Man Yue Technology Holdings Limited (the Company ) was founded in 1979 and was listed on The Stock Exchange of Hong Kong Limited in The Company

Transcription

1 (Stock Code : 00894) Annual Report 2015 SAVE OIL, SAVE MINERALS, FRESH AIR, GREEN FUTURE,

2 Man Yue Technology Holdings Limited (the Company ) was founded in 1979 and was listed on The Stock Exchange of Hong Kong Limited in The Company and its subsidiaries (collectively called the Group or Man Yue Tech ) core businesses are the manufacture and sale of high technology electronic components, including Aluminum Electrolytic Capacitors ( E-Caps ), Conductive Polymer Aluminum Solid Capacitors ( Polymer Caps ) and other innovative electronic components. The Group offers a full range of E-Caps products which satisfy the needs of global customers, consisting mainly of the world s leading information technology, telecommunications, electrical and electronic brands. In 2006, the Group launched an innovative electronic component known as the Polymer Cap, and has advanced to be a major global vendor. The Group continued its pioneering course by unveiling a new type of capacitor in 2009 Electric Double Layer Capacitors ( EDLC ), which acts as an energy storage device in electrical or electronic products. Over the years, the Group has fostered creativity and inventiveness among the well-trained and highly qualified research and development ( R&D ) professionals who have enabled the Group to develop new and groundbreaking products. As the key manufacturer of E-Caps and Polymer Caps, the Group owns the renowned SAMXON and X-CON brands, both are respected brands for their advanced technology and superior quality, backed by the Group s strong R&D capabilities and established global network. Enhancing their market attraction, all of the Group s products comply with European Union s Directives on Restriction of the Use of the Certain Hazardous Substances in Electrical and Electronic Equipment ( RoHS ) and environmental protection requirements specific to different global markets. Man Yue Tech is headquartered in Hong Kong and operates state-of-the-art E-Caps manufacturing facilities in Dongguan, Wuxi and Jiangxi of the People s Republic of China (the PRC ), with a total production capacity of over 1 billion pieces per month. The Group owns three aluminum foil factories located in Qingyuan, Urumqi and Yaan of the PRC producing aluminum foil for its own consumption. The Group has distribution offices located in Hong Kong, the PRC and Taiwan, complemented by worldwide distribution channels. Man Yue Tech is fully committed to environmental sustainability for both products and operations. All products are halogen free and complied with RoHS. In addition, all production facilities of the Group conform to local environmental regulations and obtained relevant certification where appropriate. Not content to passively observe regulations, the Group is actively pursuing opportunities to directly contribute to environmental protection. The Group introduced and continued to develop solutions for enhancing energy efficiency, such as capacitors found in LED lamps and high-efficiency lighting and new storage devices for use in environmentally friendly products. The Group remains steadfast in its support of environmental protection, consistent with its commitment to be a good corporate citizen. CONTENTS 2 Corporate Information 4 Financial Highlights 6 Chairman s Statement 8 Management Discussion and Analysis 15 Directors and Senior Management s Biographies 20 Corporate Governance Report

3 SAMXON X-CON RoHS 10 RoHS LED 41 Report of the Directors 51 Independent Auditor s Report 53 Consolidated Income Statement 54 Consolidated Statement of Comprehensive Income 55 Consolidated Balance Sheet 57 Consolidated Statement of Changes in Equity 58 Consolidated Cash Flow Statement 60 Notes to the Consolidated Financial Statements 177 Five Year Financial Summary 178 Glossary

4 CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Kee Chor Lin (Chairman) Chan Yu Ching, Eugene (Managing Director) Wong Ching Ming, Stanley Yeung Yuk Lun (shall resign on 12 April 2016) Independent Non-executive Directors Dr. Li Sau Hung, Eddy, B.B.S., J.P. Lo Kwok Kwei, David Mar, Selwyn AUDIT COMMITTEE Mar, Selwyn (Chairman) Dr. Li Sau Hung, Eddy, B.B.S., J.P. Lo Kwok Kwei, David REMUNERATION COMMITTEE Lo Kwok Kwei, David (Chairman) Kee Chor Lin Dr. Li Sau Hung, Eddy, B.B.S., J.P. NOMINATION COMMITTEE Dr. Li Sau Hung, Eddy, B.B.S., J.P. (Chairman) Kee Chor Lin Chan Yu Ching, Eugene Lo Kwok Kwei, David Mar, Selwyn COMPANY SECRETARY Yeung Yuk Lun (shall resign on 12 April 2016) Ng Sui Yin (shall be appointed on 12 April 2016) AUDITOR PricewaterhouseCoopers PRINCIPAL BANKERS The Hongkong and Shanghai Banking Corporation Limited China CITIC Bank International Limited Bank of Tokyo-Mitsubishi UFJ, Ltd. DBS Bank (Hong Kong) Limited UFJ 2 MAN YUE TECHNOLOGY HOLDINGS LIMITED

5 CORPORATE INFORMATION (Continued) REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM 11 Bermuda PRINCIPAL PLACE OF BUSINESS 16/F., Yiko Industrial Building 10 Ka Yip Street, Chai Wan, Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong CORPORATE WEBSITE INVESTOR RELATIONS CONTACT ir@manyue.com STOCK CODE Clarendon House 2 Church Street Hamilton HM 11 Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda ir@manyue.com Annual Report

