Transform To
A BETTER
Transform to
A BETTER FUTURE
CONTENT
2
Chairman’s Statement
6
Management Discussion and Analysis
8
Review of Operations
12
Environmental, Social and Governance Report
26
Board of Directors and Senior Management
30
Corporate Governance Report
38
Report of the Directors
47
Report of the Independent Auditor
53
Consolidated Statement of Profit or Loss
54
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
55
Consolidated Statement of Financial Position
56
Consolidated Statement of Changes in Equity
57
Consolidated Cash Flow Statement
58
Notes to the Financial Statements
98
Five Year Summary
99
Properties Held by the Group
Mr. Yao Xiangjun
Chairman
Chairman‘s Statement
On behalf of BOE Varitronix Limited
(the “Company”) and its subsidiaries
(“BOEVx” or the “Group”), I present
the results for the full year ended 31
December 2017.
During the year under review, revenue of HK$2,879
million was recorded, an increase of 28% when
compared with the HK$2,247 million recorded in 2016.
EBITDA
1of the Group was HK$120 million, 19% lower
than the HK$149 million recorded for the same period in
the previous year. The profit attributable to shareholders
of HK$22 million was recorded, a decrease of 57%, when
compared with the HK$51 million recorded in 2016.
As at 31 December 2017, the cash and fixed deposits
balance of the Group was HK$1,203 million, compared
to HK$1,725 million at the end of 2016. The gearing
ratio, being total bank loans over net assets, was nil as at
31 December 2017, compared to 0.3% in the previous
year.
DIVIDENDS
The Board of Directors (the “Board”) has recommended
a final dividend of 1.0 HK cent per share (2016: 2.5 HK
cents per share). The annual dividend payout ratio was
33% (2016: 30%).
BUSINESS REVIEW
During the year under review, the Group continued to
obtain stable supply of Thin Film Transistor (“TFT”) panels
from its major shareholder, BOE Technology Group Co.,
Ltd (“BOE”), which facilitated the Group to acquire the
orders of automotive displays from customers in Europe
and the People’s Republic of China (the “PRC”), and
contributed to the rapid growth in the TFT modules
sales. Meanwhile, as the average selling price of TFT
module products was higher than those of monochrome
displays, and the proportion of medium-to-large-sized
TFT modules products increased in the sales orders mix,
the average selling price of the Group’s product mix
increased accordingly, which in turn contributed to the
growth in revenue. However, the selling prices of TFT
module products were under pressure inevitably under
the intense competition in the TFT modules market. In
addition, the Group had strived to become the major
TFT supplier of its strategic customers during the year so
as to achieve the economies of scale of production in
the future. During the initial stage of rapid development
of TFT modules business, significant investment costs
were incurred which affected the profit margin of the
orders. Besides, as the Group was currently undergoing
Highlights
HK$ million 2017 2016
Revenue 2,879 2,247
EBITDA1 120 149
Profit Attributable to Shareholders 22 51
Cash and Fixed Deposits Balance 1,203 1,725
Basic Earnings per Share 3.0 HK cents 8.4 HK cents
Total Dividend per Share 1.0 HK cent 2.5 HK cents
the transformation period of the TFT production model,
which shifted from the production of monochrome
displays and small-to-medium-sized TFT module
products to that of medium-to-large-sized TFT module
products, the Group needed to invest more resources
in technologies, staff training and equipment allocation,
thus posing pressure on the gross profit margin.
In the meantime, the working capital, including
inventories and accounts receivables, increased compared
to 2017 under the expansion of TFT modules business,
as the selling prices of TFT modules were much higher
than those of monochrome displays. The net proceeds of
approximately HK$1,392 million from the Subscription
has been utilized in the manner that is consistent with the
intended use of proceeds of the Subscription as disclosed
in the circular of the Company dated 22 March 2016.
Automotive Display Business
For the year under review, the automotive display business
generated revenue of HK$2,048 million, an increase of
38% from the revenue of HK$1,487 million recorded in
2016. This business represented approximately 71% of
the Group’s overall revenue.
During the year, TFT modules orders from automobile
customers in Europe and the PRC increased significantly.
The revenue from Europe increased by approximately
38% as compared to the previous year. The European
strategic customers gained confidence of stable TFT panel
supply of the Group which placed significant size of TFT
modules orders, especially the medium-to-large-sized
TFT modules orders. However, during the initial stage,
the Group needed to invest more resources to cope the
production demand of these orders, thus resulting in the
is still a certain demand of monochrome automotive
display from the PRC automobile customers, both the
sales volume and selling prices shown a declining trend.
The Group will continue to optimize the costs structure
in order to stabilize the margin contribution of these
business to the Group.
During the year under review, the revenue from South
Korea market increased by approximately 16% as
compared to 2016. As TFT module products were
extensively adopted by automobile customers in
South Korea and were expected to be adopted by
monochrome display customers upon the expiry of their
order contracts. There would be minimal orders of the
monochrome displays from South Korea. In the first half
of 2017, the TFT modules business was affected due to
intense relationship between the PRC and South Korea.
As the intense relationship has been moderated in the
fourth quarter of 2017, the TFT modules business has
gradually recovered.
During the year under review, the monochrome
automotive displays business of Japan has achieved
significant growth. Revenue of monochrome displays
from the automobile market in Japan increased by 37%
during the year as compared to the previous year. After
years of operation, the Group has a solid automobile
customer base in Japan which benefit the growth of
monochrome displays business. In the meantime, the
local sales team in Japan had further strengthened
with certain Japanese customers with respect to TFT
automotive displays with remarkable growth.
Industrial Display Business
Chairman‘s Statement
industrial sales. The white goods manufacturers in
Europe now prefer to install TFT modules on the white
goods in order to enhance the image and price of their
products. Given that the Group secured a stable supply
of TFT panel, white goods manufacturers placed more
orders with us for TFT modules during the year, which
generated a continued growth of TFT industrial business.
The United States was a major market of industrial
displays, and revenue derived from this market increased
by approximately 12% as compared with that of the same
period in 2016. The fourth quarter of 2017 experienced
a gradual recovery of the sales of industrial displays in the
United States, in particular sales to the medical sector,
due to our efforts of rebalancing the business portfolio,
which contributed to an increase in our revenue.
