Sinjia Land Limited

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Full Year Financial Statement And Dividend Announcement 2017

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FULL YEAR FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 (UNAUDITED)

Income Statement

Review of Performance

Income Statement

On 15 December 2017, the Company completed the disposal ("Disposal") of HLN Rubber Products Pte. Ltd. and its subsidiaries (the "Disposal Group"). In accordance with the FRS, the results of the Disposal Group have been presented separately as "Discontinued Operations". "Continuing Operations" relate to the Company's remaining businesses in (i) hostel management (operating under G4 Stations Pte. Ltd. ("G4") which was acquired by the Company in October 2016); and (ii) investment in fund management.

Continuing Operations

Revenue for both FY2017 and FY2016 were contributed by the Group's business in hostel management under G4, which was acquired by the Company in October 2016. Revenue increased by S$356,000, from S$118,000 in FY2016 to S$474,000 in FY2017. The increase was due to the full year revenue contribution from G4 in FY2017, as compared to the three months contribution from G4 in FY2016.

Gross profit increased by S$51,000, from S$26,000 in FY2016 to S$77,000 in FY2017 mainly due to the increase in revenue, partially offset by an increase in consultancy fee of S$9,400 in FY2017. Accordingly, gross profit margin decreased from 22.0% for FY2016 to 16.2% for FY2017.

Other income decreased by S$377,000, from S$384,000 in FY2016 to S$7,000 in FY2017, mainly due to the absence of interest income from a debtor, Barons Vista LLC, in FY2017 as a result of the settlement of convertible loan note issued by Barons Vista LLC. Other income in FY2017 comprised only interest income from bank deposits.

Other credits increased by S$0.99 million, from S$0.21 million in FY2016 to S$1.20 million in FY2017 mainly due to a gain of S$1.00 million arising from the settlement of convertible loan note issued by Barons Vista LLC.

Administrative expenses decreased by S$0.20 million, from S$2.30 million in FY2016 to S$2.10 million in FY2017, mainly due to the decrease in office rental.

The Group recorded finance costs of S$23,000 in FY2017, as compared to finance income of S$2,000 in FY2016 mainly due to interest expense payable on the Group's borrowings in FY2017.

The Group recorded other charges of S$4.39 million in FY2017 (FY2016: S$35,000) mainly due to (i) allowance for impairment on plant and equipment of S$2.47 million; (ii) allowance for impairment on goodwill of S$0.76 million arising from the acquisition of G4 in FY2017; (iii) allowance for impairment on trade receivables of S$0.78 million; and (iv) fair value loss on financial assets (at fair value through profit or loss) of S$0.27 million (due to a decrease in the fair value of the Company's investment fund (namely, Fortune Asia Long Short Fund)).

As a result of the above, the Group registered a net loss before tax of S$5.24 million in FY2017, as compared to S$1.72 million in FY2016. The Group posted a loss attributable to equity holders of the Company of S$4.04 million in FY2017, as compared to S$1.65 million in FY2016.

Discontinued Operations

Discontinued operations, which relate to the Disposal Group, reported a loss attributable to equity holders of the Company of S$3.62 million in FY2017, whereas a profit attributable to equity holders of the Company of S$1.16 million was reported in FY2016.

Financial Position

Current Assets

The Group's current assets decreased by S$8.22 million to S$11.70 million as at 31 December 2017, from S$19.92 million as at 31 December 2016. The Group's current assets as at 31 December 2017 comprised trade and other receivables of S$3.04 million, other current assets of S$0.15 milliion, financial assets (at fair value through profit or loss) of S$1.78 million, cash and cash equivalents of S$5.94 million and assets of the disposal group classified as held-for-sale of S$0.79 million.

Inventories, and trade and other receivables decreased by S$1.54 million and S$2.92 million, respectively, mainly due to the Disposal and settlement of convertible loan note issued by Barons Vista LLC.

Financial assets, at fair value through profit or loss decreased by S$0.27 million, from S$2.05 million as at 31 December 2016 to S$1.78 million as at 31 December 2017, due to a decrease in the fair value of the Company's investment fund (namely, Fortune Asia Long Short Fund).

Cash and cash equivalents decreased by S$0.61 million, from S$6.55 million as at 31 December 2016 to S$5.94 million as at 31 December 2017. Please refer to the section on "Consolidated Statement on Cash Flows" below for the reasons on the decrease in cash and cash equivalents.

Assets of the disposal group classified as held-for-sale decreased from S$3.26 million as at 31 December 2016 to S$0.79 million as at 31 December 2017, mainly due to the reversal of Sinjia RTE Solutions Pte Ltd from the "Assets of disposal group classified as held for sale" account, as the proposed disposal of the entity did not materialise.

Non-current Assets

The Group's non-current assets decreased by S$2.88 million to S$14.09 million as at 31 December 2017, from S$16.97 million as at 31 December 2016. The Group's non-current assets as at 31 December 2017 comprised available-for-sale financial assets of S$11.51 million, investment property of S$2.54 million and plant and equipment of S$39,000.

Available-for-sale financial assets decreased by S$2.37 million, from S$13.88 million as at 31 December 2016 to S$11.51 million as at 31 December 2017. The available-for-sale financial assets relate to the Company's investment in Tianjin Swan Lake Real Estate Development Co., Ltd. ("TJSL"). Partial consideration for the disposal of TSJL was received by the Company from the prospective buyer in the form of shares in Abterra Ltd, a listed company on the SGX-ST. The decrease was mainly due to a decrease in fair value of these quoted securities in Abterra Ltd of S$2.23 million and the Company's disposal of 339,000 quoted securities in Abterra Ltd in FY2017.

