Brockman Mining Limited — Annual Report 2015

Mar 23, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Incorporated in Bermuda with limited liability) (Stock Code: 99)

ANNOUNCEMENT OF 2015 FINAL RESULTS

FINANCIAL HIGHLIGHT:

• Operating profit for the year dropped by HK$21.0 million from HK$248.2 million to HK$227.2 million as compared to last financial year. The decrease is because of the decrease in revenue as mitigated by a reduction in operating costs.

• The share of profit from the property development joint venture for the year amounted to HK$426.0 million, as compared to HK$430.3 million for the last financial year. As a result, profit attributable to owners of the Company for the year was HK$598.2 million, a modest decrease of approximately HK$18.4 million as compared to HK$616.6 million for last financial year.

FINAL RESULTS

The board of directors (the “Board” or “Directors”) of Wong’s International Holdings Limited (the “Company”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2015 as follows:

– 1 –

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2015

Note Revenue 2 Other income 3 Changes in inventories of finished goods and work in progress Raw materials and consumables used Employee benefit expenses Depreciation and amortisation charges Other operating expenses Change in fair value of investment properties Other gains/(losses) – net 4 Operating profit Finance income Finance costs Share of profit of joint ventures 8 Profit before income tax Income tax expense 5 Profit after income tax Profit attributable to owners of the Company Non-controlling interests Earnings per share attributable to owners of the Company during the year Basic earnings per share 7 Diluted earnings per share 7	2015 HK$’000 3,800,911 9,408 24,071 (2,916,261) (470,878) (43,237) (197,054) 694 19,549 227,203 8,662 (18,997) 426,010 642,878 (44,645) 598,233 598,233 – 598,233 HK$1.25 HK$1.25	2014 HK$’000 4,124,106 12,026 4,539 (3,171,069) (469,388) (36,487) (214,171) 1,810 (3,210) 248,156 12,875 (20,795) 430,320 670,556 (53,961) 616,595 616,595 – 616,595 HK$1.29 HK$1.29

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2015

Profit for the year 616,595 Other comprehensive income: Items that may be reclassified to profit or loss: Changes in fair value of available-for-sale financial assets Impairment for available-for-sale financial assets reclassified to income statement Reclassification of investment revaluation reserve on disposal of available-for-sale financial assets Reclassification of translation reserve upon liquidation of subsidiaries Currency translation differences Other comprehensive loss for the year, net of tax Total comprehensive income for the year Attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year	2015 HK$’000 598,233 616,595 (7,730) 1,230 (6,458) 13,533 (73,368) (72,793) 525,440 525,440 – 525,440	2014 HK$’000 616,595 12,975 – – – (30,161) (17,186) 599,409 599,409 – 599,409

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2015

Note ASSETS Non-current assets Property, plant and equipment Investment properties Leasehold land and land use rights Interests in joint ventures 8 Available-for-sale financial assets Deferred income tax assets Deposits and other receivables Restricted cash Current assets Inventories Trade receivables 9 Prepayments, deposits and other receivables Available-for-sale financial assets Amounts due from associates Current income tax recoverable Non-current assets held for sale 10 Short-term bank deposits Cash and cash equivalents Total assets	2015 HK$’000 280,237 27,471 19,367 2,098,576 68 10,727 1,920 3,560 2,441,926 366,365 695,439 63,738 12,915 6 8,809 – 218,823 807,973 2,174,068 4,615,994	2014 HK$’000 286,357 27,920 21,111 1,632,633 41,315 7,558 3,337 3,763
		2,023,994
		399,009 894,537 62,682 – 30 1,470 18,203 257,048 655,643
		2,288,622
		4,312,616