6 FINANCIAL HIGHLIGHTS % changes increase/ (decrease) FOR THE YEAR ENDED 31 DECEMBER HK$ 000 HK$ 000 % Operating Results Revenue 974,421 1,186,967 (17.91) Gross profit 175, ,362 (30.91) EBITDA EBITDA 83, ,104 (52.06) Net (loss)/profit (45,838) 43,836 N/A Per Share Data % (Loss)/earnings per share-basic (9.43) 9.03 N/A Total dividend per share 2.5 N/A Net assets per share (10.46) Financial Position % Total assets 2,553,022 2,749,435 (7.14) Net assets 1,396,260 1,569,145 (11.02) Financial Ratios % % % Gross profit to revenue (15.49) EBITDA to revenue EBITDA (41.89) Net (loss)/profit to revenue (4.7) 3.7 N/A Return on equity (3.3) 2.8 N/A Net debt to equity MAN YUE TECHNOLOGY HOLDINGS LIMITED

7 Financial Highlights (Continued) REVENUE For the year ended 31 December HK$ million EBITDA For the year ended 31 December HK$ million 1, , , , GROSS PROFIT For the year ended 31 December HK$ million NET ASSETS PER SHARE As at 31 December HK$ cents Annual Report

8 CHAIRMAN S STATEMENT The financial year ended 31 December 2015 was still challenging for many global electronic enterprises, including major players in the E-Caps and Polymer Caps industries. In addition to the weak demand of electronic components during the Year, the delaying effect of depreciation of Japanese Yen had significant impact to the selling price of our key products. The Group s sales revenue declined by 17.9% to HK$974,421,000 in 2015, which was in line with the poor performance of our major competitors. The gross profit margin dropped as a result of the intense pricing pressure imposed by our competitors during the Year. However, the Group s EBITDA continued to maintain at a satisfactory position with our conservative cash flow and financial management. The net gearing ratio increased slightly to 32.6% as at 31 December It was mainly due to diminution of the value of PRC-based fixed assets resulted from the depreciation of Renminbi during the Year. 17.9% 974,421,000 EBITDA 32.6% SAVE OIL, SAVE MINERALS, FRESH AIR, GREEN FUTURE, TOMORROW Ms. Kee Chor Lin Chairman 6 MAN YUE TECHNOLOGY HOLDINGS LIMITED

9 Chairman s Statement (Continued) As one of the key global suppliers of major electronic components including E-Caps and Polymer Caps, the Group continues the investment in ESS product family since The Group acquired the land use rights of a piece of land located in Qingyuan Hightech Industrial Development Zone of Guangdong Province in the PRC. It will be used for the expansion of production capacities of the ESS products (including EDLC, EDLC modules and Powerfilm Capacitors) in the coming years. The development of ESS products is encouraging, taking into account of the continuing commitment of the PRC government in the environment protection and new energy saving-related industries and sectors. This aligns with the Group s overall strategy of developing green energy products and multi-product platform with increasing sales mix of such high-technology segment in the next couple of years. With our strong material science research technology and ready-to-expand production capacities built in the past years, we are confident that the Group can capture most of the opportunities in this particular emerging market segment. Last but not least, I would like to take this opportunity to thank all of our shareholders, business partners, bankers and customers for their continuing support to the Group. I would also like to thank my fellow directors, the management team and our staff for their dedication and commitment in contributing to the success of the Group. Kee Chor Lin Chairman Hong Kong, 9 March 2016 Annual Report

10 MANAGEMENT DISCUSSION AND ANALYSIS RESULTS HIGHLIGHTS Revenue dropped by 17.9% to HK$974,421,000 (2014: HK$1,186,967,000) 17.9% 974,421,000 1,186,967,000 Gross profit margin was 18.0% (2014: 21.3%) 18.0%21.3% EBITDA of HK$83,942,000, representing an EBITDA margin of 8.6% (2014: 14.8%) EBITDA 83,942,000 EBITDA 8.6%14.8% Loss for the Year was HK$45,838,000 (2014: Profit of HK$43,836,000) 45,838,000 43,836,000 Net debt to equity ratio slightly increased to 32.6%, compared with 28.4% as at 31 December % 28.4% Net assets per share of HK$2.93, compared with HK$3.27 per share as at 31 December 2014 FINANCIAL REVIEW The sales revenue of the Group for the Year dropped to HK$974,421,000 (2014: HK$1,186,967,000), representing a decrease of 17.9%, as compared with that of last year. It was mainly attributable to the intense pricing pressure imposed by the competitors as a result of the depreciation of Japanese Yen and the decline in the global demand for electronic components during the Year ,421,000 1,186,967, % Gross profit for the Year amounted to HK$175,040,000 (2014: HK$253,362,000), representing a drop of 30.9%, compared with that of last year. It was mainly due to the increase in manufacturing costs in Mainland China, in addition to the general decrease in selling price during the Year. The Group has undergone keen cost control programs including automating the production processes to stabilise the gross profit margin in the second half of the Year. 175,040, ,362, % 8 MAN YUE TECHNOLOGY HOLDINGS LIMITED

