When we first started at
East Coast Seafood Centre
Recognition is the
Your dining experience is
Unaudited Financial Statements And Dividend Announcement For The First Quarter Ended 31 December 2017
Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
REVIEW OF THE GROUP'S PERFORMANCE
Revenue increased by 9.3% or $3.0 million, from $32.7 million in the first quarter ended 31 December 2016 (“Q1 FY2017”) to $35.7 million in the first quarter ended 31 December 2017 (“Q1 FY2018”). Revenue from our Singapore operations increased by $1.3 million while revenue from our Jumbo Seafood outlets in the People’s Republic of China (“PRC”) increased by $1.7 million due mainly to contributions from our first Jumbo Seafood restaurant in Beijing, PRC and fourth Jumbo Seafood restaurant in Shanghai, PRC, which commenced operations in July 2017 and November 2017 respectively.
Cost of sales
Cost of sales which comprised raw materials and consumables used increased by 14.0% or $1.6 million, from $11.7 million in Q1 FY2017 to $13.3 million in Q1 FY2018, in line with the increase in revenue.
Gross profit increased by 6.7% or $1.4 million, from $21.0 million in Q1 FY2017 to $22.4 million in Q1 FY2018, due to the increase in revenue.
Gross profit margin was lower at 62.7% in Q1 FY2018 as compared to 64.2% in Q1 FY2017. This was mainly due to promotional discounts given for the sale of Alaskan crabs in our Jumbo Seafood restaurants in Singapore and promotional prices offered during the launch of our fourth Jumbo Seafood restaurant in Shanghai, PRC during Q1 FY2018.
Other income increased by 74.9% or $0.3 million, from $0.4 million in Q1 FY2017 to $0.7 million in Q1 FY2018, largely due to franchise income of $0.2 million from our new franchisee in Taiwan.
Employee benefits expense
Employee benefits expense increased by 12.2% or $1.2 million, from $10.1 million in Q1 FY2017 to $11.3 million in Q1 FY2018. This was mainly due to an increase in the number of employees for our new outlets in Shanghai and Beijing, PRC as well as an overall increase in headcount and remuneration to support our regional expansion.
Operating lease expenses
Operating lease expenses increased by 8.3% or $0.2 million, from $3.3 million in Q1 FY2017 to $3.5 million in Q1 FY2018 mainly due to the leases for our new outlets in Shanghai and Beijing, PRC, and expansion of our PRC corporate office.
Utilities expenses increased by 14.1% or $0.1 million, from $0.8 million in Q1 FY2017 to $0.9 million Q1 FY2018, in line with the increase in number of outlets, as well as the expansion of our PRC corporate office.
Depreciation expense remained stable at $1.1 million in Q1 FY2018 and Q1 FY2017.
Other operating expenses
Other operating expenses increased by 18.2% or $0.5 million, from $3.0 million in Q1 FY2017 to $3.5 million in Q1 FY2018 mainly due to the increase in the number of outlets and the expansion of our PRC corporate office, coupled with preoperating and promotional expenses for our fourth Jumbo Seafood outlet in Shanghai, PRC which opened in November 2017, and marketing expenses relating to the Group’s 30th Anniversary celebrations.
Share of results of associates
Share of results of associates amounted to a loss of $0.2 million in Q1 FY2018, due mainly to pre-operating and promotional expenses incurred by our franchisee in Taiwan prior to the opening of our first franchised Jumbo Seafood outlet in Taiwan in December 2017. The franchisee is a joint venture company held by the Group (49%) and a local partner in Taiwan (51%).
Income tax expense
Income tax expense decreased by 18.4% or $0.1 million, from $0.5 million in Q1 FY2017 to $0.4 million in Q1 FY2018 mainly due to lower taxable profits from our PRC operations.
Profit after tax
As a result of the above, profit after tax decreased by 22.7% or $0.6 million, from $2.7 million in Q1 FY2017 to $2.1 million in Q1 FY2018.
Profit attributable to owners of the Company
Profit attributable to owners of the Company decreased by 19.8% or $0.5 million, from $2.6 million in Q1 FY2017 to $2.1 million in Q1 FY2018.
Review of the group's Financial Position
The Group’s current assets increased by $1.9 million from $62.2 million as at 30 September 2017 to $64.1 million as at 31 December 2017 mainly due to higher trade and other receivables, in line with the increase in revenue.
The Group’s non-current assets increased by $2.1 million from $21.0 million as at 30 September 2017 to $23.1 million as at 31 December 2017, mainly due to an increase in property, plant and equipment of $1.2 million resulting from the establishment of new outlets in Shanghai and Beijing, PRC, as well as an increase in investment in associates of $0.9 million due to establishment of the new joint venture company in Taiwan.
The Group’s current liabilities increased by $1.9 million from $14.5 million as at 30 September 2017 to $16.4 million as at 31 December 2017 mainly due to an increase in trade and other payables, in line with the increase in purchases.
The Group’s non-current liabilities remained the same as at 30 September 2017 and 31 December 2017.
REVIEW OF THE GROUP'S CASH FLOW STATEMENT
The Group generated net cash from operating activities before movementsin working capital of $3.7 million in Q1 FY2018. Net cash generated from movements in working capital amounted to $0.3 million mainly due to an increase in trade and other payables of $1.5 million and partially offset by an increase in trade and other receivables of $1.2 million. The Group paid income tax of $0.1 million. As a result, net cash from operating activities was $3.9 million in Q1 FY2018.
Net cash used in investing activities amounted to $3.3 million in Q1 FY2018. $2.2 million was used for the acquisition of property, plant and equipment, mainly for the establishment of our fourth outlet in Shanghai, PRC and purchase of equipment for our central kitchen in Singapore. In addition, the Group contributed $1.1 million in capital to subscribe for a 49% equity interest in the Taiwan joint venture company.
As a result, cash and cash equivalents increased by $0.6 million in Q1 FY2018.
Commentary on current year prospects
The food and beverage (“F&B”) industry is expected to continue to be challenging due to pressure on operating costs and keen competition.
The Group will continue to explore suitable opportunities to expand our network of F&B outlets and business through the opening of new outlets, acquisitions, joint ventures and/or strategic alliances with partners who can strengthen our market position and add value to our existing business
Leveraging on our four years of operational success in Shanghai, PRC, the Group intendsto continue expanding the Jumbo Seafood brand to other major cities in the PRC. Outside of Singapore and the PRC, the Group will continue to explore franchising opportunities to diversify and grow our business offerings. In this respect, the Group had recently announced its entry into Taiwan through franchising, with a local joint venture partner for our Jumbo Seafood brand.
As the Group continuesto grow its core operations, human capital and rising costs will likely be some of the key challenges faced by the Group. Pre-operating expenses and promotional expenses for new outlets and the performance of new outlets during the initial gestation period will also affect the Group’s performance. These were reflected in our Q1 FY2018 results. However the Group will continue to focus on cost efficiency and improving work flow processes, manpower utilisation and application of information technology systems to increase productivity, efficiency and lower operating costs.