2018 Annual Report Corporate Profile
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Technologies (Group) Limited 昂納科技(集團)有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 877) Data Center Industrial And Sensing 5G Network OOIOOI IOOIOO IIIOOO OOIOII 2018 Annual Report Corporate Profile O-Net, as a high-technology leader, is capable to provide advanced innovative products and solutions in various markets, including (1) optical networking market, which consists of (a) telecommunications applications, the Group’s traditional core business; and (b) data center market, where the Group’s effort mainly focuses on development of high-speed transceivers and associated components; and (2) industrial and sensing market, in which the Group has invested resources on machine vision systems and sensing products for Industry 4.0 as well as ultra-reliable fiber-optic components and multi-kilowatt optical components for fiber laser market, and components and module for Light Detection And Ranging (“LiDAR”) used in the emerging Advanced Driver Assistance Systems (“ADAS”) application, automation and heating modules for the E-Cigarette industry, and consumer electronics, where the Group is utilizing its optical coating capabilities to supply special products/solutions for smartphone. The Group has presence around the world including in mainland China, The United States of America, Canada, France, Taiwan, Korea and Germany and employs about 5,200-strong staff. The Company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on 29 April 2010 (stock code: 877). Operational Performance Profit attributable 1. Optical networking business to equity holders • Added new strategic overseas customers increased by • Mass production and shipment of Integrated Coherent Receivers, 10x10 TOSA & ROSA and Tunable Filters for 25.3% 100GbE applications to HKD261.8 million • Gain greater market shares from overseas customers in both telecommunications and data-communications markets Revenue increased by 23.6% to HKD2,516.4 million Gross profit increased by 2. New businesses contributed by “Diversify for 8.5% Growth” strategy to HKD788.0 million • Tapped the consumer market with outstanding returns and growth attributable to the strong demand from a leading American E-Cigarette brand • Tapped fast-growing multi-kilowatt laser market by offering Earnings per share 2 kilowatt laser engine and 6 kilowatt laser combiners, as increased by well as discrete optical components capable of handling 3 kilowatts of power 25.0% • Added new customers for LiDAR components and extended to HKD0.35 per share the penetration in the autonomous vehicle market • Maintained impressive growth in Machine Vision and automation sales Contents 4 Corporate Information 6 Financial Highlights 8 Chairman’s Statement 12 Management Discussion and Analysis 23 Biographical Details of Directors and Senior Management 29 Environmental, Social and Governance Report 64 Corporate Governance Report 81 Directors’ Report As a leading optical networking The company, devoted to: objectives • increase market share with its diversified product portfolio for both existing and new customers; of the • expand R&D teams and increase investments to develop high-growth active optical networking products for Group the next generation telecommunications and data- communications systems; and • invest in overseas companies with high proprietary technologies in chip level for the active optical networking products. 93 Independent Auditor’s Report 98 Consolidated Balance Sheet 100 Consolidated Statement of Profit or Loss – by Function of Expense 101 Consolidated Statement of Comprehensive Income 102 Consolidated Statement of Changes in Equity 104 Consolidated Statement of Cash Flows 105 Notes to the Consolidated Financial Statements 190 Five-Year Financial Summary As a diversified high technology As a listed company, devoted to: company, devoted to: • focus on R&D and provide different solutions to meet • create share price/value appreciation of the Company diverse customer demands; for long-term; and • strengthen our R&D capabilities through global • increase returns for shareholders. investments and ongoing expansion in our R&D teams; and • become leading high technology enterprise in the various high-growth market segments. Corporate Information Company Name Independent Non-Executive Directors O-Net Technologies (Group) Limited Mr. Deng Xinping Mr. Ong Chor Wei Financial Year End Mr. Zhao Wei 31 December Audit Committee Place of Incorporation Mr. Ong Chor Wei (Chairman of Audit Committee) Mr. Deng Xinping Cayman Islands Mr. Zhao Wei Registered Office Nomination Committee Cricket Square Mr. Na Qinglin (Chairman of the Nomination Committee) Hutchins Drive Mr. Deng Xinping P.O. Box 2681 Mr. Huang Bin Grand Cayman Mr. Ong Chor