11 Management Discussion and Analysis (Continued) During the Year, the Group recognised a loss arising from changes in the fair values of derivative financial instruments of HK$4,647,000 (2014: HK$5,963,000). The derivative financial instruments concerned referred to certain long term interest rate swap contracts entered into by the Group in 2009 and 2010 with the intention to hedge against the Group s future borrowing costs. The Group had to account for the decrease in the fair values of these financial instruments in the consolidated income statement at the year end. This item did not affect the cash flows of the Group. 4,647,0005,963,000 The Group s EBITDA amounted to HK$83,942,000 (2014: HK$175,104,000), representing an EBITDA margin of 8.6% (2014: 14.8%). EBITDA 83,942, ,104,000EBITDA8.6% 14.8% Loss for the Year amounted to HK$45,838,000 (2014: Profit of HK$43,836,000). The Board has resolved not to recommend final dividend for the Year (2014: 1.0 HK cent per share). 45,838,000 43,836, E- Caps and Pol ym er Cap aps fact ctor ory in Don ongg ggua uan of the PRC Annual Report

12 Management Discussion and Analysis (Continued) BUSINESS REVIEW Market overview The global demand for E-Caps and Polymer Caps dropped in 2015 as a result of the slowdown of global economy especially in Mainland China. The electronic component sector had been particularly affected due to the delay in the launching of new product models by our key customers during the Year, which then reduced the demand in the consumer electronic sectors. On the other end of the spectrum, the large-scale E-Caps manufacturers were also facing key challenges including currency fluctuation and increasing manufacturing cost, especially the labor costs in the PRC. This eroded the profitability and the operating margins during the Year. The Group continues to be one of the major suppliers of electronic components in the global market. Our flagship brands SAMXON and X-CON still maintain a very strong market position in the niche market segment. The competitive advantages of our high-quality products and the stable supply of key raw materials, especially aluminum foils, enable the Group to maintain its global market share. We expect a recovery of sales momentum in the consumer electronic and industrial sectors in next few years. SAMXON X-CON The PRC government continues its commitment in developing new energy industries and related applications. We are one of the very few suppliers in the world to supply such green energy components including EDLC, EDLC modules and Powerfilm Capacitors. The Group expects the global demand for these ESS products will experience phenomenal growth in terms of volume and spectrum of applications in the next few years. We are now keen on expanding these market sectors via production capacity expansion and continuing investment in R&D facilities to explore new applications accordingly. 10 MAN YUE TECHNOLOGY HOLDINGS LIMITED

13 Management Discussion and Analysis (Continued) Operation review The Group has successfully transformed from a single-product platform into a key global supplier of several critical electronic components including E-Caps, Polymer Caps, EDLC, EDLC modules, Powerfilm Capacitors, MLPC, aluminum foils and chemicals in the past few years. The ESS product series provides a total solution for industrial power management and energystorage applications such as wind and solar power systems, new energy transportation vehicles, escalators automatic rescue and power backup devices, national grid resources utilization, energy regeneration system for rail transportation, RTG port crane energy regeneration system etc. It enhances our niche market position for low-carbon emission and new energy-related applications. The Group has successfully developed the second generation of supercapacitors during the Year. We are in a position well prepared for capturing the market potential of ESS products in the next few years. RTG During the Year, the Group continued to enhance the efficiency of production process and to strengthen internal control over manufacturing costs and overhead in Mainland China. We have been penetrating effectively into first-tier PRC domestic market and key global electronic manufacturing segment in the past few years. With strong commitment to improve the overall competitiveness of our high-quality products and to continue to adjust our sales strategy by focusing on niche customers and products, we expect the contribution from our traditional capacitors business and the ESS family series will be improving gradually in the near future. The Group made an announcement on 16 September 2014 that the Group acquired the land use rights of a piece of land located in Qingyuan High-tech Industrial Development Zone of Guangdong Province in the PRC. The Group considers the land for the time being to be used for the future development of our new energy saving and storage businesses, including but not limited to research, development and the manufacture of EDLC, EDLC modules, MLPC and Powerfilm Capacitors and other new energy saving related products. The investment will be funded by internal resources of the Group. Annual Report

14 Management Discussion and Analysis (Continued) LIQUIDITY AND FINANCIAL RESOURCES As at 31 December 2015, the Group s total outstanding bank borrowings amounted to HK$813,575,000 (31 December 2014: HK$857,865,000) which comprised mainly bank loans and trade finance facilities. The bank borrowings with maturities falling due within one year and in the second to the fifth year amounted to HK$505,477,000 and HK$308,098,000 respectively (31 December 2014: HK$505,646,000 and HK$352,219,000 respectively). 813,575, ,865, ,477, ,098, ,646,000352,219,000 After deducting cash and cash equivalents of HK$347,797,000 (31 December 2014: HK$400,839,000) and time deposits over three months of HK$11,936,000 (31 December 2014: HK$12,676,000), the Group s net borrowing amounted to HK$453,842,000 (31 December 2014: HK$444,350,000). Shareholders equity as at 31 December 2015 was HK$1,391,978,000 (31 December 2014: HK$1,563,854,000). Accordingly, the Group s net gearing ratio was 32.6% (31 December 2014: 28.4%). 347,797, ,839,000 11,936,000 12,676, ,842, ,350,000 1,391,978,000 1,563,854, % 28.4% During the Year, the Group s net cash inflow from operating activities amounted to HK$48,240,000. This represented loss before tax of HK$37,396,000 after adjustments for non-cash items, including adding back depreciation and amortisation of HK$91,124,000, adding the share of results of joint ventures and an associate of HK$752,000, deducting the net changes in working capital of HK$1,791,000 and deducting other adjustments of HK$4,449,000. The Group s net cash outflow from investing activities for the Year amounted to HK$22,879,000, which included purchases and prepayments for prepaid land premium and property, plant and equipment of HK$25,682,000 and other cash inflow of HK$2,803, ,240,00037,396,000 91,124, ,000 1,791,0004,449,000 22,879,000 25,682,0002,803, MAN YUE TECHNOLOGY HOLDINGS LIMITED

