Brockman Mining Limited — Annual Report 2016

Mar 28, 2017

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 2016 FINAL RESULTS

FINANCIAL HIGHLIGHT:

• Operating profit for the year increased by HK$139.5 million from HK$227.2 million to HK$366.7 million as compared to last financial year. The increase in operating profit was mainly attributable to a gain on re-measurement of the property development joint venture of HK$112.2 million and reduction in operating costs.

• The share of profits from the property development joint ventures for the year amounted to HK$165.4 million, as compared to HK$426.0 million for the last financial year. As a result, profit attributable to owners of the Company for the year was HK$468.2 million, a decrease of approximately HK$130.0 million as compared to HK$598.2 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 2016 as follows:

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CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2016

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 – net 4 Operating profit Finance income Finance costs Share of profit of an associate Share of profits 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	2016 HK$’000 3,529,374 10,814 25,635 (2,682,023) (424,391) (41,289) (185,955) 551 133,995 366,711 6,422 (20,654) 614 165,389 518,482 (50,257) 468,225 468,225 – 468,225 HK$0.98 HK$0.98	2015 HK$’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

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2016

Profit for the year 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	2016 HK$’000 468,225 (11,829) 11,793 – – (81,617) (81,653) 386,572 386,572 – 386,572	2015 HK$’000 598,233 (7,730) 1,230 (6,458) 13,533 (73,368) (72,793) 525,440 525,440 – 525,440

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

Note ASSETS Non-current assets Property, plant and equipment Investment properties Leasehold land and land use rights Investments in associates Interests in joint ventures 8 Available-for-sale financial assets Deferred income tax assets Deposits and other receivables Restricted cash Current assets Inventories Stock of completed properties 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	2016 HK$’000 282,000 1,891,536 17,720 33,796 951,826 31 12,656 11,526 3,362 3,204,453 396,528 732,310 830,844 70,332 1,122 9 7,706 – 469,657 594,606 3,103,114 6,307,567	2015 HK$’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

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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 Amount due to an associate Current income tax liabilities Borrowings 12 Total liabilities Total equity and liabilities	2016 HK$’000 47,848 460,693 23,924 2,452,826 2,985,291 4 2,985,295 234 94,815 1,312,500 1,407,549 724,438 329,375 11,622 213,131 636,157 1,914,723 3,322,272 6,307,567	2015 HK$’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

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2016

Attributable to owners of the Company

As at 1 January 2015 Comprehensive income Profit for the year Other comprehensive income 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 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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Attributable to owners of the Company

As at 1 January 2016 Comprehensive income Profit for the year Other comprehensive income Changes in fair value of available-for-sale financial assets Impairment for available-for-sale financial assets reclassified to income statement 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 2016	Share capital HK$’000 47,848 – – – – – – – – 47,848	Share premium HK$’000 153,025 – – – – – – – – 153,025	Other reserves HK$’000 2,433,733 468,225 (11,829) 11,793 (81,617) (81,653) 386,572 (35,887) (35,887) 2,784,418	Non- controlling interests HK$’000 4 – – – – – – – – 4	Total HK$’000 2,634,610 468,225 (11,829) 11,793 (81,617) (81,653) 386,572 (35,887) (35,887) 2,985,295

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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”) and the requirements of the Hong Kong Companies Ordinance (Cap. 622). 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 standards and amendments to existing standards effective in financial year beginning 1 January 2016.

The following new and amended standards are mandatory for accounting periods beginning on or after 1 January 2016. The adoption of these new and amended standards does not have any significant impact to the results and financial position of the Group:

Annual Improvements Project Annual Improvements 2012 – 2014 Cycle HKAS 1 (Amendments) Disclosure Initiative HKAS 16 and HKAS 38 (Amendments) Clarification of Acceptable Methods of Depreciation and Amortisation HKAS 16 and HKAS 41 (Amendments) Agriculture: Bearer Plants HKAS 27 (Amendments) Equity Method in Separate Financial Statements HKFRS 10, HKFRS 12 and HKAS 28 Investment Entities: Applying the (Amendments) Consolidation Exception HKFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint Operations HKFRS 14 Regulatory Deferral Accounts

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• (b) New standards and amendments to existing standards have been issued but are not effective for the financial year beginning 1 January 2016 and have not been early adopted.

