Elec & Eltek International : AUDITED FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2019

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Elec & Eltek International Company Limited

依 利 安 達 集 團 有 限 公 司 *

(Incorporated in the Republic of Singapore with Limited Liability)

Singapore Company Registration Number: 199300005H

(Hong Kong Stock Code: 1151)

(Singapore Stock Code: E16.SI)

AUDITED FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT

FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2019

This announcement is made by Elec & Eltek International Company Limited (the "Company") pursuant to the disclosure obligation under Rules 13.09 and 13.10B of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("SEHK") (the "HK Listing Rules"). This announcement is originally prepared in English. In the case of any inconsistency between the English version and the Chinese version, the English version shall prevail.

This announcement is prepared in accordance with the relevant regulations of Singapore Exchange Securities Trading Limited ("SGX"). The financial information, except for the consolidated results of the Group (as defined below) for the fourth quarter, set out in this announcement has been prepared in accordance with the Singapore Financial Reporting Standards (International) ("SFRS(I)s") and has been audited by auditors.

This announcement contains projections and forward-looking statements regarding the objectives and expectations of the Company and its subsidiaries (collectively referred to as, the "Group") with respect to its business opportunities and business prospects. Such forward-looking statements do not constitute guarantees of the future performance of the Group and are subject to factors that could cause the Company's actual results, plans and objectives to differ materially from those expressed in the forward-looking statements. These factors include, but are not limited to, general industry and economic conditions, shifts in customer demands, customers and partners, and government and policy changes. The Group undertakes no obligation to update or revise any forward-looking statements contained in this announcement to reflect subsequent events or circumstances. Shareholders of the Company and public investors should exercise caution when trading in the shares of the Company.

• For identification purpose only

1

FINANCIAL HIGHLIGHTS
	Twelve months ended 31 December
	2019	2018	% Change
	US$' 000	US$' 000
Revenue	616,508	602,634	2.3%
EBITDA	82,875	74,867	10.7%
EBITDA margin	13.4%	12.4%
Profit before tax	37,427	32,670	14.6%
Net profit attributable to owners
of the Company	30,381	24,299	25.0%
Basic and diluted earnings per share	US16.25 cents	US13.00 cents	25.0%
Full-year dividend per share
- Proposed final dividend per share	US4.00 cents	US4.00 cents	-
Dividend payout ratio	24.6%	30.8%
Net asset value per share	US$2.33	US$2.19	6.4%
Net gearing ratio	22.1%	20.5%

2

RESULTS

The board of directors (the "Board") of the Company is pleased to announce the audited consolidated results of the Group for the year ended 31 December 2019 ("CY2019" or, the "Year under Review") together with the comparative figures for the year ended 31 December 2018 ("CY2018").

Consolidated Statement of Profit or Loss
		CY2019	CY2018	% Change
	Notes	US$' 000	US$' 000
Revenue	2	616,508		602,634	2.3%
Cost of sales		(544,267)	(538,049)	1.2%
Gross profit		72,241		64,585	11.9%
Gross profit margin		11.7%		10.7%
Other operating income and gains	3	4,813		6,653	-27.7%
Distribution and selling costs		(10,558)	(10,096)	4.6%
Administrative expenses		(25,762)	(26,107)	-1.3%
Other operating expenses and losses		(312)	(414)	-24.6%
Finance costs	4	(2,995)	(1,951)	53.5%
Profit before taxation		37,427		32,670	14.6%
Income tax expense	5	(6,171)	(7,755)	-20.4%
Profit for the year		31,256		24,915	25.5%
Profit attributable to:
Owners of the Company		30,381		24,299	25.0%
Non-controlling interests		875	616	42.0%
		31,256		24,915	25.5%
Earnings per share (US cents)
- Basic and diluted	7	16.25		13.00	25.0%

3

Notes to Consolidated Statement of Profit or Loss:
	CY2019	CY2018	% Change
	US$' 000	US$' 000
Depreciation of property, plant and equipment	42,323		39,952	5.9%
Amortisation of prepaid land use rights	-	399	-100%
Depreciation of right-of-use assets	239		-	n/m
Allowance for expected credit losses	4,138		267		1,449.8%
Bad trade debts written off	-	4,707		-100%
Allowance for inventory obsolescence	383		3,413		-88.8%
Consolidated Statement of Profit or Loss and Other Comprehensive Income
	CY2019	CY2018	% Change
	US$' 000	US$' 000
Profit for the year	31,256		24,915	25.5%
Other comprehensive income (expense):
Items that may be reclassified subsequently to
profit or loss:
Gain on revaluation of property, plant and equipment
upon transfer to investment properties	3,104		-	n/m
Exchange differences on translation of
foreign operations, representing other
comprehensive expense for the year, net of tax	(1,260)	(1,382)	-8.8%
Total comprehensive income for the year	33,100		23,533	40.7%
Total comprehensive income attributable to:
Owners of the Company	32,225		22,917	40.6%
Non-controlling interests	875		616	42.0%
	33,100		23,533	40.7%
n/m－present not meaningful