Plant and equipment decreased by S$2.29 million, from S$2.33 million as at 31 December 2016 to S$39,000 as at 31 December 2017, mainly due to the Disposal.

Investment property of S$2.54 million as at 31 December 2017 relates to the settlement of convertible loan note issued by Barons Vista LLC pursuant to which certain properties were transferred to the Company. There were no such items as at 31 December 2016. Please refer to the Company's announcement dated 16 June 2017 for further details on the aforementioned settlement.

Goodwill of S$0.76 million as at 31 December 2016 relate to the Company's acquisition of G4. The amount was fully impaired as at 31 December 2017.

Current Liabilities

The Group's current liabilities decreased by S$3.33 million, from S$15.71 million as at 31 December 2016 to S$12.38 million as at 31 December 2017.The Group's current liabilities as at 31 December 2017 comprised trade and other payables of S$12.28 million and borrowings of S$0.10 million.

Trade and other payables decreased by S$1.08 million, from S$13.36 million as at 31 December 2016 to S$12.28 milliion as at 31 December 2017, mainly due to the Disposal. Trade and other payables comprised mainly an amount of S$10.47 milion which relates to partial consideration received from the prospective buyer in connection with the disposal of available-for-sale financial assets of investment in equity security of TJSL.

Borrowings decreased from S$0.90 million as at 31 December 2016 to S$0.10 million as at 31 December 2017, due to repayment of borrowings of S$1.68 million, partially offset by additional bank borrowings of S$1.50 million in FY2017.

The Group reported a negative working capital of S$0.68 million as at 31 December 2017, as compared to a positive working capital of S$4.22 million as at 31 December 2016. The Group's negative working capital as at 31 December 2017 was largely due to the partial consideration of S$10.47 million received from the prospective buyer of TJSL which was recorded as a "Current liability – Other Payables", whereas the value of the equity security in TJSL was recorded as a "Non-current asset – Available-for-sale Financial Assets".

Non-current Liabilities

The Group's non-current liabilities decreased by S$0.39 million, from S$0.57 million as at 31 December 2016 to S$0.18 million as at 31 December 2017. The Group's non-current liabilities as at 31 December 2017 comprised borrowings of S$0.18 million.

Borrowings decreased by S$0.12 million, from S$0.30 million as at 31 December 2016 to S$0.18 million as at 31 December 2017. The decrease was mainly due to the repayment of finance lease liabilities of S$42,000 and borrowings of S$82,000 in FY2017. Retirement benefit obligation and deferred tax liabilities of S$0.24 million and S$23,000 as at 31 December 2016 relate to the Disposal Group. There were no such items as at 31 December 2017.

Equity

Share capital increased by S$2.10 million, from S$23.15 million as at 31 December 2016 to S$25.25 million as at 31 December 2017, pursuant to a share placement exercise ("Share Placement") completed in April 2017 whereby an aggregate of 35,000,000 new ordinary shares in the capital of the Company were issued at S$0.06 per share.

Accumulated losses increased by S$7.58 million, from S$0.61 million as at 31 December 2016 to S$8.19 million as at 31 December 2017, due to net loss incurred in FY2017.

Other reserves decreased by S$0.70 million, from S$1.60 million as at 31 December 2016 to S$0.90 million as at 31 December 2017, mainly due to the changes in the fair value of available-for-sale financial assets of S$2.23 million, partially offset by the adjustment in foreign currency translation reserves of S$1.53 million arising from the Disposal.

Consolidated Statement of Cash Flows

Net cash inflow for operating activities for FY2017 amounted to S$1.57 million, mainly due to cash from operations of S$1.49 million and working capital changes of S$0.94 million, partially offset by income tax paid of S$0.86 million. Cash from working capital in FY2017 amounted to S$0.94 million, mainly due to an increase in (i) inventories of S$0.06 million; (ii) trade and other receivables of S$5.49 million; and (iii) trade and other payables and provisions of S$5.80 million; partially offset by the decrease in (i) other current assets of S$0.42 million; and (ii) financial assets, at fair value through profit or loss of S$0.27 million.

Net cash outflow from investing activities of S$3.84 million in FY2017 was mainly due to the (i) disposal of the Disposal Group of S$3.86 million; (ii) proceeds from available-for-sale financial assets of S$0.14 million; and (iv) purchase of plant and equipment of S$0.16 million.

Net cash inflow from financing activities of S$2.40 million in FY2017 was mainly due to the proceeds received from the Share Placement exercise completed in April 2017 and borrowings of S$2.10 million and S$1.50 million respectively and the release of cash restricted for use of S$0.70 million. The increase was partially offset by repayment of borrowings of S$1.77 million and interest paid of S$0.10 million.

As a result of the above, the Group had cash and cash equivalents of S$5.94 million as at 31 December 2017, representing a decrease of S$0.61 million as at 31 December 2016.

Commentary

Notwithstanding a loss attributable to shareholders, the Group is financially strong with cash at bank of $5.94 million as at 31 December 2017.

In December 2017, the Company completed the disposal of the Disposal Group. The Company will focus its resources on property related business which include property development, property investment and property management (the "Property Business").

The Company does not plan to restrict its 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.

The Group continues to face challenges arising from uncertain economic conditions and financial environment.

The Group remains focused on streamlining its business structure and maintaining disciplined cost management. The Group has implemented various measures to stay lean and cash flow positive in order to stay competitive in the challenging business environment.

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