,335,938,485 11,582,379,561 Amortisation of intangible assets 439,474,291 283,359,395 Amortisation of long-term deferred
expenses 141,908,077 78,774,292 (Losses) / gains from disposal of fixed
assets, intangible assets, and other
long-term assets (3,694,057) 69,145 Losses from scrapping of fixed assets
and intangible assets 25,378,178 87,861,553 Financial expenses 2,568,053,826 1,446,546,521 Gains from changes in fair value (2,061,153) (32,048,211) Investment income (306,887,579) (115,602,683) Change in deferred income 87,642,739 153,536,921 (Increase) / decrease in deferred tax
(97,760,872) 40,282,908 assets
Increase in deferred tax liabilities 841,185,989 93,600,350 Increase in inventories (3,709,307,660) (3,028,554,792) Decrease in operating receivables 828,109,193 2,126,578,448 Increase in operating payables 7,416,604,903 3,920,210,006 Net cash inflow from operating activities 25,684,047,196 26,726,929,655 (b) Significant investing and financing activities not requiring the use of cash:
On January 16, 2018, the Company signed a debt examption agreement with Fuzhou Municipal People's Government, Fuzhou Chengtou BOE Investment Co., Ltd. and Fuzhou Construction& Investment Group Co., Ltd. for the investment framework agreement of Fuzhou 8.5th new semiconductor display device production line project. The loan exempted for the construction of Fuzhou's 8.5th generation new semiconductor display device production line project totaled RMB 6.3 billion.
In 2018, Hefei Display Technology, a subsidiary of the Group, signed the Overseas Payment Financing Contract with the China Development Bank. The China Development Bank arranged the Payment Bank to pay RMB47,369,984 and JPY313,000,000 in advance for imports on behalf of Hefei Display Technology. At the agreed financing maturity date, Hefei Display Technology will repay the principal and interest of the financing and related costs to the China Development Bank, which will return the relevant funds to the paying bank on behalf of the China Development Bank.
Page 97
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 In 2018, Chengdu Optoelectronics, a subsidiary of the Group, signed the Overseas Payment Financing Contract with the China Development Bank, which arranged by the China Development Bank to pay USD163,440,859 in advance for imports of Chengdu Optoelectronics on behalf of the Bank. At the agreed financing maturity date, Chengdu Optoelectronics will repay the financing principal, interest and related costs to the China Development Bank, and the China Development Bank will repay the relevant funds to the paying bank. In 2018, Chengdu Optoelectronics has paid a total of USD148,905,859. In 2018, Mianyang BOE, a subsidiary of the Group, signed the Overseas Payment Financing Contract with the China Development Bank, which arranged by the China Development Bank to pay the import money of USD 48,271,469 and JPY 7,784,950,000 in advance on behalf of Mianyang BOE. At the agreed financing maturity date, Mianyang BOE will repay the principal and interest of the financing and related expenses to the China Development Bank, and the relevant funds will be returned by the China Development Bank to the paying bank.
In 2018, Kunming BOE, a subsidiary of the company, received a minority shareholder's investment in patents and proprietary technology, and accounted for RMB 200,000,000 according to the assessed bookkeeping value.
In 2018, BOE Energy, a subsidiary of the Group, leased fixed assets. The financial leasing company directly paid for the purchase of suppliers. The total amount was RMB 111,358,145.
(c) Cha nges in cash and cash equivalents:
2018 2017 Cash and cash equivalents at the end of the
year 43,350,696,520 47,913,287,583 Less: Cash and cash equivalents at the
beginning of the year 47,913,287,583 49,354,810,388 Net Decrease in cash and cash equivalents (4,562,591,063) (1,441,522,805) (2) Information on acquisition or disposal of subsidiaries and other business units during the year
Information on acquisition of subsidiaries and other business units:
2018 2017 Cash and cash equivalents paid during
the year for acquiring subsidiaries - - Less: Cash and cash equivalents held
by acquired subsidiaries 6,801,508,810 - Net cash paid for the acquisition (6,801,508,810) -
Page 98
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Note: Details on the acquistion of subsidiaries the year, refer to Note VI.1(1).
(3) Details of cash and cash equivalents
2018 2017 Cash on hand 537,805 526,764 Bank deposits available on demand 43,340,146,382 47,912,760,611 Other monetary funds available on demand 10,012,333 208 Cash and cash equivalents at the end of
the year 43,350,696,520 47,913,287,583 Note: Cash and cash equivalents disclosed above exclude other monetary fund with restricted usage.
51 Assets with restrictive ownership title or right of use
Balance at the
beginning of the Additions during Reductions during Balance at the end
Item year the year the year of the year Reason for restriction Cash at bank and Pledged as collateral and on hand 9,215,371,993 5,150,842,367 6,235,371,169 8,130,843,191 margin deposit Discounted with recourse, endorsed with Bills receivable 503,406,676 208,324,414 503,406,676 208,324,414 resource and pledged for drawing bill Investment
properties 188,015,432 37,889,470 8,469,341 217,435,561 Mortgaged as collateral Fixed assets 56,639,021,799 50,921,156,278 9,308,311,371 98,251,866,706 Mortgaged as collateral Construction in
progress 8,275,020,678 72,197,786,830 46,354,833,254 34,117,974,254 Mortgaged as collateral Intangible assets 958,034,967 279,067,185 20,174,667 1,216,927,485 Mortgaged as collateral Total 75,778,871,545 128,795,066,544 62,430,566,478 142,143,371,611
52 Details of provision for impairment of assets
Reductions during the year
Balance at the
beginning of the Additions during Translation Balance at the Item Note year the year Move Back Transferred out differences end of the year RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan RMB Yuan Provision for bad and doubtful
debts V. 2, 4 305,196,374 6,279,434 1,779,710 3,917,581 13,883,825 319,662,342 Provision for impairment of
inventories V. 5 1,989,915,833 2,022,017,881 820,059,294 1,502,889,490 2,650,454 1,691,635,384 Provision for impairment of
available-for-sale financial
assets V. 7 150,279,655 33,130,452 - - 1,185,500 184,595,607 Provision for impairment of
held-to-maturity investments 17,960,946 - - - - 17,960,946 Provision for impairment of
long-term equity
investments V. 8 537,136,972 - - - - 537,136,972 Provision for impairment of
fixed assets V. 10 673,709,754 - - 20,847,412 - 652,862,342 Provision for impairment of
goodwill V. 13 4,423,876 - - - - 4,423,876 Total 3,678,623,410 2,061,427,767 821,839,004 1,527,654,483 17,719,779 3,408,277,469 For reasons of recognition of impairment losses, refer to the notes of relevant assets.
Page 99
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018
Page 100
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 VI. Change of consolidation scope
1 Business combinations involving entities not under common control
(1) Material business combinations involving entities not under common control occurred during the year
Acquiree from
acquisition date to 31 December 2018
Acquisition date of Basis for determination of Net cash inflow/ equity investment acquisition date Income Net profit / (loss) (outflow) Achieving actual control by
holding more than half of
SES Imagotag SA the Board of Directors of
Co.Ltd. 6 February 2018 acquiree 1,420,775,536 (130,954,351) (68,101,987) Achieving actual control by
Mianyang BOE holding more than half of
Optoelectronics the Board of Directors of
Technology Co., Ltd. 3 May 2018 acquiree - (111,309,141) (3,086,584,881) Wuhan BOE Achieving actual control by
Optoelectronics signing a concerted action
Technology Co., Ltd. 25 December 2018 agreement - - 1,099,140,725 (a) SES Imagotag SA Co.Ltd. was established in France in 1992, listed on the Euronext Paris in 2006, and headquartered in Nanterre of France. SES Imagotag SA Co.Ltd. is mainly engaged in the research and development and sales of electronic shelf labels and digital signage. On December 20, 2017 (delivery date), BOE Smart Retail (Hong Kong) Co., Ltd., a subsidiary of the Company, paid a total of 7,156,696 shares through the block tranding at a price of 30 euros per share. The total consideration is 200,075,280 euros, accounting for54.40% of the shares outstanding on the SES delivery date. After the completion of the block transaction, the board of directors consists of five directors and the company recommends two of them. According to the company's articles of association, material business and financial decision-making matters must be approved by more than the majority of the members of the board of directors. Therefore, the company has a significant impact on SES from the delivery date, and it is accounted for as an associate by the equity method. On February 6, 2018 (the purchase date), SES held a general meeting of shareholders. The meeting decided to increase the number of board members to nine, of which the number of directors of the Company increased to five. From that date, the Company has control over SES and SES will be included in the scope of consolidation. The book value of the original shareholding of the Company on the date of purchase was RMB 1,685,720,539, and the fair value was RMB 1,684,309,084, the balance between the book value and the fair value was RMB 1,411,455, which was recognised in the investment loss in consolidated financial statements.
(b) Mianyang BOE Optoelectronics Technology Co., Ltd. (Mianyang BOE) was established in Mianyang in 2016. It is mainly engaged in the investment, construction, research and development, production and sales of semiconductor display device related products and related products. Before the purchase date, the shareholding ratio of the Company and Mianyang Science and Technology City Development Investment (Group) Co., Ltd. to Mianyang BOE was61.54% and38.46% respectively. On May 3, 2018, the Mianyang BOE Shareholders' Meeting passed a resolution to amend the Articles of Association, in which material business and financial decision-making matters were revised to be approved by more than one-half of the board of directors. Mianyang BOE's board of directors consists of 5 directors, of which 3 are recommended by the company. Therefore, on May 3, 2018, the company has control over Mianyang BOE and included it in the consolidated financial statement. The book value and fair value of the original shareholding of the Company on the purchase date were RMB 5,096,980,083.
Page 101
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (c) Wuhan BOE Optoelectronics Technology Co., Ltd. (Wuhan BOE) was established in Wuhan in 2017. It is mainly engaged in the investment, construction, research and development, production and sales of thin film transistor liquid crystal display device related products and related products. Before the purchase date, the Company, Wuhan Airort Economic Development Zone Industrial Development Investment Group Co., Ltd. and Hubei Changbai Industrial Investment Fund Partnership (Limited Partnership) held shares of Wuhan BOE at14.58%,65.30% and20.12% respectively. On December 25, 2018, the Company and the shareholder of Wuhan BOE, Wuhan Airort Economic Development Zone Industrial Development Investment Group Co., Ltd. signed a concerted action agreement, Wuhan Airort Economic Development Zone Industrial Development Investment Group Co., Ltd.agreed to act as a concerted action according to the wishes of the Company, and exercised the voting rights unconditionally and irrevocably in accordance with the opinions of the Company. Since that date, the company has control of Wuhan BOE and included it in the consolidated financial statement. The book value and fair value of the original shareholding of the Company on the date of purchase were RMB 1,230,860,516.
(2) Acquisition cost and goodwill
Mianyang BOE Optoelectronics Wuhan BOE Optoelectronics SES Imagotag SA Co.Ltd. Technology Co., Ltd. Technology Co., Ltd.
Carrying Carrying Carrying
Fair value Fair value Fair value Acquisition cost amounts amount amount
Cash - - - - - - Equity interests held
before acquisition date 1,685,720,539 1,684,309,084 5,096,980,083 5,096,980,083 1,230,860,516 1,230,860,516 Total acquisition cost 1,684,309,084 5,096,980,083 1,230,860,516 Less: share of the fair
value of the identifiable
net assets acquired 977,902,263 5,096,980,083 1,230,860,516 Amount of acquisition cost
more than share of the
fair value of the
identifiable net assets
acquired 706,406,821 - - The fair value of the equity held before the purchase date in the above-mentioned acquisition of SES Imagotag SA Co.Ltd. in the merger cost is determined according to the stock price of SES Imagotag SA Co.Ltd.
