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UNITED FOOD HOLDINGS LIMITED
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UNITED FOOD HOLDINGS LIMITED - BMG9232V1054 - U01
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Annual Reports and Related Documents
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Annual Report 2014
United Food Holdings Limited
Annual Report 2014
CONTENTS
01
Our Core Business
13
Key Executives
02
Chairman’s Message
14
Corporate Governance
03
Distribution Network
27
04
Financial Highlights
66
Statistics Of Shareholdings
68
Notice Of Annual General Meeting
06
12
4
Management Discussion
And Analysis
Board Of Directors
Financial Contents
/Financial Calendar
United Food Holdings Limited
Annual Report 2014
OUR
CORE BUSINESS
OUR
COMPANY
UNITED FOOD HOLDINGS LIMITED engages in the
production and supply of soybean products and
animal feeds in the People’s Republic of China.
As a responsible corporate citizen, we endeavour
to promote healthy environment practices in our
area of operations.
1
United Food Holdings Limited
Annual Report 2014
CHAIRMAN’S
MESSAGE
DEAR
SHAREHOLDERS,
On behalf of the Board of Directors (“the Board”) of United
Food Holdings Limited (the “Company” or together with
its subsidiaries, the “Group”), I am pleased to present to
you, the Annual Report together with the Audited Financial
Statements of the Group and the Company for the financial
year ended 31 December 2014 (“FY2014”).
PERFORMANCE REVIEW
The Group has managed to turn around its performance
for FY2014 mainly due to the decrease in the soybean raw
material cost. The decrease in the cost of soybean was a
result of a global bumper harvest in FY2014.
In the second quarter of FY2014, the Group commenced
the new production lines for hydrated phospholipids
and soapstock (both are by-products from soybean
processing). The new production lines generated a new
source of revenue and profit for the Group during the year.
Although the revenue generated was not significant to the
Group, it had an impact in improving the gross margin of
the Group’s soybean processing division.
Due to unfavourable conditions for the Group’s pig rearing
business and its dim prospects, the Group has ceased its
pig rearing operations in the second quarter of FY2014.
All the fixed assets, except the land use rights, had been
fully depreciated and all of the Group’s pigs stock had also
been sold in FY2014. Management and the Board are
reviewing the possible uses of the land vacated by the
Group’s pig rearing business and will make the appropriate
strategic decision when the opportunity arises.
The results of the Group’s animal feed division had been
uplifting with a narrower loss in FY2014 compared to the
financial year ended 31 December 2013 (“FY2013”). This
was a result of the increase in the selling price of the feed
products. The Group will continue to fine-tune its operating
strategies to adapt to the market changes.
For FY2014, the Group managed to remain in a healthy
financial and cash flow position. With shareholders’ funds
of approximately RMB1.41 billion as at 31 December 2014,
a debt-free capital structure and a strong liquidity position,
the Group is well-equipped to deal with the challenges in
2015.
I wish to assure shareholders that the Board is mindful
of the need to further optimize the Group’s returns on
shareholders’ funds.
DIVIDEND
The Board has recommended a final dividend of RMB0.47
cent per share, amounting to approximately RMB5.17
million or equivalent to approximately 20% of the Group’s
net profit for FY2014.
Subject to the approval of the shareholders at the Annual
General Meeting on 22 April 2015, the final dividend will be
paid on 5 June 2015.
PROSPECTS
Despite the challenges and uncertainties ahead, the
Group is conservatively optimistic about the operating
environment in 2015.
The Group will continue to sustain its core business and
assets to create good value for the shareholders and be
diligent in strengthening its competitive edge and vigilant
on its cost controls.
ACKNOWLEDGEMENT
On behalf of the Board, I would like to extend our heartfelt
gratitude to the management team and employees of the
Group for their undivided loyalty and unstinting commitment.
We would like to take this opportunity to express our
appreciation to our shareholders for their confidence and
support during the year. We also take this opportunity to thank
our valued customers, business partners and all relevant
authorities for their confidence, patience and continued
support and co-operation rendered during the year.
Last but not least, I would like to thank my fellow Board
members for their wise counsel, unfailing guidance and
tremendous support in steering the Group throughout this
difficult operating climate.
David Yip Wai Sun
Non-Executive Chairman
2
United Food Holdings Limited
Annual Report 2014
DISTRIBUTION
NETWORK
3
United Food Holdings Limited
Annual Report 2014
FINANCIAL
HIGHLIGHTS
2014
RMB’000
2013
RMB’000
Change
%
5,080,301
5,042,986
0.74
Gross Profit / (Loss)*
72,176
(65,658)
+
Profit / (Loss) from Operations*
43,616
(98,291)
+
Profit / (Loss) Before Tax*
43,616
(98,291)
+
Profit / (Loss) After Tax*
43,616
(98,291)
+
Profit / (Loss) Attributable to Shareholders
25,563
(108,958)
+
Shareholders’ Fund
1,410,728
1,385,165
1.85
Total Assets
1,463,443
1,665,742
(12.14)
52,715
280,577
(81.21)
Revenue*
Total Liabilities
N/M
N/M
N/M
N/M
N/M
Change
%
Profitability Ratios
Gross Margin*
1.42%
(1.30%)
+
Operating Margin*
0.86%
(1.95%)
+
Return on Revenue
0.50%
(2.13%)
+
Return on Average Equity
1.83%
(7.56%)
+
Return on Average Assets
1.63%
(6.41%)
+
N/M
N/M
N/M
N/M
N/M
*Continuing Operations
Change
%
Per Share Data (Notes)
128.15
125.83
b. Earnings / (Loss) (cents)
2.32
(9.84)
+
c. Gross Dividend (cent)
0.47
0
+
a. Net Assets (cents)
1.84
N/M
N/M
Notes:
a. The net assets per ordinary share was calculated based on 1,100,808,740 shares (2013: 1,100,808,740 shares) in
issue as at 31 December 2014.
b. The basic earnings / (loss) per share was calculated based on the weighted average number of shares of
1,100,808,740 shares (2013: 1,107,473,990 shares) in issue during the year ended 31 December 2014.
c. The gross dividend per share was calculated based on 1,100,808,740 shares in issue as at 31 December 2014.
+
4
N/M – Not meaningful
United Food Holdings Limited
Annual Report 2014
FINANCIAL
HIGHLIGHTS
FIVE YEARS FINANCIAL SUMMARY
The results, assets and capital and reserves of the Group for the last five financial years are as follows:
Year Ended 31 December
Condensed Consolidated Income Statements (RMB’000)
Revenue*
Net profit/(loss) from
ordinary activities
attributable to
shareholders
2014
2013
2012
2011
2010
5,129,869
5,121,972
5,488,005
5,373,140
3,297,566
25,563
(108,958)
(255,050)
21,539
37,793
Condensed Consolidated Statements of Financial Position (RMB’000)
2014
2013
2012
2011
2010
330,033
389,418
453,877
581,117
673,301
52,482
63,521
74,560
85,599
96,638
Net current assets
1,028,213
932,226
968,783
1,089,891
972,690
Capital and reserves
1,410,728
1,385,165
1,497,220
1,756,607
1,742,629
Property, plant and
equipment
Land use rights
*For comparison purpose, the revenue from continuing operations has been combined with the revenue from discontinued operations.
5
United Food Holdings Limited
Annual Report 2014
MANAGEMENT
DISCUSSION AND ANALYSIS
The Group recorded a revenue of approximately RMB5.13
billion in FY2014 which was comparable to the revenue of
approximately RMB5.12 billion in FY2013.
1. Soybean Processing Division
1.1
Performance Review
The Group however managed to record a profit before
tax of approximately RMB25.56 million in FY2014 against
a pre-tax loss of approximately RMB108.96 million in
FY2013. This was mainly attributable to a decrease in the
cost of sales of the soybean processing division arising
from a decrease in soybean raw material cost.
Revenue & Profit and Loss
The Group’s soybean processing division
recorded a slightly higher revenue of
approximately RMB4.85 billion in FY2014
compared to approximately RMB4.83 billion in
FY2013.
A lower loss for the Group’s animal feed division in FY2014
was recorded as a result of an increase in the selling price
of the feed products.
The division recorded a profit of approximately
RMB41.18 million in FY2014 compared to a loss
of approximately RMB93.92 million in FY2013.
The turnaround was mainly attributable to a
decrease in the cost of sales resulting from a
decrease in soybean raw material cost. As a
result of the global soybean bumper harvest
in FY2014, soybean cost was lower in FY2014
compared to FY2013.
Revenue (By Activities)
RMB (million)
The Group’s pig rearing business had recorded losses
for three consecutive years since 2012 and as such, the
Group had ceased the operations in the second quarter
of FY2014 in view of its unfavourable conditions and dim
prospects.
6,000
4,846.29
4,829.69
5,000
4,000
3,000
234.01
2,000
213.29
49.57
78.99
1,000
0
Soybean Processing
Animal Feed
Pig Rearing
2014
2013
2014 Revenue (By Activities)
94.47%
4.56%
0.97%
6
Soybean
Processing
Animal
Feed
Pig
Rearing
2013 Revenue (By Activities)
94.29%
4.17%
1.54%
Soybean
Processing
Animal
Feed
Pig
Rearing
United Food Holdings Limited
Annual Report 2014
MANAGEMENT
DISCUSSION AND ANALYSIS
Soybean Processing
Animal Feed
Pig Rearing
Profit/Loss for the year
RMB (million)
200
150
100
41.18
50
0
-50
-100
-93.92
-150
-0.69
-5.32
-18.05
-10.67
-200
2014
2013
6,000
Total Assets
(By Million)
5,000
4,000
3,000
1,417.35
1,558.80
2,000
36.33
44.36
6.08
58.52
1,000
0
Soybean Processing
Animal Feed
Pig Rearing
2014
2013
2014 Total Assets (By Activities)
2013 Total Assets (By Activities)
97.09%
Soybean
Processing
2.49%
Animal
Feed
3.52%
Pig
Rearing
0.42%
Pig
Rearing
2.67%
Animal
Feed
93.81%
Soybean
Processing
7
United Food Holdings Limited
Annual Report 2014
MANAGEMENT
DISCUSSION AND ANALYSIS
The decrease in cost of sales coupled with
the profits derived from the small pack
edible soybean oil business line and the new
production lines for hydrated phospholipids and
soapstock, had lifted the overall gross margin
of the Group’s soybean processing division.
1.2
Soybean soapstock is a by-product of the
refinery process of crude soybean oil and they
were previously sold to third parties. Soybean
soapstock can be processed into oleic acid,
plant asphalt and solid acid, which can be used
for industrial purposes.
The construction of the plant had been
completed, with production commencing in the
second quarter of FY2014, generating a new
source of revenue and profit for the Group. The
gross margin of the soybean soapstock and
hydrated phospholipids were higher than other
soybean products of the Group, which helped
to improve the Group’s overall gross margin.
Small Pack Edible Soybean Oil Business Line
The small packs edible soybean oil business
line had generated a steady revenue in FY2014
although it was not significant.
Both the revenue and profit of this business
line had seen an increase in FY2014 since the
launch in FY2013.
In 2014, the Group no longer sells via
supermarkets but relied mainly on the edible
oil agents as a distribution channel for the
small packs oil. Such move had led to a wider
sales coverage, lowered the distribution costs
which resulted in the improvement of the gross
margin.
1.4
The import of soybean into the PRC, which
is the world’s largest soybean importer, had
increased by 12.65% from approximately 63.38
million tonnes in 2013 to approximately 71.40
million tonnes in 2014.
1.3Production
Lines
for
the
Hydrated
Phospholipids and Soapstock (Extension of the
Refinery Process of Crude Soybean Oil)
In
FY2013,
the
Group
commenced
construction of a plant for new production
lines to process the soybean soapstock and
hydrated phospholipids (by-products from the
soybean processing) to enhance the Group’s
revenue and performance as well as undertake
measures to protect the environment.
Hydrated phospholipids are a waste product
in the refinery process and are discharged with
water, which becomes a pollutant if it was not
further processed. Hydrated phospholipids can
be processed into lecithin, which can be used
as a nutritional additive in feed products.
8
Soybean Market Development in the People’s
Republic of China (the “PRC”)
The import and consumption of soybeans in the
PRC in the near term are expected to remain
strong while the demand for soybean meal and
soybean oil is expected to remain stable in the
near term.
1.5
Risk Factors
The primary risk lies in the difference in prices of
soybean raw material and the finished goods.
Raw material price fluctuation risk has been
identified as the major risk faced by the Group.
The profit margin is affected by the world
commodity
price
fluctuations,
market
conditions and further challenged by
constraints of government policies, as well as
the slowing of the PRC’s economy which will
reduce consumption.
United Food Holdings Limited
Annual Report 2014
The construction of new
production lines had
been completed, with
production commencing
in the second quarter of
FY2014, generating a new
source of revenue and
profit for the Group.
1.6Outlook
The outlook of the soybean processing division
remains conservatively optimistic in 2015.
The uncertainties, including price volatility of
commodities (including soybean), the global
and local economic environment and changes
in the relevant government policies and
measures in the PRC, and stiff competition
are the critical factors that would affect the
overall performance of the soybean processing
industry and the Group.
The Group will strive to enhance its performance
through managing and improving margins by
astute buying and exercising vigilance on costs
control.
Although revenue of the small pack oil business
line and production lines for the hydrated
phospholipids and soapstock are not expected
to be significant to the Group as a whole, they
would have a positive impact on the Group’s
overall performance. The Group will continue
to develop the brand name of its small pack
oil business and continue with its market
penetration efforts.
2. Animal Feed
The Group’s animal feed division recorded a higher
revenue of approximately RMB234.01 million in
FY2014, compared to approximately RMB213.29
million in FY2013. The division recorded a decrease in
the loss from approximately RMB5.32 million in FY2013
to approximately RMB690,000 in FY2014. This was
due mainly to an increase in the sales volume of pig
feed products, which were sold at a higher margin
compared to the poultry feed products.
Demand of the animal feeds is expected to remain
stable in the near term. However, fluctuations in raw
materials costs would affect the performance of this
division.
3. Pig Rearing
The Group’s pig rearing division generated a revenue
of approximately RMB49.57 million for FY2014 and
approximately RMB78.99 million for FY2013. Due to
losses recorded in the recent years and its dim
prospect, the Group’s pig rearing operations ceased
at the end of May 2014. All pigs stock had been sold
and all the property, plant and equipment under the pig
rearing operations were fully depreciated in FY2014.
The Group is reviewing the possible uses of the land
vacated by the pig rearing operations and will make
the appropriate strategic decision when an opportunity
arises.
Other Income and Gains
Other income and gains for FY2014 comprised mainly:
• Interest income of approximately RMB11.07
million (FY2013: RMB8.08 million). The increase
in interest income was due mainly to extensions
of the periods for letters of credit deposits;
• Government grants for pig
approximately
RMB396,000
RMB1.17 million); and
rearing of
(FY2013:
• Gain from sales of scrap and raw materials
of approximately RMB1.32 million (FY2013:
RMB429,000).
9
United Food Holdings Limited
Annual Report 2014
MANAGEMENT
DISCUSSION AND ANALYSIS
Administrative Expenses
Inventories
The increase in administrative expenses in FY2014 was
due mainly to an increase in tax expenses in connection
with the land use rights which were calculated based on
the land area. Due to the PRC statutory requirements, a
higher tax rate for the land use right was applied in 2014
compared to 2013.
The decrease in inventories was due mainly to the decrease
in prices of soybean raw material and finished goods.
Trade Receivables
Other Expenses, Net
There were no trade receivables as at the balance sheet
date as most of the sales transactions were conducted on
a cash basis.
The decrease in other expenses was mainly attributable to
the cessation of pig rearing business. Accordingly, there
was no recognition of change in fair value less estimated
costs for sale of biological assets as at 31 December 2014.
Trade Payables
The decrease in trade payables was due mainly to
settlements made in the year.
Income Tax Expense
Other Payables, Deposits Received and Accruals
The decrease in other payables, deposits received and
accruals was due mainly to settlements made in the year.
Corporate income tax has not been provided by the Group
as the assessable profits for the year have been offset by
the tax losses carried forward from prior years.
Cash Position and Liquidity
Linyi Shengquan Grease Co., Ltd. (a subsidiary of the
Company and incorporated in the PRC) is subject to a
corporate income tax rate of 25%. (FY2013: 25%).
The Group continued to
operate under a debt-free
capital structure with strong
liquidity position.
10
The Group continued to operate under a debt-free capital
structure with a strong liquidity position and ended the year
under review with cash and bank balances and deposits
of approximately RMB470.42 million (2013: RMB542.16
million) representing a net cash per share of approximately
RMB0.43 (2013: RMB0.49).
United Food Holdings Limited
Annual Report 2014
MANAGEMENT
DISCUSSION AND ANALYSIS
The Group has obtained sufficient trade facilities from the
banks for the procurement of soybeans.
Management has assessed the adequacy of the working
capital requirements of the Group and noted that the
working capital was maintained at a healthy level.
Exposure to Fluctuations in Exchange Rates
The businesses of the Group were mainly conducted in
Renminbi (“RMB”) except for the purchases of soybean
and the payment of certain expenses in United States
dollars, Singapore dollars and Hong Kong dollars. The
reporting currency of the Group is RMB.
Shareholders’ Equity
The Group’s shareholders’ equity increased from
approximately RMB1.39 billion as at 31 December 2013 to
approximately RMB1.41 billion as at 31 December 2014,
due mainly to the profit recorded for the year.
The Directors are of the view that RMB is relatively stable
against the relevant currencies and the Group will closely
monitor the fluctuations in exchange rates, and that
hedging by means of derivative instruments is therefore
not necessary.
Contingent Liability
The Group had no contingent liabilities as at 31 December
2013 and 31 December 2014.
Employees
As at 31 December 2014, the Group had a total of 922
employees (2013: 1,091).
11
United Food Holdings Limited
Annual Report 2014
BOARD OF
DIRECTORS
David Yip Wai Sun
Non-Executive Chairman
Mr David Yip is one of the 3 founders of the Group. He was
first appointed to the Board on 30 August 2000. As NonExecutive Chairman, Mr David Yip is responsible for the
Group’s overall corporate policies and implementation of
business strategies. He is an entrepreneur with considerable
experience in the manufacturing and trading sectors
specialising in metal products and international trade as
well as investments. He obtained his Bachelor’s degree
in International Trade from the University of International
Economics and Business in Beijing, China. Prior to his
appointment, Mr David Yip held several senior management
positions in companies incorporated in Hong Kong.
Mr David Yip is also a member of the Audit and Nominating
Committees.
Wang Tingbao
Executive Vice Chairman
Mr Wang Tingbao is a co-founder of the Group. He was first
appointed to the Board on 30 August 2000 and was last
re-elected on 20 April 2012. As Executive Vice Chairman
and Chief Executive Officer, Mr Wang Tingbao charts the
corporate directions and strategies as well as oversees the
Group’s day-to-day operations.
Mr Wang Tingbao graduated from the Yishui Medical College
and had practised as a medical physician in the Coal Mining
Hospital at Linyi, Province of Shandong, China. Mr Wang
obtained his Master’s degree in Economic Management
from the Beijing Industry and Commerce University in 1999.
Mr Wang Tingbao has considerable industrial and
commercial experience in the manufacturing of ceramics.
Prior to his appointment, Mr Wang Tingbao held the
managerial position in the Luozhuang Ceramic Factory
overseeing the entire production planning, purchasing,
human resources and capital budgeting for the firm.
Besides serving as the Executive Vice Chairman for Group,
Mr Wang also serves as a member of the Remuneration
Committee.
Sitoh Yih Pin
Independent Director
Mr Sitoh was also the director of several publicly listed
companies in the preceding 5 years including Chinasing
Investment Holdings Limited, Meiban Group Pte Ltd, Nera
Telecommunications Ltd and PNE Micron Holdings Ltd. Mr
Sitoh holds a Bachelor of Accountancy (Honours) degree from
the National University of Singapore and is a Fellow member
of both the Institute of Singapore Chartered Accountants and
the Institute of Chartered Accountants in Australia.
Fu Qiang
Independent Director
Mr Fu Qiang was appointed as an Independent Director
of the Company on 28 May 2004 and was last re-elected
on 25 April 2013. He is currently the General Manager of
Shandong Linyi Light Industry Company Limited. Mr Fu
Qiang is also an instructor for the local companies in share
composition restructuring and consultant to the local
companies in assets restructuring and matters related to
the capital markets.
Mr Fu Qiang graduated from the Chinese Language
Faculty, Linyi Teaching College in 1985. He further pursued
his Corporate Management Degree from the Shandong
Economics College in 1994. He attained his Graduate
Research Study specialised in Business Administration from
the University of Science and Technology China in 2002. In
1998, Mr Fu was awarded the title of Senior Economist by
the Shandong Economic Bureau.
Prior to his appointment, Mr. Fu Qiang served as the secretary
of the Local Economics Committee from 1980-1986. He
then served as a member of the System Development and
Reform Committee, Linyi City in 1987-1998. Mr Fu Qiang is
a member of the Audit Committee.
Lee Teck Leng
Independent Director
Mr Lee Teck Leng (48 years old) was appointed as an
Independent Director of the Company on 6 July 2011 and
was last re-elected on 28 April 2014. He is a practising
lawyer with more than 20 years of experience. He is
currently a Director in LEE chambers LLC, a boutique
litigation practice. Mr Lee Teck Leng specialises in criminal
litigation. He has acted for several companies listed on the
SGX, and for numerous directors and senior executives of
listed companies and Government Link Companies.
Mr Sitoh was appointed as an Independent Director of
the Company on 1 December 2000 and was last reelected on 25 April 2013. He serves as Chairman of the
Remuneration Committee and is also a member of the Audit
and Nominating Committees. Mr Sitoh does not hold any
shares in the Company or any of its subsidiaries.
Prior to joining private practice, Mr Lee Teck Leng was a
Judge in the Subordinate Courts (now known as State
Courts) and a Deputy Public Prosecutor in the Commercial
Affairs Department. He graduated from the National
University of Singapore with a Second Class (Upper
Honours) Law Degree on a Public Service Commission
scholarship.
Mr Sitoh is a Chartered Accountant and a director of Nexia
TS Public Accounting Corporation. Mr Sitoh is the Member
of Parliament for Potong Pasir constituency. He is also
presently a director of several publicly listed companies
comprising Allied Technologies Limited, Lian Beng Group
Ltd, Talkmed Group Limited and ISEC Healthcare Ltd.
Mr Lee Teck Leng is currently also an independent director
in Advanced Integrated Manufacturing Corp. Ltd. In the
preceding 3 years, he was an independent director in
Equation Corp Ltd (resigned on 1 September 2011) and
Asiasons Capital Ltd (retired on 28 April 2014).
12
United Food Holdings Limited
Annual Report 2014
KEY
EXECUTIVES
Li Ai
Chief Operating Officer
Hung Chung Wah, George
Chief Financial Officer
Prior to joining the Group, Ms Li served as an account
executive at the Linyi Woven & Textile Company. She was
appointed the Group’s chief accountant based in China
since 1993. In the middle of 2008, she was promoted to
be the Assistant Chief Operating Officer, assisting Mr. Li
Jian Ren, the ex-Chief Operating Officer in running various
aspect of daily operation routine. Ms Li Ai was promoted
further as the successor of Mr. Li Jian Ren, Group’s Chief
Operating Officer in September 2009.
Mr Hung joined the Group on 1 March 2010 and is in charge
of the Group’s financial management and operations. Prior
to joining the Group, he held managerial positions, qualified
accountant and company secretary in several public listed
companies in Hong Kong. His past experience included
auditing for public listed companies, participation in initial
public offering for multinational corporations located in the
People’s Republic of China and merger and acquisition.
He holds a BBA (Hons) Accountancy degree from the City
University of Hong Kong. He is a member of the Hong
Kong Institute of Certified Public Accountants and a fellow
member of Association of Chartered Certified Accountants.
Apart from her tertiary education, Ms. Li is also a qualified
accountant in China.
13
CORPORATE
INFORMATION
Board of Directors
David Yip Wai Sun, Non-Executive Chairman
Wang Tingbao, Executive Vice Chairman
Sitoh Yih Pin, Independent Director
Fu Qiang, Independent Director
Lee Teck Leng, Lead Independent Director
Management Team
Wang Tingbao, Chief Executive Officer
Li Ai, Chief Operating Officer
Hung Chung Wah, George, Chief Financial Officer
Nominating Committee
Lee Teck Leng, Chairman
Sitoh Yih Pin
David Yip Wai Sun
Remuneration Committee
Sitoh Yih Pin, Chairman
Lee Teck Leng
Wang Tingbao
Audit Committee
Lee Teck Leng, Chairman
David Yip Wai Sun
Sitoh Yih Pin
Fu Qiang
Company Secretaries
Yeo Poh Noi Caroline, FCIS
Josephine Toh Lei Mui, ACIS
Assistant Company Secretary
Codan Services Limited
Registered Office
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Tel: [1] (441) 295 5950
Fax: [1] (441) 292 4720
Business Office
Shenquan Village,
Luozhuang District
Linyi City, Shandong Province
The People’s Republic of China
Postal Code 276017
Tel: [86] (539) 7106 688
Fax: [86] (539) 7100 333
Hong Kong Office
Room 1012, 10/F., Wing On Centre
111 Connaught Road, C
Sheung Wan, Hong Kong
Tel: [852] 2851 6688
Fax: [852] 2851 6788
Share Transfer Agent
Boardroom Corporate &
Advisory Services Pte. Ltd.
50 Raffles Place #32-01
Singapore Land Tower
Singapore 048623
Share Registrar
Codan Services Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Tel: [1] (441) 295 5950
Auditors
Ernst & Young
Certified Public Accountants
22/F., CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Tel: [852] 2846 9888
Fax: [852] 2868 4432
Audit Partner-in-charge
Huang Yin, William
w.e.f. financial year 31 December 2012
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The Board and Management of United Food Holdings Limited strive to maintain high standards of corporate governance
to ensure greater transparency and to protect the interests of its shareholders. The Board’s commitment to good
corporate governance practices is essential for Directors to discharge their corporate and ﬁduciary responsibilities and
fundamental in the enhancement of long-term shareholders’ value.
The Board has taken steps to align the Group’s governance framework with the recommendations of the Code of
Corporate Governance 2012 (“the Code”), where they are applicable, relevant and practicable to the Group.
(A)
Board Matters
Board’s Conduct of its Affairs
Principle 1:
Every Company should be headed by an effective Board to lead and control the Company.
The Board is collectively responsible for the long-term success of the company. The Board
works with Management to achieve this and Management remains accountable to the Board.
The Board is responsible for the overall performance of the Group. It sets the Group’s strategic direction and
vision and directs the Group’s overall strategy, policies, business plans, as well as, stewardship and allocation of
the Group’s resources.
The principal functions of the Board include, but are not limited to the following:


Reviewing and approving board policies, strategies and ﬁnancial objectives for the Group and monitoring
the performance of Management;


Overseeing the processes for evaluating the adequacy of internal controls, risk management, including
ﬁnancial, operational and compliance risk areas identiﬁed by the Audit Committee that needed to be
strengthened for assessment and the Audit Committee’s recommendations on actions to be taken to
address and monitor the areas of concern;


Approving major funding proposals, investment and divestment proposals including merger and acquisition
transactions and timely announcements of material transactions;


Approving quarterly and full year results announcements;


Recommending the declaration of dividends;


Approving all appointments/re-appointments/re-elections of Directors and appointment of key
management personnel;


Setting of the Group’s value and standards, and ensuring that obligation to shareholders and others are
understood and met; and


Assuming responsibility for corporate governance.
The Board’s approval is required for matters, inter alia, corporate restructuring, mergers and acquisitions,
investments and divestments, acquisitions and disposals of assets, major corporate policies on key areas
of operations, acceptance of bank facilities, the Group’s quarterly and full year’s results and interested person
transactions.
The Board is supported by Board Committees including, the Audit Committee (“AC”), Nominating Committee
(“NC”) and Remuneration Committee (“RC”). These committees function within clearly deﬁned terms of reference
and operating procedures. All committees are chaired by an Independent Director and consist of a majority of
non-executive Directors. The ultimate responsibility for the ﬁnal decision on all matters, however, lies with the
Board. Further details of the scope and functions of the various Board Committees are set out in this Annual
Report.
The Board has scheduled 4 meetings a year to coincide with the announcements of the Group’s quarterly and full
year results. Additional meetings are convened as and when they are deemed necessary to address signiﬁcant
transactions or issues that may arise in between the scheduled meetings.
14
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
Where a physical Board meeting is not possible, the Company’s Bye-laws provide for meetings to be held via
telephone, electronic or other communication facilities which permits all persons participating in meetings to
communicate with each other simultaneously.
Directors may request for further explanation, brieﬁng or discussion on any aspect of the Group’s operations or
business from the Management. When circumstances require, Board members exchange views outside the formal
environment of Board meetings.
Directors’ attendances at Board and Board Committee meetings in FY2014, as well as the frequency of such
meetings, are set out below:
Total meetings held during FY2014
Wang Tingbao
David Yip Wai Sun
Sitoh Yih Pin
Fu Qiang
Lee Teck Leng
Board
Meetings
4
AC
Meetings
4
RC
Meeting
1
NC
Meeting
1
4
4
4
4
4
–
4
4
4
4
1
–
1
–
1
–
1
1
–
1
The Group encourages Directors to receive regular training and updates on relevant laws and regulations and to
participate in conferences, seminars or any training programme to equip themselves with the relevant knowledge
to discharge their responsibilities in an effective and efﬁcient manner.
Newly appointed Directors receive orientation and training, if necessary, to familiarize themselves with the Group’s
business activities, strategic direction and the regulatory environment in which the Group operates in, as well as
their statutory and other duties and responsibilities as Directors. Directors would also be provided with extensive
background information on the Group’s history, industry-speciﬁc knowledge, mission, and values. Directors are
also given the opportunity to visit the Group’s operational facilities and to interact with Management to gain a
better insight of the Group’s business operations.
Newly appointed Directors will also be given letters explaining the terms of their appointment as well as their
duties and obligations.
The Board is updated on amendments/requirements of the Singapore Exchange Securities Trading Limited (“SGXST), and other statutory and regulatory requirements and key changes in ﬁnancial reporting standards from time to
time.
Board Composition and Balance
Principle 2:
There should be a strong and independent element on the Board, which is able to exercise
objective judgment on corporate affairs independently, in particular, from Management and
10% shareholder. No individual or small group of individuals should be allowed to dominate
the Board’s decision making.
The Board comprises 5 members, three of whom are independent.
Non-Executive Director:
Mr David Yip Wai Sun (Chairman)
Executive Director:
Mr Wang Tingbao (Vice Chairman)
Independent Directors:
Mr Sitoh Yih Pin
Mr Fu Qiang
Mr Lee Teck Leng
15
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The Board comprises Directors from diverse business, industry, management, ﬁnancial and legal backgrounds.
The Directors bring with them a wide spectrum of skills, experience, expertise and objective perspective to
effectively lead and direct the Group. The diversity of the Directors’ experience allows meaningful exchange of
ideas and views in the development of the Group’s strategy and performance. The proﬁles of the Directors are set
out on page 12 of this Annual Report.
At least one-third of the Board comprises independent Directors. The independent Directors offer alternative views
to the Group’s business and corporate activities and bring objective judgment to bear on business activities as
well as, transactions involving conﬂicts of interest and other complexities.
The Directors have given due consideration to the size and composition of the Board. The composition of the
Board is reviewed on an annual basis by the NC to ensure that the Board has the appropriate mix of expertise
and experience, and collectively possess the necessary core competencies for effective and informed decisionmaking. The Board considers the present Board size appropriate and effective, taking into the account the size,
scope and nature of the Group’s operations.
The NC also reviews the independence of each Director annually with reference to the guidelines set out in
the Code, noting that the guidelines are not an exhaustive list. The Board will then, in turn, determine the
independence of Directors, taking into account the evaluation by the NC. The NC with the concurrence of the
Board is of the view that no individual or small group of individuals dominates the Board’s decision-making
process.
Non-Executive Directors contribute to the Board process by monitoring and reviewing Management’s performance
against goals and objectives. Their views and opinions provide alternative perspectives to the Group’s business.
When challenging Management’s proposals or decisions, they bring independent judgement to bear on business
activities and transactions involving conﬂicts of interest and other complexities. The Non-Executive Directors also
communicate regularly to discuss matters such as the Group’s ﬁnancial performance, corporate governance
initiatives and hold informal meetings without the presence of Management.
Chairman and Chief Executive Officer
Principle 3:
There should be a clear division of responsibilities between the leadership of the Board and
the executives responsible for managing the company’s business. No one individual should
represent a considerable concentration of power.
Mr David Yip Wai Sun is the Group’s Non-Executive Chairman. Mr Wang Tingbao, the Group’s Executive Vice
Chairman, effectively functions as the Chief Executive Ofﬁcer (“CEO”). They are not related to each other and each
performs separate functions to ensure an appropriate balance of power and authority and greater capacity of the
Board for independent decision.
The Chairman is responsible for the implementation of corporate policies and effective working of the Board. He
ensures that Board meetings are held when necessary, encouraging constructive discussion and sharing of views
among Board members.
The Vice Chairman is mainly responsible for the ﬁnancial and operational performance of the Group, including
reviewing and charting the Group’s corporate directions and strategies, ﬁnancial planning and related investment
activities. He ensures that corporate policies are properly complied with and works closely with the Chairman to
review corporate and other business issues. He also ensures the quality and timeliness of the ﬂow of information
between Management and the Board.
This division of responsibilities ensures that there are checks and balances on their individual power and authority
within the Group.
Mr Lee Teck Leng was appointed as the Lead Independent Director on 4 November 2013. As the Lead
Independent Director, Mr Lee is available to shareholders in the event their concerns are not resolved through the
Chairman, the Vice Chairman or the Chief Financial Ofﬁcer (“CFO”), or for which contact is inappropriate.
16
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
Board Membership
Principle 4:
There should be a formal and transparent process for the appointment and re-appointment
of directors to the Board.
The NC is regulated by a set of written terms of reference. The majority, including the NC Chairman, are
Independent Directors. Members of the NC are:
Mr Lee Teck Leng (Chairman, Lead Independent Director)
Mr Sitoh Yih Pin
Mr David Yip Wai Sun
The principlal functions of the NC are as follows:


reviewing and recommending to the Board the structure, size and composition of the Board and Board
Committees;


identifying candidates and reviewing all nominations for the appointment to the Board and Board
committees, having regard to the mix of skills and experience which the Directors should bring to the
Board and submission of such nominations to the Board for consideration;


reviewing and determining annually, the independence of Directors, bearing in mind the circumstances set
forth in the Code and any other salient factors;


considering and making recommendations to the Board on all Board appointments/re-appointments,
including nomination of Directors retiring by rotation, having regard to the Directors’ contribution and
performance;


reviewing and evaluating whether or not a Director is able to and has been adequately carrying out his
duties as a Director, particularly when he has multiple board representations;


deciding how the Board’s performance may be evaluated and proposing objective performance criteria for
the Board’s approval; assessing the effectiveness of the Board and Board Committees;


reviewing succession plans, in particular, the Chairman and CEO and


overseeing the induction, orientation and training for any new and existing Directors.
The NC had adopted a process for the selection and appointment of new Directors which provides the procedure
for identiﬁcation of potential candidates’ skills, knowledge, experience and assessment of candidates’ suitability.
The curriculum vitae and other particulars/documents of the nominee or candidate will be reviewed by the NC,
inter alia, his/her qualiﬁcations, business and related experience, commitment, ability to contribute to the Board,
such other qualities and attributes that may be required by the Board, before making its recommendation to the
Board. No new Director was appointed during FY2014.
The NC meets at least once a year.
In accordance with the provisions of the Company’s Bye-Laws, one-third of the Directors is to retire from the
ofﬁce by rotation and submit themselves for re-nomination and re-election at every AGM. Each Director is also
requested to retire at least once in every three years. New Directors, who are appointed during the ﬁnancial year,
will submit themselves for re-election at the next AGM.
Pursuant to Bye-law 86(1) of the Company’s Bye-laws, Mr Wang Tingbao will be retiring at the forthcoming Annual
General Meeting (“AGM”). Mr Wang Tingbao has signiﬁed his consent to remain in ofﬁce.
17
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The NC having considered the attendance and participation of Mr Wang Tingbao at the Board and Board
Committee meetings, in particular, his contribution to the business and operations of the Group had nominated Mr
Wang Tingbao for re-election at the forthcoming AGM. The Board has accepted the NC’s recommendation on the
re-election of Mr Wang Tingbao at the forthcoming AGM.
Each member of the NC shall abstain from voting on any resolutions and/or participating in deliberations in
respect of his re-election as Director.
The NC had also reviewed the independence of the Board members and, is of the opinion that Mr Fu Qiang, Mr
Lee Teck Leng and Mr Sitoh Yih Pin are independent.
The NC has also noted that the provisions of the Code require the NC and Board to consider, where a Director
has served for a period of more than nine years from the date of his appointment, whether he continues to be
independent. In this respect, the NC had noted that Mr Sitoh Yih Pin who was appointed in December 2000 and
Mr Fu Qiang who was appointed in May 2004 had both served the Board for more than nine years. Both Mr Sitoh
Yih Pin and Mr Fu Qiang are also familiar with the history of the Group which the NC believes would add to the
continuity and stability of the Group.
In view that Mr Sitoh Yih Pin and Mr Fu Qiang continue to express their individual viewpoints, debate issues
and objectively scrutinize and challenge Management, the NC had determined that Mr Sitoh Yih Pin’s and Mr Fu
Qiang’s tenure had not affected their independence or ability to bring independent and considered judgement to
bear in their discharge of their duties as Board and Committee members.
The NC had recommended the independence of Mr Sitoh Yih Pin and Mr Fu Qiang to the Board and the Board
had accepted the NC’s recommendation.
A Director with multiple board representations is expected to ensure that sufﬁcient time and attention is given to
the affairs of the Group. The Board, with the concurrence of the NC, having considered the conﬁrmations received
from Mr Fu Qiang, Mr Lee Teck Leng and Mr Sitoh Yih Pin, is of the view that their multiple board representations
do not hinder them from carrying out their duties as Directors of the Company. The Board and the NC are also
satisﬁed that sufﬁcient time and attention have been accorded by these Directors to the affairs of the Company.
The NC is of the view that putting a maximum limit on the number of listed company board representations is
arbitrary, given that time requirements for each company vary, thus one should not be presumptuous as time
commitment cannot be objectively determined in all situations.
Board Performance
Principle 5:
There should be a formal assessment of the effectiveness of the Board as a whole and its
board committees and the contribution by each director to the effectiveness of the Board.
The Board has, through the NC, adopted a process to evaluate the effectiveness of the Board and its Board
Committees. No individual Director assessment is conducted as the NC is mindful that each member of the Board
contributes in different ways to the effectiveness of the Board. As part of this process, Directors would complete
a board performance evaluation questionnaires and the ﬁndings were analysed and discussed with a view to
implementing certain recommendations to further enhance the effectiveness of the Board and Board Committees.
The Board and Board Committees evaluation covers amongst others, the size and composition of the Board and
Board Committees, access to information, Board and Board Committees processes and accountability in relation
to discharging the principlal responsibilities of the respective Board and Board Committees and standards of
conducts of Board members.
Based on the NC’s review, the NC is generally satisﬁed with the Board and Board Committees evaluation results
for FY2014, which indicated areas for improvement with no signiﬁcant problems being identiﬁed.
Access to Information
Principles 6:
18
In order to fufill their responsibilities, Directors should be provided with complete, adequate
and timely information prior to Board meetings and on an on going basis so as to enable
them to make informed decisions to discharge their duties and responsibilities.
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The Board is furnished with detailed information concerning the Group to enable them to be fully apprised of
conditions and other factors affecting the Group’s operations and to understand the decisions and actions of
Management. All Directors have unrestricted access to the Group’s Management and information. From time to
time, Independent Directors meet with Management and conduct ad-hoc discussions on the Group’s business
and operational matters. Management staff are invited to attend Board Meetings, as and when appropriate, to
provide additional insight to matters raised, and to respond to any queries that the Board members may have.
Management provides Board members with detailed Board papers containing complete and timely information
before each meeting. Such Board papers and any other relevant documents are circulated to all Board members
before the meetings. Management provides periodic ﬁnancial and corporate information, performance of the
individual divisions within each business segment and management proposals to enable the Directors to make
informed decisions on issues to be considered at Board meetings.
The Company Secretary attends the Board and Board Committee meetings and is responsible for keeping
the Board updated on any relevant regulatory changes. The Company Secretary also ensures that established
procedures, all relevant rules, and regulations that are applicable to the Group are complied with.
The appointment and the removal of the Company Secretary shall be reviewed by the Board.
The Board has separate and independent access to Management and the Company Secretary at all times.
Directors are aware that they may seek independent legal and other professional advice at the Company’s
expense, as and when necessary.
(B)
Remuneration Matters
Procedures for Developing Remuneration Policies
Principle 7:
There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director
should be involved in deciding his own remuneration.
The RC is made up of a majority of independent Directors and is chaired by an Independent Director. Members of
the RC are:
Mr Sitoh Yih Pin (Chairman)
Mr Lee Teck Leng
Mr Wang Tingbao
The RC meets at least once annually.
The RC had decided to retain Mr Wang Tingbao, an Executive Director, as a member of the RC, after taking into
account the nature and scope of the Group’s operations and the size of the Board. The RC is of the view that Mr
Wang Tingbao is able to contribute to the effectiveness of the RC, with his knowledge of the Group’s operations
and the business and operational environment in which the Group operates in.
The principal functions of the RC are as follows :


recommend to the Board a framework of remuneration for the Board and key management personnel
of the Group with the aim of building a capable and committed Board and management team through
competitive compensation which is sufﬁcient to attract, retain and motivate key management personnel of
the required caliber to run the Group effectively;


determine speciﬁc remuneration packages and terms of employment for the Executive Director and key
management personnel, including renewal of service agreements;


review and recommend Directors’ fees for Non-Executive Directors, taking into account factors such as
their effort and time spent, and their responsibilities; and
19
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE


review whether the Executive Director and key management personnel should be eligible for beneﬁts under
any long-term incentive schemes which may be set up from time to time. If required, the RC will seek
expert advice inside or outside the Company on the remuneration of all Directors.
The review covers all aspects of remuneration, including but not limited to Directors’ Fees, salaries,
allowances, bonuses, and beneﬁts-in-kind. The remuneration packages take into consideration the longterm interests of the Group, industry standards, and ensure that the interests of the Executive Directors are
aligned with that of shareholders.
The RC has access to external expert advice in the ﬁeld of executive compensation where required.
Level and Mix of Remuneration
Principle 8:
The level and structure of remuneration should be aligned with the long-term interest and
risk policies of the company, and should be appropriate to attract, retain and motivate (a)the
directors to provide good stewardship of the company; and (b) key management personnel
to successfully manage the company. However, companies should avoid paying more than
is necessary for this purpose.
As part of its responsibilities, the RC reviews the remuneration of each of the Directors and key management
personnel’s remuneration packages annually and makes recommendations to the Board for approval. The RC
ensures that their remuneration commensurate with their performance, giving due regard to the ﬁnancial and
commercial performance and business needs of the Group and the performance of the individual Director.
The RC is of the view that the current remuneration of the Non-Executive Directors is appropriate, taking into
account factors such as effort and time spent and responsibilities of the Directors. Other than the Directors’ fees,
the Non-Executive Directors do not receive any other forms of remuneration from the Company.
The RC had recommended to the Board an amount of S$234,000 as Directors’ fees for the ﬁnancial year ending
31 December 2015, payable quarterly in arrears. The Board will table this at the coming AGM for shareholders’
approval. No Director or a member of the RC is involved in deciding his own remuneration.
DISCLOSURE ON REMUNERATION
Principle 9:
Every company should provide clear disclosure of its remuneration policies, level and mix of
remuneration, and the procedure for setting remuneration, in the Company’s Annual Report.
It should provide disclosure in relation to its remuneration policies to enable investors to
understand the link between remuneration paid to directors and key management personnel,
and performance.
The following table sets out the Directors’ Remuneration for FY2014:
Name of Directors
Mr
Mr
Mr
Mr
Mr
*
20
Wang Tingbao
David Yip Wai Sun
Sitoh Yih Pin
Fu Qiang
Lee Teck Leng
Fees
Salary
Total
–
*HKD600,000
SGD60,000
*RMB40,000
SGD60,000
RMB600,000
–
–
–
–
RMB600,000
HKD600,000
SGD60,000
RMB40,000
SGD60,000
These had been converted to SGD equivalent and approved by shareholders at the last AGM held on 28 April 2014.
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The Executive Director’s Service Agreement was for an initial period of 3 years, commencing 1 February 2001
and, is renewable for successive periods of one year each. The service agreement can be terminated by not less
than 3 months’ notice in writing by either party. Gross remuneration of the Group’s key management personnel for
FY2014 is set out below:
Name of Key Management Personnel
Below SGD250,000 per annum
Ms Li Ai
Mr Hung Chung Wah
Salary %
100
100
Notwithstanding Guideline 9.3 of the Code, there were only 2 key management personnel in FY2014 and
disclosure was only made in respect of these 2 key management of the Group. Total remuneration paid to these 2
key management personnel amounted to SGD172,200.
The Company does not have any long-term incentive schemes.
Ms Wang Yu, the Admin Manager of Globe Bright Limited, is the niece of Mr Wang Tingbao, Executive Director
and CEO and substantial shareholder of the Company. Her aggregate remuneration (salary, bonus and beneﬁts-inkind) did not exceed SGD50,000 for FY2014.
(C)
Accountability and Audit
Accountability
Principle 10:
The Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
In presenting the annual audited ﬁnancial statements, quarterly and full year results announcements to
shareholders, the Board aims to provide shareholders with detailed analysis, explanation and assessment of the
Group’s ﬁnancial position and prospects. Management also recognizes the importance of providing the Board with
relevant information on a timely basis in order that Directors may effectively discharge their duties.
Management provides the Board with monthly management accounts of the Group’s performance, supplemented
by updates on matters affecting the ﬁnancial performance and business of the Group, when necessary.
In line with the listing requirements of the SGX-ST, negative assurance statements were issued by the Board
to accompany the Group’s quarterly ﬁnancial results announcements conﬁrming to the best of the Board’s
knowledge that nothing had come to the Board’s attention which could render the Company’s results
announcements to be false and misleading. The Company is not required to issue negative assurance statement
for its full year results announcement.
Risk Management and Internal Controls
Principle 11:
The Board is responsible for the governance of risk. The Board should ensure that
Management maintains a sound system of risk management and internal controls to
safeguard shareholders’ interests and the company’s assets, and should determine the
nature and extent of the significant risks which the Board is willing to take in achieving its
strategic objectives.
The Board is of the view that the Group’s risk management process and system of internal controls are designed
to manage, rather than to eliminate, the risk of failure to achieve the Group’s strategic objectives. Action plans to
manage the risks are continually being monitored and reﬁned. The Board acknowledges that it is responsible for
the overall internal controls framework to safeguard shareholders’ interests and the Group’s business and assets,
but recognizes that no cost effective internal controls system will preclude all errors and irregularities. Such system
however could only provide reasonable but not absolute assurance against material misstatement or loss.
21
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The internal controls system stipulates a series of procedures and policies, which the Board believes, plays an
important role in assisting the Board and Management with respect to risk management.
Management regularly reviews the Group’s Company’s business and operational activities to identify areas
of signiﬁcant ﬁnancial, operational and compliance risks. Steps have been taken to document the operational
procedures to minimize the identiﬁed risks in various areas. Any signiﬁcant matters are reported to the AC and
Board.
As required under the Code, the Board had received written assurances from the Company’s CEO and CFO:

(a)
that the ﬁnancial records have been properly maintained and that the ﬁnancial statements give a true and
fair view of the Group’s operations and ﬁnances; and

(b)
regarding the effectiveness and adequacy of the Group’s risk management and internal control systems.
Based on the reviews of the internal auditors and Management’s assurance on the state of the Group’s internal
controls, the Board opines, with the concurrence of the AC, that there are adequate internal controls in place
within the Group addressing ﬁnancial, operational, information technology and compliance risks in its current
business environment.
Audit Committee
Principle 12:
The Board should establish an AC with written terms of reference which clearly set out its
authority and duties.
The AC comprises all Non-Executive Directors, a majority of whom, including the Chairman, are independent. The
members of the AC are as follows:
Mr
Mr
Mr
Mr
Lee Teck Leng (Chairman)
Sitoh Yih Pin
David Yip Wai Sun
Fu Qiang
The Board is of the opinion that the AC members are appropriately qualiﬁed and possess the necessary business,
accounting or related ﬁnancial management expertise and experience to carry out their duties.
The AC meets at least four times a year and as and when deemed appropriate to carry out its functions.
The AC works under clear deﬁned terms of reference adopted by the Board. The principal functions of the AC are
to :


review with Management the Group’s general policies, procedures and controls in relation to management
accounting, ﬁnancial reporting, risk management and ethics;


review the adequacy and effectiveness of the Group’s internal controls including ﬁnancial, operational,
compliance and information technology controls;


review signiﬁcant ﬁnancial reporting issues and judgments to ensure the integrity of the ﬁnancial
statements;


review any formal announcement relating to the Group’s ﬁnancial performance;


review the independence and objectivity of the external auditors, their audit plans and the related audit
ﬁndings;


review the external auditors’ management letter and Management’s responses;
22
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE


review the assistance provided by Management to the external auditors;


review the nature and extent of non-audit services performed by the external auditors;


review the adequacy of the scope, functions and resources of the internal audit department and that it has
the necessary authority to carry out its duties;


review the effectiveness of the Group’s internal audit function;


recommend the re-appointment of the external auditors; approve the compensation of the external
auditors, and review of the scope and results of the audit and its cost-effectiveness;


review the internal audit plan and the Group’s internal accounting controls system as well as the internal
audit reports and where necessary ensure that appropriate actions have been taken to implement the
recommendations made;


review legal and regulatory matters that may have a material impact on the ﬁnancial statements;


review the Group’s transactions with related parties and interested persons and situations where a conﬂict
of interest may arise within the Group including any transaction, procedure or course of conduct that raises
questions of management integrity; and


review arrangements by which staff of the Group and any other persons, may in conﬁdence, raise
concerns about possible improprieties in ﬁnancial reporting or, other matters.
The AC has explicit authority to investigate any matters within its terms of reference, full access to and
cooperation by Management and full discretion to invite any Director or Executive Ofﬁcer to attend its meetings
and reasonable resources to enable it to discharge its functions properly. The AC also generally undertakes such
other functions and duties as may be required by statute or the Listing Manual of the SGX-ST, as amended.
For FY2014, the AC had:

(i)
held four meetings to review the quarterly and full year results;

(ii)
reviewed the annual audit plans, including the nature and scope of the internal and external audits before
commencement of these audits;

(iii)
reviewed and approved the consolidated audited ﬁnancial statements;

(vi)
reviewed the interested person transactions;

(v)
reviewed and discussed the reports of the internal auditors and external auditors and consider the
effectiveness of responses/actions taken by Management on the audit recommendations and observations;

(vi)
reviewed the adequacy and effectiveness of the Group’s internal audit function;

(vii) met with the internal and external auditors without the presence of Management and had established
that both the internal and external auditors have had the full co-operation of Management in carrying out
the audit for FY2014. Both the internal and external auditors had also conﬁrmed that no restrictions were
placed on the scope of their audits; and

(viii) undertaken a review of all audit and non-audit services provided by the external auditors to ensure that
the nature and provision of such services would not affect the independence and objectivity of the external
auditors. It was noted that audit fees amounted to RMB1,184,000 (S$244,200) for the audit of the
Company and its subsidiaries in FY2014. No non-audit services were rendered by the auditors in FY2014.
The AC is of the view that the external auditors are independent. The external auditors have afﬁrmed their
independence in this respect.
23
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The external auditors of the Company and its signiﬁcant subsidiaries is Ernst & Young, Hong Kong, an auditing
ﬁrm acceptable to the SGX-ST. The Company has complied with Rules 712 and 715 of the Listing Manual. The
AC was satisﬁed that the resources and experience of Ernst & Young, Hong Kong, the audit engagement partner
and his team assigned to the audit of the Group were adequate to meet their audit obligations, given the size,
nature, operations and complexity of the Group. The accounts of the Company and a signiﬁcant PRC subsidiary
are audited by Ernst & Young, Hong Kong. The Group’s subsidiaries are disclosed under Note 12 of the Notes to
the Financial Statements on page 55 of this Annual Report.
The AC, with the concurrence of the Board, had recommended the re-appointment of Ernst & Young, Hong Kong
as the external auditors of the Company at the forthcoming AGM, based on their performance and quality of their
audit.
The AC has full access to resources to enable it to keep abreast of changes to accounting standards and issues
which have a direct impact on ﬁnancial statements and to discharge its functions fully. During FY2014, this was
done through quarterly updates and advice from the external auditors.
The Company has in place a “Whistle-Blowing” Programme, whereby employees of the Group and any other
party may, in conﬁdence, raise concerns about possible corporate and ﬁnancial improprieties and other reporting
matters to the Independent Directors. A whistle-blowing feedback channel is posted on the Company’s website.
There were no whistle blowing incidents reported in FY2014.
Internal Controls/Internal Audit
Principal 13:
The Group should establish an internal audit function that is adequately resourced and
independent of the activities it audits.
The Group has an in-house internal audit function based at the Group’s headquarters in Linyi, PRC. The in-house
internal audit department is responsible for the review of the effectiveness of the Group’s internal controls system
and procedures and reports directly to the AC Chairman on internal audit matters.
The AC had met separately with the internal audit head to review the internal audit ﬁndings. During the year, the
Group’s in-house internal audit department adopted a risk-based auditing approach that focused on material
internal controls, including ﬁnancial, operational, information technology and compliance controls as well as risk
management procedures. Any material non-compliance and weakness in internal controls and recommendation
for improvements are reported to the AC. The FY2014 Internal Audit Report was submitted to the AC with
relevant audit ﬁndings and recommendations. The AC also had reviewed the effectiveness of actions taken by
Management on the recommendations made by the internal audit team.
The AC is satisﬁed that the Group’s internal audit function is adequately resourced and has appropriate standing
within the Group. The internal audit team has an on-going training programme to equip the staff with relevant
knowledge and experience.
Separately, an outsourced internal auditor ﬁrm, namely Compass Corporate Services Limited (“CCS”), has also
been engaged to complement the Group’s internal audit team. CCS had presented their report of their audit
ﬁndings and recommendations to the AC. Weaknesses in internal controls and recommendation for improvements
were reported to the AC, The AC also had reviewed the effectiveness of actions taken by Management on the
recommendations made by CCS.
(D)
Communication with Shareholders
Communication with Shareholders/Greater Shareholder Participation
Principle14:
Companies should treat all shareholders fairly and equitably, and should recognize, protect
and facilitate the exercise of shareholders’ rights, and continually review and update such
governance arrangements.
The Group recognizes the importance of maintaining a constructive and effective communication channel with all
shareholders, stakeholders, investors and the public in general.
24
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
The Group does not practise selective disclosure. In line with continuous disclosure obligations of the SGX-ST’s
Listing Manual and the Bermuda Companies Act, the Board’s policy is that all shareholders should be informed of
all major developments that impact the Group. The Board embraces openness and transparency in the conduct
of the Group’s affairs. Information is communicated to shareholders on a timely basis through:

Annual reports that are prepared and issued to all shareholders. The Board makes every effort to ensure
that the annual report contains all relevant information about the Group, including future developments and
other disclosures required by the Bermuda Companies Act and International Financial Reporting Standards
(“IFRS”);


Quarterly and full year results announcements containing a summary of the ﬁnancial information and affairs
of the Group for the period are disseminated through SGXNET and news releases;


Notices of and explanatory notes for annual general meetings and special general meetings;


