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The Group's revenue increased from approximately S$18.6 million for the financial period from 1 April 2016 to 30 June 2016 ("1Q2017") to approximately S$20.6 million for the period from 1 April 2017 to 30 June 2017 ("1Q2018"), an increase of approximately S$2.0 million or 10.7%.
Revenue from retail outlets increased by approximately S$2.0 million or 10.7% 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.
As at 30 June 2017, the Group operated a total of 89 outlets in Singapore as compared to 85 outlets as at 30 June 2016.
The Group's signature puff products remained the major contributor to its revenue and accounted for approximately 33.6% of the Group's revenue in 1Q2018, as compared to approximately 33.2% in 1Q2017.
Cost of sales increased by approximately S$1.1 million or 15.1% mainly due to the higher revenue generated by the Group and higher food cost for 1Q2018.
The Group's gross profit increased by approximately S$924,000 or 8.0%. The Group's gross profit margin decreased from approximately 62.4% in 1Q2017 to 60.9% in 1Q2018, mainly due to higher food cost in 1Q2018.
Selling and distribution expenses
Selling and distribution ("S & D") expenses increased by approximately S$1.1 million or 13.9%. S & D expenses in 1Q2018 amounted to approximately 42.1% of revenue as compared to approximately 40.9% of revenue in 1Q2017.
The increase in S & D expenses as a percentage of revenue was largely attributable to an increase in staff cost of approximately S$405,000; higher outlet rental expenses of approximately $396,000 and higher advertising, outlet utilities and packaging expenses of approximately S$166,000.
Administrative expenses increased by approximately S$212,000 or 8.0%. The increase in administrative expenses was mainly due to:
The decrease in other expenses of approximately S$170,000 in 1Q2018 was mainly due to foreign exchange gain of approximately S$46,000 compared to foreign exchange losses of approximately S$119,000 in 1Q2017, pursuant to foreign exchange revaluation gain for RM-denominated loans to our Malaysian operations.
As a result of the above, total operating expenses increased by approximately S$1.1 million or 10.4%. Total operating expenses amounted to approximately 56.8% of revenue in 1Q2018 and 57.0% in 1Q2017 respectively.
Finance costs increased by approximately S$17,000 mainly due to loan taken to finance the construction and renovation of factory facilities.
The increase was due to start-up losses of approximately S$31,000 for a new joint venture in the United Kingdom.
The Group's profit before tax decreased from approximately S$1.2 million in 1Q2017 to approximately S$914,000 in 1Q2018, a decrease of approximately S$240,000 or 20.8%.
The Group's non-current assets increased by approximately S$2.3 million or 7.7% mainly due to the following:
The Group's current assets increased by approximately S$680,000 or 3.3% mainly due to:
The increase in current assets was partially offset by a decrease of S$388,000 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, and investment in a United Kingdom joint venture of approximately S$537,000 during 1Q2018, partially offset by cash generated from operations and proceeds from bank loans.
The Group's current liabilities increased by approximately S$2.5 million or 15.3% mainly due to the following:
The Group's non-current liabilities decreased by approximately S$155,000 or 2.2% mainly due to repayment of bank loans and finance lease offset by an increase in deferred tax liabilities during 1Q2018.
Net working capital
As at 30 June 2017, the Group had a positive net working capital of approximately S$2.5 million as compared to approximately S$4.3 million as at 31 March 2017.
For 1Q2018, the Group generated an operating profit before working capital changes of approximately S$2.1 million. Net cash generated from operating activities, inclusive of working capital changes, amounted to approximately S$1.5 million in 1Q2018.
In 1Q2018, net cash used in investing activities amounted to approximately S$3.2 million. This was mainly attributable to additions of plant and equipment and renovation costs for the Group's new factory facility in Singapore and investment in a joint venture in the United Kingdom.
Net cash from financing activities amounted to approximately S$1.2 million in 1Q2018. This was mainly due to proceeds from bank loan of approximately S$1.6 million for the construction and renovation of the Singapore factory, offset by repayments of bank loan and finance lease liabilities, including interest paid during the period.
The Group expects operating lease expenses (rental) and 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. The Group will be integrating its factory in Iskandar Malaysia and its expanded factory facilities in Singapore at 2 and 4 Woodlands Terrace in the coming months. These will provide the Group with a platform to expand its product range and increase its production efficiency, and grow its business both locally and regionally.