Sinjia Land Limited

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Full Year Financial Statement And Dividend Announcement 2016

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FULL YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR YEAR ENDED 31 DECEMBER 2016 (UNAUDITED)

Income Statement

Review of Performance

Income Statement

In accordance with the FRS, the results of the disposed group are presented separately as "Discontinued Operations".

(i) Continuing Operations

Group revenue for FY2016 increased by 5.4% to S$16.14 million from S$15.30 million for FY2015. It was contributed by key customers of the Group’s Elastomeric business units in Singapore, Suzhou and Batam and new revenue stream of S$0.1 million from G4 Station Pte. Ltd. ("G4") following its acquisition on 3 October 2016. This was partly offset by a decrease of orders from key customers of the Elastomeric business units in Malaysia.

Gross profit in FY2016 grew by 7.6% or S$0.39 million, from S$5.09 million for FY2015 to S$5.48 million in FY2016 due to higher gross margin recorded in FY2016. Gross profit margin accordingly increased from 33.3% for FY2015 to 34.0% for FY2016.

Distribution costs and administrative expenses decreased by 9.8% to S$6.02 million in FY2016 from S$6.68 million in FY2015 mainly due to decrease of staff related cost and legal fees.

Finance costs for FY2016 were S$0.02 million as compared to S$0.24 million for FY2015 largely due to the interest cost-savings from the repayment of debenture loans in FY2015.

The Group recorded other charges of S$0.04 million in FY2016 mainly due to allowance for impairment on trade and other receivables of S$17,000, plant and equipment written off of S$5,000 and loss on disposal of plant and equipment of S$13,000. This compares to other charges of S$0.23 million in FY2015.

Other credits in FY2016 was S$0.23 million compared to S$0.71 million in FY2015 mainly due to foreign exchange gains of S$85,000, government grants of S$76,000 (FY2015: S$39,000), gain on fair value of investment fund (Fortune Asia Long Short Fund) of S$51,000 and reversal for impairment on inventories of S$16,000 (FY2015: S$10,000). In FY2015, the Group recorded a gain on its disposal of power generation system equipment of S$0.66 million in Myanmar and operating lease income from Process Innovation Technology SE Asia Pte Ltd of S$80,000.

In FY2016, the Group registered a net profit before tax of S$0.02 million (FY2015: net loss before tax of S$1.03 million) and a loss after tax of S$0.60 million (FY2015: S$1.81 million).The Group posted a loss attributable to equity holders of the Company of S$0.49 million in FY2016 compared to S$2.53 million in FY2015.

(ii) Discontinued Operations

The Group announced the voluntary liquidation of a dormant subsidiary corporation in Malaysia on 3 January 2017 and classified the energy/power segment as discontinued operations. The discontinued operations reported a profit attributable to owners of S$0.04 million (FY2015: loss attributable to owners of S$1.28 million).

Financial Position

Non-current Assets

As at 31 December 2016, the total non-current assets of the Group increased by S$0.72 million to S$16.97 million from S$16.24 million as at 31 December 2015. The Group purchased new plant and equipment of S$1.05 million, offset by the depreciation of plant and equipment of S$0.70 million. The fair value of quoted securities in Abterra Ltd previously transferred by Mr. Tan Jian You decreased by S$0.31 million. The Group completed the acquisition of G4 on 5 October 2016 and recorded provisional goodwill of $0.79 million.

Current Assets

The Group’s current assets amounted to S$19.92 million as at 31 December 2016, a decrease of S$1.10 million compared to 31 December 2015. Inventories and trade and other receivables increased by S$0.29 million and S$0.21 million, respectively, due to the increase of orders from key customers of the Group’s Elastomeric business units. The Group also subscribed for 20,000 “SGD Class A” redeemable participating shares at the price of S$100.00 per share in an investment fund (Fortune Asia Long Short Fund), for the total subscription amount of S$2.00 million and its fair value increased by S$0.05 million to S$2.05 million

Cash and cash equivalents declined by S$3.57 million mainly due to the investment in Fortune Asia Long Short Fund of S$2.00 million, purchase of new plant and equipment of S$1.05 million, new investment into G4 of S$0.66 million, repayment of borrowings and lease liabilities of S$1.21 million and the payment of income tax of S$0.83 million.

Total Liabilities

The Group had S$16.28 million total liabilities as at 31 December 2016, with approximately S$0.57 million under non-current liabilities. The increase of financial liabilities in FY2016 was mainly due to higher utilisation of trade finance facilities that were extended to the Group’s subsidiary corporation in China. During the financial year, the Group has repaid bank borrowings of approximately S$1.17 million but taken additional borrowings of S$1.55 million. As at 31 December 2016, income tax was recorded at S$0.19 million compared to S$0.38 million as at 31 December 2015. Additional income tax was provided for one of the subsidiary corporations in Singapore after a tax review by the tax authority, IRAS. The Group has also paid income tax of S$0.85 million.

Deferred tax liabilities as at 31 December 2016 was recorded at S$23,000.

The Group was in a net cash position as at 31 December 2016.

Total Equity

Total equity decreased by S$0.77 million to S$20.61 million as at 31 December 2016 from S$21.38 million as at 31 December 2015. On 3 October 2016, the Company received the Listing and Quotation Notice from the Singapore Exchange Securities Trading Limited for the listing and quotation of the Consideration Shares. Following this, the issued and paid-up share capital of the Company has increased from 140,659,920 Shares to 142,072,685 Shares.

Retained earnings decreased by S$0.48 million during the financial year. There was an increase in losses from foreign currency translation reserves of S$153,000 mainly due to the weakening of China’s Renminbi and Malaysia Ringgit against the Singapore Dollar, against the strengthening of Indonesia Rupiah against the Singapore Dollar. The changes in the fair value of available-for-sale financial assets of S$0.31 million are recognised in other comprehensive income and accumulated in the fair value reserve. The loss attributable to non-controlling interest reduced the effect of higher retained earnings on total equity.

Commentary

While recent economic indicators point to a possible bottoming out of the recession, the Group expects to operate in a very challenging business environment characterized by slow recovery and uncertain financial environment.

The Group faces rising cost pressures due to the increase in minimum wages in some of its countries of operations namely, China, Indonesia and Malaysia.

The Group has implemented various measures to stay lean and cash flow positive in order to stay competitive in the challenging business environment.

The Group has diversified its core business to include the property business and the Group intends to further participate as and when suitable opportunities arise. The Group may also invest in or acquire or dispose of shares or interests in any entity that is in the property business. The Company does not plan to restrict the property business to any specific geographical market as each project and investment will be evaluated and assessed by the Board on its merits. The Group may also explore joint ventures and/or strategic alliances with third parties who have the relevant expertise and resources to carry out the property business as and when the opportunity arises.

Nevertheless, the Company has, and will continue to explore new business opportunities which can enhance long term shareholder value. These include geographical expansion, mergers and acquisitions, divestment and partnering with long term strategic investor(s) who can add depth and breadth to the Group’s existing business portfolio.

Balance Sheet

balance sheet