		Effective for
		accounting periods
		beginning
		on or after
HKFRS 10 and HKAS	Sale or Contribution of Assets between	To be determined
28 (Amendments)	an Investor and its Associate or Joint
	Venture
HKAS 7	Disclosure Initiative	1 January 2017
(Amendments)
HKAS 12	Recognition of Deferred Tax Assets for	1 January 2017
(Amendments)	Unrealised Losses
HKFRS 2	Classification and Measurement of	1 January 2018
(Amendments)	Share-based Payment Transactions
HKFRS 9	Financial Instruments	1 January 2018
HKFRS 15	Revenue from Contracts with Customers	1 January 2018
HKFRS 15	Clarifications to HKFRS 15	1 January 2018
(Amendments)
HKFRS 16	Leases	1 January 2019

The Group has not early adopted any of the above new and amended standards.

Management is in the process of making an assessment of the impact of these new standards and amendments to standards and is not yet in a position to state whether they will have a significant impact on the Group’s results of operations and financial position.

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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 – net, finance income, finance costs, share of profit of an associate and income tax expense but excludes corporate and unallocated expenses. Other information provided to the CODM is measured in a manner consistent with that in the consolidated financial statements.

For the year ended 31 December 2016 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profits of joint ventures Change in fair value of investment properties Capital expenditure Loans to joint ventures	EMS division HK$’000 3,513,433 (2,905) 3,510,528 242,849 38,914 – – 53,453 –	ODM division HK$’000 2,972 – 2,972 (555) 2 – – – –	Property investment division HK$’000 15,874 – 15,874 172,170 – 165,389 551 – 131,641	Total HK$’000 3,532,279 (2,905) 3,529,374 414,464 38,916 165,389 551 53,453 131,641

10

For the year ended 31 December 2015 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profits 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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As at 31 December 2016 Segment assets Interests in joint ventures Total reportable segment assets As at 31 December 2015 Segment assets Interests in joint ventures Total reportable segment assets	EMS division HK$’000 2,523,923 – 2,523,923 2,343,289 – 2,343,289	ODM division HK$’000 13,263 – 13,263 8,669 – 8,669	Property investment division HK$’000 2,663,054 951,826 3,614,880 35,391 2,098,576 2,133,967	Total HK$’000 5,200,240 951,826
				6,152,066
				2,387,349 2,098,576
				4,485,925

Segment assets consist primarily of property, plant and equipment, investment properties, leasehold land and land use rights, restricted cash, inventories, stock of completed properties, trade receivables, prepayments, deposits and other receivables, non-current assets held for sale, short-term bank deposits and cash and cash equivalents but exclude investments in associates, 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 – net Finance costs – net Share of profit of an associate Corporate and unallocated expenses Profit before income tax	2016 HK$’000 414,464 10,814 133,995 (14,232) 614 (27,173) 518,482	2015 HK$’000 650,957 9,408 19,549 (10,335) – (26,701)
		642,878

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Reportable segments assets are reconciled to total assets as follows:

Reportable segment assets Investments in associates 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	2016 HK$’000 6,152,066 33,796 1,153 12,656 9 107,887 6,307,567 2016 HK$’000 38,916 2,373 41,289 53,453 602 54,055	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

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	2016 HK$’000 707,054 1,568,569 568,980 684,771 3,529,374	2015 HK$’000 564,716 1,924,041 623,537 688,617
		3,800,911

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For the year ended 31 December 2016, revenues of approximately HK$1,052,543,000 (2015: HK$1,203,503,000), HK$777,152,000 (2015: HK$720,758,000) and HK$453,528,000 (2015: HK$468,968,000) were derived from the top three external customers respectively. These customers individually account for 10 percent or more of the Group’s revenue. 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	2016 HK$’000 23 271,884 31 2,919,859 3,191,797	2015 HK$’000 26 233,669 71 2,197,433
		2,431,199

