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CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

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Consolidated statement of comprehensive income

Income Statement

Balance Sheet

Balance Sheet

(A) Statement of Comprehensive Income

For the period from 1 April 2021 to 30 September 2021 (“1H2022”), the Group’s revenue increased by approximately S$341,000 or 0.9% mainly due to higher delivery and retail sales, partially offset by a decrease from catering sales. As at 30 September 2021, the Group operated a total of 89 outlets in Singapore, as compared to 88 outlets as at 30 September 2020.

Revenue from retail outlets increased by approximately S$7.8 million or 28.4% mainly due to incremental revenue from new outlets and increase in revenue from existing outlets. The comparable period was affected by social distancing measures imposed during the Phase 1 circuit breaker (“CB”), as a result of Coronavirus Disease 2019 (“Covid-19”) outbreak. The increase in retail revenue was partially offset by a decrease in revenue from closed outlets.

Revenue from other services, such as delivery and catering services, decreased by approximately S$7.4 million mainly due to absence of packed meals catering to foreign workers dormitories, partially offset by higher delivery revenue during the current period.

The Group’s gross profit margin decreased by 1.7% to 64.3% in 1H2022, mainly due to absence of economies of scale savings from the large-scale catering of packed meals to foreign workers dormitories.

Other income decreased by approximately S$511,000 due to lower government grants, mainly the absence of foreign worker levy rebate of about S$420,000 and lower property tax rebates offset by higher Job Support Scheme (“JSS”), rebates, and additional job growth support scheme income for the current period.

The increase in selling and distribution (“S & D”) expenses was largely due to higher staff cost, to support the increase in retail revenue from outlets, absence of the waiver of foreign worker levies received in April 2020 and lower rental rebate of about S$2.0 million received from landlords, partially offset by lower depreciation expenses and packing material expenses during 1H2022.

The decrease in administrative expenses was mainly due to lower legal and professional expenses, lower entertainment and bonus provision arising from the decrease in profit for 1H2022, offset by higher medical, bank charges, property tax, and repair and maintenance expenses.

Interest expenses decreased by approximately S$46,000, mainly due to lower loan interest rates and lease interest.

Other expenses increased by S$207,000 mainly due to

  1. impairment of amount due from (a) our joint venture in United Kingdom (”UK”) of approximately S$26,000 and (b) the Company’s Malaysian associate of approximately S$51,000; and
  2. higher exchange loss of approximately S$178,000 mainly due to exchange rate loss on foreign currency denominated payables to related companies within the Group.
As a result of the above, the proportion of total operating expenses compared to revenue increased from 58.6% in 1H2021 to 63.9% in 1H2022.

The decrease in depreciation expenses was mainly due to an increase in fully depreciated assets attributed to the right-of-use assets and property, plant and equipment, partially due to recognition of impairment for loss making outlets in the prior year.

The Group’s taxation expenses decreased by S$378,000 mainly due to the drop in profit before tax for the current period.

(B) Statement of Financial Position

Non-current assets

The Group’s non-current assets decreased by approximately S$1.2 million, mainly due to

  1. a decrease in property, plant and equipment due to depreciation expenses and disposal of motor vehicles during 1H2022; and
  2. a decrease in right-of-use assets of approximately S$110,000 mainly due to right-of-use depreciation expenses offset by lease renewal and new lease committed, offset by
  3. additions to property, plant and equipment mainly renovation for new and existing outlets during the period.

Current assets

The Group’s current assets increased by approximately S$30,000 mainly due to:

  1. an increase in cash and bank balances of approximately S$661,000 as explained under the statement of cash flow in paragraph (c) below; and
  2. an increase in prepayments, mainly due to an increase in annual insurance premium during 1H2022; offset by
  3. a decrease in trade and other receivables of approximately S$845,000 mainly due to cash receipts from the disposal of the Group’s factory facility at Woodlands Loop and government support measures.

Current and non-current liabilities

The decrease in the Group’s current and non-current liabilities was mainly due to

  1. a decrease in accruals due to lower annual staff incentive provision and receipt of JSS deferred income of approximately S$1.2 million during the current period;
  2. a decrease in tax provision and deferred tax liabilities due to tax paid, offset by tax provision during the period.
  3. a decrease in bank loan and finance lease mainly due to repayment during the period; and
  4. a decrease in lease liabilities mainly due to lease repayment of approximately S$5.2 million offset by new lease commitment of approximately S$5.1 million.

Net working capital

As at 30 September 2021, the Group had a positive net working capital of approximately S$9.6 million compared to net working capital of approximately S$7.5 million as at 31 March 2021.

(C) Statement of Cash Flows

In 1H2022, the Group generated an operating profit before working capital changes of approximately S$11.4 million. Net cash generated from operating activities, inclusive of working capital changes and tax paid, amounted to approximately S$8.8 million in 1H2022.

In 1H2022, net cash used in investing activities amounted to approximately S$537,000. This was mainly due to additions of plant and equipment, and renovation costs for the Group’s new retail outlets, offset by proceeds from disposal of the Group’s motor vehicles.

Net cash used in financing activities amounted to approximately S$7.6 million in 1H2022. This was mainly due to dividends of approximately S$1.2 million paid during 1H2022, repayment of lease obligations inclusive of lease interest, of approximately S$5.5 million and repayments of bank loans and finance lease during the period.

Commentary

The impact of Covid-19 on businesses in general has been unprecedented. While our retail revenue continues to show improvements and remains fairly resilient for the 6 months ended 30 September 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 continues to receive corporate catering orders for bento meals. With the stabilizing Covid-19 situation in general, consumer traffic and sentiment has improved. The Group will closely monitor if retail sales will continue to improve to pre Covid-19 levels in the coming weeks and months. However, with the re-opening of the economies, the Group noted that inflationary pressures have increased, in particular, raw material and labour costs, while rental costs remain elevated. 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 and working with major e-commerce players during this challenging period.

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.