15 Management Discussion and Analysis (Continued) The Group s financial statements are presented in Hong Kong dollars. The Group carried out its business transactions mainly in Hong Kong dollars, Renminbi, United States dollars and Japanese Yen. As the Hong Kong dollar remained pegged to the United States dollar, there was no material exchange risk in this respect. The Group continued to monitor its foreign exchange exposure in Japanese Yen and Renminbi mainly by entering into forward contracts. The Group s long-term bank loan facilities were denominated mainly in Hong Kong dollars and carried interest at floating rates. Interest rate exposure was hedged by entering into long-term interest rate swap contracts. Credit risk was hedged mainly through credit insurance. OUTLOOK AND PROSPECTS The global economy is still challenging in the coming years, especially the reducing economic growth in Mainland China. The Group expects several key challenges ahead including the continuous increase in manufacturing costs, shorter product life cycle of consumer electronic products and also volatile capital market and currency fluctuation. With the Group s three pillars of product families: namely E-Caps, Polymer Caps and the ESS products well in place, sales momentum will be picked up in multiple dimensions in 2016 and beyond. The PRC government continues the strategic move to boost the development of key emerging new energy-related industries. The Group s existing ESS product platform covers most of these product segments including new energy, new materials, energy saving, environmental protection and new energy vehicles. With solid ongoing national policies in place, the Group believes that it can capture such market opportunities through leveraging its existing well-established, unique and diversified product platform and adequate production capabilities in the next couple of years. Annual Report

16 Management Discussion and Analysis (Continued) As one of the key global suppliers of E-Caps, Polymer Caps and ESS products, the Group will continue to align its strategic direction of strengthening its position as a main supplier of key electronic components across all sectors including the new energyrelated applications. Moreover, our bolstering R&D capabilities and the collaboration with key leading universities provides a channel for the Group to penetrate extensively into the faster-thanexpected growing renewable energy industry in the near future. EMPLOYMENT AND REMUNERATION POLICY As at 31 December 2015, the Group employed 70 staff in Hong Kong (31 December 2014: 75) and employed a total work force of 2,720 (31 December 2014: 2,846) inclusive of all the staff in the PRC and overseas offices. The Group s remuneration policy is built on the principle of equitability with incentive-based, motivating, performance oriented and market-competitive remuneration packages for its employees. Remuneration packages are normally reviewed on a regular basis. Apart from salary, other staff benefits include provident fund contributions, medical insurance coverage and performance-based bonuses ,720 2,846 Alum umin inum foi oil fact ctor ory in Qin ingy gyua uan of the PRC 14 MAN YUE TECHNOLOGY HOLDINGS LIMITED

17 DIRECTORS AND SENIOR MANAGEMENT S BIOGRAPHIES EXECUTIVE DIRECTORS Kee Chor Lin (Mrs. Chan), aged 67, is the co-founder of the Group. She was appointed as the Chairman and an Executive Director of the Company in October Mrs. Chan is the leader of the Group for corporate development, overall planning, strategies and policies making. Mrs. Chan is at present a director of several major operating subsidiaries of the Group and also a member of the Remuneration Committee and the Nomination Committee of the Company. Mrs. Chan is one of the wellknown industrialists in Hong Kong and possesses over 30 years of experience in the business of electronic components. She is the mother of Mr. Chan Yu Ching, Eugene, the Managing Director and an Executive Director of the Group and Ms. Chan Lok Yan, Lorraine, a member of the senior management of the Group. Mr. Wong Ching Ming, Stanley Mr. Yeung Yuk Lun Mr. Chan Yu Ching, Eugene Mr. Lo Kwok Kwei, David Dr. Li Sau Hung, Eddy Mr. Mar, Selwyn Ms. Kee Chor Lin Annual Report

