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ANNUAL REPORT 2018 Stock Code: 903 ANNUAL REPORT 2018 REPORT ANNUAL Stock Code: 903 / 股份編號：903 ANNUAL REPORT 2018 年報 www.tpv-tech.com BUILDING RESILIENCE POWERING EXCELLENCE CORPORATE INFORMATION DIRECTORS PRINCIPAL BANKERS Executive Director Agricultural Bank of China Limited Dr Hsuan, Jason Australia and New Zealand Banking Group Limited (Chairman and Chief Executive Officer) Bank of China Limited Bank SinoPac Non-executive Directors China Construction Bank Corporation Mr Zhang Dongchen Credit Agricole Corporate and Investment Bank Mr Xu Guofei CTBC Bank Co., Ltd. Mr Sun Jie Industrial and Commercial Bank of China Limited Dr Li Jun JPMorgan Chase Bank, N.A. Ms Bi Xianghui The Hongkong and Shanghai Banking Corporation Limited Independent Non-executive Directors INDEPENDENT AUDITOR Mr Chan Boon Teong PricewaterhouseCoopers Dr Ku Chia-Tai Certified Public Accountants Mr Wong Chi Keung COMPANY SECRETARY REGISTERED OFFICE Ms Lee Wa Ying Canon’s Court 22 Victoria Street PRINCIPAL SHARE REGISTRAR Hamilton HM 12 Estera Management (Bermuda) Limited Bermuda Canon’s Court 22 Victoria Street HONG KONG OFFICE Hamilton HM 12 Units 1208–16, 12th Floor Bermuda C-Bons International Center 108 Wai Yip Street, Kwun Tong HONG KONG BRANCH SHARE REGISTRAR Kowloon, Hong Kong Computershare Hong Kong Investor Services Limited Shops 1712–1716 LEGAL ADVISORS 17th Floor, Hopewell Centre Appleby 183 Queen’s Road East Kirkland & Ellis International LLP Wanchai, Hong Kong SINGAPORE SHARE TRANSFER OFFICE Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32–01 Singapore Land Tower Singapore 048623 COMPANY WEBSITE www.tpv-tech.com 2 TPV TECHNOLOGY LIMITED | Annual Report 2018 CONTENTS Corporate Information 67 Consolidated Income Statement 4 Financial Highlights 68 Consolidated Statement of Comprehensive Income 6 Chairman’s Statement 69 Consolidated Balance Sheet 8 Management Discussion and Analysis 71 Consolidated Statement of Changes in Equity 12 Report of the Directors 73 Consolidated Statement of Cash Flows 37 Corporate Governance Report 74 Notes to the Consolidated Financial Statements 50 Environmental, Social and Governance Report 161 Five-year Financial Summary 62 Independent Auditor’s Report FINANCIAL HIGHLIGHTS CONSOLIDATED REVENUE (US$ MILLION) 9,148 9,585 2018 2017 PROFIT/(LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY (US$ MILLION) 21.9 2017 2018 (50.6) SHIPMENT BY PRODUCT (MILLION UNITS) TV 15.1 16.8 Monitor 2018 2017 46.1 43.7 REVENUE BY GEOGRAPHIC REGIONS (%) 10.7 8.2 10.0 8.6 Europe PRC 23.4 24.6 North America 34.7 2018 29.1 2017 South America Rest of the World 23.0 27.7 4 TPV TECHNOLOGY LIMITED | Annual Report 2018 2018 2017 2016 2015 2014 OPERATING RESULTS (US$’000) Consolidated revenue 9,147,635 9,584,710 9,808,337 11,061,525 11,908,077 Profit/(Loss) attributable to owners of the Company 21,913 (50,614) 38,523 (31,337) (5,460) Basic earnings/(loss) per share (US cents) 0.93 (2.16) 1.64 (1.34) (0.23) Dividends per share (US cents) 0.28 0.128 0.49 0.128 0.128 FINANCIAL POSITION (US$’000) Total assets 5,054,909 5,564,397 5,787,819 5,931,579 6,453,138 Cash and bank balances 317,924 480,593 630,010 453,625 506,213 Total borrowings and loans 382,469 581,840 535,238 587,046 488,520 Equity attributable to owners of the Company 1,530,746 1,558,684 1,669,055 1,623,577 1,672,581 KEY FINANCIAL RATIOS Inventory turnover (days) 56.8 56.0 54.4 48.9 47.1 Trade receivables turnover (days) 71.9 72.9 73.4 70.2 68.2 Trade payables turnover (days) 84.1 86.9 89.2 84.8 82.6 Return on equity (%) 1.43 n/a 2.3 n/a n/a Return on assets (%) 0.43 n/a 0.7 n/a n/a Current ratio (%) 120.1 122.7 120.9 117.7 109.2 Gearing ratio* (%) 11.9 15.2 14.5 16.0 15.6 Interest coverage (times) 2.47 n/a 3.6 1.1 0.8 Dividend payout ratio (%) 30.0 n/a 29.8 n/a n/a * Gearing ratio is represented by the ratio of total borrowings and payables under discounting arrangement to total assets. TPV TECHNOLOGY LIMITED | Annual Report 2018 5 CHAIRMAN’S STATEMENT DEAR SHAREHOLDERS, Our monitor business continued to deliver in 2018, with increases in shipments and revenues and stable profit It is my pleasure to report that the Group’s financial margins. Backed by strong ODM orders, our shipments went performance bounced back in 2018, compared with last year. up around 5 percent on the previous year, against a 3 percent This was despite global uncertainties and US-China trade growth in the market, and led to additional market share tensions, with the latter aggravating an already slowing China gain, ending the year at 36 percent (2017: 35 percent) in market. Additionally, economic growth in some emerging terms of manufacturing volume. It proved that our pursuit of markets — in particular, South America — was under pressure quality has won