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

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3. OTHER INCOME

Government grant Others 4. OTHER GAINS – 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 on disposals of property, plant and equipment Exchange gains – net Impairment for available-for-sale financial assets Gain on disposal of nil-paid rights shares of an available-for-sale financial asset Gain on re-measurement of a joint venture_(Note 13)_ Gain on disposal of available-for-sale financial assets Gain on disposal of non-current assets held for sale Loss on liquidation of subsidiaries	2016 HK$’000 2,760 8,054 10,814 2016 HK$’000 2,001 281 – 497 (504) 1,411 29,064 (11,793) 789 112,249 – – – 133,995	2015 HK$’000 – 9,408 9,408 2015 HK$’000 2,777 529 1,366 43 (640) 741 17,992 (1,230) – – 7,957 3,547 (13,533) 19,549

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5. INCOME TAX EXPENSE

Current income tax – Hong Kong profits tax – Overseas taxation Deferred income tax Over provision in prior years – Current income tax	2016 HK$’000 (973) 53,283 (11) (2,042) 50,257	2015 HK$’000 8,000 43,842 (3,885) (3,312)
		44,645

Hong Kong profits tax has been provided at the rate of 16.5% (2015: 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% (2015: 25%) on the estimated profits, except for Welco Technology (Suzhou) Limited (“WTSZ”), a wholly-owned subsidiary of the Group. WTSZ is entitled to the preferential CIT rate of 15% under the New and High Technology Enterprises status till 31 December 2017.

6. DIVIDENDS

The dividends paid in 2016 and 2015 were approximately HK$35,887,000 (HK$0.075 per share) and HK$38,279,000 (HK$0.08 per share) respectively. A final dividend in respect of the year ended 31 December 2016 of HK$0.05 per share, amounting to a total dividend of approximately HK$23,924,000, 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 (2015: HK$0.03) per share Proposed final dividend – HK$0.05 (2015: HK$0.045) per share	2016 HK$’000 14,355 23,924 38,279	2015 HK$’000 14,355 21,532
		35,887

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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$’000) Weighted average number of ordinary shares in issue (in thousands) Basic earnings per share(HK$)_	2016 468,225 478,484 0.98	2015 598,233
		478,484
		1.25

(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

Share of net (liabilities)/assets Loans to joint ventures	2016 HK$’000 (770) 952,596 951,826	2015 HK$’000 846,310 1,252,266
		2,098,576

As at 31 December 2016, the Group’s principal joint ventures included Crown Opal Investment Limited and Open Vantage Limited, both of which the Group has 35.7% equity interest. Crown Opal Investment Limited is 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.

Movements in share of net (liabilities)/assets is analysed as follows:

At 1 January Share of profits of joint ventures Addition_(Note) Transfer to subsidiaries(Note 13)_ At 31 December	2016 HK$’000 846,310 165,389 3 (1,012,472) (770)	2015 HK$’000 420,300 426,010 – –
		846,310

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Note:

During the year ended 31 December 2016, Bollardbay Limited and its subsidiary, Easywise Limited, ceased to be joint ventures of the Group as a result of the transaction disclosed in Note 13. Open Vantage Limited, a new joint venture, was set-up between the Group and Data Giant Limited at the same proportion of percentage ownership. Investment cost in Open Vantage Limited paid by the Group was approximately HK$3,000. Certain properties owned by Easywise Limited were transferred to Open Vantage Limited at cost of approximately HK$3,974,000.

9. TRADE RECEIVABLES

The credit period allowed by the Group to its trade customers mainly ranges from 30 days to 120 days and no interest is charged.

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

0 – 60 days 61 – 90 days Over 90 days 10. NON-CURRENT ASSETS HELD FOR SALE At 1 January Disposals At 31 December	2016 HK$’000 703,808 100,336 26,700 830,844 2016 HK$’000 – – –	2015 HK$’000 535,481 105,482 54,476 695,439 2015 HK$’000 18,203 (18,203) –

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 has 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.

