SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
_____________________
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 1, 2017
WONHE HIGH-TECH INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-54744 26-0775642
(State of other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization Identification No.)
Room 1001, 10 th Floor, Resource Hi-Tech Building South Tower
No. 1 Songpingshan Road, North Central Avenue North High-Tech Zone
Nanshan District, Shenzhen, Guangdong Province, P.R. China 518057
(Address of principal executive offices) (Zip Code)
852-2815-0191
(Registrant’s telephone number including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On March 1, 2017 the Registrant's Australian subsidiary, Wonhe Multimedia Commerce Limited ("Wonhe Multimedia"), in which the Registrant holds a 53.3% equity interest, filed with the Australian Securities Exchange a Preliminary Financial Report for the year ended December 31, 2016, setting forth preliminary financial statements of Wonhe Multimedia during that period. A copy of the Report is being filed as an exhibit to this Current Report.
On the same day Wonhe Multimedia filed an announcement that its Board had declared an unfranked final dividend of AUD 0.5882 cents per share. A copy of the announcement is being filed as an exhibit to this Current Report.
Item 9.01 Financial Statements and Exhibits
Exhibits
99.1 Preliminary Financial Report filed by Wonhe Multimedia Commerce Limited for the year ended December 31, 2016.
99.2 ASX Announcement: "Wonhe Final Dividend Declared" dated March 1, 2017.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WONHE HIGH-TECH INTERNATIONAL, INC.
Dated: March 1, 2017 By: /s/ Nanfang Tong
Nanfang Tong
Chief Executive Officer
Exhibit 99.1
WONHE MULTIMEDIA COMMERCE LIMITED
AND ITS CONTROLLED ENTITIES
ABN 71 607 288 755
Preliminary Financial Report for the Year Ended
31 December 2016
Table of Contents
REVIEW OF OPERATIONS 1
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 4
CONSOLIDATED STATEMENT OF CASH FLOWS 5
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 6
WONHE MULTIMEDIA COMMERCE LIMITED
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
Principal Activities
Wonhe Multimedia Commerce Ltd was incorporated on 27 July 2015. In August 2015, through a Share Sale Agreement with World Win International Holdings Group Ltd (“World Win”), the Company acquired 100% of the shares in Kuayu International Holdings Group Ltd (“Kuayu”), a company incorporated in Hong Kong and which owns and operates the WONHE business in China via its Chinese subsidiaries. Consequently, the comparative statement of profit or loss and comprehensive income or statement of cash flows presented in this financial report covers the period from 27 July 2015 to 31 December 2015.
The WONHE operating subsidiary company is Shenzhen WONHE Technology Co., Ltd (“Shenzhen WONHE”), a company incorporated in China. Shenzhen WONHE derives revenues from the sale of the Commercial Routers, receives a commission from the retail sales to users who purchase products from a retailer via the WONHE App and derives revenue from targeted advertisements. Shenzhen WONHE also owns the user data that is compiled and aggregated from its Commercial Routers.
The WONHE business operates solely within the People’s Republic of China.
Operating Results and Financial Position
During the period the Group made a profit of $16.318 million after a tax expense of $2.414 million.
As a result of operations and its investment in the Project the Group’s net assets have increased to $67.677 million (2015: $53.018 million). Current assets decreased to $49.689 million (2015: $54.419 million, with gross assets increasing to $85.584 million (2015: $66.054 million). The Group generated $15.305 million in cash from operations, with cash and cash equivalents decreasing in total during the year to $38.672 million (2015: $49.644million).
During the current year Shenzhen WONHE has entered into an agreement entitled “Wireless Network Coverage Project in Beijing Area” with Guangdong Kesheng Enterprise Co., Ltd (“Guangdong Kesheng”). The agreement initially contemplated that the two parties shall work together to develop a wireless network in certain designated areas of Beijing. The commercial purpose of the network will be to serve as a vehicle for advertising and marketing, with revenue to be shared between Shenzhen WONHE and Guangdong Kesheng. The agreement was subsequently varied, and Shenzhen WONHE no longer participates in the construction of the project. Rather, the company has agreed to supply routers and have its contributions repaid in three equal instalments with the unpaid proportion accruing interest at a rate of 4.75% pa.
