Full Year Financial Statement and Dividend Announcement for the Year Ended 31 March 2017
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Review of the performance
Revenue for the financial year ended 31 March 2017 (“FY17”) declined by S$1.0 million (1.2%) to S$85.1 million from S$86.1 million for the financial year ended 31 March 2016
(“FY16”) mainly due to the following:
(a) loss of revenue from 2 outlets closed during FY16 amounting to S$0.6 million; and
(b) lower revenue contribution from restaurant sales amounting to S$2.4 million.
However, this was partially offset by:
(i) revenue contribution by one new outlet opened during FY17 amounting to S$0.9 million; and
(ii) increase in revenue from catering sales amounting to S$1.1 million.
Gross profit margins
Gross profit decreased by S$0.9 million (1.5%) to S$61.2 million in FY17 from S$62.1 million in FY16, in line with the lower revenue. Gross profit margin declined marginally by 0.3 percentage points to 71.9% from 72.2% due to higher raw material costs.
Other operating income
Other operating income decreased by S$0.5 million (15.2%) to S$2.6 million in FY17 from S$3.1 million in FY16 mainly due to lower grants/credits of S$0.5 million received from various government schemes.
Administrative expenses, mainly manpower-related expenses, decreased by S$1.2 million (3.8%) to S$30.3 million in FY17 from S$31.5 million in FY16 mainly due to a reduction in headcounts and related staff costs of approximately S$0.4 million, coupled with lower staff incentives of S$0.8 million in tandem with the lower revenue in FY17.
Other operating expenses
Other operating expenses increased by S$0.2 million (0.4%) to S$33.6 million in FY17 from S$33.4 million in FY16 mainly due to the following:
(i) higher rental expenses of S$0.6 million; and
(ii) higher repair and maintenance expenses of S$0.1 million.
This was offset by lower utility expenses of S$0.4 million and lower credit card commission expenses of S$0.1 million in FY17.
Share of profit of joint venture
Share of profit of joint venture increased by S$59,000 (20.6%) to S$345,000 in FY17 from S$286,000 in FY16.
Share of profit of associates
Share of profit of associates increased to S$256,000 in FY17 due to higher net profit contributions from associates.
Income tax benefits
The Group registered income tax benefits of S$170,000 in FY17 mainly due to tax benefits of S$235,000 from the Productivity and Innovation Credit ("PIC") scheme and offset by income tax expense of S$45,000 and deferred tax expense of S$20,000. The income tax benefits of S$682,000 in FY16 arose from deferred tax credits and tax benefits recognised from the PIC scheme.
Profit attributable to owners of the Company
The Group reported a profit attributable to owners of the Company of S$422,000 in FY17 compared to S$611,000 in FY16 (a decrease of 30.9%) mainly due to lower revenue and reduced income tax credits. However this was mitigated by lower administrative expenses and higher share of profits from joint venture and associates
The Group’s operational cashflow recorded a net inflow of S$2.3 million in FY17 compared to S$4.5 million in FY16, mainly due to lower revenue generated and faster creditor turnover days.
The Group’s investing cashflow recorded an outflow of S$0.7 milion in FY17 compared to S$2.9 million in FY16 mainly due to reduced acquisition of plant and equipment, repayment of loan from an associate and dividends received from joint venture and associate.
The Group’s financing cashflow recorded an outflow of S$0.6 million in FY17 compared to S$2.8 million in FY16, mainly due to lower repayment amounts for bank borrowings, finance leases, loan from a corporate shareholder and less dividends paid to non-controlling interests in subsidiaries.
Overall, the Group’s cash position increased by S$1.0 million to S$15.0 million in FY17 from S$14.0 million in FY16. This was mainly due to cash generated from operations and loan repayment from an associate and dividends received from an associate and joint venture.
Commentary on current year prospects
The Group's business in the financial year ended 31 March 2017 was affected by the volatile economic environment. Against this backdrop, we managed to strengthen the Group's financial position by improving our net working capital position and reducing our gearing ratio.
The Group expects the food and beverage industry to remain challenging in the next 12 months amid stiff competition and economic uncertainty. Rising operating costs (in particular manpower and rental) will continue to exert pressure on our profit margins. Amid these challenges, the Group will remain focused on growing revenue, managing operating costs and improving operational efficiencies.