– 4 –

Note EQUITY Equity attributable to owners of the Company Share capital Other reserves Retained earnings – Proposed dividend – Others Non-controlling interests Total equity LIABILITIES Non-current liabilities Derivative financial instrument Deferred income tax liabilities Borrowings 12 Current liabilities Trade payables 11 Accruals and other payables Current income tax liabilities Borrowings 12 Total liabilities Total equity and liabilities	2015 HK$’000 47,848 523,904 21,532 2,041,322 2,634,606 4 2,634,610 731 655 420,000 421,386 657,280 276,613 34,111 591,994 1,559,998 1,981,384 4,615,994	2014 HK$’000 47,848 579,028 23,924 1,496,645
		2,147,445 4
		2,147,449
		774 757 420,000
		421,531
		795,117 274,709 38,097 635,713
		1,743,636
		2,165,167
		4,312,616

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

Attributable to owners of the Company

				Non-
	Share	Share	Other	controlling
	capital	premium	reserves	interests	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
As at 1 January 2014	47,848	153,025	1,378,264	4	1,579,141
Comprehensive income
Profit for the year	–	–	616,595	–	616,595
Other comprehensive income
Change in fair value of available-for-sale
financial assets	–	–	12,975	–	12,975
Currency translation differences	–	–	(30,161)	–	(30,161)
Total other comprehensive loss	–	–	(17,186)	–	(17,186)
Total comprehensive income	–	–	599,409	–	599,409
Transactions with owners
Dividend paid to owners of the Company	–	–	(31,101)	–	(31,101)
Total transactions with owners	–	–	(31,101)	–	(31,101)
As at 31 December 2014	47,848	153,025	1,946,572	4	2,147,449

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Attributable to owners of the Company

As at 1 January 2015 Comprehensive income Profit for the year Other comprehensive income Change in fair value of available-for-sale financial assets Impairment for available-for-sale financial assets reclassified to income statement Reclassification of investment revaluation reserve on disposal of available- for-sale financial assets Reclassification of translation reserve upon liquidation of subsidiaries Currency translation differences Total other comprehensive loss Total comprehensive income Transactions with owners Dividend paid to owners of the Company Total transactions with owners As at 31 December 2015	Share capital HK$’000 47,848 – – – – – – – – – – 47,848	Share premium HK$’000 153,025 – – – – – – – – – – 153,025	Other reserves HK$’000 1,946,572 598,233 (7,730) 1,230 (6,458) 13,533 (73,368) (72,793) 525,440 (38,279) (38,279) 2,433,733	Non- controlling interests HK$’000 4 – – – – – – – – – – 4	Total HK$’000 2,147,449 598,233 (7,730) 1,230 (6,458) 13,533 (73,368) (72,793) 525,440 (38,279) (38,279) 2,634,610

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NOTES:

1. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”). They have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and investment properties, which are carried at fair value.

The preparation of consolidated financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

• (a) New and amended standards adopted by the Group

The following amendments are mandatory for the financial year beginning 1 January 2015.

Amendments to HKAS 19, “Employee benefits: defined benefit plans – employee contributions”

The amendments introduce a relief to reduce the complexity of accounting for certain contributions from employees or third parties under defined benefit plans. When the contributions are eligible for the practical expedient provided by the amendments, a company is allowed to recognise the contributions as a reduction of the service cost in the period in which the related service is rendered, instead of including them in calculating the defined benefit obligation. The amendments did not have significant impact on the Group financial statements.

Annual improvements to HFRSs 2010 – 2012 cycle and 2011 – 2013 cycle

These two cycles of annual improvements contain amendments to nine standards with consequential amendments to other standards. Among them, HKAS 24, Related party disclosures has been amended to expand the definition of a “related party” to include a management entity that provides key management personnel services to the reporting entity, and to require the disclosure of the amounts incurred for obtaining the key management personnel services provided by the management entity. These amendments did not have significant impact on the Group financial statements.

• (b) New Hong Kong Companies Ordinance (Cap. 622)

In addition, the requirements of Part 9, “Accounts and Audit” of the new Hong Kong Companies Ordinance (Cap. 622) come into operation during the financial year, as a result, there are changes to the presentation and the disclosures of certain information in the consolidated financial statements.

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• (c) New standards, amendments and interpretations have been issued but are not effective for the financial year beginning 1 January 2015 and have not been early adopted.

