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Chairman's Statement

When we first started at
East Coast Seafood Centre

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Dear Shareholders,

This has been a truly exciting year for JUMBO. Besides further establishing our presence in the PRC, we also ventured into new geographical markets, such as Vietnam and Taiwan. This is indeed an encouraging step for us in pursuing our dream to bring the best of Singapore’s seafood cuisine to every major city in the world.

Our emphasis on quality has led us to build an experienced local team of managers and chefs to manage our expansion and ensure consistency in the quality of food and service standards. While this will no doubt increase our operating costs, we will continue to focus our efforts on cost rationalisation, thereby ensuring that our growth plans remain well supported and sustainable.

Financial Highlights

For FY2017, we recorded revenue of $145.1 million, up 6.1% from $136.8 million in the previous corresponding year (“FY2016”). This was mainly due to a broad-based increase in revenue from both our Singapore and PRC operations, coupled with full-year revenue contribution from the Group’s third JUMBO Seafood restaurant in Shanghai, PRC.

Cost rationalisation has been a mainstay in JUMBO’s business and continues to be an important aspect, particularly as we gear up for growth. Our efforts have largely paid off as we managed to keep our cost of sales, comprising raw materials and consumables used, as a percentage of revenue at 37% in both FY2017 and FY2016.

Operating expenses, which include employee benefits expense, operating lease expenses, depreciation expense and other operating expenses, increased in line with JUMBO’s regional expansion. Included in other operating expenses were also expenses of approximately $1.0 million in relation to JUMBO’s 30th Anniversary celebrations. As a result of the increase in expenses, profit attributable to owners of the Company decreased by 6.7% or $1.0 million, from $15.5 million in FY2016 to $14.5 million in FY2017.

Year in Review

Overall, JUMBO’s business has stayed on its steady path of growth in FY2017.

Revenue contribution from Singapore rose 2.5% from $116.8 million in FY2016 to $119.7 million in FY2017 on increased sales across our portfolio of F&B brands.

We recorded an increase in revenue from our NG AH SIO Bak Kut Teh outlets, mainly bolstered by sales from our new outlet at Resorts World Sentosa. Revenue for Chui Huay Lim Teochew Cuisine also improved from the previous year. JPOT’s revenue was lower largely due to keen competition from the increasing number of hotpot and steamboat restaurants in Singapore. We are in the process of fine-tuning our JPOT brand strategy to optimise this business, with the closure of our JPOT outlet at Parkway Parade in September 2017 being part of this plan.

Good progress has also been made in promoting the sales of our packaged sauces and spice mixes, even though revenue from this segment remains relatively insignificant to the Group revenue. The retail packs that we sell currently include JUMBO Chilli Crab Paste, JUMBO Black Pepper Crab Spice, JUMBO Cereal Premix and NG AH SIO Authentic Teochew Style Bak Kut Teh Spice which are now being sold at the Singapore Changi Airport, in addition to at our outlets, selected stores, supermarkets, travel agencies and online via our JUMBO eshop.

Outside of Singapore, we made significant headway in expanding JUMBO’s regional business. In May 2017, we opened our first franchised JUMBO Seafood restaurant in Ho Chi Minh City, Vietnam.

Shortly following the above, we successfully opened two new JUMBO Seafood outlets in the PRC. Our first JUMBO Seafood outlet in Beijing, PRC opened in July 2017 in the city’ s leading high-end iconic, luxury and fashion shopping mall, Beijing SKP. In November 2017, we further expanded our presence in Shanghai, PRC with the opening of our fourth JUMBO Seafood outlet at the luxury L’Avenue Mall in Hongqiao, bringing the total number of JUMBO Seafood outlets in the PRC up to five -- within a short span of four years since our maiden entry in 2013.

The PRC has been a key growth market for us, and accounted for approximately 18% of our total revenue in FY2017. I am truly heartened by JUMBO Seafood’s growing popularity among the local and expatriate populace. It is evidence of our success in growing our core brand in the market.

With the PRC business serving as the foundation for JUMBO’s operations outside of Singapore, we embarked on further expansion in the region to include Taiwan. In November 2017, we entered into a joint venture agreement with Baipin Co., Ltd to introduce the JUMBO Seafood brand to Taiwan with plans to open eight new outlets.

Following the above, we entered into a franchise agreement with Ho Sing Food Co., Ltd. in December 2017 and went on to open Taiwan’s first JUMBO Seafood outlet at Shin Kong Mitsukoshi (Xin Yi), Taipei, one of the country’s premier shopping destinations.

Dividends

The Board of JUMBO is pleased to propose a tax exempt (one-tier) final cash dividend of 0.5 cents and a tax exempt (one-tier) special dividend of 0.7 cents per share for approval at our upcoming annual general meeting. Including the tax exempt (one-tier) interim dividend of 0.5 cents per share, this will bring the total dividend payout for FY2017 to 1.7 cents per share.

Going Forward

We expect the F&B industry to remain challenging amid pressure on operating costs and keen competition. Nevertheless, we believe that JUMBO’s business will remain stable.

We continue to see scope for continued organic growth from our existing F&B outlets in Singapore and overseas, particularly as we build our customer base in new markets and grow other revenue streams. These comprise our retail packs business, catering and event services as well as home delivery services. We are also exploring opportunities to extend the range of our retail products beyond our current offerings.

On the outlet expansion front, we believe that there is sufficient demand for us to open one to two more F&B outlets in Singapore. To this end, we have been actively exploring new locations.

The PRC will certainly be an increasingly important market for JUMBO going forward as we seek to further expand our presence to meet the increasing demand for new culinary offerings among the growing Chinese middleclass. Known for our consistent quality of food and service, we have since gained a successful foothold in the market. Revenue contribution from our PRC operations has grown steadily from about 6% in FY2014 to about 18% in FY2017. We hope to sustain this momentum further by partnering with well-placed F&B and/or property players through joint ventures, franchising and other strategic alliances to bring JUMBO Seafood into new major Chinese cities.

Beyond Singapore and the PRC, we are also actively exploring suitable franchise opportunities to bring our scalable brands into new potential markets, such as Bangkok, Hanoi, Seoul, Hong Kong, Macau and Jakarta.

Acknowledgement

FY2017 has been a positive year for JUMBO and I would like to take this opportunity to say a big thank you to all our employees and management team for your dedication and hard work put in to help realise this.

I would also like to extend my heartfelt gratitude to all our loyal customers, business partners and shareholders for your unwavering support.

Mr. Ang Kiam Meng

Group CEO & Executive Chairman