Chairman Statement

(Extracted from Annual Report 2025)

Dear Shareholders,

It is my pleasure to present to you the Annual Report of Old Chang Kee Ltd. (the "Company" or "Old Chang Kee" and together with its subsidiaries, the "Group") and the Group's financial results for the financial year ended 31 March 2025 ("FY2025").

(A) STATEMENT OF COMPREHENSIVE INCOME

FY2025 vs FY2024

The Group's revenue increased by approximately S$1.0 million or 1.0% for FY2025, mainly due to an increase in revenue from retail outlets, catering, delivery and non-retail sales.

Revenue from retail outlets increased by approximately S$0.3 million or 0.3% mainly due to incremental revenue from new outlets and an increase in revenue from existing outlets, partially offset by a decrease in revenue from closed outlets.

Revenue from other services, such as delivery and catering services, increased by approximately S$0.7 million or 6.3% mainly due to higher corporate catering and delivery sales during FY2025.

The Group's gross profit margin increased by 1.6% to 69.2% in FY2025, largely driven by (i) improved food suppliers cost management resulting in the reduction in cost of sales, (ii) effective product pricing management, and (iii) reduction in utilities and production staff costs.

Other income declined by approximately S$0.3 million or 15.7% mainly due to a reduction in government grants and employment grant income of approximately S$0.5 million during FY2025. This decline was partially offset by higher gains from the disposal of assets of approximately S$0.2 million during FY2025.

Interest income increased by approximately S$0.3 million due to higher interest rates on short-term fixed deposits and an increase in shortterm fixed deposits placement.

The increase in selling and distribution ("S & D") expenses was largely due to higher staff costs, depreciation of right-of-use assets, advertising and promotion and rental expenses, partially offset by lower outlets depreciation expenses during FY2025. As a percentage of revenue, total S & D expenses increased from 39.5% to 40.0% during FY2025.

The increase in administrative expenses was mainly due to higher staff costs including higher accrued bonus arising from the increase in profit for FY2025, higher repair and maintenance expenses, bank charges and insurance expenses for the current year.

Finance costs increased by approximately S$0.1 million or 13.0%, largely due to higher interest rates on new and renewed lease liabilities, partially offset by lower interest expenses on bank loans due to repayments made during FY2025.

Other expenses decreased by S$0.1 million mainly due to lower foreign exchange loss pursuant to foreign exchange revaluation of intercompany loans to the Group's Australian and Malaysian subsidiaries, and lower impairment loss of right-of-use assets for retail outlets, partially offset by higher depreciation expenses and higher impairment loss for amounts due from the Group's joint venture in the United Kingdom for the current financial year.

The increase in depreciation expenses was mainly due to an increase in depreciation of right-of-use assets mainly for new and renewed leases of retail outlets, partially offset by a decrease in depreciation of property, plant and equipment resulting from an increase in fully depreciated assets (comprising the Group's property, plant and equipment).

The Group's taxation expenses decreased by S$0.7 million mainly due to recognition of deferred tax assets for reinstatement cost in accordance with tax principles, partially offset by lower non-tax deductible items for the current financial year reported.

(B) STATEMENT OF FINANCIAL POSITION

Non-current assets

The Group's non-current assets decreased by approximately S$3.3 million mainly due to:

1. a decrease in property, plant and equipment arising from depreciation expenses, which was partially offset by capital expenditure incurred for renovations and additions of equipment for new and existing outlets;
2. a decrease in right-of-use assets due to depreciation expenses and outlet closures, which was partially offset by new and renewed leases entered into during FY2025; and
3. a decrease in long term deposits arising from reclassification of lease deposits in accordance with the respective lease tenures during FY2025, which was partially offset by deposits paid for new outlets and lease renewal.

The decrease in non-current assets attributable to the factors listed above was partially offset by an increase in deferred tax assets primarily due to temporary differences arising from reinstatement cost and accrued expenses.

Current assets

The Group's current assets increased by approximately S$7.4 million, mainly due to:

1. an increase in cash and bank balances of approximately S$8.3 million. Further details of the Group's cash flows are set out in paragraph (C) below;
2. an increase in short term deposits, arising from deposits for new upcoming outlets and reclassification of lease deposits in accordance with the respective lease tenures; offset by refund of deposits from closed outlets; and
3. an increase in prepayments, arising from an increase in annual insurance premium, software maintenance agreements and new renovation contracts entered into during FY2025.

The increase in current assets attributable to the factors listed above was partially offset by:

1. a decrease in inventories mainly due to improved stock management efficiency; and
2. a decrease in trade and other receivables due to credit sales settlement from corporate customers.

Current and non-current liabilities

The net decrease in the Group's current and non-current liabilities of S$5.0 million was mainly due to:

1. a decrease in trade and other payables of approximately S$0.4 million partly due to lower inventory levels;
2. a decrease in tax provision due to lower non tax-deductible items and tax paid during FY2025;
3. a decrease in finance lease and bank loans mainly due to loan repayment during the financial year;
4. a decrease in lease liabilities mainly due to lease repayment, partially offset by new lease commitments during the financial year; and
5. a decrease in deferred tax mainly due to the reversal of temporary differences for accrued expenses during FY2025.

Net working capital

As at 31 March 2025, the Group had a positive net working capital of approximately S$32.5 million, compared to a net working capital of approximately S$24.4 million as at 31 March 2024.

(C) STATEMENT OF CASH FLOWS

FY2025 vs FY2024

For FY2025, the Group generated an operating profit before working capital changes of approximately S$27.6 million. Net cash generated from operating activities, inclusive of working capital changes and tax paid, amounted to approximately S$25.1 million in FY2025.

In FY2025, net cash used in investing activities amounted to approximately S$0.7 million. This was mainly due to additions of property, plant and equipment and renovation work for the Group's new retail outlets, partially offset by interest received from short-term fixed deposits in FY2025.

Net cash used in financing activities amounted to approximately S$16.1 million in FY2025. This was mainly due to dividends of approximately S$2.4 million paid during FY2025, repayment of lease obligations inclusive of lease interest of approximately S$12.0 million, and repayment of bank loans and finance lease during the financial year.

GOING FORWARD

The Group observes that inflationary pressures remain a concern, especially in light of rising raw material and labour costs, and the continued elevated rental costs of outlets at prime locations. As Singapore's population continues to age, the retail sector faces ongoing manpower shortages, while near-term retail demand looks muted amidst economic uncertainties.

The Group will maintain its current strategies to navigate this prolonged period of inflation. These strategies include initiatives to reduce operating costs, improve gross margins and streamline operations to overcome manpower shortages. Additionally, the Group is actively seeking to diversify its revenue base through non-retail channels, such as business-to-business sales. It remains focused on expanding its retail footprint in strategic locations such as high-traffic transport hubs, while continuously exploring opportunities for synergistic business combinations and the expansion of its logistics and manufacturing facilities.

DIVIDENDS

The Directors have proposed a final dividend of 1.0 Singapore cent per ordinary share for FY2025. As mentioned in the preceding paragraph, the Board wishes to explore possibilities for business combination and expansion of the Group's facilities and has taken a prudent approach in recommending a 1.0 cent ordinary (final) dividend for FY2025. The total dividend for FY2025, if the final dividend is approved at the forthcoming Annual General Meeting, amounts to 2.0 Singapore cents per ordinary share.

ACKNOWLEDGEMENT

I would like to express my heartfelt appreciation to our customers for their continued patronage, and our shareholders, Directors, bankers, strategic business partners and our staff for their continued support, especially during this period with persistent inflationary pressures.

Han Keen Juan
Executive Chairman