		Effective for
		annual periods
		beginning on
		or after
HKAS 1 (Amendment)	Disclosure initiative	1 January 2016
HKAS 16 and 38 (Amendment)	Classification of acceptable methods of	1 January 2016
	depreciation and amortisation
HKAS 16 and 41 (Amendment)	Agriculture: bearer plants	1 January 2016
HKAS 27 (Amendment)	Equity method in separate financial statements	1 January 2016
HKFRS 9	Financial instruments	1 January 2018
HKFRS 10 and	Sale or contribution of assets between an	To be determined
HKAS 28 (Amendment)	investor and its associate or joint venture
HKFRS 10, HKFRS 12 and	Investment entities: applying the	1 January 2016
HKAS 28 (Amendment)	consolidation exception
HKFRS 11 (Amendment)	Accounting for acquisition of interest in	1 January 2016
	joint operations
HKFRS 14	Regulatory deferral accounts	1 January 2016
HKFRS 15	Revenue from contracts with customers	1 January 2018
Annual Improvements Project	Annual improvements 2012 – 2014 cycle	1 January 2016

2. SEGMENT INFORMATION

The Group’s senior executive management is considered as the Chief Operating Decision Maker (“CODM”). The Group is currently organised into three operating divisions:

Electronic Manufacturing Service (“EMS”) – manufacture and distribution of electronic products for EMS customers.

Original Design and Manufacturing (“ODM”) – original design and manufacturing for both EMS and ODM customers.

Property investment – development, sale and lease of properties.

The CODM reviews the performance of the Group on a regular basis and reviews the Group’s internal reporting in order to assess performance and allocate resources. The CODM assesses the performance of the operating segments based on a measure of segment results. This measurement basis includes profit or loss of the operating segments before other income, other gains/(losses) – net, interest income, interest expense and income tax expense but excludes corporate and unallocated expenses. Other information provided to the Group’s management is measured in a manner consistent with that in the consolidated financial statements.

– 9 –

For the year ended 31 December 2015 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profit of joint ventures Change in fair value of investment properties Rental income Capital expenditure Loans to joint ventures	EMS division HK$’000 3,800,775 (973) 3,799,802 230,911 40,594 – – – 46,946 –	ODM division HK$’000 1,109 – 1,109 (3,922) 21 – – – – –	Property investment division HK$’000 – – – 423,968 1 426,010 694 916 – 39,933	Total HK$’000 3,801,884 (973) 3,800,911 650,957 40,616 426,010 694 916 46,946 39,933

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For the year ended 31 December 2014 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profit of joint ventures Change in fair value of investment properties Rental income Capital expenditure Loans to joint ventures As at 31 December 2015 Segment assets Interests in joint ventures Total reportable segment assets As at 31 December 2014 Segment assets Interests in joint ventures Total reportable segment assets	EMS division HK$’000 4,122,288 (15,244) 4,107,044 272,265 33,776 – – – 43,135 – EMS division HK$’000 2,343,289 – 2,343,289 2,474,479 – 2,474,479	ODM division HK$’000 17,062 – 17,062 (11,211) 33 – – – – – ODM division HK$’000 8,669 – 8,669 10,873 – 10,873	Property investment division HK$’000 – – – 431,517 64 430,320 1,810 2,502 – 58,497 Property investment division HK$’000 35,391 2,098,576 2,133,967 35,568 1,632,633 1,668,201	Total HK$’000 4,139,350 (15,244) 4,124,106 692,571 33,873 430,320 1,810 2,502 43,135 58,497 Total HK$’000 2,387,349 2,098,576 4,485,925 2,520,920 1,632,633 4,153,553

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Segment assets consist primarily of property, plant and equipment, investment properties, leasehold land and land use rights, restricted cash, inventories, trade receivables, prepayments, deposits and other receivables, non-current assets held for sale, short-term bank deposits and cash and cash equivalents but exclude available-for-sale financial assets, deferred income tax assets, amounts due from associates and corporate and unallocated assets.