Page 102
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Identifiable assets and liabilities of the acquiree at the acquisition date
Mianyang BOE Optoelectronics Wuhan BOE Optoelectronics SES Imagotag SA Co.Ltd. Technology Co., Ltd. Technology Co., Ltd.
Carrying
amounts Fair value Carrying amount Fair value Carrying amount Fair value Assets
Current assets 1,206,351,591 1,206,351,591 5,361,878,464 5,361,878,464 2,012,249,472 2,012,249,472 Non-current assets 489,972,401 2,338,548,994 3,249,053,667 3,249,053,667 8,158,163,711 8,158,163,711 Liabilities:
Current liabilities 577,892,138 577,892,138 251,707,967 251,707,967 1,724,095,238 1,724,095,238 Non-current liabilities 534,566,084 1,150,696,662 77,190,000 77,190,000 4,201,925 4,201,925 Net assets 583,865,770 1,816,311,785 8,282,034,164 8,282,034,164 8,442,116,020 8,442,116,020 Less: Non-controlling
interests 269,512,440 838,409,522 3,185,054,081 3,185,054,081 7,211,255,504 7,211,255,504 Net assets acquired 314,353,330 977,902,263 5,096,980,083 5,096,980,083 1,230,860,516 1,230,860,516 The Company assessed the fair value of the identifiable assets and liabilities of SES
Imagotag SA Co. Ltd. on the acquisition date. If there is an active market for the above
identifiable assets, the quoted prices in the active market are used to establish their fair value; if there is no active market, their fair values are estimated based on the market
prices of the same or similar types of assets which have an active market; if there is no active market for the same asset or similar types of assets, valuation techniques are used to determine the fair value. For the above identifiable liabilities, the payable amount or the present value of the payable amount is its fair value.
Mianyang BOE Optoelectronics Technology Co., Ltd. and Wuhan BOE Optoelectronics Technology Co., Ltd are both in the construction period on the purchase date and have no major business activities. Therefore, the above-mentioned purchased parties have no significant difference between the fair value and the book value of identifiable assets and liabilities on the date of combination.
2 Other reasons for change of consolidation scope
The Company has set up a new subsidiary this year, which is Beijing BOE Sensing
Technology Co., Ltd. The Company holds100% of the shares of the subsidiary.
Page 103
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 VII. Interests in other entities
1 Interests in subsidiaries
(1) Composition of the Group
Shareholding (or similar equity
interest) percentage
Principal place of Acquisition Name of the Subsidiary business Registered place Business nature Registered capital Direct Indirect method Research and development, design and Founded by Beijing BOE Optoelectronics Technology Co., Ltd. Beijing, China Beijing, China manufacture of TFT-LCD USD 649,110,000 82.49% 17.51% investment Business combinations Research and development, design, involving entities manufacture, and sale of new display devices not under Chengdu BOE Optoelectronics Technology Co., Ltd. Chengdu, China Chengdu, China and components RMB 22,000,000,000 100% - common control Business combinations Investing, researching, manufacturing and involving entities promoting TFT-LCD products and accessory not under Hefei BOE Optoelectronics Technology Co., Ltd. Hefei, China Hefei, China products RMB 9,000,000,000 100% - common control Development of TFT-LCD, manufacture and Founded by Beijing BOE Display Technology Co., Ltd. Beijing, China Beijing, China sale of LCD RMB 17,882,913,500 97.17% 2.83% investment Business combinations Investing, researching, manufacturing and involving entities promoting TFT-LCD products and accessory not under Hefei Xinsheng Optoelectronics Technology Co., Ltd. Hefei, China Hefei, China products RMB 19,500,000,000 84.59% 0.03% common control The production and operation of AMOLED and Founded by Ordos Yuansheng Optoelectronics Co., Ltd. Ordos, China Ordos, China relevant products RMB 11,804,000,000 100% - investment Business Research, development, manufacture and combinations sales of semiconductor display devices, involving entities machine and relevant products, import and not under Chongqing BOE Optoelectronics Co., Ltd. Chongqing, China Chongqing, China export of goods and technical consulting RMB 19,226,000,000 100% - common control Business combinations Investing, researching, manufacturing and involving entities promoting TFT-LCD products and accessory not under Fuzhou BOE Optoelectronics Technology Co., Ltd. Fuzhou, China Fuzhou, China products RMB 17,600,000,000 81.25% - common control Research, manufacture and sales of terminal Founded by Beijing BOE Vision-electronic Technology Co., Ltd. Beijing, China Beijing, China products of LCD monitor and TV etc. RMB 3,720,600,000 100% - investment Manufacture and sales of vacuum electronic Founded by Beijing BOE Vacuum Electronics Co., Ltd. Beijing, China Beijing, China products RMB 35,000,000 55% - investment Founded by Beijing BOE Vacuum Technology Co., Ltd. Beijing, China Beijing, China Manufacture and sales of vacuum tubes RMB 32,000,000 100% - investment
Page 104
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Shareholding (or similar equity
interest) percentage
Principal place of Acquisition Name of the Subsidiary business Registered place Business nature Registered capital Direct Indirect method Development of display products and sales of Founded by Beijing BOE Special Display Technology Co., Ltd. Beijing, China Beijing, China electronic products RMB 100,000,000 100% - investment Engineering project management, real estate
development, mobile vehicle parking lot Founded by Beijing Yinghe Century Co., Ltd. Beijing, China Beijing, China services and marketing research RMB 233,105,200 100% - investment Development, manufacture and sales of
backlight and related parts and components for Founded by BOE Optical Science and technology Co., Ltd. Suzhou, China Suzhou, China LCD RMB 826,714,059 95.17% - investment Development of display products and sales of Founded by BOE Hyundai LCD Inc. Beijing, China Beijing, China electronic products USD 5,000,000 75% - investment Manufacture and sales of mobile flat screen Founded by BOE (Hebei) Mobile Technology Co., Ltd. Langfang, China Langfang, China display technical products and related services RMB 1,358,160,140 100% - investment Sales of computer software and Hardware, the
numeral regards the audio frequency Founded by Beijing BOE multimedia Technology Co., Ltd. Beijing, China Beijing, China technology RMB 400,000,000 100% - investment Design, consultation and services of solar
battery, photovoltaic system, wing turbine
system and photo-thermal system, and energy Founded by Beijing BOE Energy Technology Co., Ltd. Beijing, China Beijing, China saving service RMB 850,000,000 100% - investment Technology poromotion services, property Founded by Beijing BOE Smart Commercial Co., Ltd. Beijing, China Beijing, China management, sales of electronic products RMB 10,000,000 100% - investment Technology poromotion services, property Founded by Beijing Zhongxiangying Technologies Co.,Ltd. Beijing, China Beijing, China management, sales of electronic products RMB 10,000,000 100% - investment Founded by Ordos City Haosheng Energy Investment Co., Ltd. Ordos, China Ordos, China Investment in enegy RMB 30,000,000 20% 80% investment Processing, production, and sales of goods,
primarily comprising sales of precision
electronic metal parts and semiconductor
devices, in addition to micromodules,
microelectronic devices and electronic Founded by BOE Semi-conductor Co., Ltd. Beijing, China Beijing, China materials; import and export of goods RMB 11,700,000 80.77% - investment Design, manufacturing and sales of electronic-
Hong Kong, British Virgin information industry related products, Founded by BOE Optoelectronics Holding Co.,Ltd. China Islands investment and financing businesses USD 260,809,100 100% - investment Business combinations involving entities Sales of Supports and glass bar for TV and not under Beijing Asahi Electronic Materials Co.,Ltd. Beijing, China Beijing, China CTV low melting sealing frit RMB 61,576,840 100% - common control Business combinations involving entities not under BOE Health Investment& Management Co., Ltd. Beijing, China Beijing, China Investmentt management and investment RMB 3,000,000,000 100% common control
Page 105
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Shareholding (or similar equity
interest) percentage
Principal place of Acquisition Name of the Subsidiary business Registered place Business nature Registered capital Direct Indirect method Business Color TV, display tube, color rear projection TV combinations projection tube and electronic component involving entities materials, property management, parking not underBeijingM·atsushita Color CRT Co., Ltd. Beijing, China Beijing, China services, etc. RMB 670,754,049 88.80% - common control Business combinations Investing, researching, manufacturing and involving entities promoting TFT-LCD products and accessory not under Hefei BOE Display Technology Co.,Ltd. Hefei, China Hefei, China products RMB 24,000,000,000 8.33% - common control Development, transfer, consultation and Founded by Beijing BOE Technology Development Co., Ltd. Beijing, China Beijing, China services of technologies RMB 1,000,000 100% - investment Development, transfer, consultation, services Founded by BOE Intelligent Technology Co.,Ltd. Beijing, China Beijing, China and promotion of technologies RMB 100,000,000 100% - investment Investing, researching, manufacturing and
promoting TFT-LCD products and accessory Founded by Hefei BOE Zhuoyin Technology Co., Ltd. Hefei, China Hefei, China products RMB 800,000,000 75% - investment Development, construction, property
management and supporting services of
industrial plants and supporting facilities,
information and consultation of real estates,
lease of commercial facilities, service staff and
other supporting facilities and public parking Founded by Beijing BOE Land Co.,Ltd. Beijing, China Beijing, China area services for vehicles RMB 55,420,000 70% - investment Sales of communication devices, computer
hardware and software and accessory devices
and electronic products and equipment
maintenance; development, transfer,
consultation and services of technologies;
import and export of goods, import and export
agency, import and export of technologies;
Consigned processing of electronic products Founded by Beijing BOE Sales Co.,Ltd. Beijing, China Beijing, China and LCD RMB 50,000,000 100% - investment Development, promotion, transfer, consultation
and services of display technology; computer
software, hardware and network system
services; the construction, operations and
management of e-commerce platform; product
design; conference services; undertaking
exhibitions and presentation activities;
computer animation design; production,R&D
and sales of OLED microdisplays and AR/VR
complete machines; warehousing services; I-
type Xuanmu investment and management of Founded by Kunming BOE Display Technology Co., Ltd. Yunnan, China Yunnan, China investment projects RMB 1,000,000,000 45.11% - investment Business research and development, production and combinations sales of flexible AMOLED, the products are involving entities mainly used in smart phones, not under Mianyang BOE Optoelectronics Technology Co., Ltd. Mianyang, China Mianyang, China wearable devices, car display, AR/VR, etc. RMB 20,800,000,000 81.35% - common control
Page 106
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Shareholding (or similar equity
interest) percentage
Principal place of Acquisition Name of the Subsidiary business Registered place Business nature Registered capital Direct Indirect method Formation of X-ray sensors, microfluidic chips,
biochemical chips, gene chips, security
sensors, microwave antennas, biosensors,
logistics network technology and other
semiconductor sensors, technology testing,
technical consulting, technical services, Founded by Beijing BOE Sensing Technology Co., Ltd. Beijing, China Beijing, China technology transfer RMB 50,000,000 100% - investment Technology development, technology transfer,
technical consulting, technical services; Business technology intermediary services; information combinations system integration; basic software services; involving entities application software services; software not under Beijing BOE Yiyun Science&Technology Co., Ltd. Beijing, China Beijing, China development RMB 200,000,000 95.92% - common control Business combinations Investing, researching, manufacturing and involving entities promoting TFT-LCD products and accessory not under Wuhan BOE Optoelectronics Technology Co., Ltd. Wuhan, China Wuhan, China products RMB 17,573,000,000 14.58% - common control Business Research, development, manufacture and combinations sales of semiconductor display devices, involving entities Chongqing BOE Display Technology Co., Ltd. machine and relevant products, import and not under (Chongqing BOE Display) Chongqing, China Chongqing, China export of goods and technical consulting RMB 510,000,000 38.46% - common control Supports color electronic paper, segment LCD,
TFT-LCD display, covering ESL multi-
frequency protocol, Wi-Fi, BLE and NFC;
multiple communication methods, integrated
electronic paper supply chain resources and Business downstream software around electronic shelf combinations labels Platform, image recognition and big data involving entities analytics resources to create a complete not under SES Imagotag SA Co.Ltd. Nanterre, France Nanterre, France solution for the retail industry EUR 10,789,186 - 73.93% common control The Company and the shareholder of Hefei Display, Hefei Core Screen Industrial Investment Fund (Limited Partnership) signed a concerted action agreement on November 30, 2016, Hefei Core Screen Industrial Investment Fund (Limited Partnership) agreed to act as a concerted action according to the wishes of the Company, and exercised the voting rights unconditionally and irrevocably in accordance with the opinions of the Company. Therefore, the Company's voting right ratio to Hefei is71.67%.
