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(Extracted from Annual Report 2021)

Dear Shareholders,

It is my pleasure to present to you Old Chang Kee Ltd.'s (the "Company" or "Old Chang Kee" and together with its subsidiaries, the "Group") Annual Report and the Group's financial results for the financial year ended 31 March 2021 ("FY2021").


FY2021 vs FY2020

The Group's revenue decreased by approximately S$12.7 million or 14.4% for FY2021, mainly due to a decrease in revenue from retail outlets, offset by higher revenue from delivery, catering and events.

Revenue from retail outlets decreased by approximately S$22.2 million or 26.4% mainly due to Covid-19 safe management measures.

Revenue from other services, such as delivery and catering services, increased by approximately S$9.5 million mainly due to catering of packed meals to foreign workers dormitories, and higher delivery revenue.

The Group's gross margin improved by 1.9% to 65.6% in FY2021, mainly due to economies of scale from the large-scale catering of packed meals to foreign workers dormitories, improved food cost controls and higher production staff efficiency.

Other income increased by approximately S$6.1 million due to government grants such as Job Support Scheme ("JSS"), Wage Credit Scheme, Special Employment Grant Scheme and property tax rebates.

The decrease in selling and distribution ("S & D") expenses was largely due to lower overtime and part-timer costs, as some outlets were closed during the Phase 1 circuit breaker ("CB") period and temporary closure of some outlets due to lower traffic; lower outlet operating expenses, waiver of foreign worker levies in April 2020 and rental rebates received from landlords during FY2021.

The increase in administrative expenses was mainly due to higher staff incentive provision arising from the increase in net profit for FY2021; offset by lower travelling, upkeep of motor vehicle, repair and maintenance expenses due to the temporary closure of some outlets and travel restrictions imposed by the government during the CB.

Finance costs decreased mainly due to lower loan interest rates and lower interest expenses arising from lease liabilities during FY2021.

Other expenses decreased by S$1.8 million mainly due to lower impairment loss for our United Kingdom ("UK") joint venture and our Malaysian associate, exchange rate gains on foreign currency denominated payables to related companies within the Group, and lower fixed assets written off due to fewer outlet closures, offset by higher impairment of right-of-use assets and property, plant and equipment for retail outlets affected by the pandemic.

The increase in depreciation expenses was mainly due to recognition of lease-related depreciation attributed to the right-of-use assets, as a result of outlet lease renewals that resulted in the increase in right-of-use-assets.

The Group's tax expenses increased by S$374,000 mainly due to higher profit for FY2021. The effective tax rate for the current period increased to 12.4% mainly due to an increase in profit offset by higher non-taxable JSS grant income for FY2021.


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 resulting from the disposal of the Group's factory facility in Woodlands Loop and motor vehicles, depreciation expenses, impairment and assets written off for selected outlets, offset by additions in FY2021; offset by

  2. an increase in right-of-use assets of approximately S$405,000 mainly due to lease renewal and new lease committed, offset by depreciation and impairment of right-of-use assets for retail outlets affected by the pandemic; and

  3. an increase in long term deposits mainly due to top-up of lease deposit for lease renewal and reclassification of lease deposits in accordance with the respective lease tenures.

Current assets

The Group's current assets increased by approximately S$11.4 million mainly due to:

  1. an increase in cash and bank balances of approximately S$13.4 million as explained under the statement of cash flow in section (c) on the right; offset by

  2. a decrease in inventories mainly due to enhanced inventory control of finished goods purchased;

  3. a decrease in short term deposits, mainly due to reclassification of lease deposits in accordance with the respective lease tenures; and

  4. a decrease in trade and other receivables of approximately S$1.4 million mainly due to grant receipts from government agencies of approximately S$1.6 million, offset by receivables arising from the disposal of Group's factory facility on 31 March 2021.

Current and non-current liabilities

The increase in the Group's current and non-current liabilities was mainly due to:

  1. an increase in accruals due to higher staff incentive provision arising from the increase in profit for FY2021;

  2. an increase in tax provision during the year; and

  3. new lease liabilities of S$11.6 million for new outlets and lease renewals.

The increase in current and non-current liabilities was partially offset by a decrease in lease liabilities mainly due to repayment during the financial year of approximately S$10.7 million, a decrease in JSS deferred income of approximately S$1.1 million due to subsequent recognition as JSS income, bank loan repayments made during FY2021 and a decrease in deferred tax provision.

Net working capital

As at 31 March 2021, the Group had a positive net working capital of approximately S$7.5 million compared to negative net working capital of approximately S$2.4 million as at 31 March 2020.


FY2021 vs FY2020

For FY2021, the Group generated an operating profit before working capital changes of approximately S$26.6 million. Net cash generated from operating activities, inclusive of working capital changes and tax paid, amounted to approximately S$28.3 million in FY2021.

In FY2021, net cash used in investing activities amounted to approximately S$754,000. This was mainly due to additions of plant and equipment, renovation costs for the Group's new retail outlets and working capital loans to the UK joint venture; offset by proceeds from disposal of the Group's assets.

Net cash used in financing activities amounted to approximately S$14.1 million in FY2021. This was mainly due to dividends of approximately S$1.2 million paid during FY2021, repayment of lease obligations inclusive of lease interest, of approximately S$11.3 million and repayments of bank loans and finance lease during the period.


The impact of Covid-19 on businesses in general has been unprecedented. While our retail revenue continues to show improvements since the end of Phase 1 CB and remains fairly resilient for the month of May 2021 thus far, significant uncertainty still hangs over the entire retail sector both in Singapore and overseas.

Our retail revenues remain below pre Covid-19 levels as at to date, due to various social distancing measures put in place, resulting in operational losses for some of our retail outlets. The Group will continue to review if there is a need to provide for further impairment to our assets, depending on how Covid-19 pans out in the months ahead. While our overseas operations in Iskandar Malaysia, London and Perth have been similarly affected by Covid-19, the Group has sought new revenue streams including meal kit home deliveries and increased the range of snack deliveries and bento meals for our stay-at-home customers.

Since the onset of the pandemic, the Group had received corporate catering orders (including dormitory orders) for bento meals. The Group will continue with our efforts to reduce operating costs, improve operational efficiencies and seek more non-retail revenue streams, including beefing up our e-commerce presence during this difficult period. In the meantime, the Group will continue to closely monitor if retail sales improve to pre Covid-19 levels in the coming weeks and months.

The Group has been prudent with its spending over the past years. Provided that the health crisis does not deteriorate materially resulting in the complete closure of all our retail outlets for an extended period, the Board believes that the Group's cash balance is sufficient to buffer against the impact of Covid-19 for at least the next 12 months.


The Directors have proposed a final dividend of 1.0 Singapore cent per ordinary share for FY2021. Due to significant uncertainty on the duration and intensity of the Covid-19 pandemic, the Board has continued to take a prudent approach in recommending a 1.0 cent ordinary (final) dividend for FY2021 to conserve the Group's cash flows.


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 in these challenging times.

Han Keen Juan
Executive Chairman