A reconciliation of reportable segment results to profit before income tax is provided as follows:

Reportable segment results Other income Other gains/(losses) – net Finance costs – net Corporate and unallocated expenses Profit before income tax	2015 HK$’000 650,957 9,408 19,549 (10,335) (26,701) 642,878	2014 HK$’000 692,571 12,026 (3,210) (7,920) (22,911)
		670,556

Reportable segments assets are reconciled to total assets as follows:

Reportable segment assets Available-for-sale financial assets Deferred income tax assets Amounts due from associates Corporate and unallocated assets Total assets per consolidated statement of financial position Reconciliations of other material items are as follows: Depreciation and amortisation charges – Reportable segment total – Corporate headquarters Capital expenditure – Reportable segment total – Corporate headquarters	2015 HK$’000 4,485,925 12,983 10,727 6 106,353 4,615,994 2015 HK$’000 40,616 2,621 43,237 46,946 6 46,952	2014 HK$’000 4,153,553 41,315 7,558 30 110,160
		4,312,616
		2014 HK$’000 33,873 2,614
		36,487
		43,135 43
		43,178

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The Company is domiciled in Bermuda. Analysis of the Group’s revenue by geographical market, which is determined by the destination of the invoices billed, is as follows:

North America Asia (excluding Hong Kong) Europe Hong Kong	2015 HK$’000 564,716 1,924,041 623,537 688,617 3,800,911	2014 HK$’000 554,272 2,047,919 696,909 825,006
		4,124,106

For the year ended 31 December 2015, revenues of approximately HK$1,203,503,000 (2014: HK$1,005,051,000), HK$720,758,000 (2014: HK$923,517,000) and HK$468,968,000 (2014: HK$477,089,000) were derived from the top three external customers respectively. These revenues are attributable to the EMS division.

Analysis of the Group’s non-current assets by geographical market is as follows:

North America Asia (excluding Hong Kong) Europe Hong Kong	2015 HK$’000 26 233,669 71 2,197,433 2,431,199	2014 HK$’000 30 241,249 117 1,775,040
		2,016,436

Non-current assets comprise property, plant and equipment, investment properties, leasehold land and land use rights, interests in joint ventures, available-for-sale financial assets, deposits and other receivables and restricted cash. They exclude deferred income tax assets.

3. OTHER INCOME

Rental income Others	2015 HK$’000 916 8,492 9,408	2014 HK$’000 2,502 9,524
		12,026

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4. OTHER GAINS/(LOSSES) – NET

Write-back of trade and other payables Write-back of trade receivables previously written-off Write-back of impairment provision on amounts due from associates Gains/(losses) on financial instrument – net – Unrealised – Realised Gains/(losses) on disposal of property, plant and equipment Exchange gains – net Impairment for available-for-sale financial assets Gain on disposal of available-for-sale financial assets Gain on disposal of non-current assets held for sale Loss on liquidation of subsidiaries Impairment for intangible assets Gain on disposal of an investment property INCOME TAX EXPENSE Current income tax – Hong Kong profits tax – Overseas taxation Deferred income tax (Over)/under – provision in prior years – Current income tax	2015 HK$’000 2,777 529 1,366 43 (640) 741 17,992 (1,230) 7,957 3,547 (13,533) – – 19,549 2015 HK$’000 8,000 43,842 (3,885) (3,312) 44,645	2014 HK$’000 4,254 – 20 123 (773) (456) 4,713 – – – – (13,054) 1,963 (3,210) 2014 HK$’000 16,271 34,225 1,482 1,983 53,961

5. INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2014: 16.5%) on the estimated assessable profit arising in or derived from Hong Kong.

The Group’s subsidiaries in Mainland China are subject to the China Corporate Income Tax (“CIT”) at a rate of 25% (2014: 25%) on the estimated profits, except for Welco Technology (Suzhou) Limited (“WTSZ”), a wholly owned subsidiary of the Group. WTSZ was granted a preferential CIT Rate of 15% under the New and High Technology Enterprises (“NHTE”) status with effect from 1 January 2012 for a period of three years till 31 December 2014. During the year ended 31 December 2015, WTSZ succeeded in renewing its NHTE status and will continue to entitle to the preferential CIT Rate of 15% for another three years till 31 December 2017.