Wireless Network Coverage Project in Beijing Area
As noted above, Shenzhen WONHE has entered into an agreement entitled “Wireless Network Coverage Project in Beijing Area” with Guangdong Kesheng. The commercial purpose of the network will be to serve as a vehicle for advertising and marketing, with revenue to be shared between Shenzhen WONHE and Guangdong Kesheng. The agreement was varied in November 2016.
Under the variation Shenzhen WONHE shall cease its participation in the construction and operation of the wireless network, and its commitment to develop the data systems used by the network, effective on 1 December 2016. As a consequence, the company is released from its obligation to contribute capital in 2017 and 2018, and will no longer be entitled to fixed amount payments and any profit distributions.
Under the varied agreement, Shenzhen WONHE will continue to supply 36,300 routers to Guangdong Kesheng for RMB1,800 each throughout the period to December 2017. As of 30 November 2016 Shenzhen WONHE had contributed, by way of cash payments, the supply of equipment and engineering construction services, and the network from the Tongzhou District pilot project, a total contribution valued at RMB175,755,641 ($35.164 million).
Under the variation agreement Shenzhen WONHE’s contribution of RMB175,755,641 ($35.164 million) will be repaid by Guangdong Kesheng, together with interest of 4.75% per annum from 1 December 2016 in three equal instalments with the first instalment due of 31 December 2017.The total amount payable to Shenzhen WONHE will be RMB192,452,427 ($38.510 million at rates prevailing at 31 December 2016).
1
WONHE MULTIMEDIA COMMERCE LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Note
2016
$’000
Period from 27 July 2015 to 31 December 2015
$’000
Continuing operations
Revenue from Sale of Goods 3 66,165 22,002
Finance revenue 3 610 111
Other income - 3
66,775 22,116
Cost of goods sold (44,566 ) (13,745 )
Research and development expenses (1,071 ) (121 )
Directors’ expenses and fees (90 ) (4 )
Depreciation of property, plant and equipment (280 ) (204 )
Selling expenses (778 ) (533 )
General and administrative expenses (1,252 ) (299 )
Other expenses (6 ) (85 )
Profit before income tax 18,732 7,125
Income tax expense (2,414 ) (1,147 )
Net Profit for the period 16,318 5,978
Other Comprehensive income
Items that may be reclassified to profit or loss in the future:
Exchange differences on translation of foreign operations (921 ) (3,807 )
Other comprehensive loss net of tax (921 ) (3,807 )
Total comprehensive income 15,397 2,171
Net Profit for the period is attributable to:
Non-controlling interest - 511
Owners of Wonhe Multimedia Commerce Limited 16,318 5,467
16,318 5,978
Total comprehensive income for the year is attributable to:
Non-controlling interest - 511
Owners of Wonhe Multimedia Commerce Limited 15,397 1,660
15,397 2,171
Basic earnings per share (cents per share) 10.74 4.39
Diluted earnings per share (cents per share) 10.74 4.39
The above statement should be read in conjunction with the accompanying notes.
2
WONHE MULTIMEDIA COMMERCE LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2016
Note
2016
$’000
2015
$’000
Current Assets
Cash and cash equivalents 38,672 49,644
Trade and other receivables 11,015 4,775
Loans advanced 5 11,187
Inventory 2 -
Total Current Assets 60,876 54,419
Non-Current Assets
Property, plant and equipment 4 597 9,966
Loans advanced 5 23,977 -
Other receivable – income tax 97 1,625
Other receivable - deposit 24 22
Intangible assets 13 22
Total Non-Current Assets 24,708 11,635
Total Assets 85,584 66,054
Current Liabilities
Trade and other payables 16,575 12,706
Loan from shareholders 1,332 330
Total current liabilities 17,907 13,036
Total Liabilities 17,907 13,036
Net Assets 67,677 53,018
Equity
Issued capital 6 2,908 2,908
Retained earnings 19,366 4,892
Other reserves 7 39,877 41,082
Statutory reserve fund 8 5,526 4,136
Total Equity 67,677 53,018
The above statement should be read in conjunction with the accompanying notes.