Shareholders can access information on the Group’s website www.unitedfood.com.sg. which provides,
inter alia, corporate announcements, press releases, annual reports, and proﬁle of the Group.
The Company will review the need for analyst brieﬁngs, investor roadshows or Investors’ Day brieﬁngs when the
Group’s ﬁnancial performance improves.
Shareholders are encouraged to attend the Company’s AGM to ensure a high level of accountability and to stay
informed of the Group’s strategies and goals. The AGM as the principal forum for dialogue with shareholders,
and is for shareholders to voice their views, raise issues to and seek clariﬁcation from the Board or Management
regarding the Company and its operations. All shareholders of the Company will receive the Annual Report
and Notice of AGM within the mandatory period. The Notice of AGM is also advertised in a local newspaper in
Singapore.
The Chairmen of the AC, NC and RC attend AGMs to address questions at the AGM. The Company’s external
auditors are also invited to attend the AGM and are available to assist the Directors, in addressing any relevant
queries by the shareholders relating to the conduct of the audit and the preparation and content of their auditors’
report.
Dividend
As a token of appreciation to the Company’s shareholders, the Board has recommended and declared a ﬁnal
dividend of RMB0.0047 per ordinary share for FY2014.
(E)
Interested Person Transactions
The Company does not have a mandate for transactions with Interested Persons.
In FY2014, other than transactions with Jiang Quan Hotel, there were no transactions with other Interested
Persons. Transactions with Jiang Quan Hotel which amounted to less than 3% of the Group’s NTA, are disclosed
in the audited ﬁnancial statements.
(F)
Material Contracts
Since the end of the previous ﬁnancial year ended 31 December 2013, the Group did not enter into any material
contracts involving the interest of the CEO , Directors or Controlling Shareholders and no such material contracts
subsists at the end of FY2014.
25
United Food Holdings Limited
Annual Report 2014
CORPORATE GOVERNANCE
(G)
Dealings In Securities
The Group has adopted an internal compliance code of conduct to provide guidance to the Group, its ofﬁcers
regarding dealings in the securities of the Company and the implications of insider trading.
Directors and key employees of the Group, who have access to price-sensitive and conﬁdential information are
not permitted to deal in securities of the Company during the periods at least 2 weeks and one month before
the announcement of the Group’s quarterly and full year results respectively and ending on the date of the
announcement of such results, or when they are in possession of unpublished price-sensitive information on the
Group.
The Company conﬁrmed that it has adhered to its policy for securities transactions for FY2014 pursuant to Rule
1207(19) of the Listing Manual.
(H)
Risk Management Policies and Processes
The Board regularly reviews the Group’s business and operational activities to identify areas of signiﬁcant business
risks as well as appropriate measures to control and mitigate these risks as follows:
Fluctuation in Raw Material Prices
The prices of raw materials are not only affected by the market’s supply and demand but also the global
economic conditions which had a signiﬁcant impact on the commodity market. Management had constantly
monitored the prices of raw materials, especially soybean and capitalized on the 100,000 tons storage tank (silo)
and warehouses to maintain sufﬁcient buffer stocks to act as natural hedge / “cushion” against mild price volatility.
Threat of Outbreak of Epidemics
The Group’s policy of not breeding all the piglets by itself is in fact a measure to mitigate the threat of outbreak
of epidemics. In the event of an outbreak, the Group has measures in place to ensure that the livestock are well
protected. These measures include the disinfecting of all incoming motor vehicles driving through the chemical
pathway and segregation of potential infected livestock from those healthy ones.
The Group had ceased its pig rearing business in the second quarter of 2014 in view of the continued losses and
dim prospect. The threat of outbreak of epidemics will also cease to be a signiﬁcant business risk to the Group
going forward.
Environment Friendliness
The Group’s production processes are fully in compliance with the local environmental protection and safety
standards in the PRC. The Group’s waste-water recycling treatment plant has been appraised by the local
environmental authority to be the model for other enterprises to follow in promoting a hygienic and healthy
environment.
Fire & Other Calamity That Will Disrupt Production
To prevent ﬁre or other calamity that may disrupt the Group’s production, the Group has implemented safety
measures at all its production facilities and ofﬁce buildings. The Group has established safety procedures and
regular drills are conducted to ensure that employees familiarize themselves with the basic safety protocols.
The Group has sufﬁcient ﬁre insurance coverage against possible losses in respect of damages to its property,
inventory and plant & machinery.
Change In Political, Economic And Legal Environment In The PRC
As the PRC economy is undergoing various developments, the PRC government will continue to reﬁne its legal
system and various economic policies to maintain and encourage foreign investment. The Group endeavors to
adapt to the various changes and will seek formal consultation with the relevant legislative authorities to ensure
that the Group is in compliance with the relevant rules and regulations.
The Group’s ﬁnancial risk and management is discussed under the Notes to Financial Statements of the Annual
Report.
26
FINANCIAL CONTENTS
28
Report Of The Directors
31
Statement By The Directors
32
Independent Auditors’ Report
33
34
35
Consolidated Statement
Of Proﬁt Or Loss
Consolidated Statement Of
Comprehensive Income
36
37
Consolidated Statement
Of Changes In Equity
Consolidated Statement
Of Cash Flows
38
Notes To The Financial Statements
66
Statistics Of Shareholdings
68
Notice Of Annual General Meeting
Consolidated And Company
Statements Of Financial Position
FINANCIAL CALENDAR
RESULT ANNOUNCEMENT:
First Quarter
Second Quarter and Half-Year
Third Quarter
Fourth Quarter and Full Year
28 April 2014
6 August 2014
6 November 2014
17 February 2015
DIVIDEND:
Payment of 2014 Proposed Final Dividend
5 June 2015
FINANCIAL YEAR END
DESPATCH OF ANNUAL REPORT TO SHAREHOLDERS
ANNUAL GENERAL MEETING
31 December 2014
6 April 2015
22 April 2015
United Food Holdings Limited
Annual Report 2014
REPORT OF THE DIRECTORS
The directors present their report and the audited ﬁnancial statements for the year ended 31 December 2014.
Principal activities
The principal activity of the Company is investment holding. Details of the principal activities of the subsidiaries are set
out in note 12 to the ﬁnancial statements. During the year, the board of directors announced its decision to cease the
Group’s pig rearing business.
Results and dividends
The Group’s proﬁt for the year ended 31 December 2014 and the state of affairs of the Company and the Group at that
date are set out in the ﬁnancial statements on pages 33 to 65.
Subject to shareholders’ approval, the directors recommended the payment of a ﬁnal dividend of RMB0.0047
(2013: Nil) per ordinary share in respect of the year ended 31 December 2014. This recommendation has been
incorporated in the ﬁnancial statements as an allocation of retained proﬁts within the equity section of the statement of
ﬁnancial position.
Purchase, redemption or sale of listed securities of the Company
Neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities
during the year.
Directors
The directors of the Company in ofﬁce during the year and up to the date of this report were:
Executive director:
Wang Tingbao
Non-executive director:
David Yip Wai Sun (Chairman)
Independent non-executive directors:
Lee Teck Leng
Sitoh Yih Pin
Fu Qiang
In accordance with bye-law 86(1) of the Company’s bye-laws, one-third of the directors of the Company, except for the
Board Chairman, is subject to retirement by rotation and re-election at the annual general meeting.
Arrangements to enable directors to acquire shares and debentures
Neither at the end of the year nor at any time during the year was the Company a party to any arrangement whose
object was to enable the directors of the Company to acquire beneﬁts by means of the acquisition of shares or
debentures of the Company or any other body corporate.
28
United Food Holdings Limited
Annual Report 2014
REPORT OF THE DIRECTORS
Directors’ interests in shares and debentures
According to the register of directors’ shareholdings, the following directors, who held ofﬁce as at the end of the year, had
interests in shares of the Company and related corporations as stated below:
Direct
interests
Deemed
interests
Ordinary shares of the Company of HK$0.25 each at 1 January 2014:
David Yip Wai Sun
Wang Tingbao
–
50,000,000
483,304,620
485,304,844
Ordinary shares of the Company of HK$0.25 each at 31 December 2014:
David Yip Wai Sun
Wang Tingbao
–
50,000,000
483,304,620
485,304,844
There were no changes in any of the above mentioned interests between the end of the ﬁnancial year and 21 January
2015.
Except as disclosed in this report, no director who held ofﬁce at the end of the ﬁnancial year had interests in shares,
share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the ﬁnancial
year, or the date of appointment if later, or at the end of the ﬁnancial year.
Options
There are presently no option schemes on unissued shares of the Company.
Audit committee, nominating committee and remuneration committee
Details of the Company’s audit committee, nominating committee and remuneration committee are set out in the
Corporate Governance Report on pages 14 to 26 of this Annual Report.
Directors’ interests in contracts
Except for the transactions disclosed in note 5 to the ﬁnancial statements, since the end of the previous ﬁnancial year,
no director of the Company has received or become entitled to receive a beneﬁt by reason of a contract made by the
Company or a related corporation with the director or with a ﬁrm of which the director is a member or with a company in
which the director has a substantial ﬁnancial interest.
29
United Food Holdings Limited
Annual Report 2014
REPORT OF THE DIRECTORS
Auditors
Ernst & Young retire and a resolution for their re-appointment as auditors of the Company will be proposed at the
forthcoming annual general meeting.
ON BEHALF OF THE BOARD OF DIRECTORS
David Yip Wai Sun
Chairman
19 March 2015
30
Wang Tingbao
Director
United Food Holdings Limited
Annual Report 2014
STATEMENT BY THE DIRECTORS
We, David Yip Wai Sun and Wang Tingbao, being two of the directors of United Food Holdings Limited (the “Company”),
do hereby state that, in the opinion of the directors,
(i)
the accompanying consolidated statement of ﬁnancial position, the consolidated statement of proﬁt or loss,
the consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash ﬂows of the Group and the statement of ﬁnancial position of the Company,
together with the notes thereto, as set out on pages 33 to 65, are drawn up so as to give a true and fair view of
the state of affairs of the Group and of the Company as at 31 December 2014 and of the results of the business,
changes in equity and cash ﬂows of the Group for the year then ended; and
(ii)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they fall due.
ON BEHALF OF THE BOARD OF DIRECTORS
David Yip Wai Sun
Chairman
Wang Tingbao
Director
19 March 2015
31
United Food Holdings Limited
Annual Report 2014
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF UNITED FOOD HOLDINGS LIMITED (INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)
We have audited the consolidated ﬁnancial statements of United Food Holdings Limited (the “Company”) and its
subsidiaries (collectively referred to as the “Group”) set out on pages 33 to 65, which comprise the consolidated and
company statements of ﬁnancial position as at 31 December 2014, and the consolidated statement of proﬁt or loss, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash ﬂows for the year then ended, and a summary of signiﬁcant accounting policies and other explanatory
information.
Directors’ responsibility for the consolidated financial statements
The directors of the Company are responsible for the preparation of consolidated ﬁnancial statements that give a true
and fair view in accordance with International Financial Reporting Standards, and for such internal control as the directors
determines is necessary to enable the preparation of consolidated ﬁnancial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated ﬁnancial statements based on our audit. Our report is
made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for no other
purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
consolidated ﬁnancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
ﬁnancial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the
risks of material misstatement of the consolidated ﬁnancial statements, whether due to fraud or error. In making those
risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the
consolidated ﬁnancial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated ﬁnancial statements.
We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated ﬁnancial statements give a true and fair view of the state of affairs of the Company and of
the Group as at 31 December 2014, and of the Group’s ﬁnancial performance and cash ﬂows for the year then ended in
accordance with International Financial Reporting Standards.
Ernst & Young
Certified Public Accountants
22/F CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
19 March 2015
32
United Food Holdings Limited
Annual Report 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
YEAR ENDED 31 DECEMBER 2014
Group
CONTINUING OPERATIONS
REVENUE
Notes
2014
RMB’000
2013
RMB’000
6
5,080,301
5,042,986
(5,008,125)
(5,108,644)
72,176
(65,658)
Cost of sales
Gross proﬁt/(loss)
Other income and gains
Selling and distribution expenses
Administrative expenses
Other expenses, net
6
12,285
(11,298)
(27,813)
(1,734)
8,486
(11,492)
(26,644)
(2,983)
PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS
7
43,616
(98,291)
Income tax expense
8
–
–
43,616
(98,291)
(18,053)
(10,667)
25,563
(108,958)
Basic and diluted:
- For proﬁt/(loss) for the year
RMB0.02
RMB(0.10)
- For proﬁt/(loss) from continuing operations
RMB0.04
RMB(0.09)
PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
DISCONTINUED OPERATION
Loss for the year from a discontinued operation
9
PROFIT/(LOSS) FOR THE YEAR
EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY
HOLDERS OF THE COMPANY
11
Details of the dividend proposed for the year are disclosed in note 10 to the ﬁnancial statements.
33
United Food Holdings Limited
Annual Report 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2014
Group
PROFIT/(LOSS) FOR THE YEAR
OTHER COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
34
2014
RMB’000
2013
RMB’000
25,563
(108,958)
–
–
25,563
(108,958)
United Food Holdings Limited
Annual Report 2014
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
31 DECEMBER 2014
Notes
Group
2014
2013
RMB’000
RMB’000
Company
2014
2013
RMB’000
RMB’000
NON-CURRENT ASSETS
Investments in subsidiaries
Property, plant and equipment
Land use rights
Total non-current assets
12
13
14
–
330,033
52,482
382,515
–
389,418
63,521
452,939
223,738
–
–
223,738
223,738
–
–
223,738
CURRENT ASSETS
Inventories
Biological assets
Trade receivables
Amounts due from subsidiaries
Prepayments, deposits and other receivables
Restricted bank deposits
Cash and cash equivalents
Total current assets
15
16
17
12
18
19
19
553,389
–
–
–
57,116
388,093
82,330
1,080,928
589,340
35,450
2,317
–
43,541
498,757
43,398
1,212,803
–
–
–
536,667
–
–
495
537,162
–
–
–
542,952
–
–
504
543,456
CURRENT LIABILITIES
Trade payables
Other payables, deposits received and accruals
Total current liabilities
20
21
5,028
47,687
52,715
227,635
52,942
280,577
–
742
742
–
1,211
1,211
NET CURRENT ASSETS
1,028,213
932,226
536,420
542,245
Net assets
1,410,728
1,385,165
760,158
765,983
294,465
1,111,089
5,174
294,465
1,090,700
–
294,465
460,519
5,174
294,465
471,518
–
1,410,728
1,385,165
760,158
765,983
EQUITY
Equity attributable to owners of the Company
Issued capital
Reserves
Proposed ﬁnal dividend
Total equity
22
23
10
35
United Food Holdings Limited
Annual Report 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2014
Group
Attributable to owners of the Company
Issued
Share
Capital
share
premium Statutory redemption Retained
capital
account
reserve
reserve
profits
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 22) (note 23(b)) (note 23(a))
Proposed
final
dividend
RMB’000
(note 10)
Total
RMB’000
At 1 January 2013
Loss and total comprehensive loss
for the year
Repurchase and cancellation of
shares
297,447
510,034
19,431
–
670,308
–
1,497,220
–
–
–
–
(108,958)
–
(108,958)
(2,982)
(115)
–
2,982
(2,982)
–
(3,097)
At 31 December 2013
294,465
509,919*
19,431*
2,982*
558,368*
–
1,385,165
294,465
509,919
19,431
2,982
558,368
–
1,385,165
–
–
–
–
–
–
–
–
25,563
(5,174)
–
5,174
25,563
–
578,757*
5,174
1,410,728
At 31 December 2013 and
1 January 2014
Proﬁt and total comprehensive
income for the year
Proposed ﬁnal 2014 dividend
At 31 December 2014
*
294,465
509,919*
19,431*
2,982*
These reserve accounts comprise the consolidated reserves of RMB1,111,089,000 (2013: RMB1,090,700,000) in the
consolidated statement of ﬁnancial position.
36
United Food Holdings Limited
Annual Report 2014
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2014
Notes
2014
RMB’000
2013
RMB’000
43,616
(18,053)
(98,291)
(10,667)
78,055
11,039
–
(11,065)
103,592
86,066
11,039
15,065
(8,084)
(4,872)
35,951
35,450
2,317
(13,575)
(222,607)
(8,534)
(67,406)
(28,019)
8,954
67,969
(248)
35,723
9,978
89,485
11,065
(56,341)
8,084
97,569
(15,391)
(773,036)
883,700
95,273
(21,607)
(1,001,887)
947,457
(76,037)
–
–
( 3,097)
(3,097)
NET INCREASE IN CASH AND CASH EQUIVALENTS
38,932
18,435
Cash and cash equivalents at beginning of year
43,398
24,963
82,330
43,398
82,330
43,398
CASH FLOWS FROM OPERATING ACTIVITIES
Proﬁt/(loss) before tax:
From continuing operations
From a discontinued operation
Adjustments for:
Depreciation
Amortisation of land use rights
Write-down to net realisable value of inventories
Bank interest income
13
14
7
6
Decrease/(increase) in inventories
Decrease in biological assets
Decrease in trade receivables
Increase in prepayments, deposits and other receivables
(Decrease)/increase in trade payables
(Decrease)/increase in other payables, deposits received and accruals
Interest received
Net cash ﬂows (used in)/from operating activities
6
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of items of property, plant and equipment
Cash transferred to restricted bank deposits
Cash transferred from restricted bank deposits
Net cash ﬂows from/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for repurchase of ordinary shares
Net cash ﬂows used in ﬁnancing activities
CASH AND CASH EQUIVALENTS AT END OF YEAR
ANALYSIS OF BALANCE OF CASH AND CASH EQUIVALENTS
Cash and bank balances
19
37
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
1.
CORPORATE INFORMATION
United Food Holdings Limited (the “Company”) is a limited liability company incorporated in Bermuda. The
registered ofﬁce of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
The principal activity of the Company is investment holding. The principal activities of the Company’s subsidiaries
are set out in note 12 to the ﬁnancial statements.
During the year, the Group ceased its operations of pig rearing business.
discontinued operation are set out in note 9 to the ﬁnancial statements.
2.1
Further details regarding the
IMPACT OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
The following revised International Financial Reporting Standards (“IFRSs”) (which include all International Financial
Reporting Standards, International Accounting Standards and Interpretations), which are applicable to the Group,
are effective for the ﬁrst time for the current year’s ﬁnancial statements. The adoption of these new interpretations
and amendments has had no signiﬁcant effect on these ﬁnancial statements.
Amendments to IFRS 10, IFRS 12
and IAS 27 (2011)
Investment Entities
Amendments to IAS 32
Offsetting Financial Assets and Financial Liabilities
Amendments to IAS 36
Recoverable Amount Disclosures for Non-Financial Assets
Amendments to IAS 39
Novation of Derivatives and Continuation of Hedge Accounting
IFRIC – Int 21
Levies
Amendment to IFRS 2 included in
Annual Improvements
2010 – 2012 Cycle
Definition of Vesting Condition1
Amendment to IFRS 3 included in
Annual Improvements
2010 – 2012 Cycle
Accounting for Contingent Consideration in a Business Combination1
Amendment to IFRS 13 included in
Annual Improvements
2010 – 2012 Cycle
Short-term Receivables and Payables
Amendment to IFRS 1 included in
Annual Improvements
Meaning of Effective IFRSs
1
38
Effective from 1 July 2014
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
2.2
IMPACT OF ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING
STANDARDS
The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective in
these ﬁnancial statements.
IFRS 9
Financial Instruments4
Amendments to IFRS 10
and IAS 28 (2011)
Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture2
Amendments to IFRS 11
Accounting for Acquisitions of Interests in Joint Operations2
IFRS 14
Regulatory Deferral Accounts5
IFRS 15
Revenue from Contracts with Customers3
Amendments to IAS 1
Disclosure Initiative2
Amendments to IFRS 10,
IFRS 12 and
IAS 28 (2011)
Investment Entities: Applying the Consolidation Exception2
Amendments to IAS 16
and IAS 38
Clarification of Acceptable Methods of Depreciation and Amortisation2
Amendments to IAS 16
and IAS 41
Agriculture: Bearer Plants2
Amendments to IAS 19
Defined Benefit Plans: Employee Contributions1
Amendments to IAS 27 (2011)
Equity Method in Separate Financial Statements2
Annual Improvements
2010-2012 Cycle
Amendments to numbers of IFRSs1
Annual Improvements
2011-2013 Cycle
Amendments to numbers of IFRSs1
Annual Improvements
2012-2014 Cycle
Amendments to numbers of IFRSs2
1
Effective for annual periods beginning on or after 1 July 2014
2
Effective for annual periods beginning on or after 1 January 2016
3
Effective for annual periods beginning on or after 1 January 2017
4
Effective for annual periods beginning on or after 1 January 2018
5
Effective for an entity that ﬁrst adopted IFRSs for its annual ﬁnancial statements beginning on or after 1 January 2016 and
therefore is not applicable to the Group
The Group is in the process of making an assessment of the impact of these newly interpreted and amended
IFRSs upon initial application. So far, the Group considers that these newly interpreted and amended IFRSs are
unlikely to have a signiﬁcant impact on the Group’s results of operations and ﬁnancial position.
39
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These ﬁnancial statements have been prepared in accordance with IFRSs. The ﬁnancial statements have been
prepared under the historical cost convention, except for the biological assets which are stated at fair value as
explained below. These ﬁnancial statements are presented in Renminbi (“RMB”) and all values are rounded to the
nearest thousand except when otherwise indicated.
Basis of consolidation
The consolidated ﬁnancial statements include the ﬁnancial statements of the Company and its subsidiaries
(collectively referred to as the “Group”) for the year ended 31 December 2014. The ﬁnancial statements of the
subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.
The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases.
All intra-group assets and liabilities, equity, income, expenses and cash ﬂows relating to transactions between
members of the Group are eliminated in full on consolidation.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control described in the accounting policy for subsidiaries
below. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
Subsidiaries
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is
achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group
the current ability to direct the relevant activities of the investee).
When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
(a)
the contractual arrangement with the other vote holders of the investee;
(b)
rights arising from other contractual arrangements; and
(c)
the Group’s voting rights and potential voting rights.
The results of subsidiaries are included in the Company’s statement of proﬁt or loss to the extent of dividends
received and receivable. The Company’s investments in subsidiaries are stated at cost less any impairment
losses.
Property, plant and equipment and depreciation
Property, plant and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its
purchase price and any directly attributable costs of bringing the asset to its working condition and location for
its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation,
such as repairs and maintenance, is normally charged to the statement of proﬁt or loss in the period in which
it is incurred. In situations where the recognition criteria are satisﬁed, the expenditure for a major inspection is
capitalised in the carrying amount of the asset as a replacement. Where signiﬁcant parts of property, plant and
equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with
speciﬁc useful lives and depreciates them accordingly.
40
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment and depreciation (continued)
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over the following estimated useful lives:
Buildings
Leasehold improvements
Plant and machinery
Furniture, ﬁxtures and ofﬁce equipment
Motor vehicles
10 to 20 years
5 to 10 years
5 to 10 years
5 years
5 years
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful
lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each ﬁnancial year end.
An item of property, plant and equipment including any signiﬁcant part initially recognised is derecognised upon
disposal or when no future economic beneﬁts are expected from its use or disposal. Any gain or loss on disposal
or retirement recognised in the statement of proﬁt or loss in the year the asset is derecognised is the difference
between the net sales proceeds and the carrying amount of the relevant asset.
Construction in progress represents a facility under construction, which is stated at cost less any impairment
losses, and is not depreciated. Cost comprises the direct costs of construction during the period of construction.
Construction in progress is reclassiﬁed to the appropriate category of property, plant and equipment when
completed and ready for use.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than
inventories and ﬁnancial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is
calculated as the higher of the asset’s value in use and its fair value less costs to sell, and is determined for an
individual asset, unless the asset does not generate cash inﬂows that are largely independent of those from other
assets of groups of assets, in which case the recoverable amount is determined for the cash-generating unit
(“CGU”) to which the asset belongs.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In
assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax
discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the
asset. An impairment loss is charged to the statement of proﬁt or loss in the period in which it arises.
An assessment is made at the end of each reporting period as to whether there is an indication that previously
recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the
recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is
reversed only if there has been a change in the estimates used to determine the recoverable amount of that
asset, but not to an amount higher than the carrying amount that would have been determined (net of any
depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such
an impairment loss is credited to the statement of proﬁt or loss in the period in which it arises.
Land use rights
Land use rights are stated at cost less accumulated amortisation and any impairment losses. Amortisation is
calculated on the straight-line basis to write off the cost of the land use rights over the lease terms.
41
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets
Initial recognition and measurement
Financial assets within the scope of IAS 39 are classiﬁed as loans and receivables. When ﬁnancial assets are
recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through proﬁt
or loss, directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of loans and receivables, which are non-derivative ﬁnancial assets with ﬁxed or
determinable payments that are not quoted in an active market, is as follows:
Loans and receivables
After initial measurement, such assets are subsequently measured at amortised cost using the effective interest
rate method less any allowance for impairment. Amortised cost is calculated taking into account any discount
or premium on acquisition and includes fees or costs that are an integral part of the effective interest rate. The
effective interest rate amortisation is included in other income and gains in the statement of proﬁt or loss. The
loss arising from impairment is recognised in the statement of proﬁt or loss in ﬁnance costs for loans and in other
expenses for receivables.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a ﬁnancial
asset or a group of ﬁnancial assets is impaired. An impairment exists if one or more events that has occurred
after the initial recognition of the asset have an impact on the estimated future cash ﬂows of the ﬁnancial asset or
the group of ﬁnancial assets that can be reliably estimated. Evidence of impairment may include indications that
a debtor or a group of debtors is experiencing signiﬁcant ﬁnancial difﬁculty, default or delinquency in interest or
principal payments, the probability that they will enter bankruptcy or other ﬁnancial reorganisation and observable
data indicating that there is a measurable decrease in the estimated future cash ﬂows, such as changes in arrears
or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For ﬁnancial assets carried at amortised cost, the Group ﬁrst assesses whether impairment exists individually
for ﬁnancial assets that are individually signiﬁcant, or collectively for ﬁnancial assets that are not individually
signiﬁcant. If the Group determines that no objective evidence of impairment exists for an individually assessed
ﬁnancial asset, whether signiﬁcant or not, it includes the asset in a group of ﬁnancial assets with similar credit
risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective
assessment of impairment.
The amount of any impairment loss identiﬁed is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash ﬂows (excluding future credit losses that have not been incurred).
The present value of the estimated future cash ﬂows is discounted at the ﬁnancial asset’s original effective interest
rate (i.e., the effective interest rate computed at initial recognition).
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the
loss is recognised in the statement of proﬁt or loss. Interest income continues to be accrued on the reduced
carrying amount and is accrued using the rate of interest used to discount the future cash ﬂows for the purpose
of measuring the impairment loss. Loans and receivables together with any associated allowance are written off
when there is no realistic prospect of future recovery.
If, in a subsequent period, the amount of the impairment loss increases or decreases because of an event
occurring after the impairment was recognised, the previously recognised impairment loss is increased or
reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the
statement of proﬁt or loss.
42
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derecognition of financial assets
A ﬁnancial asset (or, where applicable, a part of a ﬁnancial asset or part of a group of similar ﬁnancial assets) is
primarily derecognised (i.e., removed from the Group’s consolidated statement of ﬁnancial position) when:

the rights to receive cash ﬂows from the asset have expired; or

the Group has transferred its rights to receive cash ﬂows from the asset or has assumed an obligation
to pay the received cash ﬂows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Group has transferred its rights to receive cash ﬂows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset.
When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred
control of the asset, the Group continues to recognise the transferred asset to the extent of the Group's
continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and
the associated liability are measured on a basis that reﬂects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be
required to repay.
Financial liabilities at amortised cost
Financial liabilities including trade and other payables are initially stated at fair value less directly attributable
transaction costs and are subsequently measured at amortised cost, using the effective interest rate method
unless the effect of discounting would be immaterial, in which case they are stated at cost.
Gains and losses are recognised in the statement of proﬁt or loss when the liabilities are derecognised as well as
through the amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the effective interest rate. The effective interest rate amortisation is included in ﬁnance costs
in the statement of proﬁt or loss.
Derecognition of financial liabilities
A ﬁnancial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.
When an existing ﬁnancial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modiﬁed, such an exchange or modiﬁcation is treated as a
derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in the statement of proﬁt and loss.
Inventories
Inventories are stated at the lower of cost and net realisable value after making due allowances for obsolete
or slow-moving items. Cost is determined on the ﬁrst-in, ﬁrst-out basis and, in the case of work in progress
and ﬁnished goods, comprises direct materials, direct labour and an appropriate proportion of manufacturing
overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to
completion and disposal.
43
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Biological assets
Biological assets represent the infant pigs, the breeder pigs and the progeny pigs which are principally measured
on initial recognition and at the end of each reporting period at their fair value less costs to sell, except where the
fair value cannot be measured reliably, in which case they are stated at cost. The fair values of the progeny pigs
are determined based on the most recent market transaction prices. Change in fair value less costs to sell of a
biological asset is included in the statement of proﬁt or loss for the period in which it arises.
Provisions
A provision is recognised when there is a present obligation (legal or constructive) as a result of a past event and
it is probable that an outﬂow of resources will be required to settle the obligation, provided that a reliable estimate
can be made of the amount of the obligation.
When the effect of discounting is material, the amount recognised for a provision is the present value at the end
of the reporting period of the future expenditures expected to be required to settle the obligation. The increase
in the discounted present value amount arising from the passage of time is included in ﬁnance costs in the
statement of proﬁt or loss.
Revenue recognition
Revenue is recognised when it is probable that the economic beneﬁts will ﬂow to the Group and when the
revenue can be measured reliably, on the following bases:
(a)
from the sale of goods, when the signiﬁcant risks and rewards of ownership have been transferred to the
buyer, provided that the Group maintains neither managerial involvement to the degree usually associated
with ownership, nor effective control over the goods sold; and
(b)
interest income, on an accrual basis using the effective interest method by applying the rate that discounts
the estimated future cash receipts over the expected life of the ﬁnancial instrument to the net carrying
amount of the ﬁnancial asset.
Operating leases
Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted
for as operating leases. Where the Group is the lessee, rentals payable under the operating leases are charged to
the statement of proﬁt or loss on the straight-line basis over the lease terms.
Income tax
Income tax comprises current and deferred tax. Income tax relating to items recognised outside proﬁt or loss is
recognised outside proﬁt or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period, taking into consideration interpretations and practices
prevailing in the countries in which the Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period
between the tax bases of assets and liabilities and their carrying amounts for ﬁnancial reporting purposes.
44
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income tax (continued)
Deferred tax liabilities are recognised for all taxable temporary differences, except:

when the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting proﬁt nor
taxable proﬁt or loss; and

in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credit
and any unused tax losses. Deferred tax are recognised, to the extent that it is probable that taxable proﬁt will
be available against which the deductible temporary differences, and the carryforward of unused tax credits and
unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting proﬁt nor taxable proﬁt or loss; and