The Company and Shareholder of Wuhan BOE, Wuhan Airport Economic Development Zone Industrial Development Investment Group Co., Ltd. signed a concerted action agreement on December 25, 2018. Wuhan Airport Economic Development Zone Industrial Development Investment Group Co., Ltd. agreed to follow the Company's will to act as a concerted action, unconditionally and irrevocably exercising voting rights in accordance with the opinions of the company, the voting rights of the Company to Wuhan BOE is79.88%.
The Company and shareholders of Chongqing BOE Display, Chongqing Strategic Emerging Industry Equity Investment Fund Partnership (Limited Partnership) and Chongqing Yuzi Optoelectronic Industry Investment Co., Ltd. signed a concerted action agreement on December 25, 2018, Chongqing Strategic Emerging Industry Equity Investment Fund Partnership (Limited Partnership) and Chongqing Yuzi Optoelectronic Industry Investment Co., Ltd. agreed to act as a concerted action according to the will of the Company, and exercise the voting rights unconditionally and irrevocably in accordance with the opinions of the Company. Therefore, the proportion of voting rights displayed by the Company on Chongqing BOE is100%.
Page 107
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Material non-wholly owned subsidiaries
Balance of non- Shareholding Losses attributable Dividend declared controlling percentage of to non-controlling to non-controlling interests non-controlling interests during the shareholders at the end of the Name of subsidiaries interests year during the year year Hefei BOE Display Technology Co.,Ltd. 91.67% (372,612,785) - 21,615,961,309 (3) Key financial information about material non-wholly owned subsidiaries
The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions, but with adjustments made for the fair value adjustment at the acquisition date and any differences in accounting policies:
Hefei BOE Display Technology Co.,Ltd.
2018 2017 Current assets 11,725,102,123 10,186,968,292 Non-current assets 36,531,775,939 22,403,727,292 Total assets 48,256,878,062 32,590,695,584 Current liabilities 7,708,059,063 3,935,813,860 Non-current liabilities 16,968,627,760 9,109,930,632 Total liabilities 24,676,686,823 13,045,744,492 Operating income 3,318,954,798 242,505,228 Net loss (406,216,942) (7,117,515) Total comprehensive income (412,759,853) 11,524,506 Cash flows from operating activities 407,026,027 (62,244,174)
Page 108
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 2 Transactions that cause changes in theGroup’s interests in subsidiaries that do not result in loss of control
(1) Changes in theGroup’s interests in subsidiaries:
Before changes of After changes of interests interests Hefei BOE Display Technology Co.,Ltd. 7.94% 8.33% Hefei BOE Zhuoyin Technology Co., Ltd. 75.05% 75.00% Kunming BOE Display Technology Co., Ltd. 81.25% 45.11% Mianyang BOE Optoelectronics Technology Co., Ltd. 61.54% 81.35% Beijing BOE Yiyun Science&Technology Co., Ltd. 51.00% 95.92% SES Imagotag SA Co.Ltd. 53.84% 73.93% (2) Impact from transactions with non-controlling interests and equity attributable to the shareholders of the Company:
BOE Smart Retail (Hong Kong) Co., Ltd., a subsidiary of the Company, acquired of non- controlling shareholders' equity through comprehensive tender offer obligation, which results to the reduction of capital reserve of RMB 378,593,283 (Note V. 32).
The changes in the shareholding of the Company in the owners of above-mentioned other subsidiaries were caused by the capital increase of the Company and its non-controlling interests, which results to the increase of capital reserver by RMB 3,754,159.
3 Interests in joint ventures or associates
Please see Note V.8 (2) for details of the summarized financial information of the associates and joint ventures.
No material restrictions on transfers of funds from investees to the Group. The judgment basis of the Company and its subsidiaries to hold lower than20% of the voting rights of other entities but have significant influence on the entity is due to the fact that the Company and its subsidiaries have seats in the board of directors of the entity, and the Company and Subsidiaries of the Company may have significant influence on the entity through the representation of the directors in the process of formulating financial and operating policies.
Page 109
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 VIII. Risk related to financial instruments
The Group has exposure to the following main risks from its use of financial instruments in the normal course of theGroup’s operations:
- Credit risk
- Liquidity risk
- Interest rate risk
- Foreign currency risk
- Other price risks
The following mainly presents information about theGroup’s exposure to each of the above risks and their sources, their changes during the year, and theGroup’s objectives, policies and processes for measuring and managing risks, and their changes during the year.
The Group aims to seek appropriate balance between the risks and benefits from its use of financial instruments and to mitigate the adverse effects that the risks of financial instruments have on theGroup’s financial performance. Based on such objectives, theGroup’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and theGroup’s activities. The internal audit department of the Group undertakes both regular and ad-hoc reviews of risk management controls and procedures.
(1) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. TheGroup’s credit risk is primarily attributable to receivables. Exposure to these credit risks are monitored by management on an ongoing basis.
The cash at bank of the Group is mainly held with well-known financial institutions. Management does not foresee any significant credit risks from these deposits and does not expect that these financial institutions may default and cause losses to the Group.
In respect of receivables, the Group has established a credit policy under which individual credit evaluations are performed on all customers to determine the credit limit and terms applicable to the customers. These evaluations focus on thecustomers’ financial position, the external ratings of the customers and the record of previous transactions. Receivables are due within 15 to 120 days from the date of billing. Debtors with balances that are past due are requested to settle all outstanding balances before any further credit is granted. Normally, the Group does not obtain collateral from customers.
TheGroup’s exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry, country or area in which the customers operate and therefore significant concentrations of credit risk arise primarily when the Group has significant exposure to individual customers. At the balance sheet date, the Group and theCompany’s accounts receivable and other receivables due from the top five customers account for40% and0.06% of the total accounts receivables respectively (2017:37% and0.2%). In addition, the accounts receivable not overdue or impaired is mainly related to many clients whodon’t have payment in arrears records recently.
Page 110
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. As mentioned in Note XII, as at 31 December 2018 the Group does not provide any external guarantees which would expose the Group or the Company to credit risk.
(2) Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations that are settled by delivering cash or another financial asset. The Company and its individual subsidiaries are responsible for their own cash management, including short-term investment of cash surpluses and the raising of loans to cover expected cash demands (subject to approval by theCompany’s board when the borrowings exceed certain predetermined levels). TheGroup’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash, readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.
2018 Contractual undiscounted cash flow
More than 1 year More than 3 years Carrying amount Within 1 year or but less than 3 but less than 5 of on demand years years More than 5 years Total balance sheet Financial liabilities
Short-term loans 5,542,824,867 - - - 5,542,824,867 5,449,954,885 Bills payable and accounts
payable 22,805,065,888 - - - 22,805,065,888 22,805,065,888 Other payables 22,956,979,828 - - - 22,956,979,828 22,956,979,828 Non-current liabilities due
within one year 6,081,520,241 - - - 6,081,520,241 5,597,563,204 Long-term borrowings 4,283,202,579 9,376,015,293 14,959,103,283 92,225,178,032 120,843,499,187 94,780,077,864 Long-term payables - 708,503,891 399,396,820 696,811,815 1,804,712,526 1,416,092,239 Bonds payable 325,986,220 10,651,972,440 335,864,440 - 11,313,823,100 10,288,666,233 Total 61,995,579,623 20,736,491,624 15,694,364,543 92,921,989,847 191,348,425,637 163,294,400,141 2017 Contractual undiscounted cash flow
More than 1 year More than 3 years Carrying amount Within 1 year or but less than 3 but less than 5 of on demand years years More than 5 years Total balance sheet Financial liabilities
Short-term loans 3,267,011,755 - - - 3,267,011,755 3,249,736,430 Bills payable and accounts
payable 16,749,587,533 - - - 16,749,587,533 16,749,587,533 Other payables 16,122,413,130 - - - 16,122,413,130 16,122,413,130 Non-current liabilities due
within one year 9,620,665,187 - - - 9,620,665,187 9,109,708,511 Long-term borrowings 2,884,011,291 8,571,300,399 6,211,128,059 78,338,069,603 96,004,509,352 78,973,633,010 Long-term payables - 591,490,764 411,613,803 414,023,014 1,417,127,581 1,176,250,982 Bonds payable 315,000,000 630,000,000 10,315,000,000 - 11,260,000,000 9,966,467,496 Total 48,958,688,896 9,792,791,163 16,937,741,862 78,752,092,617 154,441,314,538 135,347,797,092
Page 111
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Interest r ate risk
Interest-bearing financial instruments at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest risk, respectively. The Group determines the appropriate weightings of the fixed and floating rate interest-bearing instruments based on the current market conditions and performs regular reviews and monitoring to achieve an appropriate mix of fixed and floating rate exposure. The Group does not enter into financial derivatives to hedge interest rate risk.
(a) As at 31 December, the Group held the following interest-bearing financial instruments: Fixed rate instruments:
2018 2017
Effective interest
Item Effect interest rate Amount rate Amount
Financial assets
- Cash at bank and on hand 0.20%~3.74% 21,898,508,469 0.20%~2.75% 22,137,189,508
Financial liabilities
- Short-term loans 1.28%~4.95% (2,927,190,124) 1.43%~5.20% (2,172,993,056)
- Non-current liabilities due
within one year 0%~5.88% (2,967,991,325) 0%~5.64% (3,404,283,141)
- Debentures payable 3.15%~3.50% (10,288,666,233) 3.15% (9,966,467,496)
- Long-term payables 3.56%~7.09% (1,416,092,239) 4.17%~7.02% (1,176,250,982)
- Long-term loans 0%~5.88% (58,484,576,750) 0%~6.60% (35,926,709,530)
Total (54,186,008,202) (30,509,514,697)
Variable rate instruments:
2018 2017
Effective interest
Item Effect interest rate Amount Amount
rate
Financial assets
- Cash at bank and on hand 0.0001%~3.90% 29,582,493,4370.0001%~2.75% 34,990,943,302
Financial liabilities
- Short-term loans 3.44%~4.39% (2,522,764,761) 0.35% (1,076,743,374)
- Non-current liabilities due
within one year 5.37%~7.18% (2,629,571,879) 4.02%~5.62% (5,705,425,370)
- Long-term loans 1.04%~7.18% (36,295,501,114) 1.07%~5.62% (43,046,923,480)
Total (11,865,344,317) (14,838,148,922)
Page 112
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) Sensitivity analysis
As at 31 December 2018, it is estimated that a general increase / decrease of 100 basis points in interest rates of variable rate instrument, with all other variables held constant, would decrease / increase theGroup’s net profit and equity by RMB 104,380,000 (2017: RMB 123,360,000).