BUSINESS OUTLOOK
Automotive Display Business
The constructive strategic partnership relationships
between automotive customers and modules suppliers
are based on the stable product supply, good quality
and product design. Currently, the Group has
established a good reputation among its targeted
automotive customers, who have showed a high level
of appreciation of the Group’s stable supply of TFT
panels. It was evidenced by an increasing inquiry of TFT
modules from automobile customers in Europe and the
commencement of mass production of certain orders
gradually in 2018. Due to the intense competition in the
TFT modules market and small scale of production, the
gross profit margin of new sales orders is thin during the
initial stage of production. The Group has developed
a development strategy based on strategic customer
based approach, aiming at securing orders of
medium-to-large-sized TFT modules with higher selling prices,
which enable us to enhance production efficiency and
cost control through the consolidation of processing
of similar orders in the production lines and centralized
procurement of materials, so as to achieve economies
of scale.
It is expected that TFT modules orders from automotive
markets in China and South Korea will continue to
increase, with medium-to-large-sized TFT modules
orders constituting the largest portion of future growth
of both markets.
The Group will mainly adopt the TFT module products
as the core development sector in the future. Although
it is expected that orders for monochrome displays will
gradually shrink, the Group will maintain this business
segment given that there are still considerable demand of
monochrome displays of Japan automotive markets. Also,
the Group can adopt monochrome displays to penetrate
the automotive emerging markets such as India and
South America. The Group will streamline the operation
of the monochrome display production lines to meet the
production requirements of various monochrome display
products and to operate in a flexible manner, in order to
further reduce our operating costs.
Industrial Display Business
The white goods manufacturers of Europe increasingly
prefer the use of TFT modules which has a huge growth
potentials. The Group will customerize the design of
TFT modules which meet the demand of white goods
manufacturers in Europe. Monochrome displays still
dominate the basic application of electricity meters and
industrial instruments of European market. The Group
will focus on the development of projects with mass
volume and strategic value in order to stabilize the
revenue and profitability of this sector by optimizing the
cost structure and production process.
The United States market has shown a sign of steady
development after certain market adjustment. The
customers of this market have also shown a stronger
interest in TFT modules products, as evidenced by the
increasing inquiry of TFT products, indicate a room of
development in the TFT markets.
Production Strategy
Technology Development
The Group has developed and manufactured cockpit
display modules designated to be used in electric cars
and autonomous vehicles. In terms of cockpit display
modules, the multi-layer display is embedded under the
windscreen. The Group has commenced several relevant
research projects in 2017, involving cockpit display
modules, anti-reflective windscreens and three-layer
displays bonded with optical adhesives. These research
projects will be gradually completed in 2018.
Research on True Colour Display for the exclusive use
on automobiles has achieved solid progress, which
showed that its colour gamut is comparable with that
of OLED displays with cost effectiveness. The Group has
also developed the Gate on Array (“GOA”) technology
applicable to automobiles. Display products adopted
the GOA technology only have an extremely narrow
boarder, and have a stronger competitive edge than LTPS
displays due to the lower production costs as a result of
less application of masks.
The Group’s research and development of touch panel
products include One Glass Metal-mesh automotive
displays, whereby the ITO is replaced with the
metal-mesh, which makes the display thinner, improves
transmitting accuracy and reduces conductive traces and
reflections. In addition, several large-sized touch panel
research projects such as Multi-layers on Cell screens, Full
In-cell Touch screens and High Dynamic Range screens
will be gradually finished in the fourth quarter of 2018.
Under the rapid development of New Energy and Smart
Internet of Vehicles (“Smart IoV”), the development
trends of common adoption of internet, automation,
ACKNOWLEDGEMENT
The Group acted as the late market player of automotive
markets of TFT modules, the gross margin was decreased
under the intense market competition, the increase in
manufacturing overheads and operating costs resulted
from the development of the TFT business. Under the
increasing competition of the TFT modules market, the
Group is essential to take proactive approach to increase
market share to secure mass production in order to
achieve economies of scale and improve gross profit
margin gradually. In order to gain more market share
of strategic customers, the Group will further invest the
TFT modules assembly lines in 2018 and strengthen its
capability of materials procurement, product design,
production technology and quality control to create
a strong base for the development. In the meantime,
investment in production facilities also acted as a solid
foundation of the Group’s future development of
automobiles system business.
Management Discussion and Analysis
REVENUE
The Group’s revenue for the year ended 31 December
2017 increased by 28% to HK$2,879 million as compared
to the previous financial year.
PROFIT FROM OPERATIONS
The profit from operations for the year ended 31
December 2017 was HK$21 million, a decrease of
HK$39 million or 65% as compared to the previous
financial year.
During the financial year 2017, the Group spent HK$213
million on research and development (“R&D”) activities,
which represented approximately 7% of the Group’s
revenue.
NET PROFIT AND DIVIDENDS
The profit attributable to shareholders for the year ended
31 December 2017 was HK$22 million, as compared to
a profit of HK$51 million in 2016.
Basic earnings per share for the year ended 31 December
2017 were 3.0 HK cents as compared to basic earnings
per share of 8.4 HK cents in the previous financial year.
During the year, the Group did not declare an interim
dividend. The Board has recommended a final dividend
of 1.0 HK cent per share for the year ended 31 December
2017, which will aggregate to HK$7 million. The total
dividend for the year amounted to 1.0 HK cent per share.
STRUCTURE OF ASSETS
As at 31 December 2017, the total assets of the Group
amounted to HK$3,470 million (2016: HK$3,174
million). At the year end, inventories increased by 78% to
HK$803 million (2016: HK$451 million) while
available-for-sale securities amounted to HK$13 million (2016:
HK$11 million).
LIQUIDITY AND FINANCIAL
RESOURCES
As at 31 December 2017, the total equity of the Group
was HK$2,802 million (2016: HK$2,732 million). The
Group’s current ratio, being the proportion of total
current assets against total current liabilities, was 4.37 as
at 31 December 2017 (2016: 6.36).
At the year end, the Group held a liquid portfolio of
HK$1,236 million (2016: HK$1,790 million) of which
HK$1,203 million (2016: HK$1,725 million) was in cash
and fixed deposits balance, HK$33 million (2016: HK$65
million) in other financial assets. The unsecured
interest-bearing bank loans amounted to HK$Nil (2016: HK$9
million). The gearing ratio (bank loans over net assets)
was Nil% (2016: 0.3%).