3
WONHE MULTIMEDIA COMMERCE LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Issued capital
Retained earnings Statutory reserve Non-Controlling Interest Other reserve
Total
$’000 $’000 $’000 $’000 $’000
At 27 July 2015 - - - - - -
Acquisition by WMC - - 3,461 2,406 42,586 48,453
Restructure eliminating VIE - - - (3,018 ) 3,018 -
Profit for the period - 5,467 - 511 - 5,978
Other comprehensive income - - 100 101 (4,522 ) (4,321 )
Total comprehensive income for the period - 5,467 3,561 - 41,082 50,110
Appropriation of statutory reserve - (575 ) 575 - - -
Transactions with owners in their capacity as owners:
Issue of shares 2,908 - - - - 2,908
As at 31 December 2015
2,908 4,892 4,136 - 41,082 53,018
Issued capital
Retained earnings Statutory reserve Other reserve
Total
$’000 $’000 $’000 $’000 $’000
At 1 January 2016 2,908 4,892 4,136 41,082 53,018
Profit for the year - 16,318 - - 16,318
Other comprehensive income - 284 (1,205 ) (921 )
Total comprehensive income for the year - 16,318 284 (1,205 ) 15,397
Appropriation of statutory reserve (1,106 ) 1,106 - -
Transactions with owners in their capacity as owners:
Issue of shares - - - - -
Dividends paid (738 ) (738 )
As at 31 December 2016
2,908 19,366 5,526 39,877 67,677
The above statement should be read in conjunction with the accompanying notes
4
WONHE MULTIMEDIA COMMERCE LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 206
2016
$’000
Period from 27 July 2015 to 31 December 2015
$’000
Cash flows from operating activities
Receipts from customers 60,361 21,032
Payments to suppliers and employees (44,641 ) (35,277 )
Interest received 471 111
Income and other taxes received (886 ) (759 )
Net cash provided by/(used in) operating activities 15,305 (14,893 )
Cash flows from investing activities
Payments for purchase of property, plant & equipment (75 ) (8,909 )
Payments for project expenditure (25,561 ) -
Payments for intangible assets - -
Cash acquired on acquisition of WONHE - 74,784
Net cash (used in)/provided by investing activities (25,636 ) 65,875
Cash flows from financing activities
Proceeds from issue of shares - 3,390
Cost of issuing shares - (689 )
Dividends paid (738 ) -
Loans received from ultimate parent entity 365 (4 )
Net cash provided by/(used in) financing activities (373 ) 2,697
Net (decrease)/increase in cash held (10,704 ) 53,679
Cash and cash equivalents at the beginning of the year 49,644 -
Effects of exchange changes on the balances held in foreign currencies (268 ) (4,035 )
Cash and cash equivalents at the end of the year 38,672 49,644
The above statement should be read in conjunction with the accompanying notes.
5
WONHE MULTIMEDIA COMMERCE LIMITED
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
1. BASIS OF PREPARATION
This preliminary final report has been prepared in accordance with ASX listing rule 4.3A and the disclosure requirements of ASX Appendix 4E. This preliminary final report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report should be read in conjunction with the last annual report issued for the period ended 31 December 2015 and any public announcements made by Wonhe Multimedia Commerce Limited during the reporting period in accordance with the continuous disclosure requirements of the Corporation Act 2001. The full annual report for the year ended 31 December 2016 is expected to be available on or before 31 March 2017.
This preliminary financial report has been prepared in accordance with International Financial Reporting Standards (IFRS), other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.
2. SEGMENT INFORMATION
The Company views only one segment in the operation and treats the operation in terms of revenue and costs, as well as G&A expenses as a whole. Although the Company can breakdown the revenue from each type of product, as well as the direct cost associated with the purchase, management does not operate it as separate segments therefore management consider that Segment reporting disclosure is not necessary for the Company based on the current operation model.
