Annual Report 2013 WISON ENGINEERING SERVICES CO
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CONTENTS 2 Corporate Information 4 Financial Summary 6 Business Overview 16 Management Discussion and Analysis 24 Biographies of the Directors and Senior Management 32 Report of the Directors 48 Corporate Governance Report 55 Independent Auditors’ Report 58 Consolidated Statements of Profit or Loss 59 Consolidated Statements of Comprehensive Income 60 Consolidated Statements of Financial Position 62 Consolidated Statements of Changes in Equity 63 Consolidated Statements of Cash Flows 66 Statements of Financial Position 67 Notes to Financial Statements Corporate Information BOARD OF DIRECTORS REMUNERATION COMMITTEE Executive Directors Mr. Liu Ji (Chairman) Mr. Hua Bangsong (Chairman) Mr. Wu Jianmin Mr. Liu Haijun Mr. Hua Bangsong Mr. Cui Ying Mr. Zhou Hongliang GLOBAL HEADQUARTERS, PRINCIPAL PLACE OF BUSINESS AND HEAD OFFICE IN THE PRC Independent Non-executive Directors Mr. Liu Ji 699 Zhongke Road Mr. Wu Jianmin Zhangjiang Hi-Tech Park Pudong New Area AUDIT COMMITTEE Shanghai 201210 PRC (Chairman of the committee — to be appointed) Mr. Liu Ji PRINCIPAL SHARE REGISTRAR AND Mr. Wu Jianmin TRANSFER OFFICE NOMINATION COMMITTEE Appleby Trust (Cayman) Ltd. Clifton House Mr. Wu Jianmin (Chairman) 75 Fort Street Mr. Liu Ji P.O. Box 1350 Mr. Hua Bangsong George Town Grand Cayman KY1-1108 Cayman Islands Annual Report 2013 WISON ENGINEERING SERVICES CO. LTD. 03 Corporate Information HONG KONG SHARE REGISTRAR PRINCIPAL PLACE OF BUSINESS IN HONG KONG Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17/F, Hopewell Centre Room 5007 183 Queen’s Road East 50th Floor Wan Chai Central Plaza Hong Kong 18 Harbour Road Wan Chai COMPANY SECRETARY Hong Kong Ms. Luk Wai Mei COMPLIANCE ADVISER AUTHORISED REPRESENTATIVES Guotai Junan Capital Limited 27/F, Low Block, Grand Millennium Plaza Mr. Cui Ying 181 Queen’s Road Central Ms. Luk Wai Mei Hong Kong AUDITORS COMPANY’S WEBSITE Ernst & Young www.wison-engineering.com PRINCIPAL BANKS STOCK CODE Agricultural Bank of China 2236 China Minsheng Banking Corporation Limited Bank of Communications Co., Ltd. Industrial and Commercial Bank of China Limited REGISTERED OFFICE Clifton House 75 Fort Street P.O. Box 1350 George Town Grand Cayman KY1-1108 Cayman Islands Wison Engineering Services Co. Ltd. Financial Summary For the year ended or as at December 31, 2013 2012 2011 2010 2009 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Results Revenue 3,674,518 4,891,908 5,036,622 4,976,220 1,884,387 Gross profit 142,810 1,139,631 1,206,727 1,220,409 559,226 (Loss)/Profit before tax (546,291) 699,929 795,217 818,659 295,252 Income tax 32,619 (165,606) (205,504) (182,639) (65,309) (Loss)/Profit for the year (513,672) 534,323 589,713 636,020 229,943 Attributable to: Owner of the parent (471,301) 466,812 518,753 567,685 206,642 Non-controlling interests (42,371) 67,511 70,960 68,335 23,301 Annual Report 2013 WISON ENGINEERING SERVICES CO. LTD. 05 Financial Summary For the year ended or as at December 31, 2013 2012 2011 2010 2009 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Assets and liabilities Non-current assets 1,506,863 1,058,375 680,641 332,207 332,956 Current assets 5,439,034 6,610,645 3,538,712 5,613,386 3,809,264 Current liabilities 5,419,531 5,266,080 3,150,944 4,548,269 3,499,782 Net current assets 19,503 1,344,565 387,768 1,065,117 309,482 Total assets less current liabilities 1,526,366 2,402,940 1,068,409 1,397,324 642,438 Non-current liabilities 23,187 350,750 263,986 382,019 263,153 Net assets 1,503,179 2,052,190 804,423 1,015,305 379,285 Issued capital 329,803 324,560 1 – – Reserves 1,086,408 1,576,376 649,325 841,013 273,328 Non-controlling interests 86,968 151,254 155,097 174,292 105,957 Total equity 1,503,179 2,052,190 804,423 1,015,305 379,285 Earnings per share Basic RMB(0.12) RMB0.13 N/A N/A N/A Diluted N/A RMB0.13 N/A N/A N/A 06 Annual Report 2013 WISON ENGINEERING SERVICES CO. LTD. Business Overview Business Overview OVERALL REVIEW completion as well. Furthermore, technological development and promotion of proprietary technologies Looking back at 2013, the global economy grew at a progressed smoothly with the start of collaboration in modest pace, while China recorded a year-on-year GDP areas of coal-to-glycol and coal-to-substitute natural gas, increase of 7.7%, outperforming other major economies laying a foundation for the Group’s long-term and becoming a major stabilizing force in the region. technological reserves. China’s steady economic development, improved external demand, rebound in consumption growth 2013 has been a year of challenges for the Group. The together with the full implementation of economic Chairman and the executive director of the Company, Mr. reforms such as industrialization and urbanization, Hua Bangsong was required to assist the relevant PRC contributed as major driving forces behind the steady authorities in their investigations and was therefore economic growth, energy demand and development