The Group’s inventory turnover ratio (annualised cost of
inventories over average inventories balance) for the year
was 3.9 times (2016: 3.9 times). Debtor turnover days
(trade receivables over revenue times 365) for the year
was 93 days (2016: 75 days).
CASH FLOWS
In the year under review, the Group’s cash used in
operations amounted to HK$343 million (2016 cash
generated from operations: HK$235 million). The
increase in inventories and trade and other receivables
reduced cash flow by HK$348 million and HK$336
million respectively, mainly due to increase in working
capital resulted from the expansion of TFT modules
business, as the selling price of TFT modules were higher
than those of monochrome displays.
Net cash generated from investing activities amounted to
HK$230 million (2016: net cash used in investing activities
amounted to HK$576 million). There were payments for
the purchase of fixed assets of HK$250 million (2016:
HK$68 million).
CAPITAL STRUCTURE
FOREIGN CURRENCY EXPOSURE
The Group is exposed to foreign currency risk primarily
through sales, purchases, loan receivables and bank
loans that are denominated in a currency other than
the functional currency of the operations to which they
relate. The currencies giving rise to this risk are primarily
United State dollars, Euros, Japanese Yen and Renminbi.
The Group is not engaged in the use of any financial
instruments for hedging purposes. However, the
management monitors foreign exchange exposure from
time to time and will consider hedging significant foreign
currency exposure when the need arises.
CONTINGENT LIABILITIES
As at 31 December 2017, the Company had contingent
liabilities for guarantees given to banks in respect of
banking facilities granted to certain subsidiaries, which
were utilised to the extent of HK$Nil (2016: HK$9 million).
COMMITMENTS
As at 31 December 2017, the Group had capital
commitments of HK$431 million (2016: HK$84 million),
representing the purchase of property, plant and
equipment not provided for in the financial statements.
The commitment is mainly related to the purchase of
TFT modules assembly equipments in order to cope with
the increase of TFT modules sales, which is expected to
be funded by unsecured interest-bearing bank loans.
The total future minimum lease payments under
non-cancellable operating leases for properties payable within
one year amounted to HK$7 million (2016: HK$6 million).
STAFF
As at 31 December 2017, the Group employed 5,473
The Group adopts a performance-based remuneration
policy. Salary adjustments and performance bonuses are
based on the evaluation of job performance. The aim is
to create an atmosphere that encourages top performers
and provides incentives for general employees to
improve and excel.
STAFF RETIREMENT SCHEMES
The Group principally participates in defined contribution
retirement plans. In Hong Kong, the Group participates
in the Mandatory Provident Fund Scheme operated by
independent trustees. Contribution at a fixed rate of
5% of the employee’s relevant income (the “Relevant
Income”), subject to a cap of monthly Relevant Income
of HK$30,000 per employee, are made to the scheme
and are vested immediately.
In addition, the Group also operates a Top-Up ORSO
scheme, approved by the Inland Revenue Department
under Section 87A of the Inland Revenue Ordinance,
and both the employer and the employee are required
to contribute 5% of the excess of the Relevant Income to
the scheme. It is only eligible for employees who joined
the Group on or before 30 June 2009.
The employees of the Group’s subsidiaries which operate
in the PRC are required to participate in central pension
schemes operated by the local municipal government.
The subsidiaries are required to contribute certain
percentage of the payroll costs to the central pension
schemes. The contributions are charged to the profit or
loss as they become payable in accordance with the rules
of the central pension schemes.
Review of Operations
9%
AMERICA
10%
OTHERS
44%
EUROPE
32%
THE PRC
5%
KOREA
Revenue by Geography
EUROPE
During the year under review, revenue of HK$1,257
million was generated from the display business in
Europe, an increase of 38% as compared with that in
2016. The European business contributed 44% of the
total revenue for the Group in 2017.
Automotive Display Business
In Europe, the Group recorded a significant increase of
revenue from the TFT display business. This was especially
obvious in Germany and the Czech Republic. The sales
volume of monochrome display business remained
stable in 2017 but the average selling price was still
under pressure.
flexible supply of panels as well as continuous increase
of production capacity, the Group is full of confidence
to further increase the market share of TFT modules in
Europe.
During the year under review, the sales volume of
monochrome automotive displays in Europe was similar
to that in last year while the gross profit margin was still
under pressure as a result of the continual decline of
selling prices. The Group also took various measures to
reduce the material and operating costs and improve the
production efficiency of the monochrome automotive
display business in order to stabilize the gross profit margin
of this business. As it has become an predominated trend
for the European mainstream automotive customers to
adopt the TFT modules, the Group expected that there
is still a room for decline in the sales volume from the
applicable to automobiles. Display products adopting the
GOA technology are of higher resolution and more
cost-effective. In addition, New Energy and Smart Internet
of Vehicles have rapid development in recent years.
The Group is actively striving to expand the automotive
intelligent interactive system business. During the year
under review, the Group gained certain achievements
in the research and development of Dual Optical HUD,
Smart Rear Mirror etc.
Industrial Display Business
During the year under review, the Group’s industrial
business in Europe has maintained steady development.
The revenue increased slightly as compared to that
in 2016. Most European electricity meter customers
maintained stable sales order.
Review of Operations
The white goods manufacturers in Europe increasingly
prefer to install TFT modules on the white goods in
order to enhance the image of their products. The
selling prices and gross profit margin of white goods
adopting TFT modules were higher than those adopting
monochrome displays. With a stable supply of TFT panels
and its design capability, the Group was able to meet the
requirements of white goods manufacturers in Europe.
The Group believes that it can take advantage of the
development opportunities to increase the revenue and
profit contribution of this business.
AMERICA
America generated revenue of HK$268 million in
2017, contributing 9% to the total revenue of the
Group. America’s revenue in 2017 increased by 12% as
compared with that in 2016.
Industrial display has always been a major business
segment in the America’s market. The fourth quarter
of 2017 experienced a gradual recovery of the sales
of industrial displays in the United States, in particular
in the medical sector, due to our efforts of rebalancing
the business portfolio, which contributed to an increase
in our revenue. On the industrial display business side,
medical product and point of sales (“POS”) product
sectors are still the major application areas. The sales
team has secured certain quantity of sales orders from
our key medical product and POS customers, which will
provide a stable revenue source for the Group.
