Sinjia Land Limited

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Full Year Financial Statement And Dividend Announcement 2013

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FULL YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR YEAR ENDED 31 DECEMBER 2013 (UNAUDITED)

Income Statement

income statement

Review of Performance

The principal historical activities of our Group involve the manufacture and sale of a wide range of customised precision elastomeric, polymeric and metallic components which are used in a variety of industries principally in office automation, lifestyle products, industrial application, consumer electronics and automotive industries.

Our elastomeric, polymeric and metallic component production capabilities range from material formulation and compounding as well as molding to secondary process including polymeric die-cutting, precision turning and precision machining of metallic components. Our production facilities and sales offices are located in Singapore, Johor, Malaysia, Batam, Indonesia, and Suzhou, PRC. Our customers include multinational corporations with presence in South East Asia, North and East Asia, the USA and Europe.

Income Statement

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

  1. Continuing Operations

    For the year ended 31 December 2013, the Group’s revenue decreased 13.2% to $17.31 million as compared to revenue of $19.94 million in FY2012. Revenue for a subsidiary in Malaysia recorded a substantial decrease in revenue due to the decline in demand of its key customers. In addition, the revenue contribution from the Polymeric subsidiary in Singapore was excluded in the second half of FY2013.

    Gross profit declined by $0.79 million or 11.1% to $6.31 million in FY2013 from $7.10 million in the previous corresponding period. The overall gross profit margin for FY2013 was 36.4% compared to 35.6% for the previous corresponding period.

    Distribution costs and administrative expenses increased by 1.8% in FY2013 to $7.54 million from $7.40 million in FY2012 due to increase in legal fee, depreciation and withholding tax fee for restructuring of a PRC subsidiary. The increase was partly offset by the lower donation, audit fee and its disbursement, entertainment and staff related cost in FY2013.

    Finance costs increased by $13,000 to $34,000 in FY2013 mainly for the interest incurred for the revolving credit facilities of a subsidiary in Malaysia and the hire purchase interest for motor vehicles.

    The Group recorded other charges of $385,000 in FY2013 (FY2012: $402,000) mainly due to plant and equipment related cost, loss on disposal of $156,000, cost for written off of $83,000, reinstatement cost for the old faciltities in Batam subsidiary of $86,000. The Group recorded foreign exchange loss of $323,000 in FY2012 due to the depreciation of US Dollar (“USD”) against the Singapore Dollar (“SGD”) and the stronger SGD versus Ringgit Malaysia (“MYR”), China Renminbi (“RMB”) and Indonesia Rupiah (“IDR”) during FY2012. In FY2013, we recorded allowance for slow moving and obsolete inventories of $41,000 (FY2012: $11,000) and allowance for impairment on trade and other receivables of $46,000. (FY2012: $21,000)

    Other credits in FY2013 amounted to $0.49 million compared to $2.15 million in FY2012 mainly due to foreign exchange gain of $0.25 million, Government Incentive and SME Cash Grant of $0.15 million. The foreign exchange gain was due to the appreciation of US Dollar against the Singapore Dollar in FY2013. There was no contribution from the property division in FY2013 compared to the profit of $2.15 million in FY2012 from the 50.54% shareholding interest in a BVI incorporated company that holds a 30% shareholding interest in a PRC developer.

    The Group recorded a share of loss from an associate of $60,000 in FY2013 for the preoperating expenses of the Batu Pahat project in Malaysia.

    In FY2013, the Group reported a loss before tax of $1.24 million compared to the profit before tax of $1.44 million in FY2012 and a loss after tax of $1.90 million (FY2012 profit after tax: $0.78 million).

  2. Discontinued Operation

    On 19 September 2013, the Group disposed of its polymeric subsidiary in PRC and reported a loss attributable to owners of $169,000.