In respect of the exposure to cash flow interest rate risk arising from floating rate non- derivative instruments held by the Group at the balance sheet date, the impact on the net profit and equity is estimated as an annualised impact on interest expense or income of such a change in interest rates. The analysis is performed on the same basis for the previous year.
(4) Foreign currency risk
In respect of cash at bank and on hand, accounts receivable and payable, short-term loans and other assets and liabilities denominated in foreign currencies other than the functional currency, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. (a) TheGroup’s exposure as at 31 December to currency risk arising from recognized foreign currency assets or liabilities is mainly denominated in US dollar. The amount of the USD exposure is net liabilities exposure USD 2,098,686,634 (2017 net liabilities exposure: USD 2,282,216,777), translated into RMB 14,403,706,106 (2017: RMB 14,912,460,861), using the spot rate at the balance sheet date. Differences resulting from the translation of the financial statements denominated in foreign currency are excluded.
(b) The following are the exchange rates for Renminbi against US dollar applied by the Group:
Average rate Reporting date mid-spot rate 2018 2017 2018 2017 USD 6.6987 6.7356 6.8632 6.5342 Assuming all other risk variables remained constant, a5% strengthening / weakening of the Renminbi against the US dollar at 31 December would have increased / decreased both theGroup’s equity and net profit by the amount RMB 506,911,356 (2017: RMB 199,436,178). The sensitivity analysis above assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group which expose the Group to foreign currency risk at the balance sheet date. The analysis excludes differences that would result from the translation of the financial statements denominated in foreign currency. The analysis is performed on the same basis for the previous year.
Page 113
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (5) Other price risks
Other price risks include stock price risk, commodity price risk and others.
IX. Fair value disclosure
The following table presents the fair value information and the fair value hierarchy, at the end of the current reporting period, of theGroup’s assets and liabilities which are measured at fair value at each balance sheet date on a recurring or non-recurring basis. The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that is significant to the entire fair value measurement. The levels of inputs are defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date for identical assets or liabilities;
Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for underlying assets or liabilities;
Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
31 December 2018
Level 1 Level 2 Level 3
Fair value Fair value Fair value
Assets Notes measurement measurement measurement Total Recurring fair value measurements
- Wealth management products V、6 - - 5,534,413,566 5,534,413,566 - Available-for-sale financial assets V、7
Including: Available-for-sale
debt instrument - - 12,866,432 12,866,432 Available-for-sale
equity instrument 378,636,117 - - 378,636,117 Total assets measured at fair value on
a recurring basis 378,636,117 - 5,547,279,998 5,925,916,115 - Equity of redemption terms-Swap
obligation - - (71,000,000) (71,000,000) Total liabilities measured at fair value
on a recurring basis - - (71,000,000) (71,000,000) 31 December 2017
Level 1 Level 2 Level 3
Fair value Fair value Fair value
Assets measurement measurement measurement Total Recurring fair value measurements
- Wealth management products V、6 - - 9,791,137,808 9,791,137,808 - Available-for-sale financial
assets V、7
Including: Available-for-sale
debt instrument 4,328,710 - 10,583,436 14,912,146 Available-for-sale
equity instrument 512,838,390 - - 512,838,390 Total assets measured at fair value on
a recurring basis 517,167,100 - 9,801,721,244 10,318,888,344 - Equity of redemption terms-Swap
obligation - - (73,061,153) (73,061,153) Total liabilities measured at fair value
on a recurring basis - - (73,061,153) (73,061,153)
Page 114
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The fair value of available-for-sale equity instruments and available-for-sale equity instruments is determined by market price on the balance sheet date. The fair value of financial products is determined using discounted cash flow method, whose amortized cost is not significantly different from the fair value on the balance sheet date. The fair value of Equity of redemption terms-Swap obligation is determined by Monte Carlo method.
During 2018, there were no changes in valuation technique of fair value. As at 31 December, there were no significant discrepancies between the book value and fair value of all the financial assets and financial liabilities except the above available-for-sale equity instrument and wealth management products measured at fair value.
X. Related parties and related party transactions
1 Information about the parent of the Company
Ultimate Registered Shareholding Percentage of controlling party Company name Registered place Business nature capital percentage(%) voting rights(%) of the Company Operation and
management of
No. 12, state-owned
Jiuxianqiao Road assets within
Beijing Electronics Holding Co., Chaoyang authorization, RMB
Ltd. District, Beijing etc. 2,418,350,000 0.79% 11.32% Yes 2 Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
Page 115
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 3 Information about joint ventures and associates of the Company
Associates and Joint ventures that have related party transactions with the Group during this year or the previous year are as follows:
Name of entity Relationship with the Company Associate of the Group and the Beijing Nittan Electronic Co., Ltd. Company Associate of the Group and the TPV Display Technology (China) Limited Company Associate of the Group and the Beijing Xindongneng Investment Management Co., Ltd. Company Associate of the Group and the Shenzhen Yunyinggu Technology Co., Ltd. Company Cnoga Medical Co.Ltd. Associate of the Group Joint venture of the Group and Mianyang BOE Optoelectronics Technology Co.,Ltd.* the Company Associate of the Group and the Chongqing BOE Display Technology Co.,Ltd.* Company Joint venture of the Group and Wuhan BOE Optoelectronics Technology Co.,Ltd.* the Company Joint venture of the Group and Beijing BOE Yiyun Science&Technology Co.,Ltd.* the Company*The above-mentioned Companies became subsidiaries of the Company in 2018, and Note X. only disclosed the related party transactions of companies above the before the
acquisition.
Page 116
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 4 Information on other related parties
Name of other related parties Related party relationship Enterprises that are controlled by Beijng NAURA Microelectronics Equipment Co.,Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Zhengdong Electronic Power Group Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Yandong Microelectronic Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Dongdian Industrial Development Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Sevenstar PV Group Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Sevenstar Semiconductor Technologies Co.,Ltd. theCompany’s ultimate holding company Enterprises that are controlled by NAURA Technology Group Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Zhaowei Electronic Group Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Zhaowei Technology Development Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing BBEF Science& Technology Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by BeijingC&W Intelligent Equipment Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by New Vision Micro.(Hong Kong) Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Ether Electronics Group co. , Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Yansong Economic and Trade Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing BOE Investment Development Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Ripeness Sanyuan Instrumentation Co., Ltd. theCompany’s ultimate holding company Enterprises that are controlled by Beijing Electronics Holding& SK Technology Co., Ltd. theCompany’s ultimate holding company BAIC Motor Corporation., Ltd. Other related parties
Page 117
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 5 Transactions with related parties
The transactions below with related parties were conducted under normal commercial terms or agreements.
(1) Purchase of goods, equipments, and receiving of services (excluding remuneration of key management personnel)
The Group
Nature of transaction 2018 2017 Purchase of goods 141,966,350 41,887,513 Procurement of equipment 601,680,874 488,196,010 Receiving services 19,901,930 14,049,102 Total 763,549,154 544,132,625 The Company
Nature of transaction 2018 2017 Purchase of goods 11,854,329 - Receiving services 96,670,167 17,850,493 Payment of interest expenses 544,410,236 138,968,179 Total 652,934,732 156,818,672 (2) Sale of goods / rendering of services
The Group
Nature of transaction 2018 2017 Sales of goods 45,676,373 74,184,881 Provision of services 10,166,253 25,676 Total 55,842,626 74,210,557
Page 118
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 The Company
Nature of transaction 2018 2017 Provision of services 3,864,353,230 2,638,703,536 Interest income received 511,825 173,360,989 Total 3,864,865,055 2,812,064,525 (3) Leases
(a) As the lessor
The Group
Lease income Lease income recognized recognized Type of assets leased in 2018 in 2017 Investment properties 2,485,506 4,129,082 The Company
Lease income Lease income recognized recognized Type of assets leased in 2018 in 2017 Investment properties 17,972,397 18,700,067 (b) As the lessee
The Group
Lease expense Lease expense recognized recognized Type of assets leased in 2018 in 2017 Fixed assets 2,441,711 51,292 The Company
Lease expense Lease expense recognized recognized Type of assets leased in 2018 in 2017 Fixed assets 1,936,219 -
Page 119
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (4) Funding from related party
The Company
Name of related party Amount of funding Inception date Maturity date Funds from
Subsidiary of the parent company 2,000,000,000 09/06/2017 09/06/2020 Subsidiary of the parent company 700,000,000 13/04/2018 13/04/2020 Subsidiary of the parent company 500,000,000 13/09/2015 Non-fixed term Subsidiary of the parent company 1,200,000,000 30/09/2015 Non-fixed term Subsidiary of the parent company 650,000,000 25/04/2018 25/04/2020 Subsidiary of the parent company 3,500,000,000 01/08/2018 01/08/2023 Subsidiary of the parent company 200,000,000 28/07/2017 28/07/2019 Subsidiary of the parent company 1,600,000,000 04/12/2017 04/06/2019 Subsidiary of the parent company 3,800,000,000 19/07/2018 19/07/2023 Subsidiary of the parent company 1,000,000,000 23/12/2018 23/12/2019 Subsidiary of the parent company 4,000,000,000 09/06/2017 09/06/2020 Subsidiary of the parent company 3,000,000,000 28/05/2018 28/05/2020 Subsidiary of the parent company 600,000,000 19/12/2018 19/12/2023 Subsidiary of the parent company 2,250,000,000 28/05/2018 28/05/2020 Related parties Amount of funding Inception date Maturity date Funds to
Subsidiary of the parent company 30,000,000 06/01/2016 21/01/2022 Subsidiary of the parent company 50,000,000 27/03/2015 26/12/2021 Subsidiary of the parent company 5,000,000 19/08/2016 Non-fixed term Subsidiary of the parent company 2,000,000 16/12/2016 Non-fixed term Subsidiary of the parent company 50,000,000 28/04/2016 28/04/2019 Subsidiary of the parent company 25,000,000 05/05/2016 28/04/2019 Subsidiary of the parent company 25,000,000 08/06/2016 07/06/2019 Subsidiary of the parent company 100,000,000 22/11/2016 21/05/2019 Subsidiary of the parent company 100,000,000 22/11/2016 15/11/2019 Subsidiary of the parent company 9,375,000 19/01/2017 18/01/2019 Subsidiary of the parent company 9,375,000 19/01/2017 18/07/2019 Subsidiary of the parent company 9,375,000 19/01/2017 17/01/2020 Subsidiary of the parent company 40,625,000 20/01/2017 18/01/2019 Subsidiary of the parent company 40,625,000 20/01/2017 18/07/2019 Subsidiary of the parent company 40,625,000 20/01/2017 17/01/2020 Subsidiary of the parent company 350,000,000 28/12/2018 28/12/2019 Subsidiary of the parent company 50,000,000 16/03/2018 16/09/2019 Subsidiary of the parent company 50,000,000 16/03/2018 16/03/2020 Subsidiary of the parent company 50,000,000 16/03/2018 16/09/2020 Subsidiary of the parent company 50,000,000 16/03/2018 12/03/2021
Page 120
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (5) Remuneration of key management personnel
The Group and the Company
Item 2018 2017 Remuneration of key management personnel 65,765,000 40,609,000 6 Receivables from and payables to related parties
Receivables from related parties
The Group
2018 2017
Provision for bad Provision for bad Item Book value and doubtful debts Book balance and doubtful debts Accounts receivable 52,246 - 9,600,724 - Prepayments 2,814,000 - 5,007,430 - Other receivables 12,148 - 27,591,317 - The Company
2018 2017
Provision for bad Provision for bad Item Book value and doubtful debts Book balance and doubtful debts Accounts receivable 36,108,800 473,228 40,255,999 473,228 Prepayments 79,660 - 3,723,049 - Dividends receivable 14,115,915 - 10,404,147 - Other receivables 1,967,828,693 - 1,792,487,745 - Other non-current assets 280,000,000 - 480,000,000 - Non-current assets due within one year 450,000,000 - 3,648,840,000 -
Page 121
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Payables to related parties
The Group
Item 2018 2017 Accounts payable 30,361,810 14,532,494 Advances from customers 1,111 141,921 Other payables 294,554,788 133,821,563 The Company
Item 2018 2017 Accounts payable 3,119,036 1,856,219 Advances from customers 1,563,300,806 1,353,212,276 Other payables 7,690,814,090 9,472,440,978 Other non-current liabilities 20,954,104,125 7,600,000,000 7 Commitments of the related parties
As at balance sheet date, the commitments of the related parties, which are signed but not listed in financial statement are as following:
2018 2017 Procurement of equipment 370,768,209 107,208,907 XI. Capital management
TheGroup’s primary objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.
