Sinjia Land Limited

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Business Review

For the twelve months ended 31 December 2016 ("FY2016"), the manufacturing and sale of precision elastomeric components used in the manufacture of office automation equipment, lifestyle products, consumer electronics, automotive equipment and other industrial applications continued to be the Group's primary business.

The Group's production facilities are located in Batam, Indonesia, Johor Bahru, Malaysia and Suzhou, China, with the sales office in Singapore.

Its elastomeric production capabilities range from material formulation, to compounding, moulding and other secondary processes customised to the specific requirements of customers.

Customers include multi-national corporations in Asia, Europe and America and include household brand-names such as Dyson, Philips, Tyco and Shimano.

In terms of geographical spread, Malaysia accounted for 41.9% of revenue, followed by Singapore with 28.4% and China with 19.0%. Indonesia accounted for the remaining 10.7%.

The differences in revenue is mainly due to the different products and services available in each country as well as buyer demand for the different products and services.

The Group will continue with its high productivity and costefficiency drive to maintain the profit margin of its manufacturing operations. It will also intensify its business development and marketing activities to secure a wider customer base.

As part of its diversification strategy with the objective of securing additional income streams from sectors with growth potential, the Group initiated corporate developments in real estate and financial investment into a new fund to enhance the prospects for long term sustainable growth in FY2016.

Financial Review

Income Statement

(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 following its acquisition on 7 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.

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$0.73 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$1.00 million, offset by the depreciation of plant and equipment of S$0.70 million. The Group completed the acquisition of G4 Station on 7 October 2016 and recorded provisional goodwill of S$0.76 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. The Group subscribed for 20,000 "SGD Class A" redeemable participating shares at the price of S$100.00 per share in Fortune Asia Long Short Fund (the "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 as at the financial year end.

Cash and cash equivalents declined by S$3.58 million mainly due to the investment in the Fund of S$2.00 million, purchase of new plant and equipment of S$1.00 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$0.85 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 repaid bank borrowings of approximately S$1.17 million but took on additional borrowings of S$1.55 million.

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 for issue to the vendor of G4 Station. Following this, the issued and paid-up share capital of the Company has increased from 140,659,920 Shares to 142,072,685 Shares. Accumulated losses decreased by S$0.53 million during the financial year. The loss attributable to non-controlling interest reduced the effect of higher retained earnings on total equity.

There was an increase in losses from foreign currency translation reserves of S$0.31 million mainly due to the weakening of China's Renminbi and Malaysia Ringgit against the Singapore Dollar, the strengthening of Indonesia Rupiah against the Singapore Dollar.