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Review of Performance
Revenue and Profitability
The Group's revenue for the financial year ended 31 December 2016 ("FY2016") was $38.4 million, a decrease of $2.6 million or 6.4% as compared to $41.0 million for the financial year ended 31 December 2015 ("FY2015"). This was mainly due to the loss of revenue of $4.6 million from the closure of three outlets. Nevertheless, the revenue from existing and five additional new outlets (opened in the last two quarters) increased by $1.9 million. Revenue for the food processing, distribution and procurement services segment has also increased by $0.1 million or 9.0%.
Other income is maintained at $0.6 million. The increase in the sponsorship income of $0.1 million was offset by a decrease in franchise fees and government grants received.
Purchases and other consumables were maintained at approximately 23.0% of revenue, similar to FY2015.
Employee benefits expenses decreased by $1.5 million or 10.1% to $13.5 million in FY2016 due mainly to closure of the three outlets and a reduction in headcount and related staff costs for existing outlets of approximately $2.2 million, offset by an increase in employee benefits expenses for the five new outlets.
Other expenses decreased by $0.2 million or 1.5% in FY2016 mainly due to a net decrease in operating expenses of $0.4 million as a result of closure of the three outlets and opening of five new outlets, a decrease of $0.3 million in impairment loss on plant and equipment, advertising costs and utilities. This was partially offset by an increase in contract workers and operating lease expenses of $0.2 million as well as one-off and pre-operating expenses of $0.3 million for the opening and closure of outlets.
As a result, the profit before income tax decreased by $0.1 million or 5.3% in FY2016 as compared to FY2015. Earnings per share stood at 0.35 cents in FY2016.
(b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on.
Non-current assets increased by $0.6 million from $3.0 million, as at 31 December 2015 ("FY2015"), to $3.6 million as at 31 December 2016 ("FY2016"), mainly due to additions of plant and equipment of $2.3 million, offset by depreciation expense of $1.5 million as well as impairment and plant and equipment written off of $0.2 million.
Current assets decreased by $1.5 million as compared to FY2015 mainly due to a decrease in cash and cash equivalents of $0.7 million and trade and other receivables of $0.8 million. The decrease in cash and cash equivalents was attributable mainly to purchases of plant and equipment of $1.1 million, payment of dividend of $1.6 million and purchases of treasury shares of $0.6 million, offset by net cash from operating activities. Trade and other receivables decreased by $0.8 million mainly due to the utilisation of bank guarantees for security deposits.
Current liabilities increased by $0.4 million mainly due to an increase in trade and other payables of $0.3 million as a result of provision for reinstatement costs for new and existing outlets.
Total equity decreased by $1.2 million from $10.3 million, as at FY2015, to $9.1 million as at FY2016, attributable mainly to payment of final dividend of $1.6 million and purchases of treasury shares of $0.6 million, offset by profit reported during the financial year. The Group's net asset value per share stood at 3.24 cents as at FY2016.
The Group is exploring new retail concepts and taking the opportunity to consolidate and streamline our brands while looking for prime locations within Singapore and overseas for expansion. As part of the effort, the Group has carried out an evaluation of under-performing outlets, retaining and re-focusing those with the potential to turnaround and exiting those which are no longer in line with the Group's targets.
At the same time, the Group has plans to increase its central processing resources to increase its distribution capacity, tighten costs control and improve its productivity. 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 fast-moving consumer goods and ready meals.