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6. DIVIDENDS

The dividends paid in 2015 and 2014 were approximately HK$38,279,000 (HK$0.08 per share) and HK$31,101,000 (HK$0.065 per share) respectively. A final dividend in respect of the year ended 31 December 2015 of HK$0.045 per share, amounting to a total dividend of approximately HK$21,532,000, will be proposed at the upcoming annual general meeting of the Company. These financial statements do not reflect this final dividend payable.

Interim dividend paid – HK$0.03 (2014: HK$0.04) per share Proposed final dividend – HK$0.045 (2014: HK$0.05) per share	2015 HK$’000 14,355 21,532 35,887	2014 HK$’000 19,139 23,924
		43,063

7. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

Profit attributable to owners of the Company_(HK$’000) Weighted average number of ordinary shares in issue (in thousands) Basic earnings per share(HK$)_	2015 598,233 478,484 1.25	2014 616,595
		478,484
		1.29

(b) Diluted

No diluted earnings per share is presented for both years because there is no dilutive potential ordinary shares outstanding throughout both years.

8. INTERESTS IN JOINT VENTURES

	2015	2014
	HK$’000	HK$’000
Share of net assets	846,310	420,300
Loans to joint ventures	1,252,266	1,212,333
	2,098,576	1,632,633

As at 31 December 2015, the Group’s principal joint ventures included Easywise Limited and Crown Opal Investment Limited, both of which the Group has 35.7% equity interest. Both Easywise Limited and Crown Opal Investment Limited are engaged in property development.

The loans to joint ventures are unsecured, interest-free and will not be repaid in the coming 12 months. They represent the Group’s long-term interests that in substance form part of the Group’s net investments in the joint ventures.

– 15 –

Movements in share of net assets is analysed as follows:

At 1 January Share of profit of joint ventures At 31 December	2015 HK$’000 420,300 426,010 846,310	2014 HK$’000 (10,020) 430,320 420,300

Easywise Limited commenced selling of properties during the year ended 31 December 2014. Revenue from sales of completed properties in the ordinary course of business is recognised by the joint venture when the significant risks and rewards of ownership of the properties are transferred to buyers, the amount of revenue can be measured reliably; and it is probable that the economic benefits associated with the transaction will flow to the joint venture. The Group’s attributable share of the joint ventures’ profit for the year ended 31 December 2015 aggregated to approximately HK$426,010,000 (2014: HK$430,320,000). Share of profit of the joint ventures for the year ended 31 December 2015 included the share of fair value gain of investment properties owned by the joint venture of approximately HK$357,944,000 (2014: Nil).

9. TRADE RECEIVABLES

The credit period allowed by the Group to its trade customers mainly ranges from 30 days to 90 days and no interest is charged.

Ageing analysis of the Group’s trade receivables by invoice date is as follows:

0 – 60 days 61 – 90 days Over 90 days NON-CURRENT ASSETS HELD FOR SALE At 1 January Currency translation differences Disposals At 31 December	2015 HK$’000 535,481 105,482 54,476 695,439 2015 HK$’000 18,203 – (18,203) –	2014 HK$’000 682,727 173,670 38,140 894,537 2014 HK$’000 18,453 (250) – 18,203

10. NON-CURRENT ASSETS HELD FOR SALE

On 23 August 2013, the Group entered into a sale and purchase agreement with an independent third party for the disposal of the property and the leasehold land use rights in Vietnam for a consideration of US$2,800,000. The property and the related land use rights were classified as non-current assets held for sale. The transaction was completed in October 2015 and a disposal gain of approximately HK$3,547,000 was recognised to the profit or loss for the year ended 31 December 2015.

