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Review of Performance
(a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and
The Group’s revenue for the financial year ended 31 December 2017 (“FY2017”) was $40.6 million, an increase of $2.2 million or 5.8% as compared to $38.4 million for the financial year ended 31 December 2016 (“FY2016”). The increase was attributable to revenue of $6.6 million from new outlets which opened in the last two quarters of FY2016, offset by a decrease in revenue from existing outlets and closure of outlets of $4.3 million as a result of the Group’s efforts to retain those with the potential to turnaround and exit those which are no longer in line with the Group’s targets. Revenue for the food processing, distribution and procurement services segment decreased by $0.1 million due to the rescheduling of promotional events.
Other income decreased by $0.1 million or 11.6% mainly due to a decrease in government grants received of $0.2 million related to the Wage Credit Scheme and Special Employment Credit, partially offset by an increase in sponsorship income of $0.1 million.
Purchases and other consumables saw an improvement of 1.1 percentage point at 21.6% of revenue as compared to FY2016 due to tightening of cost controls.
Employee benefits expense increased by $0.8 million or 6.2% in FY2017 mainly due to an increase in employee benefits expenses for the new outlets and related staff costs for existing outlets of $2.2 million, offset by a decrease in employee benefits expenses due to closure of outlets of $1.4 million.
Other expenses increased by $0.4 million or 2.6% in FY2017 mainly due to a net increase in operating expenses of $0.1 million as a result of the opening and closure of outlets, an increase of $0.1 million for setting up the central kitchen at Changi Prison Complex, an increase of $0.2 million for operating lease expenses for existing outlets as well as an increase of $0.1 million for sales commission and advertising costs paid for online delivery services. This was partially offset by a decrease of professional fees of $0.1 million as a result of a write back.
As a result, the profit before income tax doubled to $2.1 million, an increase of $1.1 million or 102.5% in FY2017 as compared to FY2016. Earnings per share stood at 0.70 cents in FY2017.
(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 $0.2 million from $3.6 million, as at 31 December 2016 (“FY2016”), to $3.8 million as at 31 December 2017 (“FY2017”), mainly due to additions of plant and equipment of $1.7 million and intangible assets of $0.1 million, offset by depreciation and amortisation expenses of $1.6 million.
Current assets increased by $0.4 million as compared to FY2016 mainly due to an increase in cash and cash equivalents of $0.5 million and increase in inventories of $0.1 million, offset against a decrease in trade and other receivables of $0.2 million. The increase in cash and cash equivalents was attributable mainly to net cash from operating activities, offset by payments made for purchases of plant and equipment and intangible assets of $2.6 million and payment of dividend of $0.7 million. Trade and other receivables decreased by $0.2 million mainly due to the refund of security deposits of $0.6 million as a result of the utilisation of bank guarantees and closure of outlets, offset against an increase in receivables which is associated with the increased revenue.
Current liabilities decreased by $0.7 million mainly due to a decrease in trade and other payables as a result of payments for purchases of plant and equipment recorded as at FY 2016.
Total equity increased by $1.2 million from $9.1 million, as at FY2016, to $10.3 million as at FY2017, attributable mainly to the payment of the final dividend of $0.7 million, offset by profit reported during the financial year. The Group’s net asset value per share stood at 3.68 cents as at FY2017.
The Group continues to focus on strengthening our brands. The Group has plans to invest in online delivery platforms to reach a broader customer base through online delivery by utilising and maximising our current resources. At the same time, the Group will continue to manage the operation of restaurants more effectively with productivity measures with the intention to serve 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 kitchen located in Changi Prison Complex which was set up in the last quarter of FY2017.