In terms of automotive display business, the Group
recorded an increase in revenue as a result of the
development of the monochrome displays business
in 2017. In addition, some customers increased order
inquiries and placed some orders regarding TFT module
products. It is expected that the sales volume of TFT
module products in the America’s market will gradually
increase in 2018.
THE PRC
Revenue contributed by the PRC was HK$923 million
during the year under review, representing an increase
of 30% as compared with that in 2016. This region
accounted for approximately 32% of the Group’s total
revenue.
still form as fundamental customer base for the industrial
displays market in the PRC. During the year, the Group
has been continuously expanding the customer network
to increase the revenue of this business.
Besides, the Group’s automotive touch panel business
developed rapidly in the PRC. In order to cater for the
customers’ requirements of the thickness, resolution and
transmitting accuracy of touch panel products, the Group
is in the research and development of One Glass
Metal-mesh automotive displays to satisfy the expectations of
customers. In addition, several large-sized touch panel
research projects such as Multi-layers on Cell screens, Full
In-cell Touch screens and High Dynamic Range screens
will be gradually finished in 2018.
KOREA
Revenue generated in Korea was HK$152 million in 2017,
increased 16% compared to 2016. Korea accounted for
5% of the total revenue of the Group.
monochrome display. Despite of this, the Group won
a considerable amount of the TFT modules and touch
panel new sales orders and gradually commenced mass
production during the year under review, which partly
offset the adverse impact of drop in monochrome display
business in Korea.
However, in the first half of 2017, the TFT modules
business in this area was affected due to the intense
relationship between the PRC and Korea. Fortunately,
as the intense relationship has been moderated in the
fourth quarter of 2017, the TFT modules business has
gradually recovered. It is expected that there is still a
growth potential in revenue of the automotive TFT
modules products in 2018.
Environmental,
Social and Governance Report
The Group began incorporating its Environmental, Social
and Governance (ESG) Report into its Annual Report from
2014. This ESG Report was prepared for the year ended
31 December 2017 with reference to the ESG Reporting
Guide published by The Hong Kong Exchanges and
Clearing Limited (the “Stock Exchange”), and based on
the material aspects of the Group and stakeholders. Our
TFT modules assembly plant in Chengdu has been put in
the mass production in the fourth quarter of 2017, unless
otherwise stated, this ESG Report covers operations in
the PRC (including Heyuan and Chengdu) and Hong
Kong, which together represent the core operations of
the Group.
The Board has been closely overseeing the Group’s
initiative to make continuing ongoing improvements and
to formulate an effective reporting mechanism. BOEVx’s
ESG risk management and reporting mechanism takes
into consideration operational management and relevant
stakeholders. Assessment of ESG status and progress are
conducted on an ongoing basis.
ESG Risk Management and Reporting Mechanism
Functional Departments
Designing, implementing and monitoring riskmanagement and internal control systems in relation to ESG, taking into account the Board’s
ESG priority.
Monitoring to ensure effective implementation of ESG strategic plan, and regularly reviewing
stakeholders’ expectation on ESG matters.
ESG Risk Management Team
Recognising and prioritising stakeholders’ need and expectations in relation to ESG, and formulating strategic plan accordingly.
Board of Directors
Shareholders/Investors,regulators, customers, suppliers, community, employees
Key Stakeholder
The ESG Risk Management Team consists of top management from operations and finance, and communicates regularly to ensure ESG risks are properly managed.
ENGAGING STAKEHOLDERS
The Group communicates regularly with stakeholders through various channels in order to understand their different
expectations and the possible impacts to them of its sustainable development activities.
Stakeholders
Communication Channels
Content
Shareholders/Investors
•
Annual general meetings and notices
•
Annual/interim reports, financial statements and
announcements
•
Direct communications
•
Corporate website
•
Investor briefings
•
Business sustainability
•
Financial performance
•
Corporate transparency
•
Corporate social responsibility
Regulators
•
Meetings
•
Compliance reporting
•
Compliance with laws and
regulations
Customers
•
Direct communication via frontline staff
•
Customer audits and factory visits
•
Corporate website
•
Quality products and services,
and delivery arrangements
•
Technological developments
•
Product responsibility
•
Factory and labour conditions
Suppliers
•
Direct communication and meetings
•
Site visits and reviews
•
Vendor acceptance and management processes
•
Questionnaire
•
Sustainable procurement
•
RoHS considerations
•
Corporate reputation
•
Industry experience and
expertise
Community
•
Involvement in and meeting with various
communities through social services and sports
activities
•
Cooperation with local universities and NGOs
•
Improvement of community
environment and culture
•
Support for public welfare
activities
Employees
•
Training and development
•
Regular performance appraisals
•
Newsletters
•
Work-life balance activities
•
Policy communication
•
Health and safety
•
Remuneration and welfare
•
Career development
Environmental, Social and Governance Report
MATERIALITY ASSESSMENT
The issues that matter most to the Group’s business
and its stakeholders are identified and presented
in the materiality matrix above. The Group places
comparatively higher emphasis on ESG matters relating
to the environment, employee safety and supply chain
management as these are external stakeholders’ top
concerns, weighted against the risks and opportunities
they present to the Group. Whilst higher priority is given
to these areas, other ESG aspects are also monitored on
an ongoing basis and are included in this ESG report to
enhance corporate transparency.
ENVIRONMENT
Over years, the Group has developed streamlined
operating processes and energy-efficient hardware to
lessen energy and water utilisation, improved the use of
resources and investigated new means for environmental
preservation.
As a manufacturing company, the Group’s management
is always aware of the importance of sustainable
development and environmental protection. The
Group’s policy on emissions and waste is fully complied
with the requirements of the emission standard in
《水污染物排放限值》
(DB44/26-2001),
《大氣污
染物排放限值》
(DB44/27-2001) and other relevant
requirements and standards.
The Group has been accredited with ISO 14001 since
2005. Under this accreditation, the Group resolves
to comply with environmental laws, regulations and
other applicable requirements, and to reduce or
eliminate pollution while minimising any impact on
the environment.
The manufacturing facilities in Heyuan city and Chengdu
city are required to undergo stringent environmental
audit and continuous monitoring, in order to protect the
natural resources in the region and also to comply with
all relevant local environmental laws and regulations.