– 16 –

11. TRADE PAYABLES

Ageing analysis of the Group’s trade payables by invoice date is as follows:

0 – 60 days 61 – 90 days Over 90 days 12. BORROWINGS Long-term bank loan, secured Trust receipt bank loans, unsecured Short-term bank loans, unsecured Portion of a mortgage loan from bank due for repayment within one year Portion of a mortgage loan from bank due for repayment after one year which contains a repayment on demand clause Total borrowings Non-current Current Total borrowings	2015 HK$’000 590,521 59,705 7,054 657,280 2015 HK$’000 420,000 363,652 197,292 6,900 24,150 1,011,994 420,000 591,994 1,011,994	2014 HK$’000 684,174 70,943 40,000
		795,117
		2014 HK$’000 420,000 402,710 195,053 6,900 31,050
		1,055,713
		420,000 635,713
		1,055,713

– 17 –

DIVIDENDS

The Company paid an interim dividend of HK$0.03 (2014: HK$0.04) per share for 2015. The Directors now recommend the payment of a final dividend of HK$0.045 (2014: HK$0.05) per share on or before Tuesday, 21 June 2016 to the shareholders whose names appear on the Register of Members of the Company on Monday, 6 June 2016. Payment of such proposed final dividend is subject to approval of the shareholders at the forthcoming annual general meeting of the Company.

CLOSURE OF REGISTER OF MEMBERS FOR DIVIDENDS

For determining the entitlement to the proposed final dividend, the Register of Members of the Company will be closed on Monday, 6 June 2016 and no transfer of shares will be effected on that date. To qualify for the proposed final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on Friday, 3 June 2016.

REVIEW OF BUSINESS ACTIVITIES

Financial Results

For the year ended 31 December 2015, the Group reported consolidated revenue of HK$3.8 billion (2014: HK$4.1 billion) representing a decrease of 7.8% as compared to last financial year. The Group’s consolidated operating profit for the year was HK$227.2 million or 6.0% of revenue as compared to HK$248.2 million or 6.0% for the previous financial year. The decrease in revenue was mitigated by a reduction in operating costs, resulting in a moderate drop in consolidated operating profit.

Profit attributable to owners of the Company was HK$598.2 million for the year ended 31 December 2015, as compared to HK$616.6 million for the last financial year. The share of profit from the property development joint venture for the year amounted to HK$426.0 million, as compared to HK$430.3 million for the last financial year. The share of profit in the current year arose mainly from the surpluses from revaluation of investment properties held for leasing while the share of profit for the last year was from the sale of office units and car parking spaces. Basic earnings per share for the year amounted to HK$1.25 (2014: HK$1.29).

The EMS Division

Revenue for the EMS business was maintained at a steady level in the first six-month of 2015 but tailed off in the rest of the year as a result of weaker customer demand clouded by the global economic slowdown and financial market volatility. For the year ended 31 December 2015, the EMS Division reported revenue of HK$3.8 billion, a decrease of HK$0.3 billion or 7.5% as compared to HK$4.1 billion for the last financial year. The segment profit attributable to the EMS Division for the year was HK$230.9 million, representing a decrease of HK$41.4 million or 15.2% as compared to HK$272.3 million for the last financial year. The decrease in the segment net profit was attributable to the decrease in revenue as alleviated by cost control measures.

– 18 –

The ODM Division

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Apple and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries.

Property Investment Division

The Group has two property development joint ventures with Sun Hung Kai Properties Limited on two sites for office buildings in Kwun Tong. The development project at the first site was officially completed in January 2014 and launched into the market in April 2014 under the name of “One Harbour Square”. Market reception for the building was favourable and units were sold steadily in 2014. During 2015, further units and car parking spaces in the building were sold or leased, resulting in an increase in the equity value of the property development joint venture, of which the Group’s share was HK$426.0 million. The increase in the equity value of the joint venture included the Group’s share of the fair value gain in the investment properties owned by the joint venture of approximately HK$357.9 million.

The construction work for the second development project is proceeding as planned and the foundation and diaphragm wall were completed in February 2015. The site was handed over to the main contractor to commence the development construction in March 2015. The construction of the second site is targeted to be completed in 2017. During the year, the Company has obtained approval from a closely allied group of shareholders for an additional investment of HK$550.0 million by way of additional loans to be provided by the Group to the joint venture company, bringing the total investment in the two property development projects up to HK$1,880.0 million. Further details were set out in the Company’s announcement dated 24 November 2015 and the circular dated 15 December 2015.

