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Review of Performance
Revenue and Profitability
The Group’s revenue for the financial year ended 31 December 2019 (“FY2019”) was $43.2 million, a decrease of $0.7 million or 1.6% as compared to $43.9 million for the financial year ended 31 December 2018 (“FY2018”). The decrease was attributable to a decrease in revenue from the existing outlets of $2.1 million, offset against a net increase in the revenue from the opening and closure of outlets of $0.9 million. Revenue for the food processing, distribution and procurement services segment increased by $0.5 million.
Other income increased by $0.5 million or 122.7% mainly related to grants received for Technology Innovation and Employment as well as a prize for the Social Enterprise of The Year award at the President’s Challenge.
Purchases and other consumables increased 1.4 percentage point to 22.9% of revenue as compared to FY2018 mainly due to higher purchases for the festive seasons.
Employee benefits expense decreased by $0.6 million or 3.9% in FY2019 mainly due to a decrease in related staff costs and a reduction in headcount for existing outlets amounting to $1.5 million, offset by a net increase of $0.9 million as a result of the opening and closure of outlets as well as the set-up of a new kitchen located at Enabling Village in November 2018.
Other expenses decreased by $6.6 million or 41.6% in FY2019. The decrease is mainly due to a net decrease in operating leases of $7.7 million. The decrease is a result of the adoption of SFRS(I) 16 Leases of $8.0 million and a decrease in percentage rental of $0.2 million due to a decrease in revenue, netted off against an increase of $0.5 million as a result of the opening and closure of outlets. The decrease was offset by an increase in sales commission of $0.4 million associated with online delivery services, an increase in credit card commission of $0.1 million and a net increase of $0.6 million as a result of the opening and closure of outlets and the new kitchen.
As a result, the profit before income tax decreased by $1.6 million or 63.0% in FY2019 as compared to FY2018. Earnings per share stood at 0.27 cents in FY2019.
Review of Financial and Cash Flow Position
Non-current assets increased by $13.3 million from $3.3 million, as at 31 December 2018 (“FY2018”), to $16.6 million as at 31 December 2019 (“FY2019”), mainly due to the recognition of right-of-use assets of $21.0 million and the addition of plant and equipment of $1.8 million, offset by depreciation and amortisation expenses of $9.3 million and impairment on plant and equipment and right-of-use assets of $0.2 million.
Current assets decreased by $1.2 million as compared to FY2018 mainly due to a decrease in cash and cash equivalents of $1.8 million, offset by an increase in trade and other receivables of $0.4 million and an increase in inventories of $0.2 million. Trade and other receivables increased mainly as a result of the increased revenue for food processing and the prepayment of a consultancy fee related to a brand alignment exercise. The decrease in cash and cash equivalents was attributable mainly to purchases of plant and equipment of $1.7 million, payment of final dividend of $1.8 million, purchase of treasury shares of $0.1 million and repayment of lease liabilities of $8.0 million, partially offset by the net cash from operating activities of $9.8 million. Total liabilities increased by $13.2 million mainly due to an increase in lease liabilities of $13.5 million as a result of the adoption of SFRS(I) 16 Leases, an increase in other payables related to purchases of plant and equipment of $0.2 million, advance payment for rental of $0.1 million, deposits received for reservations of $0.1 million, funds received in advance for the Training Programme of $0.2 million and an increase in the current income tax payable of $0.1 million, and offset by a decrease in accrued expenses of $1.0 million as a result of payments for directors and staff bonuses.
Total equity amounted to $9.9 million and net asset value per share stood at 3.54 cents as at FY2019.
The Group continues to focus on strengthening our brands with plans for the consolidation and rejuvenation of some of our outlets in Singapore to face current market challenges amidst the COVID-19 situation and the resulting slowdown for F&B businesses in Singapore. The Group is working with our landlords and partners and also managing our manpower to lower overall operating costs during this period. Nevertheless, the Group is of the view the COVID-19 impact is short-term and we will strive to remain adaptable while monitoring the performance of the business.
The Group will also focus on bringing our food offerings to more customers through online delivery platforms from all our outlets during this period. At the same time, the Group will continue to manage the operations of our restaurants more effectively with the implementation of productivity measures with the intention of serving our customers better.
The food processing and distribution business remains focused on its core strategies to assist the Group through procurement sourcing and management, as well as widening its distribution networks for its consumer goods and ready meals through the central kitchens located in Changi Prison Complex and the Enabling Village.