Emission and Waste Performance of Heyuan Plant
Waste
Total tonnes in 2017
Tonnes/ Revenue (HKD1,000
million) in 2017
Total tonnes in 2016
Tonnes/ Revenue (HKD1,000 million) in 2016
Total tonnes in 2015
Tonnes/ Revenue (HKD1,000 million) in 2015
Total tonnes in 2014
Tonnes/ Revenue (HKD1,000 million) in 2014
Air
HCL 2.29 0.795 3.13 1.39 2.9 1.17 3.8 1.45
Particulates 0.89 0.309 <0.065 <0.0289 <0.050 <0.0201 0.098 0.0375
SO2 0.5 0.174 <0.1630 <0.0725 <0.1544 <0.0621 <0.0737 <0.0282
NOx 2.54 0.882 0.182 0.0809 0.175 0.0703 0.172 0.0658
Oil Fumes 0.02 0.007 0.01 0.01 0.02 0.01 <0.01 <0.01
Water
Wastewater 706,387 245,358 662,863 294,999 837,897 336,775 859,906 329,088
Solid
Solid Waste
Hazardous 88.97 31 82.87 37 70 28 78 30
Solid Waste
Non-hazardous 978.29 340 915 407 574 231 685 262
Emissions
Major emissions in the production plant are primarily
collected at the exhaust vents of the production buildings
and canteen kitchen of Heyuan plant. Hydrochloric acid
is the main emission created by the production process. It
is used at the etching stage when producing LCD panels.
The volatilised hydrochloric acid is drawn to the ventilation
system in the production buildings, then transmitted to
the neutralising machines on the rooftop and neutralised
with alkali before being released to the air.
Emissions such as particulates, sulphur dioxide, nitrogen
oxide and oil fumes are collected from the exhaust
vent at the canteen kitchen of Heyuan plant. These
substances are mainly produced during the process
of fuel combustion. The increase in emissions in 2017
compared with previous years was mainly due to the
increase in the amount of food served in the canteen
in Heyuan. Environmentally clean fuel has been used
consistently since the second half of 2009, to reduce
the emission of nitrogen oxide from kitchen ventilation.
The Chengdu production plant is mainly engaged in
TFT module assembly and thus no notable emission is
generated.
Wastewater
Waste is unavoidable during the manufacturing and
operation process, but the Group keeps a stringent
control on the emission and ensures it is properly treated
to minimise any negative impact to the environment.
Wastewater generated during the manufacturing process
is treated in a large underground wastewater treatment
facility with a daily maximum treatment capacity of
4,000 cubic meters. The current actual daily treatment
is about 3,000 cubic meters. A computer software
ELECTRICITY AND WATER CONSUMPTION, AND EMISSIONS
2014 2015 2016 2017
Water Consumption per
Production Output
Water (tonne / 1,000 unit)
Chengdu Heyuan
2014 2015 2016 2017
0.07
0.06
0.05
0.04
0.03
Emissions per
Production Output
CO2 (tonne / 1,000 unit)
Heyuan
Year Year
2014 2015 2016 2017
Electricity Consumption per
Production Output
Electricity (kWh / 1,000 unit)
Chengdu Heyuan
Year
500 700 900 1,100 1,300 1,500
Environmental, Social and Governance Report
Solid Waste
Non-hazardous solid waste is usually produced during
manufacturing and daily living. Used carton boxes,
wooden packing cases and scrap glass are collected by
qualified recycling contractors. Production plant staff are
also encouraged to put rubbish into designated garbage
containers. Such collected garbage is also collected by
qualified recycling contractors.
Hazardous waste from the production area consists
primarily of materials used in the manufacturing process.
Chemicals used during production are collected and
treated in full compliance with local environmental
regulations.
Measures to Reduce Emissions
and Waste
Since 2016, the Group mitigated 2.8 tonnes (per annum)
of hazardous waste by recycling the used non-dust cloths,
classified as hazardous waste after use with alcohol,
with special treatment. Wastewater was also reduced
to 40mg/L of Chemical Oxygen Demand (COD) through
Mixed Wastewater Treatment of domestic sewage and
industrial wastewater, which is lower than the emission
standard value of 90mg/L. In 2017, an investment of
HK$936,700 in the transformation of the water loop
treatment system at the Heyuan plant which was used
to treat the waste water and recycling. It reduced the
annual discharge of 6,000 tonnes of wastewater.
The Company’s TFT Production was accredited with
the “2017 Company Electronic Control - Excellence
Team in Energy Saving and Emission Reduction” by the
Beijing Electronics Industry Trade Union. The award was
recognized for the recycling of dust-free cloth, which
has been used for cleaning the patch glass and TP visual
inspection cleaning. After unified purification in the
recycling, the dust-free cloth can be used for cleaning
the glass-hydrogel reinforced process, i.e. the epoxy
dispensing process (syringe tip and syringe cleaning),
machines, worktop, curing racks, fixtures, ovens, etc. This
contributed a saving of approximately RMB1,530,000.
Use of Resources
As a manufacturing company, electricity and water
are the resources most used during the course of
operations. Management recognises the significance
of energy conservation, and ongoing measures are in
place to reduce the use of natural resources. The Group
regularly reviews ways for the efficient use of resources
and develops improvement plans, with the aim of
further reducing consumption of these resources while
maintaining effective operation of the production plant.
However, due to the increase in production capacity of
Heyuan plant in 2017 as compared to 2016, the average
energy consumption (i.e. total electricity consumption/
total production output) was reduced.
For Chengdu plant, the electricity consumption per
production output is lower than that of Heyuan plant as
it only engages in TFT module assembly process. The
water consumption per production output in 2017 is at
a higher level, as it was not reaching full capacity during
initial stage of mass production.
At the same time, the Group strives to minimise any
impact on the environment and save material costs by
continuously reviewing the design for product packaging,
with the aim of reducing packaging size. Despite this, as
the Group’s products are glass LCD panels or modules,
they must be protected with polyfoam trays during
delivery and so the use of polyfoam trays is unavoidable.
In 2017, the quantities of carton boxes and polyfoam trays
used for product storage and transportation in Heyuan
were 1,075 tonnes and 1,148 tonnes respectively. This
indicates an increase of 15.8% and 26.6% respectively,
as compared with the year 2016. In 2017, the quantities
of carton boxes and polyfoam trays used for product
storage and transportation in Chengdu were 39 tonnes
and 74 tonnes respectively.