The Group defines “capital” as including all components of equity, less unaccrued proposed dividends. The balances of related party transactions are not regarded by the Group as capital.
TheGroup’s capital structure is regularly reviewed and managed to achieve an optimal structure and return for shareholders. Factors for theGroup’s consideration include: its future funding requirements, capital efficiency, actual and expected profitability, expected cash flows, and expected capital expenditure. Adjustments are made to the capital structure in light of changes in economic conditions affecting the Group.
TheGroup’s capital structure is monitored on the basis of an adjusted net debt-to-capital ratio (total liabilities divided by total assets). The capital management strategies exerted by the Group remained unchanged from 2017. In order to maintain or adjust the ratio, the Group may adjust the amount of dividends paid to shareholders, request new loans, issue new shares, or sell assets to reduce debt.
Page 122
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 As at 31 December 2018 and 31 December 2017, theGroup’s asset-liability ratios are as follows:
2018 2017 Asset-liability ratio 60.41% 59.28% Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
XII. Commitments and contingencies
1 Significant commitments
(1) Capital commitments
The Group 2018 2017 Contracts entered into but not performed or
partially performed 61,515,573,632 51,309,042,746 Contracts authorized but not entered into 84,789,129,465 37,485,065,035 Total 146,304,703,097 88,794,107,781 TheGroup’s contracts authorised but not entered into mainly included the fixed assets that Chengdu Optoelectronics, BOE (Chengdu) Digital Medical Center, Chongqing Display Technology, Mianyang BOE and Wuhan BOE planned to purchase in 2018 and project equipment that the Group planned to purchase in 2018.
T he Company 2018 2017 Contracts entered into but not performed or
partially performed 39,666,849,756 40,532,322,288 TheCompany’s contracts entered into but not performed or partially performed mainly included guaranteed investments in Chengdu Optoelectronics, BOE (Chengdu) Digital Medical Center, Chongqing Display Technology, Mianyang BOE and Wuhan BOE.
Page 123
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Operating lease commitments
As at 31 December, the total future minimum lease payments under non-cancellable operating leases of theGroup‘s properties were payable as follows:
Item 2018 2017 Within 1 year (inclusive) 53,187,055 31,054,096 After 1 year but within 2 years (inclusive) 30,220,405 27,481,454 After 2 years but within 3 years (inclusive) 21,345,206 20,499,253 Over 3 years 82,499,050 87,810,970 Total 187,251,716 166,845,773 As at 31 December 2018, the Company had no significant operating lease commitments. 2 Guarantee
(1) The Group as the guarantor
As at 31 December 2018, the Group did not have guarantees provided for external enterprises.
(2) The Company as the guarantor
On December 31, 2018, Chengdu Optoelectronics used the equipment with a book value of RMB 13,180,966,120 and the construction in progress of RMB 12,119,027,108 as collateral to obtain long-term loans of RMB 11,150,000,000 and USD 670,000,000, and letter of credit issued but not accepted of USD 4,463,271 and JPY 4,965,422,733, the overseas payment of USD 14,535,000 and the long-term guarantee of RMB 2,318,500,000. The Company provides joint and several liability guarantee for the above loans.
On December 31, 2018, Hefei BOE used other monetary funds with a book value of RMB1,300,000, land use rights with a book value of RMB 77,725,970, and plants and buildings of RMB 1,710,957,610 and RMB 1,104,270,142 to obtain a long-term loan of USD 43,444,409. The company provided a joint liability guarantee for the above loans.
On December 31, 2018, Yuansheng Optoelectronics used its plant and construction of RMB 2,612,115,325, machinery and equipment of RMB 4,814,248,015, land use rights of RMB 47,804,118 and The Company used20% of the equity of BOE Energy Investment Co., Ltd. (BOE Energy Investment)and20% of Ordos City Haosheng Energy Investment Co., Ltd. (Haosheng Energy), Hefei BOE used65% of the shares of Haosheng Energy and BOE OT used15% of the shares of Haosheng Energy to enable Yuansheng Optoelectronics to obtain syndicated loans of RMB 633,330,000 and USD 96,000,000 ( syndicated loan phase I). The company provided a joint liability guarantee for the above loans. At the same time, Yuansheng Optoelectronics used its machinery and equipment with a book value of RMB 8,356,950,447 as collateral. The collateral of the first syndicated loan was continued as a collateral after the repayment of the first syndicated loan, so that Yuan Sheng Optoelectronics obtained a second-phase II syndicated loan of RMB 3,500,000,000 and USD 121,000,000, and the Company provided a third-party joint liability guarantee.
Page 124
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 On December 31, 2018, Hefei Xinsheng secured the land use right of RMB 119,560,942, the plant and building of RMB 3,674,066,918, and the equipment of RMB 7,392,380,002 to obtain the long-term loans due within one year of USD 254,560,000 and the long-term loans of USD 820,440,000, the Company provides joint liability guarantee for the above loans.
On December 31, 2018, Chongqing BOE secured the land use right of RMB 169,407,160 and the machinery and equipment and buildings of RMB 14,553,397,523, and the pledge of the deposit of USD 18,500,000 to obtain the long-term loans of USD 952,030,000 and RMB 823,000,000, the Company provides joint and several liability guarantee for the above loans. On December 31, 2018, Fuzhou BOE secured the land use right of RMB 216,323,878, the machinery and equipment of RMB 15,898,593,435, and the construction in progress of RMB 106,603,967 as collateral to obtain USD 984,000,000 and for long-term loans of RMB 5,002,990,000, the Company provided joint and several liability guarantees for the above- mentioned loans. In addition, the Company provided joint and several liability guarantees for the long-term guarantees of RMB 338,600 and JPY 95,200,000 for the opening of un- accepted letters of credit and RMB 1,800,000,000.
On December 31, 2018, Hefei Display Lighting secured the land use right with a book value of RMB 299,402,850, the machinery and equipment of RMB 23,173,261,703 and the construction in progress of RMB 5,136,944,836 for long-term loans of RMB 5,001,721,200 andUS$1,470,800,000. The Company provided joint and several liability guarantee for the above loans. In addition, The Company provides joint and several liability guarantee for unsecured letter of credit of RMB 14,142,912 and JPY 3,607,400,000 and a long-term guarantee of RMB 2,860,000,000.
On December 31, 2018, Mianyang BOE secured its long-term borrowings of USD 10,000,000 and RMB 6,000,000,000 with its land use rights of RMB 279,067,185, the property, plant, and equipment of RMB 108,538,569 and the construction in progress of RMB 16,597,768,730. The Company provided joint liability guarantee for the above-mentioned loans. In addition, the Company provided joint liability guarantee for the RMB 2,960,000,000 issued guarantee letters, USD 148,827,295 and JPY 4,011,006,903 for the issuance of unaccepted letters of credit, and USD 48,271,469 and JPY 7,784,950,000 overseas payment.
XIII. Segment reporting
(1) Segment reporting considerations
The Group management reviews the operation performance and allocates resources according to the business segments below.
(a) Display and Sensor Devices— This business mainly leading the innovation and development of TFT-LCD technologies, has been committed to speeding up the development of AMOLED, flexible display, VR/AR and other new display devices and sensors, promoting the development of gene sequencing, molecular antenna, multi- sign sensor, photoelectric sensing, fingerprint identification and security, and upgrading information exchange ports and related sensors on the basis of the display, so as to offer better products and services in smart phones, tablet PCs, laptops, displays, televisions, industrial control, health care, VR/AR and other applications.
Page 125
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) Smart systems— This business mainly expanding its business in digital art exhibition, supermarket retailing services, financial retailing services, smart equipment design and manufacturing services, photovoltaic facilities construction and operation& maintenance, vehicle-based display and Internet of Vehicles (IoV). It provides smart solutions for smart retailing, smart manufacturing services, smart energy and smart Internet of Vehicles.
(c) Healthcare service— This business mainly accumulate the display, sensor, artificial intelligence and large data four years core technology and medicine, life science combination, the integration of medical innovation, build, including artificial intelligence, life data detection, cell engineering, medical technology innovation transformation And other innovative technology platform, focusing on the development of mobile health, digital hospitals, regenerative medicine and health park four business, for human health to provide intelligent port products and professional services.
(d) Others— Other service mainly includes technical development service and patent maintenance service.
The main reason to separate the segments is that the Group independently manages the port devices business, the smart IoT business, and healthcare service businesses and other businesses. Because the business segments manufacture and distribute different products, apply different manufacturing processes and specifies in gross profit, the business segments are managed independently. The management evaluates the performance and allocates resources according to the profit of each business segment and does not take financing cost and investment income into account.
(2) Accounting policy for the measurements of segment profit or loss, assets and liabilities
For the purposes of assessing segment performance and allocating resources between segments, theGroup’s management regularly reviews the assets, liabilities, revenue, expenses and financial performance, attributable to each reportable segment on the following bases:
Segment assets include all tangible, intangible, other non-current and current assets, such as accounts receivable, with the exception of deferred tax assets and other unallocated corporate assets. Segment liabilities include payables, bank borrowings and other long-term liabilities attributable to the individual segments, but exclude deferred tax liabilities and other unallocated corporate liabilities.
Financial performance is operating income (including operating income from external customers and inter-segment operating income) after deducting expenses, depreciation, amortisation, impairment losses, gains or losses from changes in fair value, investment gain, non-operating income and expenses and income tax expenses attributable to the individual segments. The transfer pricing of inter-segment sales are determined with reference to prices charged to external parties for similar orders.