in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax
assets are only recognised to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable proﬁt will be available against which the temporary differences can be
utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufﬁcient taxable proﬁt will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and
are recognised to the extent that it has become probable that sufﬁcient taxable proﬁt will be available to allow all
or part of the deferred tax assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the costs it is intended to compensate.
Retirement benefits
Pursuant to the relevant regulations of the government of the People’s Republic of China (the “PRC”), the
subsidiaries in Mainland China have each participated in a local municipal government retirement beneﬁt scheme
(the “Scheme”), pursuant to which the subsidiaries in Mainland China are required to contribute a certain
percentage of the basic salaries of its employees to the Scheme to fund their retirement beneﬁts. The local
municipal government undertakes to assume the retirement beneﬁt obligations of all existing and future retired
employees of the Group’s subsidiaries in Mainland China. The only obligation of the Group with respect to the
Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under
the Scheme are charged to the statement of proﬁt or loss as incurred. There are no provisions under the Scheme
whereby forfeited contributions may be used to reduce future contributions.
45
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Retirement benefits (continued)
The Group operates a deﬁned contribution Mandatory Provident Fund retirement beneﬁt scheme (the “MPF
Scheme”) under the Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to
participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries
and are charged to the statement of proﬁt or loss as they become payable in accordance with the rules of the
MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently
administered fund. The Group’s employer contributions vest fully with the employees when contributed into the
MPF Scheme.
Foreign currencies
These ﬁnancial statements are presented in RMB, which is the Company’s functional and presentation currency.
Each entity in the Group determines its own functional currency and items included in the ﬁnancial statements of
each entity are measured using that functional currency. Foreign currency transactions recorded by the entities
in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or
translation of monetary items are recognised in the statement of proﬁt or loss. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of
the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was measured.
For the purpose of the consolidated statement of cash ﬂows, the cash ﬂows of certain subsidiaries comprising
the Group are translated into RMB at the exchange rates prevailing at the dates of the cash ﬂows. Frequently
recurring cash ﬂows of certain companies comprising the Group which arise throughout the year are translated
into RMB at the weighted average exchange rates for the year.
Research and development costs
All research costs are charged to the statement of proﬁt or loss as incurred.
Related parties
A party is considered to be related to the Group if:
(a)
Or
46
the party is a person or a close member of that person’s family and that person
(i)
has control or joint control over the Group;
(ii)
has signiﬁcant inﬂuence over the Group; or
(iii)
is a member of the key management personnel of the Group or of a parent of the
Group;
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Related parties (continued)
(b)
the party is an entity where any of the following conditions applies:
(i)
the entity and the Group are members of the same Group;
(ii)
one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii)
the entity and the Group are joint ventures of the same third party;
(iv)
one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)
the entity is a post-employment beneﬁt plan for the beneﬁt of employees of either the Group or an
entity related to the Group;
the entity is controlled or jointly controlled by a person identiﬁed in (a); and
(vi)
(vii)
a person identiﬁed in (a)(i) has signiﬁcant inﬂuence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity)
Cash and cash equivalents
For the purpose of the consolidated statement of cash ﬂows, cash and cash equivalents are deﬁned as cash on
hand and at banks, demand deposits and short term highly liquid investments which are readily convertible to
known amounts of cash, which are subject to an insigniﬁcant risk of changes in value, and have a short maturity
of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an
integral part of the Group’s cash management.
For the purpose of the statement of ﬁnancial position, cash and cash equivalents comprise cash on hand and at
banks, including term deposits, which are not restricted as to use.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period, that have a signiﬁcant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next ﬁnancial year, are discussed below:
Useful lives and residual values of property, plant and equipment
In determining the useful life and residual value of an item of property, plant and equipment, the Group has to
consider various factors, such as technical or commercial obsolescence arising from changes or improvements
in production, or from a change in the market demand for the product or service output of the asset, expected
usage of the asset, expected physical wear and tear, the care and maintenance of the asset, and legal or similar
limits on the use of the asset.
The estimation of the useful life of the asset is based on the experience of the Group with similar assets that are
used in a similar way. Additional depreciation is made if the estimated useful lives and/or the residual values of
items of property, plant and equipment are different from the previous estimation. Useful lives and residual values
are reviewed at the end of each reporting period based on changes in circumstances. Further details are included
in the above paragraph in respect of property, plant and equipment and depreciation.
47
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimation uncertainty (continued)
Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all non-ﬁnancial assets at the end of
each reporting period. Non-ﬁnancial assets are tested for impairment when there are indicators that the carrying
amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating
unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The
calculation of the fair value less costs to sell is based on available data from binding sales transactions in an arm’s
length transaction of similar assets or observable market prices less incremental costs for disposing of the asset.
When value in use calculations are undertaken, management must estimate the expected future cash ﬂows from
the asset or CGU and choose a suitable discount rate in order to calculate the present value of those cash ﬂows.
4.
OPERATING SEGMENT INFORMATION
For management purposes, the Group’s operating businesses are structured and managed separately according
to the nature of their operations and the products they provide. Each of the Group’s operating segments
represents a strategic business unit that offers products which are subject to risks and returns that are different
from those of the other operating segments.
A summary of the details of the operating segments is as follows:
(a)
The soybean processing segment manufactures and sells soybean meal and soybean oil in Mainland
China.
(b)
The feed production segment manufactures and distributes animal feed, such as pig feed and chicken
feed in Mainland China.
As stated in note 9 to the ﬁnancial statements, as a result of the ceased operation of pig rearing segment during
the year, the Group ceased the business of pig rearing and sold out all pure-bred and cross-bred live pigs.
Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third
parties at the then prevailing market prices.
Management monitors the operating results of the Group’s business units separately for the purpose of making
decisions about resources allocation and performance assessment. Segment performance is evaluated based
on operating proﬁt or loss and is measured consistently with operating proﬁt or loss in the consolidated ﬁnancial
statements. However, group ﬁnancing (including ﬁnance costs and ﬁnance income) and income taxes are
managed on a group basis and are not allocated to operating segments.
Segment assets exclude corporate and unallocated assets as these assets are managed on a group basis.
Segment liabilities exclude corporate and unallocated liabilities as these liabilities are managed on a group basis.
As the chief operating decision maker of the Group considers that most of the Group’s consolidated revenue and
results are attributable to the market in Mainland China and the Group’s consolidated assets are substantially
located in Mainland China, no geographical information is presented.
48
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
4.
OPERATING SEGMENT INFORMATION (continued)
The following tables present revenue, proﬁt or loss and certain asset, liability and expenditure information for the
Group for the years ended 31 December 2014 and 2013:
DISCONTINUED
CONTINUING OPERATIONS
OPERATION
Soybean processing Feed production
subtotal
Pig rearing
Eliminations
Consolidated
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue:
Net sales to external
customers
Intersegment sales
4,846,287 4,829,693 234,014 213,293 5,080,301 5,042,986
38,018 41,707 11,340 39,524 49,358 81,231
49,568
–
78,986
–
–
– 5,129,869 5,121,972
(49,358) (81,231)
–
–
4,884,305 4,871,400 245,354 252,817 5,129,659 5,124,217
49,568
78,986
(49,358) (81,231) 5,129,869 5,121,972
Reconciliation:
Elimination of
intersegment sales
(49,358) (81,231)
Revenue from continuing
operations
Segment results
Reconciliation:
Corporate and other
unallocated income and
expenses
Bank interest income
5,080,301 5,042,986
41,182
(93,915)
(690)
(5,322)
Proﬁt/(loss) before tax
40,492
(99,237) (18,053) (10,667)
(7,941)
11,065
(7,138)
8,084
43,616
(98,291)
–
–
22,439 (109,904)
(7,941)
11,065
(7,138)
8,084
25,563 (108,958)
DISCONTINUED
CONTINUING OPERATIONS
OPERATION
Soybean processing Feed production
Pig rearing
Consolidated
2014
2013
2014
2013
2014
2013
2014
2013
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Segment assets
Reconciliation:
Corporate and unallocated assets
1,417,351 1,558,795
36,333
44,362
6,079
58,517 1,459,763 1,661,674
3,680
Total assets
Segment liabilities
Reconciliation:
Corporate and unallocated liabilities
4,068
1,463,443 1,665,742
40,522
260,155
10,914
11,421
378
7,790
Total liabilities
51,814
279,366
901
1,211
52,715
280,577
Other segment information:
Capital expenditure
18,452
21,232
218
30
–
345
18,670
21,607
Depreciation
63,722
70,651
5,960
6,383
8,373
9,032
78,055
86,066
Amortisation
6,659
6,659
1,600
1,600
2,780
2,780
11,039
11,039
–
15,065
–
–
–
–
–
15,065
Write-down to net realisable value of inventories
49
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
4.
OPERATING SEGMENT INFORMATION (continued)
Information about major customers
None of the Group’s sales to a single customer accounted for 10% or more of the Group’s revenue during the
year (2013: Nil).
5.
INTERESTED PERSON TRANSACTIONS/RELATED PARTY TRANSACTIONS
Save as disclosed elsewhere in these ﬁnancial statements, the Group had the following related party transactions
during the year:
Group
Notes
Catering and accommodation expenses paid to a related company
(i)
Compensation of key management personnel:
Short term employee beneﬁts
(ii)
2014
RMB’000
2013
RMB’000
380
390
2,582
2,594
Notes:
(i)
The directors consider that the catering and accommodation expenses paid to Jiang Quan Hotel, a related company
owned by a nephew of Mr. Wang Tingbao, a shareholder and director of the Company, were incurred in the ordinary
course of business of the Group.
(ii)
Further details of directors’ remuneration are included in note 24 to the ﬁnancial statements.
Except for the foregoing, in compliance with the Listing Manual of the Singapore Exchange Limited (the “SGX”),
the Group and the Company conﬁrm that there was no other interested person transaction during the year (2013:
Nil).
6.
REVENUE, OTHER INCOME AND GAINS
Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts, and
after eliminations of all intra-group transactions in full. All of the Group’s revenue is derived from its operations in
Mainland China.
50
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
6.
REVENUE, OTHER INCOME AND GAINS (continued)
An analysis of revenue, other income and gains is as follows:
Group
2014
RMB’000
2013
RMB’000
5,080,301
49,568
5,129,869
5,042,986
78,986
5,121,972
Other income
Bank interest income
Sales of scrap and raw materials
Others
11,065
1,012
208
8,084
234
168
Attributable to continuing operations reported in the
consolidated statement of proﬁt or loss
12,285
8,486
313
396
3
195
1,174
33
712
12,997
1,402
9,888
Revenue
Sale of goods attributable to continuing operations
Sale of goods attributable to a discontinued operation
Sales of scrap and raw materials
Government grants
Others
Attributable to a discontinued operation reported in the
consolidated statement of proﬁt or loss
7.
PROFIT/(LOSS) BEFORE TAX FROM CONTINING OPERATIONS
The Group’s proﬁt/(loss) before tax from continuing operations is arrived at after charging/(crediting):
Group
2014
RMB’000
2013
RMB’000
5,008,125
5,093,579
1,146
600
1,152
600
1,746
1,752
Depreciation
Amortisation of land use rights
Write-down to net realisable value of inventories
Minimum lease payments under operating leases on buildings
Research and development costs
Auditors’ remuneration
69,682
8,259
–
821
889
1,279
77,034
8,259
15,065
749
1,428
1,024
Employee beneﬁt expense (excluding directors’ remuneration)
Wages and salaries
Retirement scheme contributions
Amount included in research and development costs
31,942
6,162
442
27,127
5,153
299
38,546
32,579
Cost of inventories sold
Directors’ remuneration:
Fees
Salary
51
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
8.
INCOME TAX EXPENSE
Tax has not been provided by the Group during the year either for the continuing operations or the discontinued
operation as the Group did not derive any assessable proﬁts after utilisation of available tax losses during the year
(2013: Nil).
During the year, the applicable tax rate for Linyi Shengquan Grease Co., Ltd. (“SQ Grease”) was 25% (2013:
25%).
Tax has not been provided by the Company as it did not derive any assessable proﬁts during the year (2013: Nil).
A reconciliation of the tax expense applicable to proﬁt/(loss) before tax at the statutory rates for the jurisdictions in
which the Company and its subsidiaries are domiciled to the tax expense at the effective tax rate is as follows:
Group
2014
RMB’000
2013
RMB’000
Proﬁt/(loss) before tax (including loss from a discontinued operation)
25,563
(108,958)
Tax at the applicable tax rate (25%)
Lower tax rate enacted by local authority
Non-deductible expenses
Tax losses utilised from previous periods
Deferred tax assets not recognised
6,391
178
2,206
(12,208)
3,433
(27,240)
163
2,091
–
24,986
–
–
Total tax charge for the year
Deferred tax assets have not been recognised in respect of the following items:
Group
Tax losses
Deductible temporary differences
2014
RMB’000
2013
RMB’000
254,003
152,234
406,237
377,119
138,501
515,620
The above tax losses arising in Mainland China will expire in one to ﬁve years for offsetting against future taxable
proﬁts of the company in which the losses arose.
Deferred tax assets have not been recognised in respect of the above items as it is not considered probable that
taxable proﬁts will be available against which the above items can be utilised.
52
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
9.
DISCONTINUED OPERATION
During the year, the Company ceased the operation in the pig rearing segment . The segment was engaged in the
rearing and sale of pigs.
The results of the pig rearing segment for the year are presented below:
2014
RMB’000
2013
RMB’000
49,568
78,986
712
1,402
Expenses
(68,333)
(91,055)
Loss before tax from the discontinued operation
Tax
(18,053)
–
(10,667)
–
Loss for the year from the discontinued operation
(18,053)
(10,667)
Attributable to the Company
(18,053)
(10,667)
2014
RMB’000
2013
RMB’000
Operating activities
Investing activities
Financing activities
(2,298)
–
7
525
345
6
Net cash (outﬂow)/inﬂow
(2,291)
876
(RMB0.02)
(RMB0.01)
Revenue (note 6)
Other income and gains (note 6)
The net cash ﬂows incurred by the discontinued operation are as follows:
Loss per share:
Basic and diluted from the discontinued operation
The calculation of basic and diluted loss per share amounts from a discontinued operation is based on the loss
attributable to ordinary equity holders of the Company from a discontinued operation of RMB18,053,000 (2013:
a loss of RMB10,667,000) and 1,100,808,740 ordinary shares (2013: 1,107,473,990 ordinary shares) in issue
during the year (note 11).
10.
DIVIDENDS
Proposed ﬁnal – RMB0.0047 (2013: Nil) per ordinary share
2014
RMB'000
2013
RMB'000
5,174
–
The proposed ﬁnal dividend for the year is subject to the approval of the Company’s shareholders at the
forthcoming annual general meeting.
53
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
11.
EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE
COMPANY
The calculation of the basic and diluted earnings/(loss) per share amounts is based on the proﬁt/(loss) for the year
attributable to ordinary equity holders of the Company of RMB25,563,000 (2013: a loss of RMB108,958,000) and
the weighted average number of ordinary shares of 1,100,808,740 (2013: 1,107,473,990) in issue during the year.
The Group had no potentially dilutive ordinary shares in issue during the years ended 31 December 2014 and
2013.
The calculation of the basic and diluted earnings/(loss) per share is as follows:
Earnings/(loss)
Proﬁt/(loss) attributable to ordinary equity holders of the Company
from continuing operations
from a discontinued operation
2014
RMB’000
2013
RMB’000
43,616
(18,053)
25,563
(98,291)
(10,667)
(108,958)
Number of ordinary shares
2014
2013
Shares
Weighted average number of ordinary shares in issue during the year used in
the basic and diluted earnings/(loss) per share calculations
1,100,808,740
1,107,473,990
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting
date and the date of completion of these ﬁnancial statements.
12.
INVESTMENTS IN SUBSIDIARIES
Company
Unlisted shares, at cost
2014
RMB’000
2013
RMB’000
223,738
223,738
Amounts due from subsidiaries included in the Company’s current assets of RMB536,667,000
(2013: RMB542,952,000) were unsecured, interest-free and repayable on demand.
54
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
12.
INVESTMENTS IN SUBSIDIARIES (continued)
Particulars of the subsidiaries are set out below:
Name
Place of
incorporation/
establishment
and place of
operations
Issued ordinary/
registered
shares capital
2014
2013
Percentage of
equity interest
attributable to
the Company
(%)
2014
2013
Principal
activities
Directly held by the Company
Post-Ante Trading Limited
(“Post-Ante”)
British Virgin
Islands
US$200
US$200
100
100
Investment
holding
Globe Bright Limited (“GBL”)
Hong Kong
HK$100
HK$100
100
100
Provision of
administrative
services
Linyi Shengquan Grease Co.,
Ltd. (“SQ Grease”)
PRC/
Mainland
China
100
100
Production and
sale of soybean
meal and
soybean
oil, animal feed
production and
pig rearing*
Indirectly held by the Company
*
US$59,900,000 US$59,900,000
The Group ceased the operation of pig rearing during the year.
55
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
13.
PROPERTY, PLANT AND EQUIPMENT
Group
Buildings
RMB’000
Cost:
At 1 January 2014
455,442
74,271
519,032
551
5,369
19,768
1,074,433
780
14,814
–
–
2,499
20,127
218
–
–
–
15,173
(34,941)
18,670
–
At 31 December 2014
471,036
74,271
541,658
769
5,369
–
1,093,103
Accumulated
depreciation and
impairment:
At 1 January 2014
(274,416)
(58,793)
(346,099)
(519)
(5,188)
–
(685,015)
Depreciation provided
during the year
(29,537)
(10,422)
(37,914)
(32)
(150)
–
(78,055)
At 31 December 2014
(303,953)
(69,215)
(384,013)
(551)
(5,338)
–
(763,070)
74,271
541,658
769
5,369
–
1,093,103
(69,215)
(384,013)
(551)
(5,338)
–
(763,070)
167,083
5,056
157,645
218
31
–
330,033
455,442
74,271
519,032
551
5,369
19,768
1,074,433
Accumulated
depreciation and
impairment
(274,416)
(58,793)
(346,099)
(519)
(5,188)
–
(685,015)
Net carrying amount
181,026
15,478
172,933
32
181
19,768
389,418
Addition
Transfer
At 31 December 2014:
Cost
471,036
Accumulated
depreciation and
impairment
(303,953)
Net carrying amount
At 31 December 2013:
Cost
56
Furniture,
Leasehold
fixtures
improve- Plant and and office
Motor Construction
ments
machinery equipment vehicles in progress
Total
RMB’000 RMB’000 RMB’000 RMB’000
RMB’000
RMB’000
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
13.
PROPERTY, PLANT AND EQUIPMENT (continued)
Group
Buildings
RMB’000
Cost:
At 1 January 2013
Furniture,
Leasehold
fixtures
improve- Plant and and office
Motor Construction
ments
machinery equipment vehicles in progress
Total
RMB’000 RMB’000 RMB’000 RMB’000
RMB’000
RMB’000
455,442
73,928
517,566
521
5,369
–
1,052,826
–
343
1,466
30
–
19,768
21,607
At 31 December 2013
455,442
74,271
519,032
551
5,369
19,768
1,074,433
Accumulated
depreciation and
impairment:
At 1 January 2013
(237,808)
(48,299)
(307,248)
(503)
(5,091)
–
(598,949)
Depreciation provided
during the year
(36,608)
(10,494)
(38,851)
(16)
(97)
–
(86,066)
At 31 December 2013
(274,416)
(58,793)
(346,099)
(519)
(5,188)
–
(685,015)
74,271
519,032
551
5,369
19,768
1,074,433
(58,793)
(346,099)
(519)
(5,188)
–
(685,015)
181,026
15,478
172,933
32
181
19,768
389,418
455,442
73,928
517,566
521
5,369
–
1,052,826
Accumulated
depreciation and
impairment
(237,808)
(48,299)
(307,248)
(503)
(5,091)
–
(598,949)
Net carrying amount
217,634
25,629
210,318
18
278
–
453,877
Addition
At 31 December 2013:
Cost
455,442
Accumulated
depreciation and
impairment
(274,416)
Net carrying amount
At 31 December 2012:
Cost
As at 31 December 2014, certain items of property, plant and equipment with a gross carrying amount of
RMB444,750,000 (2013: RMB178,432,000) were fully depreciated but still in use.
57
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
14.
LAND USE RIGHTS
Group
2014
RMB’000
2013
RMB’000
Cost:
As at 1 January and 31 December
216,000
216,000
Accumulated amortisation and impairment:
At 1 January
Amortisation provided during the year
At 31 December
(152,479)
(11,039)
(163,518)
(141,440)
(11,039)
(152,479)
52,482
63,521
Net book value at 31 December
15.
INVENTORIES
Group
Raw materials
Finished goods
16.
2014
RMB’000
2013
RMB’000
513,338
40,051
553,389
538,225
51,115
589,340
BIOLOGICAL ASSETS
Group
Biological assets:
At fair value
At cost
2014
RMB’000
2013
RMB’000
–
–
–
26,466
8,984
35,450
Group
Physical quantities of biological assets held at end of year:
Infant pigs
Progeny pigs
Breeder pigs
2014
Number
2013
Number
–
–
–
–
2,651
24,061
3,812
30,524
As the Group ceased the operation of the pig rearing segment, there was nil balance of biological assets at the
year end.
58
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
17.
TRADE RECEIVABLES
Group
2014
RMB’000
Trade receivables
Impairment
2013
RMB’000
–
–
2,317
–
–
2,317
Trade receivables are non-interest-bearing and aged within one month based on the invoice date. None of
the above assets is either past due or impaired. The ﬁnancial assets included in the above balances relate to
receivables for which there was no recent history of default as at the end of the reporting period.
18.
PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
Group
Other receivables
Prepayments
2014
RMB’000
2013
RMB’000
177
56,939
985
42,556
57,116
43,541
None of the above assets is either past due or impaired. The ﬁnancial assets included in the above balances
related to receivables for which there was no recent history of default.
19.
CASH AND CASH EQUIVALENTS AND RESTRICTED BANK DEPOSITS
Group
Cash and bank balances
Less: Restricted bank deposits
Cash and cash equivalents
2014
RMB’000
2013
RMB’000
470,423
388,093
542,155
498,757
82,330
43,398
The Group’s restricted bank deposits were pledged to banks as security for the issuance of letters of credit to its
suppliers.
As at 31 December 2014, the Group had cash and bank balances denominated in RMB amounting to
approximately RMB467,061,344 (2013: RMB434,012,606) deposited with banks in Mainland China. RMB is not
freely convertible into foreign currencies, however, under Mainland China’s Foreign Exchange Control Regulations
and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to
exchange RMB for other currencies through banks that are authorised to conduct foreign exchange business.
Cash at banks earns interest at ﬂoating rates based on daily bank deposit rates. The bank balances and
restricted bank deposits are deposited with creditworthy banks with no recent history of default.
59
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
20.
TRADE PAYABLES
Trade payables are non-interest-bearing and normally settled on terms of 90 days or less.
