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Consolidated statement of comprehensive income

Income Statement

Balance Sheet

Balance Sheet

Review of Performance


The Group's revenue increased from approximately S$20.3 million for the financial period from 1 July 2016 to 30 September 2016 ("2Q2017") to approximately S$21.4 million for the period from 1 July 2017 to 30 September 2017 ("2Q2018"), an increase of approximately S$1.2 million or 5.9%.

Revenue from retail outlets increased by approximately S$1.3 million or 6.4% mainly due to revenue contribution from new outlets and increase in revenue from existing outlets, partially offset by the absence of revenue from closed outlets.

As at 30 September 2017, the Group operated a total of 87 outlets in Singapore as compared to 89 outlets as at 30 September 2016.

The Group's signature puff products remained the major contributor to its revenue and accounted for approximately 29.6% of the Group's revenue in 2Q2018, as compared to approximately 33.4% in 2Q2017.

Cost of sales and gross profit

Cost of sales increased by approximately S$1.2 million or 17.1% mainly due to the higher revenue generated by the Group and higher raw material cost for 2Q2018.

The Group's gross profit decreased by approximately S$62,000 or 0.5%. The Group's gross profit margin decreased from approximately 63.9% in 2Q2017 to 60.1% in 2Q2018. This was mainly due to higher raw material cost and one-time factory test-runs for the commissioning of the Group's new factory equipment.

Other income

Other income decreased by approximately S$304,000 mainly due to government grants of approximately S$209,000 to support the Group's productivity and internationalisation projects in 2Q2017 which was absent in 2Q2018, and a gradual scaling back of government grants under the Special Employment Credit scheme amounting to approximately $104,000 in 2Q2018.

Operating Expenses

Selling and distribution expenses

Selling and distribution ("S & D") expenses increased by approximately S$467,000 or 5.7%. S & D expenses remained largely constant at approximately 40.3% of revenue in 2Q2018, as compared to approximately 40.4% of revenue in 2Q2017.

Administrative expenses

Administrative expenses increased by approximately S$96,000 or 3.2%. The increase in administrative expenses was mainly due to a corporate sponsorship of approximately S$100,000 incurred in 2Q2018 to enhance the Group's long-term brand positioning.

Other expenses

The increase in other expenses of approximately S$36,000 in 2Q2018 was mainly due to foreign exchange gain of approximately S$14,000 compared to foreign exchange losses of approximately S$63,000 in 2Q2017, pursuant to foreign exchange revaluation gain for RM-denominated loans to our Malaysian operations. This was offset by an increase in assets written off, mainly due to outlet closure as a result of mall revamps.

As a result of the above, total operating expenses increased by approximately S$630,000 or 5.5%. Total operating expenses amounted to approximately 56.6% of revenue in 2Q2018 and 56.8% in 2Q2017 respectively.

Finance costs

Finance costs increased by approximately S$31,000 mainly due to loan taken, including loans drawn down in the first quarter of the financial year ending 31 March 2018, to finance the construction and renovation of factory facilities.

Share of results of joint venture

The increase was due to start-up losses of approximately S$22,000 in 2Q2018 for a new joint venture in the United Kingdom.

Profit before tax

The Group's profit before tax decreased from approximately S$2.0 million in 2Q2017 to approximately S$958,000 in 2Q2018, a decrease of approximately S$1.0 million or 51.5% due to the reasons stated above.


The Group's taxation expenses decreased by approximately S$188,000 or 47.2%. The decrease was mainly due to the lower profit before tax in 2Q2018 as compared to 2Q2017.

Balance Sheet

Non-current assets

The Group's non-current assets increased by approximately S$3.3 million or 10.8% mainly due to the following:

  1. the purchase of fixed assets mainly for additions of plant and equipment and renovation costs for the Group's new factory facility in Singapore; partially offset by depreciation expenses and assets written off for 2Q2018;
  2. an investment in a United Kingdom joint venture of approximately S$537,000, partially offset by start-up losses of approximately S$53,000 for the joint venture; and
  3. an increase in long term deposits mainly due to additional lease deposits paid to secure new outlets, and reclassification of short term lease deposits to long term upon lease renewals, in accordance with the respective lease tenures.

Current assets

The Group's current assets decreased by approximately S$2.0 million or 9.5% mainly due to a decrease of S$2.4 million in cash and bank balances.

The decrease in cash and bank balances was mainly due to purchase of property, plant and equipment, repayment of bank loans and finance leases, investment in a United Kingdom joint venture of approximately S$537,000 and dividends of approximately S$1.8 million paid during 1H2018, partially offset by cash generated from operations and proceeds from bank loans.

The decrease in current assets was offset by:-

  1. an increase in inventories largely attributable to higher purchases of finished goods; and
  2. an increase in deposits mainly due to tender deposits for new outlets offset by reclassification of lease deposits from short term to long term in accordance with the lease tenures.

Current liabilities

The Group's current liabilities decreased by approximately S$2.4 million or 14.9% mainly due to the following:

  1. a decrease in current portions of bank loans of approximately S$2.8 million mainly due to reclassification of bank loans from short term to long term in accordance with the loan repayment periods; and
  2. a decrease in provision for taxation mainly due to tax paid of approximately S$559,000 offset by tax expenses provided for the current period.

The decrease in current liabilities was offset by an increase in trade and other payables mainly due to an increase in period-end billings by trade suppliers and contractors.

Non-current liabilities

The Group's non-current liabilities increased by approximately S$4.1 million or 57.7% mainly due to the following:

  1. an increase in non-current portions of bank loans due to the construction and renovation of the Singapore factory and reclassification of bank loans from short term to long term in accordance with the loan repayment periods;
  2. an increase in finance lease mainly for the purchase of new motor vehicles; and
  3. an increase in deferred tax provision of approximately S$200,000 for the current period.

Net working capital

As at 30 September 2017, the Group had a positive net working capital of approximately S$4.8 million as compared to approximately S$4.3 million as at 31 March 2017.

Cash flow

In 2Q2018, the Group generated an operating profit before working capital changes of approximately S$2.3 million. Net cash generated from operating activities, inclusive of working capital changes, amounted to approximately S$2.3 million in 2Q2018.

In 2Q2018, net cash used in investing activities amounted to approximately S$2.2 million. This was mainly attributable to additions of plant and equipment and renovation costs for the Group's new factory facility in Singapore and new retail outlets.

Net cash used in financing activities amounted to approximately S$2.2 million in 2Q2018. This was mainly due to dividends of approximately S$1.8 million paid during 2Q2018, and repayments of bank loan and finance lease liabilities, including interest paid during the period.


The Group's first flagship outlet in London, United Kingdom is targeted to open in 2018, generating new revenue streams for the Group and uplifting Old Chang Kee's brand positioning. On the current operations, the Group expects operating lease expenses (rental), labour and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labour market will continue to remain tight.

Following completion of the new factory facilities and the commissioning of new factory equipment in 2Q2018, the Group will be focusing its efforts on improving its gross margins and revenues. These include continuing investment in brand positioning, bulk purchases at more favourable prices with the expanded factory space, further expanding its product range and increasing the production efficiency of its factories, in order to grow the business both locally and regionally.