Half Year Financial Statement and Dividend Announcement for the Period Ended 30 September 2017
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Review of the performance
Revenue for the six months period ended 30 September 2017 ("HY18") decreased by S$2.4 million (6.1%) to S$37.3 million from S$39.7 million for the six months period ended 30 September 2016 ("HY17"), mainly due to the following:
- loss of contract to provide food service to a hotel amounting to S$0.6 million;
- lower mooncake revenue amounting to S$0.2 million; and
- lower revenue contributed by restaurants amounting to S$1.6 million.
Gross profit margin
Gross profit decreased by S$1.5 million (5.2%) to S$26.5 million in HY18 from S$28.0 million in HY17 which is in line with the decrease in revenue. Gross profit margin increased marginally by 0.7 percentage points to 71.1% from 70.4% due to better control of food costs.
Other operating income
Other operating income decreased by S$0.6 million (42.9%) to S$0.8 million in HY18 from S$1.4 million in HY17 mainly due to lower marketing and promotional funds of S$0.4 million received and lower grants/credits of S$0.2 million received from various government schemes.
Administrative expenses, mainly manpower-related expenses, decreased by S$0.4 million (2.7%) to S$14.6 million in HY18 from S$15.0 million in HY17 mainly due to reduction in headcounts and related staff costs of approximately S$0.2 million and lower casual labour costs of S$0.2 million, in line with lower revenue in HY18.
Other operating expenses
Other operating expenses decreased by S$0.3 million (1.7%) to S$16.0 million in HY18 from S$16.3 million in HY17, mainly due to the following:
- lower depreciation expenses of S$0.5 million;
- lower credit card commission expense of S$0.1 million; and
- lower upkeep and cleaning expense of S$0.1 million.
This was partially offset by:
- higher utility expense of S$0.1 million; and
- higher rental expense of S$0.3 million.
Share of profit of associates
The Group recorded a share of profit of associates amounting to S$167,000 in HY18 compared to a share of profit amounting to S$77,000 in HY17 due to higher profits contributed by associates.
Income tax benefits
The Group registered income tax benefits of S$50,000 in HY18 mainly due to deferred tax credits and tax benefits recognised from Productivity and Innovation Credit ("PIC") scheme. The income tax benefits of S$0.2 million in HY17 arose from 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$2.2 million in HY18, an increase of S$1.2 million compared to S$1.0 million in HY17 due to lower revenue generated and lower income tax credit.
The Group's operational cashflow recorded a net outflow of S$2.5 million in both HY17 and HY18 despite lower cash generated arising from reduced revenues in HY18 mainly due to slower creditor payments.
The Group's investing cashflow recorded an outflow of S$0.7 million in HY18 compared to S$0.8 million in HY17. This was mainly due to decreased acquisition of plant and equipment.
The Group's financing cashflow recorded an outflow of S$0.7 million in HY18 mainly due to repayment of bank loans and finance leases of S$0.4 million and loan repayment to non-controlling interests of subsidiary of S$0.3 million. In HY17, the Group recorded an outflow of S$0.2 million 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.
Overall, the Group's cash position decreased by S$3.9 million during HY18 to S$11.2 million. This was mainly due to operational cash outlay, payment for acquisitions of plant and equipment, repayment of bank loans and finance leases and repayment of loan to non-controlling interests of a subsidiary.
Commentary on current year prospects
The Group expects the operating environment for the food and beverage industry to remain challenging in the next 12 months in light of stiff competition and soft economic conditions. Rising business costs will also continue to exert pressure on profit margins.
Amid these challenges, the Group will press on with the growth strategies highlighted in its corporate and business update provided on 31 July 2017 in order to stay relevant and offer differentiated value to consumers. As disclosed, the strategies entail:
- Bringing promising brands to new geographical markets;
- Expanding services and capabilities to offer greater convenience and choice, particularly for younger diners; and
- Streamlining operations through innovation and automation to enhance productivity.