21.
OTHER PAYABLES, DEPOSITS RECEIVED AND ACCRUALS
Group
Other payables
Deposits received
Accruals
Company
2014
RMB’000
2013
RMB’000
2014
RMB’000
2013
RMB’000
28,934
39
18,714
29,032
358
23,552
742
–
–
1,211
–
–
47,687
52,942
742
1,211
Other payables included VAT payable amounting to RMB24,890,000 (2013: RMB24,930,000) and other noninterest-bearing payables amounting to RMB4,044,000 (2013: RMB4,102,000) with an average term of one
month.
22.
SHARE CAPITAL
Number of
ordinary
shares of
HK$0.25 each
23.
Nominal value of
ordinary shares
HK$’000
RMB’000
Authorised:
As at 31 December 2013 and 31 December 2014
2,000,000,000
500,000
535,000
Issued and fully paid:
As at 31 December 2013 and 31 December 2014
1,100,808,740
275,202
294,465
RESERVES
(a)
Group
The amounts of the Group’s reserves and the movements therein for the current and prior years are
presented in the consolidated statement of changes in equity on page 36 of this Annual Report.
Statutory reserve
In accordance with the relevant PRC regulations, SQ Grease, being a wholly-owned foreign investment
enterprise established in Mainland China, is required to appropriate not less than 10% of its proﬁt after tax
to its statutory reserve, until the balance of the reserve reaches 50% of its registered capital. Subject to
certain restrictions as set out in the relevant PRC regulations, the statutory reserve of SQ Grease may be
used to offset against any of its accumulated losses.
60
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
23.
RESERVES (continued)
(a)
Group (continued)
There were no appropriations of the statutory reserve during the year (2013: Nil).
(b)
Company
Share
Capital
Proposed
premium redemption Accumulated
final
account
reserve
losses
dividend
Total
RMB’000 RMB’000
RMB’000
RMB’000 RMB’000
Balance at 1 January 2013
Loss for the year
Repurchase and cancellation of shares
510,034*
–
(115)
–
–
2,982
(33,134)*
(5,267)
(2,982)
–
–
–
476,900
(5,267)
(115)
Balance at 31 December 2013 and
1 January 2014
509,919*
2,982*
(41,383)*
–
471,518
(5,825)
(5,174)
–
5,174
(5,825)
–
(52,382)*
5,174
465,693
Loss for the year
Proposed ﬁnal 2014 dividends
Balance at 31 December 2014
*
–
–
509,919*
–
–
2,982*
These reserve accounts comprise the Company’s reserves of RMB460,519,000 (2013: RMB471,518,000) in the
Company’s statement of ﬁnancial position.
The Company’s share premium account with a balance of RMB509,919,000 (2013: RMB509,919,000)
may be distributed in the form of fully paid bonus shares.
24.
DIRECTORS’ REMUNERATION
The number of directors of the Group whose remuneration falls within the following band is disclosed in
compliance with Rule 1207(11) of Chapter 12 of the Listing Manual of the SGX-ST:
Executive/
non-executive
directors
Independent
non-executive
directors
Total
2
3
5
2014
Below S$250,000 (equivalent to approximately
RMB1,212,134 (2013: RMB1,299,475))
61
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
25.
OPERATING LEASE ARRANGEMENTS
The Group leases certain of its buildings under operating lease arrangements. Leases for the buildings are
negotiated for terms within three years.
As at 31 December 2014, the Group had total future minimum lease payments under non-cancellable operating
leases for buildings falling due as follows:
Within one year
After one year but within ﬁve years
2014
RMB’000
2013
RMB’000
815
272
812
1,082
1,087
1,894
The Company did not have any signiﬁcant operating lease commitments as at 31 December 2014 (2013: Nil).
26.
COMMITMENTS
In addition to the operating lease commitments detailed in note 25 above, the Group had the following
commitments at the end of the reporting period:
Contracted, but not provided for Unutilised letters of credit *
Authorised but not contracted
Contracted, but not provided for construction in progress
*
2014
RMB’000
2013
RMB’000
332,806
–
–
693,779
3,842
19,391
332,806
717,012
Unutilised letters of credit represented the unutilised facilities of letters of credit issued by local banks in connection with
the procurement of soybean materials.
The Company did not have any signiﬁcant commitments as at 31 December 2014 (2013: Nil).
27.
FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of ﬁnancial instruments as at the end of the reporting period are
as follows:
Financial assets
Group
Loans and receivables
2014
2013
RMB’000
RMB’000
Trade receivables
Financial assets included in prepayments, deposits and other receivables (note 18)
Restricted bank balances
Cash and cash equivalents
62
–
177
388,093
82,330
2,317
985
498,757
43,398
470,600
545,457
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
27.
FINANCIAL INSTRUMENTS BY CATEGORY (continued)
Financial liabilities
Group
Financial liabilities at amortised cost
2014
2013
RMB’000
RMB’000
Trade payables
5,028
227,635
Financial liabilities included in other payables, deposits received and
accruals (note 21)
7,846
10,605
12,874
238,240
Financial assets
Company
Loans and receivables
2014
2013
RMB’000
RMB’000
Amounts due from subsidiaries
Cash and bank balances
536,667
495
542,952
504
537,162
543,456
Financial liabilities
Company
Financial liabilities at amortised cost
2014
2013
RMB’000
RMB’000
Financial liabilities included in other payables, deposits received and
accruals (note 21)
28.
742
1,211
FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
Management has assessed that the fair value of trade receivables, ﬁnancial assets included in prepayments,
deposits and other receivables, restricted bank balances, cash and cash equivalents, trade payables, ﬁnancial
liabilities included in other payables, deposits received and accruals, and amounts due from subsidiaries
approximate to their carrying amounts largely due to the short term maturities of these instruments.
63
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
29.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group has written risk management policies and guidelines. In addition, the board of directors meets
periodically to analyse and formulate measures to manage the Group’s exposure to market risk, which arises
principally from changes in interest rates and currency exchange rates. Generally, the Group employs a
conservative strategy regarding its risk management. The Group has not used any derivatives or other instruments
for hedging purposes. The Group does not hold or issue derivative ﬁnancial instruments for trading purposes.
The main risks arising from the Group’s ﬁnancial instruments are credit risk and liquidity risk. The board of
directors reviews and agrees policies for managing each of these risks and they are summarised below.
(i)
Credit risk
The Group’s bank balances are mainly maintained with state-owned banks in Mainland China.
The carrying amounts of trade and other receivables included in the consolidated statement of ﬁnancial
position represent the Group’s maximum exposure to credit risk in relation to the Group’s ﬁnancial
assets. No other ﬁnancial assets carry a signiﬁcant exposure to credit risk. The Group has no signiﬁcant
concentration of credit risk due to its large customer base.
The Group performs ongoing credit evaluation of its customers’ ﬁnancial conditions and requires no
collateral from its customers. The impairment allowances for trade receivables are based upon a review of
the expected collectibility of all trade receivables.
(ii)
Liquidity risk
The Group monitors its risk to a shortage of funds by considering the maturity of both its ﬁnancial
instruments and ﬁnancial assets, and projecting cash ﬂows from operations on a periodic basis.
The maturity proﬁle of the Group and the Company’s ﬁnancial liabilities as at the end of the reporting
period, based on the contractual undiscounted payments, was as follows:
Group
Trade payables
Financial liabilities included in other payables, deposits received and
accruals
2014
Less than
one year
Total
5,028
5,028
7,846
7,846
12,874
12,874
Group
Trade payables
Financial liabilities included in other payables, deposits received and
accruals
2013
Less than
one year
Total
227,635
227,635
10,605
10,605
238,240
238,240
Company
2014
Less than
one year
Other payables
64
742
Total
742
United Food Holdings Limited
Annual Report 2014
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
29.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(ii)
Liquidity risk (continued)
Company
On demand
Other payables
–
2013
Less than
one year
1,211
Total
1,211
The fair values of the Group’s ﬁnancial assets and liabilities are not materially different from their carrying
amounts because of the immediate or short term maturity of these ﬁnancial instruments.
(iii)
Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue
as a going concern and to maintain healthy capital ratios in order to support its business and maximise the
shareholders’ value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,
policies or processes for managing capital for the current year (2013: None).
The Group carries out business in Mainland China with its own capital and did not have any interestbearing borrowings as at 31 December 2014 and 2013. The Group’s capital structure mainly comprise
payables to suppliers and other non-interest-bearing payables. In the opinion of the directors, the
presentation of a quantitative capital management analysis would provide no additional useful information
to the users of the ﬁnancial statements.
30.
COMPARATIVE AMOUNTS
The comparative consolidated statement of proﬁt or loss has been re-presented as if the operation discontinued
during the current year had been discontinued at the beginning of the comparative period (note 9).
31.
APPROVAL OF THE FINANCIAL STATEMENTS
The ﬁnancial statements were approved and authorised for issue by the board of directors on 19 March 2015.
65
Annual Report 2014
United Food Holdings Limited
STATISTICS OF SHAREHOLDINGS
AS AT 11 MARCH 2015
No. of shares issued
Class of shares
Voting rights
:
:
:
1,100,808,740
Ordinary share
One vote per share
DISTRIBUTION OF SHAREHOLDINGS
SIZE OF SHAREHOLDINGS
NO. OF
SHAREHOLDERS
%
NO. OF SHARES
%
4
82
1,842
2,677
34
4,639
0.09
1.77
39.71
57.70
0.73
100.00
103
78,359
13,494,000
189,534,122
897,702,156
1,100,808,740
0.00
0.01
1.22
17.22
81.55
100.00
NO. OF SHARES
%
483,304,620
113,074,050
89,408,000
50,000,000
28,157,000
14,729,336
14,386,000
13,592,000
8,600,000
8,455,000
8,281,333
6,560,000
6,500,000
6,212,000
5,927,990
4,664,000
4,315,000
3,000,000
2,974,000
2,726,027
874,866,356
43.90
10.27
8.12
4.54
2.56
1.34
1.31
1.23
0.78
0.77
0.75
0.60
0.59
0.56
0.54
0.42
0.39
0.27
0.27
0.25
79.46
1 - 99
100 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 AND ABOVE
TOTAL
TWENTY LARGEST SHAREHOLDERS
NO.
NAME
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CHINESE GLORY INVESTMENTS LIMITED
PHILLIP SECURITIES PTE LTD
DBS VICKERS SECURITIES (SINGAPORE) PTE LTD
WANG TINGBAO
RAFFLES NOMINEES (PTE) LIMITED
UOB KAY HIAN PRIVATE LIMITED
DBS NOMINEES (PRIVATE) LIMITED
LOKE YEE WOON
TAN AH CHYE
NG WONG WAI LAN
CITIBANK NOMINEES SINGAPORE PTE LTD
DBSN SERVICES PTE. LTD.
CHAN WAI MAN
HONG LEONG FINANCE NOMINEES PTE LTD
OCBC SECURITIES PRIVATE LIMITED
WIRTZ JOCHEN
GOH BEE LAN
KIM LENG TEE INVESTMENTS PTE LTD
TENG TECK SENG
MAYBANK KIM ENG SECURITIES PTE. LTD.
TOTAL
TREASURY SHARES - Rule 1207(9)(f)
The Company does not hold any Treasure Shares.
66
United Food Holdings Limited
Annual Report 2014
STATISTICS OF SHAREHOLDINGS
AS AT 11 MARCH 2015
SUBSTANTIAL SHAREHOLDERS
(As recorded in the Register of Substantial Shareholders)
Name
Direct Interest
Chinese Glory Investments Limited
Wang Tingbao*
David Yip Wai Sun**
483,304,620
50,000,000
–
%
43.90
4.54
–
Deemed Interest
–
485,304,844
483,304,620
%
–
44.09
43.90
Notes:
*
**
Wang Tingbao’s deemed interest in 485,304,844 shares comprises:(i)
224 shares held under UOB Kay Hian Pte Ltd
(ii)
483,304,620 shares held by Chinese Glory Investments Limited by virtue of his 20% interests in Chinese Glory Investments
Limited
(iii)
2,000,000 shares held under Phillip Securities (HK) Ltd
David Yip Wai Sun is deemed to be interested in 483,304,620 shares held by Chinese Glory Investments Limited by virtue of his
70% interests in Chinese Glory Investments Limited.
PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS
Approximately 52% of the Company’s shares are in the hands of public. Accordingly, the Company has complied with
Rule 723 of the Listing Manual of the SGX-ST.
67
United Food Holdings Limited
Annual Report 2014
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of UNITED FOOD HOLDINGS LIMITED (the “Company”)
will be held at Esplanade Room 2, Level 4, Carlton Hotel Singapore, 76 Bras Basah Road, Singapore 189558 on
Wednesday, 22 April 2015 at 9.00 am for the following purposes:
AS ORDINARY BUSINESS
1.
To receive and adopt the Directors’ Report and the Audited Financial Statements of the Company for the year
ended 31 December 2014 together with the Auditors’ Report thereon.
(Resolution 1)
2.
To declare a ﬁrst and ﬁnal dividend of RMB0.0047 per ordinary share (tax not applicable) for the year ended 31
December 2014 (2013: Nil)
(Resolution 2)
3.
To re-elect Mr Wang Tingbao who is retiring by rotation pursuant to Bye-law 86(1) of the Company’s Bye-laws:
(Resolution 3)
Mr Wang Tingbao will, upon re-election as a Director of the Company, remain as a member of the Remuneration
Committee.
4.
To approve the payment of Directors’ fees of S$234,000 for the year ending 31 December 2015, to be paid
quarterly in arrears (2014: S$226,000).
(Resolution 4)
5.
To re-appoint Ernst & Young, Hong Kong as the Company’s Auditors and to authorise the Directors to ﬁx their
remuneration.
(Resolution 5)
6.
To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought ﬁt, to pass the following resolutions as Ordinary Resolutions, with or without any modiﬁcations:
7.
Renewal of the General Issue Mandate
“THAT authority be and is hereby given to the Directors to:
(a)
(i)
issue shares whether by way of rights, bonus or otherwise; and/or
(ii)
make or grant offers, agreements or options (collectively “Instruments”) that might or would require
shares to be issued, including but not limited to the creation and issue of (as well as adjustments
to) warrants, debentures or other instruments convertible into shares;
at any time and upon such terms and conditions for such purposes and to such persons as the Directors
may in their absolute discretion deem ﬁt; and
(b)
(notwithstanding the authority conferred by this Ordinary Resolution may have ceased to be in force) issue
shares in pursuance of any Instrument made or granted by the Directors while this Ordinary Resolution
was in force, provided that:
(1)
68
the aggregate number of shares to be issued pursuant to this Ordinary Resolution (including shares
to be issued in pursuance of instruments made or granted pursuant to this Ordinary Resolution)
does not exceed ﬁfty per cent (50%) of the issued share capital of the Company (as calculated in
accordance with sub-paragraph (2) below, of which the aggregate number of shares to be issued
other than on a pro rata basis to shareholders of the Company (including shares to be issued in
pursuance of Instruments made or granted pursuant to this Ordinary Resolution) does not exceed
twenty per cent (20%) of the issued share capital of the Company (as calculated in accordance with
sub-paragraph (2) below);
United Food Holdings Limited
Annual Report 2014
NOTICE OF ANNUAL GENERAL MEETING
(2)
(subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of
determining the aggregate number of shares that may be issued under sub-paragraph (1) above:
(i)
(ii)
the percentage of issued share capital shall be based on the issued share capital of the
Company as at the date of the passing of this Ordinary Resolution, after adjusting for:
(a)
new shares arising from the conversion or exercise of any convertible securities or
share options or vesting of share awards which are outstanding or subsisting as at
the date of the passing of this Ordinary Resolution; and
(b)
any subsequent consolidation or subdivision of shares;
in relation to an Instrument, the number of shares shall be taken to be that number as would
have been issued had the rights therein been fully exercised or effected on the date of the
making or granting of the Instrument;
(3)
in exercising the authority conferred by this Ordinary Resolution, the Company shall comply with the
provisions of the listing rules of the SGX-ST for the time being in force (unless such compliance has
been waived by the SGX-ST) and the Bye-laws for the time being of the Company; and
(4)
the authority conferred on the Directors of the Company pursuant to this Ordinary Resolution may
be exercised by the Directors of the Company at any time and from time to time during the period
commencing from the passing of this Ordinary Resolution and expiring on the earliest of:
(i)
the date on which the next annual general meeting of the Company is held or required by
law to be held;
(ii)
the date on which share issues have been carried out to the full extent of the authority
conferred in this Ordinary Resolution; or
(iii)
the date on which the authority conferred in this Ordinary Resolution is varied or revoked by
an ordinary resolution of shareholders of the Company in general meeting.”
[See Explanatory Note (i)]
(Resolution 6)
8.
Renewal of the Share Purchase Mandate
“THAT:
(a)
pursuant to Bye-law 3(2) of the Company’s Bye-laws and otherwise in accordance with all other laws,
regulations and rules of the SGX-ST, the Directors of the Company be and are hereby authorised to make
purchases or otherwise acquire issued ordinary shares fully paid in the capital of the Company, from time
to time of up to ten per cent (10%) of the issued ordinary share capital of the Company as at the date of
the passing of this Ordinary Resolution during the period and on the terms set out in Annexure I of the
Appendix accompanying the Notice of Annual General Meeting dated 6 April 2015 and this mandate shall,
unless revoked or varied by the Company in general meeting, continue in force until the date falling twelve
months from the date of the grant of the mandate or the date that the next annual general meeting of the
Company is held or is required by law to be held, whichever is the earlier;
(b)
the Directors of the Company and/or any of them be and are hereby authorised to complete and do
all such acts and things (including executing such documents as may be required) as they and/or he
may consider necessary, expedient, incidental or in the interest of the Company to give effect to the
transactions contemplated under and/or authorised by this Ordinary Resolution.”
[See Explanatory Note (ii)]
(Resolution 7)
By Order of the Board
Yeo Poh Noi Caroline
Josephine Toh Lei Mui
Company Secretaries
Singapore, 6 April 2015
69
United Food Holdings Limited
Annual Report 2014
NOTICE OF ANNUAL GENERAL MEETING
Explanatory Notes to Resolutions to be passed –
(i)
The Ordinary Resolution 6 proposed in item 7 above, if passed, will empower the Directors of the Company, to allot and issue
Shares and convertible securities in the Company up to an amount not exceeding ﬁfty percent (50%) of the total number of issued
shares (excluding treasury shares) in the capital of the Company, of which up to twenty percent (20%) may be issued other than
on a pro rata basis, from the date of the above Meeting until the date of the next Annual General Meeting
(ii)
The Ordinary Resolution 7 proposed in item 8 above, if passed, will empower the Directors of the Company to make purchases of
Shares from time to time (whether by way of market purchases or off-market purchases on an equal access scheme or both) of
up to ten per cent (10%) of the issued shares in the capital of the Company at the price of up to but not exceeding the Maximum
Price in accordance with the terms set out in Annexure 1 of the Appendix accompanying the Notice of Annual General Meeting
dated 6 April 2015.
Notes:
1.
A depositor holding Shares through The Central Depository (Pte) Limited (“Depositor”) who is an individual and who wishes to
attend the Annual General Meeting in person need not take any further action and can attend and vote at the Annual General
Meeting as The Central Depository (Pte) Limited’s proxy without the lodgement of any proxy form.
2.
A Depositor who is an individual but is unable to attend the Annual General Meeting personally and wishes to appoint a nominee
as The Central Depository (Pte) Limited’s proxy to attend and vote on his behalf, must complete, sign and return the Depositor
Proxy Form and deposit the duly completed Depositor Proxy Form at the ofﬁce of Singapore Share Transfer Agent, Boardroom
Corporate & Advisory Services Pte. Ltd., 50 Rafﬂes Place #32-01, Singapore Land Tower, Singapore 048623 not less than fortyeight (48) hours before the time appointed for holding the Annual General Meeting. Similarly, a Depositor who is a corporation and
who wishes to attend the Annual General Meeting must submit the Depositor Proxy Form for the appointment of nominee(s) to
attend and vote at the Annual General Meeting on its behalf.
3.
If a member with Shares registered in his name in the Register of Members is unable to attend the Annual General Meeting and
wishes to appoint a proxy to attend and vote at the Annual General Meeting in his stead, then he should complete and sign the
relevant Member Proxy Form and deposit the duly completed Member Proxy Form at the ofﬁce of Singapore Share Transfer
Agent, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Rafﬂes Place #32-01, Singapore Land Tower, Singapore 048623
not less than forty-eight (48) hours before the time appointed for holding the meeting.
4.
If a person who has Shares entered against his name in the Depository Register and Shares registered in his name in the Register
of Members is unable to attend the Annual General Meeting and wishes to be represented at the meeting, he should use the
Depositor Proxy Form and the Member Proxy Form for, respectively, the Shares entered against his name in the Depository
Register and Shares registered in his name in the Register of Members.
5.
If the member or Depositor is a corporation, the proxy form must be executed under seal or the hand of its duly authorised ofﬁcer
or attorney.
6.
All proxy forms must be deposited at Singapore Share Transfer Agent, Boardroom Corporate & Advisory Services Pte. Ltd., 50
Rafﬂes Place #32-01, Singapore Land Tower, Singapore 048623 not less than forty-eight (48) hours before the time appointed for
holding the meeting.
7.
A proxy need not be a member.
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting
and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal
data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies
and representatives appointed for the Annual General Meeting (including any adjournment thereof) and the preparation and compilation
of the attendance lists, minutes and other documents relating to the Annual General Meeting (including any adjournment thereof), and
in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the
“Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the
Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use
and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii)
agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a
result of the member’s breach of warranty.
70
BUSINESS OFFICE
Shenquan Village, Luozhuang District
Linyi City, Shandong Province
The People’s Republic of China
Postal Code 276017
Tel: [86] (539) 7106 688 Fax: [86] (539) 7100 333
HONG KONG OFFICE
Room 1012, 10/F., Wing On Centre
111 Connaught Road, C
Sheung Wan, Hong Kong
Tel: [852] 2851 6688 Fax: [852] 2851 6788
UNITED FOOD HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
(Company Registration Number: 28925)
APPENDIX ACCOMPANYING
THE NOTICE OF ANNUAL GENERAL MEETING
DATED 6 APRIL 2015
IN RELATION TO
1)
THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE; AND
2)
THE PROPOSED RENEWAL OF THE GENERAL ISSUE MANDATE
THIS APPENDIX IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ
IT CAREFULLY.
If you are in doubt as to the action you should take, you should consult your stockbroker, bank manager,
solicitor, accountant, tax adviser or other professional adviser immediately.
This Appendix is circulated to the Shareholders of United Food Holdings Limited (the “Company”)
together with the Company’s Annual Report 2014. The purpose of this Appendix is to explain to
Shareholders the rationale and provide information relating to the proposed renewal of the Share
Purchase Mandate and the General Issue Mandate (both as defined in this Appendix) to be tabled at
the Annual General Meeting of the Company to be held at Esplanade Room 2, Level 4, Carlton Hotel
Singapore, 76 Bras Basah Road, Singapore 189558 on Wednesday, 22 April 2015 at 9:00 am.
The Notice of the Annual General Meeting and a Proxy Form are enclosed with the Annual Report.
If you have sold or transferred all your Shares, you should forward this Appendix, the Notice of Annual
General Meeting and the attached Proxy Form immediately to the purchaser or transferee or to the bank,
stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the
purchaser or transferee.
The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any
of the statements made, opinions expressed or reports contained in this Appendix.
1
CONTENTS