4

Statements of Financial Position
		GROUP
		2019			2018
	Notes	US$' 000	US$' 000
ASSETS
Current assets		20,980
Cash and bank balances				25,077
Trade receivables	10	198,356			186,477
Bills receivables	10	525			1,148
Other receivables		15,624			13,294
Prepaid land use rights		-	399
Inventories	11	44,576			39,631
Total current assets		280,061			266,026
Non-current assets
	320,973
Property, plant and equipment	9			335,141
Prepaid land use rights		-	12,367
Right-of-use assets		10,598			-
Deposits for acquisition of plant		3,502
and equipment	9			8,398
Investment properties		138,348			104,554
Deferred tax assets		-	39
Total non-current assets		473,421			460,499
Total assets		753,482			726,525
LIABILITIES AND EQUITY
Current liabilities		69,205
Bank loans	13			55,353
Trade payables	12	157,684			150,176
Bills payables	12	5,237			15,442
Other payables		21,051			31,418
Contract liabilities		1,690			679
Provision for taxation		5,488			5,095
Total current liabilities		260,355			258,163
Non-current liabilities
	48,157
Bank loans	13			53,850
Deferred tax liabilities		4,464			3,403
Deferred income		4,936			1,162
Total non-current liabilities		57,557			58,415
Capital, reserves and
non-controlling interests		113,880
Share capital	14			113,880
Reserves		308,857			284,109
Equity attributable to owners of		422,737
the Company				397,989
Non-controlling interests		12,833			11,958
Total equity		435,570			409,947
Total liabilities and equity		753,482			726,525

5

Statements of Financial Position
		COMPANY
		2019	2018
	Note	US$' 000		US$' 000
ASSETS
Current assets
Cash and bank balances		42	98
Other receivables		10	7
Total current assets		52	105
Non-current asset
Subsidiary companies		477,393		474,747
Total non-current asset		477,393	474,747
Total assets		477,445	474,852
LIABILITIES AND EQUITY
Current liabilities
Other payables		3,874	4,385
Amounts due to subsidiary
companies		255,192	247,163
Total current liabilities		259,066	251,548
Capital and reserves
Share capital	14	113,880	113,880
Reserves		104,499	109,424
Equity attributable to owners of
the Company		218,379	223,304
Total equity		218,379	223,304
Total liabilities and equity		477,445	474,852

6

Statements of Changes in Equity

					Attributable to owners of the Company
														Foreign
														currency			Non-
	Share		Capital	Statutory	Revaluation		Other	Retained	translation			controlling		Total
	capital		reserve	reserve	reserve		reserve	earnings	reserve	Total	interests		equity
	US $'000		US $'000	US $'000	US $'000		US $'000	US $'000	US $'000	US $'000	US $'000		US $'000
			(Note i)	(Note ii)	(Note iii)		(Note iv)
THE GROUP
Balance at 1 January 2019	113,880	1,916	9,947	42,684	166			216,569		12,827		397,989		11,958	409,947
Total comprehensive income (expense)
for the year	-		-	-	-		-	30,381		-	30,381		875	31,256
Profit for the year
Gain on revaluation of property, plant and
equipment upon transfer	-		-	-	3,104		-	-	-	3,104		-	3,104
to investment properties
Exchange differences arising on
translation of foreign operations,
representing other comprehensive	-		-	-	-		-	-	(1,260)	(1,260)	-	(1,260)
expenses for the year, net of tax
Total	-		-	-	3,104		-	30,381		(1,260)	32,225		875	33,100
Transfer from retained earnings to
-		-	2,098	-		-	(2,098)	-	-	-		-
statutory reserve
Transactions with owners, recognised
directly in equity
Dividend paid in respect of	-		-		-		-		-			(7,477)	-	(7,477)	-	(7,477)
- previous financial year
Total	-		-	2,098	-		-	(9,575)	-	(7,477)	-	(7,477)
Balance at 31 December 2019	113,880	1,916	12,045	45,788	166			237,375		11,567		422,737		12,833	435,570
Balance at 1 January 2018	113,880	1,916	6,826	42,684	166			210,345		14,209		390,026		11,342	401,368
Total comprehensive income (expense)
for the year
Profit for the year	-		-	-	-		-	24,299		-	24,299		616	24,915
Exchange differences arising on
translation of foreign operations,
representing other comprehensive
expense for the year, net of tax	-		-		-		-		-			-		(1,382)	(1,382)	-	(1,382)
Total	-		-	-	-		-	24,299		(1,382)	22,917		616	23,533
Transfer from retained earnings to
statutory reserve	-		-	3,121	-		-	(3,121)	-	-	-		-
Transactions with owners, recognised
directly in equity
Dividend paid in respect of
- previous financial year	-		-		-		-		-			(14,954)	-	(14,954)	-	(14,954)
Total	-		-	3,121	-		-	(18,075)	-	(14,954)	-	(14,954)
Balance at 31 December 2018	113,880	1,916	9,947	42,684	166			216,569		12,827		397,989		11,958	409,947

7

Notes:

1. Capital reserve represents amounts transferred from the share option reserve upon the exercise of share options in prior years.
2. Statutory reserve represents amounts set aside by subsidiary companies operating in the People's Republic of China (the "PRC") and Thailand for declaration of dividends as required under the applicable laws of the PRC and Thailand.
3. The revaluation reserve of the Group represents the gain on revaluation of certain properties of the Group as a result of the transfer from property for own use to investment properties.
4. The amount credited to other reserve represents the difference between the fair value of consideration and the carrying amount of the net assets attributable to the additional interest in subsidiaries being acquired from non-controlling shareholders, which will be recognised to the profit and loss upon the disposal of the subsidiaries or the disposal by the subsidiaries in prior years.