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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 Trust receipt bank loans, unsecured Short-term bank loans, unsecured Portion of long-term bank loans due for repayment within one year, secured Portion of long-term bank loans due for repayment after one year, secured 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	2016 HK$’000 613,632 98,044 12,762 724,438 2016 HK$’000 418,182 127,771 66,054 1,312,500 6,900 17,250 1,948,657 1,312,500 636,157 1,948,657	2015 HK$’000 590,521 59,705 7,054
		657,280
		2015 HK$’000 363,652 197,292 – 420,000 6,900 24,150
		1,011,994
		420,000 591,994
		1,011,994

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13. BUSINESS COMBINATION

Bollardbay Limited is a company formed between Ubiquitous International Limited ("UIL"), an indirect wholly-owned subsidiary of the Company, and Data Giant Limited ("Data Giant"). As at 1 January 2016, UIL and Data Giant owned 35.7% and 64.3% of the issued share capital of Bollardbay Limited respectively. Bollardbay Limited and its wholly-owned subsidiary, Easywise Limited, (together, the "Bollardbay Group") are engaged in property development and leasing. Bollardbay Group was classified as a joint venture by the Group as at 1 January 2016.

On 23 September 2016, Bollardbay Limited repurchased all the issued share capital owned by Data Giant (the "Repurchase Transaction"). After the Repurchase Transaction, Bollardbay Group became an indirect wholly-owned subsidiary of the Company ("Deemed Acquisition"). The following table summarised the investment cost and the fair value of identified assets acquired and liabilities assumed for the Deemed Acquisition.

Investment cost of Deemed Acquisition: – Cash consideration paid, including the bank borrowings drawn down by Easywise Limited and transferred to Data Giant – Fair value of the Group’s equity interest in Bollardbay Group at the date of the Repurchase Transaction_(Note) Total investment cost Fair value of the identifiable assets acquired and liabilities assumed: – Investment properties – Stock of completed properties – Trade receivables, deposits and other receivables – Trade and other payables – Current income tax liabilities – Deferred income tax liabilities – Amount due to a shareholder Total _Note: Carrying value of the Group’s equity interest in Bollardbay Group before the Repurchase Transaction Gain on re-measurement of the Group’s equity in Bollardbay Group Fair value of the Group’s equity interest in Bollardbay Group at the date of the Repurchase Transaction

As at 23 September 2016 HK$’000 760,612 1,124,721 1,885,333 1,855,150 741,810 19,820 (37,325) (171,327) (91,484) (431,311) 1,885,333 HK$’000 1,012,472 112,249 1,124,721

The revenue and operating profit included in the consolidated income statement since 23 September 2016 contributed by Bollardbay Group were HK$14,522,000 and HK$8,628,000 respectively.

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DIVIDENDS

The Company paid an interim dividend of HK$0.03 (2015: HK$0.03) per share for 2016. The Directors now recommend the payment of a final dividend of HK$0.05 (2015: HK$0.045) per share on or before Wednesday, 21 June 2017 to the shareholders whose names appear on the Register of Members of the Company on Tuesday, 6 June 2017. 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 Tuesday, 6 June 2017 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 Monday, 5 June 2017.

REVIEW OF BUSINESS ACTIVITIES

Financial Results

For the year ended 31 December 2016, the Group reported consolidated revenue of HK$3.5 billion (2015: HK$3.8 billion) representing a decrease of 7.1% as compared to last financial year. The Group’s consolidated operating profit for the year was HK$366.7 million or 10.4% of revenue as compared to HK$227.2 million or 6.0% for the previous financial year. The increase in operating profit was mainly attributable to a gain on re-measurement of the property development joint venture amounted to HK$112.2 million and reduction in operating costs. If this gain on re-measurement had been excluded, the consolidated operating profit for the year would have been HK$254.5 million or 7.2% of revenue.

Profit attributable to owners of the Company was HK$468.2 million for the year ended 31 December 2016, as compared to HK$598.2 million for the last financial year. The decrease was mainly attributable to the decrease in the Group’s share of profit from the property development joint venture, which mainly comprises profit from sale of developed units and fair value gain from units held as investment property. The share of profit from the property development joint venture for the year amounted to HK$165.4 million, as compared to HK$426.0 million for the last financial year. Basic earnings per share for the year amounted to HK$0.98 (2015: HK$1.25).

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The EMS Division

For the year ended 31 December 2016, the EMS Division reported revenue of HK$3.5 billion, a decrease of HK$0.3 billion or 7.6% as compared to HK$3.8 billion for the last financial year. The segment profit attributable to the EMS Division for the year was HK$242.8 million, representing an increase of HK$11.9 million or 5.2% as compared to HK$230.9 million for the last financial year. The increase in the segment profit was attributable to the slight improvement in profit margin as a result of change in product mix and cost control measures.