Wei KY1-1111 Mr. Zhao Wei Cayman Islands Remuneration Committee Headquarter and Principal Place of Business in the PRC Mr. Deng Xinping 35 Cuijing Road (Chairman of the Remuneration Committee) Pingshan District Mr. Na Qinglin Shenzhen Mr. Huang Bin China Mr. Ong Chor Wei Postal Code: 518118 Mr. Zhao Wei Principal Place of Business in Hong Kong Corporate Governance Committee Mr. Na Qinglin Unit 1608 (Chairman of the Corporate Governance Committee) West Tower, Shun Tak Centre Mr. Zhou Yu 168–200 Connaught Road Central Hong Kong Authorized Representatives Company’s Website Mr. Na Qinglin Mr. Tse Kam Fai (FCS, FCIS) www.o-netcom.com Mr. Wang Kevin Haigeng (Alternative Authorized Representative) Board of Directors Executive Director Company Secretary Mr. Na Qinglin (Chairman of the Board and Mr. Tse Kam Fai (FCS, FCIS) Chief Executive Officer) Non-Executive Directors Investor Relations Contact Mr. Chen Zhujiang Mr. Wang Kevin Haigeng Mr. Huang Bin Vice President of Finance and Business Development Mr. Mo Shangyun Tel: (852) 2307-4100 Fax: (852) 2307-4300 E-mail: [email protected] 004 O-Net Technologies (Group) Limited Legal Advisors to the Company Issued Share Capital As to Hong Kong law: 801,390,240 shares (as at this report approval date) Deacons Board Lot Size As to Chinese law: 1,000 shares Global Law Office Cayman Islands Share Registrar As to Cayman Islands law: Conyers Trust Company (Cayman) Limited Conyers Dill & Pearman Cricket Square Hutchins Drive As to U.S. law: P.O. Box 2681 Shearman & Sterling Grand Cayman KY1-1111 Auditor Cayman Islands PricewaterhouseCoopers Hong Kong Share Registrar Property Valuer Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17th Floor Jones Lang LaSalle Corporate Appraisal and Hopewell Centre Advisory Limited 183 Queen’s Road East Wanchai Valuer Hong Kong ValQuest Advisory Group Limited Principal Bankers China Bank of China China Merchant Bank Bank of Hangzhou China Bohai Bank Hong Kong The Hongkong & Shanghai Banking Corporation Limited Stock Information Place of Listing The Stock Exchange of Hong Kong Limited Stock Code 0877 Listing Date 29 April 2010 Annual Report 2018 005 Financial Highlights Revenue HKD 2,516.4 million Revenue Profit Attributable to Equity (HKD’000) Holders of the Company (HKD’000) 1,598,319 2,035,085 2,516,422 130,603 208,867 261,792 16 17 18 16 17 18 Gross Profit Margin Profit* Margin 35.6% 35.7% 31.3% 8.2% 10.3% 10.4% 16 17 18 16 17 18 * Profit means profit attributable to equity holders of the Company 006 O-Net Technologies (Group) Limited Revenue from optical networking business increased by 31.4% 2018 Revenue by Geographical 2017 Revenue by Geographical Segment Segment 17.9% 15.5% 37.9% 21.1% 47.4% 26.4% 17.8% 16.0% PRC North America Europe Asia (ex PRC) Annual Report 2018 007 Chairman’s Statement Impressive Growth with Diversified Revenue Contributions O-Net’s success in optical networking " components has long been driven by its dedication to technological advancement and development of new products. Beyond optical communications, we see tremendous opportunity to leverage our core optical technology to enter new arenas such as LiDAR, Machine Vision, and Industrial Lasers. As major telecommunication operators begin to roll out 5G in the coming years and demand further rises from the DCI market, we expect to see healthy growth in our core optical networking business. The Group will continue to capture growing opportunities, expand its market share, and achieve an industry-leading level of yield across fast- growing markets, leading to sustainable growth and the delivery of favorable returns to its shareholders. " Na Qinglin Chairman and Chief Executive Officer 008 O-Net Technologies (Group) Limited Data Center Industrial And 5G Network Sensing 5G Core Business – major revenue Remarkable growth across all new contributor with stable growth businesses contributed by “Diversify for Captured greater market share from both existing and Growth” strategy new strategic overseas customers in telecommunications Leveraged on leading automation technologies and new business capacities to tap the consumer market with outstanding returns and growth attributable to the strong demand Strong demand to key products for 100GbE from a leading American E-Cigarette brand telecommunications market including EDFAs and linecards, Integrated Coherent Receivers and Tunable Filters Introduced multi-kilowatt laser components and module to capture greater market share in high-growth Strong demand to both passive optical components and industrial laser market transceiver modules from data-communications market Tapped the fast-growing Advanced Driver Assistance Multi-year high-growth cycle Systems market through optical components for the laser source module of LiDAR Eighteen years of technologies