Page 126
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 2018
Port devices Healthcare
business Smart IoT business business Others Elimination Remaining items Total Operating income 86,688,426,362 17,499,500,352 1,151,844,468 3,569,024,583 (11,799,930,830) - 97,108,864,935 Including: Operating income from external
customers 81,265,815,692 14,734,461,467 1,108,587,776 - - - 97,108,864,935 Inter-segment operating income 5,422,610,670 2,765,038,885 43,256,692 3,569,024,583 (11,799,930,830) - - Operating cost 83,977,714,485 17,397,663,021 862,984,461 2,197,359,466 (11,483,372,588) 1,048,345,187 93,100,694,032 Operating profit / (loss) 2,710,711,877 101,837,331 288,860,007 1,371,665,117 (316,558,242) (1,048,345,187) 4,008,170,903 Total profit / (loss) 2,818,100,703 106,837,228 296,075,661 1,366,180,004 (316,558,242) (1,048,345,187) 4,122,290,167 Income tax expense 624,917,163 16,151,805 90,102,577 234,879,588 276,364,961 - 1,242,416,094 Net profit / (Net loss) 2,193,183,540 90,685,423 205,973,084 1,131,300,416 (592,923,203) (1,048,345,187) 2,879,874,073 Total assets 306,849,853,351 21,967,564,757 5,852,144,685 151,623,442,496 (182,516,887,526) 252,373,622 304,028,491,385 Total liabilities 122,453,918,956 13,679,315,017 2,384,123,956 103,650,272,046 (59,915,809,696) 1,419,373,545 183,671,193,824 Other items:
- Impairment losses for the current period 1,198,177,937 39,528,417 1,882,409 - - - 1,239,588,763 - Depreciation and amortization expenses 13,511,852,315 507,380,278 92,219,472 238,099,764 (156,607,616) - 14,192,944,213 - Long-term equity investments in associates - - - 2,389,166,886 - - 2,389,166,886 - Capital outlay 55,330,404,250 1,672,461,272 815,566,097 232,876,486 (283,237,527) - 57,768,070,578 - Losses from investment in associates and
joint ventures - - - (13,925,731) - - (13,925,731) - Net interest expenses 2,409,003,425 161,469,304 9,616,358 197,583,788 - 623,009,190 3,400,682,065
Page 127
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 2017
Port devices Healthcare
business Smart IoT business business Others Elimination Remaining items Total Operating income 85,149,888,634 15,620,915,713 1,023,905,566 2,225,609,340 (10,219,840,038) - 93,800,479,215 Including: Operating income from external
customers 80,120,037,284 12,663,489,516 1,016,952,415 - - - 93,800,479,215 Inter-segment operating income 5,029,851,350 2,957,426,197 6,953,151 2,225,609,340 (10,219,840,038) - - Operating cost 75,230,477,664 15,722,416,289 670,105,169 1,892,185,869 (10,023,810,470) 635,371,412 84,126,745,933 Operating profit / (loss) 9,919,410,970 (101,500,576) 353,800,397 333,423,471 (196,029,568) (635,371,412) 9,673,733,282 Total profit / (loss) 9,939,734,442 (43,269,543) 357,160,920 318,689,267 (195,872,135) (635,371,412) 9,741,071,539 Income tax expense 1,651,714,228 2,686,594 83,168,222 143,090,936 - - 1,880,659,980 Net profit / (Net loss) 8,288,020,214 (45,956,137) 273,992,698 175,598,331 (195,872,135) (635,371,412) 7,860,411,559 Total assets 252,310,396,239 12,835,279,534 3,517,599,267 133,049,382,316 (145,710,171,164) 106,255,657 256,108,741,849 Total liabilities 106,262,096,277 9,450,107,994 384,374,814 81,468,098,461 (46,304,097,806) 563,899,276 151,824,479,016 Other items:
- Impairment losses for the current period 2,184,895,069 42,940,013 1,689,600 - - - 2,229,524,682 - Depreciation and amortization expenses 11,567,593,359 231,141,413 69,857,531 244,966,959 (169,046,014) - 11,944,513,248 - Long-term equity investments in associates - - - 6,928,854,415 - - 6,928,854,415 - Capital outlay 46,574,510,032 2,248,086,802 643,076,998 248,554,284 (579,340,067) - 49,134,888,049 - Income from investment in associates and
joint ventures - - - 169,034 - - 169,034 - Net interest expenses 2,029,955,478 92,655,402 12,635,399 83,953,305 - 373,979,047 2,593,178,631 From 2018, when theGroup’s management assessing segment performance and allocating resources between segments, Varitronix International Group Ltd is classified as Port devices business part. To make information comparable, 2017 segment reporting is adjusted corresponding.
Page 128
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Secondary segment reporting (regional segments)
(a) The geographical information is based on the location of customers receiving services or goods.
The information of theGroup’s external transactions based by locations is as follows: Operating income from external customers
2018 2017 Chinese mainland 42,942,349,994 44,077,183,105 Other Asian countries and regions 44,256,356,951 44,260,377,203 Europe 3,488,264,284 2,185,981,332 America 6,354,884,816 3,198,611,737 Other regions 67,008,890 78,325,838 Total 97,108,864,935 93,800,479,215 (b) Divided based on asset locations
The geographical location of the specified non-current assets is based on the physical location of the asset, in the case of fixed assets; the location of the operation to which they are allocated, in the case of intangible assets and goodwill; and the location of operations, in the case of interests in associates and jointly controlled enterprises. Most of the non-current assets in the Group are located in Chinese mainland.
(4) Major customers
Operating income of Display and Sensor Devices from which is over10% of theGroup’s total operating income ended up with one customer. The operating income from this customer represented RMB 16,287,833,781 (2017: RMB 18,838,046,705), which was approximately17% (2017:20%) of theGroup’s total operating income.
Page 129
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 XIV. Notes of financial statements of the Company
1 Cash at bank and on hand
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents Cash on hand:
RMB 339 1,178 USD 5 6.8632 34 5 6.5342 31 HKD 165 0.8762 145 165 0.8359 138 JPY 51,325 0.0619 3,176 51,325 0.0579 2,971 KRW 420,000 0.0061 2,562 420,000 0.0061 2,566 Other foreign currencies 16,337 16,009 Sub-total 22,593 22,893 Bank Deposits:
RMB 1,333,209,249 1,991,214,902 USD 363,428,749 6.8632 2,494,284,193 152,685,791 6.5342 997,679,497 HKD 2,622,706 0.8762 2,298,015 2,254,086 0.8359 1,884,209 Sub-total 3,829,791,457 2,990,778,608 Total 3,829,814,050 2,990,801,501 Including: Total overseas deposits were equivalent to RMB 158,521 (2017: RMB 149,395). 2 Bills receivable and accounts receivable
Note 2018 2017 Bills receivable 1,500,000 - Accounts receivable (1) 36,952,623 39,897,385 Total 38,452,623 39,897,385
Page 130
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (1) Accounts payable
(a) TheCompany’s accounts receivable by customer type:
2018 2017 Amounts due from subsidiaries 36,108,800 40,249,695 Amounts due from other related
parties - 6,304 Amounts due from other customers 3,733,689 2,531,252 Sub-total 39,842,489 42,787,251 Less: Provision for bad and doubtful
debts 2,889,866 2,889,866 Total 36,952,623 39,897,385 (c) The ageing analysis of accounts receivable is as follows:
Ageing 2018 2017 Within 1 year (inclusive) 3,889,195 829,805 1 to 2 years (inclusive) - 2,506,960 2 to 3 years (inclusive) - 5,795,247 Over 3 years 35,953,294 33,655,239 Sub-total 39,842,489 42,787,251 Less: Provision for bad and doubtful
debts 2,889,866 2,889,866 Total 36,952,623 39,897,385 The ageing is counted starting from the date when accounts receivable are recognized.
Page 131
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (c) Accounts receivable by category
2018 2017
Provision for bad and doubtful Provision for bad and doubtful Book value debts Book balance debts
Percentage Percentage Carrying Percentage Percentage Carrying Category Amount (%) Amount (%) amounts Amount (%) Amount (%) amounts Accounts receivables that are
collectively assessed for
impairment based on credit risk
characteristics* 25,743,537 65% - - 25,743,537 25,391,284 59% - - 25,391,284 Individually insignificant but
assessed for impairment
individually 14,098,952 35% 2,889,866 20% 11,209,086 17,395,967 41% 2,889,866 17% 14,506,101 Total 39,842,489 100% 2,889,866 7% 36,952,623 42,787,251 100% 2,889,866 7% 39,897,385Note*: This category includes accounts receivable having been individually assessed but not impaired.
The Company has no individually significant accounts receivable and individually for impairment this year.
As at 31 December 2018, the Company collectively assessed accounts receivable having been individually assessed but not impaired for impairment and did not recognize impairment loss against this amount of accounts receivable (2017: nil).
Page 132
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (d) Additions and recoveries of provision for bad and doubtful debts during the year:
2018 2017 Balance at the beginning of the year 2,889,866 2,889,866 Charge during the year - - Write-offs during the year - - Balance at the end of the year 2,889,866 2,889,866 For the year ended 31 December 2018, the Company had no individually significant write-off or recovery of doubtful debts which had been fully or substantially made in prior years.
(e) Five largest accounts receivable by debtor at the end of the year
The five largest accounts receivable of the Company amounted to RMB 38,947,850, amounting to98% of the total accounts receivable at the end of the year, and the corresponding balance of provision for bad and doubtful debts is RMB 2,889,866.
3 Other receivables
Note 2018 2017 Interest receivable 9,659,279 - Dividends receivable (1) 14,115,915 10,404,147 Others (2) 1,992,053,266 1,824,727,573 Total 2,015,828,460 1,835,131,720
Page 133
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (1) Dividends receivable
2018 2017 Yinghe Century 8,204,147 8,204,147 Vacuum Electronics 2,200,000 2,200,000 Beijing Electronics Zone Investment and
Development Co., Ltd. 3,711,768 - Balance at the end of the year 14,115,915 10,404,147 (2) Others
(a) TheCompany’s other receivables by customer type:
Customer type 2018 2017 Amounts due from subsidiaries 1,967,828,693 1,775,667,804 Amounts due from other related
parties - 16,819,941 Amounts due from other customers 24,224,573 32,239,828 Total 1,992,053,266 1,824,727,573 (b) TheCompany’s other receivables by currency:
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents RMB 1,992,041,781 1,824,727,573 HKD 13,107 0.8762 11,485 - Sub-total 1,992,053,266 1,824,727,573 Less: Provision for
bad and
doubtful
debts - - Total 1,992,053,266 1,824,727,573
Page 134
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (c) The ageing analysis of other receivables of the Company is as follows:
2018 2017 Within 1 year (inclusive) 1,649,255,313 1,290,921,174 1 to 2 years (inclusive) 94,152,814 169,386,864 2 to 3 years (inclusive) 11,422,640 65,663,702 Over 3 years 237,222,499 298,755,833 Total 1,992,053,266 1,824,727,573 The ageing is counted starting from the date when other receivable are recognized. (d) Other receivables categorized by nature
Nature of other receivables 2018 2017 Transaction amount 305,938,861 702,635,642 Rent 227,919,843 211,037,415 Royalty fee 1,441,130,049 878,653,588 Others 17,064,513 32,400,928 Total 1,992,053,266 1,824,727,573 (e) Five largest other receivables by debtor at the end of the year
Other receivables at the end of the year due from the top five debtors of the Company amounted to RMB 1,611,402,222 in total, most of which are borrowings and royalty fees. No provision is made for bad and doubtful debts after assessment.