18 Directors and Senior Management s Biographies (Continued) Chan Yu Ching, Eugene, aged 40, joined the Group in 1998 and was appointed as an Executive Director in December 2007 and as the Managing Director of the Group in October Mr. Chan is responsible for overseeing the business development, policies making and implementation of the Group. He is also a director of several major operating subsidiaries of the Group and a member of the Nomination Committee of the Company. Mr. Chan holds a Bachelor s degree in Applied Science (majored in Electronic and Electrical Engineering) from the University of British Columbia in Canada. He has over 18 years of experience in the industry of electronic components. He received the Young Industrialist Awards of Hong Kong in Mr. Chan is the son of Mrs. Chan and the brother of Ms. Chan Lok Yan, Lorraine. Wong Ching Ming, Stanley, aged 58, joined the Group in 2003 and was appointed as an Executive Director of the Company in January Mr. Wong is also the Business Development Director of the Group. He is now primarily responsible for managing the global sales, marketing strategies and operations and overall management of factory operations of the Group. He has over 25 years of experience in sales and marketing field and had held a senior management position in an internationally well-known information technology company. Mr. Wong holds a Master of Science degree and a Bachelor of Science (Aeronautical Engineering) degree from the University of London s Imperial College of Science. Mr. Wong is also a director of certain subsidiaries and an associate of the Company. Yeung Yuk Lun, aged 44, was appointed as an Executive Director and Company Secretary of the Company in March 2013 and August 2013 respectively. He is also the Chief Financial Officer of the Group. Mr. Yeung was the Financial Controller of the Group from July 2007 to February He re-joined the Group in November 2011 as the Chief Financial Officer and is responsible for the Group s financial planning, internal control and management, regulatory compliance and investor relations functions. Prior to joining the Group, Mr. Yeung held senior management positions in different listed companies in Hong Kong. He has extensive experience in auditing, financial and treasury management, information technology, executive management as well as business development. He holds a Bachelor s degree in Business Administration (Professional Accountancy) and a Master s degree in Business Administration from the Chinese University of Hong Kong. He is an associate member of the Hong Kong Institute of Certified Public Accountants and the Taxation Institute of Hong Kong. 16 MAN YUE TECHNOLOGY HOLDINGS LIMITED

19 Directors and Senior Management s Biographies (Continued) INDEPENDENT NON-EXECUTIVE DIRECTORS Dr. Li Sau Hung, Eddy, B.B.S., J.P., aged 61, has over 29 years of experience in the manufacturing industry. Dr. Li is a member of the National Committee of Chinese People s Political Consultative Conference and the President of Hong Kong Economic & Trade Association Ltd. and the President of The Chinese Manufactures Association of Hong Kong. He holds a Ph.D. degree in Economics and a Master s degree in Business Administration. Dr. Li was awarded The Ten Outstanding Young Persons in 1991 and the Young Industrialists of Hong Kong in He is currently an independent non-executive director and a member of the audit committee of each of Oriental Watch Holdings Limited ( Oriental Watch ) and Midas International Holdings Limited ( Midas ) and the Company (all of which were listed on the Main Board of The Stock Exchange of Hong Kong Limited). Dr. Li is also a member of the remuneration committee of Oriental Watch and the Company, a member of the nomination committee of Midas and the chairman of the Nomination Committee of the Company. Lo Kwok Kwei, David, aged 56, an Independent Non-executive Director of the Company. He is also the chairman of the Remuneration Committee and a member of the Audit Committee and the Nomination Committee of the Company. Mr. Lo holds the degrees of Bachelor of Laws and Bachelor of Jurisprudence from the University of New South Wales, Australia. He was admitted as a solicitor of the Supreme Court of New South Wales, Australia in Mr. Lo has been a member of The Law Society of Hong Kong since He has been practising as a solicitor in Hong Kong for over 27 years and is a partner in a law firm in Hong Kong. Mr. Lo is currently an independent non-executive director of esun Holdings Limited and ENM Holdings Limited (all of which were listed on the Main Board of The Stock Exchange of Hong Kong Limited). Annual Report

20 Directors and Senior Management s Biographies (Continued) Mar, Selwyn, aged 80, graduated from the London School of Economics, University of London, is a fellow member of the Institute of Chartered Accountants of the United Kingdom and the Hong Kong Institute of Certified Public Accountants. Mr. Mar has been active in commercial and industrial undertakings over the past 30 years. He is currently a director of Nexia Charles Mar Fan Limited. He is an Independent Non-executive Director and the Chairman of the Audit Committee of the Company, China Everbright International Limited and Minmetals Land Limited (all of which were listed on the Main Board of The Stock Exchange of Hong Kong Limited). Mr. Mar was appointed as an independent non-executive director, the chairman of the audit committee and a member of the nomination committee of China Kingstone Mining Holdings Limited (was listed on the Main Board of The Stock Exchange of Hong Kong) in July 2015, and resigned from the office in December in the same year. In respect of public services, he was the President of the Hong Kong Institute of Certified Public Accountants (formerly known as the Hong Kong Society of Accountants ) in 1991, a member of the Appeals Panel of the Securities and Futures Commission and a member of Board of Governors of the Chinese International School. He is an Honorary Fellow of the Lingnan University. Mr. Mar is also a member of the Nomination Committee of the Company. SENIOR MANAGEMENT Chan Lok Yan, Lorraine, aged 38, is the Business Control Director of the Group. Ms. Chan joined the Group in 2001 and is actively involving in the setting of the Group s business strategies, reengineering the Group s business processes and the establishment of business control systems. She has extensive experience in marketing, business operations and information systems management. Ms. Chan holds a Bachelor of Arts degree from the University of Toronto, Canada. She is the daughter of Mrs. Chan and the sister of Mr. Chan Yu Ching, Eugene. Hsu Dau Shin, aged 60, is the General Manager of the Group s manufacturing facility in Dongguan. Mr. Hsu joined the Group in He is responsible for the management and operation of the manufacturing facility of the Group in Dongguan. Prior to joining the Group, he was the chief executive officer of a well known Taiwan electronic company and led it to be listed on the Taiwan Stock Exchange. He holds a Bachelor s degree in Business Administration from the University of New Hampshire, United States. 18 MAN YUE TECHNOLOGY HOLDINGS LIMITED