8

	Share	Capital	Retained	Total
	capital	reserve	earnings	equity
	US$' 000	US$' 000	US$' 000	US$' 000
THE COMPANY
Balance at 1 January 2019	113,880		1,916	107,508	223,304
Profit for the year, representing total
comprehensive income for the year	-	-	2,552	2,552
Transactions with owners, recognised
directly in equity
Dividend paid in respect of
- previous financial year	-	-	(7,477)	(7,477)
Balance at 31 December 2019	113,880		1,916	102,583	218,379
Balance at 1 January 2018	113,880		1,916	120,996	236,792
Profit for the year, representing total
comprehensive income for the year	-	-	1,466	1,466
Transactions with owners, recognised
directly in equity
Dividend paid in respect of
- previous financial year	-	-	(14,954)	(14,954)
Balance at 31 December 2018	113,880		1,916	107,508	223,304

9

Consolidated Statement of Cash Flows
	CY2019	CY2018
	US$' 000	US$' 000
Operating activities
Profit before taxation	37,427		32,670
Adjustments for:
Allowance for expected credit losses	4,138		267
Bad trade debts written off	-	4,707
Finance costs	2,995		1,951
Depreciation of property, plant and equipment	42,323		39,952
Gain on disposal of right-of-use assets	(364)	-
Amortisation of prepaid land use rights	-	399
Depreciation of right-of-use assets	239		-
Gain on disposal of property, plant and equipment	(265)	(73)
Government grants relating to assets	(388)	(20)
Gain on fair value change of investment properties	(1,727)	(3,748)
Allowance for inventory obsolescence	383		3,413
Interest income	(109)	(105)
Operating income before movements in working capital	84,652		79,413
Increase in inventories	(5,963)	(1,851)
Increase in trade, bills and other receivables	(17,491)	(25,175)
(Decrease) increase in trade, bills and
other payables and contract liabilities	(10,009)	19,587
Net cash generated from operations	51,189		71,974
Interest income received	109		105
Interest paid	(3,199)	(2,225)
Income taxes paid	(4,624)	(4,363)
Net cash from operating activities	43,475		65,491
Investing activities
Proceeds from disposal of property, plant and equipment	1,680		212
Purchase of property, plant and equipment	(43,775)	(79,169)
Proceeds from disposal of right-of-use assets	423		-
Additions to prepaid land use rights	-	(128)
Deposits paid for acquisition of property, plant and equipment	(7,954)	(5,935)
Government grants received for acquisition of property,
plant and equipment	3,751		1,304
Net cash used in investing activities	(45,875)	(83,716)

10

		CY2019	CY2018
		US$' 000	US$' 000
Financing activities
Proceeds from bank borrowings	62,308		123,031
Repayment of bank borrowings	(54,162)	(86,955)
Dividends paid by the Company	(7,477)	(14,954)
Net cash from financing activities	669		21,122
Net (decrease) increase in cash and cash equivalents	(1,731)	2,897
Cash and cash equivalents at the beginning of the year	25,077		25,985
Effect of foreign exchange rate changes on the balances of
cash held in foreign currencies, net	(2,366)	(3,805)
Cash and cash equivalents at the end of the year	20,980		25,077
Cash and cash equivalents consist of:
Cash and bank balances	20,980		25,077

1. Basis of preparation and principal accounting policies

The Group adopted the following Singapore Financial Reporting Standards (International) ("SFRS(I)") pronouncements that are effective for annual periods beginning on or after 1 January 2019:

• SFRS(I)16 Lease
• SFRS(I) INT 23 Uncertainty over Income Tax Treatments

The adoption of these new and revised SFRS(I) does not result in changes to the Group's and the Company's accounting policies and has no material effect on the amounts reported for the current or prior financial period.

2. Revenue and segment information

The Group's operating activities are attributable to two reporting and operating segments on: (i) fabrication and distribution of printed circuit boards ("PCB"); and (ii) property investment. These reportable segments have been identified on the basis of internal management reports prepared in accordance with accounting policies conforming to SFRS(I)s, that are regularly reviewed by the Executive Directors of the Company.

11

Segment revenues and results

The following is an analysis of the Group's revenue and results by reportable and operating segments:

	Fabrication
	and
	distribution			Property
For the year ended 31 December 2019	of PCB			investment	Consolidated
	US$' 000			US$' 000	US$' 000
Segment revenue
Revenue from external customers	608,097	8,411	616,508
Segment Results
30,094	8,792	38,886
Corporate and other unallocated expenses						(1,459)
Profit before taxation						37,427
	Fabrication
	and
	distribution			Property
For the year ended 31 December 2018	of PCB			investment	Consolidated
	US$' 000			US$' 000	US$' 000
Segment revenue
Revenue from external customers	594,490	8,144	602,634
Segment Results
24,326	9,477	33,803
Corporate and other unallocated expenses						(1,133)
Profit before taxation						32,670

Note: The directors of the Company ("Directors", and each, a "Director") are not aware of any transactions between the operating segments during both years.