Page 135
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 4 Other current assets
2018 2017 VAT on tax credits 1,127,650 40,631,837 Others 46,677,446 20,450,238 Total 47,805,096 61,082,075 5 Available-for-sale financial assets
(1) Available-for-sale financial assets
2018 2017
Provision for Provision for
impairment of Carrying impairment of Carrying Item Book value inventories amount Book value inventories amount Available-for-sale equity
instruments
- Measured at fair value 259,708,877 150,099,655 109,609,222 280,680,730 150,099,655 130,581,075 - Measured at cost 124,689,635 106,001,603 18,688,032 124,689,635 106,001,603 18,688,032 Total 384,398,512 256,101,258 128,297,254 405,370,365 256,101,258 149,269,107 (2) Available-for-sale financial assets at fair value at the end of the year:
2018 Cost 224,818,586 Fair Values 109,609,222 Accumulated fair value movements in other comprehensive
income 34,890,291 Provision for impairment (150,099,655)
Page 136
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Available-for-sale financial assets at cost at the end of the year
Provision for
Book value impairment
Balance at the Percentage of Balance at the beginning shareholding beginning of Increase during Reductions Balance at the and the end of in investees Investee the year the year during the year end of the year the year (%) Teralane Semiconductor Inc. 11,868,000 - - 11,868,000 - 7.29% Zhejiang BOE Display Technology
Co., Ltd. 59,959,709 - - 59,959,709 59,638,453 7.03% Zhejiang Qiusheng Photoelectric
Technology Co., Ltd. 46,431,926 - - 46,431,926 46,183,150 5.09% National Engineering Laboratory of
Digital Television (Beijing) Co.,
Ltd. 6,250,000 - - 6,250,000 - 12.50% Others 180,000 - - 180,000 180,000
Total 124,689,635 - - 124,689,635 106,001,603
6 Long-term equity investments
(1) TheCompany’s long-term equity investments by category:
2018 2017 Investments in subsidiaries 141,883,775,023 116,691,267,854 Investments in associates and joint
ventures 1,675,958,462 4,562,412,537 Sub-total 143,559,733,485 121,253,680,391 Less: Provision for impairment 60,000,000 60,000,000 Total 143,499,733,485 121,193,680,391 In previous year, the Company provided full impairment losses for investments in its subsidiary, Special Display, which amounted to RMB 60,000,000.
Page 137
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Investments in subsidiaries:
Balance at the Opening balance Closing balance beginning of the Additions during Reductions during Balance at the of provision for of provision for Subsidiary year the year the year end of the year impairments impairments Beijing BOE Optoelectronics
Technology Co., Ltd. 4,172,288,084 - - 4,172,288,084 - - Chengdu BOE Optoelectronics
Technology Co., Ltd. 14,733,149,991 4,550,000,000 - 19,283,149,991 - - Hefei BOE Optoelectronics
Technology Co., Ltd. 9,000,000,000 - - 9,000,000,000 - - Beijing BOE Display
Technology Co., Ltd. 17,418,713,599 - - 17,418,713,599 - - Hefei Xinsheng
Optoelectronics Technology
Co., Ltd. 16,575,150,000 - - 16,575,150,000 - - Ordos Yuansheng
Optoelectronics Co., Ltd. 11,804,000,000 - - 11,804,000,000 - - Beijing BOE Vision-electronic
Technology Co., Ltd. 2,170,000,000 850,000,000 - 3,020,000,000 - - Chongqing BOE
Optoelectronics Co., Ltd. 19,565,354,599 - - 19,565,354,599 - - Beijing BOE Vacuum
Electronics Co., Ltd. 19,250,000 - - 19,250,000 - - Beijing BOE Vacuum
Technology Co., Ltd. 32,000,000 - - 32,000,000 - - Beijing BOE Special Display
Technology Co., Ltd. 100,000,000 - - 100,000,000 60,000,000 60,000,000 Beijing Yinghe Century Co.,
Ltd. 333,037,433 - - 333,037,433 - - BOE Optical Science and
technology Co., Ltd. 658,961,914 - - 658,961,914 - - BOE Hyundai LCD (Beijing)
Display Technology Co.,
Ltd. 31,038,525 - - 31,038,525 - - BOE (Hebei) Mobile
Technology Co., Ltd. 1,053,651,020 300,000,000 - 1,353,651,020 - - Beijing BOE multimedia
Technology Co., Ltd. 400,000,000 - - 400,000,000 - - Beijing BOE Energy
Technology Co., Ltd. 850,000,000 - - 850,000,000 - - Beijing BOE Smart Commerce
Co., Ltd. 10,000,000 - - 10,000,000 - - Beijing Zhongxiangying
Technology Co., Ltd. 10,000,000 - - 10,000,000 - - Erdos Haosheng Energy
Investment Co., Ltd. 2,000,000 - - 2,000,000 - - BOE Semi-conductor Co., Ltd. 9,450,000 - - 9,450,000 - - BOE Optoelectronics Holding
Co.,Ltd. 1,743,602,824 1,025,059,200 - 2,768,662,024 - - Beijing Asahi Electronic
Materials Co.,Ltd. 30,888,470 - - 30,888,470 - - Beijing BOE Land Co., Ltd. 7,731,474 - - 7,731,474 - - BOE KOREA Co., Ltd. 788,450 - - 788,450 - - Beijing BOE Marketing Co.,
Ltd. 20,500,000 10,000,000 - 30,500,000 - - Fuzhou BOE Optoelectronics
Technology Co., Ltd. 12,666,042,079 1,634,000,000 - 14,300,042,079 - - Healthcare Investment 1,193,154,069 550,000,000 - 1,743,154,069 - - Hefei Display 1,550,765,323 448,000,000 - 1,998,765,323 - - Technology Development 1,000,000 - - 1,000,000 - - Smart Science& Technology 50,000,000 - - 50,000,000 - - Zhuoyin Science&
Technology 400,750,000 199,250,000 - 600,000,000 - - Kunming BOE Display
Technology Co., Ltd. 78,000,000 124,800,000 - 202,800,000 - - Sensing Technology - 50,000,000 - 50,000,000 - - Wuhan BOE Optoelectronics
Technology Co., Ltd. - 1,230,860,516 - 1,230,860,516 - - Chongqing BOE Display
Technology Co., Ltd. - 193,557,370 - 193,557,370 - - Mianyang BOE
Optoelectronics Technology
Co., Ltd. - 13,936,980,083 - 13,936,980,083 - - Beijing BOE Yiyun Science
&Technology Co., Ltd. - 90,000,000 - 90,000,000 - - Total 116,691,267,854 25,192,507,169 - 141,883,775,023 60,000,000 60,000,000 For information about the major subsidiaries of the Company, refer to Note VII. 1.
Page 138
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Investments in associates and joint ventures:
Movements during the year
Investment
income Closing balance Balance at the recognized Other Cash dividends or Acquired as of beginning of the Increase in under equity comprehensive Other changes in profit subsidiaries Balance at the provision for Investee year investments method income equity declared during the year end of the year impairments Joint ventures
Wuhan BOE Optoelectronics Technology Co.,
Ltd. 91,590,309 1,140,000,000 (729,793) - - - (1,230,860,516) - - Mianyang BOE Optoelectronics Technology
Co., Ltd. 2,698,378,093 2,400,000,000 (1,398,010) - - - (5,096,980,083) - - Beijing BOE Yiyun Science&Technology Co.,
Ltd. 3,763,783 - (3,763,783) - - - - - - Sub-total 2,793,732,185 3,540,000,000 (5,891,586) - - - (6,327,840,599) - - Associates
Beijing Nissin Electronics Precision
Component Co., Ltd. - - (1,886,109) - 2,424,598 - - 538,489 - Beijing Nittan Electronic Co., Ltd. 53,786,835 - 10,946,250 - - (3,000,000) - 61,733,085 - Erdos BOE Energy Investment Co., Ltd. 9,458,312 - - - - - - 9,458,312 - Beijing Infi-Hailin Venture Investment Co.,
Ltd. 373,361 - 62,467 - - - - 435,828 - Beijing Infi-Hailin Venture Investment (Limited
Partnership) 137,448,451 - 22,591,316 (47,702,834) - (30,000,000) - 82,336,933 - TPV Display Technology (China) Limited 27,190,533 - (4,189,174) - - - - 23,001,359 - Beijing Xindongneng Investment Fund
(Limited Partnership) 1,472,249,231 150,000,000 (11,778,573) (155,295,781) - - - 1,455,174,877 - Beijing Xindongneng Investment Management
Co., Ltd. 4,861,735 - 2,327,127 - - (2,000,000) - 5,188,862 - Shenzhen Yunyinggu Technology Co., Ltd. 35,483,897 - (20,002,391) - - - - 15,481,506 - Beijing Xloong Technologies Co.,Ltd. 23,981,997 - (1,372,786) - - - - 22,609,211 - Chongqing BOE Display Technology Co., Ltd. 3,846,000 192,300,000 (2,808,246) 219,616 - - (193,557,370) - - Sub-total 1,768,680,352 342,300,000 (6,110,119) (202,778,999) 2,424,598 (35,000,000) (193,557,370) 1,675,958,462 - Total 4,562,412,537 3,882,300,000 (12,001,705) (202,778,999) 2,424,598 (35,000,000) (6,521,397,969) 1,675,958,462 -
Page 139
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 7 Deferred tax assets / deferred tax liabilities
2018 2017
Deductible/ Deductible/
(taxable) (taxable)
temporary Deferred tax temporary Deferred tax Item differences assets / (liabilities) differences assets / (liabilities) Deferred tax assets:
Provisions for impairment losses of assets 342,108,420 51,316,263 342,108,420 51,316,263 Depreciation of fixed assets 87,117,936 13,067,690 76,472,749 11,470,912 Advances from customers 1,551,798,448 232,769,767 797,348,485 119,602,273 Others 151,182,178 22,677,327 - - Sub-total 2,132,206,982 319,831,047 1,215,929,654 182,389,448 Amount offset (29,036,499) (32,183,263) Balance after offset 290,794,548 150,206,185 Deferred tax liabilities:
Bond interest (71,525,943) (10,728,891) (71,532,514) (10,729,877) Others (122,050,720) (18,307,608) (143,022,573) (21,453,386) Sub-total (193,576,663) (29,036,499) (214,555,087) (32,183,263) Amount offset 29,036,499 32,183,263 Balance after offset - - As at 31 December 2018, the Company estimated that the amount of taxable income is expected to be available in the future period that the deductible temporary differences are reversed, thereby confirming the relevant deferred tax assets.
