Dragon Group International

Chairman and CEO’s Message

Dear Shareholders,

The signifi cant bright spot for DGI in 2016 was the progress achieved in enhancing our EoCell battery technologies. Otherwise, DGI has had a very diffi cult year in 2016. Except for possibly for Eocell, we have had little success on our journey to inject new and profi table businesses for DGI. Hence we were unable to exit the Watch-list. We lacked progress in our various projects and investments because of lack of success in raising funds.



The increase in revenue for the year ended 31 December 2016 was mainly due to the increase in sales in the Group’s distribution business.

The gross profi t margin remained comparable.

General and administrative costs decreased mainly due to stocks written back during the year and reversal of prior year’s over provision for bonus and professional fees. However, this is offset by allowance for doubtful trade debt during the year.

Research and development (“R&D”) costs were incurred for research on battery storage solutions. In the fi nancial year ended 31 December 2016 (“FY2016”), R&D costs were recognised for the full year compared to 6 months in the fi nancial year ended 31 December 2015 (“FY2015”).

Other losses relate to impairment losses on available-for-sale financial assets and other receivables. Having reviewed the previously mentioned items, the Group decided to make the necessary impairments accordingly.



The increase in intangible assets was due to research and development expenditure capitalised in EoCell during the year.

Long term prepayment relates to the cost incurred for the development project along the Yangtze Riverbank.

The increases in property, plant & equipment were mainly due to equipment purchased for the research and development activities in EoCell and additional work done on the Dragon Treasure Boat construction.

The available-for-sale fi nancial assets relate mainly to the equity interest in Heat Tech Japan Ltd (“HTJ”) and Nanofuel Ltd which the Group acquired in 2015. An impairment loss of $1.2 million was recognised on these investments after impairment assessment.

In FY2015, the prepayment in current assets included the payment of $0.7 million for the acquisition of HTJ pending completion of the transaction. The acquisition was completed in FY2016 and the amount was accordingly reclassifi ed to available-for-sale fi nancial assets.

Trade debtors balance increased in line with higher sales recorded during the year.

The decrease in other debtors was due to an impairment on a loan receivable from HTJ during the year.


The increase in other creditors was due to additional advances received from a co-investor as capital injection into a subsidiary.


As at 31 December 2016, the Group has US$1.5 million net current assets and US$6.5 million shareholders’ equity.


The Group utilised US$5.0 million for its operating activities, US$2.5 million to purchase property, plant and equipment and US$1.5 million was invested in research and development activities.

Advance of US$1.1 million was received as capital injection from a co-investor of a subsidiary.

Cash and cash equivalents decreased by US$8.0 million from US$10.4 million as at 31 December 2015 to US$2.4 million as at 31 December 2016.


China has not returned to its past growth momentum. China’s growth fundamentals have structurally changed and are now set on lower growth rates in the 6% - 7% range. US dollar interest rates are on a rising trend after years of decline. Brexit and the new US administration continue to provide uncertainty to the global trade order. While our Watchlist status limits our options we will continue to work very hard on several proposals which may enable us to exit the Watch-list. Under the current set of circumstances, we may slowdown, withdraw and/or dispose from all our activities and projects, and continue to drive progress in EoCell and raise funds accordingly.


I would like to thank all of our customers, principals, bankers, and shareholders for their confi dence and trust in us, and I look forward to your support in the new fi nancial year. To our shareholders, your support will be very important to us, and your vote of confi dence will give us the needed encouragement as we continue on our attempt to exit the Watch-list and bring value to all our stakeholders.

Yours sincerely,

Dato’ Michael Loh
Executive Chairman and Chief Executive Officer


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33 Ubi Ave 3 #08-69 Vertex Singapore 408868  T (65) 6512 8310  Company Registration No.: 199306761C