Breakdown of sales
	CY2019	CY2018	% Change
	US$' 000	US$' 000
	(Unaudited)	(Unaudited)
(a) Sales reported for first half year	280,221	280,119	0.0%

1. Operating profit after tax before deducting

	non-controlling interests reported for first half year	11,159	15,088	-26.0%
(c)	Sales reported for second half year	336,287	322,515	4.3%
(d)	Operating profit after tax before deducting
	non-controlling interests reported for second half year	20,097	9,827	104.5%

12

3.	Other operating income and gains
		CY2019	CY2018
		US$' 000	US$' 000
	Interest income	109		105
	Gain on disposal on property, plant and equipment	265		73
	Gain on disposal of right-of-use assets (Note)	364		-
	Gain on fair value changes of investment properties	1,727		3,748
	Gain on foreign exchange	403		739
	Government grants relating to assets	388		20
	Government research and development grants	548		1,056
	Others	1,009		912
		4,813		6,653
	Note: This pertains to the compensation received from the PRC government for a piece of land being returned
	to the PRC government during the year.
4.	Finance costs
		CY2019	CY2018
		US$' 000	US$' 000
	Interest on bank loans	3,199		2,225
	Less: Amounts capitalised	(204)	(274)
		2,995		1,951
5.	Income tax expense
		CY2019	CY2018
		US$' 000	US$' 000
	Current tax:
	Singapore income tax	-	7
	PRC enterprise income tax	4,703		4,932
	Hong Kong income tax	314		403
		5,017		5,342
	Deferred taxation	1,154		2,413
		6,171		7,755

The Group's profit is subject to taxation from the place of its operations where its profit is generated. Taxation arising in other jurisdictions is calculated at rates prevailing in the relevant jurisdictions.

13

6.	Dividend
		CY2019		CY2018
		US$' 000		US$' 000
	In respect of previous financial year
	Dividend paid:
	Final one-tier tax exempt dividend for 2018 of US4.0
	cents (2017: US8.0 cents) per ordinary share	7,477	14,954

No dividend in respect of current financial year was paid or declared during both years.

The Directors have recommended a one-tier tax exempt final dividend of US$4.0 cents (2018: US$4.0 cents) per

share amounting to US$7,477,000 (2018: US$7,477,000) to be payable in respect of the current financial year. This dividend will be recorded as a liability on the statement of financial position of the Company and of the Group upon approval by the shareholders of the Company at the forthcoming Annual General Meeting of the Company.

7. Earnings per share

The calculation of the basic and diluted earnings per share attributable to the ordinary owners of the Company is based on the following:

	CY2019		CY2018
	US$' 000		US$' 000
Earnings for the purpose of calculating basic and diluted
earnings per share	30,381	24,299
	Number of shares
	CY2019		CY2018
	' 000		' 000
Weighted average number of ordinary shares for
the purpose of calculating basic and
diluted earnings per share	186,920	186,920
Earnings per share (US cents)
- Basic and diluted	16.25	13.00

The Group had not granted options over shares. There are no dilutive potential ordinary shares.

14

8.	Net asset value
		Group			Company
		2019			2018	2019		2018
		US$	US$	US$	US$
	Net asset value (including non-controlling
	interests) per ordinary share based on total
	number of issued shares excluding treasury
	shares at the end of the period*	2.33			2.19	1.17		1.19

1. • Based on 186,919,962 issued shares as at 31 December 2019 (2018: 186,919,962 issued shares).
2. Additions to property, plant and equipment
   During the current reporting period, the Group spent approximately US$51.7 million (2018: approximately US$85.1 million) on acquisition of property, plant and equipment, including deposits paid.
   The deposits for acquisition of plant and equipment relate to down payments made when new plant and equipment are purchased for operational needs. The amount of down payment reported at each quarter end depends on factors such as (but not limited to) timing of orders placed for respective equipment, the delivery and the commissioning of the equipment purchase.
3. Trade and bills receivables

	GROUP
	2019			2018
	US$' 000	US$' 000
Trade receivables
- Third parties	190,244			179,250
- Related companies (Note)	17,689			12,721
Less: Allowance for expected credit losses	(9,577)		(5,494)
	198,356			186,477
Bills receivables	525			1,148
Total	198,881			187,625

Note: Related companies are subsidiaries of the ultimate holding company other than the Group.

15

The following is an ageing analysis of trade receivables net of allowance for expected credit losses presented based on the relevant invoice dates at the end of the reporting period:

	GROUP
	2019			2018
	US$' 000	US$' 000
Within 90 days	174,793			156,701
91 to 180 days	23,563			29,776
	198,356			186,477

At the end of the reporting period, the bills receivables were aged within 180 days (2018: within 180 days).