Financial Position

Non-current Assets

The Group’s non-current assets decreased by $1.12 million to $2.93 million as at 31 December 2013 as compared to non-current assets of $4.05 million as at 31 December 2012. The decline was mainly due to the depreciation and amortisation of plant and equipment of $0.94 million, disposal of plant and equipment together with the loss on disposal of $0.16 million, plant and equipment written off of $0.08 million, and the foreign currency translation loss of plant and equipment in overseas operations of $0.03 million; offset by the corresponding increase in the addition of new plant and equipment of $0.72 million which consisted of the hire purchase of motor vehicle.

On 29 January 2013, the Group subscribed for 150,000 shares at an aggregate subscribtion price of MYR0.15 million for the acquisition of a 30% shareholding interest in a Malaysian developer.

Current Assets

The Group’s current assets amounted to $38.01 million as at 31 December 2013, an increase of $4.20 million compared to 31 December 2012.

Inventories decreased by $0.95 million and trade receivable decreased by $0.77 million mainly due to the disposal of the the shares in PITSEA which held $0.84 million in inventories and $1.72 million in trade receivables.

Cash and cash equivalents increased by $5.96 million mainly due to the proceeds from the disposal of PITSEA of $1.49 million; offset against the payment for income tax of $0.58 million, staff cost comprised mainly of bonus, directors’ fees and the payment of the FY2012 final dividend of $0.3 million in FY2013.

Total Liabilities

Total liabilities as at 31 December 2013 was $10.48 million, a increase of $5.40 million from $5.08 million as at 31 December 2012.

Trade and related payables increased by $5.18 million mainly due to the progress payment of RMB30.0 million for the proposed disposal of a 50.54% shareholding interest in a majority stake in a BVI incorporated company that holds a 30% shareholding interest in a PRC developer. In FY2012, the higher income tax recorded was due to profitable operations in higher tax jurisdictions. Additionally, losses incurred by subsidiaries in one tax jurisdiction were not available for offset against profit generated by subsidiaries in other tax jurisdictions. As at 31 December 2013, lower income tax was recorded due to prior year group relief shared between a Singapore Subsidiary and Holding Company.

Approximately $0.66 million under non-current liabilities was for deferred tax and the financial lease liability which comprised of the outstanding amount from a hire purchase of motor vehicle as at 31 December 2013.

Total Equity

The equity decreased by $2.32 million to $30.46 million as at 31 December 2013 from $32.78 million as at 31 December 2012. The Group recorded foreign currency translation reserve loss due to the appreciation of the SGD against MYR and IDR.

Commentary

The remaining manufacturing business unit continues to face rising cost pressure mainly due to the increase in legislated minimum wages in the respective countries of operation in PRC, Indonesia and Malaysia. In addition, the recent downward trend in business activities is likely to continue when the manufacturing partners of a few key customers move businesses away from its subsidiaries. To mitigate the risk of futher decline, the Group is concentrating on diversification away from its traditional businesses to other industries.

On 2 July 2013, the Company entered into a non-binding Letter of Intent to participate in a mixed development project in Medini Iskandar, Malaysia, as no agreement was reached at the time it lapsed, the Board has decided not to proceed with this project.

The mixed development project located in Batu Pahat, Malaysia was launched on 26 December 2013. Of the 246 units available, the project has so far received encouraging bookings for 158 units, which is equivalent to 64.2%.

Further to the announcement dated 29 April 2013 in relation to the writ of summons served on the Company, Allen & Gledhill has been appointed to act for the Company in respect of the suit. As the case is still in progress, the Board will provide shareholders with timely updates on any ongoing material developments in connection with the matter.

On 21 February 2014, the Company announced that it has entered into an agreement with Real Time Engineering Pte. Ltd. (“RTE”) in connection with a proposed joint venture, pursuant to which the Company and RTE shall incorporate a new company to undertake the business of procuring, assembling and installing fuel cell systems in commercial and other building for the generation of electricity and production of synthetic diesel in Singapore.

Meanwhile, the Group will continue to explore other 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