PAGE
LETTER TO SHAREHOLDERS
1.
Definitions..................................................................................................................................
3
2.
Introduction................................................................................................................................
5
3.
Directors’ and Substantial Shareholders’ Interests ...................................................................
6
4.
Directors’ Responsibility Statement ..........................................................................................
6
5.
Annual General Meeting ...........................................................................................................
6
6.
Action to be taken by Shareholders ..........................................................................................
7
7.
Documents Available for Inspection ..........................................................................................
7
ANNEXURE 1
PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE
1.
Background ...............................................................................................................................
2.
Renewal of the Share Purchase Mandate
8
2.1
Rationale for Share Purchase Mandate..........................................................................
8
2.2
Terms of the Share Purchase Mandate ..........................................................................
8
2.3
Status of Purchased Shares ...........................................................................................
10
2.4
Source of Funds..............................................................................................................
10
2.5
Financial and Other Impact .............................................................................................
11
2.6
Listing Manual .................................................................................................................
13
2.7
Application of the Take-Over Code.................................................................................
13
2.8
Form 2 Submission to the SIC ........................................................................................
17
2.9
Shares Purchased by the Company ...............................................................................
17
2.10 Advice to Shareholders ...................................................................................................
17
2.11 Shareholders’ Approval ...................................................................................................
17
2.12 Directors’ Recommendation ............................................................................................
17
ANNEXURE 2
PROPOSED RENEWAL OF THE GENERAL ISSUE MANDATE
1.
Background ...............................................................................................................................
2.
Renewal of the General Issue Mandate
18
2.1
Rationale for General Issue Mandate .............................................................................
18
2.2
Duration of General Issue Mandate ................................................................................
18
2.3
Shareholders’ Approval ...................................................................................................
18
2.4
Directors’ Recommendation ............................................................................................
18
2
UNITED FOOD HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
(Company Registration Number: 28925)
DIRECTORS:
DAVID YIP WAI SUN
WANG TINGBAO
LEE TECK LENG
SITOH YIH PIN
FU QIANG
REGISTERED OFFICE:
(Non-Executive Chairman)
(Executive Vice Chairman and Chief Executive Officer)
(Lead Independent Director)
(Independent Director)
(Independent Director)
CLARENDON HOUSE
2 CHURCH STREET
HAMILTON HM 11
BERMUDA
6 April 2015
To: The Shareholders of United Food Holdings Limited
Dear Sir or Madam
(I)
PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE
(II)
PROPOSED RENEWAL OF THE GENERAL ISSUE MANDATE
1.
DEFINITIONS
For the purpose of this Appendix and the Annexures thereto, the following definitions have, where
appropriate, been used:
“2015 AGM”
The annual general meeting of the Company to be held on the
date set out in the Notice of Annual General Meeting issued by the
Company on 6 April 2015.
“Act”
The Companies Act (Chapter 50) of Singapore, as amended or
modified from time to time.
“Bermuda Companies Act”
The Companies Act 1981 of Bermuda, as amended or modified
from time to time.
“Board”
The board of Directors of the Company.
“CDP”
The Central Depository (Pte) Limited.
“CGIL Group”
Chinese Glory Investments Limited, Mr Wang Tingbao and Mr
David Yip Wai Sun and/or persons acting in concert with them.
“Company”
United Food Holdings Limited, a company incorporated in
Bermuda.
“Directors”
Directors of the Company for the time being and “a Director” shall
be construed accordingly.
“General Issue Mandate”
Proposed general mandate to be given to Directors to issue
Shares in the Company, more details of which are set out in
Annexure 2.
“Group”
United Food Holdings Limited and its Subsidiaries.
3
“HKD”
Hong Kong Dollars.
“Latest Practicable Date”
26 February 2015, being the latest practicable date prior to the
printing of this Appendix.
“Listing Manual”
The Listing Manual of the SGX-ST, as may be amended, varied or
supplemented from time to time.
“Market Day”
A day on which the SGX-ST is open for trading in securities.
“Market Purchases”
Purchases or acquisitions of Shares on the SGX-ST undertaken by
the Company during the Relevant Period through the Central Limit
Order Book trading system, through one or more duly licensed
stockbrokers appointed by the Company for the purpose, and a
“Market Purchase” shall be construed accordingly.
“Maximum Price”
The price referred to in Paragraph 2.2.4 of Annexure 1
“month”
Calendar month.
“NTA”
Net tangible assets.
“Off-Market Purchases”
Purchases or acquisitions of Shares undertaken by the Company
during the Relevant Period on an equal access scheme as
determined or formulated by the Directors and an “Off-Market
Purchase” shall be construed accordingly.
“Offeree Shareholders”
Shareholders holding Shares at the time of an offer of Shares
Purchase, and an “Offeree Shareholder” shall be construed
accordingly.
“Relevant Period”
The period commencing from the date the Share Purchase
Mandate is conferred by the Company at the 2015 AGM and
expiring on the earliest of (i) the date falling twelve (12) months
after the date the Share Purchase Mandate is conferred, (ii) the
date the next annual general meeting of the Company is held or is
required to be held, or (iii) the date the said mandate is revoked or
varied by the Company in general meeting.
“Required Price”
In relation to the offer required to be made under the provisions of
Rule 14.1 of the Take-over Code, the offer shall be in cash or be
accompanied by a cash alternative at a price in accordance with
Rule 14.3 which is the highest price paid by the offerors and/or
person(s) acting in concert with them for the Company’s Shares
(i) during the offer period and within the preceding six (6) months,
(ii) acquired through the exercise of instruments convertible into
securities which carry voting rights within six (6) months of the offer
and during the offer period, or (iii) acquired through the exercise of
rights to subscribe for, and options in respect of, securities which
carry voting rights within six (6) months of the offer or during the
offer period; or at such price as determined by the SIC under Rule
14.3 of the Take-over Code.
“RMB”
Chinese Renminbi.
“S$”
Singapore Dollars.
“SGX-ST”
Singapore Exchange Securities Trading Limited.
4
“SIC”
Securities Industry Council of Singapore.
“Shareholders”
Registered holders of Shares in the Register of Members of the
Company.
“Shares”
Fully-paid ordinary shares in the capital of the Company.
“Share Purchases”
Off-Market Purchases or Market Purchases undertaken by the
Company during the Relevant Period and, a “Shares Purchase”
shall be construed accordingly.
“Share Purchase Mandate”
Proposed general mandate to authorise Directors to exercise all
powers of the Company to purchase or otherwise acquire its
issued Shares upon and subject to the terms of such mandate,
more details of which are set out in Annexure 2.
“Subsidiaries”
The subsidiaries of a company (as defined in Section 5 of the Act)
and “Subsidiary” shall be construed accordingly.
“Substantial Shareholder”
A person who has an interest in the Shares the nominal amount of
which is not less than five per cent (5%) of the nominal amount of
all the voting shares of the Company.
“Take-over Code”
The Singapore Code on Take-over and Mergers, as may be
amended or modified from time to time.
“%” or “per cent”
Per centum or percentage.
The term “Depositor” shall have the meaning ascribed to it by Section 130A of the Act.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders.
References to persons shall, where applicable, include corporations.
The headings in this Appendix and the Annexures thereto are inserted for convenience only and
shall be ignored for construing this Appendix and the Annexures.
Any reference to a time of a day and date in this Appendix is a reference to Singapore time and
date respectively, unless otherwise stated.
Reference: Exchange Rate as at 26 February 2015: SGD1 = RMB4.54
2.
INTRODUCTION
We refer to the Notice of the Annual General Meeting of United Food Holdings Limited issued by
the Company on 6 April 2015 (the “Notice of the 2015 AGM”).
Item 7 of the Notice of the 2015 AGM is an ordinary resolution (“Resolution 6”) to be proposed at
the 2015 AGM for the renewal of the Company’s General Issue Mandate, the details of which are
set out in Annexure 2.
Item 8 of the Notice of the 2015 AGM is an ordinary resolution (“Resolution 7”) to be proposed at
the 2015 AGM for the renewal of the Company’s Share Purchase Mandate which will empower
the Directors to make purchases or otherwise acquire Shares from time to time subject to certain
restrictions set out in the Listing Manual, the details of which are set out in Annexure 1.
The purpose of this Appendix is to provide Shareholders with information relating to Resolutions 6
and 7.
5
3.
DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS
The interests of the Directors and the Substantial Shareholders in issued Shares, based on the
Company’s Register of Directors’ Shareholdings and Register of Substantial Shareholders
respectively as at the Latest Practicable Date:Directors
Direct
%
Deemed
%
Nil
Nil
483,304,620
43.90
Wang Tingbao
50,000,000
4.54
485,304,844
44.09
Lee Teck Leng
Nil
Nil
Nil
Nil
Sitoh Yih Pin
Nil
Nil
Nil
Nil
Fu Qiang
Nil
Nil
Nil
Nil
David Yip Wai Sun
Substantial
Shareholders
Number of Shares Held
Direct
Interest
%
Deemed
Interest
%
Total of Direct
and Deemed
Interest
%
Chinese Glory
Investments Limited
483,304,620
43.90
Nil
Nil
483,304,620
43.90
Wang Tingbao*
50,000,000
4.54
485,304,844
44.09
535,304,844
48.63
Nil
Nil
483,304,620
43.90
483,304,620
43.90
David Yip Wai Sun**
*
Wang Tingbao’s deemed interest in 485,304,844 Shares comprises:(i)
(ii)
(iii)
**
4.
224 Shares held under UOB Kay Hian Pte Ltd
483,304,620 Shares held by Chinese Glory Investments Limited by virtue of his 20% interests in Chinese Glory
Investments Limited
2,000,000 Shares held under Phillip Securities (HK) Ltd
David Yip Wai Sun is deemed to be interested in 483,304,620 Shares held by Chinese Glory Investments Limited by
virtue of his 70% interests in Chinese Glory Investments Limited.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors collectively and individually accept full responsibility for the accuracy of the
information given in this Appendix to Shareholders and confirm after making all reasonable
enquiries that, to the best of their knowledge and belief, this Appendix constitutes full and true
disclosure of all material facts about the proposed renewal of the General Issue Mandate and
the Share Purchase Mandate and the Company and the Directors are not aware of any facts the
omission of which would make any statement in this Appendix misleading. Where information
in this Appendix has been extracted from published or otherwise publicly available sources
or obtained from a named source, the sole responsibility of the Directors has been to ensure
that such information has been accurately and correctly extracted from those sources and/or
reproduced in the Appendix in its proper form and context.
Shareholders who are in any doubt as to the action they should take, should consult their
stockbrokers or other professional advisers immediately.
5.
ANNUAL GENERAL MEETING
The 2015 AGM will be held at Esplanade Room 2, Level 4, Carlton Hotel Singapore, 76 Bras
Basah Road, Singapore 189558 on Wednesday, 22 April 2015 at 9:00 am.
6
6.
ACTION TO BE TAKEN BY SHAREHOLDERS
Shareholders who are unable to attend the 2015 AGM and who wish to appoint proxy to attend
and vote at the 2015 AGM on their behalf should complete, sign and return the proxy form
attached to the Notice of Annual General Meeting in accordance with the instructions printed
thereon as soon as possible and in any event so as to arrive at the office of Singapore Share
Transfer Agent, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01
Singapore Land Tower, Singapore 048623, not less than forty-eight (48) hours before the time
fixed for the 2015 AGM or any postponement or adjournment thereof. The appointment of proxy or
proxies by a Shareholder does not preclude him from attending and voting in person at the 2015
AGM if he wishes to do so.
Depositors who wish to attend and vote at the 2015 AGM, and whose names are shown in the
records of CDP as at a time not earlier than forty-eight (48) hours before the time appointed for the
2015 AGM supplied by The Central Depository (Pte) Ltd (the “CDP”) to the Company, may attend
as CDP’s proxies. Such Depositors who are individuals and who wish to attend the 2015 AGM
in person need not take any further action and can attend and vote at the 2015 AGM without the
lodgment of any proxy form. Depositors who are not individuals and Depositors who are unable to
attend personally and wish to appoint a nominee to attend and vote on his behalf, will find attached
to the Notice of Annual General Meeting a Depositor Proxy Form which they are requested to
complete, sign and return in accordance with the instructions printed thereon as soon as possible
and in any event, so as to arrive at the offices of the Company’s Singapore Share Transfer Agent,
Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land
Tower, Singapore 048623 not less than forty-eight (48) hours before the time appointed for the
2015 AGM. The completion and return of a Depositor Proxy Form by a Depositor who is an
individual does not preclude him from attending and voting in person at the 2015 AGM in place of
his nominee if he finds that he is able to do so.
7.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the office of Singapore Share
Transfer Agent, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01
Singapore Land Tower, Singapore 048623, during normal business hours from the date of this
Appendix up to the date of the 2015 AGM:
(a)
Memorandum of association and bye-laws of the Company for the time being; and
(b)
Annual Report 2014.
Yours faithfully
For and on behalf of the Board of Directors of
United Food Holdings Limited
DAVID YIP WAI SUN
CHAIRMAN
7
ANNEXURE 1
PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE
1.
BACKGROUND
At the annual general meeting of the Company held on 28 April 2014 (the “2014 AGM”),
Shareholders had approved the renewal of the Share Purchase Mandate to enable the Company
to purchase or otherwise acquire its issued Shares. The rationale for, authority and limitations
on, and the financial effects of, the Share Purchase Mandate were set out in the Appendix
Accompanying The Notice of Annual General Meeting dated 11 April 2014 (the “2014 Appendix”)
and Ordinary Resolution 6 set out in the Notice of the 2014 AGM.
The renewed Share Purchase Mandate was expressed to take effect from the passing of the said
Ordinary Resolution 6 at the 2014 AGM and will expire on the date of the forthcoming Annual
General Meeting to be held on 22 April 2015 (the “2015 AGM”). Accordingly, Shareholders’
approval is being sought for the renewal of the Share Purchase Mandate at the 2015 AGM.
2.
RENEWAL OF THE SHARE PURCHASE MANDATE
2.1
Rationale for Share Purchase Mandate
As stated in the 2014 Appendix to Shareholders, the Share Purchase Mandate will give the
Directors the flexibility to purchase Shares, if and when circumstances permit, with a view to
enhancing the earnings per Share and/or the net asset value per Share of the Company. The
Directors believe that Share Purchases also provide the Company and its Directors with an
alternative to facilitate the return of surplus cash over and above its ordinary capital requirements
and exercise greater control over the Company’s share capital structure.
The Directors further believe that Share Purchases may bolster confidence of Shareholders. With
the Share Purchase Mandate, the Directors will have the ability to purchase Shares on the SGXST, where appropriate, to stabilise the demand for the Shares and to buffer against short-term
share price volatility due to market speculation.
The Share Purchases by the Company will be made only in circumstances where it is considered
to be in the best interests of the Company. Further, the Directors do not propose to carry out
Share Purchases to such an extent that would, or in circumstances that might, result in a material
adverse effect on the financial position of the Company or Group, or result in the Company being
de-listed from the SGX-ST.
2.2
Terms of the Share Purchase Mandate
Any Share Purchase by the Company will have to be made in accordance with, and in the manner
prescribed by the Bermuda Companies Act and such other laws and regulations as may for the
time being be applicable.
Under the Bermuda Companies Act, a Bermuda company may, if authorised by its memorandum
of association or bye-laws, purchase its own shares and repurchased shares shall be treated
as cancelled or, if authorised by its memorandum of association or bye-laws, held as treasury
shares. The Company has the power to purchase its own Shares for cancellation pursuant to its
memorandum of association and bye-laws. Neither the Company’s memorandum of association
nor its bye-laws presently authorize the Company to purchase or acquire its own Shares to be held
as treasury shares.
As the Company is listed on the SGX-ST, it is also required to comply with Part XIII of Chapter 8
of the Listing Manual, which relates to the purchase or acquisition of issued ordinary shares in the
capital of a company which is listed on the SGX-ST.
8
The authority and limitations placed on the purchase or acquisition of Shares by the Company
under the Share Purchase Mandate including the information required under Rule 883(1) of the
Listing Manual are summarised below:2.2.1
Maximum Number of Shares
Only Shares which are issued and fully paid may be purchased or acquired by the
Company under the Share Purchase Mandate.
Subject to the Bermuda Companies Act, the Share Purchase Mandate will authorise the
Company, from time to time, to purchase such number of Shares which represent up to a
maximum of 10% of the issued ordinary share capital of the Company as at the date of the
2015 AGM at which the renewal of the Share Purchase Mandate is approved during the
Relevant Period.
2.2.2
Duration of Authority
Share Purchases may be made, at any time and from time to time, by the Company during
the Relevant Period.
2.2.3
Manner of Purchase
(a)
Share Purchases can be effected by the Company by either Market Purchases or
Off-Market Purchases or both.
(b)
For Share Purchases made by way of an Off-Market Purchase, the Company shall
as required by the Listing Manual, issue an offer document to all Shareholders. The
offer document shall contain, inter alia, the following information:
(i)
the terms and conditions of the offer;
(ii)
the period and procedures for acceptances;
(iii)
the reasons for the proposed Share Purchases;
(iv)
the consequences, if any, of Share Purchases by the Company that will arise
under the Take-over Code or any other applicable take-over rules;
(v)
whether the purchase of Shares, if made, would have any effect on the listing
of the Company’s securities on the Official List of SGX-ST; and
(vi)
details of any Share Purchases made by the Company in the previous twelve
(12) months whether through Market Purchases or Off-Market Purchases,
including the total number of Shares purchased, the purchase price per Share
or the highest and lowest prices paid for such purchases of Shares, where
relevant, and the total consideration paid for such purchases.
(c)
All Offeree Shareholders shall be given a reasonable opportunity to accept any offer
made by the Company to purchase their Shares under the Share Purchase Mandate.
(d)
The Company may offer to purchase Shares from time to time under the Share
Purchase Mandate subject to the requirement that the terms of any offer to purchase
Shares by the Company shall be pari passu in respect of all Offeree Shareholders
save under the following circumstances:
(i)
where there are differences in consideration attributable to the fact that an
offer relates to Shares with different dividend entitlements;
(ii)
where there are differences in consideration attributable to the fact that an
offer relates to Shares with different amounts remaining unpaid; and
9
(iii)
2.2.4
where there are differences in an offer introduced solely to ensure that every
Shareholder is left with a whole number of board lot Shares.
Maximum Price
The purchase price (excluding brokerage, stamp duties, applicable goods and services tax
and other related expenses) to be paid for the Shares will be determined by the Directors.
However, the purchase price must not exceed:(i)
in the case of a Market Purchase, 105% of the Average Closing Price (as defined
below); and
(ii)
in the case of an Off-Market Purchase, 120% of the Highest Last Dealt Price (as
defined below),
(“Maximum Price”).
For the above purposes:“Average Closing Price” means the average of the Closing Market Prices of the Shares
over the last five (5) Market Days on the SGX-ST, on which transactions in the Shares
were recorded, immediately preceding the day of the Market Purchase by the Company,
and deemed to be adjusted for any corporate action that occurs after such 5-Market Day
period;
“Closing Market Price” means the last dealt price for a Share transacted through the
SGX-ST’s Central Limit Order Book (CLOB) trading system as shown in any publication of
the SGX-ST or other sources;
“Highest Last Dealt Price” means the highest price transacted for a Share as recorded
on the SGX-ST on the Market Day on which there were trades in the Shares immediately
preceding the day of the making of the offer pursuant to the Off-Market Purchase; and
“day of the making of the offer” means the day on which the Company announces its
intention to make an offer for the Off-Market Purchase of Shares from Shareholders,
stating the purchase price (which shall not be more than the Maximum Price for an OffMarket Purchase, calculated on the foregoing basis) for each Share and the relevant terms
of the equal access scheme for effecting the Off-Market Purchase.
2.3
Status of Purchased Shares
Any Shares purchased pursuant to the Share Purchase Mandate will be dealt with in such
manner as may be permitted by the Bermuda Companies Act. Currently, pursuant to the Bermuda
Companies Act and the bye-laws of the Company, any share which is purchased or acquired
by the Company will be treated as cancelled immediately on purchase or acquisition, and all
rights and privileges attached to that share expire on cancellation; the amount of the Company’s
issued capital shall be diminished by the nominal value of those Shares accordingly. As such,
Shares purchased or acquired by the Company will be automatically delisted by the SGX-ST,
and certificates in respect thereof will be cancelled and destroyed by the Company as soon as
reasonably practicable following settlement of any such purchase or acquisition.
2.4
Source of Funds
Under the Bermuda Companies Act, a purchase of shares may only be funded out of the capital
paid up on the shares to be purchased, or out of the funds of the company which would otherwise
be available for dividend or distribution, or out of the proceeds of a fresh issue of shares made for
the purpose of the purchase, and the premium, if any, payable on the purchase (i.e. the amount
paid in excess of the nominal value of the shares to be purchased) must be provided for out of
the funds of the company which would otherwise be available for dividend or distribution, or out
of the company’s share premium account before the shares are purchased. Any amount due to a
10
shareholder on a purchase by a Bermuda company of its own shares may (i) be paid in cash; (ii)
be satisfied by the transfer of any part of the undertaking or property of the company having the
same value; or (iii) be satisfied partly under (i) and partly under (ii).