LIQUIDITY AND FINANCIAL RESOURCES

As at 31 December 2015, the Group had a total of HK$2,724.0 million of banking facilities. Total bank borrowings were HK$1,012.0 million (2014: HK$1,055.7 million), of which HK$17.9 million was arranged by an overseas subsidiary. Cash and cash equivalents and short-term bank deposits were HK$1,026.8 million at 31 December 2015 (2014: HK$912.7 million).

As at 31 December 2015, the Group had net cash surplus of HK$14.8 million, as compared to net bank borrowings of HK$143.0 million at 31 December 2014. The improvement was mainly attributed to HK$279.4 million funds generated from operations which was used to finance the property development joint venture of HK$39.9 million and capital investment of HK$47.0 million. Sufficient banking facilities and bank balances are available to meet the cash needs of the Group for its manufacturing operations as well as property development activities.

Net gearing ratio for the Group as at 31 December 2015 is nil (31 December 2014: 6.7%) as the Group was in net cash position as at 31 December 2015. The net gearing ratio was calculated as net debt divided by total equity. Net debt is calculated as total borrowings less cash and cash equivalents and short-term bank deposits.

– 19 –

FOREIGN EXCHANGE AND RISK MANAGEMENT

Most of the Group’s sales are conducted in United States dollars and costs and expenses are mainly in United States dollars, Hong Kong dollars, Japanese Yen and Chinese Renminbi. Consistent with prudent policy in financial risk management, the Group does not engage in any foreign exchange hedging products. The Group recognizes the currency risk in the devaluation of Chinese Renminbi and will closely monitor and actively manage the risk involved.

CAPITAL STRUCTURE

There has been no material change in the Group’s capital structure since 31 December 2014, which consists of bank borrowings, cash and cash equivalents, short-term bank deposits and equity attributable to owners of the parent, comprising issued share capital and reserves.

EMPLOYEES

As at 31 December 2015, the Group employed approximately 4,300 employees. The Group adopts a remuneration policy which is commensurate with job nature, qualification and experience of employees. In addition to the provision of annual bonuses, medical and life insurances, discretionary bonuses are also rewarded to employees based on individual performance. The remuneration packages and policies are reviewed periodically. The Group also provides in-house and external training programs to its employees.

PROSPECTS

The growth of the global economy in 2015 was modest as the further deceleration of growth in the key emerging and developing economies overshadowed a modest recovery in major high-income countries. This deceleration was accompanied by a decline in commodity prices, financial market volatility and diminished flows of trade and capital. Against the backdrop of the uncertain macroeconomic environment, the global economic outlook in 2016 continues to present challenges to our EMS business in terms of their impacts on customer demands, operating expenses and ultimately our competitiveness. To meet these challenges, the Group is committed to enhance its competitiveness and profitability through value-added services, automation and efficiency improvement programmes as well as stringent cost control initiatives.

Construction for the second property development project is targeted to be completed in late 2017. As a result of the near completion of the first property development project, share of profit from the property development joint venture in 2016 is not expected to be at a similar level as in 2015. Sufficient funding in the form of committed bank loans have been arranged to enable the whole project to be completed. It is the Group’s preference to hold its interest in both projects for long term and for leasing purposes after taking into consideration the market conditions and the financing requirements.