Energy Consumption, Water Utilisation and Packaging Material Used
Total tonnes in 2017
Tonnes/ Revenue (HKD1,000 million) in 2017
Total tonnes in 2016
Tonnes/ Revenue (HKD1,000 million) in 2016
Total tonnes in 2015
Tonnes/ Revenue (HKD1,000 million) in 2015
Total tonnes in 2014
Tonnes/ Revenue (HKD1,000 million) in 2014 Heyuan Production Plant
Electricity (kWh)
100,992,658 35,079,075 91,205,623 40,589,952 90,905,585 36,537,615 89,012,950 34,065,423
Water (Tonne)
1,362,932 473,405 1,145,386 509,740 1,414,773 568,639 1,251,385 478,907
Carton boxes (Tonne)
1,075 373 928 413 1,118 449 973 372
Polyfoam trays (Tonne)
1,148 399 907 404 999 402 825 316
Chengdu Production Plant
Electricity (kWh)
1,158,672 402,456 – – – – – –
Water (Tonne)
34,054 11,828 – – – – – –
Carton boxes (Tonne)
39 14 – – – – – –
Polyfoam trays (Tonne)
74 26 – – – – – –
Hong Kong Office
Electricity (kWh)
168,579 58,555 117,330 52,216 153,859 61,840 154,891 59,277
Water (Tonne)
108 38 96 43 88 35 90 34
Measures to Reduce Energy
Consumption and Water Utilisation
As at 31 December 2017, 1,000 T8 and T5 light bulbs
had been phased-out and replaced with LED lights.
Environmental, Social and Governance Report
Recognition
The Group received recognition for its efforts in
environmental protection in 2017. BOEVx was awarded
with the “Green Office Label” by the World Green
Organisation. The Hong Kong office was also presented
with a “Long Term Participation Award” by the HSBC
Living Business Awards Programme
1, to recognise years
of efforts on environmental protection.
SOCIAL
Employment
The Group strictly observes the labour law in Hong Kong
and the PRC. It is the policy of the Company to maintain
a working environment that complies with the Race
Discrimination Ordinance, Sex Discrimination Ordinance,
Disability Discrimination Ordinance and the Family Status
Discrimination Ordinance of the Ordinance and Code of
Practice.
The Group provides remuneration, welfare and fringe
benefits to employees comparable to the market
standard. Remuneration, salary and bonus distribution
are determined with reference to a performance-linked
scale. When it comes to annual reviews, factors such
as the Company’s financial performance, business
prospects, individual performance, market rates and
inflation rate are taken into consideration to decide the
rate and scale.
In 2017, the turnover rates for Hong Kong, the PRC and
Overseas staff were 12.5%, 29.5% and 0% respectively.
During the year, there was no significant reported case of
non-compliance with the relevant laws and regulations
in Hong Kong, the PRC and Overseas.
Health and Safety
The Group’s policy on health and safety is to comply
fully with local government regulations, as stipulated
in the law of prevention of occupational disease
《中華人民共和國職業病防治》
and fire prevention in
the PRC
《中華人民共和國消防法》
, and to maintain
a healthy and safe working environment for all
employees, including the plant and systems of work,
and to provide such information, instruction, training
and supervision as they need. The production plant in
Heyuan has successfully renewed its OHSAS18001 with
Health and Safety accreditation. The production plant in
Chengdu is accredited with its OHSAS18001 in 2017.
In 2017, there is no work-related fatality in the Group
and no injury case was reported among Hong Kong
employees. The factory recorded 35 (2016: 31) injury
cases with 563 (2016: 325) lost days due to work injuries.
Every injury case underwent a detailed review and
evaluation, with precautionary measures put in place to
avoid a repeat occurrence. Extra training was conducted
with the parties involved.
The Group understands that natural disasters and
accidents are unavoidable, and our management aims to
mitigate any damage during mishaps. An emergency and
fire drill, and fire precautionary training are conducted
once a year in both the Hong Kong office and the
production plant. First-aid training is provided to staff and
workers. Training in safe handling of chemicals is also
conducted for related workers on the production floors.
In the production plant, a patrolling team is responsible
for carrying out audits regarding workplace efficiency,
effectiveness, and safety measures.
In addition to workplace safety, a healthy lifestyle is
promoted to all employees. Talks on health & wellness and
a variety of activities related to sports and social service are
arranged for employees’ participation. The aim of these
activities is to achieve a sustainable work-life balance.
Development and Training
2017 2016 2015
Total Training Hours
Total Participants
Total Headcounts
Average Training Hours per Staff Member
Total Training Hours
Total Participants
Total Headcounts
Average Training Hours per Staff Member
Total Training Hours
Total Participants
Total Headcounts
Average Training Hours per Staff Member
HK Staff
Male 238 58 42 5.7
332 207 149 2.2 795 300 168 4.7
Female 206 70 36 5.7
PRC Staff
Male 7,008 1,398 578 12.1
5,274 2,993 770 6.8 3,173 689 699 4.5
Female 3,725 914 370 10.1
PRC Workers
Male 7,616 1,355 665 11.5
19,312 6,886 4,026 4.8 20,364 4,262 4,270 4.8
Female 20,250 5,950 3,657 5.5
Workforce and Turnover Rate
2017 2016 2015
Age Hong Kong PRC Overseas Hong Kong PRC Overseas Hong Kong PRC Overseas
Male
18 – 45 73 1,200 13 77 954 14 87 905 15
46 – 65 35 43 21 31 42 10 33 25 10
Turnover
rate 12.2% 29.5% 0% 12.7% 27.6% 0% 14% 22.7% 0%
Female
18 – 45 27 3,741 8 24 3,488 10 30 3,911 11
46 – 65 19 286 7 17 312 6 18 128 6
Turnover
rate 13.2% 29.5% 0% 18% 31.8% 11.8% 10% 19.6% 6%
Employment Type
Staff 154 948 49 149 770 40 168 699 42
Environmental, Social and Governance Report
Development and Training
The Group values its employees and is committed to
providing an ideal workplace in which its staff members
may grow and develop. In 2017, the Group conducted a
series of training sessions for staff and workers.
The Group’s policy is to ensure that all employees achieve
personal growth in their careers, and training is therefore
encouraged. This is usually held during working hours,
so that employees need not sacrifice personal time for
training. A flexible work pattern may be scheduled for
Hong Kong staff members working in the production
plant if they need to pursue further studies.
