Sinjia Land Limited

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Full Year Financial Statement And Dividend Announcement 2015

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FULL YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR YEAR ENDED 31 DECEMBER 2015 (UNAUDITED)

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.

Income Statement

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

(i) Continuing Operations

Group revenue achieved for FY2015 decreased by 1.4% to $15.31 million, compared to $15.53 million in FY2014. The contribution from the key customers from the Elastomeric business units in Malaysia in Ringgit Malaysia ("MYR") increased by 8.7%, however due to the depreciation of MYR, the revenue for the Elastomeric business units in Malaysia reported in Singapore Dollars ("SGD") dropped by 0.9%.

Gross profit in FY2015 grew by 2.6% or $0.13 million increased by $0.6 million, from $4.96 million for FY2014 to $5.09 million in FY2015 on the back of lower manufacturing expenses and higher gross margin recorded in FY2015. Gross profit margin increased from 32.0% for FY2014 to 33.3% for FY2015 due to reasons stated above.

Distribution costs and administrative expenses increased by 9.7% in FY2015 to $6.76 million from $6.16 million in FY2014 mainly due to increase of staff related cost, depreciation, legal fees, rental fee, ERM implementation fee and repair & maintenance expenses. Finance costs of $0.18 million for FY2015 were $0.10 million higher than FY2014 largely due to the interest incurred for the debenture loan, term loan, revolving credit facilities and the hire purchase interest for motor vehicles.

The Group recorded other charges of $0.34 million in FY2015 (FY2014: $5.14 million) mainly due to the forfeiture of rental deposit of $135,000, fair value adjustment on the bank borrowings of $20,000 (1H2014: NIL), foreign exchange loss of $147,000 (FY2014: $308,000), provision for doubtful debt of $31,000 (FY2014: NIL) and plant and equipment written off of $11,000 (FY2014:33,000). In FY2014, the Group also recorded loss on disposal of plant and equipment of $21,000, the plant and equipment written off of $30,000, provision for obsolete stock of $121,000 & impairment loss on available-for-sale financial assets of $4,661,000.

Other credits in FY2015 decreased by 6.9%, from $0.76 million in FY2014 to $0.71 million in FY2015, largely due to gain on disposal of power generation system equipment of $0.66 million in Myanmar, operating lease income from Process Innovation Technology SE Asia Pte Ltd of $80,000 (FY2014: $161,000), Government Grants of $39,000 (FY2014: $78,000), reversal for impairment on inventories of $10,000 and overprovision of rebate to customer of $16,000 as well as trade and other receivables of $4,000 (FY2014: $6,000). In FY2014, the Group also recorded rental income of $5,000, fair value adjustment on bank borrowings of $19,000, reversal for impairment on trade and other receivables of $15,000 and forfeiture of the deposit of $0.45 million.

The Group registered a net loss before tax of $1.18 million for FY2015 compared to the loss before tax of $5.43 million for FY2014 and a loss after tax of $1.96 million (FY2014: $5.89 million).The Group posted a loss attributable to equity holders of the Company of $1.96 million in FY2015 compared to a loss of $5.89 million in FY2014.

(ii) Discontinued Operations

The Group closed down two properties subsidiaries in Hong Kong and Malaysia respectively and classified the energy/power segment as discontinued operations in FY2015 and reported a loss attributable to owners of $64,000.

Financial Position

Non-current Assets

As at 31 December 2015, the total non-current assets of the Group increased by $0.13 million to $16.24 million compared to $16.11 million as at 31 December 2014. The variance was mainly due to the partial reversal of reclassification of the investment of Tianjin Swan Lake ("TJSL") of $3.45 million which was previously grouped as disposal group classified as held for sale. The Company received the partial payment from Mr. Tan Jian You (the "Purchaser") by way of the transfer of 1,120,000 and 6,704,000 quoted securities in Abterra Ltd (the "Listed Shares") on 31 July 2015 and 21 August 2015 respectively.

The depreciation of plant and equipment of $0.96 million, plant and equipment written-off of $0.01 million and the foreign currency translation loss for plant and equipment in overseas operations of $141,000; was offset by the purchase of new plant and equipment of $1.87 million and gain on disposal of plant and equipment of $0.56 million .

Current Assets

The Group's current assets amounted to $22.08 million as at 31 December 2015, a decrease of $3.15 million compared to 31 December 2014. Inventories decreased by $0.01 million and trade and other receivables decreased by $1.36 million due to better cash flow management by elastomeric business unit.

Cash and cash equivalents decreased by $5.30 million mainly due to the payment for finance leases & borrowings of $7.79 million, purchase of new plant and equipment of $1.87 million offset against the new increase of bank borrowings of $1.29 million and cash inflow for disposal of plant and equipment $5.4 million.

Total Liabilities

Total liabilities of the Group as at 31 December 2015 decreased by $3.92 million to $15.87 million compared to $19.79 million as at 31 December 2014. During the period, the Group has repaid its bank borrowings of approximately $7.79 million offset against the additional borrowings of $1.29 million. The Group has also paid the income tax of $0.58 million.

Trade and other payables of $13.26 million was recorded as at 31 December 2015, an increase of $1.57 million mainly due to partial payment received from the purchaser for the disposal of TJSL.

Deferred tax as at 31 December 2015 decreased by $0.11 million mainly due to the foreign currency translation gain in overseas operations.

Total Equity

The equity decreased by $0.90 million to $22.45 million as at 31 December 2015 from $21.55 million as at 31 December 2014. While retained earnings decreased by $1.99 million during the year, the increase in losses from foreign currency translation reserve which was mainly due to the depreciation of the MYR & IDR against SGD and the appreciation of the RMB against SGD and loss attributable to non-controlling interest reduced the effect of higher retained earnings on total equity.

Commentary

The Group faces rising cost pressures due to the increase in minimum wages in the countries of operations in the PRC, Indonesia and Malaysia during the financial year and in the next reporting period and the next 12 months.

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

The board is of the view that at this juncture, given the uncertain global economic outlook, it will be more prudent to focus on the existing business to ensure a steady income for the Group.

Sinjia Land has, and will continue to explore new business opportunities and further develop existing businesses to enhance the profitability of the Group.

Balance Sheet

balance sheet