Half Year Financial Statement and Dividend Announcement for the Period Ended 30 September 2016
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Review of the performance
Revenue for the six months ended 30 September 2016 ("HY17") increased by S$0.9 million (2.3%) to S$39.7 million compared to the six months period ended 30 September 2015
("HY16"), mainly due to an increase in catering sales of S$0.9 million.
Gross profit margins
Gross profit increased by S$0.7 million (2.5%) to S$28.0 million in HY17 from S$27.3 million in HY16, in line with higher revenue. Gross profit margin remained consistent at 70.4% compared to 70.2% during HY16.
Other operating expenses
Other operating expenses decreased by S$3.1 million (8.3%) to S$33.4 million in FY16 from S$36.5 million in FY15 mainly due to the following:
(i) absence of allowance for non-trade doubtful debt due from a former subsidiary, PT Ming, of S$2.5 million;
(ii) lower utility expenses of S$0.9 million;
(iii) lower depreciation expenses of S$0.6 million; and
(iv) lower upkeep and cleaning expenses of S$0.3 million.
This was partially offset by lower utility expenses of S$0.2 million.
Share of profit of joint venture
Share of profit of joint venture increased by S$0.1 million (37.8%) to S$0.4 million in HY17 from S$0.3 million in HY16 due to higher profitability.
Share of profit/(loss) of associates
The Group recorded a share of profit of associates amounting to S$77,000 in HY17 compared to a share of loss amounting to S$32,000 in HY16.
Income tax benefits
The Group registered income tax benefits of S$0.2 million in HY17 mainly due to tax benefits recognised from the Productivity and Innovation Credit ("PIC") scheme. The income tax benefits of S$0.5 million in HY16 arose from deferred tax credits and tax benefits recognised from the PIC scheme.
Loss attributable to Owners of the Company
The Group reported a loss attributable to owners of the Company of S$1.0 million in HY17, a reduction of S$0.4 million compared to HY16 due to improved revenue and higher profit contributions from joint venture and associates.
The Group's operational cashflow recorded net outflow of S$2.5 million in HY17 compared to net outflow of S$1.3 million for HY16 notwithstanding increased cash generated from operations mainly due to faster creditor payments in HY17.
The Group's investing cashflow recorded an outflow of S$0.8 million in HY17 compared to S$1.7 million in HY16. This was mainly due to less payment on plant and equipment of S$0.7 million as well as loan repayment and dividend received from associates of S$0.4 million, offset by advance payment for capital expenditures of S$0.2 million.
The Group's financing cashflow recorded an outflow of S$0.2 million in HY17 mainly due to repayment of bank loans and finance leases of S$0.4 million offset by new advances from non-controlling interest of a subsidiary of S$0.2 million. In HY16, the Group recorded an outflow of S$1.7 million mainly due to repayment of bank loans and finance leases of S$1.4 million and dividends paid to non-controlling interests in subsidiaries of S$0.3 million.
Overall, the Group’s cash position decreased by S$3.6 million during HY17 to S$10.4 million. This was mainly due to operational cash outlay, payment for acquisitions of plant and equipment, repayment of bank loans and finance leases offset by repayment of loan and dividend received from associates as well as advances from non-controlling interest of a subsidiary.
Commentary on current year prospects
The Group expects the operating environment of the food and beverage industry to remain challenging in the next 12 months amid stiff competition and an uncertain economic outlook. Rising business and manpower operating costs will continue to exert pressure on profit margins. Amid these challenges, the Group shall remain focused on driving revenue, managing operating costs and improving operational efficiencies.