Training covers a wide range of topics including
operational skills, craftsmanship, display technology,
quality standards, environmental matters, health and
safety and soft management skills. Senior managerial
staff members are usually invited to be technical
instructors. External coaches are employed for specific
trainings on soft management skills. In 2017, external
coaches were employed to conduct an Outward Bound
training for the engineering staff. The training aims at
fostering personal development, teamwork, problem
solving, and interpersonal skills.
Labour Standards
The Group complies with and observes the respective
Labour Laws and Regulations in its operating countries.
As a responsible employer, the following principles are
strictly enforced:
•
No child labour
•
Ensure that wages comply with or exceed the minimum
legal requirements of the country where employees
are based
•
Overtime practice is based on a voluntary pattern, no
forced labour is allowed
•
Respect for the opinions of general employees and the
labour union
•
Formal complaint channels are established and are
regularly promoted to employees
•
Equal employment opportunities – employment of
disadvantaged employees and diversity and inclusion
are encouraged in the workplace
•
Harassment and abuse – these are actively discouraged
in any form, to or among all employees
•
Protection of privacy and personal data at work
All potential applicants are required to complete the
Company’s Employment Application Form, where
personal data such as, names, contact details, ID
numbers, etc. will be provided by the applicants. Human
Resources Department will then reference check the
ID cards to ensure that they meet the minimum age
standard, i.e. 18 years or above.
People Caring
The headquarters office in Hong Kong was presented
with the Certificate of Merit in the Caring for People
category in the HSBC Living Business Awards 2017. The
Award recognises the Group’s outstanding performance
in aspects of staff training and development,
communications, equal opportunity, staff welfare,
work-life balance, family-friendly practices, occupational
health & safety and supply chain management. The
Group provided all-round attention in the above areas,
and performed exceptionally well in organizing work-life
balance activities for staff and showing flexible treatment
for staff members who need special care or to cope with
family issues.
Suppliers by Geographical Region
PRC Asia Europe
United States
Material Suppliers 328 70 31 19
Logistics Service
Vendors 6 3 6 1
Supply Chain Management
The Group takes a collaborative approach to supply
chain sustainability management, as it views its suppliers
as part of an interdependent ecosystem.
In 2017, the Group took the initiative to evaluate
its suppliers’ social responsibility performance. Both
material suppliers and logistics service vendors were
included in an evaluation distribution list. Completed
questionnaires helped the Group to understand and
evaluate the performance of its suppliers and vendors in
the aspects of:
•
Work hours
•
Child labour
•
Forced labour
•
Health and safety
•
Environmental concerns
•
Corporate social responsibility
Selection and Evaluation of Suppliers
The Group selects suppliers and purchases materials
and/or services from suppliers and vendors using three
methods, namely, price comparison, bidding and sentinel
procurement. Audits of suppliers and vendors are
performed on a regular basis. Results are compiled for
review by the Supplier Quality Team and are approved by
the department head of Quality.
Criteria for audit include:
•
General operation and workforce condition
•
Quality qualification
•
Quality system training
•
Inspection procedures for quality systems
Distribution of Suppliers
Suppliers are divided into material suppliers and logistics
service vendors. Certain material suppliers are requested
to sign a declaration declaring that their packing material
and Bill of Material (BOM) contains no hazardous
substance. There was no reported case of violation of the
declaration by any of our suppliers in the reporting period.
Table of Distribution and Response Status
Number Percentage (%)
Total No. of major suppliers for
manufacturing operations 92 –
Total No. of major suppliers
questionnaires sent 92 100
Total No. of completed
Environmental, Social and Governance Report
Service Vendors
The Logistics Department screens and selects service
vendors by considering of the following factors:
•
Company background – financial stability, reputation
and global network
•
Pricing and competitiveness
•
Services – performance track record, efficiency and
customer service
•
Environmental performance – for instance, most
of vendors use trucks compliant with Euro IV and V
standards
Product Responsibility
The Group has no recall on products sold or shipped due
to safety and health reasons in 2017. There are average
117 cases and 106 cases per month of automotive
quality enquiries in 2016 and 2017.
Safety is always the core of the Group quality policy. To
pursue such policy, the Group is qualified by International
Standard: ISO 14001 and QC 080000. With these
standards, the Group has developed an intensive system,
to ensure no harmful substances (dangerous material lists
from RoHS/REACH) going into BOEVx finished goods. As
a result, there is no concerned recall in 2017 record.
As one of major automotive component suppliers, the
Group takes responsibility for providing customers
with quality and completed after-sale services. Such
responsibility covers 8-discipline reporting (8D), customer
complaint review meeting (CCR) and continuous
improvement plan (CIP). With 8D approach, the negative
impact from defects is quickly limited by containment
action (which is mostly defined in 48 hours). With weekly
CCR, “cause and action” will be fully consolidated
across departments like Production, Process and Design.
Furthermore, to achieve reject rate in PPM (parts per
million) level, CIP is carried out quarterly with the
involvement of the senior management.
The Group’s prime objective is to provide high quality
products that fully conform to their requirements and
specifications. This commitment is fundamental to all work
undertaken and is closely observed by all members of the
Group in their daily activities. All products must strictly
comply with the Group’s policy of operating a Quality
Management System that fully meets the requirements
of ISO 9001 and ISO/TS 16949 for automotive products
and customer requirements for supplementary
standards. This standard stipulates all processes from
product development to completion of production and
to after-sale services. In addition, Hazardous Substance
Process Management is in place where procedures and
related processes have been assessed and confirmed to
be compliant with QC 080000. The production plant in
Heyuan is accredited with ISO 14001, ISO 9001, ISO/TS
16949, QC 080000 and OHSAS 18001 certifications.
The production plant in Chengdu is accredited with ISO
14001, QC 080000 and OHSAS 18001 certifications. In
addition, the production plant in Chengdu has already
upgraded its ISO/TS 16949 to IATF 16949 (the latest
version). The production plant in Heyuan will also get the
IATF 16949 in June 2018.
Protection of Intellectual
Property Rights
The Group is devoted to respect the concept of
intellectual property which include but not limited to
patents, product information, technology, product
design, outlook, trademarks, software, trade secrets,
images, sound records, pictures and etc. The Group
possesses the patent, copyright and trademark and
related rights, or obtain the authorization in legitimate
ways. They are protected by international treaties about
intellectual property. Without the permission of the
Group, other parties cannot possess, use, reproduce,
record or display any related intellectual property which
belongs to the Group. Otherwise the Group will consider
to take legal actions.