The ODM Division

The ODM Division recorded a small loss for the year. The sales demand in tablet was still soft as the market remained stagnant in 2016. However, the research and development efforts in tablets are continuously adding new knowledge and technologies to bring up new business opportunities to the ODM Division and the EMS Division.

Property Investment Division

The Group has two property development joint ventures with Sun Hung Kai Properties Limited (“SHKP”) on two sites for office buildings in Kwun Tong. The development project on the first site, namely One Harbour Square, has been completed. Pursuant to an agreement dated 20 September 2016 with SHKP, the joint venture in relation to that project was terminated, and the Group retains 11 office floors and a number of parking spaces, which will be held for leasing purpose. Further details in this relation were set out in the Company’s announcement dated 20 September 2016 and the circular dated 26 October 2016.

The Property Investment Division reported revenue of HK$15.9 million which included rental received from One Harbour Square from the termination of the first joint venture in September through the end of 2016. The segment profit for the year was HK$172.2 million as compared to HK$424.0 million for the last financial year. The decrease was mainly attributable to the decrease in the Group’s share of profit from the property development joint venture, which mainly comprises profit from sale of developed units and fair value gain from units held as investment property.

The construction work for the second development project, namely Two Harbour Square, is proceeding as planned and is targeted to be completed around the middle of 2017. Sufficient funding has been arranged to complete the second project.

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LIQUIDITY AND FINANCIAL RESOURCES

As at 31 December 2016, the Group had a total of HK$3,604.6 million of banking facilities. Total bank borrowings were HK$1,948.7 million (2015: HK$1,012.0 million). Cash and cash equivalents and short-term bank deposits were HK$1,064.3 million at 31 December 2016 (2015: HK$1,026.8 million).

As at 31 December 2016, the Group had a net bank borrowing of HK$884.4 million, as compared to net cash surplus of HK$14.8 million at 31 December 2015. The increase in net bank borrowing was mainly attributed to the funding requirements to finance the property development joint venture of HK$131.6 million and acquisition of subsidiaries of HK$760.6 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 2016 is 0.30 (2015: net cash). The net gearing ratio was calculated as net debt divided by total equity. Net debt is calculated as total bank borrowings less cash and cash equivalents and short-term bank deposits.

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 its prudent policy on financial risk management, the Group does not use 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

The Group’s capital structure 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 2016, the Group employed approximately 4,425 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.

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PROSPECTS

The global economic environment continues to present significant challenges to our business. Increases of commodity prices and inflation are driving the manufacturing costs higher. Those increases will impact our business in terms of cost competitiveness and profitability. In face of such challenges, the Company shall strive to expand the customer base and to improve operation efficiency through automation, lean, energy conservation and stringent cost control measures. Based on the current sales orders on hand and forecasts and feedbacks from customers, the Company expects that the result of the EMS business for 2017 will be comparable to that for 2016.

Following the termination of the joint venture in relation to One Harbour Square, the Group now directly holds 11 office floors and a number of parking spaces in One Harbour Square, which will provide the Group with a stable stream of rental income in future.

Construction work for the development project on second site, namely Two Harbour Square, is expected to be completed around the middle of 2017. It is the Group’s preference to hold its interest in this project also for long term and for leasing purposes after taking into consideration the market conditions and the financing requirements. According to current expectations, interest rates will be raised at a faster pace in 2017. The Group is monitoring it carefully and will take appropriate action to mitigate its impact.

AWARD & RECOGNITION

The Company and its wholly-owned subsidiary, Wong’s Electronics Company Limited, were awarded the Caring Company Logo by the Hong Kong Council of Social Service for the fifth consecutive year. In addition, Wong’s F&B Limited, a wholly-owned subsidiary of the Company, was 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 2016, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

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CORPORATE GOVERNANCE CODE

During the year ended 31 December 2016, 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 Non-executive 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.

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.

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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 2016.

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 2016.

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 2016 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 consolidated financial statements for the year. The work performed by 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.

ANNUAL GENERAL MEETING

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

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PUBLICATION OF RESULTS AND ANNUAL REPORT

This results announcement is published on the Company’s website at www.wih.com.hk/ investor07.asp and the Stock Exchange at www.hkexnews.hk. The 2016 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, 28 March 2017

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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