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A. Discontinued operations
At an Extraordinary General Meeting held on 8 June 2016, the shareholders of the Company approved the proposed disposal (the "Proposed Transaction") of Multi-Fineline Electronix, Inc. ("MFLEX") and its subsidiaries to Suzhou Dongshan Precision Manufacturing Co., Ltd.. On 27 July 2016, the Group announced the completion of the Proposed Transaction and MFLEX and its subsidiaries have thereafter ceased to be subsidiaries of the Company.
On 13 May 2016, the Company announced that it and its wholly owned subsidiary, UE UMC Pte. Ltd. had entered into agreements with Giant Maze Limited in relation to the sale of UES Holdings Pte. Ltd. and its subsidiaries, UE Envirotech Pte Ltd and its subsidiaries, UE Asia Pacific (Beijing) Co., Ltd. and its subsidiary, and Hengyang City UE Songmu Water Co., Ltd. (collectively known as "EE Businesses"). The Group completed the sale of the EE Businesses as announced on 26 July 2016 and 28 September 2016.
In accordance with FRS 105, Non-current Assets Held for Sale and Discontinued Operations, the results of MFLEX and its subsidiaries and EE Businesses have been presented separately on the consolidated income statement as Discontinued Operations.
The Group recorded attributable profit of $113.2 million from discontinued operations in 2016 including divestment gains of approximately $123 million.
B. Continuing operations
FY2016 compared with FY2015
Revenue decreased 44% to $479.7 million in 2016 from $851.2 million in 2015 mainly due to lower revenue from property development following the completion of Eight Riversuites. As a result, gross profit decreased 12% to $193.7 million in 2016.
Other income decreased 11% to $25.9 million in 2016 from $29.0 million in 2015.
In 2016, this included mainly:
In 2015, this included mainly:
Distribution costs increased 16% to $29.7 million in 2016 from $25.6 million in 2015 mainly due to higher selling and marketing expenses for property development business in China.
Other expenses increased 36% to $29.5 million in 2016 from $21.8 million in 2015 mainly due to revaluation deficit on certain investment properties and higher impairment loss in relation to certain development projects.
Share of profit from equity-accounted associates and joint ventures decreased 34% to $2.9 million in 2016 from $4.4 million in 2015.
Income tax expense increased to $8.8 million in 2016 from $0.5 million in 2015. The lower income tax expense in 2015 was mainly due to the write-back of over provision of prior years' income and deferred tax.
The Group's attributable profit on continuing operations decreased 62% to $27.4 million in 2016 from $71.6 million in 2015.
Financial position review
During the financial year ended 31 December 2016, the Group disposed of the following subsidiaries and associates:
(collectively known as "Disposal of Subsidiaries and Associates".)
Cash flow review
As at 31 December 2016, the Group had cash and cash equivalents of $624 million. During the year, the Company issued a $150 million 5-year fixed rate notes. Separately, the Group utilised $141 million for dividends payments and $425 million for the repayment of external bank borrowings. Apart from the above, the Group's components of cash flow and changes in these components from 31 December 2015 to 31 December 2016 were mainly the result of the Group's other ongoing operations.
Property Rental & Hospitality
Revenue decreased 3% to $135.2 million in 2016 from $139.0 million in 2015. Operating profit before interest increased 13% to $77.8 million in 2016 from $68.8 million in 2015 mainly due to $5.0 million of fidelity insurance compensation and $3.9 million gain from the disposal of available-for-sale financial assets.
Revenue decreased 82% to $70.8 million in 2016 from $402.0 million in 2015 mainly due to lower revenue recognition from the property sales at Eight Riversuites. Operating loss before interest was $23.2 million in 2016 compared with operating profit before interest of $18.4 million in 2015 mainly due to lower revenue and profit in Singapore and higher impairment and operating expenses incurred by the China operations.
Engineering & Distribution
Revenue decreased 11% to $136.9 million in 2016 from $153.0 million in 2015 mainly due to lower contribution from the systems integration business, O'Connor's. Operating profit before interest increased 63% to $9.1 million in 2016 from $5.6 million in 2015 mainly due to higher profit contribution from the distribution businesses and lower losses recorded by the systems integration businesses.
Revenue decreased 7% to $89.5 million in 2016 from $96.1 million in 2015. Operating profit before interest was $6.7 million in 2016 compared with operating loss of $4.6 million in 2015 mainly due to improved manufacturing efficiency and cost control in its operations in China.
The global economic and geopolitical uncertainties as well as the weaker economic outlook in Singapore will continue to weigh on the sentiment of the property markets in Singapore. The Group's China Property division continues to face challenging operating conditions against the backdrop of slower economic growth and patchy recovery in the property market in China. The accounting treatment on revenue recognition for certain projects using the completion-of-construction method will result in volatility in the recognition of revenues and profits. Rental income from the Group's portfolio of investment properties will help reduce this volatility but the Group is likely to face downward pressure on rental income in Singapore given the growing supply of office, industrial and retail space amid softening demand.