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Annual Report
2016
Ni Hsin Resources Berhad
(653353-W)
9
Financial Performance Review
For the financial year ended 31 December 2016, the Group achieved a total revenue of RM37.8 million which was 17.7% lower than
the total revenue achieved in FY2015 of RM45.9 million. The lower revenue recorded was mainly due to decreased sales orders in the
cookware and clad metal segments.
Gross Profit (“GP”) margin achieved during the year remained flat compared to the previous year. The Group incurred a Loss Before
Taxation (“LBT”) of RM4.6 million in FY2016 against a Profit Before Taxation of RM3.1 million in FY2015. The LBT incurred in FY2016
was mainly due to the recognition of the Employees’ Share Option Scheme (“ESOS”) fair value of RM5.03 mil, which was a notional
cost computed based on Binomial Option Pricing Model and has no impact on the cashflow and the net assets of the Group. The ESOS
fair value of RM5.03 million was recognized and charged to income statement as operating expense upon the granting of ESOS to the
Directors and eligible employees on 13 June 2016. Simultaneously, a Share Option Reserve of RM5.03 million was created and was
classified as Non-Distributable Reserves. The other factors that contributed to the difference in profitability include sale of products
with lower profit margins in FY2016 and realised gain in foreign exchange on the weakened Ringgit Malaysia in FY2015. Consequently,
the Group incurred a Loss After Taxation (“LAT”) of RM5.0 million in FY2016 compared to a Profit After Taxation of RM2.2 million
achieved in FY2015.
The Group’s net assets per share as at 31 December 2016 increased to RM0.34. The Group’s non-current assets increased to RM55.71
million compared with the non-current assets of RM37.82 million as at 31 December 2015 due to recognition of fair value for landed
properties of the Group. Inventories increased to RM18.64 million as at 31 December 2016 due to advance purchase of raw materials
at a favourable price in anticipation of price increase. Receivables, deposits and prepayments increased marginally by RM0.30 million
to RM5.58 million. The Group’s net current assets was RM22.54 million as at 31 December 2016. The Group is in a positive net cash
position as at 31 December 2016 with cash and cash equivalent of RM3.95 million after deducting all borrowings of the Group.
The Group’s net operating cash inflow for FY2016 was RM1.53 million. The net cash outflow from investing activities was RM1.91
million, mainly due to purchases of property, plant and equipment. Net cash outflow from financing activities was RM1.52 million,
mainly due to repurchase of treasury shares which was partially offset by the proceeds from exercise of warrants. The net resultant
impact to the Group’s cashflow was a decrease in cash of RM1.90 million during FY2016. Net cash and cash equivalents amounted to
RM3.95 million as at 31 December 2016.
Management Discussion And Analysis
(continued)