FINANCIAL STATEMENTS AND RELATED ANNOUNCEMENT FOR THE SECOND QUARTER ENDED 30 SEPTEMBER 2018
Consolidated statement of comprehensive income
Review of Performance
The Group's revenue increased from approximately S$21.4 million for the financial period from 1 July 2017 to
30 September 2017 ("2Q2018") to approximately S$23.4 million for the period from 1 July 2018 to 30
September 2018 ("2Q2019"), an increase of approximately S$2.0 million or 9.3%.
Revenue from retail outlets increased by approximately S$1.8 million or 8.7% mainly due to revenue
contribution from new outlets and an increase in revenue from existing outlets, partially offset by absence
of revenue from closed outlets.
Revenue from other services, such as delivery and catering services, increased by approximately S$155,000
or 45.5% from S$341,000 to S$496,000, mainly due to higher events and catering sales.
As at 30 September 2018, the Group operated a total of 89 outlets in Singapore as compared to 87 outlets as
at 30 September 2017.
Cost of sales and gross profit
Cost of sales decreased by approximately S$70,000 or 0.8% mainly due to better food cost management and
improved manpower efficiencies arising from automation of production processes for 2Q2019.
The Group's gross profit increased by approximately S$2.1 million or 16.0%. The Group's gross profit margin
increased from approximately 60.1% in 2Q2018 to 63.8% in 2Q2019, mainly due to improved manpower
efficiencies and food cost management in 2Q2019.
Other income increased by approximately S$64,000 or 29.5% mainly due to an increase in gain on disposal of
motor vehicles of approximately S$39,000, and an increase in government grant income of approximately
S$24,000 in 2Q2019.
Selling and distribution expenses
Selling and distribution ("S & D") expenses increased by approximately S$1.1 million or 12.4% in 2Q2019. S
& D expenses in 2Q2019 amounted to approximately 41.5% of revenue as compared to approximately 40.3%
of revenue in 2Q2018.
The increase in S & D expenses as a percentage of revenue was largely attributable to an increase in staff
costs of approximately S$462,000 and higher outlet rental expenses of approximately S$417,000 arising from
the increased number of retail outlets and an increase in rental rates for existing outlets.
Administrative expenses increased by approximately S$313,000 or 10.2% in 2Q2019. The increase in
administrative expenses was mainly due to an increase in head office staff costs, including staff training
expenses and recruitment expenses, of approximately S$317,000.
The increase in other expenses of approximately S$216,000 in 2Q2019 was mainly due to an increase in
depreciation expenses of approximately S$103,000 arising from depreciation of the new head office at 2
Woodlands Terrace, and foreign exchange loss of S$112,000 in 2Q2019, pursuant to foreign exchange
revaluation loss for Malaysian Ringgit-denominated loans to our Malaysian operations.
As a result of the above, the proportion of total operating expenses compared to revenue increased from 56.3%
in 2Q2018 to 58.3% in 2Q2019.
Depreciation and amortisation
The increase in depreciation and amortisation expenses of approximately S$168,000 in 2Q2019 was mainly
due to additions of plant and equipment and renovation costs for the completion of the Group's new factory
facility in Singapore and new retail outlets.
Share of results of joint venture
The increase was due to initial operating losses of approximately S$154,000 for the joint venture in the United
Kingdom in 2Q2019, compared to start-up costs of approximately S$22,000 in 2Q2018.
Profit before tax
The Group's profit before tax increased from approximately S$958,000 in 2Q2018 to approximately S$1.3
million in 2Q2019, an increase of approximately S$377,000 or 39.4%, due to the reasons stated above.
The Group's taxation expenses increased by S$105,000 or 50.0% mainly due to an increase in profit for the
current financial period, offset by lower non tax deductible items for the period.
The Group's non-current assets decreased by approximately S$1.4 million or 4.0% mainly due to the following:
- depreciation expenses and fixed assets written off of approximately S$2.8 million partially offset by
purchase of motor vehicles, plant and equipment and renovation costs of approximately S$1.4 million for
the Group's new factory facility and outlets in Singapore during 1H2019;
- a decrease in investment in joint venture from the share of start-up costs and initial operating losses for
the joint venture in the United Kingdom of approximately S$198,000 for 1H2019; and
- a decrease in long term deposits mainly due to reclassification of long term lease deposits to short term
lease deposits, in accordance with the respective lease tenures offset by top up of lease deposit for lease
The decrease in non-current assets was partially offset by an increase in investment in unquoted shares of
approximately S$186,000 due to fair value adjustment upon the adoption of SFRS(I) 9 - Financial Instruments.
The Group's current assets increased by approximately S$1.6 million or 9.7% mainly due to:
- an increase in cash and bank balances of approximately S$1.9 million;
- an increase in amount due from joint venture mainly due to a working capital loan and product sales to the
United Kingdom joint venture of approximately S$284,000; and
- an increase in amount due from associates mainly due to product sales of goods to a Malaysian associated
company of approximately S$89,000.
The increase in current assets was partially offset by a decrease in inventories due to lower bulk purchase and
a decrease in prepayments mainly due to reclassification of equipment from prepayments to property, plant
and equipment upon full payment and receipt of the equipment.
The Group's current liabilities increased by approximately S$232,000 or 1.8% mainly due to the following:
- an increase in provision for unconsumed leave of approximately S$84,000 offset by decrease in provision
for reinstatement cost due to outlet closure; and
- an increase in provision for taxation mainly due to tax expenses provided of approximately S$704,000
offset by tax paid of approximately S$348,000 during the financial period.
The increase in current liabilities was offset by a decrease in trade and other payables of approximately
S$176,000 mainly due to the final settlement to contractors for factory renovation in 2Q2019, and a decrease
in finance leases due to repayments made during the current period.
The Group's non-current liabilities decreased by approximately S$710,000 or 6.4% mainly due to repayment
of bank loans and decrease in deferred tax liabilities during 1H2019 partially offset by an increase in finance
leases mainly for the purchase of new motor vehicles.
Net working capital
As at 30 September 2018, the Group had a positive net working capital of approximately S$5.1 million as
compared to approximately S$3.7 million as at 31 March 2018.
In 2Q2019, the Group generated an operating profit before working capital changes of approximately S$3.1
million. Net cash generated from operating activities, inclusive of working capital changes, amounted to
approximately S$2.4 million in 2Q2019.
In 2Q2019, net cash used in investing activities amounted to approximately S$373,000. This was mainly
attributable to additions of plant and equipment and renovation costs for the Group's new retail outlets and
factory facility in Singapore.
Net cash used in financing activities amounted to approximately S$2.3 million in 2Q2019. This was mainly due
to dividends paid on 24 August 2018, and repayments of bank loan and finance lease liabilities, including
interest paid during the period.
The Group continues to focus on improving its gross margins and revenues. These initiatives include continuing
investment in brand positioning, further expanding its product range including seasonal product launches, and
increasing the production efficiency of its factories. The Group will continue with its efforts to drive operational
efficiencies, and to enhance its brand positioning.
Initial sales results for the Group's first flagship outlet in Covent Garden - London, United Kingdom ("UK") are
encouraging, but manpower and food costs remain high. The Group will continue to fine-tune its product offerings to
adapt to the UK market, and to manage its manpower and food costs more effectively, as it becomes more familiar
with the UK conditions.
In relation to the current Singapore operations, the Group expects 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