of temporarily unable to perform his duties. In March 2014, related energy service industries. the Company learned from a family member of Mr. Hua Bangsong that Mr. Hua has been arrested by PRC public Guided by the three established development strategies security authority over alleged bribery activity. However, — “business diversification”, “strengthening the case is still under investigation. Trading in the shares technological R&D and innovation capabilities” and of the Company on The Stock Exchange of Hong Kong “improving operational management backed by talents Limited has been suspended since September 2 , 2013. development and information technology”, in the first half of the year, Wison Engineering Services Co. Ltd (the The board of directors (the “Board”) of the Company “Company”, together with its subsidiaries, the “Group”) made proactive and swift responses to this unexpected has well grasped the favorable trends in coal-to- incident by constantly reviewing its business operations chemicals industry and reaped satisfactory results in and engaging in an array of initiatives. First, the Group business diversification. In addition to the high-standard strengthened its professional management team and delivery and commencement of Baoji Methanol Project structure through the appointments in September 2013 of Xuzhou Coal Mining Group and Jinchengtai Methanol of Mr. Cui Ying, who has extensive experience in strategic Project , the Group secured a number of new orders, management, sales and marketing, and Mr. Zhou including Shanxi Lu’an Mining (Group) High Sulfur Coal- Hongliang, who has 20 years of experience in project to-Liquid, Chemical, Heat and Power Integration Project, management and operations in the petrochemicals and Shandong Yangmei Hengtong’s MTO Project. The industry, as executive directors of the Group, to ensure Group’s first overseas EPC project achieved mechanical that the Group’s operations continue smoothly and are in Annual Report 2013 WISON ENGINEERING SERVICES CO. LTD. 07 Business Overview line with its business plans. Second, the Group reinforced In addition to the measures described above, the Board its cash flow control and actively communicated with its with all the staff continues to adhere to its established bankers to seek their understanding and support. The development strategies since the occurrence of the Board promptly changed the use of its IPO proceeds, incident. MTO separation technology, for which the reallocating idle cash from the net proceeds that was Company has proprietary intellectual property rights, was either not of immediate use or no longer needed for their successfully commercialized in September 2013 at the originally intended purposes, to be earmarked for Nanjing Chemical Industrial Park, and qualified ethylene additional working capital as well as to reduce the and propylene products have been successfully produced Group’s leverage level, to facilitate the effective use of at the plant, thus serving as a solid record for its future financial resources. Meanwhile, the Group has been in promotion of this proprietary technology. Further to active communications and negotiations with its bankers Shandong Yangmei Hengtong and other clients who with the immediate aim of reaching consensus on a debt adopted the Group’s proprietary MTO separation stabilization programme so that the Group could technology, more projects have been applied this continue to fulfill its contracts and other obligations and technology, including Shandong Lianmeng 360kta to maintain normal business operations, mitigating the polystyrene and auxiliary project — 300kta MTO plant. impacts that the investigations would otherwise have on Meanwhile, the Wison-Shell Hybrid Gasification the Group, its shareholders, customers and other Demonstration Plant has successfully started up in stakeholders. Moreover, the Group abided by and Nanjing in October 2013, marking the commencement of enhanced its corporate governance standards and took the demonstration and application phase of the an active approach in maintaining close communications technology. with external parties by constantly updating the market via announcements on latest developments in purpose Led by technological R&D and innovation, the Group’s for a high degree of transparency. The Board will design and consultation services have opened up new continue to assess the impact of the investigations on the space for development by constantly making Group’s business operation and financial performance breakthroughs. In 2013, the Group leveraged its from time to time, and will announce updates on any technological advantages to enter into 18 new design or results of the investigations as they become available for technology service or consulting service contracts. In disclosure to enable shareholders, stakeholders and the addition to the engineering design contracts, patent public to stay abreast of the Group’s operations on a licensing, process design package compilation and timely basis.