21 Directors and Senior Management s Biographies (Continued) Lui Man Lung, Johnny, aged 45, is the Sales General Manager of the Group. Mr. Lui joined the Group in 1996 and is mainly responsible for the development of the Group s business in the Greater China and Taiwan region. He has over 21 years of experience in the sales and marketing fields. He holds a Bachelor s degree in Business Administration from the Lingnan University, Hong Kong. Pan Su Qing, aged 54, is the Vice Chief Engineer of the Group s manufacturing facility in Dongguan. Ms. Pan joined the Group in She is responsible for product development, product design, technical support and product cost management of the Group. Prior to joining the Group, she worked in the research & development department of a well known state-owned National 4321 Factory and engaged in the development of new aluminum electrolytic capacitor products for commercial customers and military uses. She graduated from the Nan Chang Radio Technological School, majored in electronics component and material in Peng Shu Hong, aged 41, is the General Manager of the Group s Sichuan and Qingyuan aluminum foil manufacturing business. Mr. Peng joined the Group in 1997 with the responsibility of managing the production, quality control and research & development. He has over 17 years of experience in operation management field. Wai Ching Han, Doris, aged 56, is the Operation Director of the Group. Ms. Wai joined the Group in March She is responsible for the Group s strategic human resources management and general administration. Ms. Wai has over 23 years human resources and administration experience gained in global corporations. She holds a Bachelor s degree in Business Administration (Human Resources Management) from the RMIT University of Australia. She is also a professional member of the Hong Kong Institute of Human Resource Management. Wan Wah, aged 45, is the Assistant Business Development Director of the Group. Ms. Wan rendered her services from 1994 to 2013 and re-joined the Group in She is mainly responsible for the development of the Group s business. She has over 22 years of experience in the sales and marketing fields and has successfully led sales teams in the development of new and potential markets for the Group. She holds a Master s degree in Business Administration from the University of Sydney, Australia. Annual Report

22 CORPORATE GOVERNANCE REPORT The Board of the Company and management are committed to uphold high standard of corporate governance practices in order to enhance the performance of the Group. The principles of corporate governance adopted by the Company emphasise on an effective Board for leadership and control, sound business ethics and integrity in all business activities, transparency and accountability to shareholders. CORPORATE GOVERNANCE The Group has complied with the applicable code provisions in the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules. The Company has adopted the code provisions as its own code of corporate governance practices with the exception of the following deviation: Pursuant to code provision A.4.1, non-executive directors and independent non-executive directors should be appointed for a specific term. Currently, all the Independent Non-executive Directors of the Company are not appointed for a specific term but are subject to retirement by rotation at the annual general meeting under bye-law 87 of the Company s Bye-laws. A Save as disclosed above, the Company considers that sufficient measures had been taken to ensure that corporate governance practices of the Company were in line with the code provisions for the Year. COMPLIANCE WITH THE MODEL CODE The Group has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules to govern securities transactions by the Directors of the Company. After having made specific enquiry by the Company, all Directors confirmed that they had fully complied with the Model Code throughout the Year. 20 MAN YUE TECHNOLOGY HOLDINGS LIMITED

23 Corporate Governance Report (Continued) THE BOARD The Board currently comprises four Executive Directors and three INEDs. The number of INED represents more than one-third of the Board which comply with the requirement under rule 3.10(A) of the Listing Rules. Their names are identified in various corporate communications and in all announcements. The biographical details and the relationship among the members of the Board are disclosed under the section headed Directors and Senior Management s Biographies on pages 15 to 19 of this Annual Report. Also, the Board established three Board committees, namely the Audit Committee, the Remuneration Committee and the Nomination Committee. The Composition of the Board The Directors believe that the current composition of the Board reflects the necessary balance of skills and experience appropriate for the requirements of the business of the Group and the effective leadership. The INEDs of the Company are experts in various business sectors. Under rule 3.10 of the Listing Rules, at least one of the INEDs has appropriate professional qualifications or accounting or related financial management expertise. The Directors are of the opinion that the present structure of the INEDs of the Company complies with rule 3.10 of the Listing Rules and can ensure independence and objectivity and provide checks and balances to safeguard the interests of the shareholders and the Company. The Chairman and the Managing Director The Board believes that clear division of responsibilities between the Chairman and the Managing Director is crucial to the effective running of the Board and the development of the Group. Ms. Kee Chor Lin ( Mrs. Chan ) and Mr. Chan Yu Ching, Eugene are the Chairman and the Managing Director of the Company respectively. Their roles and duties are separate and distinct. Mrs. Chan, as the Chairman, takes up the challenging role of leading the Board to develop and formulate strategic business development plans whilst Mr. Chan Yu Ching, Eugene, as the Managing Director, is to implement the policies and answerable to the Board for the operations and management of the Group. Mrs. Chan is the mother of Mr. Chan Yu Ching, Eugene. 3.10(A) Annual Report

