(Extracted from Annual Report 2024)
Dear Shareholders,
It is my pleasure to present to you the Annual Report of Old Chang Kee Ltd. (the “Company" or “Old Chang Kee" and together with its subsidiaries, the “Group") and the Group's financial results for the financial year ended 31 March 2024 (“FY2024").
FY2024 vs FY2023
For FY2024, the Group's revenue increased by approximately S$11.2 million or 12.4%. This increase in revenue arose mainly due to higher retail, catering, delivery and non-retail sales.
Revenue from retail outlets increased by approximately S$8.8 million or 10.9% mainly due to incremental revenue from new outlets and an increase in revenue from existing outlets, partially offset by a decrease in revenue from closed outlets.
Revenue from other services, such as delivery and catering services, increased by approximately S$2.3 million or 26.4% mainly due to higher catering, delivery, non-retail and events revenue during the current financial year.
The Group's gross profit margin increased by 2.7% to 67.6% in FY2024, mainly due to improved cost management, product pricing management, and lower production utilities expenses as a percentage of revenue due to the higher revenue generated during FY2024.
Other income increased by approximately S$0.5 million due to higher employment grant income and higher government grants, offset by lower gain on disposal of assets during the financial year.
Interest income increased by approximately S$0.7 million due to higher interest rates on short-term fixed deposits.
The increase in selling and distribution (“S & D") expenses was largely due to higher staff costs, depreciation of right-of-use assets, advertising and promotion, rental expenses, and the absence of rental rebates received from landlords, partially offset by lower outlets depreciation expenses during FY2024. As a percentage of revenue, total S & D expenses decreased slightly from 39.9% to 39.5%, mainly due to the increase in retail sales during the financial year.
The increase in administrative expenses was mainly due to higher staff costs including higher bonus provision arising from the increase in profit for FY2024, higher legal and professional expenses, bank charges, and other maintenance expenses for the current year.
Finance costs increased by approximately S$0.4 million or 54.3%, mainly due to higher interest rates on finance leases and bank loans.
Other expenses decreased by S$0.5 million mainly due to lower depreciation expenses and lower impairment loss on amounts due from our joint venture in the United Kingdom and the Company's Malaysian associate, lower foreign exchange loss pursuant to foreign exchange revaluation of inter-company loans to Australia and Malaysia, partially offset by higher impairment loss of right-of-use assets for retail outlets for the current financial year.
The increase in the Group's depreciation expenses was mainly due to an increase in depreciation of right-of-use assets mainly for new and renewed leases of retail outlets, partially offset by a decrease in depreciation of property, plant and equipment resulting from an increase in fully depreciated assets (comprising the Group's property, plant and equipment).
The Group's taxation expenses increased by S$1.3 million mainly due to the higher profit, and lower non-tax deductible items for FY2024.
Non-current assets
The Group's non-current assets increased by approximately S$1.9 million mainly due to:
Current assets
The Group's current assets increased by approximately S$10.8 million, mainly due to:
Current and non-current liabilities
The net increase in the Group's current and non-current liabilities of S$5.4 million was mainly due to:
As at 31 March 2024, the Group had a positive net working capital of approximately S$23.0 million, compared to approximately S$16.8 million as at 31 March 2023.
FY2024 vs FY2023
For FY2024, the Group generated an operating profit before working capital changes of approximately S$26.8 million. Net cash generated from operating activities, inclusive of working capital changes and tax paid, amounted to approximately S$26.7 million in FY2024.
In FY2024, net cash used in investing activities amounted to approximately S$0.8 million. This was mainly due to acquisitions of property, plant and equipment, and renovation work for the Group's new retail outlets, partially offset by interest received from short-term fixed deposits in FY2024.
Net cash used in financing activities amounted to approximately S$15.7 million in FY2024. This was mainly due to dividends of approximately S$2.4 million paid during FY2024, repayment of lease obligations inclusive of lease interest of approximately S$11.6 million, and repayment of bank loans and finance lease during the financial year.
The Group notes that inflationary pressures have remained persistent, particularly raw material and labour costs, and rental costs remain elevated. The ongoing manpower shortage in the retail sector remains challenging while retail demand looks subdued in the near term.
The Group will continue with its current strategies to navigate this difficult period of sustained inflation. These strategies include efforts to reduce operating costs, improve gross margins and rationalise the Group's operations to overcome manpower shortages, and to actively look for more non-retail revenue streams, including business-to-business sales. The Group continues to look for opportunities to increase the number of outlets at strategic locations such as high traffic transport hubs. The Group also constantly explores possibilities for synergistic business combinations, and to expand our logistics and manufacturing facilities.
The Directors have proposed a final dividend of 1.0 Singapore cent per ordinary share for FY2024. As mentioned in the preceding paragraph, the Board wishes to explore possibilities for business combination and expansion of the Group's facilities, and has taken a prudent approach in recommending a 1.0 cent ordinary (final) dividend for FY2024. The total dividend for FY2024, if the final dividend is approved at the forthcoming Annual General Meeting, amounts to 2.0 Singapore cents per ordinary share.
I would like to express my heartfelt appreciation to our customers for their continued patronage, and our shareholders, Directors, bankers, strategic business partners and our staff for their continued support, especially during this period with persistent inflationary pressures.
Han Keen Juan
Executive Chairman