The Company will use internal resources and/or external borrowings to finance buy-backs of
its Shares. It is not possible for the Company to realistically calculate or quantify the impact of
purchases that may be made pursuant to the Share Purchase Mandate on the net asset value
and earnings per Share as the resultant effect would depend on factors such as the aggregate
number of Shares purchased, the purchase prices paid at the relevant time, and the amount (if
any) borrowed by the Company to fund the purchases.
2.5
Financial and Other Impact
The purchased Shares will be cancelled. Any Shares Purchase will reduce the issued share
capital of the Company by the nominal value of the Shares purchased. No reduction is made to
the Company’s authorised share capital. Any Shares Purchase will also reduce the Company’s
retained earnings by the aggregate sum of the purchase price, to the extent the Company’s
retained earnings are utilised for the purchase price.
The impact of the Shares Purchases by the Company pursuant to the Share Purchase Mandate
on the Group’s and the Company’s financial positions is illustrated below. The existing issued and
paid-up ordinary share capital of the Company as at the Latest Practicable Date is 1,100,808,740
shares and based on that number, the exercise in full of the Share Purchase Mandate would result
in the purchase of up to 110,080,874 Shares. Assuming that the Maximum Price is S$0.067, which
is five per cent (5%) above the average of the closing prices of the Shares over the five (5) trading
days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the
maximum amount of funds required for the purchase of up to 110,080,874 Shares is S$7.38 million
or equivalent to RMB33.48 million. On this assumption, the impact of the Shares Purchases by the
Company undertaken in accordance with the Share Purchase Mandate on the Company’s and the
Group’s audited financial statements for the financial year ended 31 December 2014 is as follows:
Group
After
Shares
Purchase
(RMB’000)
Before
Shares
Purchase
(RMB’000)
Company
Before
After
Shares
Shares
Purchase
Purchase
(RMB’000)
(RMB’000)
As at 31 December 2014
Shareholders’ funds
1,410,728
1,377,244
760,158
726,674
Net tangible assets (NTA)
1,410,728
1,377,244
760,158
726,674
Current Assets
1,080,928
1,047,444
537,162
537,162
(52,715)
(52,715)
(742)
(34,226)
1,028,213
994,729
536,420
502,936
(52,715)
(52,715)
(742)
(34,226)
1,100,808,740
990,727,866
1,100,808,740
990,727,866
NTA Per Share
1.28
1.39
0.69
0.73
Earnings /(Loss) Per Share
0.02
0.03
N.M.(2)
N.M.
–
–
–
–
20.51
19.87
N.M.(5)
15.69
(1)
Current Liabilities
Working Capital
Total Liabilities
Number of Shares
Financial Ratios
Gearing(3)
Current Ratio(4)
NOTES:
(1)
Net tangible assets equals Shareholders’ fund less intangible assets.
(2)
Not meaningful.
11
(3)
Gearing equals total bank borrowings and hire purchase creditors for the Group and Company respectively, divided
by Shareholders’ fund.
(4)
Current ratio equals current assets divided by current liabilities.
(5)
Not meaningful. This was due to the fact that the Company has total liabilities of approximately RMB742,000 as at 31
December 2014.
As at 31 December 2014, the Group had cash balances and restricted bank deposits of RMB82.33
million and RMB388.09 million respectively. In order to effect a purchase of up to 110,080,874
Shares at the Maximum Price computed at the Latest Practicable Date, cash reserves by the
Company of RMB33.48 million will be required.
For purposes of this illustration, it is assumed that the Company borrows RMB33.48 million from
its related corporations to finance purchases of its Shares. The Company may, however, when
making Share Purchases pursuant to the Share Purchase Mandate, use internal resources and/or
external borrowings to finance the purchases.
As illustrated above, the purchase of Shares will have the effect of reducing the working capital
and the net tangible assets of the Company and Group by the dollar value of the Shares
purchased. The consolidated NTA per Share as at 31 December 2014 will increase from
RMB1.28 to RMB1.39 as a result of the reduction in the number of issued Shares after the Shares
Purchases.
Assuming that the Shares Purchases had taken place on 31 December 2014, the consolidated
basic earnings per Share of the Group for the financial year ended 31 December 2014 would
be increased (in absolute terms) from RMB0.02 per Share to RMB0.03 per Share as a result of
the reduction in the number of issued Shares, after taking into account interest income foregone
(based on an interest rate of 0.35% per annum, being the prevailing savings interest rate for
RMB in the People’s Republic of China). The Company’s current liabilities will increase from
RMB742,000 to RMB34.23 million as it is assumed that the Company borrows from its related
corporations to finance the purchases of its Shares while its current assets will remain unchanged
after the purchase at the Maximum Price in a Market Purchase. The Group’s current assets will
decrease from RMB1.08 billion to RMB1.05 billion after the purchase.
As the Shares Purchase will reduce the cash reserves of the Group and the Company, there will
be a corresponding reduction in the current assets and the Shareholders’ funds of the Group and
the Company. The current ratios of the Group and the Company will decline. The actual impact
on the current ratios will depend on the number of Shares purchased and the prices at which the
Shares were purchased.
Shareholders should note that the financial effects set out above, based on the respective
aforementioned assumptions, are for illustration purposes only. In particular, it is important
to note that the above analysis is based on historical audited financial year 2014 numbers,
and is not necessarily representative of future financial performance.
The Company will take into account both financial factors (for example, cash surplus, debt position
and working capital requirement) and non-financial factors (for example, share market conditions
and the performance of the shares) in assessing the relative impact of a Share Purchase before
execution.
Shares Purchases by the Company pursuant to the Share Purchase Mandate will only be made in
circumstances where it is considered to be in the best interests of the Company. It should be noted
that purchases pursuant to the Share Purchase Mandate may not be carried out to the full ten per
cent (10%) as mandated. Further, the Directors do not propose to exercise the Share Purchase
Mandate to such an extent as would have a material adverse effect on the financial condition of
the Company or the working capital requirements or the gearing levels which, in the opinion of the
Directors, are from time to time appropriate for the Company.
12
2.6
Listing Manual
The Listing Manual specifies that a listed company shall report all purchases or acquisitions of
its shares to the SGX-ST, in such reporting format as prescribed by the SGX-ST or the Listing
Manual, not later than 9.00 a.m (a) in the case of a Market Purchase, on the Market Day following
the day of purchase of any of its shares; and (b) in the case of an Off-Market Purchase under an
equal access scheme, on the second Market Day after the close of acceptances of the offer. The
Listing Manual restricts a listed company from purchasing shares by way of a Market Purchase at
a price which is more than five per cent (5%) above the Average Closing Market Price (as defined
in paragraph 2.2.4 above). Hence, the Maximum Price for the purchase or acquisition of Shares by
the Company by way of a Market Purchase complies with this requirement.
Although the Listing Manual does not prescribe a maximum price in relation to purchase or
acquisition of shares by way of an Off-Market Purchase, the Company has set a cap of twenty per
cent (20%) above the Highest Last Dealt Price of a Share as the Maximum Price for a Share to be
purchased or acquired by way of an Off-Market Purchase.
The Company will not purchase or acquire any Shares during the period of two (2) weeks before
the announcement of the Company’s interim financial statements for each of the first three (3)
quarters of its financial year, and one (1) month before the announcement of the Company’s
financial statements for the full financial year (as the case may be).
The Listing Manual requires a listed company to ensure that at least ten per cent (10%) of any
class of its listed equity securities (excluding preference shares and convertible equity securities)
is at all times held by public shareholders. Under the Listing Manual, “public” is defined as persons
other than the directors, substantial shareholders, chief executive officer or controlling shareholders
of the company and its subsidiaries, as well as the associates of such persons.
As at the Latest Practicable Date, approximately 51.37% of the issued Shares were held by public
Shareholders. In the event that the Company purchases the maximum of ten per cent (10%) of its
issued Shares from such public Shareholders, the resultant percentage of the issued Shares held
by the public Shareholders would be reduced to approximately 45.97%. Accordingly, the Directors
are of the view that there is, at present, a sufficient number of Shares in issue held by public
Shareholders that would permit the Company to potentially undertake purchases or acquisitions of
the Shares through Market Purchases up to the full ten per cent (10%) limit pursuant to the Share
Purchase Mandate without affecting adversely the listing status of the Shares on the SGX-ST, and
that the number of Shares remaining in the hands of the public will not fall to such a level as to
cause market illiquidity or adversely affect orderly trading of the Shares.
2.7
Application of the Take-Over Code
Appendix 2 of the Take-Over Code sets out the Share Buy-Back Guidance Note. The take-over
implications arising from any purchase or acquisition by the Company of its Shares are set out
below.
2.7.1
Obligations to make a Take-Over Offer
If, as a result of the purchase or acquisition by the Company of its Shares, the
proportionate interest in the voting rights of the Company of a Shareholder and persons
acting in concert with him increases, such increase will be treated as acquisition for the
purposes of Rule 14 of the Take-Over Code. Consequently, a Shareholder or a group of
Shareholders acting in concert with a Director could obtain or consolidate effective control
of the Company and become obliged to make an offer under Rule 14 of the Take-Over
Code.
13
Under the Take-Over Code, persons acting in concert comprise individuals or companies
who, pursuant to an agreement or understanding (whether formal or informal), co-operate,
through the acquisition by any of them of shares in a company, to obtain or consolidate
effective control of that company. Unless the contrary is established, the following persons
will, inter alia, be presumed to be acting in concert:
(a)
a company with any of its directors (together with the close relatives, related trusts
as well as companies controlled by any of the directors, their close relatives and
related trusts);
(b)
a company, its parent, subsidiaries and fellow subsidiaries, and their associated
companies and companies of which such companies are associated companies, all
with each other. For this purpose, a company is an associated company of another
company if the second-mentioned company owns or controls at least twenty per
cent (20%) but not more than fifty per cent (50%) of the voting rights of the firstmentioned company;
(c)
directors of a company, together with their close relatives, related trusts and
companies controlled by any of them, which is subject to an offer where they have
reason to believe a bona fide offer for their company may be imminent;
(d)
partners;
(e)
an individual, his close relatives, his related trusts, and any person accustomed to
act according to the instructions and companies controlled by any of the above; and
(f)
any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights.
The circumstances under which Shareholders, including Directors, and persons acting in
concert with them, respectively, will incur an obligation to make a take-over offer after a
purchase or acquisition of Shares by the Company are set out in Rule 14 and Appendix 2
of the Take-over Code.
In general terms, the effect of Rule 14 and Appendix 2 is that:
(g)
unless exempted, Directors and persons acting in concert with them will incur an
obligation to make a take-over offer under Rule 14 if, as a result of a purchase or
acquisition of Shares by the Company, the percentage of voting rights held by such
Directors and their concert parties in the Company increase to thirty per cent (30%)
or more, or if the Directors and their concert parties hold thirty per cent (30%) or
more but less than fifty per cent (50%) of the Company’s voting rights, and their
voting rights increase by more than one per cent (1%) in any period of six (6)
months; and
(h)
a Shareholder who is not acting in concert with the Directors will not be required to
make a take-over offer under Rule 14 if, as a result of the Company purchasing its
Shares, the voting rights of such Shareholder would increase to thirty per cent (30%)
or more, if such Shareholder holds thirty per cent (30%) or more but less than fifty
per cent (50%) of the Company’s voting rights, the voting rights of such Shareholder
would increase by more than one per cent (1%) in any period of six (6) months. Such
Shareholder need not abstain from voting in respect of the resolution authorising the
Share Purchase Mandate.
14
2.7.2
Take-Over implication arising from the Share Purchase Mandate
Name
Direct
Interest
%
Deemed
Interest
%
Total of Direct
and Deemed
Interest
%
Chinese Glory
Investments
Limited
483,304,620
43.90
Nil
Nil
483,304,620
43.90
Wang
Tingbao *
50,000,000
4.54
485,304,844
44.09
535,304,844
48.63
David Yip
Wai Sun **
–
–
483,304,620
43.90
483,304,620
43.90
*
Wang Tingbao’s deemed interest in 485,304,844 Shares comprises:(i)
(ii)
(iii)
**
224 Shares held under UOB Kay Hian Pte Ltd
483,304,620 Shares held by Chinese Glory Investments Limited by virtue of his 20% interests in
Chinese Glory Investments Limited
2,000,000 Shares held under Phillip Securities (HK) Ltd
David Yip Wai Sun is deemed to be interested in 483,304,620 Shares held by Chinese Glory Investments
Limited by virtue of his 70% interests in Chinese Glory Investments Limited.
Chinese Glory Investments Limited, Wang Tingbao and David Yip Wai Sun (who are
directors of the Company as well as Chinese Glory Investments Limited) are presumed to
be acting in concert (the ”CGIL Group”) under the Take-over Code.
For the purposes of illustration, assuming that (i) no further Shares are issued by the
Company on or prior to the 2015 AGM approving the proposed renewal of the Share
Purchase Mandate, (ii) the Company purchases the maximum number of 110,080,874
Shares under the Share Purchase Mandate, representing ten per cent (10%) of the total
number of Shares in issue as at the date of the 2015 AGM, and (iii) such Shares are
cancelled (the “Share Buyback”):
(a)
the total number of Shares in issue will be reduced from 1,100,808,740 to
990,727,866 Shares; and
(b)
the percentage of the aggregate voting rights in the Company held by the Directors
and Substantial Shareholders will increase as follows:
Name
Chinese Glory
Investment Limited
Wang Tingbao
David Yip Wai Sun
Direct
Interest
Total of Direct
and Deemed
Interest
483,304,620
Percentage voting rights in the Company
Before Share
Buyback
After Share
Buyback
483,304,620
43.90
48.78
50,000,000
535,304,844
48.63
54.03
–
483,304,620
43.90
48.78
Based on the above illustration, the respective shareholding of the Directors and
Substantial Shareholders will increase after the above Share Buyback, and that of all the
CGIL Group will cross the mandatory offer threshold of Rule 14 of the Takeover Code.
15
The CGIL Group will be exempted from the requirement to make a general offer for the
Company under Rule 14 of the Take-over Code following an increase in the aggregate
percentage of total voting rights in the Company held by the CGIL Group by more than one
per cent (1%) in any period of 6 months as a result of the Company purchasing its Shares
under the Share Purchase Mandate, subject to the following conditions:
(a)
the circular to Shareholders seeking their approval for the renewal of the Share
Purchase Mandate will contain advice to the effect that by voting in favour of the
resolution to approve the renewal of the Share Purchase Mandate, Shareholders are
waiving their right to a general offer at the required price from the CGIL Group;
(b)
the aforesaid circular discloses the names and voting rights of the CGIL Group (i) as
at the time of the resolution to approve the renewal of the Share Purchase Mandate,
and (ii) after the Company purchases the maximum number of Shares under the
Share Purchase Mandate, representing ten per cent (10%) of the total number of
issued Shares;
(c)
the resolution to approve the renewal of the Share Purchase Mandate is approved
by a majority of the Shareholders who are present and voting at the meeting on a
poll who could not become obliged to make a general offer as a result of the buyback of Shares by the Company pursuant to the Share Purchase Mandate;
(d)
within seven (7) days after the passing of the resolution to approve the renewal of
the Share Purchase Mandate, each of the directors Wang Tingbao and David Yip
Wai Sun submits to the SIC a duly signed form as prescribed by the SIC;
(e)
the CGIL Group will abstain from (i) voting on the resolution to approve the renewal
of the Share Purchase Mandate, and (ii) recommending the Shareholders to vote in
favour of such said resolution;
(f)
the CGIL Group have not acquired and will not acquire any Shares between the date
on which they know that the announcement of the proposal for the renewal of the
Share Purchase Mandate is imminent and the earlier of:
(i)
the date on which the authority for the renewed Share Purchase Mandate
expires; and
(ii)
the date on which the Company announces that it has (i) bought back such
number of Shares as authorised by the renewed Share Purchase Mandate, or
(ii) decided to cease buying back the Shares, as the case may be,
if any such acquisitions, taken together with the buy-back of Shares, would cause the
aggregate voting rights in the Company of the CGIL Group to increase by more than one
per cent (1%) in the preceding six (6) months.
It follows that where the aggregate voting rights held by the CGIL Group increase by more
than one per cent (1%) solely as a result of the buy-back of Shares and none of them
has acquired any Shares during the relevant period defined above, then the CGIL Group
would be eligible for the SIC’s exemption from the requirement to make a general offer
under Rule 14, or where such exemption had been granted, would continue to enjoy the
exemption.
If the Company ceases to buy-back its Shares pursuant to the Share Purchase Mandate
and the increase in the aggregate voting rights held by the CGIL Group is less than one
per cent (1%), the CGIL Group may acquire further voting rights in the Company. However,
any increase in their percentage voting rights as a result of the buy-back of Shares
pursuant to the Share purchase Mandate will be taken into account together with any
voting rights acquired by the CGIL Group (by whatever means) in determining whether they
have increased their voting rights by more than 1% in any 6-month period.
16
Other than the foregoing, the Directors are not aware of any fact(s) or factor(s) which
suggest or imply that any particular person(s) and/or Shareholder(s) are, or may be
regarded as, parties acting in concert such that their respective interests in voting Shares
in the capital of the Company should or ought to be consolidated, and consequences under
the Take-Over Code would ensue as a result of a purchase of Shares by the Company
pursuant to the Share Purchase Mandate.
2.8
Form 2 Submission to the SIC
Form 2 (Submission by directors and their concert parties pursuant to Appendix 2 of the Take-Over
Code) is the prescribed form to be submitted to the SIC by a director and persons acting in concert
with him pursuant to the conditions for exemption from the requirement to make a take-over offer
under Rule 14 of the Take-Over Code as a result of the buy-back of shares by a listed company
under its share purchase mandate, as set out in page 13 hereinabove.
As at the Latest Practicable Date, Wang Tingbao and David Yip Wai Sun have informed the
Company that they each will submit a Form 2 to the SIC within seven (7) days after the passing of
the resolution relating to the renewal of the Share Purchase Mandate.
2.9
Shares Purchased by the Company
The Company has not made any Share Buy-Back in the twelve (12) months preceding the Latest
Practicable Date.
2.10 Advice to Shareholders
Shareholders should note that approving the renewal of the Share Purchase Mandate
will constitute a waiver by the Shareholders in respect of their right to a general offer by
Chinese Glory Investments Limited, Mr Wang Tingbao and Mr David Yip Wai Sun and/or
persons acting in concert with them, if any, at the required price, if a Share Purchase by
the Company results in the aggregate shareholding of Chinese Glory Investments Limited
and/or persons acting in concert with them, if any, would increase their voting rights in the
Company by more than 1% within any 6-month period.
Shareholders who are in doubt as to whether they would incur any obligation to make a
take-over offer under the Take-over Code as a result of any purchase or acquisition of
Shares by the Company pursuant to the Share Purchase Mandate are advised to consult
their professional advisers and/or the SIC at the earliest opportunity.
2.11 Shareholders’ Approval
For the reasons set out above, the Company is proposing to seek the approval of the Shareholders
for the renewal of the Share Purchase Mandate, which will be proposed as an ordinary resolution
(“Resolution 7”) at the 2015 AGM.
2.12 Directors’ Recommendation
The Directors (other than Wang Tingbao and David Yip Wai Sun who are comprised in the CGIL
Group) are of the opinion that the renewal of the Share Purchase Mandate would be in the best
interest of the Company and its Shareholders. The Directors (other than Wang Tingbao and David
Yip Wai Sun) accordingly recommend that Shareholders vote in favour of Resolution 7 to be
proposed at the 2015 AGM.
Shareholders are advised to read this Appendix and the Annexures thereto in their entirety and for
those who may require advice in the context of their specific investment, to consult their respective
stockbroker, bank manager, solicitor, accountant or other professional adviser.
17
ANNEXURE 2
PROPOSED RENEWAL OF THE GENERAL ISSUE MANDATE
1.
BACKGROUND
At the annual general meeting of the Company held on 28 April 2014, (the “2014 AGM”),
Shareholders had approved the renewal of the General Issue Mandate to permit the Company to
issue Shares and/or Instruments (as defined in the Company’s bye-laws). The rationale for and
limitations on, the General Issue Mandate were set out in the Appendix Accompanying The Notice
of Annual General Meeting dated 11 April 2014 (the “2014 Appendix”) and Ordinary Resolution 5
set out in the Notice of the 2014 AGM.
The renewed General Issue Mandate was expressed to take effect from the passing of the said
Ordinary Resolution 5 at the 2014 AGM and will expire on the date of the forthcoming Annual
General Meeting to be held on 22 April 2015 (the “2015 AGM”). Accordingly, Shareholders’
approval is being sought for the renewal of the General Issue Mandate at the 2015 AGM.
2.
RENEWAL OF THE GENERAL ISSUE MANDATE
2.1
Rationale for General Issue Mandate
As previously stated in the 2014 Appendix, a general (as opposed to specific) approval for the
Directors to issue Shares and/or Instruments will enable the Company to act quickly and take
advantage of market conditions. The expense and delay of otherwise having to convene general
meetings of the Company to approve the making or granting of each specific Instrument would
thus be avoided.
2.2
Duration of General Issue Mandate
If renewed, the General Issue Mandate will take effect on the date of the passing of the ordinary
resolution relating thereto at the 2015 AGM and continue in force until the next annual general
meeting of the Company, unless prior thereto, issues of Shares are made to the full extent
permitted by the General Issue Mandate or the General Issue Mandate is varied or revoked by an
ordinary resolution of Shareholders in general meeting.
2.3
Shareholders’ Approval
For the reasons set out above, the Company is proposing to seek the approval of the Shareholders
for the renewal of the Share Issue Mandate, which will be proposed as an ordinary resolution
(“Resolution 6”) at the 2015 AGM.
2.4
Directors’ Recommendation
The Directors are of the opinion that the renewal of the General Issue Mandate would be in
the best interest of the Company and its Shareholders. They accordingly recommend that
Shareholders vote in favour of Resolution 6 to be proposed at the 2015 AGM.
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