24 Corporate Governance Report (Continued) Resignation of an Executive Director and the Chief Financial Officer and change of the Company Secretary Mr. Yeung Yuk Lun has tendered his resignation from the offices of Executive Director, Chief Financial Officer and Company Secretary with effect from 12 April Mr. Ng Sui Yin shall be appointed as the Company Secretary on the same day following the resignation of Mr. Yeung Yuk Lun. Proceedings of Meetings The Chairman is responsible for drawing up and approving the agenda for each Board meeting in consultation with all Directors and the Company Secretary of the Company. Prior notice of each Board meeting is given to all Directors at least 14 days in advance of all regular Board meetings and the Directors are invited to include matters of their special concerns for discussion in the agenda. The Company Secretary assists the Chairman in preparing agenda for each Board meeting. Draft agenda for each Board meeting is circulated to all Directors to enable them to include other matters in the agenda. The agenda and accompanying meeting papers are then sent in full to all Directors at least 3 days in advance or within reasonable time prior to the relevant Board meetings. The minutes of Board meetings recorded the matters considered by the Board in details. The minutes of all Board meetings and all other committee meetings are kept by the Company Secretary and are available upon prior appointment for inspection by any Directors, auditors or any relevant eligible parties who are entitled to have access to such information. The Directors are reminded to declare any conflicts of interest at the Board meetings and to abstain from voting and be excluded from counting as quorum in that meeting whenever there are potential or actual conflicts of interest arising. Directors Training Every newly appointed Director of the Company will receive a comprehensive, formal and tailored induction package to ensure that he or she has a proper understanding of the Company s operation and business and the relevant statues, common laws, the Listing Rules, legal and regulatory requirements and governance policies. The Company Secretary also provides the updates on latest development and changes in the Listing Rules and other relevant legal and regulatory requirements to the Board from time to time MAN YUE TECHNOLOGY HOLDINGS LIMITED

25 Corporate Governance Report (Continued) Besides, all Directors are encouraged to participate in continuous professional development to develop and refresh their knowledge and skills. Specific in-house training seminars were organised for all Directors in January and March 2015 to update the Board the latest development and knowledge on market misconduct and risk management. A summary of trainings received and seminars or conferences attended by Directors from for the Year is as follows: Type of trainings In-house training Directors Seminars or conferences or forums Corporate events or visits Reading Executive Directors Kee Chor Lin Chan Yu Ching, Eugene Wong Ching Ming, Stanley Yeung Yuk Lun Independent Non-executive Directors Dr. Li Sau Hung, Eddy Lo Kwok Kwei, David Mar, Selwyn Appointment, Re-election and Removal of Directors The Bye-laws of the Company contain provisions for the appointment, re-election and removal of Directors. Appointment of Directors Subject to the bye-law 86(1) of the Bye-laws of the Company, the Directors shall be elected or appointed in the first place at the statutory meeting of the members and thereafter at the annual general meeting. However, the Board shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the Board or, subject to authorisation by the members in general meeting, as an addition to the existing Board subject to bye-law 86(2) of the Company s Bye-laws. 86(1) 86(2) Annual Report

26 Corporate Governance Report (Continued) Re-election of Directors Bye-law 86(2) of the Company s Bye-laws provides that any Director so appointed by the Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election at that meeting. Pursuant to byelaw 87 of the Company s Bye-laws, one-third of the Directors for the time being shall retire from office by rotation, provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every three years at the annual general meeting. 86(2) 87 Removal of Directors Under bye-law 86(4) of the Company s Bye-laws, the members may, at any general meeting and by an ordinary resolution, remove a Director at any time before the expiration of his or her period of office provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting, such Director shall be entitled to be heard on the motion for his or her removal. BOARD DIVERSITY The Group adopted the Board Diversity Policy on 1 August A summary of this policy, together with the implementation are disclosed as below. Summary of Board Diversity Policy The Board Diversity Policy aims to set out the approach to achieve diversity on the Board of the Company. To achieve a sustainable and balanced development, the Company encourages increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives and its sustainable development. In designing an appropriate composition of the Board, the diversity of the Board has been considered from a number of perspectives, including but not limited to gender, age, educational background, professional experience, skills, knowledge and length of service. All Board appointments will be based on meritocracy and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board. 86(4) MAN YUE TECHNOLOGY HOLDINGS LIMITED

27 Corporate Governance Report (Continued) Implementation of Board Diversity Policy The Nomination Committee reviews the composition of the Board from diversified angles and summarised as follows: Education background Overseas 5 Hong Kong 2 Designation ED 4 INED 3 Gender Male 6 Female 1 BOARD DIVERSITY INED : Independent Non-executive Director ED : Executive Director INED : ED : Professional experience Professional associated 6 Entrepreneur 1 Age group 35-45: : 3 66: 2 Length of service (year) 1-5: : 1 11: 5 Annual Report

28 Corporate Governance Report (Continued) RESPONSIBILITIES OF DIRECTORS The Directors are collectively responsible for promoting the success of the Company by directing and supervising the Company s affairs. The Chairman leads the Board to formulate corporate mission, visions and policies of the Group and to ensure that all Directors are properly briefed on issues. All EDs take an active interest in the affairs of the Company with a good understanding of the business, and play important roles in the daily operations and management of the Company, whilst all INEDs participate in the Board meetings and bring their independent views and judgments on various issues. Each of the INEDs has been appointed with a formal letter of appointment setting out the terms and conditions of their respective appointment. Prior to their respective appointment, each of the INEDs has submitted a written confirmation to the Company and the Stock Exchange confirming their independence and has undertaken to inform the Company and the Stock Exchange as soon as practicable if there is any subsequent change of circumstances which may affect their independence. INEDs provide the Group with a wide range of skills, expertise and varied backgrounds and qualifications through their regular attendance at various committee meetings and to provide operations on the affairs of the Company. They bring independent opinion and judgment on the strategy and policies to ensure that the interests of all shareholders are taken into account. The Company reviews annually and obtains confirmation of independence from each of the INEDs during their respective terms of appointment. During the Year, the Company received written confirmation from each of the INEDs his independence with reference to rule 3.13 of the regarding Listing Rules. Based on the confirmations, the Company considers that the all INEDs are independent, in compliance with the Listing Rules requirements MAN YUE TECHNOLOGY HOLDINGS LIMITED