Trade receivables are non-interest bearing and generally on 30 to 120 days' credit terms (2018: 30 to 120 days).

11.	Inventories
			GROUP
			2019			2018
			US$' 000	US$' 000
	Raw materials	11,409			11,477
	Work-in-progress	15,998			11,903
	Finished goods	17,169			16,251
			44,576			39,631
12.	Trade and bills payables
			GROUP
			2019			2018
			US$' 000	US$' 000
	Trade payables
	- Third parties	96,639			99,985
	- Related companies (Note)	61,045			50,191
			157,684			150,176
	Bills payables	5,237			15,442
	Total	162,921			165,618

Note: Related companies are subsidiaries of the ultimate holding company other than the Group.

16

Trade and bills payables are non-interest bearing and generally on 15 to 120 days' terms (2018: 15 to 120 days).

The following is an ageing analysis of trade payables presented based on the relevant invoice dates at the end of the reporting period:

	GROUP
	2019			2018
	US$' 000	US$' 000
Within 90 days	99,745			91,938
91 to 180 days	39,644			41,132
Over 180 days	18,295			17,106
	157,684			150,176

Trade payables principally comprise amounts outstanding for trade purchases and outgoing costs.

At the end of the reporting period, the bills payables were aged within 180 days (2018: within 180 days). The bills payables mainly related to the purchase of equipment and inventories via the payment mode of issuing irrevocable letters of credits.

13. Bank loans
		GROUP
		2019			2018
		US$' 000	US$' 000
Unsecured:
Bank loans	117,362			109,203
Carrying amounts repayable:
- Within one year	69,205			55,353
- More than one year	48,157			53,850
		117,362			109,203

The Group's total external borrowings increased by approximately 7.5% to approximately US$117.4 million as at 31 December 2019 from 31 December 2018, due to draw down of additional loans during CY2019.

1. Share capital
   As at 31 December 2019, the Company had a total of 186,919,962 (2018: 186,919,962) issued ordinary shares excluding treasury shares.
2. Share options
   No share option has been granted under the 2018 Elec & Eltek Employees' Share Option Scheme which was adopted by the Company on 12 September 2018 since its adoption to the date of this announcement.

17

16. Capital commitments
	GROUP
	2019			2018
	US$' 000	US$' 000
Capital expenditure not provided for in the financial statements:
Commitments in respect of contracts placed for plant expansion	25,838			37,422

17. Net current assets and total assets less current liabilities

As at 31 December 2019, the Group's net current assets, defined as current assets less current liabilities, amounted to approximately US$19.7 million (2018: approximately US$7.9 million).

As at 31 December 2019, the Group's total assets less total current liabilities amounted to approximately US$493.1 million (2018: approximately US$468.4 million).

18

BUSINESS REVIEW

The Company is delighted to announce its results for the financial year ended 31 December 2019 (the "Year under Review" or "CY2019"). During the Year under Review, the Group maintained steady growth in terms of orders and equipment utilisation in terms of production capacity coupled with increased percentage of production of higher layers PCB. The Group's revenue for CY2019 increased by 2.3% as compared with that of CY2018 to approximately US$616.5 million (CY2018: US$602.6 million). The Group's gross profit increased by 11.9% to US$72.2 million as compared with that of CY2018 (CY2018: US$64.6 million), gross margin increased to 11.7% as compared with that of CY2018 (CY2018: 10.7%). Net attributable profit (profit after tax and non-controlling interests) increased by 25.0% to US$30.4 million as compared with that of CY2018 (CY2018: US$24.3 million).

During the Year under Review, communication & networking products (including mobile phones) accounted for approximately 43.8% (CY2018: 47.1%) of the Group's PCB sales, while automotive PCB sales accounted for about 23.1% (CY2018: 22.0%) of the Group's PCB sales. Other products (including computer & peripherals, consumer electronics and industrial related products) accounted for 33.1% (CY2018: 30.9%) of the Group's PCB sales. High Density Interconnect ("HDI") PCB accounted for approximately 26.7% (CY2018: 25.4%) of the Group's PCB sales.

The Group's financial position remained healthy throughout the Year under Review. The Board has recommended a final one-tier tax exempt dividend of US4.0 cents per share to shareholders of the Company, which will be subject to the shareholders' approval at the forthcoming annual general meeting.

To the best of the Board's knowledge, nothing has come to the attention of the Board that may render the audited financial results for CY2019 to be false or misleading in any material respect.

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LIQUIDITY AND CAPITAL RESOURCES

As at 31 December 2019, the Group's net current assets were approximately US$19.7 million (31 December 2018: approximately US$7.9 million), making the current ratio 1.08 as compared to 1.03 as at 31 December 2018.

The net working capital cycle was 36 days as at 31 December 2019 (31 December 2018: 36 days) based on the following key metrics:

• Inventories, in terms of stock turnover days, remained at 25 days (31 December 2018: 25 days).
• Trade receivables, in terms of debtors turnover days, increased to 114 days (31 December 2018: 107 days).
• Trade payables, in terms of creditors turnover days, increased to 103 days (31 December 2018: 96 days).

