Financials

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023

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Condensed interim consolidated statement of comprehensive income for the six-months ended 30 September 2023

Condensed interim statement of financial position

(A) Statement of Comprehensive Income

For the period from 1 April 2023 to 30 September 2023 (“1H2024”), the Group’s revenue increased by approximately S$6.6 million or 15.1%. This increase in revenue arose mainly due to higher retail, catering, and non-retail sales, partially offset by lower delivery revenue. As at 30 September 2023, the Group operated a total of 82 outlets in Singapore.

Revenue from retail outlets increased by approximately S$5.4 million or 13.6% mainly due to increased revenue earned from new outlets as well as an increase in revenue from the Group’s existing outlets, partially offset by a decrease in revenue from closed outlets.

Revenue from other services, such as delivery, catering services and non-retail sales, increased by approximately S$1.2 million or 28.5%. This increase in revenue from other services arose primarily due to higher corporate catering orders and non-retail sales with the continued pick-up in corporate events being organised, partially offset by lower delivery sales during the period.

The Group’s gross profit margin increased by 1.2% to 66.5% in 1H2024, mainly due to improved cost management, product pricing management and lower production depreciation expenses as a percentage of revenue due to higher revenue generated for the current period.

Other income increased slightly by approximately S$57,000 due to new employment grant income of approximately S$114,000, which was partially offset by lower other government grant income of approximately S$46,000 for the current period.

Interest income increased by approximately S$0.4 million due to higher interest rates on short-term fixed deposits.

The increase in the Group’s selling and distribution (“S & D”) expenses had arisen due to higher staff costs, utility expenses at retail outlets, packing materials, depreciation of right-of-use assets, turnover rental expenses and the absence of rental rebates from landlords, with these expenses being partially offset by lower depreciation expenses at retail outlets during 1H2024. As a percentage of revenue, total S & D expenses decreased from 40.7% to 38.9%, mainly due to the increase in retail sales during the period.

The increase in the Group’s administrative expenses was attributable to higher staff costs including higher bonus provision arising from the increase in profit for 1H2024, bank charges and medical and other maintenance expenses, with these expenses being partially offset by lower expenses in respect of upkeep of motor vehicles for the current period.

Finance costs increased slightly by approximately S$0.2 million mainly due to higher interest rates on bank loans.

Other expenses decreased by S$0.2 million mainly due to lower depreciation expenses and impairment loss for amounts due from an associated company, and lower foreign exchange loss pursuant to foreign exchange revaluation of inter-company loans to the Group’s Australian and Malaysian subsidiaries for the current period, with the reduction in expenses being partially offset by higher impairment for amounts due from the Group’s joint venture in the United Kingdom.

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

The Group’s taxation expenses increased by S$0.6 million mainly due to the increase in revenue and lower nontax deductible items for the period.

(B) Statement of Financial Position

Non-current assets

The Group’s non-current assets decreased by approximately S$0.8 million mainly due to:

1. a decrease in property, plant and equipment arising from depreciation expenses, which was offset by additions during 1H2024;
2. a decrease in right-of-use assets arising from right-of-use depreciation expenses, which was offset by new and renewed leases entered into during 1H2024; and
3. a decrease in long term deposits arising from reclassification of lease deposits in accordance with the respective lease tenures during 1H2024; which was offset by deposits paid for new outlets and lease renewal.

Current assets

The Group’s current assets increased by approximately S$4.0 million, mainly due to:

1. an increase in cash and bank balances of approximately S$3.6 million. Further details of the Group’s cash flows are set out in paragraph (C) below;
2. an increase in inventories of approximately S$0.2 million, arising from bulk purchase of products from a new overseas supplier;
3. an increase in prepayments, arising from an increase in annual insurance premium during 1H2024;
4. 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
5. an increase in trade and other receivables, arising from increases in credit sales to corporate customers.

Current and non-current liabilities

The net increase in the Group’s current and non-current liabilities of S$69,000 was mainly due to:

1. an increase in trade and other payables of approximately S$0.6 million, arising from an increase in trade creditors as a result of the higher sales and an increase in accrual expenses during the period;
2. an increase in tax provision due to the higher profit before tax and lower tax-deductible items during the period, which was partially offset by tax paid during the period;
3. a decrease in lease liabilities mainly due to lease repayment, which was offset by new lease commitments during the period; and
4. a decrease in liabilities pertaining to bank loans and finance leases, mainly due to repayments made during the period.

Net working capital

As at 30 September 2023, the Group had a positive net working capital of approximately S$19.9 million, compared to approximately S$16.8 million as at 31 March 2023.

(C) Statement of Cash Flows

In 1H2024, the Group generated an operating profit before working capital changes of approximately S$12.8 million. Net cash generated from operating activities, inclusive of working capital changes and tax paid, amounted to approximately S$12.0 million in 1H2024.

In 1H2024, net cash used in investing activities amounted to approximately S$613,000. This was mainly due to acquisitions of motor vehicles as well as plant and equipment, and a loan extended to the Group’s joint venture for the current period.

Net cash used in financing activities amounted to approximately S$7.7 million in 1H2024. This was mainly due to the distribution of dividends amounting to approximately S$1.2 million during 1H2024, repayment of lease obligations inclusive of lease interest of approximately S$5.7 million, and repayments of bank loans and finance lease during the period.

Commentary

The Group notes that inflationary pressures have remained persistent, particularly raw material, utility and labour costs, and rental costs remain elevated. Singapore’s extremely low unemployment rate and foreign manpower policies have also intensified the ongoing manpower shortage in the retail sector.

The Group has and will continue with its efforts to reduce operating costs, improve gross margins and rationalise its operations to overcome manpower shortages, and seek more non-retail revenue streams, including business-to-business sales during this challenging period of sustained inflation. The Group continues to look for opportunities to increase the number of outlets at key transport nodes.