2016
$’000
2015
$’000
3. REVENUE
Sale of Home media and Routers 66,165 22,002
Interest received 610 111
4. PROPERTY PLANT AND EQUIPMENT
Plant & Equipment
$’000
Office Equipment
$’000
Motor Vehicles
$’000
Capital work in progress
$’000
Total
$’000
As at 1 January 2016
Cost or fair value 1,695 151 647 7,677 10,170
Accumulated depreciation (108 ) (28 ) (68 ) - (204 )
1,587 123 579 7,677 9,966
Additions 76 - 76
Disposals (6 ) - (6 )
Transfers to project expenditure (1,486 ) (7,677 ) (9,163 )
Depreciation expense (101 ) (49 ) (116 ) (266 )
Foreign exchange variance - (4 ) (6 ) (10 )
As at 31 December 2016 - 140 457 - 597
6
WONHE MULTIMEDIA COMMERCE LIMITED
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
5. LOANS ADVANCED
In January 2016, the Company announced that Shenzhen WONHE Technology Co., Ltd (“Shenzhen WONHE”) had entered into an agreement titled “Wireless Network Coverage Project in Beijing Area with Guangdong Kesheng Enterprise Co., Ltd (“Guangdong Kesheng”). The agreement was for the development of a wireless network in certain designated areas of Beijing. The commercial purpose of the network is to provide a vehicle for advertising and marketing, with revenue generated to be shared between the two parties. Under the agreement Shenzhen WONHE committed to provide RMB382,990,000 to the project, including RMB226,010,000 in cash and RMB 118,980,000 in commercial routers and other equipment. Shenzhen WONHE was also to contribute the network it developed in the Tongzhou District of Beijing as a pilot project. To date Shenzhen WONHE has incurred expenditure as follows: -
On 5 December 2016 the Company announced that it had agreed with Guangdong Kesheng to vary the agreement. Under the variation Shenzhen WONHE shall cease its participation in the construction and operation of the wireless network, and its commitment to develop the data systems used by the network, effective on 1 December 2016. As a consequence the company is released from its obligation to contribute capital in 2017 and 2018, and will no longer be entitled to fixed amount payments and/or profit distributions.
Under the variation Shenzhen WONHE will continue to supply 36,300 routers to Guangdong Kesheng for RMB1,800 each throughout the period to December 2017. As of 30 November 2016 Shenzhen WONHE had contributed, by way of cash payments, the supply of equipment and engineering construction services, and the network from the Tongzhou District pilot project, a total contribution valued at RMB175,755,641 ($35.164 million).
Under the variation agreement Shenzhen WONHE’s contribution of RMB175,755,641 ($35.164 million) will be repaid by Guangdong Kesheng, together with interest of 4.75% per annum from 1 December 2016 in three equal instalments with the first instalment due 31 December 2017. The total amount payable to Shenzhen WONHE will be RMB192,452,427 ($38.510 million at rates prevailing at 31 December 2016).
6. CONTRIBUTED EQUITY
NUMBER OF SHARES SHARE CAPITAL
2016 2015
2016
$’000
2015
$’000
Ordinary shares – fully paid (no par value) 151,951,802 151,951,802 2,908 2,908
Total Share Capital 2,908 2,908
Terms and Conditions of Issued Capital
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands each holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.
7
2016
$’000
2015
$’000
7. RESERVES
Foreign currency translation reserve (5,727 ) (4,522 )
Other reserve – common control transaction 45,604 45,604
39,877 41,082
(i) Nature and Purpose of Reserves
Foreign currency translation reserve
This reserve is used to record the exchange differences arising on translation of foreign operations where the foreign operations functional currency is different from the Group’s presentation currency.
Common control transaction
In August 2015 the Company entered into a Share Sale Agreement with World Win International Holdings Group Ltd, the Company acquired 100% of the shares in Kuayu International Holdings Group Ltd (“Kuayu”). The ultimate controlling party of the Group prior to the acquisition of Kuayu remained the ultimate controlling party of the Group after the acquisition. Consequently, the transaction was deemed to be between entities under common control and therefore did not qualify for accounting under AASB 3 Business Combinations . The assets and liabilities were incorporated into the Group at their pre-combination carrying amounts without any adjustments for fair values, and no goodwill has been recorded on the transaction. The difference between the carrying value of the net assets and the cost of the transaction has been recorded directly in equity.