The Group's net gearing ratio (which is the ratio of interest bearing borrowings net of cash and cash equivalents to total equity) as at 31 December 2019 was approximately 22.1% (31 December 2018: 20.5%). As at 31 December 2019, the proportion of short-term and long-term bank borrowings stood at 59%: 41% (31 December 2018: 51%: 49%). The total equity of the Group, as at 31 December 2019, was approximately US$435.6 million (31 December 2018: approximately US$409.9 million). As at 31 December 2019, the Group had cash on hand and undrawn loan facilities of approximately US$21.0 million and US$60.0 million respectively.

The Group's transactions and monetary assets are principally denominated in United States dollars, Renminbi and Hong Kong dollars, and the Group is therefore subject to risks associated with fluctuations in exchange rate between Renminbi and other currencies in which the Group conducts its businesses.

HUMAN RESOURCES

As at 31 December 2019, the Group had approximately 8,600 employees (31 December 2018: approximately 8,400). The salaries of employees are maintained at a competitive level and are reviewed annually, with reference to the relevant labour market and the minimum wage guidelines prescribed by the relevant local government from time to time. The Group awards discretionary bonuses to eligible employees based upon profit target achievements of the Company and individual performance.

The Company has in place a share option scheme in the Year under Review, in order to, among other purposes, attract and retain the best available personnel in due course and to align the individual interests of the employees with the Group's interests.

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PROSPECTS

The slowdown in global economic growth in CY2019 together with the recent outbreak of novel coronavirus has brought about uncertainties for global economy. The Group will continue to focus on product quality and cost control and strictly control capital expenditure in order to continuously maintain the Group's competitiveness. In addition, the Group has begun to receive rental in respect of a newly completed industrial building in Guangzhou, which is expected to bring stable rental income to the Group.

FINAL DIVIDEND

The proposed final dividend of US4.0 cents per share, the payment of which is subject to approval by the shareholders of the Company at the forthcoming annual general meeting of the Company, is to be payable on Friday, 29 May 2020.

CLOSURE OF REGISTER OF MEMBERS IN RESPECT OF SHAREHOLDERS' ENTITLEMENT TO ATTEND THE ANNUAL GENERAL MEETING AND TO FINAL DIVIDEND

The Company will make appropriate announcements at a subsequent date and time to be confirmed.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the Year under Review, there was no purchase, sale and/or redemption by the Company or any of its subsidiaries, of the Company's listed securities on the SEHK.

AUDIT COMMITTEE

The Audit Committee of the Company has reviewed, with the management and auditors, the accounting principles and practices adopted by the Group, and discussed auditing, internal control and financial reporting matters, including the review of the audited financial statements of the Group for CY2019.

COMPLIANCE WITH THE HONG KONG CODE ON CORPORATE GOVERNANCE PRACTICES

The Company has adopted the code provisions ("Code Provisions") in the Corporate Governance Code and Corporate Governance Report (the "CG Code"), as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "HK Listing Rules"), as the code of the Company.

Currently, there are four Board Committees, namely, the Nomination Committee, the Remuneration Committee, the Employees' Share Option Scheme Committee and the Audit Committee. The respective terms of reference of the Board Committees, except the Employees' Share Option Scheme Committee, are posted on the SEHK's and Company's websites.

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During the Year under Review, the Company fully complied with the Code Provisions in the CG Code, save for the following:

1. Deviation from Code Provision A.4.1
   Under Code Provision A.4.1 of the CG Code, non-executive directors should be appointed for a specific term, subject to re-election.
   All the existing non-executive directors (except Mr. Ong Shen Chieh ("Mr. Ong") for the reason disclosed in "2. Deviation from Code Provision A.4.2" below) of the Company are not appointed for a specific term, but are subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with "Article 95 - Election of Directors" of the Articles of Association of the Company. Article 95 provides that one-third of its directors (prioritised by the length of service since a director's previous re-election or appointment) shall retire or offer themselves for re-election by shareholders at every annual general meeting of the Company. This effectively means that no director (except Mr. Ong for the reason disclosed in "2. Deviation from Code Provision A.4.2" below) will remain in office for more than three years without being re-elected by the Company's shareholders at a general meeting of the Company or otherwise. The Company considers that sufficient measures have been taken to ensure the Company's corporate governance practices are no less exacting than those in the CG Code.
2. Deviation from Code Provision A.4.2
   Under Code Provision A.4.2 of the CG Code, every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.
   The Companies Act of Singapore requires that a company incorporated in Singapore shall have, at all times, at least one director who is ordinarily resident in Singapore. Mr. Ong is currently the only Singapore resident director of the Company. As advised by the Company's Singapore legal adviser, as long as Mr. Ong remains as the only Singapore resident director, Mr. Ong cannot be subject to Code Provision A.4.2 of the CG Code to retire by rotation and re-election at any annual general meeting of the company. The Company would run the risk of violating the Companies Act of Singapore as if Mr. Ong were to be subject to the requirement to retire at the annual general meetings of the Company, there would be no Singapore resident director existing in the Company immediately following Mr. Ong's retirement.
   In order to comply with this Code Provision without violating the Companies Act of Singapore, the Company will consider as and when appropriate to appoint an additional Singapore resident director to the Board so that two Singapore resident directors can choose to retire alternately, in order to avoid the absence of a Singapore resident director at any one time.

