Unaudited Financial Statements Announcement For The Financial Year Ended 31 December 2016
Combined Statements of Comprehensive Income
Combined Statements of Financial Position
Review of the Group's Performance
The Group's revenue increased by 9.5% or S$4.9 million, from S$51.9 million in FY2015 to S$56.8 million in FY2016 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 11.0% or S$4.8 million from S$43.6 million in FY2015 to S$48.4 million in FY2016 in line with the revenue increase. The cost of sales as a percentage of revenue increased from 84.0% in FY2015 to 85.2% in FY2016 mainly due to higher depreciation and rental leases from four new outlets amounting to S$0.2 million and S$1.0 million respectively.
Gross profit increased by 1.5% or S$0.1 million in line with the revenue increase.
The increase in other income by 34.4% or S$0.2 million was mainly attributed to the promotional support funds from the beverage suppliers.
Selling and distribution costs
Selling and distribution costs increased by 25.5% or S$0.2 million from S$0.8 million in FY2015 to S$1.0 million in FY2016. This was due to increased marketing effort to promote our online ordering service to customers in FY2016.
Administrative expenses/IPO expenses
Administrative expenses increased by 32.3% or S$0.9 million year on year which was mainly due to increase in administrative staff salary expenses and directors' remunerations. IPO expenses of S$1.4 million (S$0.5 million was capitalized) were incurred in FY2016 in connection with the IPO of the Group.
Due to the repayment of term loan, interest expenses have reduced to from S$9K in FY2015 to S$3K in FY2016.
Other expenses increased by S$262K mainly due to impairment loss on the property, plant and equipment of non performing outlets, namely Streats One KM in Singapore and the two outlets in the People's Republic of China.
Profit after tax
Profit after tax decreased by 44.4% or S$1.9 million from S$4.3 million in FY2015 to S$2.4 million in FY2016.
Review Of Financial Position
The Group's non-current assets increased from S$10.9 million as at 31 December 2015 to S$11.0 million as at 31 December 2016 mainly due to increase in refundable deposits for new outlets, offset by a decrease in property, plant and equipment due to the impairment provision on non-performing outlets.
The Group's current assets increased from S$12.6 million as at 31 December 2015 to S$13.6 million as at 31 December 2016 mainly due to increase in trade receivables owed by online delivery vendors coupled with cash and cash equivalent from the IPO proceeds and receipts of government grants, offset by a decrease in refundable deposits due to reclassification to non-current assets.
The Group's current liabilities increased by S$2.2 million from S$6.7 million as at 31 December 2015 to S$8.9 million as at 31 December 2016. Trade and other payables increased by S$0.4 million arising from the increased purchases of food ingredients, accrual of salaries and deferred rental. Other liabilities also increased due to accrual of staff bonus and unutilised leave. Amount due to directors increased by S$1.7 million resulting from the dividend declared by a subsidiary prior to IPO and accrual of performance bonus. This was partially offset by lower provision for taxation and nil term loan balance.
Non-current liabilities remained stable around S$1.0 million as at 31 December 2016 which mainly comprised of deferred rental and provision for restoration costs of outlets.
The Group's shareholders' equity decreased by S$1.2 million as at 31 December 2016 mainly attributed to dividend payment to Katrina Singapore's shareholders of S$10.0 million, offset by net IPO proceeds of S$7.0 million, net profit for the year of S$2.4 million and elimination of S$0.6 million of share capital of a subsidiary pursuant to restructuring exercise.
REVIEW OF CASH FLOWS
The Group generated net cash from operating activities before changes in working capital of S$6.7 million in FY2016. Net cash generated from working capital amounted to S$0.5 million mainly due to increase in trade and other payables of S$0.3 million, other liabilities of S$0.4 million, amount due to directors of S$0.2 million and partially offset by increase in refundable deposits of S$0.4 million and trade and other receivables of S$0.1 million. The Group also paid income tax of S$0.9 million. As a result, net cash generated from operating activities was S$6.3 million.
Net cash used in investing activities amounted to S$2.6 million mainly due to the acquisition of property, plant and equipment and acquisition of equity interest in Beijing Bali Thai from the Company's CEO and Executive Director at an aggregate cash consideration of S$0.6 million.
Net cash used in financing activities of S$2.6 million was mainly attributed to the net proceeds from initial public offering ("IPO") amounting S$6.1 million offset against net payment of dividend to directors S$8.5 million.
As a result of the above, the net increase in cash and cash equivalents as at 31 December 2016 was S$1.1 million.
Commentary On Current Year Prospects
The Food and Beverage ("F&B") industry in Singapore faced some challenges in 2016 as uncertainties in the macro environment saw Singapore mark its weakest annual GDP growth rate since 2009.1 Consequently, consumers' cautious spending in 2016 saw the Food & Beverage Services Index ("FSI") in Singapore decline 10 out of the 12 months in 2016 when compared at constant prices to the corresponding month in 2015.2
In view of these uncertainties, the Group has taken a cautious approach and restrategized its growth plans. Apart from organic growth and expansion via strategic alliances, acquisitions or joint ventures, the Group is moving towards franchising, which is expected to support its growth while lowering the level of investment and risk involved. To build sustainable growth in existing operations, the Group will also evaluate the viability of its restaurant outlets that that are reaching the end of their lease agreements. Currently, the Group has no intention to renew the lease agreement for its outlet in Gemdale Beijing.
The Group's first year expansion into online food ordering and delivery services showed promising results with the Group achieving revenue of S$2.4 million for FY2016 and the Group expects this to continue to grow in FY 2017.
Complementing its expansion plans with existing cost management measures, the Group has also upgraded its business software solutions and embarked on plans to increase the use of consumer-focused technology like selfordering devices. These measures will increase staff proficiency and productivity while lowering costs in the long run.
Overall, the Group expects to continue to grow its business in the next 12 months.
At the close of FY2016, the Group's nine proprietary restaurant brands were represented by 33 restaurants in Singapore and two restaurants in the PRC.
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