Data Protection and
Privacy Policies
In order to gain trust from our stakeholders, the security
of their personal information is important to us. The
Group acknowledges the importance in handling the
personal information carefully.
The Group understands stakeholders use their personal
information for different purpose. Therefore, it is
important for us to handle this information with care. To
protect this information from any unauthorised access,
accidental loss and destruction, the Group adopts
appropriate security measures in the transfer and storage
of the personal data.
Anti-Corruption
The Group places emphasis on ensuring all business is
conducted in accordance with relevant local laws and
regulations, with policies in place to safeguard against
corruption activities. Such measures are preventive,
detective and punitive in nature.
Policies include:
•
Code of conduct, which covers conflict of interests and
acceptance of advantages / benefits
•
Whistle-blowing policy
•
Entertainment policy
•
Travel policy
Environmental, Social and Governance Report
Community Involvement
The Group is resolved to cultivate good relationships
and focusing on needy areas within the community.
The BOEVx Social Service Team has enjoyed a successful
partnership with ELCHK Sheung Tak Integrated Youth
Service Centre (“Sheung Tak”) since 2013, serving
youngsters from ethnic groups such as Indians and
Pakistanis.
In 2017, the BOEVx Social Service Team engaged
in a new mentorship programme themed “Family
Assistance”. Family support plays an important role for
the growth development of youngsters. Volunteers and
ethnic families established a trust relationship. Volunteers
brought the families out of the community, expand
the network. Hence, the ethnic families could further
understand and make good use of the community
resources.
The project demanded a great deal of participation and
effort from the volunteers who guided the 6 ethnic
families throughout the process. A series of visitations
were provided by volunteers for the families to enhance
their understanding of Hong Kong, while the role of the
social workers of Sheung Tak were to organize Friday
support group activities every two weeks to provide
personal development, parental communications and
community information sharing to ethnic mothers.
The BOEVx Social Service Team cares deeply about the
development and prospects of this group of ethnic young
people and their family development. Looking into the
future, it is committed to implementing more programs
for the youth of ethnic minorities in a concerted effort
with Sheung Tak.
Awards and Accolades
It was an honour for the BOEVx Social Service Team to
be presented with “The 8th Hong Kong Outstanding
Corporate Citizenship Logo – Volunteer Category” by
the Hong Kong Productivity Council in 2017.
The Group provided sustainability in the community
services. It will continue to encourage employees and
their families to take part in the Group’s social service
activities, and we anticipate the BOEVx Social Service
Team will expand on its own strengths and achieve
continuous improvement.
Participation in Charity and
Work-Life Balance Activities
The Group is involved in a variety of events that combine
charity and sports. In 2017, the Group sponsored
colleagues to participate in:
•
Hong Kong Streetathon @ Kowloon
•
Standard Chartered Marathon
•
Oxfam Trailwalker
•
Heyuan International Marathon
The Group encourages work-life balance, yoga classes
were organised in the Hong Kong office and Chengdu
plant to encourage healthy living, and attracted many
colleagues to join, which enhanced the cohesion of
the Group.
Scholarship
Board of Directors and
Senior Management
DIRECTOR’S BIOGRAPHICAL INFORMATION
aged 41, was appointed as an Executive Director and the Chairman of the Company in April 2016. Mr. Yao is the chairman of the Nomination Committee and a member of the Remuneration Committee of the Company. Mr. Yao graduated from Beijing Technology and Business University with a master degree in management. He is a China Certified Public Accountant. Since 2001, Mr. Yao has worked as the head of the finance department, a finance director and the head of corporate planning center, the chief strategy officer, a director and an associate chief executive officer of the smart system business group of BOE Technology Group Co., Ltd (“BOE”), a deputy finance director of Beijing BOE Optoelectronics Technology Co., Ltd. (a subsidiary of BOE) and a finance director of Hefei BOE Optoelectronics Technology Co., Ltd. (a subsidiary of BOE). Mr. Yao is a member of the executive committee of BOE, a senior vice president, a joint chief operating officer and the chief executive officer of the smart system business group of BOE. Mr. Yao is also a president of BOE Optoelectronics Technology Co., Ltd., Beijing BOE Vision-electronic Technology Co., Ltd., Beijing BOE Multimedia Science & Technology Co., Ltd. and Beijing Intelligence Science & Technology Co., Ltd.
aged 38, was appointed as an Executive Director and the Chief Financial Officer of the Company in October 2014. Ms. Ko was also appointed as the Chief Executive Officer of the Company in March 2015 and was redesignated to a Co-chief Executive Officer of the Company in April 2016. Ms. Ko is a member of the Remuneration Committee of the Company and a director of various subsidiaries of the Group. Ms. Ko holds a Bachelor Degree in Economics and Mathematics from Mount Holyoke College, U.S.A., and a Master Degree in Finance from the Imperial College, London. She has over
7 years of experience in banking and has extensive experience in the securities and capital markets, and was a director of global markets — structured credit and fund solutions of HSBC until August 2009. Before joining HSBC, Ms. Ko served at Morgan Stanley (Hong Kong) and JP Morgan Securities Limited (London). Ms. Ko is the daughter of Mr. Ko Chun Shun, Johnson who is a substantial shareholder of the Company.
aged 37, was appointed as an Executive Director and a Co-chief Executive Officer of the Company in April 2016. Mr. Su is a member of the Nomination Committee of the Company and a director of various subsidiaries of the Group. Mr. Su graduated from the Graduate School of Chinese Academy of Sciences with a master degree in engineering. Since 2005, Mr. Su has served as a deputy division chief in the module technical department, a deputy department head in the new application business department, the division chief, a deputy general manager in the application business department of Beijing BOE Optoelectronics Technology Co., Ltd. (a subsidiary of BOE). Mr. Su is the general manager of the application business department of Beijing BOE Display Technology Co., Ltd. (a subsidiary of BOE).
aged 39, was appointed as a Non-executive Director of the Company in April 2016. Ms. Yang graduated from The University of International Business and Economics with a master degree in business administration. She has 15 years of experience in financial management. Since joining BOE Group in 2002, Ms. Yang has acted as the head of financial planning department, the head of accounting and taxation centre and the head of budgeting centre of BOE. She is a vice president and a deputy financial controller of BOE. Ms. Yang is also a director or a supervisor of a number of subsidiaries of BOE.