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3. Deviation from Code Provision E.1.2

Under Code Provision E.1.2 of the CG Code, the Chairman of the Board should attend the annual general meeting of the Company.

The then Chairman of the Board, Mr. Cheung Kwok Wing, was unable to attend the annual general meeting of the Company held on 26 April 2019 ("2019 AGM") due to business reasons. He delegated the duty of answering and addressing questions raised by the shareholders of the Company at the 2019 AGM to the then Vice Chairman and Executive Director, Ms. Stephanie Cheung Wai Lin, who assumes the duty of chief executive officer of the Company.

Notwithstanding the aforesaid deviations, the Company considers that sufficient measures have been taken to ensure that the Company's corporate governance practices are no less exacting than those in the CG Code.

HONG KONG CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted a code of conduct regarding securities transactions by its directors and relevant employees (as defined in the CG Code) on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in Appendix 10 to the HK Listing Rules. A copy of the internal memorandum is circulated to each director and relevant employees at least 30 days and 60 days respectively before the date of the board meeting to approve the Company's quarterly results and annual results respectively, with a reminder that such directors and relevant employees cannot deal in the securities of the Company until after such results have been published.

On specific enquiry made, all directors and relevant employees of the Company have confirmed that they have complied with the required standard set out in the Model Code and the Company's code of conduct throughout the year ended 31 December 2019.

AUDIT OR REVIEW OF THE FINANCIAL RESULTS

The figures for CY2019, prepared in accordance with SFRS(I)s, have been audited by the Group's auditors.

SCOPE OF WORK OF MESSRS. DELOITTE & TOUCHE LLP

The figures in respect of the Group's statements of financial position, consolidated statement of profit or loss and other comprehensive income, statement of changes in equity, consolidated statement of cash flows and the related notes thereto for the year ended 31 December 2019, as set out in this announcement, have been agreed by the Group's auditor, Messrs. Deloitte & Touche LLP, to the amounts set out in the Group's audited consolidated financial statements for the year prepared for the purpose of statutory reporting in Singapore. The work performed by Messrs. Deloitte & Touche LLP in this respect did not constitute an assurance agreement in accordance with Singapore Standards on Auditing, Singapore Standards on Review Engagements or Singapore Standards on Assurance Engagements and consequently no assurance has been expressed by Messrs. Deloitte & Touche LLP on this announcement.

The auditors' report on the consolidated financial statement of the Group and the statements of financial position and statement of changes in equity of the Company as at and for the year ended 31 December 2019, prepared for the purpose of statutory reporting in Singapore, is attached as the Appendix.

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FORECAST STATEMENT

No forecast statement has been previously disclosed to shareholders.

DISCLOSURE ON THE WEBSITE OF THE EXCHANGES

This announcement shall be published on the website of SGX (http://www.sgx.com), the SEHK (http://www.hkexnews.hk) and on the Company's website (http://www.eleceltek.com).

INTERESTED PERSONS TRANSACTIONS

Interested persons transactions carried out during the reporting period, which fall under Chapter 9 of the SGX Listing Manual, are as follows:

	Aggregate value of
	all interested person
	transactions during		Aggregate value of
	the period under		all interested person
	review (including		transactions
	transactions less than		conducted under
	S$100,000 and		shareholders'
	excluding transactions		mandate pursuant to
	conducted under		Rule 920 of the SGX
	shareholders'		Listing Manual
	mandate pursuant to		(including
	Rule 920 of the SGX		transactions less than
	Listing Manual)		S$100,000)
Name of Interested Person	CY2019	CY2018		CY2019			CY2018
US$' 000
Purchases of plant and equipment
Chung Shun Laminates (Macao	-				11,996
Commercial Offshore) Limited	-		9,867
	-	-	11,996	9,867
Purchases of goods and services
Chung Shun Laminates (Macao	-		152,651
Commercial Offshore) Limited	-	109,555
Delta Realty Limited	176			106		-			-
Heng Yang Kingboard Chemical Co., Ltd.	-	-	2,325	2,385
Hong Kong Fibre Glass Company Limited	-	-	26,678	26,919
Huizhou Chung Shun Chemical	-					1,276
Company Limited	-		1,971
	176			106	182,930	140,830
Provision of goods and services
Chung Shun Laminates (Macau	-		4,747
Commercial Offshore) Limited	-	5,008
Express Electronics (Suzhou) Co., Ltd.	-	-	136	8
Techwise (Macao Commercial Offshore)	-				21,826
Circuits Limited	-		23,872
	-	-	26,709	28,888

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CONFIRMATION OF DIRECTORS' AND EXECUTIVE OFFICERS' UNDERTAKINGS PURSUANT TO RULE 720(1) OF THE SGX LISTING MANUAL

The Company confirms that it has procured the undertakings required under Rule 720(1) of the SGX Listing Manual from all its directors and executive officers, in the form set out in Appendix 7.7 of the SGX Listing Manual.