8 Employee benefits payable
(1) Employee benefits payable:
Balance on Balance as of Increase during Reductions during 31 December Note January 01, 2018. the year the year 2018 Short-term employee benefits (2) 271,338,126 807,603,371 887,781,188 191,160,309 Post-employment benefits
- defined contribution plans (3) 11,662,067 77,656,828 79,339,943 9,978,952 Termination benefits - 547,277 547,277 - Total 283,000,193 885,807,476 967,668,408 201,139,261 Balance on Balance as of Increase during Reductions during 31 December Note January 01, 2017. the year the year 2017 Short-term employee benefits (2) 162,208,573 761,394,639 652,265,086 271,338,126 Post-employment benefits
- defined contribution plans (3) 7,708,530 56,247,103 52,293,566 11,662,067 Termination benefits - 43,597 43,597 - Total 169,917,103 817,685,339 704,602,249 283,000,193
Page 140
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Short-term employee benefits
Balance on Balance as of Increase during Reductions during 31 December January 01, 2018. the year the year 2018 Salaries, bonuses and allowances 232,610,577 622,616,346 705,728,418 149,498,505 Staff welfare - 37,159,393 37,159,393 - Social insurance
Medical insurance 13,533,102 36,532,908 37,038,227 13,027,783 Work-related injury insurance 963,123 2,603,687 2,627,503 939,307 Maternity insurance 1,363,607 2,921,927 2,840,340 1,445,194 Housing fund 3,136,970 43,830,388 44,121,341 2,846,017 Labour union fee, staff andworkers’
education fee 19,730,747 29,224,557 25,551,801 23,403,503 Others - 32,714,165 32,714,165 - Total 271,338,126 807,603,371 887,781,188 191,160,309 Balance on Balance as of Increase during Reductions during 31 December January 01, 2017. the year the year 2017 Salaries, bonuses and allowances 124,332,853 636,782,785 528,505,061 232,610,577 Staff welfare - 33,701,495 33,701,495 - Social insurance
Medical insurance 14,421,576 26,055,881 26,944,355 13,533,102 Work-related injury insurance 991,072 2,108,621 2,136,570 963,123 Maternity insurance 1,142,898 2,171,760 1,951,051 1,363,607 Housing fund 5,160,816 30,942,311 32,966,157 3,136,970 Labour union fee, staff andworkers’
education fee 16,159,358 21,661,709 18,090,320 19,730,747 Others - 7,970,077 7,970,077 - Total 162,208,573 761,394,639 652,265,086 271,338,126
Page 141
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (3) Post-employment benefits - defined contribution plans
Balance on Balance as of Increase during Reductions during 31 December January 01, 2018 the year the year 2018 Basic pension insurance 11,238,473 69,320,207 70,786,273 9,772,407 Unemployment insurance 249,227 2,917,729 2,960,411 206,545 Annuity 174,367 5,418,892 5,593,259 - Total 11,662,067 77,656,828 79,339,943 9,978,952 Balance on Balance as of Increase during Reductions during 31 December January 01, 2017 the year the year 2017 Basic pension insurance 7,035,905 49,445,579 45,243,011 11,238,473 Unemployment insurance 300,444 2,080,473 2,131,690 249,227 Annuity 372,181 4,721,051 4,918,865 174,367 Total 7,708,530 56,247,103 52,293,566 11,662,067 9 Other payables
Note 2018 2017 Interest payable 330,964,989 312,029,252 Dividends payable 6,451,171 6,451,170 Others (1) 7,872,319,930 9,713,912,548 Total 8,209,736,090 10,032,392,970 (1) Others
(a) TheCompany’s other payables by category are as follows:
2018 2017 Projects, equipment and intangible
assets 52,308,258 143,778,196 External agency fee 17,476,002 21,106,470 Advanced disbursement 7,690,628,499 9,472,358,381 Others 111,907,171 76,669,501 Total 7,872,319,930 9,713,912,548
Page 142
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (b) TheCompany’s other payables by currency:
2018 2017
RMB / RMB / Amount in Exchange RMB Amount in Exchange RMB original currency rate equivalents original currency rate equivalents RMB 5,082,657,694 9,321,901,661 USD 406,452,150 6.8632 2,789,562,393 59,993,708 6.5342 392,010,887 JPY 1,612,973 0.0619 99,843 - Total 7,872,319,930 9,713,912,548 10 Long-term loans
2018
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 27,510,000,000 Credited Less: Long-term loans due within one year 990,000,000 Credited Total 26,520,000,000
2017
Credited RMB / /collateralised Amount in original guaranteed currency Exchange rate RMB equivalents /pledged Bank loans
- RMB 26,668,000,000 Credited - USD 200,000,000 6.5342 1,306,840,000 Credited Less: Long-term loans due within one year 4,031,840,000 Credited Total 23,943,000,000
The interest rate of RMB long-term loans for the Company ranged from0% to4.75% in 2018 (2017:0% to4.75%). The Company had no renewed long-term loans because of overdue loans (2017: nil).
11 Deferred income
Balance at the Amount
beginning of the Additions during included in Balance at the Item year the year other income Other changes end of the year Government grants
- Government grants related to
assets 6,407,437 6,324,630,210 (913,120,098) (973,500) 5,416,944,049 - Government grants related to
income 124,244,690 64,925,367 (82,164,265) - 107,005,792 Total 130,652,127 6,389,555,577 (995,284,363) (973,500) 5,523,949,841
Page 143
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 12 Capital reserve
Other capital
Item Share premiums reserves Total Balance at the beginning of the
year 37,546,517,053 42,024,540 37,588,541,593 Add: Changes in other equity of
investees - 2,424,598 2,424,598 Closing balance 37,546,517,053 44,449,138 37,590,966,191 13 Other comprehensive income
Movements during the year
Opening balance Closing balance of of other other comprehensive comprehensive income income at the beginning of Before-tax amount Less: Income tax at the beginning of Item the year during the year expenses the year Other comprehensive income that will be
reclassified to profit or loss
Including: Gains or losses arising from
changes in fair value of
available-for-sale
financial assets 47,482,822 (20,971,853) (3,145,778) 29,656,747 Share of the other comprehensive income
of the equity-accounted investee that may
be reclassified to profit or loss 144,614,667 (202,778,999) - (58,164,332) Total 192,097,489 (223,750,852) (3,145,778) (28,507,585) 14 Retained earnings
Item 2018 2017 Retained earnings at the beginning of the
year 1,765,291,136 1,493,363,829 Add: Net profits for the year 2,629,858,350 1,465,006,203 Less: Appropriation for statutory surplus
reserve 262,985,835 146,500,620 Less: Cash dividends declared 1,739,919,938 1,046,578,276 Retained earnings at the end of the year 2,392,243,713 1,765,291,136
Page 144
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 15 Operating income
2018 2017 Rental income of investment properties 180,927,207 148,470,813 Technology development income 3,326,012,588 2,344,168,358 Others 541,409,893 322,922,350 Total 4,048,349,688 2,815,561,521 16 Taxes and surcharges
2018 2017 Property tax 36,681,107 34,628,574 Land use tax 2,864,304 2,864,304 Stamp duty 2,218,487 1,046,438 Urban maintenance and construction tax 706,057 913,638 Education surcharges and local education
343,357 183,462 surcharges
Others 1,316,562 12,900 Total 44,129,874 39,649,316 17 Financial expenses
2018 2017 Interest expenses from loans 1,055,792,484 556,880,963 Interest income from bank deposits (44,583,524) (58,850,619) Net exchange losses 1,797,658 5,408,147 Other financial expenses 1,414,091 2,441,048 Total 1,014,420,709 505,879,539 18 Other income
2018 2017 Government grants related to assets 913,120,098 9,017,759 Government grants related to income 82,164,265 14,495,697 Total 995,284,363 23,513,456
Page 145
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 19 Investment income
2018 2017 Income from long-term equity investments
accounted for using cost method 936,394,420 949,318,351 Long-term equity investments (loss) / gains under
equity method (12,001,705) 169,034 Investment income from holding available-for-sale
financial assets 3,917,184 792,018 Total 928,309,899 950,279,403 20 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Amount recognized in extraordinary gain and loss Item 2018 2017 in 2018 Government grants - 771,051 - Others 4,336,405 2,781,521 4,336,405 Total 4,336,405 3,552,572 4,336,405 (2) Non-operating expenses
Amount recognized in extraordinary gain and loss Item 2018 2017 in 2018 Donations provided 7,830,588 18,004,947 7,830,588 Others 837,822 3,187 837,822 Total 8,668,410 18,008,134 8,668,410 21 Income tax expenses
Note 2018 2017 Current tax expense based on tax law and
regulations 372,322,173 124,006,061 Changes in deferred tax (1) (137,442,585) (110,905,862) Total 234,879,588 13,100,199
Page 146
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (1) The analysis of changes in deferred tax assets / liabilities is set out below:
2018 2017 Origination and reversal of temporary
differences (137,442,585) (110,905,862) (2) Reconciliation between income tax expense and accounting profit is as follows:
Item 2018 2017 Profit before taxation 2,864,737,938 1,478,106,402 Expected income tax expense at tax rate of15% 429,710,691 221,715,960 Add: Non-deductible expenses 4,554,071 3,141,493 Non-taxable income (139,246,485) (142,663,108) Tax deduction forR&D activities (60,138,689) (29,911,193) Recognized temporary differences of previous
years - (32,857,761) Changes of deductible temporary differences
unrecognized - (6,325,192) Income tax expense 234,879,588 13,100,199
Page 147
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 22 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
2018 2017 (a) Reconciliation of net profit to cash flows from
operating activities:
Net profit 2,629,858,350 1,465,006,203 Add: Depreciation of fixed assets and
investment property 125,672,901 106,857,117 Amortisation of intangible assets 112,898,414 109,446,190 Amortisation of long-term deferred
expenses 34,008,232 30,511,433 Losses from disposal of fixed assets,
intangible assets, and other long-term
assets - 157,430 Finance expenses 1,041,426,618 503,438,491 Investment income (928,309,899) (950,279,403) increase in deferred tax assets (140,588,363) (110,905,862) Decrease / (increase) in inventories 3,462,706 (681,982) Increase in operating receivable items (315,481,253) (549,268,534) Increase / (decrease) in operating
payable items 898,567,740 (4,307,629,184) Net cash inflow from operating activities 3,461,515,446 (3,703,348,101) (b) Net changes in cash and cash equivalents:
2018 2017 Cash and cash equivalents at the end of the
year 3,829,814,050 2,990,801,501 Less: Cash and cash equivalents at the
beginning of the year 2,990,801,501 7,548,700,412 Net increase / (decrease) in cash and cash
equivalents 839,012,549 (4,557,898,911)
Page 148
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 (2) Details of cash and cash equivalents
2018 2017 Cash on hand 22,593 22,893 Bank deposits available on demand 3,829,791,457 2,990,778,608 Cash and cash equivalents at the beginning of the
year 3,829,814,050 2,990,801,501 Note: Cash and cash equivalents disclosed above exclude other monetary fund with restricted usage.
23 Assets with restrictive ownership title
As at 31 December 2018, the Company pledged its20% equity of BOE Energy Investment and20% equity of Haosheng Energy as security for the syndicated loans of RMB 633,330,000 and USD 96,000,000 for Yuansheng Optoelectronics, which will expire on 9 June 2021.
The Company has no other asset with restrictive ownership title.
XV. Extraordinary gains and losses in 2018
2018 2017 Losses from long-term equity investments (3,948,640) - Losses from disposal of non-current assets (21,684,121) (87,930,698) Government grants recognized in current profit or
loss (except for government subsidies that are
closely related to the normal business operations
of the company and that are in compliance with
national policies and are subject to constant or
fixed amount according to certain standards) 2,073,709,661 962,283,001 Fair value changes in derivative financial liabilities,
and income from available-for-sale financial
assets and wealth management products on
maturity 315,279,377 134,810,181 Reversal of provision for bad and doubtful debts
assessed on an individual basis 1,779,710 2,616,024 Other non-operating income and expenses besides
items above 63,734,628 46,503,917 Less: Tax effect 328,634,385 126,533,931 Total 2,100,236,230 931,748,494 Including: Extraordinary gains affecting net profit of
equity shareholders of the Company 1,917,425,622 888,471,355 Extraordinary gains affecting net profit of
equity shareholders of the non-
controlling shareholders 182,810,608 43,277,139
Page 149
BOE Technology Group Co., Ltd. Financial statements for the year ended 31 December 2018 Notes:Extraordinary gain and loss item listed above are presented in the amount before taxation.
XVI. Return on net assets and earnings per share
In accordance with Regulation on the Preparation of Information Disclosures by Companies Issuing Securities No.9– Calculation and Disclosure of the Return on Net Assets and Earnings Per Share (2010 revised) issued by the CSRC and relevant accounting standards, theGroup’s return on net assets and earnings per share are calculated as follows:
Weighted average
return on net Basic earnings per Diluted earnings Profit for the reporting period assets(%) share per share Net profit attributable to theCompany’s
ordinary equity shareholders 4.00% 0.10 0.10 Net profit excluding extraordinary gain and
loss attributable to theCompany’s ordinary
equity shareholders 1.77% 0.04 0.04
Page 150