the trust of customers. In addition, we also over the past year, leading to significant currency depreciation continued our penetration of the specialty monitor market in countries including Brazil and Argentina. These challenges in 2018, and added new customers in the gaming monitor notwithstanding, I am delighted to note that the Group sector. Additionally, we integrated a self-developed content recorded a profit of US$21.9 million for fiscal 2018. management system into our B2B professional displays in China, creating greater value for our customers. Panel prices remained on a downtrend throughout the year. Monitor panel prices were more stable, ending around 5 Looking ahead to the rest of 2019, we expect the global percent lower by year end, while TV panel prices ended 10 to economy to continue to be affected by challenges and 20 percent lower. Our inventory control, meanwhile, showed uncertainties. At present, the US-China trade conflict remains substantial improvements, with little provision required over unresolved, economies are slowing down in Europe as well the year. The low price environment gave us the opportunity as in developing markets, and we are experiencing a rising to sell more large-size displays measuring 50 inches and interest rate environment. To maintain and enhance the above, lifting the Group’s overall profit margin. Group’s competitiveness in the face of these developments, we will keep our efforts on cost tightening and the strengthening Our TV business faced strong headwinds in 2018. Under of supply chain management. Working capital management is the no-growth market demand environment, competition also a high priority, enabling us to meet our goal of preserving intensified and both our ODM and OBM businesses were liquidity while minimising borrowings. affected, particularly in China where we saw irrational price cuts from our competitors. In addition, the management was cautious about the increasing risk in Argentina’s economy and despite the country historically being one of the key and profitable markets for our TV business, we decided to scale back our business there starting in the second quarter. Furthermore, the geo-political conflict between the US and Turkey leading to the sharp devaluation of local currency also affected our business negatively. As a result, the Group’s TV shipment and revenue were lower than a year ago. Despite all these adversities, the business recorded improvement with loss at operating level reducing significantly by 74 percent over the previous year, showing that our operation has been strengthening and is moving on the right direction. Moreover, I am happy to share that Philips TV showed excellent performance in Europe during the year. New models, including OLED TVs, were well received by the market and achieved high acclaim, both professionally and in consumer surveys. The OLED models we launched during the year won more than 43 awards. Also, we formed a partnership with an expert in the audio world to create outstanding products that set a new reference for visual and audio performance standards in the TV market. 6 TPV TECHNOLOGY LIMITED | Annual Report 2018 In terms of our TV products, we will continue to roll out models in OLED technology equipped with the 3rd generation of proprietary P5 processor, new products in 8K picture quality and enhanced smart voice features. We will also concentrate attention on audio performance, cognisant of the fact that picture and sound come together to create the best user experience. Our collaboration with a well-known audio brand and the new license to distribute Philips audio and video products will provide a significant boost in this regard. As for our monitor business, we will defend and leverage our position in the year ahead, with a view to increasing our influence by continuing to explore and penetrate the specialty display sector. I am confident that we remain well placed for sustained growth. APPRECIATION As always, I am profoundly grateful for the support of our shareholders, customers, partners and employees. I would also like to thank our board of directors for their valuable guidance over the year. The board saw several changes in its composition in 2018 up to the date of this report. My special thanks go to Mr Yang Jun, Mr Zhu Lifeng and Ms Jia Haiying, who resigned from the non-executive director post in 2018 and 2019. I would also like to extend a warm welcome to Mr Zhang Dongchen, Mr Xu Guofei and Mr Sun Jie, who join us as new board members. Looking ahead to the future, I feel confident of our continued success in 2019 and beyond. Our team members’ commitment to excellence and innovation will shine a path for us, even in a challenging business environment.
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