DISCLOSURE PURSUANT TO RULE 704(13) OF THE SGX LISTING MANUAL

Please refer to the Company's another announcement made on 28 February 2020.

By order of the Board

Elec & Eltek International Company Limited

依利安達集團有限公司*

Stephanie Cheung Wai Lin

Chairman

Hong Kong, 28 February 2020

As at the date of this announcement, the Board of the Company comprises the following directors:

Executive Directors:	Independent Non-executive Directors:
Stephanie Cheung Wai Lin (Chairman)	Stanley Chung Wai Cheong
Chang Wing Yiu	Ong Shen Chieh
	Kong Tze Wing

• For identification purpose only

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Appendix

The auditor's report on the full financial statements of Elec & Eltek International Company Limited for the financial year ended 31 December 2019 is as follows:

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF

ELEC & ELTEK INTERNATIONAL COMPANY LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Elec & Eltek International Company Limited (the "Company") and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position of the Group and the statement of financial position of the Company as at 31 December 2019, and the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies as set out on pages [ ••• ] to [ ••• ].

In our opinion, the accompanying consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 ("the Act") and Singapore Financial Reporting Standards (International) ("SFRS(I)s") so as to give a true and fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 December 2019 and the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group and changes in equity of the Company for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing ("SSAs"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority's Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities ("ACRA Code") together with ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Loss allowance for trade receivables

As at 31 December 2019, the Group has trade receivables amounting to US$198,356,000, net of allowance amounting to US$9,577,000.

Management judgement is required in assessing and determining the recoverability of trade receivables and adequacy of allowance made using the expected credit losses ("ECL") model under SFRS(I) 9 "Financial Instruments".

These judgement include estimating and evaluating expected future receipts from customers based on historical experience and forward-looking information such as credit ratings, trade receivables ageing analysis, collections subsequent to the end of the reporting period, local economic conditions, past collection history and trend analysis and knowledge of the businesses.

We obtained an understanding of the Group's control over the credit and collection process of its trade receivables, and tested the design and implementation of the relevant key controls over the assessment and monitoring of credit risks, and determination of loss allowance for trade receivables.

We discussed with management and evaluated the ECL model used in determining the allowance for ECL . We challenged and evaluated management's assessment on both the quantitative and qualitative information considered by them that is reasonable and supportable, including historical experience and forward-looking information such as credit ratings, trade receivables ageing analysis, collections subsequent to the end of the reporting period, local economic conditions, past collection history and trend analysis and knowledge of the businesses.

The key assumptions and estimation on allowance for ECL and the Group's credit risk management are disclosed in Notes [ ••• ] and [ ••• ] to the financial statements, and further information related to trade receivables is provided in Note [ ••• ] to the financial statements.

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Key audit matter

How our audit addressed the key audit matter

Investment properties

The carrying amount of Group's investment properties as at 31 December 2019 is US$138,348,000. The investment properties are stated at fair value, determined based on valuation performed by independent professional external valuers using the direct comparison method.

The valuation of investment properties requires the application of significant judgement and estimation in determining the appropriate valuation methodology to be used, use of subjective assumptions and various unobservable inputs. The valuation is sensitive to underlying assumptions applied by the valuers such as market comparable used and the capitalisation rate may have a significant impact to the valuation.

We assessed competency, capability and objectivity of the independent professional external valuers and read the terms of engagements of the valuers to determine whether there were any matters which might affect their objectivity or impede their scope of work.

We assessed the valuation methodology (direct comparison method), assumptions and estimates used against general market practice for similar property type.

We held discussions with the valuers without presence of the management to discuss and understand the valuation process, the valuation methodology, performance of the properties and the significant judgement and assumptions applied, including future lease income and yields.

We have also considered the adequacy and appropriateness of the disclosures made in the financial statements, including description of the inherent degree of subjectivity relating to significant unobservable inputs.

The key judgement and estimation on investment properties are disclosed in Note [ ••• ] to the financial statements, and further information related to investment properties, including the valuation techniques, the key inputs and the inter-relationships between the inputs and valuation is provided in Note [ ••• ] to the financial statements.

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Information Other than the Financial Statements and Auditor's Report Thereon

Management is responsible for the other information. The other information comprises the Directors' Statement but does not include the financial statements and our auditor's report thereon which we obtained prior to the date of our auditor's report, and the Corporate Profile, Financial Highlights and Calendar, Five Years' Financial Summary, Corporate Information, Structure of the Group, Chairman's Statement, Profiles of Board of Directors and Core Management, Interested Persons Transactions and Statistics of Shareholdings, which are expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is material misstatement on this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the other information which are expected to be made available to us after the date of this auditor's report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions in accordance with SSAs. We have not performed our work at the date of this auditor's report.

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and SFRS(I)s, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair view financial statements and to maintain accountability of assets.

In preparing the financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors' responsibilities include overseeing the Group's financial reporting process.

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Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

The engagement partner responsible for the audit resulting in this independent auditor's report is Mr. Kee Cheng Kong, Michael.

Deloitte & Touche LLP

Public Accountants and

Chartered Accountants

Singapore

28 February 2020

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