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AWARD & RECOGNITION

The Company and its wholly-owned subsidiary, Wong’s Electronics Company Limited, have been awarded the Caring Company Logo by the Hong Kong Council of Social Service since March 2012. In addition, Wong’s F&B Limited, which is also a wholly-owned subsidiary of the Company, has also been awarded the Caring Company Logo in March 2016. These serve as recognition of the Group’s active participation in community activities and good corporate citizenship.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the year ended 31 December 2015, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

CORPORATE GOVERNANCE CODE

During the year ended 31 December 2015, the Company has complied with the code provisions under the Corporate Governance Code (the “CG Code”) as set out in Appendix 14 to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), except for the following deviations:

Code provision A.2.1

Code provision A.2.1 provides that the roles of chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Wong Chung Mat, Ben is the Group’s Chairman and Chief Executive Officer and has occupied these two positions since February 2003. In allowing the two positions to be occupied by the same person, the Company has considered the following:

• (a) Both positions require in-depth knowledge and considerable experience of the Group’s business. Candidates with the suitable knowledge, experience and leadership are difficult to find both within and outside the Group. If either of the positions is occupied by an unqualified person, the Group’s performance could be gravely compromised.

• (b) The Company believes that the supervision of the Board and its Independent Nonexecutive Directors can provide an effective check and balance mechanism and ensures that the interests of the shareholders are adequately represented.

Code provision A.4.1

Code provision A.4.1 provides that non-executive directors should be appointed for a specific term, subject to re-election.

None of the existing Independent Non-executive Directors of the Company is appointed for a specific term. However, every Director of the Company is now subject to retirement by rotation and re-election under Bye-law 112 of the Bye-laws of the Company. As such, the Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the CG Code.

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Code provisions A.5.1 to A.5.4

Code provisions A.5.1 to A.5.4 provide that a nomination committee should be established with specific terms of reference which should be made available on the websites of the Stock Exchange and the listed issuer, and that sufficient resources should be provided to such committee to perform its duties.

The Company does not have the present intention to establish a Nomination Committee in view that the Board itself shall discharge all duties expected to be dealt with by a Nomination Committee. In addition, the policy and procedure for nomination of directors have been set out in writing and adopted by the Board to serve as a guideline in order to ensure that there is a formal, considered and transparent procedure for the appointment of new directors with suitable experience and capabilities to maintain and improve the competitiveness of the Company.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules. Having made specific enquiry to all Directors, all Directors confirmed that they had complied with the required standard set out in the Model Code during the year ended 31 December 2015.

AUDIT COMMITTEE

The Audit Committee, which comprises of three Independent Non-executive Directors, has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting matters including a review of the financial statements for the year ended 31 December 2015.

SCOPE OF WORK OF THE AUDITOR

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of comprehensive income, consolidated income statement, consolidated statement of changes in equity and the related notes thereto for the year ended 31 December 2015 as set out in this preliminary announcement have been agreed by the Group’s auditor, PricewaterhouseCoopers, to the amounts set out in the Group’s draft c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s f o r t h e y e a r . T h e w o r k p e r f o r m e d b y PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by PricewaterhouseCoopers on this preliminary announcement.

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ANNUAL GENERAL MEETING

The annual general meeting of the Company (the “2016 AGM”) will be held as soon as possible. A notice convening the 2016 AGM, which constitutes part of the circular to shareholders, will be sent to the shareholders together with the 2015 annual report of the Company. The notice of the 2016 AGM and the proxy form will also be available on the websites of the Company and the Stock Exchange.

PUBLICATION OF RESULTS AND ANNUAL REPORT

T h i s r e s u l t s a n n o u n c e m e n t i s p u b l i s h e d o n t h e C o m p a n y ’ s w e b s i t e a t www.wih.com.hk/investor07.asp and the Stock Exchange at www.hkexnews.hk. The 2015 annual report will be dispatched to shareholders of the Company and will be available on the above websites in due course.

By Order of the Board WONG CHUNG MAT, BEN Chairman and Chief Executive Officer

Hong Kong, 23 March 2016

As at the date of this announcement, the Executive Directors of the Company are Mr. Wong Chung Mat, Ben, Ms. Wong Yin Man, Ada, Mr. Chan Tsze Wah, Gabriel, Mr. Wan Man Keung and Mr. Hung Wing Shun, Edmund; and the Independent Non-executive Directors are Dr. Li Ka Cheung, Eric GBS, OBE, JP, Dr. Yu Sun Say GBM, JP, Mr. Alfred Donald Yap JP and Mr. Cheung Chi Chiu, David.

Website: www.wih.com.hk

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