Page 5 - ar2014

CHAIRMAN’S STATEMENT AND OPERATIONS REVIEW
3
Annual Report 2014 •
The Group’s signature puff products remained the major contributor
to its revenue and accounted for approximately 31.4% of the Group’s
revenue in FY2014, as compared to approximately 33.3% in FY2013.
Cost of sales and gross proft
Cost of sales increased from approximately S$25.3 million in FY2013
to S$26.0 million in FY2014, an increase of approximately S$701,000
or 2.8%. The increase was mainly due to the higher revenue
generated by the Group.While revenue increased by 5.0%, the cost
of sales increased at a lower rate of 2.8%.
The Group’s gross proft increased from approximately S$40.3 million
in FY2013 to S$42.8 million in FY2014, an increase of approximately
S$2.5 million or 6.3%.The Group’s gross proft margin increased from
approximately 61.4% in FY2013 to 62.2% in FY2014.
The increase in the gross proft margin was mainly due to improved
effciency of production staff and revision of our products’ selling
prices in December 2012.
Other income
Other income increased from approximately S$1.0 million in FY2013
to S$1.1 million in FY2014, an increase of approximately S$137,000
or 13.6%.The increase was mainly due to the following:
a) Wage Credit Scheme (“WCS”) of approximately S$161,000
provided by the government in March 2014; and
b) gain fromdisposal of motor vehicles of approximately S$94,000.
The increase in other income was partially offset by lower
government grant received from government agencies and lower
miscellaneous income from sale of waste oil by approximately
S$131,000 and S$28,000 respectively.
Operating Expenses
Selling and distribution expenses
Selling and distribution (“S & D ”) expenses increased slightly from
approximately S$25.0 million in FY2013 to S$25.4 million in FY2014,
an increase of approximately S$321,000 or 1.3%. S & D expenses in
FY2014 amounted to approximately 36.8% of revenue as compared
to approximately 38.2% in FY2013.
The improvement in S & D expenses as a percentage of revenue
was largely attributed to the following:-
a) staff benefts, including salaries and CPF contributions,
decreased from approximately 15.6% of revenue in FY2013 to
approximately 15.0% in FY2014;
b) cessation of subcontract riders’ services since October 2012.
Subcontract expenses amounted to approximately 0.3% of
revenue in FY2013;