Unaudited Financial Statements Announcement For The Financial Year Ended 31 December 2017
Combined Statements of Comprehensive Income
Combined Statements of Financial Position
REVIEW OF FINANCIAL PERFORMANCE
The Group's revenue increased by 2.0% or S$1.2 million, from S$56.8 million in FY2016 to S$58.0 million in FY2017 mainly due to the contribution from online sales and overall increase in revenue from its 3 brands namely Bali Thai, Streats and So Pho.
Cost of sales
Cost of sales, which mainly comprised food and beverage, rental leases of restaurants, staff costs and depreciation, increased by 7.9% or S$3.9 million from S$48.4 million in FY2016 to S$52.3 million in FY2017. The cost of sales as a percentage of revenue increased from 85.2% in FY2016 to 90.1% in FY2017 mainly due to higher staff costs and rental leases from four new outlets amounting to S$0.7 million and S$1.4 million, and higher commission paid and food costs of S$0.9million and S$0.3 million respectively.
Gross profit reduced by 32.1% or S$2.7 million from S$8.4 million in FY2016 to S$5.7 million in FY2017, as a result of increase in Cost of Sales.
The decrease in other income by 12.7% or S$0.1 million was mainly due to lower government grants accrued as a result of decrease in payout rate during the current financial year.
Selling and distribution costs
Selling and distribution costs reduced by 2.3% or S$24k in FY2017 as compare with FY2016.
Administrative expenses remained at around $3.9 million in FY2017.
Other expenses increased by 27.0% or S$0.1 million mainly due to higher impairment loss on the property, plant and equipment of non-performing outlets in FY2017.
Profit after tax
Profit after tax decreased by 57.7% or S$1.4 million from S$2.4 million in FY2016 to S$1.0 million in FY2017.
REVIEW OF FINANCIAL POSITION
The Group's non-current assets increased from S$11.0 million as at 31 December 2016 to S$12.2 million as at 31 December 2017 mainly due to increase in refundable deposits and property, plant and equipment acquired for the new outlets.
The Group's current assets reduced from S$13.5 million as at 31 December 2016 to S$10.6 million as at 31 December 2017 mainly due to the decrease in cash and cash equivalent, which was used for business expansion and implementation of the new SAP and POS systems.
The Group's current liabilities decreased by S$1.6 million from S$8.9 million as at 31 December 2016 to S$7.3 million as at 31 December 2017. This is due to a decrease of S$1.7 million in amount due to directors mainly as a result of payment of dividend declared in the previous year to the directors who were the then existing shareholders of a subsidiary. In addition, there is lower provision for taxation of S$0.8 million for FY2017. This is offset by the increase in trade payables which is in line with the increase in sales and increase in other liabilities due to accrual of staff bonus and unutilised leave of S$0.3 million.
Non-current liabilities increased slightly by S$0.2 million from S$1.1 million as at 31 December 2016 to S$1.3 million as at 31 December 2017 which is mainly attributed to additional provision for restoration costs for the new outlets.
The Group's shareholders' equity decreased by S$0.4 million as at 31 December 2017 mainly attributable to dividend payment to shareholders of S$1.4 million, offset by net profit for the year of S$1.0 million.
REVIEW OF CASH FLOWS
The Group generated net cash of S$3.9 million from operating activities before changes in working capital in FY2017. Net cash used in working capital amounted to S$0.5 million mainly due to increase in trade and other receivables of S$0.4 million, refundable deposits of S$0.4 million which was partially offset by increase in other liabilities of S$0.6 million. The Group also paid income tax of S$0.8 million. As a result, net cash generated from operating activities was S$2.7 million.
Net cash used in investing activities amounted to S$3.7 million mainly due to the acquisition of property, plant and equipment for new outlets.
Net cash used in financing activities of S$2.9 million was attributed to the net payment of dividend to directors of S$1.5 million and shareholders of S$1.4 million.
As a result of the above, the net decrease in cash and cash equivalents as at 31 December 2017 was S$3.9 million.
Commentary On Current Year Prospects
The Food and Beverage (F&B) Industry in Singapore continues to face headwind; facing shortages in the labour market, tough competition due to low entry barriers, and more cautious consumer spending. We expect the outlook of the F&B Industry to remain challenging in the coming year.
The Group's growth plan involves continuing its efforts to manage cost through automation and information technology. The Group has been utilising technology to improve work processes and optimise usage of manpower resources by increasing productivity. The Group expects more of its processes to be integrated into the Enterprising Resource Planning (ERP), Points-of-Sale (POS), Bill-of-Materials (BOM), and Offline- Procurement-System (OPS). This is to further automate its back-office functions, and further reduce reliance on manpower in restaurants, maintain the consistency of food quality, and further lower its operating costs.
The Group has been extending its online food ordering and delivery services to its customers, more set meals and food pairings will be made available moving forward.
At the close of FY2017, the Group's 9 proprietary F&B brands were represented by 38 restaurants in Singapore and 1 in China, which include halal-certified brands Bali Thai, So Pho, Streats and Indobox. The Group is actively exploring opportunities to grow its business through acquisitions, joint ventures, franchising and strategic alliances with parties who can help to strengthen its brands and expand its market share in the region, to support its growth with lower investment risks.
Barring any unforeseen circumstances, the Group expects to continue to grow its business and remain profitable in FY2018.
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