8. STATUTORY RESERVE
Pursuant to corporate law of PRC, Shengshihe and Shenzhen WONHE are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund.
9. DIVIDENDS
Current year interim dividend paid on 31 October 2016
2016
$’000
2015
$’000
Unfranked dividend on ordinary shares 738 -
Current year final dividend payable 31 May 2017
2016
$’000
2015
$’000
Unfranked dividend on ordinary shares 893 -
8
WONHE MULTIMEDIA COMMERCE LIMITED
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
10. CONTROLLED ENTITIES
EQUITY
HOLDINGS
NAME OF ENTITY
COUNTRY OF
INCORPORATION
PRINCIPAL ACTIVITY
2016
%
2015
%
Kuayu International Holdings Group Ltd PR China No trading activities 100 100
Shenzhen WONHE Technology Co., Ltd PR China Sale of domestic and commercial routers 100 100
Shengshihe Consulting Co., Ltd PR China Consulting 100 100
The ultimate parent entity of the Group is WONHE High-Tech International Inc., a company incorporated in the USA.
11. EVENTS OCCURRING AFTER REPORTING DATE
Other than the proposed dividend the directors are not aware of any matter or circumstance not otherwise dealt with in these financial statements that has significantly or may significantly affect the operation of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.
12. SIGNIFICANT RESTRICTIONS
According to Chinese laws and regulations, in the event that the Company needs to finance its Chinese operations in the future, it is able to provide funding by means of capital contributions to Shenzhen WONHE and/or loans to Shengshihe. These loans would be subject to applicable government registration and approval requirements.
Cash transfers from Chinese subsidiaries to their parent companies outside China are subject to government control of currency conversion, and the Company may receive the majority or all of its revenues in RMB. Under the current corporate structure of the WONHE Group, the Company’s income is primarily derived from its China subsidiaries. Under existing Chinese foreign exchange regulations, payment of current account items, including profit distributions, interest payments and expenditures from trade-related transactions can be made in foreign currency without prior regulatory approval by complying with certain procedural requirements.
As profit and dividends are current account items, the profit and dividends generated in China may be paid to shareholders outside China without prior approval, as long as the Company complies with certain procedural requirements. However, the Chinese government also may, at its discretion, restrict access in the future to foreign currencies for current account transactions. If changes to the foreign exchange control system prevents the Company’s China subsidiaries’ from obtaining sufficient foreign currency to satisfy their currency demands, they may not be able to pay dividends in foreign (non-RMB) currencies to the Company.
Any inability to obtain the requisite approval for converting RMB into foreign currencies, any delays in obtaining such approval or future restrictions on currency exchange may restrict the ability of the Company’s China Subsidiaries to remit sufficient foreign currency to pay dividends or other payments to the Company, or otherwise satisfy its obligations.
The level of cash held by the Company’s PRC based subsidiaries was $38.370 million at 31 December 2016 (2015: $46.598 million).
In addition, under PRC regulations, the Company’s operating subsidiary, Shenzhen WONHE, may pay dividends only out of its accumulated profits, determined in accordance with the accounting standards and regulations prevailing in the PRC (“PRC GAAP”).
9
Exhibit 99.2
WONHE MULTIMEDIA COMMERCE LIMITED ACN 607 288 755
SUITE 3, 35 TOORAK ROAD, SOUTH YARRA, VIC, 3141 PH 613 9041 6663
1 March 2017
ASX Announcement
Wonhe Final Dividend Declared
The Board of Wonhe Multimedia Commerce Limited (Company) is pleased to announce that the Company will pay a 0.5882 cents per share unfranked final dividend. The final dividend has been declared after consideration of the Company’s strong cash flow and profitability for 2016. This follows the 0.4857 cents per share unfranked interim dividend paid on 31 October 2016.
The full year dividend of 1.0739 cents per share represents a strong 10% payout of unaudited profit for 2016.
The key proposed dates in relation to the 2016 final dividend are as follows:
Ex Date - 27 April 2017
Record Date - 28 April 2017
Payment date - 31 May 2017
Justyn Stedwell
Company Secretary
On behalf of the Board of Directors
Wonhe Multimedia Commerce Limited
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