29 Corporate Governance Report (Continued) Directors Securities Transactions As mentioned above, the Company has made specific enquiry to all Directors and all of them confirmed that they had fully complied with the required standard as set out in the Model Code during the Year. Directors and Officers Indemnity The Company continues to subscribe for an insurance policy to indemnify the Directors and senior executives from any losses, claims, damages, liabilities and expenses, including without limitation, any proceedings brought against them, arising from the performance of his or her duties pursuant to his or her appointment under his or her respective service agreement entered into with the Company. The current policy has been renewed and shall be under regular review. Corporate Governance Functions The Board is responsible for performing the following corporate governance duties: 1. to develop and review the Company s policies and practices on corporate governance and to make appropriate recommendations to the Board; to review and monitor the training and continuous professional development of Directors and senior management; to review and monitor the Company s policies and practices on compliance with legal and regulatory requirements; to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and Directors; and to review the Company s compliance with the Model Code and disclosure in the Corporate Governance Report. 5. Annual Report

30 Corporate Governance Report (Continued) DELEGATION BY THE BOARD While at all times the Board retains full responsibility for guiding and monitoring the operations of the Group, the Board delegated certain responsibilities to the senior management team of the Company, including the day-to-day operations of the Group. Such senior management team is accounted for their performance to the Board. During the Year, EDs frequently met and discussed with the senior management team in order to maintain an effective feedback system and enable the Group to react to changes or problems quickly and efficiently. The Board shall review its arrangement on delegation of responsibilities and authority regularly to ensure that such delegations are appropriate in view of the Company s prevailing circumstances and that appropriate reporting system is in place. Each Director is free to seek advice from and has access to the Company s senior management team independently. BOARD COMMITTEES The Board currently has three committees, namely the Audit Committee, the Remuneration Committee and the Nomination Committee. All the committees are empowered by the Board under their own terms of reference which have been posted on the websites of the Stock Exchange and the Company and are available for inspection by the shareholders of the Company upon request made to the Company Secretary. Audit Committee The Audit Committee is comprised of three INEDs, namely: Mr. Mar, Selwyn (Chairman) Dr. Li Sau Hung, Eddy Mr. Lo Kwok Kwei, David 28 MAN YUE TECHNOLOGY HOLDINGS LIMITED

31 Corporate Governance Report (Continued) The Board considers that each Audit Committee member has extensive commercial experience and the Audit Committee has a suitable mix of expertise in commercial, financial and legal sectors and that the composition and establishment of the Audit Committee comply with the requirements under rule 3.21 of the Listing Rules The Audit Committee is primarily responsible to assist the Board in providing an independent view on the effectiveness of the financial process and internal control system of the Group. It is empowered by the Board and its responsibilities and powers are set forth in the terms of reference. The committee members shall meet at least twice every year to consider the interim and final results prepared by the Board. During the Year, the Audit Committee met four times, together with an additional meeting with external auditor for special audit planning. The attendance of individual Directors at the Audit Committee meetings is set out on page 34 and page 31 respectively of this Annual Report The following is a summary of work performed by the Audit Committee during the Year: 1. Reviewed the financial reports for the year ended 31 December 2014 and for the interim period ended 30 June 2015 The Audit Committee reviewed the Group s audited consolidated financial statements for the year ended 31 December 2014 and the unaudited interim financial information for the interim period ended 30 June It was of the opinion that such financial statements complied with the applicable accounting standards, the Listing Rules and the relevant legal requirements, and that adequate disclosures had been made. 1. Annual Report

32 Corporate Governance Report (Continued) 2. Reviewed and recommended to the Board for the appointment of PricewaterhouseCoopers as the external auditor of the Company for the Year The Audit Committee reviewed and considered the appointment of PricewaterhouseCoopers ( PwC ) as the external auditor of the Company for the Year. It also reviewed the remuneration payable to PricewaterhouseCoopers, for the services provided during the Year as follows: 2. Fees paid/ payable Services rendered by External Auditor HK$ 000 Audit services 1,525 Non-audit services (Note) 427 Total 1,952 The Audit Committee reflected its view to the Board that the remuneration payable to the Company s external auditor was reasonable and fair in all circumstances and there had been no major disagreement between the external auditor and the management of the Company during the Year. Note: the fee paid for non-audit services including review of interim financial information, work performed on the preliminary announcement of results of the Group and tax compliance services. 3. Reviewed the internal audit work In connection with the internal control review conducted in the Year, the Audit Committee periodically reviewed the internal audit work and had regular meetings with the internal auditor of the Company to follow up on the findings being identified in the assessment reports prepared by the internal auditor of the Company. The Audit Committee members were of the view that the key areas of the Company s internal control system had been reasonably implemented and no material issues calling for concerns by the Board MAN YUE TECHNOLOGY HOLDINGS LIMITED